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UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: PEREGRINE FINANCIAL GROUP, INC., ) ) ) ) ) ) ) ) ) Chapter 7 Case No. 12-27488

Honorable Judge Carol A. Doyle Hearing Date: July 24, 2012 Hearing Time: 10:00 a.m.

Debtor.

NOTICE OF MOTION PLEASE TAKE NOTICE that on July 24, 2012 at 10:00 a.m., the undersigned shall appear before the Honorable Carol A. Doyle, in Courtroom 742, 219 S. Dearborn Street, Chicago, Illinois, or before any other Judge sitting in her stead, and then and there present the TRUSTEE’S MOTION TO AUTHORIZE PAYMENT OF TRUSTEE’S BOND PREMIUM at which time you may appear if you see fit and a copy of which is attached and herewith served upon you.

Dated: July 19, 2012

Robert M. Fishman (#3124316) Salvatore Barbatano (#0109681) John Guzzardo (#6283016) Shaw Gussis Fishman Glantz Wolfson & Towbin LLC 321 North Clark Street Suite 800 Chicago, Il 60654 Phone: (312) 541-0151 Fax: (312) 980-3888 Proposed Counsel to the Trustee

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CERTIFICATE OF SERVICE John Guzzardo certifies that he caused to be served a true copy of the above and foregoing NOTICE OF MOTION and TRUSTEE’S MOTION TO AUTHORIZE PAYMENT OF TRUSTEE’S BOND PREMIUM upon the attached ECF Electronic Mail Notice List and Service List in the manner so indicated on this 19th day of July, 2012.

/s/ John Guzzardo Mailing Information for Case 12-27488 Electronic Mail Notice List The following is the list of parties who are currently on the list to receive email notice/service for this case. ECF List
• • • • • • • • • • • • •

Kimberly A Bacher kbacher@shawgussis.com, bharrington@shawgussis.com Salvatore A Barbatano sbarbatano@shawgussis.com, jhampton@shawgussis.com Lawrence M. Benjamin lbenjamin@ngelaw.com, rwills@ngelaw.com Ira Bodenstein iratrustee@shawgussis.com, IL29@ecfcbis.com;sdelamora@shawgussis.com David E Cohen davidecohen@lawcohen.com Brooke E Conner bconner@vedderprice.com, ecfdocket@vedderprice.com;ecarlson@vedderprice.com Robert M Fishman rfishman@shawgussis.com John W Guzzardo jguzzardo@shawgussis.com Vincent E. Lazar vlazar@jenner.com, lyap@jenner.com;mmatlock@jenner.com;docketing@jenner.com Randall M Lending rlending@vedderprice.com, trobinson@vedderprice.com;ecfdocket@vedderprice.com Jennifer M. Muchoney jmuchoney@pfgbest.com Richard A. Saldinger rsaldinger@shawgussis.com Thomas C. Wolford twolford@ngelaw.com

Via Electronic Mail Michael M. Eidelman Vincent Lazar Vedder Price 222 North LaSalle St. Chicago, IL 60601 meidelman@vedderprice.com vlazar@jenner.com

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William P. Janulis U.S. Commodity Futures Trading Commission 525 West Monroe Street, Ste. 1100 Chicago, IL 60601 wjanulis@cftc.gov James L. Koutoulas Chief Executive Officer Typhon Capital Management jk@typhoncap.com Jon J Kramer U.S. Commodity Futures Trading Commission 525 W. Monroe Street Chicago, IL 60661 312 596 0563 jkramer@cftc.gov Rosemary C. Hollinger U.S. Commodity Futures Trading Commission 525 West Monroe Street Suite 1100 Chicago, IL 60601 Email: rhollinger@cftc.gov Gretchen Silver Office of the United States Trustee 219 S. Dearborn Street Room 873 Chicago, IL 60604 Gretchen.Silver@usdoj.gov Constantine.Harvalis@usdoj.gov Roman.L.Sukley@usdoj.gov Kathryn.M.Gleason@usdoj.gov Scott R. Williamson Deputy Regional Counsel CFTC Division of Enforcement 525 W Monroe Street, Suite 1100 Chicago, IL 60661 swilliamson@cftc.gov

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Robert Wasserman Commodity Futures Trading Commission 1155 21st Street, NW Washington, DC 20581 rwasserman@cftc.gov Joseph M. Russell JP Morgan Chase Bank NA 10 S. Dearborn Street Chicago, IL 60603 Joe.russell@jpmchase.com Thomas Kiriakos Sean Scott Mayer Brown LLP 71 S. Wacker Dr. Chicago, IL 60606 tkiriakos@mayerbrown.com stscott@maybrown.com Gilbert B. Weisman Becket & Lee LLP P.O. Box 3001 Malvern, PA 19355 Notices@becket-lee.com Attorney for American Express Travel Related Services Co, Inc Stephen Beahm One Shell Square 701 Poydras Street Suite 420 New Orleans, LA 70139 sbeahm@internationalsureties.com

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UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: PEREGRINE FINANCIAL GROUP, INC., ) ) ) ) ) ) ) ) ) Chapter 7 Case No. 12-27488

Honorable Judge Carol A. Doyle Hearing Date: July 24, 2012 Hearing Time: 10:00 a.m.

Debtor.

TRUSTEE’S MOTION TO AUTHORIZE PAYMENT OF TRUSTEE’S BOND PREMIUM Pursuant to 11 U.S.C. §§ 322 and 363, Ira Bodenstein, not personally, but as chapter 7 trustee (the “Trustee”) for the estate of Peregrine Financial Group, Inc. d/b/a PFG Best (the “Debtor”), respectfully requests (the “Motion”) that this Court enter an order: authorizing the Trustee to pay the premium costs of a supplemental chapter 7 trustee’s bond from the nonsegregated, unencumbered general funds of the Debtor and pay future premium costs that will become due while the estate remains open; and deeming the limited notice of this Motion sufficient for cause shown and waive and dispense with any further notice requirements. In support of the Motion, the Trustee respectfully states as follows: BACKGROUND 1. On July 10, 2012 (the “Petition Date”), the Debtor filed a voluntary petition for

relief under chapter 7 of the Bankruptcy Code, 11 U.S.C. § 101, et. seq. (the “Bankruptcy Code”). On or about July 11, 2012, Mr. Bodenstein was appointed the chapter 7 trustee for the Debtor’s estate. (See Docket No. 4.) 2. This Court has jurisdiction to hear this matter and enter a final order granting the

relief requested herein pursuant to 28 U.S.C. §§ 157 and 1334 and Internal Operating Procedure

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15(a) of the United States District Court for the Northern District of Illinois. Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409. 3. Prior to the Petition Date, the Debtor was a futures commission merchant

(“FCM”) and was registered as such with the United States Commodity Futures Trading Commission (“CFTC”). The CFTC filed a lawsuit in the United States District Court for the Northern District of Illinois (“District Court”) alleging that the Debtor and its founder, Russell Wasendorf Sr., committed fraud, customer-funds violations and made false statements (the “Lawsuit”). In connection with the Lawsuit, on July 10, 2012, the District Court entered an Order Appointing a Temporary Receiver. Shortly thereafter, the Debtor commenced the abovecaptioned case – a commodity broker liquidation under subchapter IV of chapter 7 of the Bankruptcy Code. 4. The Debtor’s bankruptcy petition reflects that its assets total approximately $500

million to $1 billion and that its liabilities total approximately $100 million to $500 million. As of the Petition Date, the Debtor had over 24,000 customer accounts. In accordance with the Debtor’s brokerage business, it controlled segregated customer accounts containing hundreds of millions of dollars that are not considered property of the estate. 5. In conducting his initial due diligence, however, the Trustee believes that

approximately $24 million of the Debtor’s funds are in general operating accounts or are otherwise not in segregated customer accounts (the “Unencumbered Funds,” also called the “house account”). Therefore, at this time, the Trustee believes the liquid funds of the estate, as opposed to the funds of the Debtor’s customers, are in the approximate amount of $24 million. 6. The blanket bond that all chapter 7 trustees maintain in the Northern District of

Illinois (the “Blanket Bond”) is not sufficient to cover the Trustee’s administration of an estate

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with assets of this size. The Blanket Bond is in the amount of $8 million, with an upward limit of $5 million per chapter 7 trustee case. 7. Pursuant to 11 U.S.C. § 322, the Trustee must “file with the court a bond in favor

of the United States conditioned on the faithful performance of [his] official duties.” The United States Trustee determines the amount of a bond required the sufficiency of the surety of the bond. Id. The Trustee consulted with United States Trustee representatives regarding

appropriate bond requirements prior to the filing of the instant Motion. 8. The Trustee has determined that acquiring an additional bond is necessary to

sufficiently insure the funds and estate property he is responsible for. To that end, the Trustee consulted with full services bonding facilities to secure such a bond. International Sureties, Ltd. has offered to provide a $25 million chapter 7 bond to the Trustee (the “Supplemental Bond”). A copy of the Supplemental Bond and the invoice for the Supplemental Bond are attached hereto as Group Exhibit A. The amount due for the Supplemental Bond is $25,475.00 (the “Premium”). The amount of the Premium will also become due on a recurring annual basis while the estate remains open. RELIEF REQUESTED 9. Pursuant to 11 U.S.C. §§ 322 and 363, the Trustee requests authorization to use

the Unencumbered Funds to pay the Premium and to pay future Premiums in order to secure the Supplemental Bond. 10. The Supplemental Bond protects any and all general unsecured creditors asserting

an interest in the Debtor’s estate and, therefore, the Unencumbered Funds should be used to pay the actual and necessary expenses of the administration of the estate.

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REQUEST FOR LIMITED NOTICE 11. No less than five (5) days notice of this Motion and Proposed Order has been given

to the Office of the United States Trustee and those parties on the CM/ECF service list or those who have requested service. For obvious reasons, the Trustee has not served notice of this Motion on the 24,000 customers of the Debtor, but has posted the Motion to the Trustee’s website (www.pfgchapter7.com). In light of the relief sought herein, the Trustee requests that limited notice be deemed sufficient for cause shown and waive and dispense with any further notice requirements. WHEREFORE, Ira Bodenstein, not individually, but solely in his capacity as the chapter 7 trustee for the estate of Peregrine Financial Group, Inc. d/b/a PFG Best respectfully requests that this Court enter an order, substantially in the form attached hereto: (a) authorizing the Trustee to pay the Premium and future Premiums as they become due in order to acquire and maintain the Supplemental Bond; (b) approving the notice of the Motion as sufficient and waiving further notice; and (c) for such other, further and different relief as this Court deems just and proper. Respectfully submitted, Ira Bodenstein, not personally, but as chapter 7 trustee for the estate of Peregrine Financial Group, Inc.

Dated: July 19, 2012 Robert M. Fishman (#3124316) Salvatore Barbatano (#0109681) John Guzzardo (#6283016) Shaw Gussis Fishman Glantz Wolfson & Towbin LLC 321 North Clark Street Suite 800 Chicago, Il 60654 Phone: (312) 541-0151

By:

/s/ John Guzzardo One of his proposed attorneys

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NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
In re: PEREGRINE FINANCIAL GROUP, INC., ) ) ) ) ) ) ) Chapter 7 Case No. 12-27488 Honorable Judge Carol A. Doyle

Debtor.

ORDER AUTHORIZING PAYMENT OF TRUSTEE’S BOND PREMIUM Upon consideration of the motion (the “Motion”) (capitalized terms used herein shall have the meanings ascribed thereto in the Motion) of Ira Bodenstein, not personally, but as chapter 7 trustee for the estate of Peregrine Financial Group, Inc. d/b/a PFG Best, for the entry of an order pursuant to 11 U.S.C. §§ 322 and 363: (a) authorizing the Trustee to pay the Premium and acquire the Supplemental Bond; and (b) deeming notice sufficient under the circumstances; the Court having core jurisdiction to hear and determine the Motion; and the Court being otherwise fully advised in the premises; it is Ordered: 1. The Trustee is authorized to pay the Premium and future Premiums from

Unencumbered Funds of the Debtor’s estate to acquire and maintain the Supplemental Bond; 2. 3. Notice of the Motion is sufficient and further notice is waived; and This Court shall retain jurisdiction over any and all issues arising from or related

to the implementation and interpretation of this Order. ENTER:

Dated: _________________ United States Bankruptcy Judge Prepared by: John Guzzardo

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Shaw Gussis Fishman Glantz Wolfson & Towbin LLC 321 North Clark Street, Suite 800 Chicago, IL 60654

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Filed 07/19/12 Entered 07/19/12 15:20:53 Order Page 1 of 1 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS Eastern Division BK No.: Chapter: 7
Honorable Carol A. Doyle

Desc Proposed

In Re: ) PEREGRINE FINANCIAL GROUP, INC. ) ) ) ) ) Debtor(s) )

12-27488

ORDER AUTHORIZING PAYMENT OF TRUSTEE'S BOND PREMIUM Upon consideration of the motion (the “Motion”) (capitalized terms used herein shall have the meanings ascribed thereto in the Motion) of Ira Bodenstein, not personally, but as chapter 7 trustee for the estate of Peregrine Financial Group, Inc. d/b/a PFG Best, for the entry of an order pursuant to 11 U.S.C. §§ 322 and 363: (a) authorizing the Trustee to pay the Premium and acquire the Supplemental Bond; and (b) deeming notice sufficient under the circumstances; the Court having core jurisdiction to hear and determine the Motion; and the Court being otherwise fully advised in the premises; it is Ordered:

1. The Trustee is authorized to pay the Premium and future Premiums from Unencumbered Funds of the Debtor’s estate to acquire and maintain the Supplemental Bond; 2. Notice of the Motion is sufficient and further notice is waived; and 3. This Court shall retain jurisdiction over any and all issues arising from or related to the implementation and interpretation of this Order. Enter:

Dated: Prepared by: John Guzzardo Shaw Gussis Fishman Glantz Wolfson & Towbin LLC 321 North Clark Street, Suite 800 Chicago, IL 60654

United States Bankruptcy Judge

Rev: 20120501_bko