Pagers do double duty as collateral for two loans
What Brought the Beeper Wars
Into Whitehead's Court Room?

 

Fast Page, a Reno beeper company at the center of a ten-year legal brawl through Nevada courts, was first formed in 1985.  
That was shortly after Kent and Maria Steglich signed a $132,300 agreement to purchase Reno-area rights for a wide-area paging system which communications technology entrepreneur Mark A. Edwards had designed and started under the name of the "ARC Systems ARCNET Wide Area Paging System."
Also to be purchased under the agreement were certain "goods" -- some 105 local commercial customer accounts, about 70 ARC-owned pagers, a Motorola simulcast base station installed at Slide Mountain, two omidirection antennas and various other equipment used to operate the system.
The agreement -- between Mark Edwards, for Edwards Industries, Inc. and the Steglich couple -- was signed on January 28, 1985. It specified that title to all the listed "goods" was to remain with Edwards until the full sum had been paid and those goods were to constitute security for the Steglichs' performance obligation.
However, court papers show that on January 22, 1985 -- six days before Edwards and the Stegliches had signed the agreement -- another couple, Wayne J. and Rebecca S. Alexander, had been in the Keystone branch of First Interstate Bank in Reno, pledging "all furniture, fixtures and equipment of Arc Systems" as collateral for a $35,000 loan.
Attached to the Alexander loan application were copies of the same dot-matrix-printer-printed listings of ARC pagers and other "goods" that were attached to the then-yet-unsigned agreement between the Stegliches and Edwards Industries.
On February 15, 1985, the Stegliches and Alexanders signed a partnership agreement for a company to be called "Advanced Radio Communication Systems of Reno, also ARC Systems of Reno."
Kent and Maria Steglich, as their contribution to the new partnership, listed their agreement with Edwards Industries. The Alexanders, as their initial contribution, listed $35,000 -- the same sum the bank had loaned them three weeks earlier on the collateral of the pagers actually owned by Edwards Industries' ARC Systems division.
By March of 1986, the ARC Systems of Reno partnership, suffering serious cash-flow problems, were given loans totalling $230,000 from the profit-sharing plan of a California company owned by Mark A. Edwards father, William H. Edwards.
On June 11 the Steglich-Alexander company dropped its partnership status and became a corporation. But an audit completed July 11 revealed the company's situation was worsening, with the firm now defaulting on major contractual obligations.
In a telephone call the evening of July 17, after a day of meetings and discussions with Steglich and Alexander about the company's serious plight, Mark Edwards, according to a memo in the court documents, learned that ARC Reno was actually in more serious default than Steglich had acknowledged that day to him.
"It appears now, in hindsight, that the entire exercise conducted today was simply lip-service, done to avoid and conceal the real issues at hand..." says the Edwards memo. "Kent knew, during each of the discussions, that the system was in the trouble I felt was still several months off, yet nothing

Top of page





was said. I am astounded that while we were discussing additional funding, Kent was fully aware that he was essentially in default on existing notes."
Three days later Edwards wrote Steglich and Alexander a heated letter, saying that while he had been attempting to obtain additional financing for the Reno operation, "you have made a concerted effort to keep relevant and derogatory information from me."
Later Edwards would learn the situation was actually worse than that. Another court document -- dated July 17, 1986, that same day Edwards was having his conferences and discussions with Steglich and Alexander about ways to deal with ARC-Reno's serious financial problems -- is a Xerox copy of a demand note, signed by both Steglich and Alexander. The note was to effect a $10,000 loan from the ARC-Reno company -- despite its dire financial situation -- to Kent Steglich's other company, Commercial Telephone Exchange.
On August 18, as the situation continued to deteriorate, attorney Mark H. Gunderson, in behalf of Edwards Industries, Inc., its ARC division and the senior Edwards' company's profit sharing and pension plan, formally notified the Steglich-Alexander firm that it was in default on several security and other agreements.
Under the terms of the original agreement between Edwards Industries and the Stegliches, default on the latter's part gave Edwards the option of accelerating payment dates for all obligations due him, and he was taking that option, wrote Gunderson.
"There is due and owing to Edwards an amount in the approximate sum of $323,000.00 which must be paid within ten (10) days of the date of this letter," Gunderson said.
The next letter in the court documents is dated October 13, 1986, eight weeks later. It announces that Edwards Industries, Inc., its ARC division and the Edwards Heat Treating Service Profit Sharing and Pension Plan, having not received accelerated-payment sum, are exercising another provision of their agreements with the ARC-Reno firm and "have elected to take possession of Collateral as of the date of this letter."
Two days later, Harold G. Albright, Esquire, the attorney who had prepared both the original February 15, 1985 partnership agreement between the Steglich and Alexander couples, and the June 11, 1986, articles of incorporation for the successor firm, appeared in Reno's Booth Street Federal Building. In behalf of ARC Systems of Reno, Inc., he filed a "Voluntary Petition for Relief under a Chapter 11 Reorganization." On the next day, U.S. Bankruptcy Judge R. Jones issued a temporary restraining order against Mark A. Edwards or anyone else turning off or disrupting the "pager system of debtor."
After a year of fighting between Fast Page and Edwards, on November 13, 1987, U.S. Bankruptcy Judge James H. Thompson confirmed the final reorganization plan that had been worked out under his supervision.
The fighting, however, continued, and in August of 1988, Fast Page sought and received the temporary-restraining-order protection of then-judge Jerry Carr Whitehead .



Want to share your opinion? Electric Nevada's comment page is open!

Back to Electric Nevada's front Page