Food Maker Sues Eldorado Bank : Firm Says Failure to Renegotiate Loan Led to Its Demise

Draper International Inc. and its principal owners have sued Eldorado Bank in Tustin, claiming that the bank reneged on promises and forced the snack-food maker to close its doors 16 months ago.

The company, which was based in Irvine, made plain and cinnamon-flavored tortilla chips under the name California Crisp.

Draper and its owners are seeking $3 million in general damages and $15 million in punitive damages for what they claim was Eldorado’s withdrawal of verbal commitments to renegotiate a $100,000 interim financing loan. Loss of the new loan caused Draper to go out of business, the suit alleges.

Eldorado President J. B. Crowell could not be reached for comment.

The bank’s refusal to renegotiate the loan broke up plans for the sale of the company, according to Gary Draper, president and chief stockholder, with about 25% of the shares.

“The bank knew we had a real buyer and yet it stood in the way of the sale,” he said Wednesday.

According to the suit, Eldorado provided a number of loans to Draper International from November, 1983, through January, 1984, to keep the company afloat while it planned a private offering of $750,000 in convertible debentures. The final loan, which was used in part to pay earlier loans from Eldorado, was for $100,000, Draper said.

But instead of moving ahead with the offering, Draper said, the securities broker retained by the company put him in touch with Olson Farms Inc., a Sherman Oaks egg producer, to negotiate a possible sale of his company.

Meantime, the suit says, an Eldorado loan officer who made commitments to renegotiate the interim loan left the bank. The bank refused to honor the commitments to extend the loan into a fully amortized, five-year note, the suit charges.