Oilgear Co. v. Hitt

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As Oilgear’s CEO, Hitt held restricted stock. When Hitt left his position in 2014, Oilgear exercised its option to repurchase the shares. Oilgear and Hitt agreed that he would receive $753,000: $108,000 immediately and $215,000 (plus interest) each June for the next three years. Oilgear also owes money to JPMorgan Chase Bank. Hitt, Oilgear, and the Bank signed an agreement acknowledging that Oilgear’s debt to Hitt is subordinate to Oilgear’s debt to the Bank and that Hitt will not be paid while Oilgear is in default of its obligations to the Bank. After paying the 2015 installment, Oilgear defaulted on an obligation to the Bank. The Bank agreed to waive most consequences of the default if Oilgear promised the Bank that it would not resume paying Hitt without the Bank’s consent. The Bank did not consent to the payment of Hitt’s 2016 installment. The Seventh Circuit affirmed a declaratory judgment that Oilgear is entitled to defer payment of the 2016-2017 installments. Oilgear paying Hitt without the Bank’s consent would vitiate the Bank’s waiver and a default “would exist.” View "Oilgear Co. v. Hitt" on Justia Law