2 of 7 DOCUMENTS In re: COUNTY OF ORANGE, a political subdivision of t e !tate of California" ORANGE COUNTY IN#E!T$ENT %OO&!

, an instru'entalit( of t e Count( of Oran)e, *ebtors+ A&&IANCE CA%ITA& $ANAGE$ENT &+%+ AN* %UTNA$ IN#E!T$ENT $ANAGE$ENT AN* T,E -EN,A$ CA&IFORNIA TA./FREE AN* $UNICI%A& FUN*!: TA./FREE $ONEY $AR0ET FUN* AN* $UNICI%A& $ONEY $AR0ET FUN*, Appellants, vs+ COUNTY OF ORANGE, a political subdivision of t e !tate of California" ORANGE COUNTY IN#E!T$ENT %OO&!, an instru'entalit( of t e Count( of Oran)e, Appellees+ *istrict Court Case No+ !AC# 12/345/G&T 6AR7 UNITE* !TATE! *I!TRICT COURT FOR T,E CENTRA& *I!TRICT OF CA&IFORNIA 581 -+R+ 411" 5112 U+!+ *ist+ &E.I! 59953

:ul( 5;, 5112, *ecided :ul( 5;, 5112, FI&E*" :ul( 53, 5112, ENTERE* %RIOR ,I!TORY: [**1] Appeal from the Bankrupt ! Court" Central D#$tr# t of Cal#forn#a% &EMANDED% Bankrupt ! Ca$e No% SA '()22272)*&" +*o#ntl! A,m#n#$tere, -#th Ca$e No% SA '() 2227.)*&/%

COUN!E&: 0or A112ANCE CA32TA1 MANA4EMENT 1%3%" 3UTNAM 2N5ESTMENT MANA4EMENT" appellant$6 &o7ert E Dar7!" 0ul7r#8ht 9 *a-or$k#" 1o$ An8ele$" CA% Cha, C Coom7$" Stroo k 9 Stroo k 9 1a:an" 1o$ An8ele$" CA% :U*GE!: 4A&; 1% TA;1O&" UN2TED STATES D2ST&2CT *UD4E O%INION -Y: 4A&; 1% TA;1O& O%INION [*<==] &U12N4 ON A33EA1 The ourt on lu,e$ the Cal#forn#a Government Code $e t#on <.><? l#en $e ur#n8 Appellant$@ 1''()'< TaA an, &e:enue Ant# #pat#on Note$ #$ a $tatutor! l#en -h# h $ur:#:e, the f#l#n8 of Oran8e Count!@$ Chapter ' pet#t#on% 2% BACKGROUND Appellant$ hol, approA#matel! B ?= m#ll#on of Oran8e Count!" Cal#forn#a taA an, re:enue ant# #pat#on note$% Appellee$ are Oran8e Count! an, #t$ 2n:e$tment 3ool" an #n$trumental#t! of the Count!% Cal#forn#a Government Code $e t#on$ <.><=)<.><> author#Ce lo al a8en #e$" #n lu,#n8

ount#e$" to #$$ue taA an, re:enue ant# #pat#on note$ +referre, to a$ DT&AN$D/ a$ a form of $hort)term mun# #pal f#nan #n8% Cal#forn#a Government Code$e t#on <.><. reEu#re$ all T&ANS 7e author#Ce, 7! re$olut#on% Cal#forn#a Government Code $e t#on <.><? 8o:ern$ the ple,8e of re:enue$" an, pro:#,e$6 An! taAe$" #n ome" re:enue" a$h re e#pt$" or other mone!$ of the lo al a8en ! % % % ma! 7e ple,8e, to [**2] the pa!ment of the note or note$ an, the #ntere$t thereon% % % % The re$olut#on author#C#n8 the #$$uan e of the note or note$ $hall $pe #f! -hat taAe$" #n ome" re:enue" a$h re e#pt$ or other mone!$ are ple,8e, for pa!ment thereof% [*<=1] The note or note$ an, the #ntere$t thereon $hall 7e a f#r$t l#en an, har8e a8a#n$t" an, $hall 7e pa!a7le from the f#r$t mone!$ re e#:e, 7! the lo al a8en ! from" $u h ple,8e, mone!$%

3ur$uant to th#$ pro:#$#on" Oran8e Count!@$ Boar, of Super:#$or$ a,opte, &e$olut#on No% '() ?7< #n *une 1''(" author#C#n8 #$$uan e of up to B 2== m#ll#on #n T&AN$% The &e$olut#on pro:#,e$ A$ $e ur#t! for the pa!ment of the pr#n #pal of an, #ntere$t on the Note$ the Count! here7! ple,8e$ an, 8rant$ a f#r$t l#en an, har8e a8a#n$t [ erta#n $pe #f#e, unre$tr# te, re:enue$]%

The &e$olut#on reEu#re, all ple,8e, re:enue$ 7e $et a$#,e on a monthl! 7a$#$ #n a $e8re8ate, repa!ment fun," 7e8#nn#n8 #n Septem7er 1''( an, en,#n8 #n *une 1''<% 2f ,ur#n8 an! month the $et a$#,e -a$ #n$uff# #ent to $at#$f! the monthl! reEu#rement" the Count! -a$ reEu#re, to make up the ,#fferen e from an! 8enerall! a:a#la7le fun,$ the Count! re e#:e, ,ur#n8 f#$ al !ear 1''()'<% The Count! [**.] al$o eAe ute, a pur ha$e ontra t -#th 3a#neFe77er" 2n %" for 3a#neFe77er to un,er-r#te the note$% The ontra t $tate$ the note$ % % % $hall 7e #$$ue, an, $e ure, pur$uant to the pro:#$#on$ of the [&e$olut#on] -h# h Note &e$olut#on -a$ a,opte, #n a or,an e -#th an, pur$uant to the pro:#$#on$ of [Government Code GG <.><=)<.><>]%

The Count! a,,#t#onall! #$$ue, an DOff# #al Statement"D -h# h ,#$ lo$e, mater#al #nformat#on a7out the 1''( Ser#e$ A T&AN$% 2t #nforme, pro$pe t#:e pur ha$er$ the note$ -ere D#$$ue,D #n a or,an e -#th Government Code $e t#on$ <.><=)<.<<> Dpur$uantD to the &e$olut#on" an, D$ol, pur$uant toD the Contra t% 1 1 The $tatement al$o -arne, 7on,hol,er$ enfor ea7#l#t! of the r#8ht$ an, reme,#e$ of the o-ner$ of the Note$" an, the o7l#8at#on$ #n urre, 7! the Count!" ma! 7e ome $u7He t to the follo-#n86 the 0e,eral Bankrupt ! Co,e an, appl# a7le 7ankrupt ! % % % la-$ relat#n8 to or affe t#n8 the enfor ement of re,#tor@$ r#8ht$ 8enerall!% % % %

2n *ul! [**(] 1''(" the Count! #$$ue, an, $ol, the note$ to 3a#neFe77er% Ea h note $tate,

the Dpa!ment of the pr#n #pal of th#$ Note an, the #ntere$t hereon are $e ure, 7! a ple,8e of" an, f#r$t l#en an, har8e a8a#n$t % % % the @3le,8e, Mone!$%@ % % %D 0rom Septem7er 1''( throu8h No:em7er 1''(" the Count! performe, #t$ $et a$#,e re$pon$#7#l#t#e$" mak#n8 7ookkeep#n8 entr#e$ of $et a$#,e pa!ment$ total#n8 approA#matel! B .?%? m#ll#on% On De em7er ?" 1''(" Appellee$ f#le, for Chapter ' 7ankrupt ! prote t#on% The Count! $toppe, mak#n8 #t$ $et a$#,e pa!ment$" a$$ert#n8 #t -a$ not reEu#re, to make pa!ment$ ,ue to 11 U%S%C% $e t#on <<2+a/% 2n late De em7er the Count! not#f#e, Appellant$ #t -oul, no lon8er honor the $et a$#,e reEu#rement$% Appellant$ $ou8ht rel#ef from $ta! from the 7ankrupt ! ourt to pur$ue a $tate ourt a t#on ompell#n8 the Count! to make the reEu#re, $et a$#,e pa!ment$% After not#n8 that the matter pre$ente, Da :er! ,#ff# ult #$$ueD -#th Dno a$e la- that@$ helpful #n term$ of ,e #,#n8 th#$ #$$ue"D the 7ankrupt ! ourt ,en#e, the reEue$te, rel#ef% The ourt rule, Appellant$ ha, a $e ur#t! #ntere$t rather than a $tatutor! l#en" -h# h ,#, not $ur:#:e the f#l#n8 of the Count!@$ Chapter [**<] ' pet#t#on% See 11 U%S%C% G <<2+a/% Appellant$ no- appeal that rul#n8" onten,#n8 the! ha:e a $tatutor! l#en% 22% DISCUSSION The 7ankrupt ! ourt@$ on lu$#on$ of la- are re:#e-e, de novo, an, #t$ f#n,#n8$ of fa t are re:#e-e, un,er the D learl! erroneou$D $tan,ar,% 0e,% &% Bankr% 3% >=1.I Steelcase Inc. v. Johnston (In re Johnston , 21 0%., .2." .2? +'th C#r% 1''(/% A ourt ma! 8rant rel#ef from the automat# 7ankrupt ! $ta! Dfor au$e" #n lu,#n8 the la k of a,eEuate prote t#on of an #ntere$t #n propert! of [a] part! #n #ntere$t%D 11 U%S%C% G .?2+,/+1/% Appellant$" a$ the mo:#n8 part!" 7ear the #n#t#al 7ur,en of ,emon$trat#n8 $u h D au$eD eA#$t$% See 2 Coll!er on Ban"r#$tc%, para% .?2%1=" at .?2)>7 +1<th e,% 1''(/% To meet th#$ 7ur,en" Appellant$ a$$ert the l#en $e ur#n8 the T&AN$ #$ a $tatutor! l#en" [*<=2] an, thu$ #$ eAempt from 11 U%S%C% $e t#on <<2+a/ an, $ur:#:e$ the ommen ement of the 7ankrupt !% A or,#n8l!" Appellant$ ar8ue" the Count!@$ fa#lure to make monthl! $et a$#,e$ on$t#tute$ D au$eD for rel#ef from the 7ankrupt ! $ta!% The #$$ue to 7e ,e #,e," therefore" #$ -hether Appellant$@ #ntere$t #$ a $tatutor! l#en" an, therefore not o:ere, 7! $e t#on [**?] <<2+a/% 1% &he sec#r!t% !s a stat#tor% l!en. 11 U%S%C% $e t#on <<2+a/ pro:#,e$6 EA ept a$ pro:#,e, #n $u7$e t#on +7/ of th#$ $e t#on" propert! a Eu#re, 7! the e$tate or 7! the ,e7tor after the ommen ement of the a$e #$ not $u7He t to an! l#en re$ult#n8 from an! $e ur#t! a8reement entere, #nto 7! the ,e7tor 7efore the ommen ement of the a$e%

B! #t$ term$" $e t#on <<2+a/ onl! appl#e$ to l#en$ re$ult#n8 from $e ur#t! a8reement$" not other t!pe$ of l#en$ $u h a$ $tatutor! l#en$% See, e.'., Un!ted States v. (#ller (In re (#ller , 1.( Bankr% '(<" '(> +Bankr% 'th C#r% 1''2/I ( Coll!er, para% <<2%=1" at <<2)(% Appellant$ ar8ue the l#en $e ur#n8 the T&AN$ #$ a $tatutor! l#en" an, therefore $e t#on <<2+a/ ,oe$ not appl!% The ourt a8ree$% 11 U%S%C% $e t#on 1=1+.7/ ,ef#ne$ a Dl#enD a$ a D har8e a8a#n$t or #ntere$t #n propert! to $e ure pa!ment of a ,e7t or performan e of an o7l#8at#on%D The le8#$lat#:e omment$ to th#$ pro:#$#on $tate"

#n 8eneral" the on ept of l#en #$ ,#:#,e, #nto three k#n,$ of l#en$6 Hu,# #al l#en$" $e ur#t! #ntere$t$" an, $tatutor! l#en$% Tho$e three ate8or#e$ are mutuall! eA lu$#:e % % % %

S% &ep% No% '<)'>'" '<th Con8%" 2n, [**7] Se$$% +1'7>/" re$r!nted !n 1'7> U%S%C%C%A%N% <7>7" ?2?'% 11 U%S%C% $e t#on 1=1+<./ ,ef#ne$ a D$tatutor! l#en"D #n rele:ant part" a$ a l#en ar#$#n8 $olel! 7! for e of a $tatute on $pe #f#e, #r um$tan e$ or on,#t#on$" % % % 7ut ,oe$ not #n lu,e $e ur#t! #ntere$t or Hu,# #al l#en" -hether or not $u h #ntere$t or l#en #$ pro:#,e, 7! or #$ ,epen,ent on a $tatute an, -hether or not $u h #ntere$t or l#en #$ ma,e full! effe t#:e 7! $tatute%

The le8#$lat#:e omment$ to $e t#on 1=1+<./ pro:#,e D[a] $tatutor! l#en #$ onl! one that ar#$e$ automat# all!" an, #$ not 7a$e, on an a8reement to 8#:e a l#en or on a Hu,# #al a t#on%D S% &ep% No% '<)'>'" '<th Con8%" 2n, Se$$% +1'7>/" re$r!nted !n 1'7> U%S%C%C%A%N% <7>7" ?271% 11 U%S%C% $e t#on 1=1+<1/" on the other han," ,ef#ne$ a D$e ur#t! #ntere$tD a$ a Dl#en reate, 7! an a8reement"D an, 11 U%S%C% $e t#on 1=1+<=/ ,ef#ne$ a D$e ur#t! a8reementD a$ an Da8reement that reate$ or pro:#,e$ for a $e ur#t! #ntere$t%D Coll#er ,#$t#n8u#$he$ $tatutor! l#en$ an, $e ur#t! #ntere$t$ 7! not#n86 2f the l#en ar#$e$ 7! for e of $tatute" -#thout an! pr#or on$ent 7et-een the part#e$" #t -#ll 7e ,eeme, a $tatutor! l#en% % % % 2f the [**>] reat#on of the l#en #$ ,epen,ent upon an a8reement" #t #$ a $e ur#t! #ntere$t e:en thou8h there #$ a $tatute -h# h ma! 8o:ern man! a$pe t$ of the l#en%

2 Coll!er, para% 1=1%<." at 1=1)1<=)<1% The ,#fferen e 7et-een $tatutor! l#en$ an, $e ur#t! #ntere$t$ #$ $omet#me$ o7$ ure% Se ur#t! #ntere$t$ D ommonl! f#n, author#Cat#on an, lar#f# at#on #n eA#$t#n8 $tate $tatute$% % % %D Seel v. &o$e"a )#m*er Co. (In re Seel , 22 Bankr% ?'2" ?'< +Bankr% D% Jan% 1'>2/ (+#ot!n' 2 Norton Ban"r#$tc% )a, and -ract!ce G .1%=1" at 2). +1'>1//% Mean-h#le" $tatutor! l#en$ mo$t ommonl! ar#$e onl! #f a ontra t eA#$t$ 7et-een the ,e7tor an, the l#en la#mantI me han# @$ l#en$ on real e$tate are a pr#mar! eAample% 2n ,#$t#n8u#$h#n8 7et-een the t-o" the fo u$ #$ on the pre$en e of a ontra t pro:#$#on 8rant#n8 a propert! #ntere$t to the la#mant an, on the eAtent to -h# h that ontra t pro:#$#on #$ a ne e$$ar! on,#t#on pre e,ent for the eA#$ten e of the l#en% 2f $u h ontra tual 8rant #$ a ne e$$ar! pre on,#t#on" the l#en #$ not a $tatutor! l#en e:en thou8h $tate $tatute$ ,ef#ne the $ ope an, Eual#t! of the propert! #ntere$t #n ,eta#le, term$%

Id. Thu$" the D,#$t#n8u#$h#n8 [**'] feature of a $tatutor! l#en #$ that #t ar#$e$ @$olel!@ 7! for e of a $tatute%D Id. [*<=.] The #ntere$t at han, 8et$ the r#ter#a for a $tatutor! l#en% Cal#forn#a Government Code $e t#on <.><2 author#Ce$ the Count! to 7orro- 7! #$$u#n8 note$% Se t#on <.><? author#Ce$ the Count! to ple,8e a$$et$ to $e ure tho$e note$" an, reEu#re$ the re$olut#on author#C#n8 the note$ to $pe #f! -hat a$$et$ are ple,8e,% 0#nall!" $e t#on <.><? #mpo$e$ a

$tatutor! l#en 7! pro:#,#n8 Dthe note or note$ an, the #ntere$t thereon $hall 7e a f#r$t l#en an, har8e a8a#n$t" an, $hall 7e pa!a7le from the f#r$t mone!$ re e#:e, 7! the lo al a8en ! from" $u h ple,8e, mone!$%D The pla#n lan8ua8e of the $tatute reate$ a $tatutor! l#en% Se t#on <.><? perm#t$ the Count! to ,e #,e ,hether to ple,8e" an, ,hat to ple,8e% But the $tatute #t$elf #mpo$e$ the ple,8e" -#thout further a t#on 7! the Count!% The Count! ha$ no ho# e of the t!pe of l#en or #t$ term$% The l#en #$ f#Ae, 7! la- a$ a f#r$t l#en" pre lu,#n8 an! a8reement for $e on,ar!" Hun#or" or le$$er $tatu$% The fa t the Count! ha$ the ho# e of -hether to ple,8e an, -hat to ple,8e ,oe$ not un,erm#ne the $tatutor! $our e of the l#en% Th#$ potent#al -a$ [**1=] fore$een #n 11 U%S%C% $e t#on 1=1+<./@$ ,ef#n#t#on of a $tatutor! l#en a$ a Dl#en ar#$#n8 $olel! 7! for e of a $tatute on s$ec!.!ed c!rc#mstances or cond!t!ons % % %D +empha$#$ a,,e,/% Kere" the #r um$tan e$ $pe #f#e, #n the $tatute -ere met6 the Count! ,e #,e, to ple,8e" an, -hat to ple,8e% The $pe #f#e, #r um$tan e$ ha:#n8 o urre," the l#en aro$e 7! operat#on of la-% No ,#fferent out ome #$ ompelle, 7e au$e $e t#on <.><? pro:#,e$ that re:enue$ /ma% 7e ple,8e,%D Althou8h the ho# e -hether to 7orro- on a $e ure, 7a$#$ -a$ :oluntar!" the $tatute a ompl#$he, the ple,8e% 2n man,ator! D$hallD lan8ua8e" the $tatute #mpo$e$ the l#en% Th#$ #$ no ,#fferent from the man,ator! lan8ua8e reat#n8 other Cal#forn#a $tatutor! l#en$% See, e.'., Cal#forn#a Government Code GG <.>2' +D on$t#tute$ a f#r$t l#en an, har8eD/" <.>.= +D on$t#tute$ a f#r$t l#en an, har8eD/" <.>(= +D$hall 7e $e ure, 7! a l#enD/" <.><'%=? +Dare a f#r$t l#enD/% E:en thou8h the ho# e -hether to make $e ure, 7orro-#n8 #$ on$en$ual" the l#en #$ not% 2 The l#en aro$e" -#thout on$ent or ne8ot#at#on a$ to #t$ term$ or nature" upon the happen#n8 of the #r um$tan e $pe #f#e, #n the $tatute)) the ,e #$#on [**11] to make $e ure, 7orro-#n8 an, -hat to ple,8e% See 11 U%S%C% G 1=1+<./% 2 The u$e of the -or, Dma!D #n allo-#n8 a ho# e to 7orro- ,oe$ not make the $e t#on <.><? l#en on$en$ual" an! more than the u$e of the -or, Dma!D #n the $e t#on <.>(= $tatutor! l#en make$ #t on$en$ual% (Government Code G <.>(=6 D[A ount!] ma! 7orro- % % % D/% The $tatutor! nature of the l#en #$ not han8e, 7! the fa t there -a$ an a8reement 7et-een the part#e$% Fhether 7orro-#n8 #$ $e ure, 7! a $tatutor! l#en or a $e ur#t! a8reement" ,o umentat#on to refle t the part#e$@ meet#n8 of the m#n,$ -oul, 7e eApe te,% But here the creat!on o. the l!en #$ not ,epen,ent upon the a8reement% See 2 Coll!er, para% 1=1%<." at 1=1) 1<=)<1% The l#en aro$e automat# all!" -#th no ontra t pro:#$#on a$ a on,#t#on pre e,ent% 2f the Count! 7a, ma,e no referen e to 8rant#n8 a l#en #n #t$ &e$olut#on or later ,o umentat#on" the l#en -oul, 7e pre$ent 7! operat#on of $e t#on <.><?% . . Appellant$ are not part# ularl! $upporte, 7! the#r rel#an e on Bad'er 0o#nta!n Irr!'at!on D!str!ct Sec#red Bondholders1 Comm!ttee v. Bad'er 0o#nta!n Irr!'at!on D!str!ct (In re Bad'er 0o#nta!n Irr!'at!on D!str!ct , >>< 0%2, ?=? +'th C#r%/ reh1' den!ed +1'>2/" -h# h ,#, not #n:ol:e $e t#on <<2+a/ an, the Eue$t#on -hether a l#en -a$ a $e ur#t! #ntere$t or $tatutor! l#enI the N#nth C#r u#t merel! a8ree, -#th an un,#$pute, 7ankrupt ! ourt on lu$#on that the l#en -a$ a $tatutor! l#en% l!en. [**12] 2% &he $art!es1 transact!onal doc#ments do not !nval!date or re$lace the stat#tor%

The 7ankrupt ! ourt foun, the tran$a t#onal ,o ument$ 7et-een the part#e$" -hen taken to8ether" on$t#tute a $e ur#t! a8reement6 The ,o ument$ +the &e$olut#on" Contra t" an, T&AN$/" -hen :#e-e, to8ether" #n,# ate that the part#e$ #nten,e, to reate a l#en% The &e$olut#on ma! 7e :#e-e, a$ an offer to $ell the T&AN$" $e ure, 7! a f#r$t l#en an, har8e a8a#n$t erta#n

re:enue$% Th#$ offer -a$ then a epte, 7! 3a#neFe77er% Althou8h the Contra t ,oe$ not onta#n an! lan8ua8e $pe #f# all! reat#n8 a [*<=(] l#en" #t $pe #f# all! #n orporate$ the 8rant#n8 lan8ua8e onta#ne, #n the &e$olut#on%

2t #$ not ne e$$ar! for th#$ ourt to re:#e- -hether the part#e$@ ,o umentat#on amounte, to merel! a ontra tual a kno-le,8ment an, aff#rman e 7et-een them of the $tatutor! l#en reate, 7! $e t#on <.><?" or the reat#on of a $eparate $e ur#t! a8reement% E:en #f #t #$ a $eparate $e ur#t! a8reement" #t ,oe$ not #n:al#,ate or repla e the $e t#on <.><? $tatutor! l#en e$ta7l#$he, 7! la-% The po$$#7#l#t! of $#multaneou$ $eparate l#en$ ha$ 7een re o8n#Ce,6 Clo$e Eue$t#on$ of #nterpretat#on ar#$e" ho-e:er" [**1.] #n tho$e a$e$ #n -h# h a ontra t 8rant #$ pre$ent e:en thou8h #t #$ not a ne e$$ar! on,#t#on pre e,ent to the reat#on of a l#en [ #t#n8 11 U%S%C% G 1=1+<./]% 2n $u h a$e$" one po$$#7le on lu$#on #$ that t-o ,#$t#n t l#en$ eA#$t" one ontra tual an, one $tatutor!% % % %

Norton" Ban"r#$tc% )a, And -ract!ce 2, G <<61" at <<)< +1''(/% Fhether a $eparate $e ur#t! a8reement or not" the ,o umentat#on 7et-een the part#e$ ,oe$ not ,#$pla e the $tatutor! l#en% The $tatute ,oe$ not reEu#re" or e:en ontemplate" $eparate l#en lan8ua8e #n the part#e$@ ,o umentat#on a$ a on,#t#on pre e,ent to a l#en% .% &he sect!on 223(* /$roceeds/ e4ce$t!on ,o#ld not a$$l%. Appellant$ ar8ue that" e:en #f the#r l#en -ere a $e ur#t! #ntere$t or,#nar#l! ut off 7! $e t#on <<2+a/" the l#en -oul, $ur:#:e un,er the eA ept#on #n $e t#on <<2+7/% Th#$ ar8ument -a$ orre tl! reHe te, 7! the 7ankrupt ! ourt% Se t#on <<2+7/ pro:#,e$6 2f the ,e7tor an, an ent#t! entere, #nto a $e ur#t! a8reement 7efore the ommen ement of the a$e an, #f the $e ur#t! #ntere$t reate, 7! $u h $e ur#t! a8reement eAten,$ to propert! of the ,e7tor a Eu#re, 7efore the ommen ement of the a$e an, to [**1(] pro ee,$" pro,u t" off$pr#n8" or prof#t$ of $u h propert!" then $u h $e ur#t! #ntere$t eAten,$ to $u h pro ee,$" pro,u t" off$pr#n8" or prof#t$ a Eu#re, 7! the e$tate after the ommen ement of the a$e to the eAtent pro:#,e, 7! $u h $e ur#t! a8reement an, 7! appl# a7le non7ankrupt ! la-" eA ept to an! eAtent that the ourt" after not# e an, a hear#n8 an, 7a$e, on the eEu#t#e$ of the a$e" or,er$ other-#$e% The Count!@$ &e$olut#on #,ent#f#e, the a$$et$ to 7e ple,8e, a$6 The f#r$t B 1("==="=== of unre$tr# te, re:enue$ re e#:e, 7! the Count! #n Septem7er" 1''( [an, the f#r$t or :ar#ou$ amount$ of unre$tr# te, re:enue$ re e#:e, ea h month throu8h *une 1''<] % % % % The term Dunre$tr# te, re:enue$D $hall mean taAe$" #n ome" re:enue" a$h re e#pt$" an, other mone! of the Count! a$ pro:#,e, #n Se t#on <.><? of the 1a-" -h# h are #nten,e, a$ re e#pt$ for the 8eneral fun, of the Count! ,ur#n8 f#$ al !ear 1''()'< an, -h# h are 8enerall! a:a#la7le for the pa!ment of urrent eApen$e$ an, other o7l#8at#on$ of the Count!% The pr#n #pal of the Note$ an, the #ntere$t thereon $hall 7e pa!a7le from the 3le,8e, Mone!$ an, from all other #n ome" re:enue" a$h re e#pt$ an, mone!$ of the Count! [**1<] la-full! a:a#la7le for the pa!ment of the pr#n #pal of the Note$ an, the #ntere$t thereon%

Appellant$ a$$ert the lan8ua8e of the &e$olut#on ne e$$ar#l! #n lu,e, a $e ur#t! #ntere$t #n all r#8ht$ to unre$tr# te, 1''()'< taAe$" #n lu,#n8 propert! taAe$% S#n e f#$ al !ear 1''()'< propert! taAe$ a rue, on Mar h 1" 1''(" +#%e%" 7efore the 7ankrupt !/" Appellant$ ar8ue the Count! ha, a pre)7ankrupt ! pet#t#on propert! r#8ht to pa!ment of the$e taAe$% A or,#n8l!" Appellant$ a$$ert po$t)7ankrupt ! pet#t#on taA pa!ment$ on$t#tute Dpro ee,$D of the pre) pet#t#on propert! r#8ht -h# h #$ $u7He t to the l#en% The 7ankrupt ! ourt rule, $e t#on <<2+7/ ,#, not appl! 7e au$e ne#ther the &e$olut#on nor $e t#on <.><? make an! referen e to a $e ur#t! #ntere$t #n pre)pet#t#on propert!% Th#$ ourt a8ree$% Se t#on <<2+7/ onl! Dpro:#,e$ a narro, eA ept#on to the 8eneral rule of <<2+a/%D -h!l!$ 0orr!s Ca$!tal Cor$. v. Ber!n' &rader, Inc. (In re Ber!n' &rader, Inc. , '(( 0%2, <==" <=2 +'th C#r% 1''1/ +empha$#$ #n or#8#nal/% 2n or,er for the $e t#on <<2+7/ eA ept#on to appl!" the $e ur#t! #ntere$t mu$t eAten, to Dprepet#t#on propert! of [*<=<] the ,e7tor and to pro ee,$" pro,u t" off$pr#n8" rent$ [**1?] or prof#t$ of $u h propert!%D Id. at <=1 +empha$#$ #n or#8#nal/% 2n the pre$ent a$e" Appellant$ ha:e not ,emon$trate, the! ha:e an #ntere$t #n the Count!@$ pre)7ankrupt ! pet#t#on r#8ht to olle t taAe$% The l#en onl! 8a:e Appellant$ an #ntere$t #n taAe$ olle te," not #n the r#8ht to olle t taAe$% See Kle!n.eld v. (.D.I.C. (In re (ro!d , 1=' Bankr% (>1 +Bankr% M%D% 0la% 1'>'/% Appellant$ ha:e not $ho-n $e t#on <<2+7/ -oul, appl! #f the#r #ntere$t -ere a $e ur#t! #ntere$t rather than a $tatutor! l#en% 222% DIS-OSI&ION The ourt on lu,e$ the l#en $e ur#n8 the $u7He t 1''()'< TaA an, &e:enue Ant# #pat#on Note$ #$ a $tatutor! l#en -h# h $ur:#:e, f#l#n8 of the Count!@$ Chapter ' pet#t#on% Ko-e:er" th#$ ,oe$ not reEu#re 8rant#n8 Appellant$@ mot#on for rel#ef from the automat# $ta! to pur$ue rel#ef #n $tate ourt% The 7ankrupt ! ourt foun," an, the Count! ha$ a8ree," that the 7ankrupt ! ourt ma! or,er a,eEuate prote t#on of Appellant$@ #ntere$t% At oral ar8ument" the part#e$ a8ree, the 7ankrupt ! ourt oul, perform that fun t#on% A or,#n8l!" the matter #$ reman,e, to the 7ankrupt ! a,eEuate prote t#on of the#r #ntere$t$% DATED6 [**17] *ul! 12" 1''< 4A&; 1% TA;1O& UN2TED STATES D2ST&2CT *UD4E ourt to pro:#,e Appellant$ -#th

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