You are on page 1of 47

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 1 of 16

Desc Main

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: ) ) PEREGRINE FINANCIAL GROUP, INC., ) ) Debtor. ) ) ) ) Chapter 7 Case No. 12-27488 Honorable Carol A. Doyle Hearing Date: October 4, 2012 Hearing Time: 10:00 a.m.

NOTICE OF MOTION PLEASE TAKE NOTICE that on October 4, 2012 at 10:00 a.m., the undersigned shall appear before the Honorable Judge Carol A. Doyle, in Courtroom 742, 219 South Dearborn Street, Chicago, Illinois, and then and there present the TRUSTEE’S APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE EMPLOYMENT AND RETENTION OF PRICEWATERHOUSECOOPERS CORPORATE FINANCE LLC AS INVESTMENT BANKER EFFECTIVE NUNC PRO TUNC TO THE ENGAGEMENT DATE, at which time you may appear if you deem fit. Dated: September 27, 2012 Respectfully submitted, Ira Bodenstein, not personally, but as chapter 7 trustee for the estate of Peregrine Financial Group, Inc. By: Robert M. Fishman (#3124316) Kimberly Bacher (#6285677) Shaw Gussis Fishman Glantz Wolfson & Towbin LLC 321 North Clark Street, Suite 800 Chicago, Il 60654 Phone: (312) 541-0151 Fax: (312) 980-3888 /s/ Kimberly Bacher One of his attorneys

{10403-001 APP A0328163.DOCX 4}

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 2 of 16

Desc Main

CERTIFICATE OF SERVICE Kimberly Bacher certifies that she caused to be served a true copy of the above and foregoing NOTICE OF MOTION and TRUSTEE’S APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE EMPLOYMENT AND RETENTION OF PRICEWATERHOUSECOOPERS CORPORATE FINANCE LLC AS INVESTMENT BANKER EFFECTIVE NUNC PRO TUNC TO THE ENGAGEMENT DATE upon the attached Electronic Mail Notice List through the ECF System and on the attached Service List in the manner so indicated on this 27th day of September, 2012. /s/ Kimberly Bacher
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  Ira Bodenstein ibodenstein@shawgussis.com, sdelamora@shawgussis.com  David E Cohen dcohen@fishercohen.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  Geoffrey S. Goodman ggoodman@foley.com, egreen@foley.com;khall@foley.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  David Paul Holtkamp dholtkamp@wfactorlaw.com, nb@wfactorlaw.com  Stephanie K. Hor-Chen shor@vedderprice.com, ecfdocket@vedderprice.com  Kevin M Hyde khyde@shawgussis.com, jhampton@shawgussis.com  Thomas S Kiriakos tkiriakos@mayerbrown.com, Courtnotification@mayerbrown.com  James C. Koutoulas jk@typhoncap.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  Michael C. Moody mmoody@orourkeandmoody.com, firm@orourkeandmoody.com,morourke@orourkeandmoody.com  Jennifer M. Muchoney jmuchoney@pfgbest.com  Michael J O'Rourke morourke@okmlaw.com  Mark L Radtke mradtke@shawgussis.com, bharrington@shawgussis.com  Rene S Roupinian RSR@outtengolden.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

{10403-001 APP A0328163.DOCX 4}

2

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 3 of 16

Desc Main

   

Anne W Stukes astukes@cftc.gov William W Thorsness wthorsness@vedderprice.com, ecfdocket@vedderprice.com John Edward Waters john.waters@iowa.gov Thomas C. Wolford twolford@ngelaw.com

Via Electronic Mail and U.S. Mail CRT Special Investments LLC Attn: Joseph Sarachek 262 Harbor Drive Stamford, CT 06902 Gaivesville Coins, Inc. c/o Stephanie C. Lieb, Esq. 101 E. Kennedy Blvd., Ste. 2700 Tampa, FL 33602 rcolton@trenam.com slieb@trenam.com Joseph M. Russell JP Morgan Chase Bank NA 10 S. Dearborn Street Chicago, IL 60603 Joe.russell@jpmchase.com Gilbert B. Weisman Becket & Lee LLP 16 General Warren Blvd. Malvern, PA 19355 Notices@becket-lee.com John B. Connor John B. Connor, P.L.C. 1033 N. Fairfax St., Ste. 310 Alexandria, VA 22314 jack@johnbconnor.com Outten & Golden LLP 3 Park Ave., 29th Floor New York, NY 10016 Attn: Jack Raisner Rene Roupinian Stephen Mertz Michael Stewart Faegre Baker Daniels LLP 90 South 7th St., Ste. 2200 Minneapolis, MN 55402 stephen.mertz@faegrebd.com Michael.stewart@faegrebd.com William L. Wallander John Paul K. Napier Vinson & Elkins L.L.P. 2001 Ross Avenue, Ste. 3700 Dallas, TX 75201 jnapier@velaw.com bwallander@velaw.com Lazonia Clark Chase Paymentech Solutions, LLC 14221 Dallas Parkway Building II Dallas, TX 75254-2942 Lazonia.clark@chasepaymentech.com Andrea M. Momnie Philip J. Hendel Hendel & Collins, P.C. 101 State Street Springfield, MA 01103 amomnie@hendelcollins.com

Alicia Martin Attn: Steven R. Lehr, Esq. Steven R. Lehr, P.C. 33 Clinton Road, Ste. 100 West Caldwell, NJ 07006 slehr@lehrlaw.com Via Electronic Mail Rosemary Hollinger rhollinger@cftc.gov Robert W. Wasserman rwasserman@cftc.gov Scott Williamson swilliamson@cftc.gov Pat DiMaria pdimaria@pfgbest.com Vivian Drohan vdrohan@dlkny.com

{10403-001 APP A0328163.DOCX 4}

3

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 4 of 16

Desc Main

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: ) ) PEREGRINE FINANCIAL GROUP, INC., ) ) Debtor. ) ) ) ) Chapter 7 Case No. 12-27488 Honorable Carol A. Doyle Hearing Date: October 4, 2012 Hearing Time: 10:00 a.m.

TRUSTEE’S APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE EMPLOYMENT AND RETENTION OF PRICEWATERHOUSECOOPERS CORPORATE FINANCE LLC AS INVESTMENT BANKER EFFECTIVE NUNC PRO TUNC TO THE ENGAGEMENT DATE 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”), files this motion (this “Application”) for the entry of an order, substantially in the form attached hereto as Exhibit A: (a) authorizing the Trustee to employ and retain PricewaterhouseCoopers Corporate Finance LLC (“PwC CF” ) as his investment banker pursuant to that certain engagement letter dated September 12, 2012 (the “Engagement Date”), annexed as Exhibit 1 to Exhibit A (the “Engagement Letter”), nunc pro tunc to the Engagement Date; (b) approving the terms of the Engagement Letter; and (c) granting related relief. In support of this Application, the Trustee submits the Declaration of Michael L. Milani, a Senior Managing Director at PwC CF (the Milani Declaration”), which is attached hereto as Exhibit B. In further support of this
1

1

PwC CF has subcontracted the performance of certain services described herein to PricewaterhouseCoopers LLP ("PwC"), a limited liability partnership, the United States-based member firm of the global network of separate and independent member firms that operate locally in countries around the world. Unless otherwise specified, references herein to PwC CF shall mean PwC CF and its affiliated entities, including without limitation, PwC.

{10403-001 APP A0328163.DOCX 4}

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 5 of 16

Desc Main

Application, the Trustee respectfully states as follows: Jurisdiction 1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334. This

matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2). 2. 3. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. The statutory bases for the relief requested herein are sections 327(a) and 328(a)

of title 11 of the United States Code (the “Bankruptcy Code”) and Rules 2014(a) and 2016 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”). Relief Requested 4. By this Application, the Trustee seeks the entry of an order substantially in the

form attached hereto as Exhibit A: (a) authorizing the Trustee to employ and retain PwC CF as his investment banker nunc pro tunc to the Engagement Date; (b) approving the terms of the Engagement Letter; and (c) granting related relief. Background 5. 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 thereby commencing the above captioned case (the “Case”). Ira Bodenstein is the duly appointed chapter 7 trustee of the Estate (the “Estate”). 6. 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. 7. 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

{10403-001 APP A0328163.DOCX 4}

2

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 6 of 16

Desc Main

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 Case. 8. On September 12, 2012, this Court entered an Order authorizing the Trustee to

employ PwC and PwC CF as the Trustee’s financial advisors (the “PwC FA Order”). The engagement of PwC CF as requested herein will replace the services of PwC CF as authorized pursuant to the PwC FA Order. The compensation arrangement for services rendered by PwC CF pursuant to this Motion will also replace that authorized pursuant to the PwC FA Order effective as of the Engagement Date. The Trustee’s Determination to Engage PwC CF 9. Since his appointment, the Trustee has undertaken a careful assessment of the Through this process, the Trustee

options available to maximize the value to the Estate.

determined that his ability to retain an investment banker with significant restructuring experience, including with respect to the disposition of distressed assets, would be an important element in the liquidation process. PwC CF’s Qualifications 10. The Trustee seeks to retain PwC CF as his investment banker because it has

extensive bankruptcy experience and an excellent reputation in providing high quality investment banking services to debtors and creditors in bankruptcy proceedings, reorganizations, and other restructurings. PwC CF is part of the PricewaterhouseCoopers Corporate Finance Global Network which has more than 1,400 experienced professionals worldwide. PwC CF also has a proven track record in mid-market transactions, including sales of the following companies: Brothers Gourmet Coffee (acted as the advisor in its sale to Procter & Gamble in

{10403-001 APP A0328163.DOCX 4}

3

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 7 of 16

Desc Main

chapter 11); Fruehauf Trailer Corporation (advised and assisted the debtor in the chapter 11 sale of the company to multiple buyers); Ganton Technologies (acted as the advisor to the debtor in the $60 million chapter 11 sale of the company to a financial buyer); Liberty Aerospace (financial advisor to the company in its sale to Fernas Europe SLF for $45 million); Network Plus (acted as advisor to the company in its sale to Broadview Networks under chapter 11); RMS Family Restaurants, Inc. (acted as the advisor to the company in the sale of Captain D’s, Popeyes, and Shoney’s franchises); Roney Palace (financial advisor to the company in its chapter 11 sale for $150 million to the Chetrit group); Scottsboro Aluminum (advisor to company in its chapter 11 sale to PPM America); Yorkshire Group (acted as advisor to company in the sale of its Americas dyestuff unit to Dystar LP). 11. PwC CF’s resources and capabilities, together with its unique ability to advise the

Trustee, are crucial to the Trustee’s efforts to maximize value to the Estate. Broadly speaking, PwC CF will assist in the evaluation of strategic alternatives and render advisory services to the Trustee in connection with the ultimate disposition of the Estate. 12. Since its engagement, PwC CF has continued to acquire knowledge of the

Debtor’s business and is rapidly becoming familiar with the Debtor’s financial affairs, debt structure, operations, and related matters. Having worked with the Trustee and his other

advisors, PwC CF has continued to develop relevant experience and expertise regarding the Debtor’s business that will assist the Trustee in providing effective and efficient services in this Case. Accordingly, the Trustee believes that PwC CF is well-positioned to render investment banking services on his behalf in this Case. Services to Be Provided 13. PwC CF will advise and assist the Trustee in connection with the following tasks:

{10403-001 APP A0328163.DOCX 4}

4

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 8 of 16

Desc Main

(A) Advise and assist the Trustee in developing the Trustee’s teaser, executive summary style power point format Offering Memorandum (“Offering Memorandum”), and management presentation describing the assets or specific business of the Debtor (“Businesses”) owned by the Debtor and the opportunities that the Businesses may provide to prospective acquirers. (B) Contact potential buyers agreed to by the Trustee, facilitate the Trustee’s execution of confidentiality agreements with potential buyers, assist the Trustee in issuing the Offering Memorandums, and request indications of interest from potential 2 buyers for the Transaction(s). (C) Assist the Trustee in the Trustee’s evaluation of indications of interest and the Trustee’s negotiation of term sheets and/or letters of intent. (D) Assist the Trustee in the Trustee’s preparation for and coordination of due diligence visits by potential buyers. These services do not include the set up and management of a virtual data room (to be hosted by a third-party provider), or uploading of Debtor-provided data into the virtual data room. Services provided will be coordinated with PricewaterhouseCoopers LLP Transaction Services to avoid duplicative efforts. (E) Assist the Trustee in the Trustee’s negotiation of a sale agreement(s) with a potential buyer(s). (F) Assist the Trustee in its preparation for meetings with the creditor groups, official constituencies and other interested parties, as necessary, and assist and participate in management’s presentations to potential buyers. (G) Participate in hearings before the Bankruptcy Court and provide relevant testimony with respect to the matters described herein and arising in connection with any Transaction(s). Our role would include assistance with the sale of the Businesses under Section 363 of the Bankruptcy Code, and as appropriate, coordination with the Trustee’s other financial and legal advisors.

2 The Engagement Letter defines “Transaction” as the following: “[A]ny transaction or series of transactions involving (a) an acquisition, merger, consolidation or other transaction with another party through which any material assets of the Company and / or Businesses are, directly or indirectly, combined with or transferred to another party outside the ordinary course of business; (b) the acquisition, directly or indirectly, by a buyer or buyers of equity interests or options, or any combination thereof constituting a majority of controlling portion of the stock of the company or possessing a majority or controlling portion of the voting power of the Company; (c) any other purchase or acquisition, directly or indirectly by a buyer or buyers of a majority or controlling portion of the securities or other interests of the Company (through, merger, sale, exchange or otherwise); or (d) any combination of the foregoing.

{10403-001 APP A0328163.DOCX 4}

5

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 9 of 16

Desc Main

(H) Provide such other services as may from time to time be specifically agreed upon by PwC CF and the Trustee and which are consistent with applicable state, local or professional regulations. Professional Compensation 14. PwC CF intends to apply for compensation for professional services rendered in

connection with this Case, subject to the Court’s approval and in compliance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules for the Bankruptcy Court for the Northern District of Illinois (the “Local Rules”), and the Order Establishing Procedures for Interim Compensation and Reimbursement of Expenses of Trustee’s Professionals, entered on August 9, 2012 (the “Interim Compensation Order”), and consistent with the proposed compensation set forth in the Engagement Letter (the “Fee Structure”), provided that the Fee Structure shall be subject to review pursuant to the standard set forth in section 328 of the Bankruptcy Code and not section 330 of the Bankruptcy Code. 15. It is not the practice of PwC CF’s professionals to keep detailed time records in

one-tenth-of-an-hour (0.1) increments as customarily kept by attorneys who are compensated subject to approval of the Court. Instead, the customary practice of PwC CF’s professionals is to keep reasonably detailed records of services rendered during the course of an engagement in onehour (1.0) increments. The Trustee requests that the Court allow PwC CF’s professionals to provide the following in its monthly, interim and final fee applications: (a) a narrative

summarizing each project category and the services rendered under each project category; (b) as an exhibit to each monthly, interim and final fee application that PwC CF files or serves in this Case, a summary, by project category, of services rendered to the Trustee, which identifies each professional rendering services, the number of hours expended by each professional, and the amount of compensation requested with respect to the services rendered by each professional;

{10403-001 APP A0328163.DOCX 4}

6

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 10 of 16

Desc Main

and (c) reasonably detailed records of time in one-hour (1.0) increments, describing the services rendered by each professional and the amount of time spent on each date. 16. In summary, the Fee Structure provides for the following compensation:  
3

Initial Retainer. Upon entry of an order authorizing PwC CF’s retention, the Trustee shall pay PwC CF $90,000. Monthly Retainer. On October 31, 2012, the Trustee shall pay PwC CF $90,000. On November 30, 2012, the Trustee shall pay PwC CF $90,000. On December 31st, and on the last calendar day of each month thereafter, the Trustee shall pay PwC CF $60,000. Transaction Fees. In addition to any other fees hereunder, if any Transaction(s) (as defined in the Engagement Letter) is consummated (as defined in the Engagement Letter), upon the consummation of the Transaction(s), PwC CF shall be paid, in cash, an additional fee as follows: 3.0% of Aggregate Consideration, subject to a minimum Transaction Fee of $750,000. Crediting. The Retainers (as defined in the Engagement Letter) paid by the Trustee shall be credited against any Transaction(s) Fees payable to PwC CF.

 17.

In addition, the Trustee will reimburse PwC CF for its travel and the reasonable

out-of-pocket expenses it incurs in connection with its services under the Engagement Letter, subject to the procedures set forth in the Bankruptcy Code, the Bankruptcy Rules, and the Interim Compensation Order. 18. The Fee Structure is consistent with PwC CF’s normal and customary billing

practices for comparably sized and complex cases, both in and out-of-court, involving the services to be provided in this Case. The compensation arrangement provided for in the

Engagement Letter and generally described above is also consistent with and typical of

3

The summary provided herein is for illustrative purposes only and is subject to the Engagement Letter in all respects. In the event of any inconsistency between the Fee Structure as set forth herein and the Engagement Letter, the Engagement Letter will control.

{10403-001 APP A0328163.DOCX 4}

7

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 11 of 16

Desc Main

arrangements entered into by other investment banking and financial advisory firms of comparable standing in connection with the rendering of similar services to similarly-situated clients. PwC CF and the Trustee believe that the foregoing compensation arrangement is both reasonable and market-based. 19. To induce PwC CF to do business with the Trustee, the compensation structure

described above was established to reflect the difficulty of the assignment PwC CF expects to undertake and the potential for an unfavorable outcome as a result of factors outside of PwC CF’s control. The Trustee believes that PwC CF’s strategic and financial expertise as well as its capital markets knowledge, financing skills, restructuring capabilities, and mergers and acquisitions expertise, some or all of which may be required by the Trustee during the term of PwC CF’s engagement hereunder, were important factors in determining the Fee Structure. In evaluating the ultimate benefit to the creditors and customers of the Debtor, the Trustee believes that PwC CF’s services described hereunder cannot be measured by reference to the number of hours to be expended by PwC CF’s professionals in the performance of such services. 20. The Trustee and PwC CF have agreed upon the Fee Structure in anticipation that a

substantial commitment of professional time and effort will be required of PwC CF and its professionals hereunder and in light of the fact that: (a) such commitment may foreclose other opportunities for PwC CF; and (b) the actual time and commitment required of PwC CF and its professionals to perform its services hereunder may vary substantially on a weekly or monthly basis, creating “peak load” issues for PwC CF. 21. In light of the foregoing and given the numerous issues that PwC CF may be

required to address in the performance of its services hereunder, PwC CF’s commitment to the variable level of time and effort necessary to address all such issues as they arise and the market

{10403-001 APP A0328163.DOCX 4}

8

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 12 of 16

Desc Main

prices for PwC CF’s services for engagements of this nature, the Trustee believes that the Fee Structure is fair, reasonable, and market-based under the standard set forth in section 328(a) of the Bankruptcy Code. Indemnification Provisions 22. The Engagement Letter contains standard indemnification provisions (the

“Indemnification Provisions”) with respect to PwC CF’s services. 23. The terms and conditions of the Engagement Letter were negotiated by the

Trustee and PwC CF at arm’s-length and in good faith. The Trustee respectfully submits that the Indemnification Provisions, viewed in conjunction with the other terms of PwC CF’s proposed retention, are reasonable and in the best interests of the Trustee, the Estate, and all parties in interest. Provisions. No Duplication of Services 24. The Trustee intends that PwC CF’s services will complement, and not duplicate, Accordingly, the Trustee requests that the Court approve the Indemnification

the services to be rendered by the Trustee or any other professional retained by the Trustee in this Case, including those authorized pursuant to the PwC FA Order. The Engagement Letter reflects PwC CF’s understanding that the Trustee has retained other professionals during the term of the engagement, and the Trustee believes PwC CF will work cooperatively with such professionals to integrate any respective work conducted by the professionals on behalf of the Trustee. PwC CF’s Disinterestedness 25. To the best of the Trustee’s knowledge and except to the extent disclosed herein

and in the Milani Declaration: (a) PwC CF is a “disinterested person” within the meaning of section 101(14) of the Bankruptcy Code, as required by section 327(a) of the Bankruptcy Code

{10403-001 APP A0328163.DOCX 4}

9

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 13 of 16

Desc Main

and does not hold or represent an interest adverse to the Trustee or the Estate; and (b) PwC CF has no connection to the Trustee, the Estate, its creditors, or its related parties except as may be disclosed in the Milani Declaration. 26. To the extent that any new relevant facts or relationships bearing on the matters

described herein during the period of PwC CF’s retention are discovered or arise, PwC CF will use reasonable efforts to file promptly a supplemental declaration as required by Bankruptcy Rule 2014(a). Basis for Relief 27. Section 327(a) of the Bankruptcy Code authorizes a debtor in possession to

employ professionals that “do not hold or represent an interest adverse to the estate, and that are disinterested persons.” 11 U.S.C. § 327(a). As discussed above, PwC CF satisfies the

disinterestedness standard of section 327(a). 28. In addition, the Trustee seeks approval of the Fee Structure and the

Engagement Letter pursuant to section 328(a) of the Bankruptcy Code, which provides, in relevant part, that the Trustee “with the court’s approval, may employ or authorize the employment of a professional person under section 327 . . . on any reasonable terms and conditions of employment, including on a retainer, on an hourly basis, on a fixed or percentage fee basis, or on a contingent fee basis.” 11 U.S.C. § 328(a). 29. Section 328 permits the compensation of professionals, including investment

bankers and financial advisors, on more flexible terms that reflect the nature of their services and market conditions. As the United States Court of Appeals for the Fifth Circuit recognized in Donaldson Lufkin & Jenrette Sec. Corp. v. Nat’l Gypsum (In re Nat’l Gypsum Co.), 123 F.3d 861 (5th Cir. 1997):

{10403-001 APP A0328163.DOCX 4}

10

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 14 of 16

Desc Main

Prior to 1978 the most able professionals were often unwilling to work for bankruptcy estates where their compensation would be subject to the uncertainties of what a judge thought the work was worth after it had been done. That uncertainty continues under the present § 330 of the Bankruptcy Code, which provides that the court award to professional consultants “reasonable compensation” based on relevant factors of time and comparable costs, etc. Under present § 328 the professional may avoid that uncertainty by obtaining court approval of compensation agreed to with the trustee (or debtor or committee). Id. at 862 (internal citations and emphasis omitted). 30. Thus, courts in this jurisdiction have regularly approved the retention and

engagement of investment banking professionals under the standard of review set forth by section 328 of the Bankruptcy Code and not section 330. See, e.g., In re Giordano’s

Enters., Inc., No. 11-06098 (Bankr. N.D. Ill. May 31, 2011) (authorizing retention of investment banker and approving fee structure pursuant to standard of review set forth by section 328 of the Bankruptcy Code); In re Hartmarx Corp., Case No. 09-02046 (Bankr. N.D. Ill. March 4, 2009) (same); In re Kimball Hill, Inc., Case No. 08-10095 (Bankr. N.D. Ill. May 28, 2008) (same); In re Enesco Grp., Inc., No. 07-00565 (ABG) (Bankr. N.D. Ill. Jan. 26, 2007) (same); In re UAL Corp., No. 02-48191 (Bankr. N.D. Ill. Feb. 21, 2003) (same); see also In re Corus Bankshares, Inc., No. 10-26881 (Bankr. N.D. Ill. July 9, 2010) (authorizing retention of financial advisor and approving fee structure pursuant to standard of review set forth by section 328 of the Bankruptcy Code); In re Holly Marine Towing, Inc., No. 07-00266 (Bankr. N.D. Ill. June 27, 2007) (same); In re Orius Corp., No. 05-63876 (Bankr. N.D. Ill. Jan. 10, 2006) (same). 31. Moreover, the Trustee and PwC CF believe that the Indemnification Provisions

are customary and reasonable for investment banking engagements, both out of court and in chapter 11 cases, and reflect the qualifications and limitations on indemnification provisions in this District and other jurisdictions. See, e.g., In re Giordano’s Enters., Inc., No. 11-06098

{10403-001 APP A0328163.DOCX 4}

11

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 15 of 16

Desc Main

(Bankr. N.D. Ill. May 31, 2011) (authorizing debtors to retain investment banker pursuant to agreement that provided for indemnification by debtors); In re Hartmarx Corp., No. 09-02046 (Bankr. N.D. Ill. Mar. 4, 2009) (same); In re Kimball Hill, Inc., Case No. 08-10095 (Bankr. N.D. Ill. May 28, 2008) (same); In re Enesco Grp., Inc., No. 07-00565 (Bankr. N.D. Ill. Jan. 26, 2007) (same); In re UAL Corp., No. 02-48191 (Bankr. N.D. Ill. Feb. 21, 2003) (same); see also In re Select Snacks, Inc., No. 07-18769 (Bankr. N.D. Ill. Oct. 18, 2007) (authorizing debtors to retain financial advisor pursuant to agreement that provided for indemnification by debtors); In re Holly Marine Towing, Inc., No. 07-00266 (Bankr. N.D. Ill. June 6, 2007) (same); In re Orius Corp., No. 05-63876 (Bankr. N.D. Ill. Jan. 10, 2006) (same). Conclusion 32. For the reasons set forth herein and in the Milani Declaration, the Trustee

respectfully requests that the Court enter an order granting the relief requested herein. Notice 33. The Trustee has caused notice of this Application to be given to the following

parties: (a) the U.S. Trustee; and (b) all parties who have filed appearances or requested notices through the Court’s CM/ECF system. The Trustee submits that, in light of the nature of the relief requested, no other or further notice need be given. WHEREFORE, for the reasons set forth herein and in the Milani Declaration, the Trustee respectfully requests that the Court enter an order, substantially in the form attached hereto as Exhibit A: (a) authorizing the Trustee to employ and retain PwC CF as his investment banker nunc pro tunc to the Engagement Date; (b) approving the terms of the Engagement Letter and the Fee Structure; and (c) granting related relief.

{10403-001 APP A0328163.DOCX 4}

12

Case 12-27488

Doc 202

Filed 09/27/12 Entered 09/27/12 15:54:16 Document Page 16 of 16

Desc Main

Dated: September 27, 2012

Respectfully submitted, Ira Bodenstein, not personally, but as chapter 7 trustee for the estate of Peregrine Financial Group, Inc. By: /s/ Kimberly Bacher One of his attorneys

Robert M. Fishman (#3124316) Salvatore Barbatano (#0109681) Kimberly Bacher (#6285677) Shaw Gussis Fishman Glantz Wolfson & Towbin LLC 321 North Clark Street, Suite 800 Chicago, Il 60654 Phone: (312) 541-0151 Fax: (312) 980-3888

{10403-001 APP A0328163.DOCX 4}

13

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 1 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 2 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 3 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 4 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 5 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 6 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 7 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 8 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 9 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 10 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 11 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 12 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 13 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 14 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 15 of 16

Desc Exhibit

Case 12-27488

Doc 202-1

Filed 09/27/12 Entered 09/27/12 15:54:16 A Page 16 of 16

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 1 of 12

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 2 of 12

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 3 of 12

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 4 of 12

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 5 of 12

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 6 of 12

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 7 of 12

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 8 of 12

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 9 of 12

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 10 of 12

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 11 of 12

Desc Exhibit

Case 12-27488

Doc 202-2

Filed 09/27/12 Entered 09/27/12 15:54:16 B Page 12 of 12

Desc Exhibit

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS Eastern Division ) ) PEREGRINE FINANCIAL GROUP, INC. ) ) ) ) Debtor(s) ) In Re: BK No.: Chapter: 7
Honorable Carol A. Doyle

12-27488

ORDER AUTHORIZING THE EMPLOYMENT AND RETENTION OF PRICEWATERHOUSECOOPERS CORPORATE FINANCE LLC AS INVESTMENT BANKER NUNC PRO TUNC TO THE ENGAGEMENT DATE Upon the application (the “Application”) (all capitalized terms used but otherwise not defined herein shall have the meanings set forth in the Application) of 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”), for the entry of an order (this “Order”): (a) authorizing the employment and retention of PricewaterhouseCoopers Corporate Finance LLC (“PwC CF”) as his investment banker nunc pro tunc to September 12, 2012 (the “Engagement Date”); (b) approving the Engagement Letter (as defined herein); and (c) granting related relief; and upon the Milani Declaration; and the Court having found that the Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334; and the Court having found that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); and the Court having found that venue of this proceeding is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and the Court having found that the relief requested in the Application is in the best interests of the Estate, its creditors, and other parties in interest; and the Trustee having provided appropriate notice under the circumstances of the Application and the opportunity for a hearing on the Application, and that no other or further notice is required; and the Court having determined that the legal and factual bases set forth in the Application establish just cause for the relief granted herein; and after due deliberation and sufficient cause appearing therefor, it is hereby ORDERED THAT: 1. The Trustee is authorized, pursuant to sections 327(a) and 328(a) of the Bankruptcy Code, to employ and retain PwC CF as his investment banker in accordance with the terms and conditions set forth in the Application and that certain engagement letter, effective as of September 12, 2012 (the “Engagement Letter”) and attached hereto as Exhibit 1. The Engagement Letter is approved, and the Trustee is authorized to pay fees to PwC CF on the terms and at the times specified in the Engagement Letter without the necessity of filing interim or monthly fee statements; provided, that, in the event of any inconsistency between the Engagement Letter and this Order, this Order will control in all respects. 2. PwC CF will file applications for interim and final allowance of compensation and reimbursement of expenses at the times set forth in the Interim Compensation Order; provided however, that any requirements under Local Rule 5082-1(c) are hereby modified such that PwC CF’s restructuring professionals shall be required only to keep time records in one hour increments, PwC CF’s non-restructuring professionals shall not be required to keep time records, and PwC CF shall not be required to provide or conform any schedule of hourly rates. 3. Notwithstanding Paragraph 2 hereof or anything else herein to the contrary, the fees payable to PwC CF shall be subject to review only pursuant to the standard set forth in section 328(a) of the
Rev: 20120501_bko

Bankruptcy Code and shall not be subject to the standard of review set forth in section 330 of the Bankruptcy Code. 4. On September 12, 2012, this Court entered an Order authorizing the Trustee to employ PwC and PwC CF as the Trustee’s financial advisors (the “PwC FA Order”). The engagement of PwC CF as requested herein will replace the services of PwC CF as authorized pursuant to the PwC FA Order. The compensation arrangement for services rendered by PwC CF pursuant to this Motion will also replace that authorized pursuant to the PwC FA Order effective as of the Engagement Date. 5. If before the entry of an order closing or dismissing this Case, an Indemnified Party (as defined in the Engagement Letter) believes that it is entitled to the payment of any amounts from the Estate on account of the indemnification, contribution and/or reimbursement obligations set forth in the Engagement Letter (as modified by this Order), including without limitation the advancement of defense costs, such Indemnified Party must file an application in this Court, and the Trustee shall not pay any such amounts to such Indemnified Party before the entry of an order by this Court approving the payment. Subparagraph (b) of this Paragraph 4 is intended only to specify the period of time under which the Court shall have jurisdiction over any request for fees and expenses by an Indemnified Party for indemnification, contribution, or reimbursement and is not a provision limiting the duration of the indemnification obligation set forth in the Engagement Letter. All parties in interest shall retain the right to object to any demand for indemnification, contribution or reimbursement. 6. Neither the Trustee nor the Estate shall have any obligation to indemnify any Indemnified Party, or to provide contribution or reimbursement to any Indemnified Party, for any claim or expense that is settled without the Trustee’s consent prior to a judicial determination (x) as to such Indemnified Party’s gross negligence, willful misconduct or lack of good faith and (y) as to whether such asserted claim or expense is a claim or expense for which such Indemnified Party should not receive indemnity, contribution, or reimbursement under the terms of the Engagement Letter as modified by this Order. 7. The Trustee is authorized to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Application. 8. The terms and conditions of this Order shall be immediately effective and enforceable upon its entry. 9. This Court retains jurisdiction with respect to all matters arising from or related to the implementation of this Order. Enter:

Dated: Prepared by: Robert M. Fishman (#3124316) Kimberly Bacher (#6285677) Shaw Gussis Fishman Glantz Wolfson & Towbin LLC 321 North Clark Street, Suite 800 Chicago, Il 60654

United States Bankruptcy Judge

Rev: 20120501_bko

Phone: (312) 541-0151 Fax: (312) 980-3888

Rev: 20120501_bko