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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 Carol A. Doyle

Debtor.

Hearing Date: August 9, 2012 Hearing Time: 9:30 a.m.

NOTICE OF MOTION TO: See Attached

PLEASE TAKE NOTICE that on August 9, 2012 at 9:30 a.m., the undersigned shall appear before the Honorable Carol A. Doyle, United States Bankruptcy Judge for the United States Bankruptcy Court, Northern District of Illinois, Eastern Division, in Courtroom 742 of the Dirksen Federal Building, 219 South Dearborn Street, Chicago, Illinois 60604, and then and there present the TRUSTEE’S MOTION FOR ENTRY OF AN ORDER AUTHORIZING (I) THE SALE OF THE ESTATE’S INTEREST IN CERTAIN ASSETS TO GAIN CAPITAL GROUP, LLC; (II) THE ASSUMPTION AND ASSIGNMENT OF CERTAIN RELATED EXECUTORY CONTRACTS AND UNEXPIRED LEASES; AND (III) THE REJECTION OF THE NONRESIDENTIAL REAL PROPERTY LEASE WITH 681 FIFTH AVENUE LLC, at which time you may appear and be heard. THE PARTIES RECEIVING THIS MOTION SHOULD LOCATE THEIR NAMES AND THEIR CONTRACTS OR LEASES LISTED IN EXHIBIT B. Respectfully submitted, Ira Bodenstein, not personally, but as chapter 7 trustee for the estate of Peregrine Financial Group, Inc. Dated: August 6, 2012 By: /s/ Allen J. Guon One of his proposed attorneys

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Robert M. Fishman (#3124316) Allen J. Guon (#6244526) Shaw Gussis Fishman Glantz Wolfson & Towbin LLC 321 North Clark Street Suite 800 Chicago, Il 60654 Phone: (312) 541-0151 Fax: (312) 980-3888

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CERTIFICATE OF SERVICE Allen J. Guon certifies that he caused to be served a true copy of the above and foregoing NOTICE OF MOTION and TRUSTEE’S MOTION FOR ENTRY OF AN ORDER AUTHORIZING (I) THE SALE OF THE ESTATE’S INTEREST IN CERTAIN ASSETS TO GAIN CAPITAL GROUP, LLC; (II) THE ASSUMPTION AND ASSIGNMENT OF CERTAIN RELATED EXECUTORY CONTRACTS AND UNEXPIRED LEASES; AND (III) THE REJECTION OF THE NONRESIDENTIAL REAL PROPERTY LEASE WITH 681 FIFTH AVENUE LLC upon the attached ECF Electronic Mail Notice List and Service List in the manner so indicated on this 6th day of August, 2012.

/s/ Allen J. Guon

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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.
                         

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 Stephen T. Bobo sbobo@reedsmith.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 Michael M. Eidelman meidelman@vedderprice.com, ecfdocket@vedderprice.com Robert M Fishman rfishman@shawgussis.com Ava Gould agould@cftc.gov Joshua M Grenard jgrenard@mayerbrown.com, courtnotification@mayerbrown.com Allen J Guon aguon@shawgussis.com, sdelamora@shawgussis.com John W Guzzardo jguzzardo@shawgussis.com, mcarter@shawgussis.com Stephanie K. Hor-Chen shor@vedderprice.com, ecfdocket@vedderprice.com Thomas S Kiriakos tkiriakos@mayerbrown.com, Courtnotification@mayerbrown.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 Mark L Radtke mradtke@shawgussis.com, bharrington@shawgussis.com Richard A. Saldinger rsaldinger@shawgussis.com Jessica M Scheller jscheller@shawgussis.com, kdevries@shawgussis.com Sean T Scott stscott@mayerbrown.com Scott A Semenek scott.semenek@faegrebd.com, melanie.senesac@faegrebd.com Anne W Stukes astukes@cftc.gov William W Thorsness wthorsness@vedderprice.com, ecfdocket@vedderprice.com Thomas C. Wolford twolford@ngelaw.com

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Via Electronic Mail and Overnight Federal Express Delivery CRT Special Investments LLC Attn: Joseph Sarachek 262 Harbor Drive Stamford, CT 06902 Jon J Kramer U.S. Commodity Futures Trading Commission 525 W. Monroe Street Chicago, IL 60661 jkramer@cftc.gov John B. Connor John B. Connor, P.L.C. 1033 N. Fairfax St., Ste. 310 Alexandria, VA 22314 jack@johnbconnor.com

Gaivesville Coins, Inc. c/o Stephanie C. Lieb, Esq. 101 E. Kennedy Blvd., Ste. 2700 Tampa, FL 33602 rcolton@trenam.com slieb@trenam.com William P. Janulis Ava Gould U.S. Commodity Futures Trading Commission 525 West Monroe Street, Ste. 1100 Chicago, IL 60601 wjanulis@cftc.gov agould@cftc.gov James L. Koutoulas Chief Executive Officer Typhon Capital Management 190 S. LaSalle St., Ste. 3000 Chicago, IL 60601 jk@typhoncap.com Joseph M. Russell JP Morgan Chase Bank NA 10 S. Dearborn Street Chicago, IL 60603 Joe.russell@jpmchase.com

Outten & Golden LLP 3 Park Ave., 29th Floor New York, NY 10016 Attn: Jack Raisner Rene Roupinian

Gilbert B. Weisman Becket & Lee LLP 16 General Warren Blvd. Malvern, PA 19355 Notices@becket-lee.com

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Via Electronic Mail Rosemary Hollinger rhollinger@cftc.gov Robert W. Wasserman rwasserman@cftc.gov Scott Williamson swilliamson@cftc.gov Deborah J. Piazza dpiazza@tarterkrinsky.com KT Stallings Bren KTBren@metropolerealty.com

Via Facsimile Robert A. Siegel KT Stallings Bren 681 Fifth Avenue LLC c/o Metropole Realty Advisors, Inc. 681 Fifth Avenue New York, NY 10022 Fax: 212-980-2428 IPC Systems, Inc. Attn: Legal Department Harborside Financial Center Plaza 10 1500 Plaza Ten, 15th Floor Jersey City, NJ 07311 Fax: 201-253-2361 Time Warner Cable Business Services Attn: Legal Department 13820 Sunrise Valley Drive Herndon, VA 20171 Fax: 703-345-2514

Priscilla H. Douglas, Esq. Corporate Counsel Attn: Legal Department California First National Bancorp 18201 Von Karman Avenue, Suite 800 Irvine, CA 92612 Fax: 949-255-5320 Rainbow Broadband, Inc. Rainbow Broadband, LLC Attn: Jonathan M. Nelson 14 Penn Plaza, Suite 806 New York, NY 10122 Fax: 646-205-9536

Cisco Systems Capital Corporation Attn: Legal Department 170 W. Tasman Drive MS SJ 13/3 San Jose, CA 95134 Fax: 877-247-2690

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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 Carol A. Doyle

Debtor.

Hearing Date: August 9, 2012 Hearing Time: 9:30 a.m.

TRUSTEE’S MOTION FOR ENTRY OF AN ORDER AUTHORIZING (I) THE SALE OF THE ESTATE’S INTEREST IN CERTAIN ASSETS TO GAIN CAPITAL GROUP, LLC; (II) THE ASSUMPTION AND ASSIGNMENT OF CERTAIN RELATED EXECUTORY CONTRACTS AND UNEXPIRED LEASES; AND (III) THE REJECTION OF THE NONRESIDENTIAL REAL PROPERTY LEASE WITH 681 FIFTH AVENUE LLC Ira Bodenstein, not personally, but as chapter 7 trustee (“Trustee”) for the estate of Peregrine Financial Group, Inc. d/b/a PFG Best (“Debtor”), pursuant to 11 U.S.C. § 363(b), 365(a), (b) and (f) and Fed. R. Bankr. P. 2002(a)(2), 6004(h), 6006, 9006(c) and 9007, moves for entry of an order authorizing the Trustee to (i) sell all of the estate’s interest in certain furniture, fixtures and equipment to Gain Capital Group, LLC (“Gain Capital”) pursuant to the Asset Purchase Agreement (“Agreement”) attached hereto as Exhibit A; (ii) assume and assign certain executory contracts and unexpired personal property leases (“Contracts”) identified in Exhibit B attached hereto; and (iii) reject the Debtor’s unexpired lease on nonresidential real property (“Office Lease”) with 681 Fifth Avenue LLC for the property located at 681 Fifth Avenue, 7th Floor, New York, New York (“Premises”). In support of the motion, the Trustee states as follows:

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Background 1. On July 10, 2012 (“Petition Date”), the Debtor filed a voluntary petition for relief

under chapter 7 of the Bankruptcy Code, 11 U.S.C. § 101, et. seq. Ira Bodenstein is the duly appointed chapter 7 trustee of the Debtor’s estate. On July 13, 2012, the Court entered an order authorizing the Trustee to operate the Debtor’s business and pay employee obligations pursuant to 11 U.S.C. § 721. 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 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 United States Commodity Futures Trading

Commission (“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 (“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 Case – commodity broker liquidation under subchapter IV of chapter 7 of the Bankruptcy Code. The New York Investment Office 4. On or about August 17, 2011, the Debtor entered into the five year Office Lease

for the purpose of operating a financial investment firm at the Premises. The Office Lease currently requires the Debtor to make monthly rental payments in the amount of $28,895.25, plus “additional rent” as defined in the Office Lease. The Debtor also deposited with Landlord a

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letter of credit in the amount of $173,371.50 (“Letter of Credit”) as security for the performance of the Debtor’s obligations under the Office Lease. 5. The Trustee is not conducting any business at the Premises. At the present time,

the Trustee is in the process of securing and removing all documents and electronic data stored at the Premises. The Trustee expects to complete this process by August 8, 2012. At that time, the Lease will no longer provide any benefit to the estate. 6. Prior to the Petition Date, the Debtor also entered into several vendor and

financial services executory contracts and unexpired personal property lease that were necessary to the operations at the Premises. None of those contracts or leases provide any benefit to the estate and are not necessary to the Debtor’s remaining limited operations. 7. The Debtor also has certain personal property located at the Premises including

furniture, fixtures and equipment (“Personal Property,” and together with the Personal Property, the “Assets”). The Trustee has determined that the Personal Property will be burdensome to the estate compared with the expense of removing and storing the Personal Property. Gain Capital’s Offer 8. The Trustee has decided to accept Gain Capital’s offer, subject to Court approval,

pursuant to the terms of the Agreement to (i) purchase all of the estate’s right title and interest in the Assets for the amount of $13,000.00; (ii) assume the Contracts and pay all costs and expenses necessary to cure all defaults existing under the Contracts. In connection with the transaction, Gain Capital has also agreed to pay the all rent (and any additional rent) due under the Lease for the month of August, 2012.

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Relief Requested 9. By this Motion, the Trustee requests that this Court enter an order approving the

Agreement, which authorizes the Trustee to (i) sell all of the estate’s interest in the Assets for the amount of $13,000.00; (ii) assume and assign to Gain Capital the Contracts; and (iii) reject the Lease for the Premises effective as of August 9, 2012. Basis for Relief A. Sale Out Of The Ordinary Course Under 11 U.S.C. § 363(b) 10. Section 363(b)(1) permits a debtor to “use, sell, or lease, other than in the

ordinary course of business, property of the estate,” after notice and a hearing. The sale of property under § 363(b)(1) is authorized when “the transaction makes good business sense” and “preserves the priorities among creditors.” See, e.g., United Retired Pilots Benefits Protection Assn. v United Airlines, Inc. (In re UAL Corp.), 443 F.3d 565, 572 (7th Cir. 2006). Additionally, courts generally require that adequate and reasonable notice of the sale be provided to interested parties, and that the purchase price be fair and reasonable. See, In re Delaware & Hudson Rwy. Co., 124 B.R. 169, 176 (D. Del. 1991); In re Taylor, 198 B.R. 142, 156-57 (Bankr. D. S.C. 1996); In re Country Manor of Kenton, Inc., 172 B.R. 217, 220 (Bankr. N.D. Ohio 1994). 11. Based upon the UAL Corp. benchmarks, the Trustee’s proposed transaction with

Gain Capital should be approved. First, the Trustee has an immediate and compelling need to reduce administrative expenses. Gain Capital has agreed to pay all rent due under the Lease for the month of August (i.e., an amount not less than $28,895.25), which the estate would otherwise be obligated to pay. Gain Capital may also enter into a new long term lease for the Premises, which would reduce or eliminate any rejection damages and allow the estate to recover the Letter of Credit. Gain Capital has also agreed to take an assignment and pay all costs of cure under, the Contracts which will also reduce administrative expenses.
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12.

Second, there is only a limited amount of Personal Property located at the

Premises. The Trustee has determined that the Personal Property will be burdensome to the estate compared with the expense of removing and storing the Personal Property. The Trustee is also required to preserve all of the Debtor’s electronic data that may reside in any of the computers and servers located at the Premises. The Trustee intends to remove all of the hard drives from all of the computers and servers (even those hard drives subject to the Contracts) and Gain Capital has agreed to incur the expense of purchasing and installing new hard drives for each computer and server. B. Assumption and Assignment of Contracts Under 11 U.S.C. § 365(a), (b) and (f) 13. Pursuant to the Agreement, the Trustee seeks to assume and assign the Contracts

to Gain Capital. For each of the Contracts, Exhibit B sets forth (a) the non-debtor party thereto, (b) certain facts relating to that contract such as subject description or identification number and a commencement date, and (c) the proposed cure amount for each Contract as indicated by the Debtors’ books and records, which amount will be paid by Gain Capital to satisfy the cure requirements of 11 U.S.C. §365(b) (“Cure Amount”). 14. The Trustee has the right, subject to court approval, to assume any executory

contract or unexpired lease. 11 U.S.C. § 365(a). The assumption of an unexpired lease by a trustee is subject to review under the business judgment standard. If such business judgment has been reasonably exercised, the court should approve the assumption. See, e.g., NLRB v. Bildisco and Bildisco, 465 U.S. 513, 523 (1984); Sharon Steel Corp. v. National Fuel Gas Distribution, 872 F.2d 36, 39-40 (3d Cir. 1989); In re RLR Celestial Homes, Inc., 109 B.R. 36, 46 (Bankr. S.D.N.Y. 1989). 15. Section 365(b)(1) of the Bankruptcy Code sets forth the requirements for

assumption. This subsection provides as follows:
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(b) (1) If there has been a default in an executory contract or unexpired lease of the debtor, the trustee may not assume such contract or lease unless, at the time of assumption of such contract or lease, the trustee(A) cures, or provides adequate assurance that the trustee will promptly cure, such default other than a default that is a breach of a provision relating to the satisfaction of any provision (other than a penalty rate or penalty provision) relating to a default arising from any failure to perform nonmonetary obligations under an unexpired lease of real property, if it is impossible for the trustee to cure such default by performing nonmonetary acts at and after the time of assumption, except that if such default arises from a failure to operate in accordance with a nonresidential real property lease, then such default shall be cured by performance at and after the time of assumption in accordance with such lease, and pecuniary losses resulting from such default shall be compensated in accordance with the provisions of this paragraph; (B) compensates, or provides adequate assurance that the trustee will promptly compensate, a party other than the debtor to such contract or lease, for any actual pecuniary loss to such party resulting from such default; and (C) provides adequate assurance of future performance under such contract or lease. 11 U.S.C. § 365(b)(1). 16. In connection with the sale of the Assets, the Trustee has agreed to use reasonable

efforts to obtain this Court’s approval of the assumption and assignment of the Contracts. In addition, Gain Capital has agreed to assume all liabilities with respect to the Contracts and pay the Cure Amount under each of the Contracts. Gain Capital can, if requested to do so, provide the affected non-debtor parties with adequate assurance of future performance under each of the Contracts. Because assumption and assignment remains subject to payment of the Cure Amount, the Trustee submits that the requirements of 11 U.S.C. § 365 have been satisfied or will be satisfied upon entry of the Order approving the Agreement. Importantly the Trustee’s assumption of the Contracts is conditional upon the closing of the sale and the assignment of the Contracts to Gain Capital.

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17.

As the assumption and assignment of the Contracts is an integral part of the sale,

the proposed assumption and assignment is in the best interests of the estate, creditors and other parties-in-interest. C. Rejection of the Office Lease Under 11 U.S.C. § 365(a), (b) and (f) 18. Under section 365(a) of the Bankruptcy Code a trustee, “subject to the court’s

approval, may assume or reject any executory contract or unexpired lease.” 11 U.S.C. § 365(a). The trustee’s rejection of an executory contract or an unexpired lease is subject to review under the business judgment standard. See NLRB v. Bildisco and Bildisco, 465 U.S. 513, 523 (1984); Durkin v. Benedor Corporation (In re G.I. Industries), 204 F.3d 1276, 1282 (9th Cir. 2000); see In re Bullet Jet Charter, Inc., 177 B.R. 593, 601 (Bankr. N.D. Ill. 1995); In re Del Grosso, 115 B.R. 136, 138 (Bankr. N.D. Ill. 1990); Johnson v. Fairco Corp., 61 B.R. 317, 319 (N.D. Ill. 1986). If the trustee’s business judgment has been reasonably exercised, his decision to reject should be approved. See id. 19. This Court has previously authorized the Trustee to operate the Debtor’s business

on a limited basis for the purpose of preserving value for the estate. The Trustee has determined that the Office Lease provides no benefit to the estate and is not necessary to the Debtor’s remaining limited operations. As discussed above, Gain Capital has agreed to pay August rent so that it may negotiate a new lease with the Landlord. If Gain Capital is able to enter into a new long term lease for the Premises, it would reduce or eliminate any rejection damages and allow the estate to recover the Letter of Credit. Since the Office Lease provides no benefit to the estate, its rejection and the attendant reduction in the estate’s administrative costs reflects the Trustee’s exercise of sound business judgment under the Bankruptcy Code. Accordingly, the Trustee has determined that it is in the best interests of the estate to reject the Office Lease as of August 9, 2012.
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Request for Shortened Notice 20. The Trustee has provided three (3) day’s notice of the Motion to the United States

Trustee, and all other parties requesting notice in this case. Bankruptcy Rule 2002(a)(2) generally requires at least twenty-one (21) days’ notice by mail of a proposed sale of property other than in the ordinary course of business, “unless the court for cause shown shortens the time or directs another method of giving notice.” Fed. R. Bankr. P. 2002(a)(2). In addition, Fed. R. Bankr. P 9006(c)(1) provides that “when an act is required or allowed to be done at or within a specified time by these rules … the court for cause shown may in its discretion with or without motion or notice order the period reduced.” Fed. R. Bankr. P. 9006(c). 21. The Trustee requests prompt approval of the motion to expedite the sale of the

Assets. A prompt sale will reduce the ongoing costs of maintaining and safeguarding the Assets. Gain Capital has agreed to pay the full month of August rent even though it will not be able to take possession of the Premises until approval of the Agreement. Gain Capital has made this offer on the basis that it can immediately obtain possession of the Premises. Therefore, prompt approval of the Agreement and sale is essential. Accordingly, in light of the extent of the notice provided the Trustee requests that further notice be waived. Notice 22. Pursuant to Fed. R. Bankr. P. 6006(c), notice of this Motion has been given to:

(a) the Office of the United States Trustee; (b) the non-Debtor parties to the Contracts; (c) the Landlord; and (d) the parties requesting notice in this case. In light of the nature of the relief requested, the Trustee submits that no further or other notice is required. WHEREFORE, the Trustee requests the entry of an order, pursuant to 11 U.S.C. § 363(b) and 365 and Fed. R. Bankr. P. 2002(a)(2), 6004, 6006, 9006(c) and 9007 (a) authorizing the sale of the Assets to Gain Capital pursuant to the terms of the Agreement; (b) authorizing the Trustee
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to assume and assign the Contracts to Gain Capital; and (c) approving the rejection of the Office Lease effective as of August 9, 2012; and (b) granting such other and further relief as is just and equitable. Respectfully submitted, Ira Bodenstein, not personally, but as chapter 7 trustee for the estate of Peregrine Financial Group, Inc. Dated: August 6, 2012 Robert M. Fishman (#3124316) Allen J. Guon (#6244526) Shaw Gussis Fishman Glantz Wolfson & Towbin LLC 321 North Clark Street Suite 800 Chicago, Il 60654 Phone: (312) 541-0151 Fax: (312) 980-3888 By: /s/ Allen J. Guon One of his proposed attorneys

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