SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 24, 2002
Date of Report
(Date of Earliest Event Reported)
CAPITOL COMMUNITIES CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Nevada 0-23450 88-0361144
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
25550 Hawthorne Boulevard, Suite 207, Torrance, CA 90505
(Address of Principal Executive Offices)
Registrant's Telephone Number: 310-375-2266
ITEM 5. OTHER EVENTS.
Resure Inc., Settlement and Related Court Orders. For background
relating to this topic, see "ITEM 3. LEGAL PROCEEDINGS" in the Company's Annual
Report on Form 10-KSB filed with the Securities and Exchange Commission on
January 14, 2001.
On December 20, 2001, Capitol Communities Corporation's wholly owned
subsidiary, Capitol Development of Arkansas, Inc., (the "Operating Subsidiary")
and Nathaniel S. Shapo, the Director of Insurance for the State of Illinois, in
his Capacity as the Liquidator for Resure, Inc.("Resure"), reached a settlement
agreement ("2001 Settlement Agreement")to resolve payment on the outstanding
Resure loan evidenced by a first priority mortgage against approximately 701
acres of residential land located in Maumelle, Arkansas. The 2001 Settlement
Agreement resolves the Resure Motions and Competing Plan of Reorganization filed
by Resure with the United States Bankruptcy Code in the United States Bankruptcy
Court, Eastern District of Arkansas (the "Bankruptcy Court").
On July 21, 2000, the Operating Subsidiary, which holds substantially
all of the Company's assets, filed a voluntary petition for relief under Chapter
11 of the United States Bankruptcy Code in the Bankruptcy Court. Since then, the
Company has continued to operate its business as a debtor-in-possession, but
must seek Bankruptcy approval of the 2001 Settlement Agreement, a transaction
outside the ordinary course of business.
The Bankruptcy Court entered an Order approving the 2001 Settlement
Agreement on December 20, 2001, and dismissed all pending motions by Resure,
subject to the Liquidator for Resure receiving approval of the agreement from
the Circuit Court of Cook County, Illinois, Chancery Division (the "Cook County
Court"). The Cook County Court issued an Order approving the 2001 Settlement
Agreement on January 9, 2002.
The 2001 Settlement Agreement requires Resure to forebear from
collecting on the Resure Note or entering any pleadings, hearings or other
actions for a forbearance period ("Forbearance Period"). This Forbearance Period
shall be through and including a date (the "Option A Date") which shall be the
latter of a date (i) February 15, 2002, if the Resure Liquidator has obtained a
written Order from Cook County approving the agreement on or before January 15,
2002, or (ii) a date which is one day for each day after January 15, 2002, until
an Order is entered by Cook County; provided however, that if, on or before six
days prior to the Option A Date, the Operating Subsidiary elects Option B by
giving Resure written notice, then the Forbearance Period shall be through and
including a date which shall be the latter of a date ("Option B Date")(i) April
15, 2002, if Resure Liquidator has obtained and given notice to the Operating
Subsidiary of the entry of the Cook County Order prior to January 15, 2002, or
(ii) a date which is one day for each day after January 15, 2002, until an Order
is entered by Cook County.
Under the terms of the Agreement, the Liquidator for Resure agrees to
accept $3,850,000 on or before the Option A Date in full satisfaction of all
claims against the Operating Subsidiary. If the Operating Subsidiary elects the
Option B Date, a payment of $3,987,353.95, plus simple interest at an annual
rate of nine percent (9%) accrued from April 24, 2000, until the payment date
will be due.
If full payment required under Option A or Option B, is not timely
rendered to Resure, the Operating Subsidiary has agreed to the entry of a
Consent Foreclosure Decree and In Rem Judgment in the Pulaski County Chancery.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
Exhibit No.
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Exhibit 10.42 Order Resolving Motion For Relief from Stay (the 2001 Resure
Agreement) dated December 20, 2001.
Exhibit 10.43 Order Permitting Withdrawal of Dismissal Motion dated December
20, 2001.
Exhibit 10.44 Order in the Cook County Court, Illinois In the Matter of the
Liquidation of Resure, Inc., dated January 9, 2002.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: January 23, 2002 CAPITOL COMMUNITIES CORPORATION
BY: /s/ Michael G. Todd
------------------------
Michael G. Todd
President and Chairman of
the Board
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EXHIBIT INDEX
Exhibit Description
- ------- -----------
Exhibit 10.42 Order Resolving Motion For Relief from Stay dated December 20,
2001. The Order approves the 2001 Resure Agreement between
the Liquidator for Resure and Capitol Development of Arkansas,
Inc.
Exhibit 10.43 Order Permitting Withdrawal of Dismissal Motion dated December
20, 2001. Motion is withdrawn by the Liquidator for Resure.
Exhibit 10.44 Order in the Cook County Court, Illinois In the Matter of the
of the Liquidation of Resure, Inc., dated January 9, 2002.
Liquidator for Resure's Motion for Approval of a Settlement
and Compromise of a Certain Debt Owing to Resure Inc.
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