Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 1 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
Stephen A. McCartin (TX 13374700)
Holland Neff O'Neil (TX 14864700)
Virgil Ochoa (TX 24070358)
GARDERE WYNNE SEWELL LLP
3000 Thanksgiving Tower
1601 Elm Street Dallas, TX 75201-4761
Telephone: (214) 999-3000
Facsimile: (214) 999-4667
and
Jeffrey C. Krause (CA 94053)
Gregory K. Jones (CA 181072)
STUTMAN, TREISTER & GLATT PROFESSIONAL
CORPORATION
1901 Avenue of the Stars, 12th Floor
Los Angeles, CA 90067
Telephone: (310) 228-5600
Facsimile: (310) 228-5788
PROPOSED COUNSEL FOR DEBTORS AND
DEBTORS IN POSSESSION
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
In re:
R.E. LOANS, LLC,
R.E. FUTURE, LLC and
CAPITAL SALVAGE, a California
corporation,
Debtors.
§
§
§
§
§
§
§
§
Chapter 11
Case No. 11-35865-BJH
Jointly Administered
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO
CONSUMMATE CONTRACT OF SALE AND ESCROW AGREEMENT WITH
FORESTAR (USA) REAL ESTATE GROUP1
1 Contemporaneously with the filing of this Motion, the Debtors have filed a motion to expedite the hearing on
this Motion given that there is cause to have this matter heard on the earliest available date.
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 1 of 12
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 2 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
R.E. Loans, LLC, a California limited liability company ("R.E. Loans"), Capital
Salvage, a California corporation ("Capital Salvage") and R.E. Future, LLC, a California
limited liability company ("R.E. Future"), the debtors and debtors-in-possession in the above-
captioned cases (collectively, the "Debtors"), hereby file the Emergency Motion for Order
Authorizing Debtors to Consummate Contract of Sale and Escrow Agreement With Forestar
(USA) Real Estate Group (this "Motion") and respectfully state as follows:
I.
JURISDICTION AND VENUE
1. This Court has jurisdiction over these chapter 11 cases and the Motion pursuant to
28 U.S.C. §§ 1334 and 157(b), and venue is proper in this District pursuant to 28 U.S.C. §§ 1408
and 1409.
II.
RELIEF REQUESTED
2. The Debtors hereby request the Court enter an order pursuant to section 363 of
Title 11 of the United States Code (as amended, the "Bankruptcy Code") and Rules 2002, 6004,
and 9014 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") authorizing
the Debtors to complete their required performance obligations under the "Contract of Sale and
Escrow Agreement with Forestar (USA) Real Estate Group," as amended (the "Forestar
Contract"). True and correct copies of the original contract and all amendments thereto are
attached hereto collectively as Exhibit "A" and made a part hereof.
3. This Motion is supported by the evidence contained in the Declaration Of W.
Farley Dakan In Support Of Emergency Motion for Order Authorizing Debtors to Consummate
Contract of Sale and Escrow Agreement with Forestar (USA) Real Estate Group (the "Dakan
Declaration") filed concurrently herewith, and the record in these cases.
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 2 of 12
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 3 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
III.
BACKGROUND
A. The Indebtedness
4. R.E. Loans, Capital Salvage, and R.E. Future each filed a voluntary chapter 11
petition on September 13, 2011 (the "Petition Date"). Pursuant to Bankruptcy Code
sections 1107(a) and 1108, the Debtors are continuing to operate their respective businesses and
managing their respective financial affairs as debtors in possession.
5. R.E. Loans is a California limited liability company that made loans to certain
borrowers secured by real property. The promissory notes from these borrowers and the deeds of
trust securing those notes have been pledged to secure both (a) R.E. Loans' prepetition
obligations to Wells Fargo Capital Finance, LLC ("Wells Fargo"), in the aggregate amount of
approximately $68 million, and (b) certain notes issued to the former members of R.E. Loans
(the "Noteholders") in the aggregate amount of approximately $776 million, including
prepetition interest (the "Exchange Notes"). The security interest granted to Wells Fargo in the
notes payable by Capital Salvage (and other borrowers of R.E. Loans) is senior in priority to any
security interest granted in favor of the Noteholders.
6. R.E. Loans is the sole shareholder of Capital Salvage. Capital Salvage's only
material debts are notes payable to R.E. Loans (most of which Capital Salvage has delivered to
R.E. Loans in exchange for real estate acquired by Capital Salvage) and ad valorem property
taxes that constitute senior liens against the real estate owned by Capital Salvage.
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 3 of 12
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 4 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
B. The Harris County Property
1. Loan to Bravo Marshall Communities, L.P.
7. On or around January 14, 2008, R.E. Loans made one or more loans in the
aggregate principal amount of $23,000,000 (the "BMC Debt") to Bravo Marshall Communities,
L.P., a Texas limited partnership ("BMC"). The BMC Debt was evidenced by a note payable by
BMC to R.E. Loans (the "BMC Note")2, secured by a first-lien deed of trust (the "Deed of
Trust"), security agreement, and assignment of leases and rents, executed by BMC in favor of
R.E. Loans. The repayment of the BMC Note was secured by certain real and personal property
located in Harris County, Texas (the "Property"). Capital Salvage acquired a second note
executed by BMC and secured by a second-lien deed of trust on the Property (the "Second Deed
of Trust").
8. In connection with the Deed of Trust, on January 14, 2008, BMC also executed a
Collateral Assignment of Utility Agreement Rights (the "Utility Assignment") in favor of R.E.
Loans. Pursuant to the Utility Assignment, BMC assigned to R.E. Loans certain tax increment
reinvestment zone rights (the "TIRZ Reimbursements") relating to the Property. A true and
correct copy of the Utility Assignment is attached hereto as Exhibit "B" and is incorporated
herein for all purposes.
2. BMC Bankruptcy
9. On September 19, 2008, BMC filed a voluntary petition for relief under chapter 7
of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of
2 In July 2007, Wells Fargo was granted a first-priority security interest in all, or substantially all, of the assets of
R.E. Loans, including after-acquired property, which would include the BMC Note and any and all collateral
securing payment thereof (including the Property and the TIRZ Reimbursements, as defined herein), together with
any and all proceeds of the foregoing.
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 4 of 12
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 5 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
Texas, Houston Division (the "Houston Bankruptcy Court"), Case No. 08-36044-H3-7 (the
"Chapter 7 Case").
10. Notwithstanding the fact that R.E. Loans had an assignment of the TIRZ
Reimbursements pursuant to the Utility Assignment, BMC stated in its bankruptcy Schedules of
assets and liabilities (the "Schedules") that it owned such TIRZ Reimbursements. R.E. Loans
and Capital Salvage disputed the assertions in BMC's Schedules, but no immediate action was
taken to amend BMC's Schedules.
11. On February 11, 2009, the Houston Bankruptcy Court entered an order
abandoning BMC's interests in the Property (the "Abandonment Order"). The TIRZ
Reimbursements were not included as part of Property abandoned within such Abandonment
Order.
12. After the Abandonment Order was entered, Capital Salvage foreclosed on the
Second Deed of Trust, and credit bid at the foreclosure sale. As a result, Capital Salvage
acquired title to the Property, subject to R.E. Loans' first-lien deed of trust, which had been
pledged to Wells Fargo. Based on the foregoing, Capital Salvage acquired title to the Property,
subject to the first-lien deed of trust in favor of R.E. Loans and securing the BMC Note payable
to R.E. Loans in the amount of approximately $23 million.
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 5 of 12
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 6 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
3. Agreement To Sell Property To Forestar
13. On or around July 11, 2011, Capital Salvage and Forestar (USA) Real Estate
Group, Inc. ("Forestar") entered into the Forestar Contract, whereby Capital Salvage agreed to
sell and transfer the Property and the TIRZ Reimbursements to Forestar. The Forestar Contract
was amended on August 29, 2011, August 31, 2011, and September 6, 2011.
14. Capital Salvage agreed to transfer the proceeds obtained from the sale of the
Property from Forestar (the "Proceeds") to R.E. Loans. Once received by R.E. Loans, the
Proceeds would constitute Wells Fargo's cash collateral. Pursuant to the terms and conditions of
the Forestar Contract, R.E. Loans agreed to sell and transfer the TIRZ Reimbursements to
Capital Salvage, which would then sell and transfer the TIRZ Reimbursements to Forestar.
4. Separation Of The TIRZ Reimbursements From The Sale Of The Property
15. Because BMC had asserted in its Schedules that it owned the TIRZ
Reimbursements relating to the Property, notwithstanding the prior transfer of such rights to R.E.
Loans, there was an issue regarding whether R.E. Loans or Capital Salvage could transfer clean
title to the TIRZ Reimbursements to Forestar.
16. R.E. Loans and Capital Salvage contacted BMC's chapter 7 trustee (the "Chapter
7 Trustee") to discuss BMC's assertion of rights to the TIRZ Reimbursements.
17. The Chapter 7 Trustee agreed with R.E. Loans and Capital Salvage that BMC had
improperly included the TIRZ Reimbursements in its Schedules, and he committed to file a
motion to abandon the estate's interests in the TIRZ Reimbursements (the "TIRZ Abandonment
Motion"). A hearing to consider the TIRZ Abandonment Motion is presently scheduled for
September 20, 2011.
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 6 of 12
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 7 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
18. However, R.E. Loans, Capital Salvage and Forestar wished to close the sale of the
Property when it was scheduled to close, which was before the hearing on the TIRZ
Abandonment Motion. Accordingly, to resolve issues relating to the TIRZ Reimbursements,
R.E. Loans, Capital Salvage, Forestar, and Stewart Title-Kingwood, as escrow agent ("Stewart
Title"), entered into an Escrow Agreement (the "Escrow Agreement"), which was consented to
by Wells Fargo. A true and correct copy of the Escrow Agreement is attached hereto as Exhibit
"C" and is incorporated herein for all purposes. The Escrow Agreement provided that (a)
Forestar would transfer $2,000,000 (the "Deposit") to an escrow account in the name of Stewart
Title, and (b) upon entry of an order (i) authorizing the abandonment of the TIRZ
Reimbursements, (ii) confirming Capital Salvage's right, title and interest in the TIRZ
Reimbursements or (iii) abandoning the TIRZ Reimbursements from the bankruptcy estate in
form and substance reasonably acceptable to Forestar (the "TIRZ Abandonment Order"),
Stewart Title would release the Deposit to Capital Salvage.
19. Pursuant to the terms and conditions of the Escrow Agreement, the parties agreed
to close the sale of the Property as scheduled and establish the $2,000,000 Deposit attributable to
the TIRZ Reimbursements, pending the entry of the TIRZ Abandonment Order.
5. Closing Of Sale Of Property (Not Including TIRZ Reimbursements)
20. On or around September 6, 2011, Capital Salvage conveyed the Property to
Forestar pursuant to the Forestar Contract. R.E. Loans (through Capital Salvage) received
approximately $4.9 million of the net proceeds generated by the sale (after payment of property
taxes, brokerage fees and other closing costs). These collateral proceeds were delivered to Wells
Fargo and applied against R.E. Loans' prepetition obligations to Wells Fargo.
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 7 of 12
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 8 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
21. Additionally, pursuant to the Escrow Agreement, Forestar delivered the
$2,000,000 Deposit to Stewart Title. As of the Petition Date, the $2,000,000 Deposit remained
with Stewart Title in an escrow account, pending the determination of the TIRZ Abandonment
Motion.
6. Relief Requested Through This Motion
22. Through this Motion, Capital Salvage seeks Court approval to consummate the
Forestar Contract and Escrow Agreement, obtain the Deposit following the Houston Bankruptcy
Court's entry of the TIRZ Abandonment Order, and apply the Deposit as collateral proceeds in
reduction of the prepetition indebtedness owed to Wells Fargo3 (the first-priority lienholder on
such property and the cash proceeds thereof). Further, by this Motion the Debtors seek the
waiver of the stay under Bankruptcy Rule 6004(h) for "cause," so that the order on this Motion
may be effective immediately without the fourteen (14) day stay otherwise applicable.
23. There is cause to waive such stay inasmuch as the closing of this transaction and
the receipt of the Deposit could occur immediately, and the attendant pay down of the Wells
Fargo, will reduce additional interest accrual.
IV.
ARGUMENT AND AUTHORITIES
A. The Debtors Have Articulated a Reasonable Justification to Consummate the
Forestar Contract and Escrow Agreement
24. Bankruptcy Code section 363 provides, in pertinent part:
(b)(1) The trustee, after notice and a hearing, may use, sell or lease,
other than in the ordinary course of business, property of the estate.
11 U.S.C. § 363(b).
3 Wells Fargo, the first-priority lienholder on such assets, consents to this transaction, provided it receives adequate
protection of its interests under 11 U.S.C. § 363(e), with the proceeds of such transaction to be applied in reduction
of its prepetition indebtedness.
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 8 of 12
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 9 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
25. Under applicable legal standards, a debtor may use or sell property of the estate if
the court finds that the transaction represents a reasonable business judgment by the debtor.
Institutional Creditors of Continental Air Lines, Inc. v. Continental Air Lines, Inc. (In re
Continental Air Lines, Inc.), 780 F.2d 1223, 1226 (5th
Cir. 1986) (citing In re Lionel Corp., 722
F.2d 1063, 1071 (2d Cir. 1983)); see also In re ASARCO LLC, 441 B.R. 813, 823 (S.D. Texas
2010), aff'd, 2011 U.S. App. LEXIS (5th Cir. 2011); GBL Holding Co. v. Blackburn/Travis/Cole,
Ltd. (In re State Park Building Group, Ltd.), 331 B.R. 251, 254 (N.D. Tex. 2005); In re Wilde
Horse Enters., 136 B.R. 830, 841 (Bankr. C.D. Cal. 1991); In re Ionosphere Clubs, Inc., 184 B.R.
648, 653 (S.D.N.Y. 1995).
26. Bankruptcy Code section 363 does not require that the court substitute its business
judgment for that of the debtor. See, e.g., In re Ionosphere Clubs, Inc., 100 B.R. 670, 676
(Bankr. S.D.N.Y. 1989) (court will not substitute a hostile witness's business judgment for
debtor's unless testimony "established that [the debtor] has failed to articulate a sound business
justification for its chosen course"). Rather, the court should ascertain whether the debtor has
articulated a valid business justification for the proposed transaction. See, e.g., Lewis v.
Anderson, 615 F.2d 778 (9th Cir. 1979), cert. denied, 449 U.S. 869, 101 S. Ct. 206 (1980). This
is consistent with "the broad authority to operate the business of the debtor . . . [which] indicates
Congressional intent to limit court involvement in business decisions by a trustee . . . [so that] a
court may not interfere with a reasonable business decision made in good faith by a trustee." In
re Airlift Int'l, Inc., 18 B.R. 787, 789 (Bankr. S.D. Fla. 1982).
27. In this case, adequate business justification exists to allow Capital Salvage and
R.E. Loans to consummate the Forestar Contract and Escrow Agreement. Prior to the Petition
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 9 of 12
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 10 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
Date, the Debtors (with the consent of Wells Fargo) determined that it was in their best interests
to sell the Property to Forestar pursuant to the Forestar Contract.
28. Capital Salvage received a significant portion of the proceeds of the sale of the
Property prepetition and transferred those proceeds to R.E. Loans to be applied against the note
secured by the first-lien deed of trust on the Property. In exchange, R.E. Loans agreed to release
its lien on the Property. When it received the initial proceeds from Capital Salvage, R.E. Loans
delivered those proceeds to Wells Fargo to reduce Wells Fargo's prepetition claims against R.E.
Loans.
29. However, as detailed above, $2,000,000 of the purchase price (subject to Wells
Fargo's liens) was held in the Deposit until entry of the TIRZ Abandonment Order.
30. It is in the best interests of the Debtors and their estates to take necessary action to
consummate the Forestar Contract and Escrow Agreement and obtain the Deposit. If the TIRZ
Abandonment Order is approved, the Debtors will be able to obtain $2,000,000. Because the
$2,000,000 will constitute cash collateral proceeds securing Wells Fargo's secured claims against
R.E. Loans, R.E. Loans proposes to turn over the cash collateral proceeds to Wells Fargo in
reduction of R.E. Loans' prepetition indebtedness owed to Wells Fargo, which has consented to
this transaction conditioned upon receiving such proceeds as set forth above.
31. There is no possible downside to allowing the Debtors to consummate the
Forestar Contract and Escrow Agreement. If this Court approves the Motion, the Debtors will
incur minimal expenses and secure the opportunity to receive $2,000,000. On the other hand, if
the Court denies the Motion, the Debtors will be precluded from obtaining the Deposit, to no
apparent benefit. Prior to the Petition Date, the Debtors determined that it was preferable to
transfer the TIRZ Reimbursements for $2 million rather than attempt to maintain and monetize
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 10 of 12
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 11 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
the TIRZ Reimbursements over time. The Debtors' ability to utilize the TIRZ Reimbursements
would have been dependant on numerous contingencies, including (i) the construction of
finished homes on the Property and the sale of such homes to end users, and (ii) the possibility
that the proceeds available under the TIRZ Reimbursements would be re-allocated for other
projects in the public interest.
32. Accordingly, since consummating the Forestar Contract and Escrow Agreement
reflects sound business judgment decision, this Court should grant the Motion.
V.
NOTICE
33. No trustee, examiner or statutory creditors' committee has been appointed in these
chapter 11 cases. This Motion has been provided to: (i) the Office of the United States Trustee
for the Northern District of Texas; (ii) a combined list of the twenty largest unsecured creditors
of the Debtors, and the twenty largest Noteholders, as defined in the Order Establishing Notice
Procedures and Permitting Debtors in Possession to Serve Insured Depository Institutions by
First-Class Mail [Docket No. 54]; (iii) counsel to Wells Fargo Capital Finance, LLC; (iv) the
Internal Revenue Service; (v) the U.S. Securities and Exchange Commission; and (vi) all parties
in interest who have requested notice. The Debtors respectfully submit that no further notice of
this Motion is required.
34. The Pleadings in these cases and supporting papers are available on the Debtors'
website www.RELoansllc.com, on the Bankruptcy Court's website at ecf.txnb.uscourts.gov,
and may be requested from the Debtors at the following addresses: (a) Stutman, Treister & Glatt
PC, c/o Kendra Johnson, 1901 Avenue of the Stars, 12th Floor, Los Angeles, California 90067
([email protected]), or (b) Gardere Wynne Sewell LLP, c/o Sharon Hawthorne, 1601 Elm
Street, Suite 3000, Dallas, Texas, 75201 ([email protected]).
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 11 of 12
EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT
OF SALE AND ESCROW AGREEMENT WITH FORESTAR (USA) REAL ESTATE GROUP - Page - 12 DA-3205151 v4 1279056-00201 DALLAS 2266618v.3
VI.
CONCLUSION
WHEREFORE, based on the arguments and authorities set forth above, the Debtors
respectfully request that the Court (i) enter an order, with a waiver of the Bankruptcy Rule
6004(h) stay, authorizing the Debtors to consummate the Forestar Contract and Escrow
Agreement and engage in such transactions as described above, and (ii) granting such other and
further relief as the Court deems to be just and proper.
DATED: September 19, 2011 Respectfully submitted by:
/s/ Holland N. O'Neil Stephen A. McCartin (TX 13374700) Holland Neff O'Neil (TX 14864700) Virgil Ochoa (TX 24070358) GARDERE WYNNE SEWELL LLP 3000 Thanksgiving Tower 1601 Elm Street Dallas, TX 75201-4761 Telephone: (214) 999-3000 Facsimile: (214) 999-4667 [email protected] [email protected] [email protected]
and /s/ Jeffrey C. Krause Jeffrey C. Krause (CA 94053) Gregory K. Jones (CA 181072) STUTMAN, TREISTER & GLATT PROFESSIONAL CORPORATION 1901 Avenue of the Stars, 12th Floor Los Angeles, CA 90067 Telephone: (310) 228-5600
Facsimile: (310) 228-5788 [email protected]
PROPOSED COUNSEL FOR DEBTORS AND
DEBTORS IN POSSESSION
Case 11-35865-bjh11 Doc 60 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Main Document Page 12 of 12
DECLARATION OF W. FARLEY DAKAN IN SUPPORT OF EMERGENCY MOTION FOR ORDER
AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT OF SALE AND ESCROW AGREEMENT
WITH FORESTAR (USA) REAL ESTATE GROUP - PAGE - 1
DALLAS 2266625v.3
Stephen A. McCartin (TX 13374700)
Holland Neff O'Neil (TX 14864700)
Virgil Ochoa (TX 24070358)
GARDERE WYNNE SEWELL LLP
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201-4761
Telephone: (214) 999-3000
Facsimile: (214) 999-4667
and
Jeffrey C. Krause (Cal. 94053)
Gregory K. Jones (Cal. 181072)
STUTMAN, TREISTER & GLATT
PROFESSIONAL CORPORATION
1901 Avenue of the Stars, 12th Floor
Los Angeles, CA 90067
Tel: (310) 228-5600
Fax: (310) 228-5788
PROPOSED COUNSEL FOR DEBTORS AND
DEBTORS IN POSSESSION
IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
In re: R.E. LOANS, LLC, R.E. FUTURE, LLC, CAPITAL SALVAGE, a California Corporation Debtors.
§ § § § § § § §
Chapter 11 Cases Case No. 11-35865-BJH Jointly Administered
DECLARATION OF W. FARLEY DAKAN
IN SUPPORT OF EMERGENCY MOTION FOR ORDER AUTHORIZING DEBTORS
TO CONSUMMATE CONTRACT OF SALE AND ESCROW AGREEMENT WITH
FORESTAR (USA) REAL ESTATE GROUP
Case 11-35865-bjh11 Doc 60-1 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Affidavit Farley Dakan Page 1 of 7
DECLARATION OF W. FARLEY DAKAN IN SUPPORT OF EMERGENCY MOTION FOR ORDER
AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT OF SALE AND ESCROW AGREEMENT
WITH FORESTAR (USA) REAL ESTATE GROUP - PAGE - 2
DALLAS 2266625v.3
I, W. Farley Dakan, declare as follows:
1. I am over 18 years of age and if called upon I would competently testify to
the matters set forth herein from my own personal knowledge or from knowledge gathered from
my review of relevant documents, or my opinion based upon my experience.
2. During January of 2010, R.E. Loans, LLC, a California limited liability
company ("R.E. Loans"), engaged Mackinac Partners ("Mackinac"), of which I am a managing
director, to provide consulting services. On April 10, 2010, R.E. Loans formally engaged
Mackinac to serve as Chief Restructuring Officer.
3. James A. Weissenborn assumed primary responsibility as the Chief
Restructuring Officer ("CRO") since that date. Mackinac's authority to act on behalf of R.E.
Loans and its wholly owned subsidiaries, Capital Salvage, a California corporation ("Capital
Salvage"), and R.E. Future, LLC, a California limited liability company ("R.E. Future") (with
R.E. Loans and Capital Salvage, the "Debtors") was expanded as of September 13, 2011 (the
“Petition Date”), and Mr. Weissenborn's expanded role was approved on an interim basis by the
Bankruptcy Court.1
4. Since January of 2010, I have provided numerous services to the Debtors.
Among other things, I have assisted in the management of the Debtors' real estate portfolio,
handled general and administrative matters relating to the Debtors' businesses, and assisted in the
overall restructuring of the Debtors. Based upon my personal knowledge of the Debtors, their
business operations, history, industry, and books and records, and based upon information
contained in the Debtors' books and records, I am qualified to give this declaration on behalf of
the Debtors.
1 See Interim Order Authorizing Employment of Mackinac Partners and James Weissenborn on an Interim Basis
From the Petition Date to Provide Interim Management Assistance to Debtors Pursuant to 11 U.S.C. §363 [Doc.
No. 52].
Case 11-35865-bjh11 Doc 60-1 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Affidavit Farley Dakan Page 2 of 7
DECLARATION OF W. FARLEY DAKAN IN SUPPORT OF EMERGENCY MOTION FOR ORDER
AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT OF SALE AND ESCROW AGREEMENT
WITH FORESTAR (USA) REAL ESTATE GROUP - PAGE - 3
DALLAS 2266625v.3
5. Some of the information presented below is based upon my review of data
regularly compiled by the Debtors in the ordinary course of their business prior to my
involvement.
6. I submit this declaration in support of the Emergency Motion for Order
Authorizing Debtors to Consummate Contract of Sale and Escrow Agreement with Forestar
(USA) Real Estate Group (the "Motion").
A. The Harris County Property
7. On or around January 14, 2008, R.E. Loans made one or more loans in the
aggregate principal amount of $23,000,000 (the "BMC Debt") to Bravo Marshall Communities,
L.P., a Texas limited partnership ("BMC"). The BMC Debt was evidenced by a note payable by
BMC to R.E. Loans (the "BMC Note"), secured by a deed of trust (the "Deed of Trust"),
security agreement, and assignment of leases and rents, executed by BMC in favor of R.E.
Loans. The repayment of the BMC Note was secured by certain real and personal property
located in Harris County, Texas (the "Property"). Capital Salvage acquired a second note
executed by BMC and secured by a second-priority deed of trust on the Property (the "Second
Deed of Trust").
8. In connection with the Deed of Trust, on January 14, 2008, BMC also
executed a Collateral Assignment of Utility Agreement Rights (the "Utility Assignment") in
favor of R.E. Loans. Pursuant to the Utility Assignment, BMC assigned to R.E. Loans certain
tax increment reinvestment zone rights (the "TIRZ Reimbursements") relating to the Property.
A true and correct copy of the Utility Assignment is attached to the Motion as Exhibit "B".
B. BMC's Bankruptcy
9. On September 19, 2008, BMC filed a voluntary petition for relief under
chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of Texas, Houston Division (the "Houston Bankruptcy Court"), Case No. 08-36044-
H3-7 (the "Chapter 7 Case").
Case 11-35865-bjh11 Doc 60-1 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Affidavit Farley Dakan Page 3 of 7
DECLARATION OF W. FARLEY DAKAN IN SUPPORT OF EMERGENCY MOTION FOR ORDER
AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT OF SALE AND ESCROW AGREEMENT
WITH FORESTAR (USA) REAL ESTATE GROUP - PAGE - 4
DALLAS 2266625v.3
10. Notwithstanding the fact that R.E. Loans had an assignment of the TIRZ
Reimbursements pursuant to the Utility Assignment, BMC stated in its Schedules of assets and
liabilities (the "Schedules") that it owned such TIRZ Reimbursements. R.E. Loans and Capital
Salvage disputed the assertions in BMC's Schedules, but no immediate action was taken to
amend BMC's Schedules.
11. On February 11, 2009, the Houston Bankruptcy Court entered an order
abandoning BMC's interests in the Property (the "Abandonment Order"). The TIRZ
Reimbursements were not included as part of property abandoned within such Abandonment
Order.
12. After the Abandonment Order was entered, Capital Salvage foreclosed on
the Second Deed of Trust, and credit bid at the foreclosure sale. As a result, Capital Salvage
acquired title to the Property, subject to R.E. Loans' first-lien deed of trust, which had been
pledged to Wells Fargo. Based on the foregoing, Capital Salvage acquired title to the Property,
subject to the first-lien deed of trust in favor of R.E. Loans and securing the BMC Note payable
to R.E. Loans in the amount of approximately $23 million.
C. Agreement to Sell Property To Forestar
13. On or around July 11, 2011, Capital Salvage and Forestar (USA) Real
Estate Group, Inc. ("Forestar") entered into the "Contract of Sale and Escrow Agreement with
Forestar (USA) Real Estate Group" (the "Forestar Contract"), whereby Capital Salvage agreed
to sell and transfer the Property and the TIRZ Reimbursements to Forestar. The Forestar
Contract was amended on August 29, 2011, August 31, 2011, and September 6, 2011. A true
and correct copy of the Forestar Contract and amendments are attached to the Motion as Exhibit
“A.”
D. Separation Of The TIRZ Reimbursements From The Sale Of The Property
14. Because BMC had asserted in its Schedules that it owned the TIRZ
Reimbursements relating to the Property, notwithstanding the prior transfer of such rights to R.E.
Case 11-35865-bjh11 Doc 60-1 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Affidavit Farley Dakan Page 4 of 7
DECLARATION OF W. FARLEY DAKAN IN SUPPORT OF EMERGENCY MOTION FOR ORDER
AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT OF SALE AND ESCROW AGREEMENT
WITH FORESTAR (USA) REAL ESTATE GROUP - PAGE - 5
DALLAS 2266625v.3
Loans, there was an issue regarding whether R.E. Loans or Capital Salvage could transfer clean
title to the TIRZ Reimbursements to Forestar.
15. Employees of Mackinac under my supervision contacted BMC's chapter 7
trustee (the "Chapter 7 Trustee") to discuss BMC's assertion of rights to the TIRZ
Reimbursements.
16. The Chapter 7 Trustee agreed that BMC had improperly included the
TIRZ Reimbursements in its Schedules, and he committed to file a motion to abandon the
estate's interests in the TIRZ Reimbursements (the " TIRZ Abandonment Motion"). A hearing
to consider the TIRZ Abandonment Motion is currently set for September 20, 2011.
17. However, R.E. Loans, Capital Salvage and Forestar wished to close the
sale of the Property when it was scheduled to close, which was before the hearing on the TIRZ
Abandonment Motion. Accordingly, to resolve issues relating to the TIRZ Reimbursements,
R.E. Loans, Capital Salvage, Forestar, and Stewart Title-Kingwood, as escrow agent ("Stewart
Title"), entered into an Escrow Agreement (the "Escrow Agreement"), which was consented to
by Wells Fargo (the first-priority lienholder on the net cash proceeds from the sale). A true and
correct copy of the Escrow Agreement is attached to the Motion as Exhibit “C.”
D. Closing Of Sale (Not Including TIRZ Reimbursements)
18. On or around September 6, 2011, Capital Salvage conveyed the Property
to Forestar pursuant to the Forestar Contract. R.E. Loans (through Capital Salvage) received
approximately $4.9 million of the net proceeds generated by the sale (after payment of property
taxes, brokerage fees and other closing costs). These collateral proceeds were delivered to Wells
Fargo and applied against R.E. Loans' prepetition obligations to Wells Fargo.
19. Additionally, pursuant to the Escrow Agreement, Forestar delivered
$2,000,000 to Stewart Title. As of the Petition Date, the $2,000,000 Deposit remained with
Stewart Title in an escrow account, pending the determination of the TIRZ Abandonment
Motion.
Case 11-35865-bjh11 Doc 60-1 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Affidavit Farley Dakan Page 5 of 7
DECLARATION OF W. FARLEY DAKAN IN SUPPORT OF EMERGENCY MOTION FOR ORDER
AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT OF SALE AND ESCROW AGREEMENT
WITH FORESTAR (USA) REAL ESTATE GROUP - PAGE - 6
DALLAS 2266625v.3
E. Best Interests Of Debtors To Consummate Forestar Contract And Escrow
Agreement
20. It is in the best interests of the Debtors and their estates to take necessary
action to consummate the Forestar Contract and Escrow Agreement and obtain the holdback. If
the order approving the TIRZ Abandonment Motion is approved, the Debtors will be able to
obtain $2,000,000.
21. There is no possible downside to allowing the Debtors to consummate the
Forestar Contract and Escrow Agreement. If this Court approves the Motion, the Debtors will
incur minimal expenses and secure the opportunity to receive $2,000,000. On the other hand, if
the Court denies the Motion, the Debtors will be precluded from obtaining the Deposit, to no
apparent benefit.
22. Prior to the Petition Date, the Debtors determined that it was preferable to
transfer the TIRZ Reimbursements for $2 million rather than attempt to maintain and monetize
the TIRZ Reimbursements over time. The Debtors' ability to utilize the TIRZ Reimbursements
would have been dependant on numerous contingencies, including (i) the construction of
finished homes on the Property and the sale of such homes to end users and (ii) the possibility
that the proceeds available under the TIRZ Reimbursements would be re-allocated for other
projects in the public interest.
Case 11-35865-bjh11 Doc 60-1 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Affidavit Farley Dakan Page 6 of 7
DECLARATION OF W. FARLEY DAKAN IN SUPPORT OF EMERGENCY MOTION FOR ORDER
AUTHORIZING DEBTORS TO CONSUMMATE CONTRACT OF SALE AND ESCROW AGREEMENT
WITH FORESTAR (USA) REAL ESTATE GROUP - PAGE - 7
DALLAS 2266625v.3
I declare under penalty of perjury under the laws of the United States of America
that the foregoing is true and correct.
Executed at Austin, Texas, on September 19, 2011.
/s/ W. Farley Dakan W. Farley Dakan
Case 11-35865-bjh11 Doc 60-1 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Affidavit Farley Dakan Page 7 of 7
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 1 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 2 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 3 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 4 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 5 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 6 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 7 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 8 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 9 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 10 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 11 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 12 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 13 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 14 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 15 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 16 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 17 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 18 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 19 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 20 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 21 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 22 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 23 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 24 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 25 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 26 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 27 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 28 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 29 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 30 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 31 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 32 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 33 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 34 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 35 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 36 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 37 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 38 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 39 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 40 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 41 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 42 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 43 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 44 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 45 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 46 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 47 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 48 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 49 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 50 of 51
Case 11-35865-bjh11 Doc 60-2 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit A Page 51 of 51
Case 11-35865-bjh11 Doc 60-3 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit B Page 1 of 10
Case 11-35865-bjh11 Doc 60-3 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit B Page 2 of 10
Case 11-35865-bjh11 Doc 60-3 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit B Page 3 of 10
Case 11-35865-bjh11 Doc 60-3 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit B Page 4 of 10
Case 11-35865-bjh11 Doc 60-3 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit B Page 5 of 10
Case 11-35865-bjh11 Doc 60-3 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit B Page 6 of 10
Case 11-35865-bjh11 Doc 60-3 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit B Page 7 of 10
Case 11-35865-bjh11 Doc 60-3 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit B Page 8 of 10
Case 11-35865-bjh11 Doc 60-3 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit B Page 9 of 10
Case 11-35865-bjh11 Doc 60-3 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit B Page 10 of 10
Case 11-35865-bjh11 Doc 60-4 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit C Page 1 of 7
Case 11-35865-bjh11 Doc 60-4 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit C Page 2 of 7
Case 11-35865-bjh11 Doc 60-4 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit C Page 3 of 7
Case 11-35865-bjh11 Doc 60-4 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit C Page 4 of 7
Case 11-35865-bjh11 Doc 60-4 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit C Page 5 of 7
Case 11-35865-bjh11 Doc 60-4 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit C Page 6 of 7
Case 11-35865-bjh11 Doc 60-4 Filed 09/19/11 Entered 09/19/11 22:26:52 Desc Exhibit C Page 7 of 7