7. Credit Agreements, Notes Payable, Subordinated and Convertible Debentures Payable

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Credit Agreements, Notes Payable, Subordinated and Convertible Debentures Payable

Credit agreements consisted of the following:

	September 30,		December 31,
	2018		2017
	($ in thousands)
Notes payable - $1,176,000 bearing
interest at prime plus 2%,
the remainder non-interest bearing,
all past due	$	1,198	$	1,198
Subordinated convertible debentures payable:
At 6.5% interest; due June 1991		138		447
At 6% interest; due May 1992		8,025		8,025
		8,163		8,472
	$	9,361	$	9,670

The Trustee of the 6.5% subordinated convertible debentures, which matured in June 1991, with an original face amount of $1,034,000, provided notice of final distribution to holders of such debentures on September 2, 2014. In connection with such final distribution, the Trustee maintains a debenture reserve fund with a balance of $13,000 and $41,000 as of September 30, 2018 and December 31, 2017, respectively, available for final distribution of $92 per $1,000 in face amount to holders of such debentures who surrender their respective debenture certificates.

The 6.5% Subordinated convertible debenture balances for the nine months ended September 30, 2018 and year ended December 31, 2017 are as follows:

	September 30,		December 31,
	2018		2017
	($ in thousands)
Outstanding debenture principal balance	$	138	$	447
Face value of debentures surrendered		22		-
Face value of debentures escheated		287		-
Accrued and unpaid interest balance		268		846
Debenture reserve account balance		13		41
Debenture reserve funds utilized
in payment of final distribution		2		-
Debenture reserve funds utilized
in escheatment to states of debenture holders		26		-
Forgiveness of debt		281		-
Forgiveness of interest		594		-

During the nine month period ended September 30, 2018, $28,000 of the debenture reserve funds were utilized with $2,000 disbursed in final distribution to debenture holders and $26,000 disbursed in escheatment to states of respective debenture holders as debentures with a face amount of $22,000 were surrendered by debenture holders and $287,000 in face amount of debentures were effectively surrendered with the escheatment of respective funds to the states of debenture holders. Accordingly, the Company has recognized $281,000 in forgiveness of debt during the nine months ended September 30, 2018. In addition, accrued interest of $594,000 on such debentures that are considered surrendered was recorded as forgiveness of interest expense during the nine months ended September 30, 2018. There were no debentures surrendered or escheated in 2017.

As of September 30, 2018, the outstanding principal balance on such 6.5% subordinated convertible debentures that were not surrendered by the respective holders, or escheated by the Trustee to the states of residence of the respective holders, equals $138,000 plus accrued and unpaid interest of $268,000. The outstanding principal balance on such respective debentures as of December 31, 2017 was $447,000 plus accrued and unpaid interest of $846,000.

If and when such remaining debentures are surrendered to the Trustee, or escheated to the states of residence of the respective debenture holders, the applicable portion of such principal and accrued interest will be recorded as debt and accrued interest forgiveness. As the Company has consistently stated in prior filings, the Company believes that any potential claims by the respective debenture holders on such 6.5% subordinated convertible debentures would be barred under the applicable statutes of limitations.