in the united states district court for the middle ... · counsel for bsf participated in the...

05279029.1

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA

MACON DIVISION

VC MACON GA, LLC

Plaintiff,

v.

VIRGINIA COLLEGE, LLC; and EDUCATION CORPORATION OF AMERICA,

Defendants.

)))))))))))

Civil Action No. 5:18-cv-00388-TES

RECEIVER’S EXPEDITED MOTION FOR SANCTIONS; ENTRY OF AN INJUNCTION AND RELATED RELIEF

COMES NOW, John F. Kennedy, solely in his capacity as receiver (the “Receiver”) for

the receivership estate (the “Receivership Estate”) of Education Corporation of America (“ECA”),

Virginia College, LLC (“VC”), and New England School of Business and Finance (“NECB”,

together with ECA and VC, the “Receivership Entities”) in the above-captioned civil action (the

“Receivership Proceeding”), by and through undersigned counsel, and hereby files this motion

(this “Motion”) seeking an order from this Court, pursuant to its broad inherent powers,

sanctioning the Petitioning Creditors (defined below), and further enjoining them against taking

any action that could result in the further interference with, or detriment to, the Receivership Estate,

and for related relief. In support of this Motion, the Receiver states as follows:

INTRODUCTION

Sixteen months ago, this Court appointed the Receiver to oversee the administration and,

ultimately, the liquidation of ECA and the two other Receivership Entities, both of which are

ECA’s subsidiaries. Over the course of these sixteen months, under this Court’s supervision, the

Receiver has liquidated substantially all of the Receivership Entities’ assets, including the sale of

Case 5:18-cv-00388-TES Document 330 Filed 02/24/20 of 37

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NECB, the sale of certain real property located in Semmes, Alabama, and virtually all accounts

receivables of the Receivership Entities. The Receiver has also substantially administered the

Receivership Estate, a process that included rejecting all campus leases and virtually all executory

contracts, winding down operations of the Receivership Entities’ operations, closing schools in

cooperation with various state and federal agencies, and establishing a Court-approved nationwide

claims process under which the Receiver currently is administering nearly 2,000 claims. In short,

the bulk of the administration and wind down of the Receivership Estate, performed in accordance

with the Receivership Order and other orders of this Court, is complete, and the Receivership

Estate has been substantially administered. What remains is to complete the claims administration

process, liquidate the Receivership Estate’s claims and causes of action, complete the required

reporting to the United States Department of Education (“ED”), terminate the 401(k) pension plans

of the Receivership Entities, distribute funds to creditors, and file a final report with this Court.

The single most active participating creditor1 in the Receivership Proceedings has been

Monroe Capital Management Advisors, LLC, as administrative and collateral agent under the Loan

Facility (as defined below) (the “Monroe Agent”), together with its affiliated lenders under the

Loan Facility (the “Monroe Lenders”), its affiliated creditors with claims as Series G Preferred

Stockholders (the “Monroe Stockholders”), and Monroe Capital Private Credit Fund II LP

1 This statement is not intended to discount BSF’s substantial involvement in these Receivership Proceedings. BSF has also materially participated in these proceedings by appearing through counsel at several hearings and joining in objections filed by another landlord, Southern Plaza, LLC, to the motion to appoint the Receiver, the entry of the Receivership Order, and a motion to vacate or alternatively modify the Receivership Order. (See Docs. 21, 49, 50, 52, 87.) BSF, Southern Plaza, LLC and various other landlords are represented in the Receivership Proceedings by the same attorney at took identical positions. On December 13, 2018, after a hearing and discussion on the various motions and objections to the Receivership Order, this Court entered its Supplemental Order, mooting the objections to the Receivership Order by causing the Receiver to reject all leases and surrender all leased premises to the landlords, including BSF. (See Doc. 104.) Counsel for BSF participated in the drafting of the Supplemental Order and BSF’s joinder was withdrawn or rendered moot. BSF has not materially participated in this case since approximately December 2018, other than filing its proof of claim.


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(“Monroe II” and, collectively with the Monroe Agent, the Monroe Lenders, and the Monroe

Stockholders, “Monroe”). For all intents and purposes, Monroe has acted without distinction as to

the various capacities in which it allegedly serves – it is apparent that there is no distinction

between the affiliated Monroe Agent, Monroe Lenders and Monroe Stockholders, despite clear

conflicts of interest arising from these separate roles. Monroe’s actions in the Receivership

Proceedings include: (i) filing proofs of claims on behalf of the Monroe Lenders, including Monroe

II, in its capacity as Monroe Agent; (ii) filing proofs of claims on behalf of the Monroe

Stockholders, including Monroe II, based on their purported claims as preferred equity owners;

(iii) liquidating the physical assets left behind at the Receivership Estate’s closed campuses for the

sole benefit of Monroe; (iv) filing insurance claims, and, upon information and belief, collecting

proceeds, for the theft and damage to their collateral for the benefit of Monroe; (v) purchasing

NECB; (vi) participating in the Loan Facility that extended credit both prior to and after the entry

of the Receivership Order for the purpose of funding the Receivership, primarily for its own

benefit; and (vii) most recently, attempting to use its position as agent for the Loan Facility to

prevent the Receiver from opposing the Involuntary Petition (as defined below) filed by its

affiliate, Monroe II. (See Doc. 322, ¶ 4)

Not once has Monroe lodged any objection to the Receiver’s administration of the

Receivership Estate or protested any action taken by the Receiver. The same thing goes for the

other Petitioning Creditors, but to a slightly lesser extent with respect to BSF (as defined below).2

So why, at the eleventh hour, did the Petitioning Creditors, and particularly Monroe, attempt to

terminate these Receivership Proceedings by circumventing this Court’s jurisdiction and assert

2 To be clear, BSF did raise objections and participate in several challenges early in the Receivership Proceedings, but all were withdrawn or rendered moot because BSF got the relief that it requested. (See fn. 1, supra.) Both BSF and Monroe provided comments to the Supplemental Order that the Court ordered, granting them their requested relief. (See Doc. 104.)


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control of ECA through a bogus Chapter 11 involuntary filing in Delaware? It was pure self-

interest. In late 2019, the Receiver rejected an offer from Monroe to finance the prosecution of

certain claims and causes of action of the Receivership Estate, including D&O claims (collectively,

the “Potential Claims”) because the Receiver, pursuant to his business judgment, concluded that

Monroe’s demands and conditions for the proposed financing were not in the best interests of the

Receivership Estate’s creditors. Monroe wanted to exclude, or substantially preclude, all other

creditors from any meaningful recovery of ECA’s Potential Claims . Instead of coming to this

Court, as provided in the Receivership Order and pursuant to this Court’s jurisdiction over the

Potential Claims and any allegations regarding the Receiver’s conduct, Monroe’s response was to

take the “nuclear option” and throw ECA into an involuntary bankruptcy and seek the appointment

of a Chapter 11 trustee that it would finance, asserting that the Receiver has mismanaged this

Receivership from day one, that this Court exercised poor judgment in selecting Mr. Kennedy as

Receiver and that this Court has not been an effective forum.

To comply with his fiduciary role, the Receiver had no choice but to defend the involuntary

chapter 11 petition (the “Involuntary Petition”) filed against ECA. Failure to do so would have

potentially allowed Monroe to unjustly seize control of the Receivership Estate’s largest remaining

assets to the exclusion of other creditors and duplicate the results already achieved in these

Receivership Proceedings. Furthermore, Monroe took the aggressive, unsubstantiated and highly

inequitable position that the Receiver could not use any of the Receivership Estate’s assets to

defend the Involuntary Bankruptcy – effectively attempting to engineer the entry of an order

granting the Involuntary Petition by default. See id. This Court approved the Receiver’s defense

of the Involuntary Petition and summarily dismissed the Monroe’s underhanded abuse of its

purported lien on the Receivership Estate’s assets to advance the interests of its affiliate, Monroe


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II. (See Doc. 323) The United States Bankruptcy Court for the District of Delaware (the

“Bankruptcy Court”) agreed with the Receiver’s defense of the Involuntary Petition and promptly

abstained from and dismissed the Involuntary Petition. (See Bankr. Doc. 52) The Bankruptcy Court

dismissed the action on the Receiver’s Motion to Abstain or Dismiss before hearing any other

motion filed with the Bankruptcy Court, except the Petitioning Creditors’ own motion to

voluntarily dismiss the Involuntary Petition. Recognizing their certain doom in Delaware, the

Petitioning Creditors separately filed their own voluntary Motion to Dismiss Involuntary Chapter

11 Petition (See Bankr. Doc. 34) and further took the position at the hearing on the parties’ motions

to dismiss and in Certifications of Counsel file with the Bankruptcy Court that the Receiver and

this Court does not have, or should not have, any right to address their actions in this

Receivership after dismissal – a position that the Bankruptcy Court correctly rejected outright.

(See generally Ex’s. E-F.)

The damage done to the Receivership Estate as a result of the wasteful Involuntary Petition

is significant. On the Petition Date, the Receivership Estate had sufficient cash on hand and a

workable cash budget that would have allowed the Receivership Estate to wind down in an orderly

and efficient manner, including the completion of a claims report and the Receiver’s further pursuit

and resolution of the Potential Claims. Unfortunately, the Receivership Estate was forced to

expend substantial expenses defending what the Bankruptcy Court and the Petitioning Creditors

themselves determined to be an “unwise” exercise. (See Bankr. Docs. 27, 34) As a result of the

Involuntary Petition, the Receivership Estate’s funds that could otherwise have been used to

complete the remaining wind down of this Receivership have been substantially depleted, the

automatic stay and other restrictions under the Bankruptcy Code have prevented the Receiver’s

disbursement of funds, potentially exposing the Receivership Estate to further claims, and the


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Receiver’s negotiations and discussions with the insurer regarding the Potential Claims have been

disrupted and delayed. The Involuntary Petition ultimately has substantially impaired and

interfered with the Receiver’s administration of the Receivership Estate. The Petitioning Creditors,

and Monroe in particular, should be immediately forced to compensate the Receivership Estate so

that it is in at least as good of a position as it was in prior to the inappropriate involuntary

bankruptcy filing, as well as compensate the Receivership Estate for attorneys’ fees, expenses and

costs incurred in filing and prosecuting this Motion. Further, the Petitioning Creditors, and Monroe

in particular, should be enjoined from taking any additional harmful actions against the

Receivership Estate to ensure this type of continued interference with the prompt administration

of the Receivership Estate does not occur again.

BACKGROUND

The Receivership Proceedings

1. ECA, a Delaware corporation, is the parent company of VC, an Alabama limited

liability company and NECB, a Massachusetts limited liability company. As this Court is aware,

ECA faced significant challenges in the months prior to the institution of the Receiver over the

Receivership Estate, including ECA’s potential inability to receive financing from the federal

government, ECA’s accreditation, federal regulations, pressure from multiple landlords, and a

variety of other issues. The Receivership Entities’ options were very limited, as a traditional

bankruptcy filing was not an option because federal regulations provide that institutions in

bankruptcy (either voluntary, or in this case, upon the entry of an order for relief in an involuntary

bankruptcy) are not eligible for any federal student aid. 20 U.S.C. § 1002 (a)(4)(A).

2. Given the limited options available, the Receivership Entities sought the

protections provided by a federal receiver in this Court in November of 2018 to seek the


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restructuring of their operations and debts and obtain a “breathing spell” pursuant to a federal

court’s injunction.

3. On November 14, 2018, this Court entered its Order Appointing Receiver and

Preliminary Injunction (Doc. 26)3 (the “Receivership Order”), appointing the Receiver over the

Receivership Estate.

4. Since its inception, Monroe has been the most active participant in this

Receivership Proceeding—other than the Receiver—and its primary beneficiaries, the Monroe

Lenders. On December 13, 2018, this Court entered an order (the “Financing Order”) authorizing

the Receiver to obtain $7 million in additional financing (the “Loan Facility”) where Monroe was

the agent for the lenders, including the Monroe Lenders, under the Loan Facility to enable the

Receivership Entities to complete the teach out of several of its campuses, to pay its remaining

employees, to otherwise fund the Receivership Estate, to fund the sale of NECB as a going concern

and to fund the premium for the $80 Million insurance policy that covers the Potential Claims.

(See Doc. 101.)4 To secure the Receivers’ obligations under the Loan Facility, based on the good

faith agreements and representations of Monroe, the Financing Order granted a lien on all of the

Receivership Estate’s present and future property, including, without limitation, all present and

future accounts, general intangibles, documents, contract rights, instruments, chattel paper,

inventory, equipment, deposit accounts, investment property, and all products and proceeds thereof

and all accessions thereto (collectively, the “Collateral”). (Id. at p. 7, ¶ 5.) Subsequently, when the

Receiver was unable to achieve a successful reorganization of the Receivership Entities, Monroe

3 References to documents filed in this Receivership Proceeding are cited as (Doc. __). References to documents filed with the Bankruptcy Court are cited as (Bankr. Doc. __).

4 For greater detail regarding the Loan Facility and its history, see Receiver’s Assented to Motion for Authority to Borrow Funds and the Financing Order. (Docs. 101, 105.)


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acquired, via credit bid, substantially all of the assets of the only remaining Receivership Entity

with a going-concern value, NECB, pursuant to this Court’s April 11, 2019 order. (See Doc. 198.)

5. As reflected in multiple reports filed by the Receiver in the Receivership

Proceeding, substantially all of the assets of the Receivership Estate have been liquidated.

Following the sale of NECB’s assets to Monroe, the Receiver successfully confirmed the sale of

certain accounts receivable of ECA on September 17, 2019. (See Doc. 268.) On October 29, 2019,

this Court confirmed the Receiver’s sale of a parcel of real property in Semmes, Alabama. (See

Doc. 288, p. 3.) ECA and the other Receivership Entities are now (and have been for some time)

non-operating entities. The Receiver currently is working to finalize reporting requirements with

ED. The Receiver has been in constant communication with ED concerning the reporting

requirements and further regulatory issues pertaining to the Receivership. Such communications

have included periodic conference calls, as well as the submission of the Receiver’s monthly

Receiver’s reports to ED officials. The Receiver has also been in constant communication with

numerous state regulatory bodies, including several state attorneys general, concerning student

records and other documents. Concerning pensions and 401(k) plans of the Receivership Entities,

the Receiver has cooperated with and communicated with the Pension Benefit Guaranty

Corporation (“PBGC”), a federally chartered corporation, concerning the PBGC’s takeover and

termination of NECB’s pension. The Receiver has developed a good working relationship with

ED, regulators and the PBGC, which have been impacted by the useless involuntary bankruptcy

filing. Furthermore, the Receiver was working to terminate the ECA 401(k) plan prior to the filing

of the Involuntary Petition, which this Court authorized and approved in a recent order. (See Doc.

312.)


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6. The Receiver is also conducting a claims administration process. On March 6, 2019,

this Court entered its Order Approving Claims Procedures (Doc. 175) (the “Claims Procedures

Order”), which ordered that all claimants holding or wishing to assert any claim, cause of action,

or other right against the Receiver or Receivership Estate must file their claims pursuant to the

Claims Procedures Order. (See Doc. 175 at pp. 1-2.) Additionally, with the exception of certain

excluded entities (that do not include the Petitioning Creditors), the Claims Procedures Order

enjoined all claimants from pursuing or otherwise asserting claims against the Receiver or

Receivership Estate other than through the Court’s claims process. (See Doc. 175 at p. 2.) None

of the Petitioning Creditors objected to the Receiver’s motion to establish the claims process or

objected to the Claims Procedures Order. In fact, the Petitioning Creditors have all filed proofs of

claim pursuant to the Claims Procedures Order and have fully participated in this Receivership

and submitted to this Court’s jurisdiction.5

7. The Receiver hired Omni Management Group to assist with claims administration.

Among other things, Omni hosts a webpage on its website with claims information. In accordance

with the Claims Procedures Order, the Receiver served notice of the claims procedure on students,

creditors and other stakeholders. The latest bar date expired on May 23, 2019, and to date the

Receiver has received approximately 2,000 proofs of claim. The total proof of claim amount is

$512,623,639.68. The Receiver is currently in the process of reconciling the submitted proof of

claims to form a claims report for this Court.

8. Effectively, only six primary tasks, which have been, and continue to be, ongoing,

remain to complete the wind down and closure of the Receivership proceedings: 1) liquidating the

5 See Claims 48, 61 717, 718 which can be located on Omni’s website at: https://cases.omniagentsolutions.com/claimdocket?clientid=CsgAAncz%2b6ZIjznx4bOsj5kvekSk%2bUUGapaxwc1JrMCLO2ISvvyb8VNk%2b6hYmHXhiA1sDsKjkCk%3d


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Potential Claims; 2) administering the 2,000 claims filed pursuant to the Claims Procedures; 3)

distributing proceeds of the Receivership Estate’s assets to the creditors in accordance with the

Claims Procedures; 4) filing a final report and requesting an order from the Court closing the

Receivership Proceedings; 5) the completion of the required reporting to the ED; and 6) the final

termination of the 401(k) pension plans of the Receivership Entities.

Monroe’s Offer to Fund the Potential Claims

9. In the Spring of 2019, Monroe approached the Receiver in connection with the

Receiver’s investigation of claims and causes of action of the Receivership Estate (the “Potential

Claims”), requesting to become substantially involved with the investigation and prosecution of

the Potential Claims.

10. Purportedly understanding the limited funds available to the Receivership,

Monroe offered financial assistance to the Receiver to permit the Receiver to continue to

investigate and prosecute the Potential Claims. As consideration for their financial assistance,

Monroe sought a deal with the Receiver that would provide Monroe with a significant recovery

from the proceeds of the Potential Claims. The Receiver evaluated Monroe’s series of terms to

determine if Monroe’s offer was in the best interest of the entire Receivership Estate. Numerous

counteroffers regarding a potential recovery split were offered by both Monroe and the

Receiver. Fierce negotiations regarding a potential deal for Monroe’s financial assistance

ensued for months – to the point that Monroe’s relentless pursuit and aggressive threats and

demands began interfering with the Receiver’s efforts to pursue the Potential Claims and caused

the Receivership Estate to continue expending resources to deal with Monroe and delaying the

Receiver’s own pursuit of the Potential Claims – which are the exclusively the property of the

Receivership Estate. Monroe’s frustration with the Receiver’s vigorous negotiations, as the


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Receiver fought to achieve terms that would be in the best interest of the Receivership Estate,

was evident. As recently as August of 2019, Monroe had threated to file an involuntary

bankruptcy if the Receiver did not accept the terms of Monroe’s most recent proposal. By mid-

November 2019, after several months of negotiating with Monroe, the Receiver continued to

reject the terms of Monroe’s proposals as the Receiver. Additionally, recent other developments

provided the Receiver a potential avenue to pursue the prosecution of the Potential Claims

without substantially burdening the Receivership Estate’s limited funds or needing to rely on

Monroe’s offer of financial assistance and Monroe’s terms associated therewith.

11. In mid-November of 2019, as Monroe and the Receiver were continuing to

negotiate, the insurer covering the Potential Claims contacted the Receiver concerning the

Receiver’s investigation into the Potential Claims. The insurer inquired whether the Receiver

was interested in cooperatively discussing a potential mediation regarding any of the covered

Potential Claims. The Receiver informed the insurer that the Receiver was interested in a further

discussion with the insurer concerning a potential mediation of the Potential Claims, if the

insurer’s offer to mediate was sincere, and if the potential mediation could be set and conducted

in the first quarter of 2020. The insurer stated that they were sincere in their offer to discuss

mediation, and that they appreciated the time-sensitivity of the Receiver’s request to mediate.

Following this discussion with the insurer, the Receiver informed Monroe of the recent

developments and the possibility of a mediation of the Potential Claims with the insurer. The

Receiver had determined, in his business judgment, a non-binding mediation with the Insurer

was in the best interests of the entire Receivership Estate and that participating in a mediation

could potentially bring the highest possible recovery for the entire Receivership Estate. As no

deal with Monroe had been executed, the Receiver informed Monroe that the Receiver would


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be pursuing the mediation with the insurer solely. This was the event that triggered the

Petitioning Creditors filing the Involuntary Petition, as clearly reflected in the Chapter 11

Trustee Motion. (See Bankr. Doc. 26, pp. 4-5.)

12. During the month between the Receiver’s initial communication with the insurer

and the Petition Date, Monroe continuously informed the Receiver of its displeasure that the

Receiver was going to pursue the mediation without Monroe’s assistance. Monroe’s continued

interference with the Receiver’s exercise of his powers and duties to prosecute and liquidate the

exclusive assets of the Receivership Estate, in which Monroe has no direct interest, pursuant to

the Receivership Order and the exercise of his duties has been unwarranted and culminated in

the inexplicable filing of the Involuntary Petition –the greatest possible means of interference

with the Receivership and this Court’s exclusive jurisdiction over these Receivership

Proceedings.

The Involuntary Petition

13. On the Petition Date, the Involuntary Petition was filed in the Bankruptcy Court.

The petitioning creditors filing the Involuntary Petition were Monroe II, Reputation Partners LLC

(“RP LLC”), and BSF Richmond, LP (“BSF”, together with Monroe II and RP LLC, the

“Petitioning Creditors”). Monroe (together with the Monroe Lenders, including Monroe II) is one

of the senior secured lenders to the Receivership Entities under the Loan Facility and has been

very actively involved in the Receivership Proceeding, including, without limitation, ultimately

acquiring NECB by credit bidding its secured debt. (See Doc. 198.) Additionally, Monroe is the

holder of certain Class G preferred stock in ECA. BSF is a former landlord of one of the

Receivership Entities’ campuses, and RP LLC is a trade vendor.


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14. Monroe has materially participated in the Receivership Proceeding and has done so

more than any other creditor. As stated, on October 15, 2018, Monroe, as a party to the Monroe

Credit Agreement, provided a mechanism for a $12 million tranche of funding to be advanced to

ECA upon ECA’s successfully obtaining an order appointing a receiver over ECA, ultimately

providing Monroe with the ability to acquire certain profitable schools via a credit bid under the

restructuring Plan, as evidenced by its acquisition of NECB. (See Doc. 10, p. 6.) Pursuant to the

Receivership Order, throughout the course of the Receivership, the Receiver has consistently made

himself, and his counsel, available to Monroe for periodic updates about the progress and status of

the Receivership.6 Following ECA’s closure and the implementation of the necessary closure of

substantially all of the Receivership Estate’s campuses in December of 2018, this Court modified

its injunction under the Receivership Order, permitting Monroe to “take possession of, sell, or

otherwise liquidate the personal property subject to the lien under the Monroe Credit Agreement

(the “Remaining Personalty”) without being in violation of the injunction of the Receiver Order or

this Order [. . . .].” (See Doc. 104, p. 3.) It is the Receiver’s understanding that Monroe is

continuing to liquidate the Remaining Personalty to this day. The Receiver has no current

accounting of Monroe’s actual debt as the Monroe Lenders or as agent for the other lenders under

the Loan Facility—affiliates of Willis Stein, which funded the post-receivership $7 million tranche

under the Loan Facility in December 2018 . As discussed further below, Monroe has filed a proof

of claim pursuant to the claims procedures approved in this Court, and to the best of the Receiver’s

belief, Monroe has been represented by counsel at every hearing held before this Court concerning

the Receivership and has provided input on many proposed orders submitted to the Court.

6 The Receivership Order states the Receiver shall have the full power and authority to “interface with secured creditors of ECA, including, without limitation, periodic updates to Monroe about the progress and status of the Receivership, the sale effort, and other material matters, and provide all non-privileged information provided to any investment banker, financial advisor or other financial advisory retained by the Receiver.” (See Doc. 26, p, 7, ¶ 16.)


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15. The Petitioning Creditors filed the Involuntary Petition—against ECA only—more

than fourteen months after the entry of the Receivership Order and the substantial administration

of the Receivership Estate. Moreover, the Involuntary Petition was filed to commence a chapter

11 proceeding, despite the fact that the Petitioning Creditors, and Monroe in particular, are well

aware that there was no business to reorganize, as all but one school in the Receivership closed

early during the Receivership Proceeding after ECA lost its accreditation.

16. The timing of the Involuntary Petition and facially bad-faith choice to file under

Chapter 11 speaks volumes, as it shows that the decision to file the Involuntary Petition was

directly linked to the Receiver’s rejection of Monroe’s onerous terms for providing financial

assistance to prosecute the Potential Claims (as explained below) and ultimately exert control

of those claims, elevating its recovery substantially above the recovery to other creditors. The

timing of the filing of the Involuntary Petition can only be construed as an attempt led by

Monroe to disrupt the Receiver’s control of these claims and causes of action.

17. During the short time in which the Involuntary Petition was pending before the

Bankruptcy Court, the Petitioning Creditors took several aggressive actions reflective of their

intent to immediately disrupt the Receiver’s control over the Receivership Estate. For example,

on February 4, 2020, the Petitioning Creditors filed their Motion of Petitioning Creditors for

Appointment of a Chapter 11 Trustee, a true and correct copy of which is attached hereto as

Exhibit “A” (the “Chapter 11 Trustee Motion”). The Chapter 11 Trustee Motion sought the

appointment of a third-party chapter 11 trustee to control and administer the Receivership

Estate, despite the fact that the Receiver had already been appointed by this Court to serve such

a role and had already done the overwhelming majority of the work that a Chapter 11 trustee

would have performed. Monroe indicated it willingness to provide postpetition financing to the


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trustee, thereby lifting its priority and amount of recovery from the insurance proceeds In the

Receiver’s Motion for Abstention From Involuntary Petition Under 11 U.S.C. § 305, or

Alternatively Dismissal Under 11 U.S.C. §§ 303 & 1112(B) (the “Motion to Abstain or

Dismiss”)7, the Receiver specifically anticipated this strategy. A true and correct copy of the

Motion to Abstain or Dismiss is attached hereto as Exhibit “B”.

18. In its Chapter 11 Trustee Motion, the statements made by the Petitioning Creditors

are shocking, asserting both that the Receiver and this Court have exercised poor judgment and

breached their duties and powers, and as a result, after participating in these Receivership

Proceedings for over a year, determined that it has been an abject failure and was doomed from

the start.

7 The Bankruptcy Code permits a bankruptcy court to abstain and dismiss or suspend a bankruptcy case if “the interests of creditors and the debtor would be better served by such dismissal or suspension” 11 U.S.C. § 305(a)(1). Generally, abstention is a federal principle that provides a federal court with the discretion to decline to hear a case on a number of grounds. In the bankruptcy context, the bankruptcy court has the discretion to abstain from and dismiss a bankruptcy case if the interests of the creditors and debtor would be better served other than in bankruptcy. See id. Courts have often abstained where they found that a receivership or other non-bankruptcy court restructuring was well underway. See In re Michael S. Starbuck, Inc., 14 B.R. 134 (Bankr. S.D.N.Y. 1981)(“Allowing this matter to continue as a debtor proceeding under the Bankruptcy Code would result in a terrible waste of time and resources. Many services, already rendered in the administration of the receivership estate, would have to be repeated at additional expense to the estate. No advantage would accrue to the creditors if this matter were to proceed in the bankruptcy court. Rather, their best interests will be served by the continued administration of the equity receivership.”); see also In re Skymark Properties II, LLC, 597 B.R. 391, 398 (Bankr. E.D. Mich. 2019) (quoting 2 Collier on Bankruptcy ¶ 305.02[2][c]) (“[W]hen the debtor has been in receivership for so long that the bankruptcy case would be duplicative and wasteful, courts have deferred to [receivership] courts and abstained under section 305(a)(1).”); In re Starlite Houseboats, Inc., 426 B.R. 375, 389 (Bankr. D. Kan. 2010) (dismissing the bankruptcy case under § 305(a)(1) where a “state court receivership had been pending for approximately eight months when [the bankruptcy] case was filed,” and the court finding that “the interests of creditors and the [d]ebtor would be served by dismissal of the case” because “continuation of the state court receivership proceeding, which [was] well underway, [was] preferable to starting anew in [the bankruptcy] court”); In re Sun World Broadcasters, Inc., 5 B.R. 719, 721 (Bankr. M.D. Fla. 1980) (granting receiver’s request for abstention because it best served the interests of the creditors and the debtor). Emphasizing the importance of a bankruptcy court’s deferential abstention Congress curtailed any right to appeal a dismissal based on abstention. Section 305(c) provides “An order under subsection (a) of this section dismissing a case or suspending all proceedings in a case, or a decision not so to dismiss or suspend, is not reviewable by appeal or otherwise by the court of appeals under section 158(d), 1291, or 1292 of title 28 or by the Supreme Court of the United States under section 1254 of title 28.” 11 U.S.C. § 305(c).


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19. The Petitioning Creditors assert in the very first paragraphs of their Chapter 11

Trustee Motion that this Court, by choosing the Receiver over the candidate proposed by ECA

(and Monroe) exercised poor judgment:

When a receivership for ECA became an immediate and urgent necessity to save ECA, ECA, in consultation with Monroe, took pains to identify qualified restructuring professionals with experience in the education industry and working with [ED]. ECA agreed on those candidates. On November 6, 2018, ECA commenced the Receivership (defined below) and requested that one of the agreed upon receiver candidates be appointed. Instead, the District Court (as defined below) presiding over the Receivership disregarded ECA’s proposed candidates and appointed the Receiver, a local politician without any experience with for-profit education companies. The Receiver was appointed without any input from ECA or its creditors.

. . . .

What has followed in the Receivership has been unfortunately predictable.

(Bankr. Doc. 26, pp. 1-2) (emphasis added).

20. As this Court is well aware, the Petitioning Creditors’ representations are blatantly

false. This Court had no obligation to accept the proposed receivership candidate and certainly did

not force any entity to accept Mr. Kennedy as Receiver. Prior to Mr. Kennedy’s appointment, the

Court encouraged the parties to meet with Mr. Kennedy in person and determine if they could

successfully work together. Thus, the Court and all parties are aware that the appointment of Mr.

Kennedy as Receiver came only after ECA and Monroe’s counsel met with, interviewed and

agreed to his appointment as Receiver.

21. The foregoing statements and additional allegations detailed below are not only

false and disparaging, but simply insulting. The Receiver worked patiently and diligently to assist

Monroe when it obtained relief from this Court. Monroe alleges waste of its collateral by failing

to protect Personalty located at the closed campuses – the Receiver and his team have worked


05279029.1 17

diligently with Monroe and approximately 75 landlords to assist Monroe with obtaining and

liquidating its collateral – which was Monroe’s sole responsibility to secure its collateral after this

Court permitted it to do so under the Court’s Supplemental Order. (See Doc. 104.) Furthermore,

the Receiver has spent a significant amount of time, attention and expense, and has gone to great

lengths, to assist with the orderly transfer of NECB to Monroe both before and after the NECB

sale closed. These are only a few examples where the Receiver and his professionals have fulfilled

their duties to the Court and Receivership Estate by assisting Monroe in good faith – only now to

be disparaged for doing so.

22. The Petitioning Creditors’ diatribe goes further and ultimately culminates in the

sole stated intention for the Involuntary Petition – obtaining seizure and control over the Potential

Claims that the Receiver refused to let them do pursuant to his fiduciary duties to all creditors:

The Receiver has been an abject failure who, rather than serve as a fiduciary to creditors, has through lack of experience, oversight, deliberate inaction and incompetence presided over the loss of millions of dollars in value that could have been obtained for ECA’s creditors. But now that the Receivership is near an end, after all of ECA’s hard assets have been liquidated, the Petitioning Creditors were forced to act to protect their interests before the Receiver could jeopardize recovery on ECA’s single largest asset—valuable litigation claims against ECA’s officers and directors (the “D&O Claims). As set forth herein, the Receiver has inexplicably delayed pursuing the D&O Claims and has instead chosen to align himself with the target of such claims, and their insurers, rather than the very creditors to which he owes fiduciary duties. Put simply, enough is enough.

. . . .

The Petitioning Creditors have commenced this chapter 11 case so that a proper estate fiduciary can be appointed to ensure proper liquidation of ECA’s most significant remaining asset.

(Bankr. Doc. 26, pp. 2-3) (emphasis added).


05279029.1 18

23. Not only do the Petitioning Creditors, and Monroe in particular, make

misrepresentations in their Chapter 11 Trustee Motion, they make their intent in doing so explicit

– to seize control of the Potential Claims.

24. Interestingly, despite all the ways in which the Petitioning Creditors, and Monroe

in particular, have participated and benefitted from these Receivership Proceedings, the chief

objection they raise is the Receiver’s delay in liquidating the Potential Claims. However, this

purported delay was actually caused by Monroe’s continued, aggressive interference with the

Receiver’s attempts to investigate and liquidate those very claims, culminating in the filing of the

Involuntary Petition once Monroe learned that the Receiver was in discussions with the insurer –

completely stalling the Receiver’s ability to obtain any recovery for the Receivership Estate.

25. Before the Bankruptcy Court would rule on the Chapter 11 Trustee Motion, the

Court set the Motion to Abstain or Dismiss on the basis of abstention and issued a letter

questioning the “wisdom” of the Involuntary Petition, informally making reference in a footnote

to Section 303(i) of the Bankruptcy Code, which provides for the recovery of attorney’s fees

and compensatory and punitive damages from involuntary bankruptcy petitioners. (See Bankr.

Doc. 27) Seeing the writing on the wall, the Petitioning Creditors, via email to the Bankruptcy

Court’s chambers, withdrew the Chapter 11 Trustee Motion on an expedited basis (the

“Voluntary Dismissal Email”). A true and correct copy of the Voluntary Dismissal Email is

attached hereto as Exhibit “C”. The Motion to Abstain or Dismiss and the Voluntary Dismissal

were set for the same hearing.

26. In an attempt to consensually resolve the terms of the proposed order dismissing

the Bankruptcy Case, the Receiver proposed a form of order that contained a provision that

stated that the dismissal of the Bankruptcy Case would not impair any of the Receiver’s rights


05279029.1 19

and remedies in the Receivership Proceedings resulting from the Involuntary Petition and deny

this Court jurisdiction over the Petitioning Creditors to address their actions – a continuing,

blatant attempt to deprive this Court of its jurisdiction and inherent powers. (See generally Ex.

E)

27. On February 24, 2020, the Bankruptcy Court entered its Order Dismissing Case

(the “Dismissal Order”), attached hereto as Exhibit “D”, pursuant to which the Bankruptcy

Court chose to abstain from exercising its jurisdiction over the Receivership Estate and

dismissed the Involuntary Petition, notably, determining, over the Petitioning Creditors’

objection, this Court’s retained jurisdiction over ECA and the Receivership Estate and that the

Dismissal Order did not impact or impair the Receiver’s rights in the Receivership or this

Court’s inherent ability to exercise its powers. (See Bankr. Doc. 52)

ARGUMENT

The Petitioning Creditors recent actions, including their petition to force ECA into chapter

11 bankruptcy, have significantly interfered with this Court’s administration of the Receivership

Proceedings, and drained what little is left of the Receivership Estate. In order to make the

Petitioning Creditors, and Monroe in particular, think twice about engaging in this type of reckless

behavior again, the Court should exercise its inherent power under the Constitution and sanction

the Petitioning Creditors by requiring that it pay the Receiver’s attorney’s fees incurred to defend

against Monroe’s actions and to prepare the instant Motion. Furthermore, the Court should exercise

its equitable authority under the All Writs Act to issue a carefully-tailored injunction forbidding

the Petitioning Creditors, and specifically, Monroe, from exercising any remedies under the

Court’s Order (A) Authorizing Receiver to Obtain Ninth Amendment Term Loans and (B) Granting

Security Interests and Liens (Doc. 105) (the “Financing Order”) or otherwise taking action to


05279029.1 20

interfere with the Receivership Estate’s assets, including the estate’s funds and the Potential

Claims.

I. The Court Can Impose Sanctions on the Petitioning Creditors Pursuant to its Broad Inherent and Equitable Powers

“A district court enjoys broad equitable powers to appoint a receiver over assets disputed

in litigation before the court.” Liberte Capital Grp., LLC v. Capwill, 462 F.3d 543, 551 (6th Cir.

2006). As the Sixth Circuit explained, “[o]nce assets are placed in receivership, a district court’s

equitable purpose demands that the court be able to exercise control over claims brought against

those assets” and stop “a drain on receivership assets.” Id. It is therefore well established that

“[d]istrict courts have ‘broad powers and wide discretion’ to fashion relief and administer federal

receiverships.” Sec. & Exch. Comm'n v. BIC Real Estate Dev. Corp., No. 1:16-CV-00344-LJO-

JLT, 2017 WL 2619111, at *2 (E.D. Cal. June 16, 2017) (quoting SEC v. Wencke, 622 F.2d 1363,

1371 (9th Cir. 1990)). Indeed, the United States Supreme Court long ago explained that “[n]o rule

is better settled than that when a court has appointed a receiver, his possession is the possession of

the court, for the benefit of the parties to the suit and all concerned, and cannot be disturbed without

the leave of the court, and that if any person, without leave, intentionally interferes with such

possession, he necessarily commits a contempt of court, and is liable to punishment therefor.” Ex

parte Tyler, 149 U.S. 164, 181 (1893).

These broad equitable powers enjoyed by receivership courts supplements the “potent

inherent power” of every federal district court to manage and control the proceedings before them

and to “fashion an appropriate sanction for conduct which abuses the judicial process.” Peer v.

Lewis, 571 F. App'x 840, 844 (11th Cir. 2014) (quoting Chambers v. NASCO, Inc., 501 U.S. 32,

44-45, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)). The Eleventh Circuit has explained that courts’

inherent sanction power is “deeply rooted in the common law tradition is the power of any court


05279029.1 21

to manage its affairs.” Carlucci v. Piper Aircraft Corp., Inc., 775 F.2d 1440, 1447 (11th Cir. 1985)

(quoting Flaksa v. Little River Marine Constr. Co., 389 F.2d 885, 888 n.10 (5th Cir. 1968)).

Moreover, “[t]he inherent power of the federal court to punish for improper conduct … reaches

both conduct before the court and that beyond the court’s confines[.]” In re Kozich, 406 B.R. 949,

955 (Bankr. S.D. Fla. 2009). Accordingly, pursuant to their inherent power, courts may impose

sanctions on both parties and nonparties alike, as well as their attorneys. See, e.g., In re Lapin, 226

B.R. 637, 641 (B.A.P. 9th Cir. 1998) (“[T]he Ninth Circuit has recognized the inherent power of

the district court to impose attorneys' fees against a non-party to curb abusive litigation practices

and to sanction a non-party whose actions or omissions caused the parties to incur additional

expenses.”); Alderwoods Grp., Inc. v. Garcia, 682 F.3d 958, 972 (11th Cir. 2012) (same).

Because a court’s inherent powers are so potent, however, they must be exercised with

restraint and discretion. Thus, the court’s invocation of its inherent sanction power requires a

finding of “bad faith.” See In re Mroz, 65 F.3d 1567, 1575 (11th Cir. 1995). Bad faith may be

shown by, among other things, “delaying or disrupting the litigation or by hampering enforcement

of a court order.” Hutto v. Finney, 437 U.S. 678, 689 n. 14 (1978).

Courts frequently impose sanctions on litigants and attorneys for conduct that interferes

with a district court’s orderly administration over a receivership proceeding. See, e.g., Fed. Trade

Comm'n v. Productive Mktg., Inc., 136 F. Supp. 2d 1096, 1112 (C.D. Cal. 2001) (sanctions

appropriate where “[t]he receivership estate incurred $16,246.25 in damages, consisting of

accountant and receiver fees, due to ACCPC's noncompliance with the court’s Order.”); Klein v.

Harper, 777 F.3d 1144 (10th Cir. 2015) (district court did not abuse its discretion in entering

default judgment as sanction for transferee’s failure to comply with discovery rules and court

orders in receiver's action to recover assets fraudulently transferred to him); In re Cedar Falls


05279029.1 22

Hotel Props. Ltd. P'ship, 102 B.R. 1009 (Bankr. N.D. Iowa 1989) (filing of chapter 11 petition by

debtor was for “improper purpose” of removing state court-appointed receiver rather than

legitimate purpose of reorganization, thus warranting imposition of sanctions); Fed. Trade

Comm'n v. Neiswonger, No. 4:96-CV-2225-SNLJ, 2009 WL 2998356, at *3 (E.D. Mo. Sept. 15,

2009) (sanctions appropriate where party’s actions “would result in a multiplicity of actions in

different forums, and would increase litigation costs for all parties while diminishing the size of

the receivership estate”); In re Yellow Cab Co-op. Ass'n, 144 B.R. 505, 507 (D. Colo. 1992)

(affirming sanctions imposed by bankruptcy court on attorney who filed chapter 11 bankruptcy

petition on behalf of entity that was in state-court receivership).

Moreover, relevant here, courts have specifically imposed sanctions for a litigant’s bad

faith filing of a bankruptcy petition. See, e.g., Cedar Falls, 102 B.R. 1009; Roberts v. Heim, 184

B.R. 814, 822 (N.D. Cal. 1995) (district court determined that defendant TexOil’s filing of a

bankruptcy petition was done in bad faith and constituted an “abusive litigation practice” after

finding that TexOil filed the collateral bankruptcy proceeding in order to avoid the district court’s

adverse ruling on a default motion brought by the plaintiffs); Prince v. MacDonald, 237 Mich.

App. 186, 195–96 (Mich. Ct. App. 1999) (court in which former employee of corporation had

brought suit against corporation, and its principal, had authority to sanction defendants based on

principal's actions in filing bankruptcy petition on behalf of corporation which was ultimately

dismissed, apparent purpose of which was to attempt to reach a nominal settlement of case through

misrepresentation, or to otherwise delay proceedings and create hardship for employee and

unnecessary burden to court even though defendants had no intention of following through with

bankruptcy); Havens v. Becerra, No. 17-CV-06772-PJH, 2018 WL 6079293, at *2 (N.D. Cal. Nov.

21, 2018) (sanctioning party in state-court receivership that filed voluntary bankruptcy petition on


05279029.1 23

behalf of entity in state-court receivership in federal bankruptcy court in Delaware in violation of

receivership court’s order).

Here, based on the Petitioning Creditors’ bad faith filing of the chapter 11 bankruptcy

petition in Delaware, sanctions are appropriate, particularly against Monroe. As previously laid

out in this Motion in detail, the Petitioning Creditors have been involved with and materially

participated and has been informed of and/or had input on virtually every aspect of these

Receivership Proceedings from the outset. In particular, and without limitation:

a. Monroe provided financing to facilitate the Receivership and conditioned its

financing on the appointment of a receiver (see Doc. 26, p. 6);

b. Monroe was consulted on and agreed to the appointment of Mr. Kennedy as

Receiver;

c. Monroe was consulted on and contributed to the form and substance of the

Receivership Order;

d. Monroe requested, and received, for relief to seize and liquidate its collateral

from the closed campuses pursuant to the Supplemental Order that it

participated in drafting;

e. Monroe participated in the $7 Million in funding pursuant to the Financing

Order and Ninth Amendment to the Loan Facility – the very financing that

facilitated its acquisition of NECB and funded the insurance policy covering

the Potential Claims;

f. Monroe materially participated in the form of the sale procedure for NECB and

ultimately acquired NECB by credit bidding its debt;


05279029.1 24

g. Monroe consented to the sale of the accounts receivable (despite having the

opportunity to submit its own bid if it felt that the purchase price was

inadequate);

h. Monroe consented or otherwise did not object to the sale of the Semmes

property;

i. Monroe consented to the Court-approved claims process and participated in the

claims process by filing multiple proofs of claims;

j. Monroe attempted to “finance” the prosecution of the Potential Claims (putting

this statement in the most neutral way possible); and

k. Monroe generally consented to or did not object to each and every other action

taken by the Receiver, including any motion, report or other pleading filed with

the Court, or any order entered by this Court.

Similarly, the other Petitioning Creditors, BSF in particular, have participated fully in this

case. BSF and its counsel vigorously sought protection of its rights as a landlord at the outset of

the Receivership Proceedings – objecting to multiple motions and participating in an attempt to

vacate the Receivership Order itself. After BSF obtained possession of its premises, it withdrew

its objections and filed a proof of claim pursuant to the claims process. BSF has not objected to

any other aspect of these Receivership Proceedings.

RP LLC also filed a proof of claim pursuant to the claims procedures. RP LLC has not

objected to any aspect of these Receivership Proceedings.

The Involuntary Petition was facially filed in bad faith, as clearly evidenced by, among

other things:


05279029.1 25

a. The Petitioning Creditors’ explicit intent to seize control of the Potential

Claims, misrepresentations and other relief requested pursuant to their

Involuntary Petition and Chapter 11 Trustee Motion;

b. The facts and circumstances surrounding the timing of their filing – particularly

the Receiver’s decision to attempt to negotiate in good faith with the insurer to

avoid protracted litigation of the Potential Claims;

c. Filing the Involuntary Petition under Chapter 11 of the Bankruptcy Code when

there was clearly no business to restructure;

d. By filing the Involuntary Petition under Chapter 11 of the Bankruptcy Code,

and thereby attempting to obtain the procedural advantage, as evidenced by

their Chapter 11 Trustee Motion, to get their preferred trustee appointed, as

opposed to a trustee chosen solely by the United States Trustee in and

involuntary petition under Chapter 7 of the Bankruptcy Code. See 11 U.S.C. §

303(g);8 and

e. Lastly, and most egregiously, attempting to prevent the Receiver from

defending the Involuntary Petition by inequitably and improperly attempting to

prevent the Receiver from using of estate funds.

Put simply, the Petitioning Creditors allegations and requested relief in their Chapter 11

Trustee Motion summarizes their bad faith clearly by outlining a laundry list of grievances and

violations of duties by the Receiver. However, the Petitioning Creditors already had this Court as

8 By offering secured funding to the potential Chapter 11 trustee, Monroe would have obtained a higher priority claim to any proceeds of the Potential Claims – exactly what Monroe attempted to do in this case, but which the Receiver rejected because it was not in the best interests of the creditors of the Receivership Estate. See 11 U.S.C. § 364(c)-(d) (granting a lender security for its postpetition credit ranging from superpriority administrative expense treatment to a superpriority lien on all assets.


05279029.1 26

the appropriate forum for asserting the allegations that they raised for the first time in the Chapter

11 Involuntary Petition – and the Receivership Order that Monroe had input on explicitly required

that any such allegations be brought in this Court. (Doc. 26, pp. 11-13)

Based on the battle of proposed orders on dismissal in the Bankruptcy Court evidenced by

the certifications of counsel filed with the Bankruptcy Court and attached hereto as Exhibit “E”,

the Receiver anticipates that the Petitioning Creditors will argue that, since the Involuntary Petition

was filed in the Bankruptcy Court, that the Bankruptcy Court is the only forum to hear the

Receiver’s sanctions motion or any motion relating in any way to the involuntary bankruptcy.

However, such an argument is easily rejected and should be disregarded. The fact that the

Involuntary Petition was filed in the Bankruptcy Court does not in any way preclude the Receiver

from moving for sanctions in this Court. Furthermore, there is nothing that precludes the Court

from exercising its own inherent powers sua sponte. At least three reasons support this proposition.

First, the Receiver is not seeking sanctions against the Petitioning Creditors under any

section of the Bankruptcy Code. Instead, the Receiver seeks sanctions pursuant to the Court’s

inherent power. It is well established that in these circumstances, the remedies available to a debtor

aggrieved by the filing of an involuntary bankruptcy petition are not limited to those under the

Bankruptcy Code. In Chambers, the Supreme Court held that a court’s inherent power exists

independent of any rule or statute authorizing sanctions. See Chambers, 501 U.S. at 46 (“We

discern no basis for holding that the sanctioning scheme of the statute and the rules displaces the

inherent power to impose sanctions for the bad-faith conduct described above.”). Courts have often

found that a debtor could seek damages under the Bankruptcy Code, or alternatively seek sanctions

under a court’s inherent powers. See, e.g., In re S. Cal. Sunbelt Developers, Inc., 608 F.3d 456,

467 (9th Cir. 2010) (affirming district court’s award of damages under both Rule 303(i) and


05279029.1 27

sanctions under the court’s inherent powers); Prince v. MacDonald, 237 Mich. App. 186, 193

(1999) (rejecting argument that the Bankruptcy Code preempted state court’s right to impose

sanctions pursuant to inherent power for bad-faith filing of bankruptcy petition); id. (“While

Federal Rules of Bankruptcy Procedure 9011, the general sanction rule, does cover the situation,

it is not determinative regarding the issue of preemption.”); Roberts v. Heim, 184 B.R. 814, 818

(N.D. Cal. 1995) (imposing sanctions pursuant to inherent powers after bad-faith filing of

bankruptcy petition in order to stall pending action).

To be sure, the Receiver could have sought to recover damages in the Delaware Bankruptcy

Court. Specifically, the Receiver could have taken the position that the Involuntary Petition be

dismissed under Bankruptcy Code section 303(j), as proposed by the Petitioning Creditors in their

Voluntary Dismissal, thereby preserving and exercising their statutory rights under Section 303(i)

of the Bankruptcy Code. See 11 U.S.C. § 303(i)(2) (providing that a petitioning creditor can be

held liable for actual, proximate and punitive damages). See id. Nevertheless, there is no law that

required the Receiver to go that route in order to obtain relief in this Court. Moreover, as a practical

matter, the Receiver is cognizant of the fact that seeking damages in the Bankruptcy Court could

have potentially turned into a costly endeavor given that, not only Monroe would undoubtedly

fight any attempt to recover punitive damages, but that it would take that court a significant amount

of time to familiarize itself with this complex case and would continue to hamper these

Receivership Proceedings. The Receiver therefore prudently chose to request the relief under this

Motion before this Court who is familiar with the matter, has overseen and controlled the

Receivership Estate for over fifteen (15) months, and has the inherent power to fashion appropriate

relief for damage to the Receivership Estate under its jurisdiction.


05279029.1 28

Second, the Court has the inherent and equitable power to sanction Monroe regardless of

where its misconduct took place. The Supreme Court held in Chambers that the court’s inherent

power to sanction misconduct extends to conduct that occurred before other tribunals.

See Chambers, 501 U.S. at 57; see also In re Kozich, 406 B.R. 949, 955 (Bankr. S.D. Fla. 2009)

(“The inherent power of the federal court to punish for improper conduct is well established and

this power reaches both conduct before the court and that beyond the court's confines.”) (emphasis

added). The Northern District of Georgia has stated that “[t]o be subject to the Court's inherent

power to sanction, a non-party ... must (1) have a substantial interest in the outcome of the litigation

and (2) substantially participate in the proceedings in which he interfered.” Warrant Exch., LLC v.

NetworkD Corp., No. 1:08-CV-1623-BBM, 2008 WL 11333546, at *9 (N.D. Ga. Oct. 24, 2008).

Here, this Court never lost jurisdiction over this case or Monroe. Monroe was before this Court in

this case long before it filed a bankruptcy petition in Delaware. It clearly has an interest in the

outcome of this case and has been participating in it since the inception. So this is not a case where

the Receiver is filing an entirely new case for the sole purpose of finding a judge it thinks will rule

in its favor, e.g., Raymark Indus., Inc. v. Baron, No. 96–7625, 1997 WL 359333, at *9–11 (E.D.

Pa. June 23, 1997) (“Allowing litigants to file completely collateral cases requesting relief that

could and should have been requested in the original proceeding is tantamount to allowing litigants

to ‘judge shop’ until they find a judge willing to impose sanctions.”).

Third, the Bankruptcy Court has already issued an order abstaining from hearing the

Involuntary Petition, finding that this Court is the appropriate jurisdiction to administer ECA’s

assets. (See Ex. B.) The bankruptcy case is therefore closed. There is a split of authority regarding

whether a debtor in these circumstances can ever recover attorney’s fees and costs when a case is

dismissed on abstention grounds by a bankruptcy court. Compare In re Macke Int'l Trade, Inc.,


05279029.1 29

370 B.R. 236, 248 (B.A.P. 9th Cir. 2007) with In re Sun World Broadcasters, Inc., 5 B.R. 719,

723 (Bankr. M.D. Fla. 1980) (summarily concluding that “[t]he court holds that the costs and fees

allowable under [§] 303(i) are not possible in a case that is dismissed under [§] 305”); Koffman v.

Osteoimplant Tech., Inc., 182 B.R. 115, 127 (D. Md. 1995) (same); see also In re TPG Troy, LLC,

793 F.3d 228, 233 (2d Cir. 2015) (“[T]he law is unsettled as to whether the statute provides for

attorneys' fees when an involuntary petition is dismissed on abstention grounds[.]”). Here, without

taking a position as to which of the above-cited authorities are correct, it is clear that the Receiver’s

ability to even obtain relief under the Bankruptcy Code would not go uncontested by Monroe and

the Receiver does not seek statutory damages under Section 303(i) of the Bankruptcy Code under

this Motion. What’s more, the Bankruptcy Court stated in the Dismissal Order: “[F]or the

avoidance of doubt, nothing in this Order shall affect the District Court’s ability to grant any

relief in the Receivership Case as the District Court may deem appropriate.” (See Bankr. Doc.

52, p. 2) (emphasis added).

For the reasons set forth above, the Receiver requests that the Court exercise its broad

inherent power as a court sitting in equity to sanction the Petitioning Creditors for their bad-faith

conduct, interference with the Receiver’s administration of the Receivership Estate, disparagement

of the Receiver and this Court, and violations of this Court’s orders. The Receiver specifically

urges the Court to sanction Monroe by ordering that Monroe reimburse the Receiver for all

attorney’s fees, costs, and expenses that it has incurred defending against Monroe’s recent

litigation, in both the Bankruptcy Court and this Court, including the fees incurred to prepare this

motion. See Meyrowitz v. Brendel, No. 16-81793-CV, 2018 WL 1718289, at *11 n.4 (S.D. Fla.

Apr. 9, 2018) (noting that “The Eleventh Circuit has held that ‘fees on fees’ are compensable.”)

(citing Norelus v. Denny’s, Inc., 628 F.3d 1270, 1301 (11th Cir. 2010)). The Eleventh Circuit has


05279029.1 30

held that “the dollar amount of the sanctions ‘may not exceed the costs, expenses, and attorneys’

fees reasonably incurred because of [the] conduct’ giving rise to the sanctions.” Eldredge v.

EDCare Mgmt., Inc., 766 F. App'x 901, 909 (11th Cir. 2019) (quoting Peterson v. BMI

Refractories, 124 F.3d 1386, 1396 (11th Cir. 1997)). In setting the amount of a sanctions award,

the district court must decide “whether a given legal fee ... would or would not have been incurred

in the absence of the sanctioned conduct.” Id. (quoting Goodyear Tire & Rubber Co. v. Haeger,

137 S.Ct. 1178, 1187 (2017)). While the brunt of the Receiver’s expenses have been incurred

defending the Receivership Estate against the chapter 11 bankruptcy petition, which this Court

authorized, the Receiver has also spent resources in this litigation due to Monroe’s recent actions.

Due to the very recent dismissal of the Involuntary Petition, the Receiver cannot fully quantify its

damages, but will supplement this Motion to do so.

II. The Court Should Enjoin the Petitioning Creditors From Taking Further Action That Interferes with the Receivership Estate Pursuant to its Authority Under the All Writs Act

In addition, in order to avoid the needless waste of resources on matters such as this one in

the future, the Court should also enjoin the Petitioning Creditors from taking any action in the

future that would interfere with the administration of the Receivership Estate.

The Court’s ability to enjoin the Petitioning Creditors is based on the codification of its

inherent authority in the All Writs Act, 28 U.S.C. § 1651(a). As the former Fifth Circuit has

explained, “[b]oth the All Writs Act and the inherent powers doctrine provide a federal court with

various common law equity devices to be used incidental to the authority conferred on the court

by rule or statute.” ITT Cmty. Dev. Corp. v. Barton, 569 F.2d 1351, 1359 (5th Cir. 1978).

It is well established that district courts “enjoy a considerable degree of discretion” power

under the All Writs Act to enjoin litigants who abuse the court system and in “fashioning the


05279029.1 31

contours of those restrictions in a particular case[.]” Odion v. Google, Inc., No. 1:13-CV-3906-

LMM, 2017 WL 5484695, at *2 (N.D. Ga. Feb. 14, 2017). The Eleventh Circuit has explained that

“[t]he All–Writs Act gives federal courts the power to issue injunctions in aid of their jurisdiction.

In addition, courts hold that despite its express language referring to ‘aid of ... jurisdiction,’ the

All–Writs Act also empowers federal courts to issue injunctions to protect or effectuate their

judgments.” Wesch v. Folsom, 6 F.3d 1465, 1470 (11th Cir. 1993).

Moreover, “[s]uch writs may be directed to not only the immediate parties to a proceeding,

but to ‘persons who, though not parties to the original action or engaged in wrongdoing, are in a

position to frustrate the implementation of a court order or the proper administration of justice,

and … even those who have not taken any affirmative action to hinder justice.’” Klay v. United

Healthgroup, Inc., 376 F.3d 1092, 1100 (11th Cir. 2004) (quoting United States v. New York Tel.

Co., 434 U.S. 159, 174 (1977)). Indeed, “[a]n important feature of the All–Writs Act is its grant

of authority to enjoin and bind non-parties to an action when needed to preserve the court's ability

to reach or enforce its decision in a case over which it has proper jurisdiction.” In re Baldwin–

United Corp. (Single Premium Deferred Annuities Ins. Litigation), 770 F.2d 328, 338 (2d Cir.

1985).

The Eleventh Circuit has held that “in cases that are essentially in rem—and therefore

concern the orderly and efficient distribution of a res—the court’s power to enjoin and to sanction

extends to the whole world, to any person who comes into contact with the res.” Alderwoods Grp.,

Inc. v. Garcia, 682 F.3d 958, 972 (11th Cir. 2012). “When particular property is before the district

court … such as when it is the subject of an in rem proceeding or in the custody of a bankruptcy

trustee, the court may generally enjoin proceedings in any other court regarding that property.”

Klay, 376 F.3d at 1103–04 (citing Matter of Macon Uplands Venture, 624 F.2d 26, 28 (5th Cir.


05279029.1 32

1980) (noting that, under the All Writs Act, the district court “had the power, in aid of its

jurisdiction, to enjoin the debtor from filing further actions that touched on the subject of the res

during the pendency of the Chapter XII appeal”)).

There is precedent under the All Writs Act for this Court to enjoin the Petitioning Creditors

in these unique circumstances involving a receivership. The Second Circuit held that “district

courts possess the authority and discretion” to “issue anti-litigation injunctions barring bankruptcy

filings as part of their broad equitable powers.” Sec. & Exch. Comm'n v. Byers, 609 F.3d 87, 91

(2d Cir. 2010) (also noting that “we join both the Ninth and Sixth Circuits, which also allow similar

anti-litigation injunctions”). In SEC v. Wencke, the Ninth Circuit held that the authority of a district

court to issue an order staying a non-party from bringing litigation derived from “the inherent

power of a court of equity to fashion effective relief.” 622 F.2d 1363, 1369 (9th Cir. 1980). “The

Ninth Circuit concluded that if a district court could not control the receivership assets, the receiver

would be unable to protect those assets.” Byers, 609 F.3d at 91.

While the Receiver is fully aware that an injunction will limit the Petitioning Creditors’

rights regarding this matter, he is of the belief that their past actions merit this relief. Nevertheless,

to be sure, like with its inherent power to sanction, a court’s power to issue injunctions under the

All Writs Act is “subject to the proviso that they cannot completely foreclose even the most

vexatious and abusive litigant from seeking judicial relief.” Odion, 2017 WL 5484695, at *2

(quoting Bethel v. Bosch, No. 10-0651-WS-M, 2010 WL 5014752, at *5 (S.D. Ala. Dec. 2, 2010));

Dinardo v. Palm Beach Cty. Circuit Court Judge, 199 F. App'x 731, 736 (11th Cir. 2006) (noting

that a court cannot “completely foreclose a litigant from any access to the courts”) (quoting

Riccard v. Prudential Ins. Co., 307 F.3d 1277, 1295 n. 15 (11th Cir. 2002); Tripati v. Beaman, 878

F.2d 351, 352 (10th Cir. 1989 (“There is strong precedent establishing the inherent power of


05279029.1 33

federal courts to regulate the activities of abusive litigants by imposing carefully tailored

restrictions under the appropriate circumstances.”).

The record of the Petitioning Creditors’, and particularly, Monroe’s, bad faith actions and

resulting damage to the Receivership Estate before the Court is clear. As the Petitioning Creditors

asserted in their Chapter 11 Trustee Motion “Put simply, enough is enough.” (Bk. Doc. 26, p. 2)

Accordingly, the Receiver requests that the Court issued a “carefully tailored restriction”

that enjoins the Petitioning Creditors from taking action that would, in any way, interfere with the

Receiver’s exercise of his rights and duties and this Courts inherent powers to exercise jurisdiction

over this Case, including without limitation:

a. No Petitioning Creditor, including Monroe and its affiliates, shall take any

action in any other jurisdiction that in any way affects the Receiver or the

Receivership Estate, including without limitation the filing of an involuntary

petition in bankruptcy against any entity that would have a direct or indirect

impact on the Receiver or the Receivership Estate;

b. No Petitioning Creditor shall take any action in this case that in any way affects

the Receiver or Receivership Estate, directly or indirectly;

c. Specifically, Monroe (as defined herein in all of its multiple capacities) shall

not take any action that in any way affects the Receivership and Receivership

Estate, directly or indirectly;

d. Specifically, the Monroe Agent and the lenders shall not take any action that in

any way affects the Receivership and Receivership Estate, directly or indirectly,

including without limitation exercising any rights or remedies under the Loan

Facility; and


05279029.1 34

e. That the Court’s order and injunctions contained therein supersede any prior

order entered in these Receivership Proceedings unless otherwise determined

by this Court.

REQUEST FOR EXPEDITED RELIEF

The Receiver requests that this Motion be heard on an expedited basis. The actions taken

by the Petitioning Creditors have severely damaged the Receivership Estate, including the funds

available to further administer the Receivership Estate. Furthermore, the actions taken by the

Petitioning Creditors evidence an intent to take any measure necessary to interfere with the

administration of the Receivership Estate. Therefore, time is of the essence and it is in the best

interests of creditors that this Motion be heard and relief be granted as soon as possible.

Given the severe damage done to the Receivership Estate and the urgent need for a hearing

and relief granted as soon as possible to inject crucially-needed funds into the Receivership Estate,

the Receiver proposes the following briefing schedule:

• The Petitioning Creditors’ response to this Motion due on Monday, March 2,

2020 at 12:00 p.m. EST;

• Receiver’s reply to the Petitioning Creditors’ response due on Friday, March 6,

2020 at 12:00 p.m. EST; and

• Hearing to be held on Tuesday, March 10, 2020 at 10:00 a.m. EST.

Attached hereto as Exhibit “F” is a proposed Order (the “Proposed Order”) setting this briefing

schedule.

RESERVATION OF RIGHTS

The Receiver files this Motion without waiving any rights, remedies or claims that it may

have against any Petitioning Creditor, under law or equity, and expressly reserves all rights with


05279029.1 35

respect thereto, including without limitation requesting supplemental or additional relief for

sanctions or other remedies. Given the immediate need to obtain the relief requested herein due to

the time and attention required to dismiss the Involuntary Petition, the Receiver has had little time

to fully review all potential avenues of relief resulting from the filing of the Involuntary Petition

and review and investigate all relevant facts. This is especially true since the representations and

allegations made in the Chapter 11 Trustee Motion relate back to virtually every aspect of these

Receivership Proceedings and, at a minimum, raise the specter of impropriety and dishonesty by

Monroe in particular throughout the entirety of these Receivership Proceedings.

CONCLUSION

WHEREFORE, PREMISES CONSIDERED, the Receiver respectfully requests this Court

to enter an order granting this Motion and imposing sanctions on the Petitioning Creditors, at a

minimum: (i) requiring them to pay the attorney’s fees, expenses and costs and other appropriate

damages to the Receivership Estate resulting from the Involuntary Petition and the Receiver’s

successful defense thereof, as well as from the filing and prosecution of this Motion; and (ii)

entering the injunctive relief set forth above, and (iii) such other, further relief as the Court deems

appropriate.

[Signatures on following page]


05279029.1 36

Submitted this 24th day of February, 2020.

/s/ James F. Banter JOHN F. KENNEDY, Court Appointed Receiver Georgia Bar No. 414830 JAMES F. BANTER Georgia Bar No. 581797 Counsel to John F. Kennedy, Receiver

JAMES-BATES-BRANNAN-GROOVER-LLP 231 Riverside Drive P.O. Box 4283 Macon, Georgia 31208-4283 (478) 742-4280 telephone (478)742-8720 facsimile [email protected] [email protected]

/s/ Ollie A. Cleveland, III OLLIE A. CLEVELAND, III (admitted pro hac vice) ALEXANDER B. FEINBERG (Georgia Bar No. 956505) Special Counsel to John F. Kennedy, Receiver

MAYNARD, COOPER & GALE, P.C. 1901 Sixth Avenue North Suite 2400, Regions/Harbert Plaza Birmingham, Alabama 35203-2618 (205) 254-1000 telephone (205) 254-1999 facsimile [email protected] [email protected]


05279029.1 37

CERTIFICATE OF SERVICE

The undersigned certifies that on the 24th day of February, 2020, a true and exact copy of

the foregoing document has been served on the counsel to the parties by way of filing on CM/ECF,

as well as on the counsel to the Petitioning Creditors listed below via US First Class Mail.

Monroe Capital Private Credit Fund II LP c/o Potter Anderson & Corroon LLP Attn: Jeremy W. Ryan 1313 N. Market Street, Sixth Floor Wilmington, DE 19801

Reputation Partners LLC c/o Potter Anderson & Corroon LLP Attn: Jeremy W. Ryan 1313 N. Market Street, Sixth Floor Wilmington, DE 19801

BSF Richmond, LP c/o Potter Anderson & Corroon LLP Attn: Jeremy W. Ryan 1313 N. Market Street, Sixth Floor Wilmington, DE 19801

/s/ Ollie A. Cleveland, III Ollie A. Cleveland, III


Exhibit “A” to Motion for Sanctions

Chapter 11 Trustee Motion

Case 5:18-cv-00388-TES Document 330-1 Filed 02/24/20 Page 1 of 49

IMPAC 6565502v.1

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re: EDUCATION CORPORATION OF AMERICA, Alleged Debtor.

) ) ) ) ) ) )

Chapter 11 Case No. 20-10034 (BLS) Hearing Date: TBD Objection Deadline: TBD

MOTION OF PETITIONING CREDITORS FOR APPOINTMENT OF A CHAPTER 11 TRUSTEE

Monroe Capital Credit Fund II LP (“Monroe”), Reputation Partners LLC, and BSF

Richmond, LP (collectively, the “Petitioning Creditors”), by and through undersigned counsel,

hereby submit this motion (the “Motion”) for the appointment of a chapter 11 trustee of the above-

captioned alleged debtor (“ECA”). In support thereof, the Petitioning Creditors respectfully state

as follows:

PRELIMINARY STATEMENT

1. When a for-profit education company is in distress and needs to be rescued, the

single most important decision to be made is the selection of an experienced and qualified

restructuring professional to oversee the effort. In such a situation, a receiver is required because

the company will lose its federal Title IV funding if it files for chapter 11 protection. When a

receivership for ECA became an immediate and urgent necessity to save ECA, ECA, in

consultation with Monroe, took pains to identify qualified restructuring professionals with

experience in the education industry and working with the Department of Education (“DOE”).

ECA agreed on those candidates. On November 6, 2018, ECA commenced the Receivership

(defined below) and requested that one of the agreed upon receiver candidates be appointed.

Instead, the District Court (as defined below) presiding over the Receivership disregarded ECA’s

Case 20-10034-BLS Doc 26 Filed 02/04/20 Page 1 of 20Case 5:18-cv-00388-TES Document 330-1 Filed 02/24/20 Page 2 of 49

2 IMPAC 6565502v.1

proposed candidates and appointed the Receiver, a local politician without any experience with

for-profit education companies. The Receiver was appointed without any input from ECA or its

creditors.

2. What has followed in the Receivership has been unfortunately predictable. At the

time the Receiver was appointed, ECA intended to sell certain of its financially viable campuses

on a “go forward” basis as part of a restructuring plan to maximize the value of ECA’s enterprise

for the benefit of its creditors and stakeholders. The Petitioning Creditors believe that the value of

ECA’s assets shorty before the Receiver was appointed was approximately $154.3 million.

However, the Receiver faced immediate and urgent deadlines with the DOE to maintain Title IV

funding. The Receiver failed to meet those deadlines, and ECA and almost all of its subsidiaries

lost access to their funding and had to cease operations and liquidate.

3. The situation never improved. The Receiver has been an abject failure who, rather

than serve as a fiduciary to creditors, has through lack of experience, oversight, deliberate inaction

and incompetence presided over the loss of millions of dollars in value that could have been

obtained for ECA’s creditors. But now that the Receivership is near an end, after all of ECA’s

hard assets have been liquidated, the Petitioning Creditors were forced to act to protect their

interests before the Receiver could jeopardize recovery on ECA’s single largest asset—valuable

litigation claims against ECA’s officers and directors (the “D&O Claims). As set forth herein, the

Receiver has inexplicably delayed pursuing the D&O Claims and has instead chosen to align

himself with the target of such claims, and their insurers, rather than the very creditors to which

he owes fiduciary duties. Put simply, enough is enough.

4. At this point only the Receiver and his professionals are benefitting from the

Receivership. ECA has been liquidated; the Receiver will not aggressively pursue the D&O


3 IMPAC 6565502v.1

Claims; and the Receiver will not make any distributions to creditors. Other than a modest amount

of spending on operating expenses to preserve documents, the Receiver and his professionals

intend to consume all of ECA’s remaining cash to pay for their own fees in an attempting to thwart

this chapter 11 case and to stop the Petitioning Creditors from pursuing the D&O Claims. The

Petitioning Creditors have commenced this chapter 11 case so that a proper estate fiduciary can be

appointed to ensure proper liquidation of ECA’s most significant remaining asset.

JURISDICTION

5. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334.

This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Venue is proper in this district

pursuant to 28 U.S.C. §§ 1408 and 1409. The legal predicate for the relief requested herein is 11

U.S.C. § 1104(a). The Petitioning Creditors confirm their consent, pursuant to rule 9013-1(f) of

the Local Rule of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for

the District of Delaware, to the entry of a final order by the Court in connection with this Motion

to the extent that it is later determined that the Court, absent consent of the parties, cannot enter

final orders or judgments in connection herewith consistent with Article III of the United States

Constitution.

FACTUAL BACKGROUND

I. ECA’s Operations and Appointment of Receiver

6. ECA previously operated as a for-profit college, whose student population largely

consisted of nontraditional students, such as unemployed and underemployed adults, who were

seeking to obtain job skills to find employment or to change careers.

7. Monroe Capital Management Advisors, LLC (“Agent”), an affiliate of Monroe, is

the senior secured lender to ECA pursuant to that certain 8th Amendment to the Credit Agreement


4 IMPAC 6565502v.1

(as amended from time to time, the “Monroe Credit Agreement”) by and between Agent, as

administrative agent and collateral agent, and each of the lender parties thereto, and ECA.

8. Agent has a first priority and perfected security interest in all of ECA’s assets,

including without limitation, accounts receivable, general intangibles and all proceeds therefrom.

9. On October 5, 2018, VC Macon, GA, LLC, a landlord who leased space to ECA

in Macon, Georgia, filed a civil action against ECA, Virginia College, LLC and New England

College of Business and Finance, LLC (collectively, the “Receivership Entities”) and commenced

the civil action styled VC Macon, GA LLC v. Virginia College LLC, CA 5:18-cv-00388-TES et al.

pending in the United States District Court for the Middle District of Georgia (the “Receivership”).

10. On November 6, 2018, the Receivership Entities filed an Emergency Motion for the

Appointment of a Receiver and Entry of a Temporary Restraining Order and Preliminary

Injunction (the “Receivership Motion”) seeking the appointment of a receiver in the Receivership.

John F. Kennedy, was appointed receiver of ECA (“Kennedy” or the “Receiver”) and affiliated

Receivership Entities pursuant to an Order dated November 14, 2018 (the “Receivership Order”).

11. At the time of filing the Receivership Motion, ECA was operating seventy-four

(74) campuses across twenty (20) states, with approximately 20,000 students enrolled therein. As

of October 5, 2018, ECA owed Monroe and its lenders approximately $19 million under the

Monroe Credit Agreement, and had unsecured debt of approximately $46,773,000.00.

12. Approximately 85% of ECA’s students paid their tuition through some form of

federal aid under Title IV of the Higher Education Act of 1965 (“Title IV”). Many of those

students were not able to pay the costs of their college education without the access to these funds.

ECA took the extraordinary step of placing itself into receivership, rather than filing a bankruptcy

petition, in order to preserve the ability of its students to access funding under Title IV. Those


5 IMPAC 6565502v.1

funds were also the primary source of revenue for ECA. Had ECA filed for bankruptcy protection,

it no longer would have been an “eligible institution” and would have lost access to Title IV

funding. See 20 U.S.C. § 1002(a)(4)(A) (defining an “eligible institution” as on that has not filed

for bankruptcy).

13. Neither VA Macon, GA LLC, nor any of the Receivership Entities proposed that

Kennedy be appointed as the Receiver. Indeed, not a single creditor proposed Kennedy. ECA,

after consultation with Monroe, proposed that the District Court select a receiver that had

experience in the education industry; a professional that had a proven track record in the for-profit

education space, and the respect of industry players, such as the DOE.

14. The United States District Court for the Middle District of Georgia (the “District

Court”) rejected ECA’s suggested receiver and, sua sponte, appointed Kennedy as the Receiver,

despite the fact that Kennedy had no meaningful prior experience in the for-profit education

industry.

II. The Receiver’s Failures to Effectively Administer Assets After Appointment

15. It became apparent almost immediately after the Receivership was commenced that

the Receiver was not up to the task. The costs of the Receiver’s inexperience administering a large,

highly regulated estate were ultimately borne by creditors. Over the course of fourteen months,

the Receiver failed to protect the assets and interests of ECA’s Estate and maximize value for

ECA’s creditors. The Receiver’s failures to appropriately manage ECA’s estate and winddown

ECA’s business are, without limitation, discussed infra.1

1 The facts set forth herein do not constitute an exhaustive list of all the Receiver’s shortcomings and mismanagement during the Receivership. The Petitioning Creditors acknowledge that the parties are engaged in briefing several motions regarding the propriety of this chapter 11 case and the appointment of a trustee, and that the parties intend to seek discovery during such briefing. All rights of the Petitioning Creditors are reserved.


6 IMPAC 6565502v.1

A. The Receiver Fails to Develop Appropriate “Teach-Out Plans”

16. Two weeks before Kennedy was appointed the Receiver, the Accrediting Council

for Independent Colleges and Schools (“ACICS”) placed ECA’s campuses on “show cause” status.

Additionally, the DOE had informed ECA that it was required to develop “teach-out plans”2 for

those campuses it intended to close as part of its restructuring plan (as opposed to selling on a “go

forward” basis). ECA’s deadline for developing “teach-out plans” was November 27, 2018.

17. The DOE required that ECA develop “teach-out plans” in order to facilitate the

orderly closure of campuses and outline how students could finish their programs of study. These

“teach-out plans” are a common and necessary feature of school closures and protect the interests

of students, faculty and other stakeholders. Additionally, the DOE conditions its public funding

on a school’s compliance with such “teach-out plans.”

18. Notwithstanding DOE’s well-established requirements, and the fact that ECA, like

all American colleges and universities, relied heavily on public funding, including financial aid

under Title IV, Pell Grant benefits, GI Bill benefits and other funds, the Receiver failed to develop

the appropriate “teach-out plans” for ECA’s campuses by November 27, 2018, despite being

appointed two-weeks prior to the deadline. Approximately a week after failing to meet the

deadline, the ACICS also suspended accreditation for ECA’s institutions because, among other

things, the Receivership Estate failed to demonstrate its ongoing ability to meet financial

obligations.

19. A day after the ACICS suspended accreditation, and with no “teach-out plans” in

place, the Receiver inexplicably closed more than twenty-five campuses for two of ECA’s primary

2 The term “teach-out” refers to an educational institution’s obligation to continue educating students already enrolled at the institution prior to the closing of that institution. Applicable laws and regulations required ECA to deliver degrees to its students, even if a campus was closed.


7 IMPAC 6565502v.1

institutions—Virginia College and Brightwood College. The Receiver’s unexpected closures left

more than fifteen thousand students without an opportunity to continue or complete their

education. Moreover, the information the Receiver and ECA’s management bluntly provided to

these students was simply that they should “request their transcripts and contact local schools to

determine transferability.”

20. The Receiver’s precipitous decision to close campuses with no “teach-out plans”

ultimately resulted in the DOE declining to provide further federal funds to ECA. Thus, the

Receiver failed to preserve ECA’s most critical source of cash flow. The Receiver’s failure to

work constructively with the DOE not only left ECA’s campuses (i.e., assets of ECA’s Estate)

with little or no ongoing value, but it also undermined the very purpose of the Receivership.

B. The Receiver Exposes Debtor to Claims and Damages

21. The Receiver’s failure to protect ECA’s Estate by working constructively with the

DOE and complying with critical “teach-out” obligations negatively impacted other Estate assets

and exposed ECA to claims and damages.

22. The Receiver’s decision to abruptly close ECA’s campuses stripped thousands of

students of their opportunity to complete their programs. In fact, the Petitioning Creditors believe

that many of these students still owe money to the federal government, despite having lost their

opportunity to obtain their degree or certificate, and were unable to transfer their credits to another

institution.

23. Such harm to thousands of students did not go unnoticed. An illustration of the

harm the Receiver caused is set forth in a letter from United States Senator Doug Jones, which was

sent to ECA in December 2018 shortly after the Receiver’s decision to close the schools. The

letter states, in pertinent part, the following:


8 IMPAC 6565502v.1

I am writing on behalf of the students in Alabama and across the country who are enrolled in one of Education Corporation of America’s colleges, including Brightwood Career Institute, Brightwood College, Ecotech Institute, Golf Academy of America, and Virginia College. When the news broke yesterday regarding your decision to abruptly close these colleges, I was immediately concerned about the futures of 20,000 students enrolled nationwide in 20 states, including 4,000 veterans and military service members using the G.I. Bill. In Alabama, Education Corporation of America’s Virginia College campuses will close in Birmingham, Huntsville, Mobile, and Montgomery, leaving a combined total of more than 3,800 students in my state, including 670 student veterans who have been using the G.I. Bill benefits they have earned, left scrambling to figure out their educational future. According to your company’s website, there will be information for students regarding transcript retrieval, transfer, and contact information that you “expect to start loading” on or around December 17, 2018. After abruptly closing the doors, your decision to make students and families wait nearly two weeks to receive any information about their next steps is simply unacceptable. You have a responsibility to these students, including our veterans and service members, to ensure they have all of the tools and information they need to move forward, including the choice between receiving a discharge of their federal student loans or transferring to a similar program if they can find an institution willing to accept their credits. Veteran students also need to understand the impact of the closure on their G.I. Bill benefit eligibility. I am deeply troubled by reports that many Education Corporation of America colleges have not been informing students of their right to seek a “closed school discharge” of their federal loan as is required by federal law under the 2016 “borrower defense” rule. Additionally, students who are encouraged to transfer should understand the limitations of fully transferring credits, and the impact on their eligibility for a loan discharge. I urge you to do all you can to inform these students of their options. They have invested thousands of dollars into your institution and could potentially lose everything.

A copy of Senator Jones’ letter to ECA’s CEO is attached as Exhibit A. Other legislators similarly

expressed frustration with the Receiver’s management. On December 19, 2018, Senator Elizabeth

Warren and Representatives Elijah Cummings and Suzanne Bonamici signed a congressional letter

that outlined Kennedy’s gross mismanagement and his failure to properly warn students and


9 IMPAC 6565502v.1

employees, as well as the massive costs incurred by students and, of course, the American

taxpayers. A copy of this letter is attached hereto as Exhibit B.

24. The Receiver’s decision to abruptly close campuses also resulted in ECA’s teachers

and other employees losing their jobs. These injuries gave rise to class action litigation now

pending in United States District Courts. See. e.g., Garcia et al. v. Willis Stein and Partners, et

al., Case No. 18-cv-621 (E.D. Tex.). Naturally this litigation compounded claims against ECA’s

Estate, further threatening creditor recoveries.

C. Receiver’s Failure to Properly Manage Estate Assets

25. In September 2018, ECA’s accounts receivable (the “Accounts Receivable”) were

valued on ECA’s balance sheet at $52.7 million (net of reserves). These Accounts Receivable

were predominantly monies owed from students, many of whom had graduated and received their

degrees. However, the Receiver’s failure to manage ECA as an ongoing concern and abide by the

DOE’s requirements for “teach-out plans” essentially gave rise to claims from state attorneys

general and others that the Accounts Receivable must be discounted since students across the

nation were left adrift after the Receiver suddenly closed campuses.

26. After twelve months of managing ECA’s Estate, the Receiver was only able to

generate $400,000 from the sale of the Accounts Receivable.

27. The Receiver also failed to properly manage the millions of dollars in personalty

assets that ECA owned, and which served as valuable collateral to the Estate’s secured creditors.

28. In September 2018, ECA’s personalty—including, without limitation, its

equipment, teaching materials, desks, chairs, office equipment, computers, simulator, and kitchen

equipment from campuses across the country—was valued at $37.8 million (net of depreciation).


10 IMPAC 6565502v.1

29. During the Receivership, the Receiver obtained authority to terminate ECA’s leases

at over seventy campuses where ECA’s personalty was located. Prior to doing so, however, the

Receiver failed to properly evaluate the personalty at each location and make appropriate

arrangements for the preservation and protection of ECA’s property. In fact, the Receiver simply

abandoned valuable collateral and permitted others, including landlords and former employees, to

seize such collateral. Likewise, the Receiver failed to properly protect these assets from looters

and thieves who were able to enter ECA’s premises and simply walk off with Estate property.

30. As the senior secured creditor, Monroe was then forced to step in and attempt to

locate remaining personal property so that it could be liquidated for the benefit of ECA’s creditors.

31. The Receiver’s failures cost ECA’s Estate millions of dollars. At the time ECA’s

remaining personalty was ready for liquidation, it was valued at only $8.4 million and generated

little more than $3 million at sale, before liquidation costs. The liquidation process was also more

costly and less efficient due to the Receiver’s disorganization and mismanagement.

III. The Current Status of Receivership and Receiver’s Conflict of Interests

32. All of ECA’s campuses were closed by mid-December 2018, and almost all of

ECA’s assets have been liquidated or abandoned. ECA has no current employees, operations or

other assets other than the D&O Claims. Despite being given the ability to pursue such claims in

the Receivership Order, however, the Receiver has taken no meaningful steps to pursue the D&O

Claims.

33. The Petitioning Creditors believe that ECA possesses strong claims against its

officer and directors for damages resulting from negligence, breaches of fiduciary duty and other

misconduct. Critically, the D&O Claims are covered by insurance that may provide up to $80

million in coverage.


11 IMPAC 6565502v.1

34. For the past nine months, Monroe and its counsel have consulted with the Receiver

regarding the value of the D&O Claims and the need to diligently prosecute these claims to secure

value for ECA’s creditors. In the spring of 2019, Monroe approached the Receiver to discuss

funding the Receiver’s pursuit of the D&O Claims since ECA’s resources were scarce and the

D&O Claims remained the principal source of recovery for ECA’s creditors. However, the

Receiver’s purported pursuit of the D&O Claims was troubled from the outset.

35. The Receiver failed to protect and secure properly critical assets and evidence

necessary for prosecution of the D&O Claims. Like the collateral described above, the Receiver

wholly failed to secure properly ECA’s servers, databases and other critical repositories of

evidence (including countless emails, documents, and other evidentiary materials). The Receiver’s

failures include, inter alia, permitting the insurer for the putative defendants to hold and maintain

such repositories. This is patently improper and demonstrates the Receiver’s negligence in

connection with this critical asset. The Receiver permitted the lead insurer to host and/or maintain

the very evidence needed to demonstrate a multi-million dollar liability on the D&O Claims. Such

conduct constitutes an unwaivable conflict of interest and demonstrates the Receiver’s unfitness

to prosecute the D&O Claims.

36. Additionally, the Receiver failed to protect the interests of ECA’s Estate by failing

to pursue the D&O Claims in good faith or in any reasonable and timely fashion. On May 23,

2019, the Receiver entered into a Common Interest Doctrine Agreement (the “Common Interest

Agreement”) that was explicitly designed to permit Monroe, as secured creditor, to review

information and materials in connection with the anticipated D&O Claims. The Receiver refused

to perform under that agreement and, instead, continued to delay pursuit of the D&O claims.3

3 On January 27, 2020, the Receiver formally withdrew from that agreement. See Exhibit C attached hereto.


12 IMPAC 6565502v.1

37. Then, in November 2019, the Receiver negotiated a Cooperation Agreement with

Monroe, which the parties advanced towards execution. However, only after Monroe inquired as

to the status of the Receiver’s signature on the agreement did Kennedy disclose that he had begun

secret negotiations with ECA’s insurer to try and settle the claims. Thus, rather than diligently

pursuing the D&O Claims as contemplated by the Common Interest Agreement and Cooperation

Agreement, the Receiver has engaged in backroom conversations with the insurers in an attempt

to shortchange the interests of ECA’s Estate and its creditors by settling with the D&O Claims for

less than their true value.

38. Importantly, the Receiver’s reluctance to aggressively pursue the D&O Claims

comes as no surprise. As a state senator, one of Kennedy’s key legislative victories has been the

passage of Georgia HB 192 (2017), for which Kennedy was the senate sponsor. HB 192 amends

(and limits) the duties of care for officers and directors in corporations. Stated simply, HB 192

increases the burdens required to hold officers and directors liable for injuries done to the

corporation and shareholders – that is, Kennedy’s sponsored law gives more protection to directors

and officers. In fact, Kennedy even earned a A+ rating from the Georgia Chamber of Commerce

for his sponsorship of this law.4

39. In order to ensure that the D&O Claims are adequately and timely pursued, the

Petitioning Creditors filed an involuntary petition for chapter 11 against ECA on January 6, 2020.

IV. The Receiver’s Machinations since the Involuntary Petition was Filed

40. The Receiver’s conduct since the Petitioning Creditors filed the involuntary petition

underscores his debilitating and ongoing conflicts of interest. Despite admitting that ECA has no

4 Kennedy’s sponsored legislation was signed into law on May 9, 2017 and became effective on July 1, 2017.


13 IMPAC 6565502v.1

remaining assets other than prosecuting causes of action, including the D&O Claims,5 the Receiver

is vehemently fighting to preserve his control over ECA’s affairs, as overseen by the District Court.

41. On January 27, 2020, the Receiver filed an Emergency Motion to Clarify the

Court’s Order Appointing Receiver and Related Relief in the District Court (the “Emergency

Motion”). In the Emergency Motion, the Receiver sought to clarify that the Receivership Order

provided him with authority to act on behalf of, and to take all actions and exercise all rights of

ECA, to oppose the Petitioning Creditors’ involuntary petition. In support of the Emergency

Motion, the Receiver sought and obtained a resolution from the ECA’s board of directors (i.e.,

from the very individuals that are the target of contemplated litigation), wherein ECA’s board

purportedly agreed that the involuntary petition is not in the best interests of ECA’s creditors, that

ECA lacks resources to defend the involuntary petition, and that ECA requests that the Receiver

assume the defense of the involuntary petition on behalf of ECA. See Education Corporation of

America Consent in Lieu of a Special Meeting of the Board of Directors dated January 27, 2020

at p. 2, attached hereto as Exhibit D.

42. In other words, the Receiver essentially got ECA’s directors to agree that they

would rather have the Receiver, who disavowed the Common Interest Agreement with Monroe,

pursue the D&O Claims than a disinterested, and more appropriate, third party. The Receiver is

the directors’ plaintiff of choice for claims against themselves.

43. On January 28, 2020, the day after filing the Emergency Motion, the Receiver filed

a status report in the Receivership and provided a 13-week cash flow budget. A copy of the budget

is attached hereto as Exhibit E. The budget indicates that the Receiver currently has

approximately $344,000 in cash (of which $58,000 is not property of ECA). The Receiver projects

5 See generally Receiver’s Motion for Abstention from Involuntary Petition under 11 U.S.C. § 305, or Alternatively Dismissal under 11 U.S.C. §§ 303 & 1112(B).


14 IMPAC 6565502v.1

to spend $249,000 of the $286,000 remaining on “professional” fees during the 13-week period

and just $27,000 on expenses to preserve records and documents. The Receiver intends to spend

the last of the cash fighting Monroe, not pursuing the D&O Claims.

44. Monroe filed a limited objection to the Emergency Motion to object to

mischaracterizations of Monroe’s conduct contained therein. Monroe further requested that the

proposed order submitted by the Receiver in support of the Emergency Motion remove language

allowing the Receiver to use Receivership assets (i.e., Monroe’s cash collateral) to retain new

counsel to oppose the involuntary petition. Notably, Monroe did not request that the District Court

restrict the Receiver’s ability or authority to defend the involuntary petition on behalf of ECA, or

work with his present counsel to do so. However, after mismanaging ECA’s assets in the

Receivership and crippling creditor recoveries, the Receiver and his professionals have still

managed to reap over $700,000 from Receivership assets for themselves and plan to consume what

remains. Monroe’s request that ECA’s assets and its cash collateral not be further depleted from

the payment of retainers was reasonable under the circumstances.

45. On February 3, 2020, the District Court granted the Emergency Motion.

RELIEF REQUESTED

46. By this Motion, the Petitioning Creditors seek entry of an order appointing a chapter

11 trustee for ECA pursuant to section 11 U.S.C. § 1104(a)(2).

BASIS FOR RELIEF

47. Upon the request of a party in interest and following notice and a hearing, the Court

shall appoint a trustee “(1) for cause, including fraud, dishonesty, incompetence, or gross

mismanagement of the affairs of the debtor by current management, either before or after the

commencement of the case, or similar cause . . . ; or (2) if such appointment is in the interests of


15 IMPAC 6565502v.1

creditors, any equity security holders, and other interests of the estate . . . .” 11 U.S.C. § 1104(a).

Where a court finds either that cause exists or that appointment is in the interest of creditors, an

order for the appointment of a trustee is mandatory. In re W.R. Grace & Co., 285 B.R. 148, 158

(Bankr. D. Del. 2002).

A. The Court Should Appoint a Chapter 11 Trustee for Cause Under Section 1104(a)(1).

48. The categories enumera in 11 U.S.C. § 1104(a)(1) “cover a wide range of conduct”

and, thus, are best described as illustrative, rather than exclusive. In re Marvel Entm’t. Corp., 140

F.3d 463, 472 (3d Cir. 1998) (internal quotations omitted). Fraud, dishonesty, incompetence, and

gross mismanagement of a debtor’s business affairs are all grounds for appointment of a chapter

11 trustee under § 1104(a)(1). See, e.g., In re Sharon Steel Corp., 871 F.2d 1217 (3d Cir. 1989);

In re Colby Constr. Corp., 51 B.R. 113, 116-18 (Bankr. S.D.N.Y. 1985). The determination of

whether cause exists is discretionary; it must be taken on a case-by-case basis, taking into account

all relevant factors and the totality of the circumstances. See Sharon Steel, 871 F.2d at 1225, 1228.

49. While gross mismanagement and incompetence are the most common reasons

supporting appointment of a trustee, see In re Sharon Steel Corp., 86 B.R. 455, 458 (Bankr. W.D.

Pa. 1988) aff d, 871 F.2d 1217 (3d Cir. 1989), other factors, although not explicitly enumerated,

are also considered:

In determining the existence of cause, courts should consider enumerated and similar grounds in the context of the totality of the circumstances, including such things as management’s competence and the quality of its business decisions, strategies and tactics; the debtor’s policies, procedures and accounting practices; any financial improprieties; failure to maintain adequate records or to provide timely reports; the debtor’s business with related parties; conflicts of interest; the actual or perceived dishonesty of debtor’s management; and acrimony or loss of trust and confidence between the debtor and its creditors or employees or other parties with whom the debtor does business. No single circumstance is necessarily


16 IMPAC 6565502v.1

determinative, and the importance ascribed to any particular circumstance must be considered in light of the whole.

In re Railyard Co., LLC, No. 15-12386-J11, 2016 WL 1254998, at *11 (Bankr. D.N.M. Mar. 30,

2016).

50. As the foregoing recitation of the Receiver’s extensive failures makes clear, cause

exists to support the appointment of a trustee because the Receiver has failed to protect the assets

and interests of ECA’s Estate in the Receivership.6 The Receiver’s failure to work constructively

with the DOE caused the loss of Title IV funding and led to the premature shut down of ECA’s

campuses and significant revenue loss. This set off a cavalcade of additional damages, including

discounting of Accounts Receivable and a failure to preserve and protect ECA’s personal property

that remained at the campuses as they were being wound down. These failures alone caused

millions of dollars in losses to the Estate and its creditors.

51. Apart from the Receiver’s mismanagement and failure to preserve the value of

ECA’s hard assets, the Receiver has also failed to secure and protect evidence needed to prosecute

the D&O Claims. Even worse, when the Receiver took steps to secured such evidence, it placed

that evidence under the control of the lead insurer, who represents the key (if not exclusive) source

of recovery. This massive lapse of judgment (whether intentional or otherwise) demonstrates the

Receiver’s unfitness to prosecute the D&O Claims. Moreover, the conflicts of interest presented

by these facts inevitably disqualify the Receiver from serving as the representative of ECA’s estate

in connection with the D&O Claims.

6 Nothing contained herein should be construed as an admission that the Receiver is tantamount to, or the operating as the debtor-in-possession. All rights with respect to the Receiver’s Emergency Motion for Entry of an Order (I)(A) Confirming that Receiver is not Required to Comply with Bankruptcy Code § 543, Or, in the Alternative, (B) Excusing Receiver’s Compliance Therewith Pursuant to Subsection 543(d) are reserved.


17 IMPAC 6565502v.1

52. These acts and omissions constitute gross mismanagement of ECA, at a minimum.

These reasons compel the immediate appointment of a chapter 11 trustee.

53. Moreover, since the filing of the involuntary petitions, the Receiver’s conflicts of

interest have only become more apparent. Rather than work with the Petitioning Creditors to

transition ECA’s remaining assets to the bankruptcy proceeding, the Receiver has sought to

entrench himself as the sole party in control of ECA’s assets. First, on January 27, 2020, he

withdrew from the Common Interest Agreement, citing a lack of common interest between the

Receiver and Monroe, one of the creditors to whom he owes a fiduciary duty.

54. Second, that same day he filed the Emergency Motion seeking to “clarify” that the

Receivership Order permitted the Receiver to respond to the involuntary petition on behalf of ECA.

In reality, that motion sought to modify the Receivership Order to give the Receiver additional

powers he did not originally possess under the Receivership Order. In support of that modification,

the Receiver submitted resolutions from the very targets of the D&O Claims granting the Receiver

the ability to “exercise all rights of the Corporation as a ‘debtor’ under . . . the Bankruptcy

Code. . . .” Emergency Motion, at Ex. 3, p. 2. By aligning himself with the targets of the D&O

Claims against the Petitioning Creditors to stop this bankruptcy proceeding from moving forward,

the Receiver has demonstrated that he is no longer acting in the best interests of ECA or its

creditors. See In re Intercat, Inc., 247 B.R. 911 (Bankr. S.D. Ga. 2000) (appointing chapter 11

trustee for “cause” in part because management would not investigate potential targets of litigation

in the manner a disinterested person would); In re Soundview Elite, Ltd., 503 B.R. 571 (Bankr.

S.D.N.Y. 2014) (finding cause existed to appoint chapter 11 trustee, in part, because management

had conflict of interest and could not be expected to investigate themselves).


18 IMPAC 6565502v.1

55. Third, the Receiver’s budget makes it clear that he intends to spend the remaining

cash on his professionals. The Receivership is at a critical juncture and the Petitioning Creditors

can no longer tolerate continued depletion of the estate without maximizing recovery of ECA’s

most lucrative asset. If there has been any activity on the D&O Claims at all, the Receiver has

operated in the shadows, with little communication with ECA’s largest creditor. Given that the

Receiver has commenced no litigation to date, has refused to accept additional funding from

Monroe, and has a limited amount of remaining assets, his decision to allocate almost all of his

remaining funds to professional fees in such a short time period shows the Receiver’s true

intentions in defending against the involuntary petition on ECA’s behalf.

56. After aligning himself with the lead insurer prior to the commencement of this

bankruptcy proceeding, the Receiver, just in these past few weeks, has now also aligned himself

with the board members who are the targets of the D&O Claims in an effort to improve his chances

of defeating the involuntary petition. These entrenchment motives, combined with the Receiver’s

existing conflicts of interest and his recent decision to withdraw from the Common Interest

Agreement entered into with creditors to whom he owes fiduciary duties, demonstrate that the

Receiver is not acting in the best interest of ECA or its creditors and provides ample additional

support for the appointment of a chapter 11 trustee.

B. The Appointment of a Chapter 11 Trustee Is in the Best Interest of Creditors Under Section 1104(a)(2).

57. Even if the appointment of a chapter 11 trustee for cause is not required based on

the foregoing mismanagement and conflicts of interest, the appointment of a trustee is still in the

interest of creditors under section 1104(a)(2) of the Bankruptcy Code for several reasons.

58. First, there is no management to serve as a debtor-in-possession. There are no

remaining officers, directors or employees of ECA. All such individuals terminated their


19 IMPAC 6565502v.1

association with ECA long ago. All that is left is the Receiver. He is neither a debtor-in-possession

nor a trustee under the Bankruptcy Code; but rather, a “custodian” under the Bankruptcy Code.

See 11 U.S.C. § 101(11)(a). Nor can a receiver be appointed under the Bankruptcy Code because

section 105 of the Bankruptcy Code expressly prohibits such appointment. See 11 U.S.C. § 105(b)

(“[A] court may not appoint a receiver in a case under this title.”).

59. Second, the Receiver has not made meaningful progress toward the investigation

and prosecution of ECA’s litigation claims in over a year. While the Receiver has liquidated

ECA’s real estate and wound down ECA’s business, the prosecution of estate causes of action

requires a different mindset and a different type of expertise. That is especially true where, as

here, the potential causes of action to be brought include causes of action under chapter 5 of the

Bankruptcy Code, which are more properly brought by a party with more extensive bankruptcy

litigation experience. With the Bankruptcy Case pending in Delaware, a chapter 11 trustee more

familiar with Delaware and Third Circuit law on avoidance actions under chapter 5 is preferable

to the Receiver, who is located in Georgia and has conflicts of interest with respect to the D&O

Claims.

60. Third, Monroe, and its other affiliates who are ECA’s largest remaining creditors,

support the appointment of a chapter 11 trustee and are prepared to fund the litigation, provided

that such a trustee is put in place. As significantly undersecured creditors, Monroe and the other

Petitioning Creditors do not believe that the Receiver is the best person to pursue these claims due

to the conflicts of interest described above, and are unwilling to provide additional funding to ECA

if the Receiver remains in place. This lack of support from ECA’s key creditors, standing alone,

provides ample support for the appointment of a chapter 11 trustee.


20 IMPAC 6565502v.1

61. Fourth, the involvement of the Receiver is no longer necessary. ECA has no

remaining operations, no employees and no assets to liquidate other than the litigation claims. The

Receiver’s role in winding down and liquidating ECA’s assets did not provide him with any unique

or specialized knowledge that would make him better suited to oversee the forthcoming litigation

claims than a more specialized chapter 11 trustee that has the support of ECA’s creditors. Any

remaining items under the control of the Receiver can easily be transitioned to a chapter 11 trustee,

once appointed. Moreover, the reasons underlying the Receivership Motion—namely the

preservation of students’ access to Title IV funding—is no longer present.

WHEREFORE, the Petitioning Creditors request that the Court enter an order

substantially in the form attached hereto and grant such other and further relief as it deems just and

proper.

Dated: February 4, 2020 Wilmington, Delaware

POTTER ANDERSON & CORROON LLP /s/ R. Stephen McNeill Jeremy W. Ryan (DE Bar No. 4057) R. Stephen McNeill (DE Bar No. 5210) 1313 North Market Street, Sixth Floor P.O. Box 951 Wilmington, Delaware 19801 Telephone: (302) 984-6000 Facsimile: (302) 658-1192 Email: [email protected] [email protected] -and- VEDDER PRICE P.C. Michael M. Eidelman pro hace vice pending 222 N. LaSalle Street, Suite 2600 Chicago, Illinois 60601 Telephone: (312) 609-7500 Facsimile: (312) 609-5005 Email: [email protected] Attorneys for the Petitioning Creditors


Exhibit A

Case 20-10034-BLS Doc 26-1 Filed 02/04/20 Page 1 of 4Case 5:18-cv-00388-TES Document 330-1 Filed 02/24/20 Page 22 of 49

Senator Doug Jones Calls on Birmingham-based For-Profit Corporation CEO to Assist Students After Abrupt Nationwide Closure AnnouncedIn a letter today, Jones urged more help for students who have invested thousands of dollars in the nowdefunct schools

Washington, DC – In response to news that Education Corporation of America (ECA) would be abruptly closing its campuses in Alabama and across the country, U.S. Senator Doug Jones wrote to CEO Stu Reed today calling for ECA to help students navigate their options and understand the resources available to them. ECA represents Brightwood Career Institute, Brightwood College, Ecotech Institute, Golf Academy of America, and Virginia College throughout the country. Based in Birmingham, ECA operates forprofit Virginia College campuses in Birmingham, Huntsville, Mobile, and Montgomery and serves more than 3,800 Alabama students. Of those students, 670 are using GI Bill benefits.

The closures were announced yesterday and are effective this Friday. According to ECA’s website, information for students is currently not expected to be available until on or around December 17, which could delay students from being able to transfer to another institution in time for the spring semester.

In his letter, Jones urged Reed to speed up outreach and assistance to students, writing, “After abruptly closing the doors, your decision to make students and families wait nearly two weeks to receive any information about their next steps is simply unacceptable. You have a responsibility to these students, including our veterans and service members, to ensure they have all of the tools and information they need to move forward, including the choice between receiving a discharge of their federal student loans or


transferring to a similar program if they can find an institution willing to accept their credits.”

ECA operates more than 70 campuses nationwide and serves more than 20,000 students, including 4,000 who are veterans or military service members.

Full text of Senator Jones’ letter is below.

December 6, 2018

Mr. Stu Reed

Chief Executive Officer

Education Corporation of America

3660 Grandview Parkway, Suite 300

Birmingham, AL 35243

Dear Mr. Reed:

I am writing on behalf of the students in Alabama and across the country who are enrolled in one of Education Corporation of America’s colleges, including Brightwood Career Institute, Brightwood College, Ecotech Institute, Golf Academy of America, and Virginia College. When the news broke yesterday regarding your decision to abruptly close these colleges, I was immediately concerned about the futures of 20,000 students enrolled nationwide in 20 states, including 4,000 veterans and military service members using the G.I. Bill.

In Alabama, Education Corporation of America’s Virginia College campuses will close in Birmingham, Huntsville, Mobile, and Montgomery, leaving a combined total of more than 3,800 students in my state, including 670 student veterans who have been using the G.I. Bill benefits they have earned, left scrambling to figure out their educational future. According to your company’s website, there will be information for students regarding transcript retrieval, transfer, and contact information that you “expect to start loading” on or around December 17, 2018.

After abruptly closing the doors, your decision to make students and families wait nearly two weeks to receive any information about their next steps is simply unacceptable.


You have a responsibility to these students, including our veterans and service members, to ensure they have all of the tools and information they need to move forward, including the choice between receiving a discharge of their federal student loans or transferring to a similar program if they can find an institution willing to accept their credits. Veteran students also need to understand the impact of the closure on their G.I. Bill benefit eligibility. I am deeply troubled by reports that many Education Corporation of America colleges have not been informing students of their right to seek a “closed school discharge” of their federal loan as is required by federal law under the 2016 “borrower defense” rule. Additionally, students who are encouraged to transfer should understand the limitations of fully transferring credits, and the impact on their eligibility for a loan discharge.

I urge you to do all you can to inform these students of their options. They have invested thousands of dollars into your institution and could potentially lose everything.

Sincerely,

Doug Jones

U.S. Senator

###


Exhibit B


Qrongr.esn of tq.e lltnit.eh §tat.en MasI1ington, ID« 20515

December 21, 2018

Mr. Stu Reed President and Chief Executive Officer Education Corporation of America 3660 Grandview Parkway, Suite 300 Birmingham, Alabama 35243

Dear Mr. Reed and Mr. Kennedy:

Mr. John F. Kennedy, Esq. Receiver James Bates Brannan Groover, LLP 231 Riverside Drive Macon, Georgia 31201

We write to obtain information regarding Education Corporation of America's (ECA) abrupt school closures within its chain of for-profit colleges, and to demand a full accounting of events leading up to its collapse. We are particularly concerned as to whether ECA took adequate steps to warn students and regulators about the company's precarious financial standing, and whether ECA took adequate steps to pursue "teach-out agreements" that would have protected its students' class credits and educational investments in the event of permanent school closure.

On Wednesday, December 5, 2018, ECA announced that it would immediately close more than 70 of its campuses across 21 states, including the campuses of Brightwood Career Institute, Brightwood College, Ecotech Institute, Golf Academy of America, and Virginia College. 1 ECA's collapse immediately displaced approximately 18,000 students.2 In one instance, students enrolled at one of Brightwood's Maryland campuses were given as little as two days' notice of their school's closure, and must now find another school to accept their class credit.3

An administrative official at Ecotech stated he knew his school's "days were .. . numbered" after ECA told Ecotech "it would be closed in a year to a year and a half."4

Despite having this information, the school told its students "You guys will finish. You guys will be fine. Don' t worry about it."5

1 Aurora 's For-Pro.fit Ecotech Institute Authority Abruptly Closes, leaving Students on Their Own, Colorado Public Radio (Dec. 7, 2018) (online at www.cpr.org/news/story/aurora-for-profit-tech-college-abruptlycloses-leaving-students-on-their-own).

2 Receiver's Initial Report (Dec. 12, 2018), VC Macon, GA LLC v. Virginia College LLC, M.D. Ga. (No. 5: 18-cv-00388).

3 Brightwood College Suddenly Closes leaving Students Frustrated, WBALTV (Dec 6, 20 I 8) (on line at www.wbaltv.com/article/brightwood-college-sudden ly-closes-leaving-students-frustrated/2542553 9).

4 Aurora's For-Profit Ecotech Institute Authority Abruptly Closes, leaving Students on Their Own, Colorado Public Radio (Dec. 7, 2018) (online at www.cpr.org/news/story/aurora-for-profit-tech-college-abruptlycloses-leaving-students-on-the ir-own).

5 Id.

PAINTED ON RECYCLED PAPER

Case 1:18-cv-00621-MAC Document 30-15 Filed 06/05/19 Page 1 of 5 PageID #: 1376Case 20-10034-BLS Doc 26-2 Filed 02/04/20 Page 2 of 6Case 5:18-cv-00388-TES Document 330-1 Filed 02/24/20 Page 27 of 49

Mr. Stu Reed Mr. John F. Kennedy, Esq. Page2

Federal student loans are tl1e primary means by wl1ich for-profit colleges sustain themselves.6 In 2016, Department of Education records show ECA tool( over $390 inillion in taxpayer-funded federal stt.tdent aid and GI bill be11efits. 7

Several thot1sand veterans are among the students hrumed by ECA's collapse. According to Deparlinent of Veterans Affairs data, ECA 's closure 'vill i1npact nearly 4,000 stude11t veterans w110 had been using their GI Bill funds at ECA can1puses. 8

Begi1ming in March 2015, the Departn1ent ofEdt1cation, amid concerns about the schools' compliance and stability, placed many of EC.A's crnnpuses on a 1-Ieightened Cash Monitoring (HCM) financial restriction, resulting in additional federal oversigl1t of federal student aid funds. 9 In February 2018, tl1e Department of Edttcation levied additional fi11ancia_l and operational reporting requirements on ECA arising fro111 a federal review of the company's 2016 financial statements. 10

In May 2018, ECA's most enrolled institution, Virginia College, failed to obtai11 accreditation recog11ition fro111 the Accrediti11g Council for Continuing Education and Trairllng (AC-CET) due to poor graduation rates, poor job placement rates, 11igh faculty turnover rates, and t11e failure to provide st11dents access to proper supplies. 11 That sa1ne month, multiple Brigl1twood College a11d Brightwood Career l11stitute campuses, two chains operated by ECA, were required by their accreditor to "sho\v cause" and den1011strate why their accreditation should not be witl1draw11, joining 50 ca111puses and the Virginia College chain already u11der this sanction. 12 In August 2018, ACCET denied ECA's appeal for recognitio11 of many of its cainpuses. 13

6 For-l~rojlt College Chain Closes, Shutting Gui 1Vearly 20,000 ,')tudents, New York 'fi1nes (Dec. 6, 2018) (on 1 ine at W\VW. nytimes.com/20 18112/06/business/ education-corporation-of-amerlca-c losing.html).

7 Veterans Education Success, C'ould Education Corporation qf A1nerica's Sudden Closure !!ave Been Avoided (Dec. 2018) (online at https://static l .squarespace.co1n/static/5567I8b2e4b02e470eb1b186/t/Sc 17fc43c2241b89460al977 I l 545075779356/1 ssue+ Brief·+on+ ECA.FINAL.pdf).

8 Id_

9 U.S. Departlnent of Education, lleightened Cash Monitoring (on line at https:/fstudentaid.ed.gov/sa/about/data-ce11ter/school/hcm) (accessed Dec. 17, 2018).

1° Co1nplaint (Oct. 16, 2018), Education C'orporatfon oj'An1erica, Virginia College, LLC and Nerv England Cof/ege of' Business and Finance, LLC v. United States Deparllnenr of' Education and Betsey Del7os, N.D. Ala. (No. 2: J 8-cv-01698).

11 Another .)etbackfor Progra111s Overseen by Trouble Accreditor, Inside 1--Iigher Ed (May 22, 2018) (on line at \V\V\N. insidehighered. con11news/20 l 8/0 5/22/profit-chain-fa \ls-short-attcn1pt-get-new-accreditorsapproval).

12 Id.

13 Letter fron1 William Larkin, Executive Director, Accrediting Council for Continuing Education and 'fraining, to John Carreon, Senior Vice President, Regulatory Affairs ai1d Associate General Counsel, Virginia College, LLC (Aug. 31, 2018) (on!ine at https://s3.amazona\vs.com/docs,accet.org/downloads/adverse/J539.pdf).


Mr. Stu Reed Mr. John F. Kennedy, Esq. Page 3

In Septe1nbcr 2018, ECA announced that by early 2020, it \:vould close and end new enrollment at 26 campuses, a third of its ca1npuscs at that time. 14 In October 2018, the re1naining ECA campuses were placed on "show cause" status by ACICS and were required by November 27, 2018, to have all ca1npt1ses develop teach-out plans, a basic plan for orderly campus closUrcs that specify how stt1dents would finish their programs of study. 15 ECA's mismanagement continued in October 2018 with reports showing tl1e company unable to make on-time payments on its debt obligations, while "fighting eviction from n1ultiple locations as creditors purs11ed judgments against the cornpa11y." 16

ECA attempted to overl1aul its corporate structure witl1 a court-approved receivership, and in October 2018, sued the Department ofEd11cation i11 order to tnaintain access to federal student aid funds while it pt1rsued a receiversl1ip plan. 17 In the lawsuit, ECA revealed that tmless a Receiver was a·ppoi11ted to oversee and administer teacl1-out plans "their students will suffer irn1nediate and irreparable hann." 18 A federal judge dismissed that lawsuit on No\'ember 5, 2018, ruling that the court did not have jurisdiction in the case. 19

Even after t11e federal jt1dge dismissed ECA 's lawsuit in Noven1ber, it appears· ECA did not warn stude11ts that its colleges were 011 the verge of closing. ECA 11ad several signals over an extended an1ount of time tl1at its de1nise was potentially in1minent, wl1ile its students across the country had 11one.

The educational pursuits and financial \Vell-being of coll11tless students have been dis1upted and put at risk, while massive costs have bee11 i11curred by Ainerican taxpayers. In order to better understand ECA's operations and actions leading llp to its collapse, we ask that yot1 please provide tl1e following docume11ts and information by Jan11ary 21, 2019:

I. A full timeline, beginning in January 2015, of events leading tlp to ECA's collapse, inclt1ding all doctunents and commt1nications ECA or the Receiver shared with the Department of Education, ACICS, and all)' other accreditor regarding ECA's fina11cial standing, instability, and e\'entual closttre.

14 For-Profit C'hain Will Close Dozens of Ca111puses, Inside l,Iigher Ed (Sep. 12, 2018) (on line at www.insidehighered.com/ncws/20 18/09/ 12/profit-chai n-wi ll-close-dozens-ca1npuses ).

15 Letter from Michelle Edwards, President and CEO, Accrediting Council for Independent Colleges and Schools, to Stuart Reed, Chief Executive Officer, Education Corporation of An1er!ca (Oct. 30, 2018) (on line at http://acics.org/up loadedFil.es/ A ctions/000 16224 . ..: ECA-V C _ FinAdv-SC%20(Revised) .pdQ.

I£ For-Pro.fit College C'hain S'11es to Keep U.S. Aid, Inside Higher Ed (Oct. 19, 2018) (online at W\YW .insideh ighered.com/news/20 1 8/ J OJ 1 9/pro fit-college-chain-sues- Ji::ds-keep-federal-aid-am id-restructuring).

17 Id.

18 Complaint (Oct. 16, 2018), Education Corporation of An1erica, Virginia College, LLC and Ne~i' England College of Business and Finance, LLC v. United States Depart1ne11t of Education and Betse.v De Vos, N.D. Ala. (No. 2: 18-cv-O 1698).

IQ Memorandu1n Opinion (Nov. 5, 2018), Education Corporation of A1nerica v. United States Deparflnent ofEducarian, N.D. Ala. (No. 2:18-cv-01698).


Mr. Stu Reed Mr . .Tol1n F. Kennedy, Esq. Page4

2. All documents and communications provided to students regardi11g ECA 's financial position, instability, and eventual clostu·e at eacl1 of its campuses.

3. All documents and communications provided to ECA's faculty and staff regarding ECA's financial position, instability, and eventual closure.

4. Documents reflecting the iI1for1nation tl1at ECA communicated to students, faculty, and staff whe11 campuses were placed on ''show cause" by their accreditor in May 2018, as_ well as whe11 all ECA can1puses were placed on "show cause" in October 2018.

5. Doct1ments indicating wl1ether ECA ever asked the Department ofEdt1cation to reduce its oversigl1t of the company by removing any of its colleges from I-ICM or redi1cing the HC.M level. If this was done in more than one instance, please provide docun1ents regarding each time the request was made.

6. Copies of all teach-out plans prepared by ECA since January 1, 2015, ii1cluding those produced in accordance witl1 t11e November 27 i 2018, "show cause" sanctio11.

7. Copies of all comtnunications n1ade to students enrolled at the 26 ca1npuses slated for closure in 2020 during and after September 2018.

8. Docu1nents and communications regarding or reflecting the timing of '\Vhen ECA executive leadership learned tl1at tl1e scl1ool was likely to collapse, any plans made for the collapse, and any contingency plans that were developed to protect students in the event that ECA lost its lawsuit against the Education Department.

9. All copies of the document retention policies or directives issued to ECA campuses "skeleton crews" regarding document destruction.20

10. Mr. Reed's total annual co1npensation, including salru·y and any bonuses for 2015, 2016, 2017, and 2018. Please describe the compone11ts of Mr. Reed's compensation indi\1idually.

11. The total annual compensation, including salary and any bonuses, for the top five highest compensated ECA e1nployees besides Mr. Reed, for 2015, 2016, 2017, and 2018.

12. Documents and co1nmunications regru·ding or reflecting whetl1er Mr. Reed or any other top ECA executive is currently scl1eduled to or expected to receive in the future any bonuses, incentive awards, or other special payments, including tl1e amount oftl1e payment, the reasons for the payme11t, and the dates the individual is expected to receive tl1e payn1ent.

20 Receiver's Initial Report (Dec. 12, 2018), J·'C Afacon, GA LL(' v. Virginia College LLC, M.D. Ga. (No. 5: I 8-cv-00388).


Mr. Stu Reed Mr. John F. Kennedy, Esq. Page 5

13. Indicate the total investment rriade by Willis Stein & Partners, the Chicago-based private equity investment firm with a majority ownership stake in ECA.

Thank you for your prompt attention to this request.

U ited States Senator

c.,., S e Bonamici Vice Ranking Member House Committee on Education

and the Workforce

Sincerely,

' A

"--~· &.~.:.=? ElijaH . Cummings Ranking Member House Committee on Oversight and Government Reform

cc: Trey Gowdy, Chairman, House Committee on Oversight and Government Reform

Virginia Foxx, Chairwoman, House Committee on Education and the Workforce


Exhibit C


Exhibit D


EDUCATION CORPORATION OF AMERICACONSENT IN LIEU OF A SPECIAL

MEETING OF TIM BOARD OF DIRECTORSA-)

January zU,ZOZO

The undersigned, being all of the members of the Board of Directors of Education

Corporation of America, a Delaware corporation (the "Corporation"). in lieu of holding a special

meeting of the Board of Directors of the Corporation (the "Board"). hereby take the following

actions and adopt the following resolutions by unanimous written consent pursuant to Section

l4l(0 of the General Corporation Law of the State of Delaware and the bylaws of the

Corporation:

ACKNOWLEDGMENT AND AUTHORIZATION TO THE COURT-APPOINTEDRECEIVER REGARDING INVOLUNTARY BANKRUPTCY PETITION

WHEREAS, the Corporation and its subsidiaries, Virginia College, LLCand NECB Oldco, LLC flkla New England College of Business, (collectively, the"Receivership Entitied'), are in receivership under the jurisdiction of the UnitedStates District Court for the Middle District of Georgia (the "BgeeivgfShipCourt") in the case styled VC Macon GA, LLC v. Virginia College, LLC, et al,,

Case No. 5:18-cv-00388-TES (the "Begeiyership-easg"), and that, pursuant to the

Receivership Court's Order Appointing Receiver and Preliminaty Injunction (the

"Ap.pointmed-Qrdel"), John F. Kennedy (the "Receiver"), has been appointed as

receiver for the Receivership Entities; and

WHEREAS, that on January 6, 202A, certain creditors within theReceivership Case, Monroe Capital Private Credit Fund II LP ("Monroe"), BSFRichmond,LP(..s.E''),andReputationPartners,LLc(..@',Reputation, along with Monroe and BSF, are collectively referred to as the"Petitioners") filed an involuntary petition (the "Petition") under Chapter I I ofthe United States Bankruptcy Code against the Corporation, in the United States

Bankruptcy Court for the District of Delaware (the "hhgp!glb$"), In re:Education Corporation of America, Case No. 20-10034-BLS (the "BankruptcyCase"); and

WHEREAS, the Corporation has no assets with which to defend orotherwise respond to the Petition, and that the entry of an order for relief bydefault in the Bankruptcy Case would be detrimental to the Corporation and itscreditors.

NOW, THEREFORE, BE IT RESOLVED that the Board acknowledgesand agrees that purrsuant to the Appointment Order, the Receiver is vested with

052t8951.2

Case 5:18-cv-00388-TES Document 318-3 Filed 01/27/20 Page 1 of 10Case 20-10034-BLS Doc 26-4 Filed 02/04/20 Page 2 of 11Case 5:18-cv-00388-TES Document 330-1 Filed 02/24/20 Page 35 of 49

the broad power and authority to defend or otherwise respond to an involuntarybankruptcy petition, including the Petition, which broad powers include acting on

behalf of, and in lieu of, the Cotporation as a "debtor" under, and as defined in,the United States Bankuptcy Code.

RESOLVED FURTHER, that the Board, consistent with the power and

authority afforded to the Receiver in the Appointment Order, hereby consents to and

authorizes, to the extent necessary and as permitted by the Receivership Court, the

Receiver, to the extent the Receiver determines in his prudent business judgment, to

defend against or otherwise respond to the Petilion on behalf of, and in lieu of, the

Corporation, and to exercise all rights of the Corporation as a "debtor" under, and as

defined in the United Stated Bankruptcy Code, including without limitation, the exercise

of all rights afforded to a "debtor" under Section 303 of the Bankruptcy Code; and

RESOLVED FURTHER, that, to the extent necessary and as permitted

by the Receivership Couft, the Receiver is hereby authorized, empowered and

directed to take all actions that he deems necessary or appropriate to defend orotherwise respond to the Petition, and the approvals contained in these resolutions

are hereby approved, authorized, consented to and ratified in all respects as acts

by, for and on behalf of the Corporation; and

RFSOLVED FURTHER, that the consent, authority and power

authorized pursuant to these resolutions shall be deemed retroactive, and all acts

authorized by these resolutions performed prior to the adoption of these

resolutions are hereby approved, authorized, consented to, and ratified in allrespects as acts by, for and on behalf of the Corporation.

The actions taken by this consent shall have the same force and effect as if taken

at a special meeting of the Board duly called and constituted pursuant to the Bylaws of

the Corporation and the laws of the State of Delaware'

This consent may be executed in as many counterparts as may be required; all

counterparts shall collectively constitute one and the same consent.

2052r8957.2


IN WITNESS WHEREOF, the undersigned have executed this Consent of the

Board of Directors as of the date first writtenabove.

fze, 4rr4cd€o

Avy H. Stein

9a. Aznctep

John Bakalar

(sa. 4'rrAAeo

Christopher G. Boehm

{ac 4rr4clEo

Scott Conners

Restcxeo

John P. Frazee, Jr.

(ee 0rrtuleOJohn Kline, Jr.

4osranteo

Michael E. Lavin

Sa 4rrdcleo

Michael Moskow, Ph.D

Re:.tcnro

Stuart Reed

{ra $vaaleoDenis Sugg

052t8957.2



Board of Directors as of the date first writtenabovc.

Michael Moskow, Ph.D.

{r/1"4-n#H. si't

John Bakalar


Scott Conners

John P. Frazee, Jr

John Kline, Jr.

MichaelE. Lavin

Stuart Reed

Denis Sugg

052rE9t7 2


lN WITNESS WHEREOF, the undersigned have executed this Consent of the


Christopher C. Boehm

H

J Bakalar

Scott Conners

John P, Fraeee, Jr

John Klinc, Jr.

Michael E. tavin

Michael Moskow, Ph'D

Stuart Reed

Denis Sugg

052 18957.i


IN WITNBSS WHEREOF, tho undorsigned have Executed this Consent of the


Christqfer G. Boehm{ / -.*- -.,ij-..---'--'( .--n' ^-?"

Avy H..Sloirr

John Bakalar

Scott Conners

John P. trer.c*, ,lu

John KFnr..Jr

Michael E. Lavin

Michael Moskow, Ph.D.

Stuartf,sc$

DenisSugg

0521895v8




MichaEl Moskow, Ph.D.

Avy H. Stein

John Bakalar

Conners

Boehm

John P. Frazee, Jr

John Kline, Jr

MichaelE. Lavin

Stuart Reed

Dcnis Sugg

052 I 8957.2


IN WITNBSS WHEREOF, the undersigncd have cxocuted this Consent ofthe

Bmrd ofDirectolrs as ofthc date first wri&cnabovc.

AvyH. Stein

JohnBakalar

ChristopherG. Boehm

Soott Conners

Kline,Jr.

MfubelE t avin

Michael Moskoq Ph.D.

SturtRood

Denis Sugg


lN WITNESS WIIEREOF, tlre undetsigned have executed this Consent of the

Board of Directol'$ as of the date first writtenabove.

Michacl Moskoq Ph.D,

Avy H. Slein

John Bakalar

Christopher G. Boehrn

Scott Connem

John P. Fmzee, Jr.

John Kline, Jr.

MichaelC

Stuart Reed

Denis Sugg

052 I 895?.2


lN WITNESS WHEREOF, the undersigned have executed this Consent of the

Board of Directors as of the date first writtenabove,

MichaelMoskow, Ph.D.

Avy H. Stein

John Bakalar


Scoff Conners

John P. Frazee, Jr

John Kline, Jr.

MichaelE. Lavin

Stuart Reed

L[hPDenis Sugg

052 l 895?.2


Exhibit E


Ending Cash BalancePlusrluinus Net Cash FlowBeginning Cash Balance

Total Restructurc Cash UtilizaNECB Workino CaoitalProfessional Fees

Restructure cash l,rtilization

Ooeretino Cash Fl,ow

Total ooeEtno ExoensesOtherAccounts Pavable

,RSEMENTS

TOTAL RECEIPTSOther/lnsNECts Mrlnary;EIPTS

Week Endinqweekf

iino(n's)weel(v gasn Fonercast -EUA

S 3,{4

0

34

o

1t311

s 211

(1 33)

344

(1 1E)

(581(60)

{15t

(15)

(15)

2n2

$ 174

(37)211

(35)

(35)

t2l

QI

(21

2t143

$ 157

t17l174

(15)

(15)

t2l

tzl

(z',t

4214

3 90

{67)157

(65)

(65)

tzl

(21

(2)

z2a5

3 7g

fit)90

(9)

(9)

tzl

(21

(21

3r65

s a2

t17l79

(151

(15)

IZI

(2)

t2l

3t137

$ &t22l62

azo

s 38

l2l4

t2l

3tz7

3 6

t32l38

(3Ul

(30)

t2l

(21

(21

4t310

3 4

t2l6

t2l

(21

QI

4t1011

$ 2

t2l4

l2l

(2)

el

4t1712

$ o

el2

l2l

(2'l

el

4ta13

$ 0

/34/l34

(307)5 t5Ets t2491

t37

t37$5 137

s$

Total


IMPAC 6565502v.1



) ) ) ) ) )

Chapter 11 Case No. 20-10034 (BLS)

ORDER APPROVING THE MOTION OF PETITIONING CREDITORS FOR

APPOINTMENT OF A CHAPTER 11 TRUSTEE Upon consideration of the Motion of Petitioning Creditors for Appointment of a Chapter 11

Trustee (the “Motion”); and the Court having jurisdiction to approve the Motion; and due notice

having been given of the Motion; and the Court having reviewed the Motion and any responses to

the Motion; and the Court having heard the oral argument of counsel, if any; and the Court having

determined that the relief sought in the Motion is in the best interests of ECA and its estate, its

creditors, and other parties in interest; and after due deliberation and for good and sufficient cause

appearing; it is hereby ORDERED and ADJUDGED as follows:

1. The Motion is GRANTED as set forth herein;

2. The United States Trustee for Region Three is directed to appoint a chapter 11

trustee in these cases.

3. The Court retains jurisdiction to the extent necessary to enforce this Order.



I, R. Stephen McNeill, hereby certify that I am not less than 18 years of age and that on

this 4th day of February 2020, I caused a true and correct copy of the foregoing Motion of

Petitioning Creditors for Appointment of a Chapter 11 Trustee to be served upon the parties on

the attached service list via email and first class mail, postage pre-paid.

Under penalty of perjury, I declare the foregoing is true and correct.

/s/ R. Stephen McNeill R. Stephen McNeill (DE Bar No. 5210)


IMPAC 6565279v.1

CHICAGO/#3406548.3

SERVICE LIST

David L. Buchbinder, Esq. Delaware Office of the U.S. Trustee J. Caleb Boggs Federal Building, Suite 2207 Wilmington, DE 19801 Facsimile: 302-573-6497 Email: [email protected]

Daniel J. DeFranceschi, Esq. Cory D. Kandestin, Esq. J. Zachary Noble, Esq. RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 N. King Street Wilmington, DE 19801 Email: [email protected] [email protected] [email protected]

J. Leland Murphree, Esq. Ryan Thompson, Esq. MAYNARD, COOPER &GALE, P.C. 1901 Sixth Avenue North Suite 2400 Birmingham, AL 35203 Email: [email protected] [email protected]

John F. Kennedy, Court Appointed Receiver James F. Banter, Esq. JAMES-BATES-BRANNAN-GROOVER-LLP 231 Riverside Drive P.O. Box 4283 Macon, Georgia 31208-4283 Email: [email protected] [email protected]

Elizabeth Weller, Esq. LINEBARGER GOGGAN BLAIR & SAMPSON, LLP 2777 N. Stemmons Freeway, Suite 1000 Dallas, TX 75207 Email: [email protected]

Don Stecker, Esq. LINEBARGER GOGGAN BLAIR & SAMPSON, LLP 112 E. Pecan Street, Suite 200 San Antonio, TX 78205 Email: [email protected]

Diane Wade Sanders, Esq. LINEBARGER GOGGAN BLAIR & SAMPSON, LLP P.O. Box 17428 Austin, TX 78760 Email: [email protected]


Exhibit “B” to Motion for Sanctions

Motion to Abstain or Dismiss


RLF1 22814964v.1


In re: EDUCATION CORPORATION OF AMERICA,

Alleged Debtor.

_____________________________________

) ) ) ) ) ) )


RE: D.I. 1

RECEIVER’S MOTION FOR ABSTENTION

FROM INVOLUNTARY PETITION UNDER 11 U.S.C. § 305, OR ALTERNATIVELY DISMISSAL UNDER 11 U.S.C §§ 303 & 1112(B)

John F. Kennedy, solely in his capacity as receiver (the “Receiver”) for the Receivership

Estate (the “Receivership Estate”) of Education Corporation of America (“ECA” or the

“Alleged Debtor”), as well as Virginia College, LLC (“VC”) and New England School of

Business and Finance (“NECB”, together with ECA and VC, the “Receivership Entities”) in

the receivership proceeding pending in the United State District Court for the Middle District of

Georgia (the “District Court”), styled VC Macon GA, LLC v. Virginia College, LLC and

Education Corporation of America, Case No. 5:15-cv-00388-TES (the “Receivership Case”),

by and through undersigned counsel, hereby files this motion (the “Motion”) for abstention from

the involuntary petition for chapter 11 bankruptcy relief (Involuntary Bankruptcy Case, D.I. 1)1

(the “Involuntary Petition”) filed in the above-styled bankruptcy case (the “Involuntary

Bankruptcy Case”), or alternatively to dismiss the Involuntary Petition. In support of the

Motion, the Receiver respectfully states as follows:

1 Docket entries in the Involuntary Bankruptcy Case are cited as “(Involuntary Bankruptcy Case, D. I. __)”.


2 RLF1 22814964v.1

INTRODUCTION

Fourteen months ago, the District Court appointed the Receiver to oversee the

administration, and ultimately, the liquidation of ECA and the two other Receivership Entities,

both of which are ECA’s subsidiaries, which together owned and operated several for-profit

colleges. Over the course of those fourteen months, under the District Court’s supervision, the

Receiver liquidated substantially all of the Receivership Entities’ assets. The Receiver also

substantially administered the estates of the Receivership Entities, a process that included

rejecting all leases, winding down operations in cooperation with various state and federal

agencies, and setting up a nationwide claims process pursuant to procedures approved by the

District Court, under which the Receiver currently is administering nearly 2,000 claims with the

aid of Omni Management Group.2 In short, the bulk of the wind down is complete, and the

estates of ECA and its subsidiaries have been substantially administered. What remains is to

complete the claims administration process, prosecute or liquidate ECA’s causes of action,

complete the required reporting to the United States Department of Education, terminate the

401(k) pension plans of the Receivership Entities (a process that the District Court authorized

and approved by Court order last month), and file a final report with the District Court.

Given all this time and progress, a chapter 11 involuntary petition at this very late date

(and against ECA only) is inappropriate. ECA has no business to reorganize. A chapter 11 case

would add no new value, and in fact would harm ECA and its creditors and stakeholders by

imposing a new layer of unnecessary costs and administrative burdens.

The petitioning creditors know this. Each is an active participant in the Receivership

Case. In particular, Monroe Capital Private Credit Fund II LP (“Monroe”), a private hedge fund

2 See https://cases.omniagentsolutions.com/cases


3 RLF1 22814964v.1

that describes itself as specializing in “opportunistic” investing, participated in the Receivership

more heavily than any other creditor, filed proofs of claim, and purchased the New England

School of Business and Finance, the last remaining going concern school, through a credit bid in

the Receivership. Indeed, Monroe actually extended additional credit for the purpose of funding

the Receivership. So why now, at this late date, do they attempt to challenge the Receivership

proceedings? The timing is telling. In late 2019, the Receiver rejected an offer from Monroe to

finance the prosecution of certain of ECA’s claims and causes of action because the Receiver

concluded that Monroe’s conditions were unfair to other creditors. Monroe’s response was to

throw ECA into an involuntary bankruptcy filing.

This case is ripe for abstention or dismissal. First, the Court has discretion to abstain

from hearing the case under Bankruptcy Code § 305(a) if the Court determines that abstention is

in the best interests of ECA and its creditors. The factors that courts typically consider when

deciding whether to abstain include “efficiency,” “whether another forum is available to protect

the interests of both parties or there is already a pending proceeding,” “whether there is an

alternative means of achieving the equitable distribution of assets,” and “whether a non-federal

insolvency has proceeded so far in those proceedings that it would be costly and time consuming

to start afresh with the federal bankruptcy process.” In re Northshore Mainland Servs., Inc., 537

B.R. 192, 203 (Bankr. D. Del. 2015). Here, the Receivership Case in the District Court already

provides a forum for an efficient process that, for over a year, has (and will continue to) protect

the best interests of all of the creditors and stakeholders, including the interests of the Petitioning

Creditors. It also would be inefficient and uneconomical to commence a bankruptcy case,

inclusive of all its fees and costs, to administer an already substantially administered estate. The

end result would be an estate with less to distribute to creditors. Abstaining to allow the


4 RLF1 22814964v.1

Receivership Case to conclude in the District Court is in the best interests of ECA and its

creditors. Notably, the U.S. Trustee does not object to the Receiver’s request for abstention.

Second, if the Court does not abstain, then it should dismiss the Involuntary Petition as an

improper and bad faith filing under Bankruptcy Code §§ 303 and 1112, each of which

independently apply. The form and timing of the Involuntary Petition demonstrate that it was a

hasty reaction to the Receiver’s refusal of Monroe’s offer to provide litigation funding on

Monroe’s terms. In other words, it was a reaction to an adverse result perceived by Monroe in

the Receivership Case—a litigation tactic. Further, there is no valid bankruptcy purpose served

by proceeding with a chapter 11 bankruptcy: ECA has no business to reorganize, and a

bankruptcy would not add any new value to ECA. In short, this Involuntary Bankruptcy Case

was commenced to seize control of the last remaining assets (certain unliquidated claims and

causes of actions) and to relitigate, in a new forum, a receivership proceeding that has nearly

concluded for an entity that has no prospect of reorganizing. Thus, if the Court does not abstain,

it should dismiss the Involuntary Petition as an improper and bad faith filing.

JURISDICTION

1. The Court has jurisdiction over the contested Chapter 11 Involuntary Petition and

this Motion under 28 U.S.C. §§ 1334(b) and 157, and the Amended Standing Order of Reference

from the United States District Court for the District of Delaware dated as of February 29, 2012.

2. The Motion is a core matter under 28 U.S.C. § 157(b) and the Bankruptcy Court

may enter a final order consistent with Article III of the United States Constitution. Pursuant to

Local Rule 9013-1(f), the Receiver consents to the entry of a final judgment or order with respect

to this motion if it is determined that the Court would lack Article III jurisdiction to enter such

final order or judgment absent consent of the parties.


5 RLF1 22814964v.1

3. Venue of the Chapter 11 Involuntary Petition and this Motion are proper in this

Bankruptcy Court under 28 U.S.C. §§ 1408 and 1409.

4. The statutory and procedural predicates for the relief requested herein are §§ 105,

303, 305, and 1112 of the Bankruptcy Code, and Bankruptcy Rules 1002, 1003, 1011, 1013,

1018, and 7001 et seq.

BACKGROUND

A. The Parties

5. ECA, a Delaware corporation, is the parent company of VC, an Alabama limited

liability company and NECB, a Massachusetts limited liability company. In 2018, the

Receivership Entities operated approximately 75 campuses and served approximately 20,000

students across the nation. The Receivership Entities’ revenues flowed almost exclusively from

tuition and fees paid by its students, a significant majority of whom utilized federal grants and

student loans provided under Title IV of the Higher Education Act of 1965 (the “HEA”), 20

U.S.C. § 1001 et seq. Enrollment in many of the Receivership Entities’ campuses had been

falling for several years, which was due largely to numerous regulatory and macroeconomic

factors, including: 1) the U.S. Department of Education’s (“ED”) de-recognition of the

Accrediting Council for Independent Colleges and Schools (“ACICS”), the agency that

accredited nearly all of the Receivership Entities’ institutions; 2) new federal regulations

requiring the Receivership Entities to advise potential students of the consequences of the

Receivership Entities’ inability to obtain alternate accreditation within a specified time frame,

thereby causing some potential students to choose not to enroll or remain enrolled; and 3) the

upturn in the economy and improving unemployment rate which provided the Receivership

Entities’ historically nontraditional students opportunities to find employment without the need


6 RLF1 22814964v.1

for more education or training. Furthermore, the Receivership Entities’ financial exigency

increased dramatically when ED placed greater financial restrictions on the Receivership

Entities, thereby significantly delaying payment of Title IV funds to the Receivership Entities.

Lastly, several landlords had threatened or initiated legal proceedings to dispossess the

Receivership Entities from possession of their campuses, which would have had a catastrophic

impact on the Receivership Entities’ ability to restructure and protect the students’ interests. The

Receivership Entities’ options were very limited, as a traditional bankruptcy filing was not an

option because federal regulations provide that institutions in bankruptcy (either voluntary, or in

this case, upon the entry of an order for relief in an involuntary bankruptcy) are not eligible for

any federal student aid. 20 U.S.C. § 1002 (a)(4)(A).

6. Given the limited options available, the Receivership Entities sought the

protections provided by a federal receiver in the District Court in November of 2018 to seek the

restructuring of their operations and debts and obtain a “breathing spell” pursuant to a federal

court’s injunction. The restructuring plan proposed by the Receivership Entities (the “Plan”)

essentially consisted of four steps. First, the Receivership Entities sought to fulfil their regulatory

requirements inside the Receivership proceedings by “teaching-out” certain non-profitable

schools (“Teach-Out Schools”), while preserving certain schools (“Go-Forward Schools”) as a

going concern to sell for the benefit of the Receivership Entities’ stakeholders and creditors. (See

Receivership Case, D.I. 10, p. 5-7). Second, a nationwide injunction from the receivership court

would stay landlord proceedings to evict the Receivership Entities and students from the

campuses. Third, upon the entry of a court order appointing a receiver, additional funding in the

amount of $12 million from a senior-secured secured credit facility (the “Credit Facility”)

evidenced by that certain 8th Amendment to the Credit Agreement (as amended time to time, the


7 RLF1 22814964v.1

“Monroe Credit Agreement”), with Monroe, as administrative agent and collateral agent, and

each of the lender parties thereto (collectively, the “Participating Lenders”), which Participating

Lenders included Monroe and several of its affiliates (collectively the “Monroe Lenders”) would

be extended to the Receivership Entities to fund the Receivership. (See Receivership Case, D.I.

10, p. 6-7, 9-10). Lastly, certain of the Participating Lenders under the Credit Facility would act

as a stalking horse purchaser to purchase the Go-Forward Schools and the Receivership Entities’

management platform by credit bidding the secured obligations under the Monroe Credit

Agreement. After the entry of the Receivership Order (defined below), the Receiver vigorously

negotiated with ED and other regulators, but, ultimately, ACICS, which by that point had been

provisionally recognized, pulled the accreditation for ECA and VC’s schools, and ECA and VC,

with the assistance of the District Court, were able to teach out the remaining schools before

closing them in December 2019. Only one school, NECB, retained its accreditation and

continued to operate as a going concern after December 2019. An additional tranche of funding

in the amount of $7 million was extended by certain Participating Lenders under that certain 9th

Amendment to the Monroe Credit Agreement to, among other things, fund NECB through to a

going concern sale while the Receiver and his professionals continued to negotiate with ED to

release much-needed Title IV funds.

7. The petitioning creditors are Monroe, Reputation Partners LLC (“RP LLC”), and

BSF Richmond, LP (“BSF”, together with Monroe and RP LLC, the “Petitioning Creditors”).

8. Monroe (together with its affiliates) is one of the senior secured lenders to the

Receivership Entities under the Credit Facility and has been very actively involved in the

Receivership Case, including without limitation, ultimately acquiring NECB by credit bidding its

secured debt. (See Receivership Case, D.I. 198). Additionally, Monroe is the holder of certain


8 RLF1 22814964v.1

preferred stock in ECA. BSF is a former landlord of one of the Receivership Entities’ campuses,

and RP LLC is a trade vendor.

9. Monroe has materially participated in the Receivership Case, more than any other

creditor. As stated, on October 15, 2018, Monroe, as a party to the Monroe Credit Agreement,

provided a mechanism for a $12 million tranche of funding to be advanced to ECA upon ECA’s

successfully obtaining an order appointing a receiver over ECA and facilitating Monroe’s ability

to acquire the profitable, Go-Forward Schools via a credit bid under the Plan. (See Receivership

Case, D.I. 10, p. 6). Pursuant to the Receivership Order, throughout the course of the

Receivership, the Receiver has consistently made himself, and his counsel, available to Monroe

for periodic updates about the progress and status of the Receivership.3 Following ECA’s

closure and the implementation of the necessary wind down in December of 2018, the District

Court permitted Monroe the ability to “take possession of, sell, or otherwise liquidate the

personal property subject to the lien under the Monroe Credit Agreement (the “Remaining

Personalty”) without being in violation of the injunction of the Receiver Order or this Order [. . .

.].” (See Receivership Case, D.I. 104, p. 3). It is the Receiver’s understanding that Monroe is

continuing to liquidate the Remaining Personalty to this day. As discussed further below,

Monroe has filed a proof of claim pursuant to the claims procedures approved in the District

Court, and to the best of the Receiver’s belief, Monroe has been represented by counsel at every

hearing held before the District Court concerning the Receivership.

10. Additionally, petitioning creditor BSF has also materially participated in these

proceedings by appearing through counsel at several hearings and joining in objections filed by

3 The Receivership Order states the Receiver shall have the full power and authority to “interface with

secured creditors of ECA, including, without limitation, periodic updates to Monroe about the progress and status of the Receivership, the sale effort, and other material matters, and provide all non-privileged information provided to any investment banker, financial advisor or other financial advisory retained by the Receiver.” Doc. 26, p, 7, ¶ 16.


9 RLF1 22814964v.1

another landlord, Southern Plaza, LLC, to the motion to appoint the Receiver, the entry of the

Receivership Order, and a motion to vacate or alternatively modify the Receivership Order. (See

Receivership Case, D.I. 21, 49, 50, 52, 87). BSF, Southern Plaza, LLC and various other

landlords are represented in the Receivership proceedings by the same attorney, Lisa Wolgast of

Morris, Manning and Martin, LLP. On December 13, 2018, after a hearing and discussion on the

various motions and objections to the Receivership Order, the District Court entered its

Supplemental Order, mooting the objections to the Receivership Order by causing the Receiver

to reject all leases and surrender all leased premises to the landlords, including BSF. (See

Receivership Case, D.I. 104). Counsel for BSF participated in the drafting of the Supplemental

Order and BSF’s joinder was withdrawn or rendered moot. BSF has not materially participated

in this case since approximately December 2018, other than filing its proof of claim.

B. The Receivership Case

11. On November 14, 2018, the District Court entered its Order Appointing Receiver

and Preliminary Injunction, a copy of which is attached hereto as Exhibit A (the “Receivership

Order”). The docket of the Receivership Case is located at Case No. 5:18-cv-00388-TES (M.D.

Ga.), a printout of which is attached hereto as Exhibit B. District Judge Self has presided over

the case since its inception.

12. The Receiver is John F. Kennedy, a partner at James Bates Brannan Groover,

LLP, of Macon, Georgia. Mr. Kennedy has almost thirty years of experience in civil litigation,

trial work, business advice, and fiduciary law. Mr. Kennedy has also twenty years of experience

serving as a court appointed receiver and trustee, having been appointed by numerous judges

around the state of Georgia to serve as a receiver to take over corporations and ongoing business

entities, and control and manage assets and interests nationally and internationally. Mr. Kennedy


10 RLF1 22814964v.1

has served as a court appointed trustee in bankruptcy cases to manage assets and pursue causes

of action on behalf of the estates for which he was responsible; he has also served as a

conservator to oversee and manage corporate operations.

13. Pursuant to the Receivership Order, the Receiver may, among other things,

“operate ECA’s business and the Receivership Property in the ordinary course” and “do all

things that the board and management of ECA may do in the exercise of ordinary business

judgment,” including by “tak[ing] any and all acts as may be necessary to conclude this

receivership.” Receivership Order at page 4, subparagraphs (1) and (2), and page 7

subparagraph (17).

14. To date, and as reflected in multiple reports filed by the Receiver in the

Receivership Case, substantially all of the assets of the Receivership Estate have been liquidated.

The reports are attached hereto as Exhibit C. The District Court authorized the sale of

substantially all of the assets of NECB to Monroe, via credit bid, on April 11, 2019. (See

Receivership Case, D.I. 198). The Receiver successfully confirmed the sale of certain accounts

receivable of ECA on September 17, 2019. (See Receivership Case, D.I. 268). On October 29,

2019, the District Court confirmed the Receiver’s sale of a piece of real property in Semmes,

Alabama. (See Receivership Case, D.I. 288, p. 3). ECA and the other receivership entities are

now (and have been for some time) non-operating entities. The Receiver currently is working to

finalize reporting requirements with ED. The Receiver has been in constant communication with

ED concerning the reporting requirements and further regulatory issues pertaining to the

Receivership. Such communications have included periodic conference calls, as well as the

submission of the Receiver’s monthly Receiver’s reports to ED officials. The Receiver has also

been in constant communication with numerous state regulatory bodies, including several state


11 RLF1 22814964v.1

attorneys general, concerning student records and other documents. Concerning pensions and

401(k) plans of the Receivership Entities, the Receiver has cooperated with and communicated

with the Pension Benefit Guaranty Corporation (“PBGC”), a federally chartered corporation,

concerning the PBGC’s takeover and termination of NECB’s pension. Furthermore, the

Receiver was working to terminate the ECA 401(k) plan prior to the filing of the Involuntary

Petition, which the District Court authorized and approved in a recent order. (See Receivership

Case, D.I. 312.)

15. The Receiver also is conducting a claims administration process. On March 6,

2019, the District Court entered its Order Approving Claims Procedures (Receivership Case, D.I.

175) (the “Claims Procedures Order”), which ordered that all claimants holding or wishing to

assert any claim, cause of action, or other right against the Receiver or Receivership Estate must

file their claims pursuant to the Claims Procedures Order. (See Receivership Case, D.I. 175 at pp.

1-2) (copy attached hereto as Exhibit D). Additionally, with the exception of certain excluded

entities (that do not include the Petitioning Creditors), the Claims Procedures Order enjoined all

claimants from pursuing or otherwise asserting claims against the Receiver or Receivership

Estate other than through the Court’s claims process. (See Receivership Case, D.I. 175 at p. 2).

None of the Petitioning Creditors objected to the Receiver’s motion to establish the claims

process or objected to the Claims Procedures Order. In fact, the Petitioning Creditors have all

filed proofs of claim pursuant to the Claims Procedures Order (copies attached as Exhibit E).

16. The Receiver has hired Omni Management Group to assist with claims

administration. Among other things, Omni hosts a webpage on its website

https://cases.omniagentsolutions.com with claims information. In accordance with the Claims

Procedures Order, the Receiver served notice of the claims procedure on students, creditors and


12 RLF1 22814964v.1

other stakeholders. The latest bar date expired on May 23, 2019, and to date the Receiver has

received approximately 2,000 proofs of claim. The total proof of claim amount is

$512,623,639.68. The Receiver was in the process of reconciling the submitted proof of claims

to form a claims report for the District Court when the Involuntary Petition was filed.

17. Effectively, only six primary tasks, which have been, and continue to be, ongoing,

remain to complete the wind down and closure of the Receivership proceedings: 1) liquidating

certain claims and causes of action; 2) administering the 2,000 claims filed pursuant to the

Claims Procedures; 3) distributing proceeds of the Receivership Estate’s assets to the creditors in

accordance with the Claims Procedures; 4) filing a final report and requesting an order from the

Court closing the Receivership Proceedings; 5) the completion of the required reporting to the

United States Department of Education; and 6) the final termination of the 401(k) pension plans

of the Receivership Entities.

C. Monroe’s Offer to Fund Causes of Action

18. In the Spring of 2019, Monroe approached the Receiver in connection with the

Receiver’s investigation of claims and causes of action of the Receivership Estate (the “Potential

Claims”), requesting to become substantially involved with the investigation and prosecution of

the Potential Claims.

19. Understanding the limited funds for the Receivership, Monroe offered financial

assistance to the Receiver to permit the Receiver to continue to investigate and prosecute the

Potential Claims. As consideration for their financial assistance, Monroe sought a deal with

the Receiver that would provide Monroe with a significant recovery on the proceeds from a

successful prosecution of the Potential Claims. Fierce negotiations regarding a potential deal

for Monroe’s financial assistance ensued for months. The Receiver evaluated Monroe’s series


13 RLF1 22814964v.1

of terms to determine if Monroe’s offer was in the best interest of the entire Receivership

Estate. Numerous counteroffers regarding a potential recovery split were offered by both

Monroe and the Receiver. Monroe’s frustration with the Receiver’s vigorous negotiations, as

the Receiver fought to achieve terms that would be in the best interest of the Receivership

Estate, was evident. As recently as August of 2019, Monroe had threated to file an

involuntary bankruptcy if the Receiver did not accept the terms of Monroe’s most recent

proposal. Monroe’s threats and aggressive negotiating tactics are evidenced by an email from

the Receiver to Monroe dated August 20, 2019 memorializing the state of the negotiations and

Monroe’s threat to put ECA into an involuntary bankruptcy (the “August Email”). A true and

correct copy of the August Email, with certain redactions, is attached hereto as Exhibit F.4

By mid-November, after several months of negotiating with Monroe, the Receiver had not

accepted the terms of Monroe’s proposals as the Receiver. Additionally, recent developments

had provided the Receiver a potential avenue to pursue the prosecution of the Potential Claims

without substantially burdening the Receivership Estate’s limited funds or needing to rely on

Monroe’s offer of financial assistance and Monroe’s terms associated therewith.

4 On May 23, 2019, Monroe and the Receiver, acting solely in his capacity as the court-appointed Receiver, made and entered into a common interest doctrine agreement (the “Agreement”) for the sole purpose of jointly considering the potential opportunity to assert common causes of action and/or defenses in fact or in law by the sharing of litigation materials in furtherance of the common interests of both Monroe and the Receiver. Pursuant to the Agreement, certain discussions regarding litigation materials were to remain confidential as the two parties discussed and negotiated the possibility of a potential deal whereby Monroe would finance the Receiver’s liquidation of certain causes of action of the Receivership Estate. The Receiver informed Monroe of the Receiver’s withdrawal from the Agreement on January 27, 2020. Out of an abundance of caution, and based on an extremely conservative reading of the Agreement, the Receiver has decided to redact some portions of the email that may be considered as litigation materials. The Receiver’s decision to redact portions of this email are meant in no way to bind the Receiver to such a conservative reading of the Agreement, and the Receiver retains all rights to further determine and apply the Agreement to items the Receiver may or may not disclose. Furthermore, pursuant to the Agreement, the Receiver will produce any and all litigation materials received pursuant to the Agreement upon a court order mandating such disclosure.


14 RLF1 22814964v.1

20. In mid-November of 2019, as Monroe and the Receiver were continuing to

negotiate a potential agreement that would be in the best interest of the Receivership Estate,

the insurer of the Potential Claims contacted the Receiver concerning the Receiver’s

investigation into the Potential Claims. The insurer inquired whether the Receiver was

interested in cooperatively discussing a potential mediation regarding any of the covered

Potential Claims. The Receiver informed the insurer that, in the Receiver’s business

judgment, the Receiver was interested in a further discussion with the insurer concerning a

potential mediation of the Potential Claims, if the insurer’s offer to mediate was sincere, and

if the potential mediation could be set and conducted in the first quarter of 2020. The insurer

stated that they were sincere in their offer to discuss mediation, and that they appreciated the

time-sensitivity of the Receiver’s request to mediate. Following this discussion with the

insurer, the Receiver informed Monroe of the recent developments and the possibility of a

mediation of the Potential Claims with the insurer. The Receiver had determined, in his

business judgment, that the mediation was in the best interest of the entire Receivership Estate

and that participating in a mediation currently offered the highest possible recovery for the

entire Receivership Estate. As no deal with Monroe had been executed, the Receiver

informed Monroe that the Receiver would be pursuing the mediation with the insurer solely.

The Receiver further informed Monroe that should the potential mediation not be successful,

and further litigation avenues be required to pursue the Potential Claims, the Receiver would

be willing to then further discuss and evaluate Monroe’s offers of financial assistance to

pursue a recovery from the Potential Claims. This was the event that triggered the Petitioning

Creditors filing the Involuntary Petition.


15 RLF1 22814964v.1

21. During the month between the Receiver’s initial communication with the

insurer and the filing of the Involuntary Petition, Monroe continuously informed the Receiver

of its displeasure that the Receiver was going to pursue the mediation without Monroe’s

assistance.

D. The Involuntary Petition

22. The Petitioning Creditors filed the Involuntary Petition—against ECA only—

more than fourteen months after the entry of the Receivership Order and the substantial

administration of the Receivership Estate. Moreover, the Involuntary Petition was filed to

commence a Chapter 11 proceeding, despite the fact that the Petitioning Creditors, and Monroe

in particular, are well aware that there is no business to reorganize, as all but one school in the

Receivership closed early during the Receivership Case after ECA lost its accreditation. On

Tuesday, December 4, 2018, accreditation for ECA-owned entities VC and Brightwood Career

Institute was suspended by ACICS. ECA had previously had its application for accreditation

denied by the Accrediting Council for Continuing Education and Training (“ACCET”) in May of

2018, and on appeal in August of 2018. In the application denial, ACCET cited numerous

findings, including but not limited to ECA’s widespread shortages of qualified instructors, high

faculty turnover, and low rate of job placement. Due to the loss of accreditation from ACICS

and ECA’s failure to have any alternative accreditation for its institutions, combined with ECA’s

financial troubles, the Board decided to shut down ECA and its campuses on December, 5, 2018.

The only school that remained as a going concern after December 2018 was NECB—and

Monroe acquired that business via credit bid in April 2019.

23. The timing of the Involuntary Petition speaks volumes, as it shows that the

decision to file the Involuntary Petition was directly linked to the Receiver’s rejection of


16 RLF1 22814964v.1

Monroe’s onerous terms for providing financial assistance to prosecute the Potential Claims.

Given the timing, the filing of the Involuntary Petition can only be an attempt by Monroe to

disrupt the Receiver’s control of the unliquidated Potential Claims. In any event, a

bankruptcy case would be inappropriate given the Receivership Case.

ARGUMENT

24. The Receiver seeks entry of an order, a form of which is attached hereto as

Exhibit G, abstaining from considering the Involuntary Bankruptcy Case and dismissing the

Involuntary Bankruptcy Case under Bankruptcy Code § 305(a), or alternatively under

Bankruptcy Code §§ 303 and 1112, so that the Receiver can continue to administer ECA’s assets

through the Receivership Case.

I. Because of the Substantial Progress That the Receiver Has Made in the Receivership Case, the Court Should Abstain Under Bankruptcy Code § 305

25. Bankruptcy Code § 305(a) provides, in relevant part:

(a) The court, after notice and a hearing, may dismiss a case under this title, or may suspend all proceedings in a case under this title, at any time if—

(1) the interests of creditors and the debtor would be better served by such dismissal or suspension . . . .

11 U.S.C. § 305(a). “Whether to dismiss a case or abstain pursuant to section 305 is committed

to the discretion of the bankruptcy court, and is determined based upon the totality of the

circumstances.” In re Northshore Mainland Servs., Inc., 537 B.R. 192, 203 (Bankr. D. Del.

2015) (quoting In re Mylotte, 2007 WL 3027352, *5 (Bankr. E.D. Pa. 2007)). As the movant,

the Receiver bears the burden to demonstrate “that the interests of the debtors and creditors

would benefit from dismissal.” In re AMC Investors, LLC, 406 B.R. 478, 488 (Bankr. D. Del.

2009).


17 RLF1 22814964v.1

26. Although sometimes characterized as an “extraordinary” remedy, courts have

often abstained where they found that a receivership or other non-bankruptcy court restructuring

was well underway. The analysis by the Bankruptcy Court in In re Michael S. Starbuck, Inc., 14

B.R. 134 (Bankr. S.D.N.Y. 1981), is short but instructive. In Starbuck, three creditors filed an

involuntary petition against two entities that were previously placed in a federal receivership.

For more than one year before the involuntary petition was filed, the receiver had: (i) taken

possession of and sold the securities held for the receivership entities; (ii) used the sale proceeds

from the sale of securities to extinguish a large debt of one of the receivership entities; (iii)

assisted the state attorney general’s office in investigation of the entities’ principal; (iv) hired

professionals, including counsel and an independent accounting firm to assist in the

administration of the receivership estate; (v) commenced a lawsuit to recover damages on behalf

of the receivership estate; and (vi) advised stakeholders (as well as the District Court) of his

progress throughout the year. Id. at 315. In response to the creditors’ involuntary petition, the

receiver filed an abstention motion pursuant to § 305. Id. Stressing the importance of

considering efficiency and economy of administration when evaluating the best interests of

creditors and the debtor, the bankruptcy court held:

[T]here is no need to invoke the machinery of the bankruptcy process if there is an alternative means of achieving the equitable distribution of assets. The bankruptcy court may abstain if it is in the best interests of the creditors and the debtor that it do so.

* * * The SEC equity receivership is providing efficient and equitable distribution of [the receivership estate’s] assets. Over 1,400 hours and $4,500 have already been expended by the receiver and counsel in the administration of the estate. Allowing this matter to continue as a debtor proceeding under the Bankruptcy Code would result in a terrible waste of time and resources. Many services, already rendered in the administration of the receivership estate, would have to be repeated at additional expense to the estate. No advantage would accrue to the creditors if this matter were to proceed in the


18 RLF1 22814964v.1

bankruptcy court. Rather, their best interests will be served by the continued administration of the equity receivership.

Id. (emphasis added). Thus, under the circumstances of the case, the bankruptcy court abstained

and dismissed the petitions. Id.

27. Several other courts have reached the same conclusion where the alleged debtor

was in a receivership case that was well under way and approaching substantial consummation.

See In re Skymark Properties II, LLC, 597 B.R. 391, 398 (Bankr. E.D. Mich. 2019) (quoting 2

COLLIER ON BANKRUPTCY ¶ 305.02[2][c]) (“[W]hen the debtor has been in receivership for so

long that the bankruptcy case would be duplicative and wasteful, courts have deferred to

[receivership] courts and abstained under section 305(a)(1).”); In re Starlite Houseboats, Inc.,

426 B.R. 375, 389 (Bankr. D. Kan. 2010) (dismissing the bankruptcy case under § 305(a)(1)

where a “state court receivership had been pending for approximately eight months when [the

bankruptcy] case was filed,” and the court finding that “the interests of creditors and the [d]ebtor

would be served by dismissal of the case” because “continuation of the state court receivership

proceeding, which [was] well underway, [was] preferable to starting anew in [the bankruptcy]

court”); In re Fax Station, Inc., 118 B.R. 176, 177 (Bankr. D.R.I. 1990) (quoting Matter of Win–

Sum Sports, Inc., 14 B.R. 389, 394 (Bankr. D. Conn. 1981) (abstaining where creditors sought

“to use the bankruptcy court as an alternate approach to state court procedures to resolve intra-

company management and stockholder problems”); In re Sun World Broadcasters, Inc., 5 B.R.

719, 721 (Bankr. M.D. Fla. 1980) (granting receiver’s request for abstention because it best

served the interests of the creditors and the debtor); In re Runaway II, Inc., 168 B.R. 193, 198

(Bankr. W.D. Mo. 1994) (abstention would not harm creditors because “[a]bsent the bankruptcy,

the estate would be in the hands of the Receiver who is charged with its preservation for the

benefit of creditors.”).


19 RLF1 22814964v.1

28. Bankruptcy courts also have abstained in the analogous situation where an

involuntary petition is filed against an entity that has previously made an assignment for the

benefit of creditors. See, e.g., In re The Cincinnati Gear Co., 304 B.R. 784, 785 (Bankr. S.D.

Ohio 2003) (granting a motion to abstain when the debtor previously made an assignment for the

benefit of creditors and explaining that “[r]eplacing one professional fiduciary with another

would generally be a waste of resources and time, and most such involuntary bankruptcies are

dismissed, or the bankruptcy court abstains in deference to the existing ABC.”).

29. As noted by this Court in AMC Investors, LLC, when considering whether to

abstain from and dismiss a proceeding under § 305(a), courts consider a non-exclusive list of

factors including:

(1) the economy and efficiency of administration; (2) whether another forum is available to protect the interests of both parties or there is already a pending proceeding in a state court; (3) whether federal proceedings are necessary to reach a just and equitable solution; (4) whether there is an alternative means of achieving the equitable distribution of assets; (5) whether the debtor and the creditors are able to work out a less expensive out-of-court arrangement which better serves all interests in the case; (6) whether a non-federal insolvency has proceeded so far in those proceedings that it would be costly and time consuming to start afresh with the federal bankruptcy process; and (7) the purpose for which bankruptcy jurisdiction has been sought.

406 B.R. 478, 487-88 (Bankr. D. Del. 2009) (citing In re Paper I Partners, L.P., 283 B.R. 661,

679 (Bankr. S.D.N.Y. 2002) (citing In re 801 South Wells Street, L.P., 192 B.R. 718, 723 (Bankr.


20 RLF1 22814964v.1

N.D. Ill. 1996)).5 Here, these factors heavily favor abstention and dismissal of the Involuntary

Bankruptcy Case.

A. Economy and Efficiency of Administration

30. There is no question that the Receivership Case will be more economical and

efficient than a bankruptcy proceeding. Bankruptcy courts that have addressed motions for

abstention where a separate liquidation proceeding had already been filed have found that

allowing the separate liquidation proceeding to proceed would be more economical and efficient.

See, e.g., In re Packard Square LLC, 575 B.R. 768, 780–81 (Bankr. E.D. Mich. 2017)

(concluding that displacing the previously appointed receiver would, in effect, be changing

horses in mid-stream and would inevitably result in delays and inefficiencies); Short Hills

Caterers Inc., 2008 Bankr. LEXIS 1726 (Bankr. D.N.J. June 4, 2008) (dismissing the bankruptcy

case after finding that, judicial economy and efficiency warrant the continuation of the ABC

Proceeding. . . .”); In re O’Neil Village Personal Care Corp., 88 B.R. 76, 80 (Bankr. W.D. Pa.

1988) (holding that the receiver should not be divested of authority and control in favor of a

chapter 11 trustee because such transfer of power “would not provide for the economic and

efficient administration of the estate”); Starbuck, 14 B.R. at 135 (“Allowing this matter to

continue as a debtor proceeding under the Bankruptcy Code would result in a terrible waste of

time and resources. Many services, already rendered in the administration of the receivership

estate, would have to be repeated at additional expense to the estate.”); In re M. Egan Co., Inc.,

5 This seven-factor test has been applied in many cases. See, e.g., In re Crown Village Farm, LLC 415 B.R. 86, 95 (Bankr. D. Del. 2009); Short Hills Caterers Inc., No. 08-18604 DHS, 2008 Bankr. LEXIS 1726, at *12-13 (Bankr. D.N.J. Jun. 4, 2008); In re Compañía de Alimentos Fargo, S.A., 376 B.R. 427, 434-35 (Bankr. S.D.N.Y. 2007); In re Euro-American Lodging Corp., 357 B.R. 700, 729 (Bankr. S.D.N.Y. 2007); In re Mylotte, Adv. No. 07-0419, 2007 Bankr. LEXIS 3572, at *18 (Bankr. E.D. Pa. Oct 11, 2007) (citing In re Greene, 1999 U.S. Dist. LEXIS 14689, *12-13 (E.D. Pa September 27, 1999); In re R A Bus. Assoc., Inc., 1999 Bankr. LEXIS 543, *53-54 (Bankr. E.D. Pa. March 8, 1999)); In re Century/ML Cable Venture, 294 B.R. 9, 38 (S.D.N.Y. 2003); In re Mazzocone, 200 B.R. 568, 575 (E.D. Pa. 1996); 801 South Wells Street, L.P., 192 B.R. 718, 723 (Bankr. N.D. Ill. 1996).


21 RLF1 22814964v.1

24 B.R. 189, 192 (Bankr. W.D.N.Y. 1982) (abstaining where “switch to [bankruptcy] Court …

w[ould] result in only a duplication of effort and an increase in costs.”); In re Colonial Ford.,

Inc., 24 B.R. 1014, 1023 (Bankr. D. Utah 1982) (abstaining from permitting an “encore”

reorganization in chapter 11 following an agreed out-of-court workout, in furtherance of “the

policies of expedition, economy, and good sense.”); Sun World Broadcasters, 5 B.R. at 721

(concluding that “[i]t is too late in the game to switch playing fields” after a receivership had

been pending for years and hundreds of thousands of dollars had been spent by the debtor, the

receiver, their attorneys, and attorneys for the creditors).

31. Like the receiver in Starbuck, the Receiver here has made substantial progress

toward the equitable distribution of ECA’s Receivership Estate, and a bankruptcy case would

only duplicate administrative expenses. The Receiver has been involved in administering the

Alleged Debtor’s assets for over a year. During that time, the Receiver and its counsel have

become familiar with the Alleged Debtor’s assets, including selling substantially all of the

Receivership Estate assets, winding down of all operations of the Receivership Entities in

cooperation with various state and federal agencies, including but not limited to efforts to

preserve sensitive electronic data, investigating potential claims and causes of action of the

Receivership Estate, collecting the accounts receivable of the Receivership Estate, defending

lawsuits, and negotiating for over a year with regulators and state attorneys general. The

Receiver has also been overseeing the administration of nearly 2,000 claims filed pursuant to the

Claims Procedures Order, many of which have been filed by students, who would likely be

confused by a new claim process instituted in the Bankruptcy Case. In the event the Bankruptcy

Case is allowed to proceed, any students who previously filed claims in the Receivership Case

who do not file duplicative claims in the Bankruptcy Case would not receive the benefits of their


22 RLF1 22814964v.1

efforts in the Receivership Case. In addition, the Receiver has been working to finalize reporting

requirements with the U.S. Department of Education, and, on December 27, 2019, the District

Court instructed and directed the Receiver to terminate the ECA 401(k) plan. (See Receivership

Case, D.I. 312).

32. Not only would a bankruptcy be inefficient, it would be unnecessarily costly.

First, because ECA no longer has any management, a chapter 11 likely would require appointing

a trustee who then, with its advisors, would need to begin the process of familiarizing themselves

with the ECA’s affairs. Effectively, the trustee and professionals would start from scratch at

creditors’ expense.6 In addition, bankruptcy cases (and in particular chapter 11 cases) are

expensive. But this expense would be for no reason, since ECA no longer has a going concern

business to reorganize or liquidate in chapter 11.

33. For the foregoing reasons, the Receiver respectfully asserts that the Court, like

other bankruptcy courts that have considered motions to abstain where a separate liquidation

proceeding, such as a receivership, was pending at the time that the involuntary petition was

filed, should conclude that allowing the Receivership Case to proceed is more economical and

efficient than proceeding in bankruptcy.

B. Another Forum Exists to Protect Parties’ Interests

34. The fact that there is another available forum to protect parties’ interests is a

significant factor for courts considering whether to dismiss or abstain from hearing a bankruptcy

case. As noted by the bankruptcy court in Starbuck, “there is no need to invoke the machinery of

the bankruptcy process if there is an alternative means of achieving the equitable distribution of

assets.” 14 B.R. at 135; see also In re 801 S. Wells St. Ltd. P’ship, 192 B.R. 718, 723-24 (Bankr.

6 The Receiver reserves all rights with respect to his powers and authority to act for ECA or to seek to be

appointed as trustee in the event a bankruptcy case goes forward.


23 RLF1 22814964v.1

N.D. Ill. 1996) (explaining that bankruptcy courts have found that a receivership is a suitable

alternative forum that equitably satisfies creditors and is not unduly burdensome or prejudicial to

the debtor).

35. The Receivership is also sufficient to protect the Petitioning Creditors’ interests.

A receiver is an officer and extension of the appointing court and possesses and derives its power

from the appointing court. Federal courts are vested with broad, inherent, equitable powers to

achieve justice. See Michaelson v. U.S., ex rel Chicago, St. P., M & O Ry. Co., 266 U.S. 42

(1924); Link v. Wabash R. Co., 370 U.S. 626 (1962); In re Stone, 986 F2d 898 (5th Cir. 1993).

Pursuant to the equitable nature of a federal receivership, the court has expansive equitable

powers to fashion any order or decree that is in the interest of preserving or protecting the value

of receivership assets. See In re Chinichian, 784 F.2d 1440, 1443 (9th Cir. 1986); see also

Norwest Bank Wisconsin, N.A. v. Malachi Corp., 245 F. App’x 488 (6th Cir. 2009).

36. As an officer and extension of a federal court, a receiver acts in a fiduciary

capacity, and parties are stayed from suing the receiver without leave of the Court pursuant to the

well-known “Barton Doctrine”. See Barton v. Barbour, 104 U.S. 126 (1881); SEC v. Wenke, 622

F.2d 1363 (9th Cir. 1980); Standifer v. SEC, 542 F. Supp. 2d 1312 (N.D. Ga. 2008); Eller

Industries, Inc. v. Indian Motorcycle Manuf. Inc., 929 F. Supp. 369 (D. Colo. 1995). Relatedly,

the court’s judicial immunity is extended to the receiver to the extent a receiver is acting within

the direction of the appointing court. See New Alaska Development Corp. v. Guetschow, 869

F.2d 1298 (9th Cir. 1989); Capitol Terrace, Inc. v. Shannon & Luchs, Inc., 564 A.2d 49 (D.C.

Ct. App. 1989).

37. At the outset of the Receivership Case, the Receiver executed and filed with the

District Court his Oath and Acceptance of his duties as Receiver, “solemnly [swearing] to


24 RLF1 22814964v.1

faithfully perform the duties set forth in the Receivership Order.” (See Receivership Case, D.I.

34). There is no indication in the Receivership proceedings that any Petitioning Creditor has

alleged that the Receiver has breached his duty or has acted in such a way that he should be

subject to claims in his official capacity or have his limited immunity challenged. Far from it, the

Receiver has gone above and beyond in exercising his fiduciary duties to all creditors – as

evidenced by the Receiver’s decision not to accept Monroe’s onerous financing terms. In fact,

two of the Petitioning Creditors have benefitted from the Receivership process: 1) Monroe has

benefitted from the sale process established by the Receiver to sell NECB, which Monroe

acquired over the offer of a competing bidder via credit bid; and 2) in light of the objections and

arguments of BSF and other landlords, the Receiver worked with the Court and all of the

landlords to consensually address the landlords’ primary concerns, resulting in an agreement and

a jointly drafted Supplemental Order allowing BSF to regain possession of its premises as

quickly as possible. Given the District Court’s ability to adjudicate disputes, there should be no

question that, if there is an actual issue, creditors will get their fair day in court, and the District

Court will determine and adjust the parties' rights in a fair and equitable manner.

C. Federal Proceedings Are Not Necessary

38. The Receivership Case is a federal proceeding. The District Court is able to fully

adjudicate all of the issues necessary for the liquidation of the Alleged Debtor’s assets. This

factor therefore supports dismissal of the Involuntary Bankruptcy Case.

D. Alternative Means for Achieving Equitable Distribution of Assets

39. The Receivership Case provides a means by and through which the Alleged

Debtor’s assets are liquidated and for the equitable distribution from the proceeds of that

liquidation. Accordingly, this factor supports dismissal of the Involuntary Bankruptcy Case.


25 RLF1 22814964v.1

E. Less Expensive Out-of-Court Arrangements

40. As noted above, the Receivership Case would be less expensive than a Chapter 11

or Chapter 7 proceeding. Beyond that, there really are no realistic alternatives. Of course, there

is a possibility that the Receiver could reach a settlement with the Petitioning Creditors beyond

either a bankruptcy proceeding or the Receivership Case, although the Receiver believes that is

highly unlikely, given the limited resources of ECA, the significant number and amount of

claims asserted against the Receivership Estate and Monroe’s demonstrated unwillingness to

agree to reasonable terms and use of unwarranted and extreme litigation tactics like filing the

Involuntary Petition. The Alleged Debtor thus believes that any settlement outside either court is

unlikely to happen. This factor favors abstaining because the Receivership Case is less

expensive than a Chapter 11 or Chapter 7.

F. A Non-Bankruptcy Insolvency Has Proceeded So Far That It Would Be Costly And Time Consuming to Start Afresh With the Bankruptcy Process

41. The Receiver was appointed to administer the Alleged Debtor’s assets in

November 2018. Accordingly, the Receiver has now had more than one year to become familiar

with the Alleged Debtor’s assets and liabilities, including accounts receivable owed to the

Alleged Debtor. Allowing this Involuntary Bankruptcy Case to go forward at this point would

require the appointment of either a Chapter 11 or Chapter 7 trustee who has little or no

knowledge of the history of the case, the investigation of the Potential Claims and the lengthy

and ongoing negotiations that the Receiver has had with many creditors and stakeholders.

Importantly, the Receiver has spent over a year in extensive, complex negotiations and disputes

with ED, accreditors and state attorneys general with which a trustee would have little or no

familiarity or experience. The trustee and his counsel would necessarily have to become familiar

with those same facts and legal issues, a process that would cost significant time and money and


26 RLF1 22814964v.1

require the retention of multiple professionals. While the process for getting up to speed occurs,

the Alleged Debtor’s Potential Claims may dissipate or lose negotiating value, as ongoing

negotiations would inevitably be disrupted. In sum, it is inevitable that moving forward with the

bankruptcy will inevitably result in a lower, delayed recovery to creditors.7 In similar situations,

courts have concluded that this factor significantly favors abstention because incurring costs to

recreate the wheel would harm the interests of the alleged debtor and its creditors. See, e.g.,

Starbuck, 14 B.R. at 135 (“Allowing this matter to continue as a debtor proceeding under the

Bankruptcy Code would result in a terrible waste of time and resources. Many services, already

rendered in the administration of the receivership estate, would have to be repeated at additional

expense to the estate.”); Egan, 24 B.R. at 192 (abstaining where “switch to [bankruptcy] Court . .

. w[ould] result in only a duplication of effort and an increase in costs”).

G. The Purpose for Selecting Bankruptcy Jurisdiction

42. Although the Receiver cannot read the Petitioning Creditors’ minds, the timing of

the Involuntary Petitions is transparent. The Petitioning Creditors were content with the

Receivership Case until they suffered an adverse result—the Receiver’s rejection of Monroe’s

offer to fund the Receiver’s investigation of potential claims and causes of action, and his

decision to proceed without Monroe’s substantial involvement. This timing is telling, because if

the Petitioning Creditors truly had an issue with ECA being in receivership, they would have

acted much earlier, including acting upon their threats to file an involuntary bankruptcy as early

as the Summer of 2019. The fact that they act now, only after suffering an adverse result,

demonstrates that this bankruptcy filing is a litigation tactic, not a good faith attempt to

maximize the value of ECA’s estate. See § II below. Perhaps Monroe seeks to effect its initial

7 The Receiver reserves all rights to seek to be appointed trustee in the event that a bankruptcy proceeds.


27 RLF1 22814964v.1

Plan that was in place when it funded the Receivership in October 2018. The initial Plan (now

defunct) proposed to use Monroe’s secured funding as a stalking horse bid to purchase ECA’s

assets, which at the time consisted of going-concern schools. However, it is not out of the realm

of possibility that Monroe seeks to replace the Receiver with a new, neutral party – a chapter 11

trustee of its own choosing or a chapter 7 trustee – who will have no funds with which to pursue

the Potential Claims, and further to achieve its goal of having itself paid first out of any proceeds

of the Potential Claims through providing postpetition financing with a roll-up of its existing

secured debt.

43. Further, if the Petitioning Creditors attempt to justify their conduct by claiming

that the Receiver somehow is not acting in the best interests of creditors—a claim that would

have no basis in fact—they already have a forum in which to seek redress: the District Court,

which as a federal district court is well equipped to address any allegations of wrongdoing

against an officer of its own court.

44. Notably, the U.S. Trustee does not object to the Receiver’s request for abstention.

45. For the reasons above, the seven factors identified by AMC Investors as guiding

the Court’s discretion weigh heavily in favor of abstaining. Dismissal of this case serves the

interests of ECA and its creditors by avoiding the imposition of unnecessary costs in favor of a

less-expensive out-of-court proceeding that already is well underway. Congress contemplated

the use of § 305(a) of the Bankruptcy Code to dismiss involuntary bankruptcy cases where there

already exists an alternative forum for the protection of creditors, In re Cincinnati Gear Co., 304

B.R. at 785-86, Starbuck, 14 B.R. at 135, and the actions of three recalcitrant creditors should

not override the progress made in the Receivership Case. For the reasons above, the Court should

abstain from hearing the Involuntary Bankruptcy Case.


28 RLF1 22814964v.1

II. Alternatively, the Court Should Dismiss the Involuntary Petition Because the Petitioning Creditors filed it in Bad Faith

46. The filing of an involuntary bankruptcy petition is an “extreme remedy with

serious consequences to the alleged debtor.” In re Forever Green Athletic Fields, Inc., 804 F.3d

328, 335 (3d Cir. 2015). Because of the seriousness of forcing an unwilling entity into

bankruptcy, a petitioning creditor must not only meet the express statutory requirements of

Bankruptcy Code § 303, but also must act for a good faith purpose. Id. at 334. An involuntary

petition that is filed with a bad faith purpose will be dismissed, even where the statutory

elements of Bankruptcy Code § 303 are satisfied. Id.

47. A bankruptcy petition must serve a valid bankruptcy purpose. In a chapter 11

case, the petition must “preserv[e] a going concern or maximiz[e] the value of the debtor’s

estate.” Santa Fe Minerals, Inc. v. BEPCO, L.P. (In re 15375 Mem’l Corp.), 589 F.3d 605, 619

(3d Cir. 2009) (citations omitted). In a liquidating case where there is no going concern to

preserve, the petition must maximize value by preserving “some value that otherwise would be

lost outside of bankruptcy.” Id. (citations omitted). A creditor’s mere “desire to take advantage

of the protections of the Code, such as the automatic stay … cannot establish good faith as a

matter of law” given the truism that every petition seeks to take advantage of some provision of

the Code. Id. at 620.8

48. The Third Circuit applies a “totality of the circumstances” test to evaluate whether

an involuntary petition is filed in bad faith. See Forever Green Athletic Fields, Inc., 804 F.3d at

336. In conducting this review, courts may consider the following, non-exhaustive factors: (i)

whether the creditors satisfied the statutory criteria for filing the petition; (ii) whether the

8 Although Santa Fe Minerals discussed the standard as it applies to voluntary bankruptcy petitions, Forever Green noted that the standard is “the same” in both voluntary and involuntary cases. Forever Green, 804 F.3d at 336 (the “totality of the circumstances” test for bad faith involuntary petitions “is the same standard we apply when reviewing allegations that a debtor filed a voluntary petition in bad faith.”).


29 RLF1 22814964v.1

involuntary petition was meritorious; (iii) whether the creditors made a reasonable inquiry into

the relevant facts and pertinent law before filing; (iv) whether there was evidence of preferential

payments to certain creditors or of dissipation of the debtor's assets; (v) whether the filing was

motivated by ill will or a desire to harass; (vi) whether the petitioning creditors used the filing to

obtain a disproportionate advantage for themselves rather than to protect against other creditors

doing the same; (vii) whether the filing was used as a tactical advantage in pending actions; (viii)

whether the filing was used as a substitute for customary debt-collection procedures; and (ix)

whether the filing had suspicious timing. Id.

49. As set forth below, the totality of circumstances establishes that the Petitioning

Creditors filed the Involuntary Petition in bad faith. Indeed, several other courts have reached

the same conclusion when considering whether an involuntary petition for relief is filed in bad

faith when there is a liquidation proceeding, such as a receivership, pending in another forum.

See, e.g., In re 801 South Wells Street, L.P., 192 B.R. 718, 727 (Bankr. N.D. Ill. 1996)

(dismissing involuntary case for bad faith where petition was brought by the petitioner “to

prevent foreclosure” of property managed by receiver and “no reasonable likelihood of

reorganizing the Debtor exist[ed]”); In re First Fin. Enters., Inc., 99 B.R. 751, 755–56 (Bankr.

W.D. Tex. 1989) (dismissing involuntary bankruptcy case for bad faith filing where “[t]he

obvious purpose of the filing . . . [was] an attempt by the [petitioners] to halt the state court

receivership and conservatorship of the Debtor’s subsidiary insurance companies and take

control of their assets.”).

A. The Timing of the Involuntary Petition Demonstrates Bad Faith

50. The “suspicious timing” of an involuntary petition is an important factor in

determining whether the petition was filed in bad faith, because it can put the lie to whatever


30 RLF1 22814964v.1

pretext the petitioning creditor relies upon to explain the filing. See Forever Green, 804 F.3d at

336 (“[T]he suspicious timing of Dawson’s filing … and his threatening comments to Day

suggest that he was just using bankruptcy as an alternative weapon….”); In re Metrogate, LLC,

2016 WL 3150177, at *17 (Bankr. D. Del. 2016) (timing of involuntary petition was “telling”);

id. at 12 (“Substantial case law prior to Forever Green focused on the nexus between the seventh

(litigation tactic) and ninth (timing) factors, inquiring into whether the action was brought with a

‘valid bankruptcy purpose’ such as ‘preserving a going concern or maximizing the values of the

Debtors’ estate.’”).

51. The Petitioning Creditors actively participated in, and did not object to, the

Receivership Case until after they suffered an adverse result—the Receiver’s rejection of

Monroe’s offer to fund the Receiver’s investigation of potential claims and causes of action, and

his decision to proceed without Monroe’s substantial involvement. Only then, well into the case,

did they then seek to commence an Involuntary Petition.

52. Why then? All else equal, ECA’s circumstances did not change between then and

the commencement of the Receivership: after ECA and VC lost their accreditation in December

2019, ECA was an entity being liquidated pursuant to a federal court receivership, and the

Petitioning Creditors could have attempted to file an involuntary petition much earlier if they had

a genuine problem with the Receivership. The fact that they filed the Involuntary Petition only

after suffering an adverse result therefore is significant. It signals that their motive was not to

maximize the value of the estate for all creditors, but rather was a tactic in response to a decision

by the Receiver with which they disagree, by attempting to wrest control of causes of action

away from the Receiver and creating a second chance for them to pitch their funding to a

potentially new and friendlier entity. In the context of this case, the “timing” factor is powerful


31 RLF1 22814964v.1

evidence of bad faith, as the Receivership Case has experienced no other changes that can

explain the Involuntary Petition’s “suspicious” and “telling” timing. Forever Green, 804 F.3d at

336; Metrogate, 2016 WL 3150177, at *17.

53. The Receiver did not accept Monroe’s terms because the Receiver had

determined, in his business judgment, that the onerous terms offered by Monroe were not in the

best interest of the entire Receivership Estate. Additionally, Monroe’s offer of financial

assistance to pursue the Potential Claims was not required at the time as the Receiver was

engaged in cooperative discussions regarding a potential mediation with the insurers for the

Potential Claims. Accordingly, Monroe’s terms associated with Monroe’s offer of financial

assistance were not in the best interest of the entire Receivership Estate, and due to the

Receiver’s efforts, Monroe’s financial assistance was not needed at the time.

54. If the Involuntary Petition were to proceed in the Bankruptcy Court, though,

Monroe’s financial assistance would all but be required for a bankruptcy trustee to proceed. The

funds in the Receivership Estate are limited. Additional funding would be required to allow a

new bankruptcy trustee to get up to speed and to investigate and pursue the Potential Claims. As

Monroe was willing to offer the Receiver financial assistance concerning the Potential Claims, it

is reasonably certain that Monroe will also seek to provide the new bankruptcy trustee similar, if

not worse, terms that Monroe provided the Receiver. Monroe’s offer of financial assistance will

be used as leverage to increase its recovery from the Potential Claims, to the detriment of all

other creditors of the Receivership Estate.

55. Thus, the Petitioning Creditors, namely Monroe, used the Involuntary Petition to

create a disproportionate advantage for themselves. That is an improper litigation tactic. See,

e.g., Forever Green, 804 F.3d at 336 (explaining that a bad faith filing is evidenced by an


32 RLF1 22814964v.1

involuntary petition “used as a tactical advantage in pending actions”); WLB-RSK Venture, 296

B.R. at 513, 515 (dismissing an involuntary chapter 11 petition filed in bad faith and explaining

that the petitioner, “in a forum shopping effort,” “employed [the] involuntary petition to

circumvent his lack of success . . . in prior litigation . . . and to avoid the [already pending court

action].); First Fin. Enters., Inc., 99 B.R. 751 at 56 (Bankr. W.D. Tex. 1989) (dismissing an

involuntary petition for bad faith when “the obvious purpose in this case is to use the Chapter 11

filing as a litigation strategy and leverage in order to defeat the Texas regulatory scheme for the

receivership . . . .”).

B. The Involuntary Petition Does Not Serve A Valid Bankruptcy Purpose

56. A valid bankruptcy purpose exists if an involuntary petition “preserv[ed] a going

concern or maximiz[ed] the value of the debtor’s estate.” Santa Fe Minerals, Inc. v. BEPCO,

L.P. (In re 15375 Mem’l Corp.), 589 F.3d 605, 619 (3d Cir. 2009) (citations omitted). In the

context of an involuntary chapter 11 petition, the bad faith determination will naturally consider

whether the alleged debtor “ha[s] an ongoing business to reorganize” or “any cash flow to fund a

plan, or litigation, or pay its bills.” In re WLB-RSK Venture, 296 B.R. 509, 514-15 (Bankr. C.D.

Cal. 2003) (dismissing an involuntary chapter 11 petition as a bad faith filing on this ground,

among others); see also 801 South Wells Street, 192 B.R. at 727 (dismissing involuntary case for

bad faith where “no reasonable likelihood of reorganizing the Debtor exist[ed]”).

57. Here, as stated above, ECA has no going concern to preserve. All but one school

in the Receivership closed early during the Receivership Case after ECA had its accreditation

from ACICS suspended on December 4, 2018. That one school, New England College of

Business, was sold to Monroe in the Receivership Case in April 2019. Thus, at the time of the


33 RLF1 22814964v.1

filing of the Involuntary Petition, ECA had no going concern. Put simply, there is nothing to

reorganize.

58. Likewise, a bankruptcy case would not maximize the value of the debtor’s assets,

because there is no value that would be lost but for the bankruptcy. The Receiver already has

wound down the Receivership Entities’ assets. The two most significant activities remaining are

concluding the claims process and asserting causes of action. The Receiver could perform these

tasks as well as a debtor or trustee in bankruptcy.

59. Nor is this a case where there has been any dissipation of assets that could justify

a bankruptcy filing. Courts recognize that “proper reasons” for filing an involuntary petition

include preventing an alleged debtor from further depleting its assets in the absence of court

oversight. See, e.g., Forever Green, 804 F.3d at 335; In re Quinto & Wilks, P.C., 531 B.R. 594,

609 (Bankr. E.D. Va. 2015) (internal quotation marks omitted) (describing “the recognized [good

faith] purpose of protecting against the threatened depletion of assets”). For this reason, one of

the factors considered in the bad-faith analysis is whether, prior to the involuntary filing, “there

was evidence of . . . dissipation of the debtor’s assets.” Forever Green, 804 F.3d at 336.

60. This is not a case in which an involuntary petition was necessary to stop

management from placing assets beyond the reach of creditors or making preferential payments

to favored creditors. For more than one year prior to the filing of the Involuntary Petition, the

District Court has been overseeing the Receiver’s administration of Alleged Debtor and its

operations, affairs, management and assets. As set forth in the Receivership Order, the District

Court granted significant authority to operate and manage the Receiver vis-à-vis the

Receivership Entities and the Receivership Estate, including, but not limited to, the following:

Authority to operate the Receivership Entities in the ordinary course and in compliance with applicable laws;


34 RLF1 22814964v.1

Authority to do all the things the board and management of the

Receivership Entities may do in the exercise of ordinary business judgment or in the ordinary operation of the Receivership Entities;

Authority to pursue for the benefit of the Receivership Estate

any claims of the Receivership Estate for the benefit of the Receivership Estate;

Authority to use, sell, or lease assets of the Receivership

Entities other than in the ordinary course of business;

Authority to obtain financial accommodations for the benefit of the Receivership Estate;

Authority to reject, impair, or terminate any contract, or, in the

alternative, to enforce any contract of the Receivership Entities; and

Authority to take any and all actions necessary to efficiently

wind-down these receivership proceedings. (See Receivership Case, D.I. 26, pp. 4-7.)

61. The District Court’s appointment of the Receiver immediately stabilized the

Alleged Debtor, and the Receiver has substantially administered the Receivership Estate.

Moreover, the Petitioning Creditors, in particular, Monroe, have been actively involved in the

Receivership Case and have had their interests protected. For example, Monroe purchased the

only division of the Alleged Debtor with a net-positive value as a going concern via credit bid

and all of the Petitioning Creditors filed proofs of claim in accordance with the District Court’s

Claims Procedures Order. There was no legitimate or proper basis to file the Involuntary

Petition.

62. Monroe has been consistently informed of the Receiver’s efforts concerning the

Receivership from the beginning. Pursuant to the Receivership Order, throughout the course of

the Receivership, the Receiver has consistently made himself, and his counsel, available to


35 RLF1 22814964v.1

Monroe for periodic updates about the progress and status of the Receivership. The Receiver

had standing weekly conference calls with representatives from Monroe concerning the status of

the Receivership for several months. The Receiver has consistently answered any and all of

Monroe’s questions, and instructed his counsel and financial advisors to make themselves

available to answer Monroe’s questions. Monroe has never objected to any of the Receiver’s

reports or motions in the Receivership Court, nor has Monroe filed any motion moving the

Receivership Court to dismiss the Receiver. Monroe has actively and consistently engaged with

the Receiver and the Receivership from the beginning. Monroe’s filing of the Involuntary

Petition is now a clear act, in bad faith, to secure control of the Potential Claims, in spite of

Monroe’s presence and relationship with the Receiver for the past year.

63. Furthermore, the Receiver has received no indication from the Petitioning

Creditors, namely Monroe, or any other creditor for that matter, that the Receiver’s actions are

depleting assets of ECA. Pursuant to the Receivership Order, the Receiver has filed monthly

reports concerning his efforts to marshal assets and wind down the Receivership Estate. See

Exhibit C. Such reports have also included the monthly Receivership Estate disbursements that

the Receiver approved, and the thirteen week cash-forecast. No creditor has filed objections to

these reports or motions for clarifications. Accordingly, the Involuntary Petition has not been

filed to preserve depleting assets.

64. Given the transparent timing of the Involuntary Petition and the lack of a valid

bankruptcy purpose, the Court should dismiss the Involuntary Petition under Bankruptcy Code §

303 as a bad faith failing.


36 RLF1 22814964v.1

III. Alternatively, the Bankruptcy Court Should Dismiss the Involuntary Bankruptcy Case for Cause Pursuant to § 1112(b)

65. Bankruptcy courts also have the authority to dismiss a bankruptcy case for cause

when it is in the best interest of the creditors and the estate. 11 U.S.C. § 1112(b); see also In re

SGL Carbon Corp., 200 F.3d 154, 160 (3d Cir. 1999); Taberna Preferred Funding IV, Ltd. v.

Opportunities, II. Ltd. (In re Taberna Preferred Funding IV, Ltd.), 594 B.R. 576, 600 (Bankr.

S.D.N.Y. 2018); In re Corinthian, LLC, 440 B.R. 97, 102 (Bankr. E.D. Pa. 2009). Here, cause

exists to dismiss the Involuntary Bankruptcy Case under § 1112(b) because: (1) the Involuntary

Petition was filed in bad faith; (2) the Involuntary Bankruptcy Case is an inappropriate use of the

Bankruptcy Code; and (3) there is not a reasonable possibility of a successful reorganization

within a reasonable period of time.

A. The Involuntary Petition was Filed in Bad Faith 66. Cause exists to dismiss a case under § 1112(b) when the case is commenced in

bad faith. See, e.g., Santa Fe Minerals, Inc. v. BEPCO, L.P. (In re 15375 Mem’l Corp.), 589

F.3d 605, 618 (3d Cir. 2009) (“Chapter 11 bankruptcy petitions are ‘subject to dismissal under

11 U.S.C. § 1112(b) unless filed in good faith and the burden is on the bankruptcy petitioner to

establish [good faith].’”) (citation omitted); 801 South Wells Street, L.P., 192 B.R. at 727. The

same totality of the circumstances test for bad faith applies under § 1112(b) as under §303. In re

15375 Mem’l Corp.), 589 F.3d at 618; Forever Green, 804 F.3d at 336. Thus, for the same

reasons provided in Section II of this Motion, the Involuntary Petition was filed in bad faith, and

should be dismissed for cause pursuant to § 1112(b).


37 RLF1 22814964v.1

B. The Involuntary Bankruptcy Case is an Inappropriate Use of the Bankruptcy Code

67. Even if the Bankruptcy Court determines that the Involuntary Petition was not

filed in bad faith, cause exists for dismissal under § 1112(b) when a petition constitutes misuse

of the Bankruptcy Code. See Taberna Preferred Funding IV, 594 B.R. at 601 (quoting Wilk

Auslander LLP v. Murray (In re Murray), 900 F.3d 53, 60 (2d Cir. 2018) (“While a finding that

the filer acted in bad faith is often invoked as a reason to dismiss for cause, the Court ‘need not .

. . classify misuse of the Bankruptcy Code as bad faith in order to accept it as cause to

dismiss[.’]”). As explained by the court in Taberna Preferred Funding IV, “[a]n involuntary

chapter 11 is appropriate where the petitioning creditor seeks to guard against other creditors

obtaining an unfair and disproportionate share of the alleged debtor’s assets.” 900 F.3d at 60.

Thus, such a petition “must seek to create or preserve some value that would otherwise be lost—

not merely distributed to a different stakeholder—outside of bankruptcy.” Id. (quoting In re

Integrated Telecom Express, Inc., 384 F.3d 108, 129 (3d Cir. 2004)). When no bankruptcy

purposes are served by the filing of a petition, dismissal is warranted. Id. at 602. The goal of the

Bankruptcy Code is “to afford a debtor an opportunity to continue business, preserve equity, and

provide a collective remedy, goals which serve to protect the interests of all creditors equally and

fairly.” Id. at 606.

68. Here, these goals are not served by the Involuntary Bankruptcy Case. There is no

business to reorganize and, thus, no rehabilitative objective that could be served by allowing the

Involuntary Bankruptcy Case to proceed. Furthermore, there is no need to protect ECA’s estate

or ECA’s creditors, as the Receivership Case and the Receiver’s actions have ensured equitable

protection of estate assets for the benefit of creditors. The Petitioning Creditors, namely

Monroe, only filed the Involuntary Petition to gain a tactical advantage for Monroe’s own


38 RLF1 22814964v.1

benefit, which does not constitute a proper bankruptcy purpose. See id. (internal citations

omitted) (dismissing an involuntary bankruptcy case because the petition was not a genuine

attempt to reorganize the putative debtor so that it could reemerge from bankruptcy as a viable

going concern but was rather a last-ditch effort by a senior sophisticated creditor to further its

personal, tactical and pecuniary aims and to coerce better treatment of its claims to the detriment

of junior creditors).

69. Thus, the Involuntary Bankruptcy Case is an inappropriate use of the Bankruptcy

Code, and the Involuntary Bankruptcy Case should be dismissed for cause pursuant to § 1112(b).

C. There is not a Reasonable Possibility of a Successful Reorganization Within a Reasonable Period of Time

70. The Third Circuit has found that cause exists to dismiss a case under § 1112(b)

when there is not “a reasonable possibility of a successful reorganization within a reasonable

period of time.” Anderson v. Commonwealth Renewable Energy, Inc. (In re Commonwealth

Renewable Energy, Inc.), 550 B.R. 279, 283 (quoting Am. Capital Equip., LLC, 688 F.3d 145,

162 (3d Cir. 2012)). Here, as the Petitioning Creditors know, there is no business to reorganize.

Thus, there is no reasonable possibility of a successful reorganization within a reasonable period

of time, and the Involuntary Bankruptcy Case should be dismissed for cause pursuant to §

1112(b).

RESERVATION OF RIGHTS TO ASSERT CLAIMS UNDER 11 U.S.C. § 303(b), (i) OR OTHERWISE

71. The Receiver specifically reserves the right to file and pursue claims and remedies

under § 303(b), (i) or otherwise against the Petitioning Creditors arising in connection with the

filing of the Involuntary Petition, including claims for costs, attorney’s fees, damages caused by

the filing of the Involuntary Petitions, and punitive damages.


39 RLF1 22814964v.1

Dated: January 27, 2020 Wilmington, Delaware

Respectfully submitted, /s/ Daniel J. DeFranceschi Daniel J. DeFranceschi (No. 2732) Cory D. Kandestin (No. 5025) J. Zachary Noble (No. 6689) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 N. King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Facsimile: (302) 651-7701 Email: [email protected] [email protected] [email protected] -and- MAYNARD, COOPER & GALE, P.C. J. Leland Murphree Ryan Thompson 1901 Sixth Avenue North Suite 2400 Birmingham, AL 35203 (205) 254-1000 [email protected] [email protected] -and- John F. Kennedy, Court Appointed Receiver James F. Banter, counsel to Receiver JAMES-BATES-BRANNAN-GROOVER-LLP 231 Riverside Drive P.O. Box 4283 Macon, Georgia 31208-4283 (478) 742-4280 telephone (478)742-8720 facsimile [email protected] [email protected] Attorneys for Receiver


RLF1 22814964v.1



Alleged Debtor.

_____________________________________

) ) ) ) ) ) )


Hearing Date: TBD Obj. Deadline: Feb. 10, 2020 at 4:00 pm (ET)

NOTICE OF MOTION

PLEASE TAKE NOTICE that on January 27, 2020, John F. Kennedy, solely in his

capacity as receiver (the “Receiver”) for the Receivership Estate of Education Corporation of

America, as well as Virginia College, LLC and New England School of Business and Finance in

the receivership proceeding pending in the United State District Court for the Middle District of

Georgia, styled VC Macon GA, LLC v. Virginia College, LLC and Education Corporation of

America, Case No. 5:15-cv-00388-TES, filed with the United States Bankruptcy Court for the

District of Delaware (the “Bankruptcy Court”) a motion to abstain from hearing the involuntary

petition, or in the alternative to dismiss the involuntary petition (the “Motion”).

PLEASE TAKE FURTHER NOTICE THAT if you wish to respond to the Motion,

you are required to file such response on or before February 10, 2020 at 4:00 p.m. prevailing

Eastern Time (the “Objection Deadline”). At the same time, you must serve a copy of such

response on the undersigned counsel so as to be received by the Objection Deadline.

PLEASE TAKE FURTHER NOTICE THAT a hearing on the Motion will be held at a

date and time to be determined before the Honorable Brendan L. Shannon, United States

Bankruptcy Court, for the District of Delaware, 824 North Market Street, 6th Floor, Courtroom

#1, Wilmington, Delaware 19801.


2 RLF1 22814964v.1

IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF DEMANDED BY THE MOTION WITHOUT FURTHER NOTICE OR HEARING.

Dated: January 27, 2020 Wilmington, Delaware

Respectfully submitted, /s/ Daniel J. DeFranceschi Daniel J. DeFranceschi (No. 2732) Cory D. Kandestin (No. 5025) J. Zachary Noble (No. 6689) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 N. King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Facsimile: (302) 651-7701 Email: [email protected] [email protected] [email protected] -and- MAYNARD, COOPER & GALE, P.C. J. Leland Murphree Ryan Thompson 1901 Sixth Avenue North Suite 2400 Birmingham, AL 35203 (205) 254-1000 [email protected] [email protected] -and- John F. Kennedy, Court Appointed Receiver James F. Banter, counsel to Receiver JAMES-BATES-BRANNAN-GROOVER-LLP 231 Riverside Drive P.O. Box 4283 Macon, Georgia 31208-4283 (478) 742-4280 telephone (478)742-8720 facsimile [email protected] [email protected] Attorneys for Receiver


RLF1 22814964v.1

EXHIBIT A

Receivership Order



MACON DIVISION

VC MACON, GA LLC,

Plaintiff,

v.

VIRGINIA COLLEGE LLC,

Defendant.

CIVIL ACTION NO. 5:18-cv-00388-TES

ORDER APPOINTING RECEIVER AND PRELIMINARY INJUNCTION

This cause coming before the Court on the Emergency Motion for Appointment of

General Receiver and Injunction (the “Motion”)1 filed by EDUCATION CORPORATION

OF AMERICA, VIRGINIA COLLEGE, LLC and NEW ENGLAND COLLEGE OF BUSINESS

AND FINANCE, LLC (collectively, “ECA” or “Debtors”). The Court, being fully advised in the

premises and having jurisdiction in this matter, and upon consideration of the Declaration of Mike

Ranchino of ECA , and with the consent of Plaintiff, and upon consideration of any and all objections

to the relief sought in the Motion; and after hearings on November 7 and 14, 2018 to consider the

relief sought in the Motion; and the Court having issued a temporary restraining order on November

7, 2018; and after due deliberation and sufficient cause appearing for the relief sought in the Motion;

the Court hereby ORDERS that the Motion is GRANTED as set forth herein. The Court further finds

1 Capitalized terms used in this Order and not otherwise defined herein shall have the meanings ascribed to them in the Motion.

Case 5:18-cv-00388-TES Document 26 Filed 11/14/18 Page 1 of 15Case 20-10034-BLS Doc 10-2 Filed 01/27/20 Page 2 of 16Case 5:18-cv-00388-TES Document 330-2 Filed 02/24/20 Page 44 of 148

2

and concludes2 that, in accordance with Rule 65 and Rule 66 of the Federal Rules of Civil Procedure

(the “Rules”):

The Court has subject matter jurisdiction under U.S. CONST., art. III, § 2 and 28 U.S.C.

§ 1332. This Court exercises diversity jurisdiction because the parties are of complete diverse

citizenship and the amount in controversy is in excess of $75,000. The Court has ancillary

jurisdiction over the request to appoint a receiver and for an injunction, because such relief is

substantially related to the claims of the Plaintiff that in addition to creating diversity jurisdiction

also raises federal questions and bears a logical relationship to the aggregate core of operative

facts surrounding the federal questions. See U.S. Bank Nat’l Assoc. v. Nesbitt Bellevue Props.,

866 F.Supp.2d 247, 255 (S.D.N.Y. 2012) (appointing a receiver while exercising diversity

subject matter jurisdiction as an ancillary remedy to protect the value of various properties

located in six states). Venue is proper in this Court under 28 U.S.C. § 1391(e)(1)(B) because a

substantial part of the events giving rise to this action took place in this judicial district and a

substantial part of property that is the subject of the action is situated in this judicial district. ECA

employs approximately 250 Georgia residents and their Georgia institutions have enrolled in

excess of 1,100 active students.

In determining whether to grant or deny a preliminary injunction, the Court must consider

whether the moving party has demonstrated (1) a substantial likelihood of success on the merits;

(2) that the order is necessary to prevent irreparable injury; (3) that the threatened injury outweighs

the harm that the order would cause to the non-movant; and (4) that the order would not be adverse

to the public interest. See, e.g., McDonald’s Corp. v. Robertson, 147 F.3d 1301, 1306 (11th Cir.

2 To the extent any portion of these findings constitute a ruling of law, such portion shall constitute this Court’s ruling with respect to the matters so-stated.


3

1998). In this case, the Court finds that the preliminary injunctive relief set forth in this Order is

appropriate because ECA have demonstrated a substantial likelihood of success on the merits; that

they will suffer irreparable injury if the injunction is not granted; the injunction will not

substantially injure other interested parties; and the injunction will further the public interest.

Federal courts typically consider the following factors when determining whether to appoint

a receiver: (1) the probability that fraudulent conduct has occurred or will occur to frustrate that

claim; (2) imminent danger that property will be concealed, lost, or diminished in value; (3)

inadequacy of legal remedies; (4) lack of a less drastic equitable remedy; and (5) likelihood that

appointing the receiver will do more good than harm. See Consolidated Rail Corp. v. Fore River

Ry., 861 F.2d 322, 326–27 (1st Cir.1988); Mintzer v. Arthur L. Wright & Co., 263 F.2d 823, 826

(3d Cir.1959); Bookout v. Atlas Fin. Corp., 395 F.Supp. 1338, 1342 (N.D.Ga.1974), aff'd, 514 F.2d

757 (5th Cir.1975).

Based on an analysis of these factors, the Court finds that a receiver should be appointed

because ECA have demonstrated that there is an imminent danger of damage to the Business

(defined below) and its stakeholders; ECA’s available legal remedies and less drastic equitable

remedies are inadequate to protect their interests and the interests of other stakeholders; the

probability of harm to ECA and other stakeholders by denial of the appointment of a receiver is

greater than the injury to other parties; ECA have demonstrated a substantial likelihood of success

on the merits and possible irreparable injury to the interests of ECA and other stakeholders in the

Business; the allegations of potential fraud made by the Plaintiff; and ECA have demonstrated that

the interests of ECA and other stakeholders will be protected and well served by the receivership.


4

IT IS HEREBY ORDERED, ADJUDGED AND DECREED that John F. Kennedy of

Macon, Georgia (“Receiver”) is hereby appointed Receiver with respect to all the business,

business interests and property of ECA, wherever located, by whomsoever held, without

limitation (the “Receivership Property” or “Business”), which shall hereby be vested in a

Receivership Estate. Receiver shall provide this Court with his written oath and acceptance to

faithfully perform his duties set forth in this Order. The Receiver shall make, execute and deliver

to the Clerk of this Court a bond in the sum of [Ten Thousand and No/100 Dollars ($10,000.00)],

within five (5) business days after the date of this Order. The Receiver may use assets of the

Receivership Estate to pay the costs of any such bond.

The Receiver shall take immediate possession of the Receivership Property and shall have

the full power and authority to exercise the usual and customary powers afforded to a receiver

under federal common law (except as otherwise limited by an order of this Court), including, but

not limited to, the following powers:

(1) To operate ECA’s Business and the Receivership Property in the ordinary course and in compliance with applicable laws, regulations and rules, with a primary focus on financing of the business and other restructuring or sale transactions, with the delivery of academic services continuing to be performed by ECA’s current management as overseen by the Receiver and ECA’s current boards (including the independent board of New England College of Business and Finance, LLC (“NECB”)), provided, however, that, for the avoidance of doubt, consent of the Receiver shall be required for any sale, conveyance, or transfer of Receivership Property outside of the ordinary course of business. The Receiver is authorized to incur and pay expenses incidental to the Receiver’s preservation and use of the Receivership Property, and otherwise in the performance of the Receiver’s duties, including, upon application to this Court for approval, the power to pay obligations incurred prior to the Receiver’s appointment if and to the extent that payment is determined by the Receiver to be prudent in order to preserve the value of Receivership Property and upon approval of the Court;

(2) To do all the things that the board and management of ECA may do in the exercise of ordinary business judgment, or in the ordinary course of the


5

operation of the Business and/or the Receivership Property as a going concern or use of the property subject to the general scope in sub-paragraph 1 above, including, but not limited to, cooperation with ECA’s boards with respect to any operational decisions; the continued retention of ECA’s management and employees; the maintenance of regulatory and accreditation approvals for all schools owned by ECA or its subsidiaries, including without limitation fully complying with NECHE’s accrediting standards applicable to NECB’s operations and with ACICS’s accrediting standards applicable to all other ECA institutions; the collection of all accounts, incomes, profits and other revenues of the Business and/or the Receivership Property, the purchase and sale of goods or services in the ordinary course of such Business and/or the Receivership Property, the incurrence of unsecured trade debt, the grant of security, including cash collateralization, in connection with issued or the issuance of bonds related to the operation of and licensure for the Business in consultation with Monroe Capital Management Advisors, LLC (“Monroe”), as agent under the Business’s existing credit agreement, dated as of September 3, 2015 (the “Monroe Credit Agreement”) and payment of expenses of the Business or Receivership Property in the ordinary course, including, without limitation, any amounts due and owing to Monroe or the lenders (the “Monroe Lenders”) party to the Monroe Credit Agreement; and, upon application to this Court for approval, the implementation of any key employee retention or incentive plan that the Receiver determines to be necessary or beneficial to the Receivership Estate;

(3) To maintain any and all existing bank accounts and accounts containing or evidencing securities, funds or cash equivalents, including without limitation deposit and checking accounts, or to open new bank accounts using ECA’s tax identification numbers in the convenience of the Receiver and for the benefit of the Receivership Estate;

(4) To assert any rights, claims, or choses in action of ECA (except to the extent that the rights, claims, or choses in action have been released prior to the commencement of these proceedings) that are Receivership Property or related thereto, to maintain in the Receiver’s name or in the name of ECA any action to enforce any right, claim, or chose in action, and to intervene in actions in which ECA is a party for the purpose of exercising the powers under this Order;

(5) To intervene in, remove, and/or transfer to this Court any action in which a claim is asserted against ECA or any actual or purported guarantor of a real property lease involving ECA or any ECA affiliate, whether such claim is a direct or a derivative claim or the subject of any claim to which any party to such other proceeding holds or asserts any right of indemnification, reimbursement or contribution against ECA, for the purpose of prosecuting or defending the claim and requesting the transfer of venue of the action to this Court, except that this Order does not transfer actions in which a state agency is a party and as to which such state is exercising its police or regulatory powers;


6

(6) To assert rights, claims, or choses in action of the Receiver arising out of transactions in which the Receiver is a participant;

(7) To pursue in the name of the Receiver for the benefit of the Receivership Estate any claim that may be asserted by any creditor of ECA, if pursuit of the claim is determined by the Receiver to be appropriate in the exercise of the Receiver’s business judgment;

(8) To seek and obtain advice or instruction from the Court with respect to any course of action in which the Receiver is uncertain in the exercise of the Receiver’s powers or the discharge of the Receiver’s duties;

(9) To obtain appraisals with respect to Receivership Property;

(10) To compel by subpoena any person to submit to an examination under oath, in the manner of a deposition in accordance with the Federal Rules of Civil Procedure, with respect to Receivership Property or any other matter that may affect or relate to the administration of the Receivership Estate;

(11) To use, sell, or lease Receivership Property other than in the ordinary course of business, whether as a whole or in parts, as a going concern or otherwise, and to execute such documents, conveyances, and consents as may be required in connection therewith upon application to this Court for approval, and in connection with the exercise of any such powers or authorities as this Court may direct to seek direction from the Court with respect to approval of marketing and notice procedures, to affirm the agreement between ECA and Hilco Real Estate, LLC concerning real estate consulting services and pay the agreed upon compensation to Hilco Real Estate, LLC following approval by this Court, to market and sell ECA’s assets to affirm the retention agreement between ECA and Parchman, Vaughan & Company, L.L.C. as investment banker without further order of this Court and pay the agreed upon compensation to Parchman, Vaughan & Company, L.L.C. following approval by this Court, and to seek further orders of this Court authorizing the sale of all or any such assets free and clear of all claims, liens, encumbrances and rights of others;

(12) To obtain credit and other financial accommodations solely in Receiver’s capacity as receiver for the Receivership Estate, grant liens, and grant adequate protection, in consultation with Monroe and Monroe Lenders, that in the Receiver’s business judgment is beneficial to the Receivership Estate upon application to this Court for approval;

(13) To seek employment of one or more attorneys, accountants, appraisers, auctioneers, or other professional persons who do not hold or represent an interest adverse to the Receivership Estate to represent or assist the Receiver in carrying out the Receiver’s duties; provided, however: (a) the Receiver is hereby authorized to retain Cooley LLP as regulatory


7

counsel and to honor ECA’s payment arrangements with Cooley LLP for fees incurred in its representation of ECA prior to the date hereof; (b) the Receiver is hereby authorized to retain counsel pursuant to an engagement letter in form and substance satisfactory to the Receiver; and (c) the Receiver is hereby authorized to retain a financial advisory firm to the Receiver pursuant to an engagement letter in form and substance satisfactory to the Receiver;

(14) To disavow, reject, impair or terminate any contract, agreement, understanding, lease or occupancy agreement in or to which ECA is a party that in the Receiver’s business judgment is burdensome or is of inconsequential value to the Receivership Estate, provided, however, the Receiver will not have authority to disavow, reject or terminate ECA’s contractual indemnification obligations and the Receiver shall seek approval of the Court to disavow or affirm any contract, agreement, understanding, lease or occupancy agreement in or to which ECA is a party;

(15) To enforce any contract, agreement, understanding, lease or occupancy agreement in or to which ECA is a party and to affirm, and affirm and assign, any contract, agreement, understanding, lease or occupancy agreement in or to which ECA is a party that in the Receiver’s business judgment is beneficial to the Receivership Estate; provided, however, the Receiver and his successor(s) shall not: (a) extend, transfer or assign any actual or purported guaranty of any obligations under real property leases to which ECA or any affiliate is a party without the actual or purported guarantor’s prior written consent; or (b) extend or modify any lease or occupancy agreement that is guaranteed by Kaplan, Inc. or its affiliates without the prior written consent of Kaplan, Inc. or its affiliates;

(16) To interface with secured creditors of ECA, including, without limitation, periodic updates to Monroe about the progress and status of the Receivership, the sale effort, and other material matters, and provide all non-privileged information provided to any investment banker, financial advisor or other financial advisor retained by the Receiver;

(17) To take any and all acts as may be necessary to conclude this receivership; and

(18) All other powers as may be conferred upon the Receiver specifically by statute, Court rule, or the Court.

IT IS FURTHER ORDERED that, during the pendency of the receivership, the Receiver

shall prepare on a monthly basis, beginning sixty (60) days after the entry of this Order, a 13-

week cash flow forecast, as well as reports setting forth all receipts and disbursements, cash flow,


8

changes in the assets in his charge, claims against the assets in his charge, and other relevant

issues and actions that have occurred during the prior month. The Receiver shall thereafter file

such reports, including weekly and cumulative variance reports, with the Clerk of Court within

28 days after the first calendar day of each month.

IT IS FURTHER ORDERED that ECA shall provide access to all employees of ECA

and deliver or cause to be delivered to the Receiver upon the date of entry of this Order; all keys

and other means of accessing the Receivership Property; original signed leases (or copies of such

agreements where originals are unavailable); accounting records, including, without limitation,

those identifying accounts receivable and payable; originals of agreements with vendors and

service providers (or copies of such agreements where originals are unavailable); correspondence

files with vendors and service providers; all documentation relating to the maintenance and

operation of the property, including, without limitation, operating manuals, building plans and

the like; and all bank accounts and other accounts containing or evidencing securities, funds or

cash equivalents, including, without limitation, deposit and checking accounts. To the extent that

any of the foregoing information is accessible and stored electronically, ECA shall preserve such

information and make same accessible to the Receiver. The disclosure of any documents or

materials by ECA to the Receiver shall not breach any confidentiality obligation of ECA or waive

the attorney-client privilege, work product privilege or any other confidentiality right or

privilege, including any common interest privileges, that may exist in favor of ECA and, unless

and until further order of this Court, ECA shall retain the right to assert any privilege against any

third party.

IT IS FURTHER ORDERED that, upon immediate entry of this Order, other than in the

furtherance of the implementation of this Order or at the direction of the Receiver, ECA and each


9

of its directors, officers, agents, employees, managers and all other interested persons are

enjoined from interfering with, transferring, selling, disposing or dissipating the property of the

Receivership Estate, including, but not limited to, accounts receivable, and are further enjoined

from taking any actions that would, directly or indirectly, have an adverse impact on the value of

the Receivership Estate.

IT IS FURTHER ORDERED that the Receiver, as an officer of this Court, shall enjoy

the same immunities enjoyed by this Court.

IT IS FURTHER ORDERED that, from the time and date of this Order, a stay of any

actions asserting claims or other rights and remedies against ECA, any affiliate of ECA, and/or

any actual or purported guarantor that has indemnity rights against any Defendant (whether any

Defendant or affiliated entity is initially named in the suit or not), including enforcing, attaching

or perfecting liens against property of ECA or any such guarantor, is in effect, enjoining:

(1) The commencement or continuation, including the issuance, employment, or

service of process, of a judicial, administrative, or other action or proceeding against ECA or any

schools owned directly or indirectly by ECA that was or could have been commenced before the

entry of the order of appointment to recover a claim against the Debtors that arose before the

entry of the order of appointment;

(2) The commencement or continuation of any action against any actual or purported

guarantor of any lease where any Defendant or affiliated entity is the tenant, obligor or lessee on

the lease, and where any Defendant has agreed to indemnify such guarantor for any claims related

to such lease;

(3) The enforcement or levy against ECA or any Receivership Property of a judgment

obtained before the order of appointment;


10

(4) Any act to obtain possession of Receivership Property from the Receiver or to

interfere with or exercise control, over, Receivership Property;

(5) Any act to create, perfect, or enforce any lien or claim against Receivership

Property except by exercise of a right of setoff, to the extent that the lien secures a claim against

the Debtors that arose before the entry of the order of appointment; or

(6) Any act to collect, assess, or recover a claim against ECA that arose before the entry

of the order of appointment; provided, however, nothing herein shall be construed to enjoin or

otherwise interfere with the Department of Education’s or any accrediting agency’s supervision

of ECA and enforcement of applicable rules and regulations.

The injunction ordered by the Court in this Order is a preliminary injunction. The

Receiver shall lodge a copy of this Order in all jurisdictions where Receivership Property is

situated within ten (10) days of the date of this Order in accordance with 28 U.S.C. section 754.

For clarity, if any party asserts a claim against an actual or purported guarantor of a real

property lease involving ECA in violation of the above stay, the Receiver may intervene in such

action to enforce the stay and/or seek to remove or transfer the action to this Court. This Order

does not prohibit any actual or purported guarantor named in any such action from asserting a

claim against ECA for indemnification or other relief.

Notwithstanding anything to the contrary, any current or former student of ECA may

assert any claim or cause of action against ECA in any court of competent jurisdiction and pursue

such claim or cause of action to liquidate such claim at which time such student shall pursue

collection of any such liquidated claim only in this Court from the Receivership Estate.

IT IS FURTHER ORDERED that (i) the NECB board may employ separate counsel to

assist the NECB board in connection with, inter alia, compliance with the terms of this Order and


11

dealing with the impact of the Order on its operations, and (ii) any professionals employed by

ECA, the NECB board, or Monroe and the Monroe Lenders (solely to the extent permitted under

the Monroe Credit Agreement) shall periodically be allowed and paid a fee for services and out-

of-pocket expenses, as set forth herein in more detail.

IT IS FURTHER ORDERED that any debts, liabilities, obligations, claims for relief, or

other adverse actions incurred by or asserted against the Receiver or the Receivership Estate arising

out of or in the course of this receivership, including without limitation, related to the operation

and management of the Business, the administration of the Title IV federal student financial

assistance programs, or the teach-out of those certain Teach-Out Schools (as defined in the

Motion), whether in the name of the Receiver or ECA, shall be the debt, liability, obligation or

otherwise the responsibility of the Receivership Estate only and not of the Receiver individually.

The sole recourse of any federal, state, or local governmental agency, or any accrediting agency or

any other individual for any claim asserting, or arising out of, a violation by Receiver, ECA, or the

Teach-Out Schools of laws, regulations, standards, or common law, at law or in equity, shall be

against the Receivership Estate, and neither Receiver, nor any attorney, or agent of Receiver,

shall have any liability associated with such debt, liability, obligation, claim for relief, negative

administrative action, or other adverse action, unless a Court of competent jurisdiction

determines that any such claim is the result of fraud, gross negligence or the willful misconduct

of any such party.

IT IS FURTHER ORDERED that the Receiver may resign and be discharged of his

responsibilities at any time by giving thirty (30) days’ prior written notice to this Court; provided

however, that the Receiver may petition the Court to approve such resignation and discharge upon

shorter notice for good cause shown.


12

IT IS FURTHER ORDERED that, notwithstanding anything herein to the contrary, the

Receiver has no power or authority to file or authorize the filing of: (i) a petition for relief by or

against the Debtors under 11 U.S.C. 101, et seq. (the “Bankruptcy Code”); or (ii) any other action

that would constitute a “change of control” under applicable laws or regulations. All power and

authority to initiate and file any petition for relief under the Bankruptcy Code, or take any action

with respect thereto, shall remain vested solely in ECA. In the event of an involuntary filing of a

petition or any equivalent thereof against ECA under the Bankruptcy Code, ECA shall have standing

to and may defend against the entry of an order for relief and Receiver may support ECA’s defense

with respect to such involuntary petition.

IT IS FURTHER ORDERED that the Receiver shall not be deemed, now or at any point

in the future, to exercise, or have exercised “substantial control,” as that term is defined in 20 U.S.C.

§ 1099c and 34 C.F.R. § 668.174, over ECA, the Business, the Receivership Estate, or the

Receivership Property based on Receiver’s appointment by this Court or subsequent involvement

in the operation and management of the Business and/or the Receivership Property.

IT IS FURTHER ORDERED that the Receiver and each of the Receiver’s attorneys and

agents (collectively, the “Receiver Parties”) shall have no liability for any and all claims, liabilities,

damages, fees, costs, expenses and charges incurred or arising from their respective acts or

omissions in connection with ECA, this Order, the Receivership Property, the Business or the

Receivership Estate (collectively, the “Related Matters”), except to the extent that this Court

determines by a final judgment (subject to any right of appeal) that such acts or omissions resulted

from their willful misconduct, bad faith, gross negligence or fraud. The Receiver Parties shall be

held harmless and indemnified by the Receivership Estate for any losses, claims, damages,

liabilities and expenses (including attorneys’ fees, disbursements and expenses) that any Receiver


13

Party may incur or to which any Receiver Party may become subject in connection with any action,

suit, proceeding or investigation brought or threatened against such Receiver Party over an issue

arising out of or related to the Related Matters; provided, however, that such indemnity shall not

apply with respect to a Receiver Party to the extent that such indemnification claim arises out of

such Receiver Party’s actions that are determined by a final order of this Court to be willful

misconduct, bad faith, gross negligence or fraud. In the event that, at any time whether before or

after termination or resignation of the Receiver, as a result of or in connection with the Related

Matters, any Receiver Party is required to produce any of its personnel (including former

employees) for examination, deposition or other written, recorded or oral presentation, or the

Receiver or any other Receiver Party is required to produce or otherwise review, compile, submit,

duplicate, search for, organize or report on any material within such Receiver Party’s possession

or control pursuant to a subpoena or other legal (including administrative) process, the Receiver

Party will be reimbursed by and from the Receivership Estate for its out of pocket expenses,

including the reasonable fees and expenses of its counsel. This Section shall survive the

termination or resignation of Receiver, and the termination or suspension of the Receivership

Estate.

IT IS FURTHER ORDERED that the Receiver, its consultants, agents, legal counsel, and

other professionals, as well as professionals employed by ECA and the NECB board, shall be paid

on a monthly basis. Receiver is authorized to pay and/or reimburse itself from the Receivership

Property reasonable receiver fees of at Receiver’s standard rates and for its reasonable monthly

expenses. Receiver also is authorized to fund a retainer out of Receivership Estate assets in an

amount equal to $50,000 and to pay and reimburse Receiver and Receiver’s consultants, agents,

legal counsel, and other professionals, as well as professionals employed by ECA and the NECB

board, from the Receivership Property, for reasonable professional fees and expenses incurred on


14

or prior to the date of the entry of this Order and hereafter. To be paid on a monthly basis, the

Receiver and each professional must file a statement of account with the Court and serve a copy on

Receiver and ECA each month for the fees and reasonable monthly expenses incurred in the

preceding calendar month. If no objection thereto is filed and served on or within five (5) business

days following service thereof, such statement of account shall be paid no later than five (5) business

days after the expiration of the applicable objection deadline. If an objection is timely filed and

served, the portion of such statement of account that is subject to an objection shall not be paid

absent further order of the Court; provided, however, that the portion of such statement of account

that is not subject to an objection shall be paid within five (5) business days after the expiration of

the applicable objection deadline. In the event objections are timely made to fees and expenses, the

objected to portion of the fees and expenses will be paid within five (5) business days of an

agreement among the parties or entry of a Court order adjudicating the matter.

IT IS FURTHER ORDERED that the Receiver shall apply all income received by the

Receivership Estate in the following order and priority:

1. On a monthly basis, the Receiver’s fees and reasonable out-of-pocket expenses;

2. On a monthly basis, the fees and reasonable out-of-pocket expenses of the

Receiver’s consultants, agents, legal counsel and other professionals, as well as

professionals employed by ECA and the NECB board;

3. The current expenses relating to the Receivership Estate accruing after the date

hereof; and

4. All other expenses necessary to maintain, preserve, and protect the property of the

Receivership Estate.


15

IT IS FURTHER ORDERED that this Order shall not be deemed by any federal, state,

or local governmental agency, or any accrediting agency, as having triggered a substantive

change or change of ownership or control requiring the approval of such agency; further, the

actions taken by Receiver during the course of this receivership shall not be taken into account

by any such agency in any future determination of whether Receiver is qualified to own, or serve

in any capacity with, an institution approved or regulated by that agency.

IT IS FURTHER ORDERED that the United States Marshall Service’s assistance to

enforce the terms of this Order in the form of peace-keeping duties is hereby authorized.

IT IS FURTHER ORDERED that the receivership established pursuant to this Order

shall remain in effect until further order of this Court and until the receivership is terminated, the

Court retains jurisdiction over this matter to (i) amend, supplement or delete any provisions of

this Order; (ii) enforce compliance with or punish violations of this Order; (iii) interpret any

provision of, and resolve all disputes with respect to, this Order; and (iv) order any additional

actions or remedies as may be reasonably necessary or appropriate.

IT IS FURTHER ORDERED that the reversal or modification on appeal of this Order

shall not affect the validity or any actions taken in good faith by the Receiver, the payment of

compensation to which the Receiver and any professional is entitled, or the payment of expenses

incurred by the Receiver pursuant to this Order.

DONE the 14th day of November, 2018.

S/ Tilman E. Self, III TILMAN E. SELF, III, JUDGE UNITED STATES DISTRICT COURT


RLF1 22814964v.1

EXHIBIT B

Receivership Docket


'U27t2020 CM/ECF LIVE- GAMD

STAYED,LEAD,STAYED - DISCOVERY

U.S. District Court ILIVE AREAIMiddle District of Georgia (Macon)

CM DOCKET FOR CASE #: 5:18-cv-00388-TES

VC MACON GA LLC v. VIRGINIA COLLEGE LLC et al Date Filed: l0ll8l20l8Assigned to: US DISTRICT JUDGE TILMAN E SELF, III Jury Demand: NoneCase: 5:18-cv-00385-TES Nature of Suit: 230 Rent Lease & Ejectment

Case in other court: Eleventh Circuit Court of Appeals, 18-15183- Jurisdiction: DiversityKSUPERIOR COURT OF BIBB COUNTY,2018-CV-069412

Cause: 28:1332 Diversity-Notice of Removal

Plaintiff

VC MACON GA LLC represented by JON A GOTTLIEB8OO JOHNSON FERRY RDATLANTA, GA3O342404-497-8000Email: [email protected] ATTORNEYATTORNEY TO BE NOTICED

V.

Defendant

VIRGINIA COLLEGE LLC represented by OLLIE A CLEVELAND ,IIII9O1 SIXTH AVENUE NORTH STE 24OO

BIRMINGHAM, AL352O3Email : [email protected] ATTORNEYPRO HAC VICEATTONIVEY TO BE NOTICED

STUART M BROW\12OI N MARKET ST STE 21OO

WILMINGTON, DE 19801Email: [email protected] ATTORNEYPRO HAC T/ICEATTORNEY TO BE NOTICED

J LELAND MURPHREE1901 SIXTH AVE N STE 24OO

BIRMINGHAM, AL352O3Email: [email protected] HAC VICEATTORNEY TO BE NOTICED

hftps://ecf.gamd.uscourts.gov/cgi-bin/DktRpt.pl?72171514734736-L-'l -'l-'l

JAY CLIFFORD TRAYNHAM1t35


1t2712020

Defendant

EDUCATION CORPORATION OFAMERICA

Receiver

JOHN FLANDERS KENNEDY

CM/ECF LIVE. GAMD

PO BOX 5088MACON, GA 31208-5088478-745-1625Email : j aytraynham@hb gm. comATTORNEY TO BE NOTICED

WALKER STEVEN STEWART577 MULBERRY ST SUITE 15OO

MACON, GA 31201478-745-1625Email : walkerstewart@hb gm. comATTORNEY TO BE NOTICED

ALEXANDER B FEINBERG1901 SIXTH AVE N STE 24OO

BIRMINGHAM, AL 35209205-254-1858Email: [email protected] TO BE NOTICED

represented by OLLIE A CLEVELAND, III(See above for address)LEAD ATTORNEYPRO HAC VICEATTORNEY TO BE NOTICED

STUART M BROWII(See above for address)LEAD ATTORNEYPRO HAC VICEATTORNEY TO BE NOTICED

J LELAND MURPHREE(See above for address)PRO HAC VICEATTOKNEY TO BE NOTICED

JAY CLIFFORD TRAYNHAM(See above for address)ATTORNEY TO BE NOTICED

WALKER STEVEN STEWART(See above for address)ATTORNEY TO BE NOTICED

ALEXANDER B FEINBERG(See above for address)ATTORNEY TO BE NOTICED

represented by CHRISTOPHER R CONLEY231 RIVERSIDE DRMACON, GA 3120I

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1t27t2020 CM/ECF LIVE- GAMD

Email : cconley@j amesbatesllp.comATTOKNEY TO BE NOTICED

JAMES F BANTER231 RIVERSIDE DRMACON, GA 31201478-742-4280Email : jb anter @j amesb ate s 11p. comATTORNEY TO BE NOTICED

JOHN FLANDERS KENNEDY23I RIVERSIDE DRMACON, GA 3120I478-749-9983Email : jkennedy@jbpslaw comATTORNEY TO BE NOTICED

Date Filed # Docket Text

10/18/2018 I NOTICE OF REMOVAL against VC MACON GA LLC Fee paid: Receipt # 113G-

3001425, $400 filed by EDUCATION CORPORATION OF AMERICA, VIRGINIACOLLEGE LLC (Attachments: # 1 Removal Documents Declaration of Tres Cleveland,# 2 Removal Documents Declaration of Roger Swartzwelder, # 3 Civil Cover Sheet)(FEINBERG, ALEXANDER) (Entered: I 0/1 8/20 1 8)

t0l18l20t8 2 Corporate Disclosure Statement by EDUCATION CORPORATION OF AMERICA,VIRGINIA COLLEGE LLC (FEINBERG, ALEXANDER) (Entered: 10/18/2018)

t0lt8l20t8 aJ Jurisdictional Statement by EDUCATION CORPORATION OF AMEzuCA, VIRGINIA

COLLEGE LLC (FEINBERG, ALEXANDER) (Entered: 10/18/2018)

t0/t8/2018 4 Consent Form (28 USC 636(c)(1)) sent to VC MACON GA LLC (ggs) (Entered:1o/18/2018)

1012312018 Case REASSIGNED tO US DISTRICT ruDGE TILMAN E SELF, III. US DISTRICTruDGE MARC THOMAS TREADWELL no longer assigned to the case. (ggs) (Entered:

rol23l2o18)

1012312018 5 NOTICE of Attorney Appearance by WALKER STEVEN STEWART on behalf ofEDUCATION CORPORATION OF AMERICA, VIRGINIA COLLEGE LLC AttoTneyWALKER STEVEN STEWART added to party EDUCATION CORPORATION OFAMERICA(pty:dft), Attomey V/ALKER STEVEN STEWART added to partyVIRGINIA COLLEGE LLC(pty : dft) (STEWART, WALKER) (Entered : I 0 I 23 I 2018)

6 ORDER STAYING CASE until further order from the Court. Ordered by US

DISTRICT ruDGE TILMAN E SELB III on 1012412018.(ggs) (Entered: 1012412018)

1012412018

l0 1 120I 811 7 SUMMONS Returned Executed by VC MACON GA LLC as to EDUCATIONCORPORATION OF AMERICA. (GOTTLIEB, JON) (Entered: lll0Il20l8)

10512018n 8 ANSWER to Complaint by EDUCATION CORPORATION OF AMERICA, VIRGINIACOLLEGE LLC.(FEINBERG, ALEXANDER) (Entered: 1 I /05/20 I 8)

MOTION to Consolidate Cases by EDUCATION CORPORATION OF AMERICA,VIRGINIA COLLEGE LLC fllEd bY ALEXANDER B FEINBERG.(FEINBERG,ALEXANDER) (Entered: I 1/05/201 8)

105120181l I

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1t27t2020

tU06l20t8 10

tU09l20l8 t8

CM/ECF LIVE- GAMD

EMERGENCY MOTION to Appoint Receiver by EDUCATION CORPORATION OFAMERICA, VIRGINIA COLLEGE LLC frled by WALKER STEVEN STEWART.(Attachments: # I Exhibit Declaration of Michael Ranchino, # 2 Exhibit ECA's leased

real estate, # 3 Exhibit List of Go-Forward Schools, # 4 Exhibit List of Teach-OutS chools)( STEWART, WALKER) (Entered: I I I 0 6 I 20 I 8)

NOTICE Notice of Compliance by EDUCATION CORPORATION OF AMERICA,VIRGINIA COLLEGE LLC (Attachments : # 1 Exhibit Notice Matrix)(FEINBERG,

NOTICE OF SETTING HEARING ON MOTION re 10 MOTION to Appoint Receiver:Motion Hearing set for lll8l20l8 at 02:00 PM in Macon before US DISTRICT ruDGETILMAN E SELF III. (chc) (Entered: 1110612018)

106120r81l

t!0712018 NOTICE OF RESETTING HEARING ON MOTION re l0 MOTION to AppointReceiver: Motion Hearing previously set for Ill8l20I8 at2:00 p.m. is NOW re-set forlll7l20l8 at 04:00 PM in Macon before US DISTRICT ruDGE TILMAN E SELF III.(chc) (Entered: 1 | 107 12018)

tU07l20r8 11 NOTICE of Attorney Appearance by JAY CLIFFORD TRAYNHAM on behalf ofEDUCATION CORPORATION OF AMERICA, VIRGINIA COLLEGE LLC AttoTneyJAY CLIFFORD TRAYNHAM added to party EDUCATION CORPORATION OFAMERICA(pty:dft), Attomey JAY CLIFFORD TRAYNHAM added to party VIRGINIACOLLEGE LlC(pty:dft) (TRAYNHAM, JAY) (Entered: 1 I I 07 I 2018)

rU07l20r8 I2 Minute Entry for proceedings held before US DISTRICT ruDGE TILMAN E SELF, IIIMotion Hearing held on lIl7l20l8 re l0 MOTION to Appoint Receiver filed byVIRGINIA COLLEGE LLC, EDUCATION CORPORATION OF AMERICA ANd 9MOTION to Consolidate Cases filed by VIRGINIA COLLEGE LLC, EDUCATIONCORPORATION OF AMERICA. Court Reporter: Darlene Fuller.Time in Court: I hour10 minutes. (chc) (Entered: lll07l20l8)

NOTICE OF SETTING Status Conference set for lIll4l20l8 at 11:00 AM in Maconbefore US DISTRICT ruDGE TILMAN E SELF III. (chc) (Entered: ltl07l20l8)

nl07l20r8

13 ORDER GRANTING IN PART 10 Emergency Motion for the Appointment of aReceiver and Entry of a Temporary Restraining Order and Preliminary Injunction. At thistime, the Court only grants the motion as it pertains to temporary injunctive relief.Ordered by US DISTRICT ruDGE TILMAN E SELF, III on lll7l20l8. (Attachments: #

I Exhibit Schedule 1 to Order Granting Temporary Injunctive Relief) (ech) (Entered:

n10712018)

tU07l20r8

ORDER TO CONSOLIDATE CASE Lead Case # 5:18-CV-388. Member Case #

5:18-CV-385. Ordered by US DISTRICT ruDGE TILMAN E SELF, III on lll7l20l8.(ggs) (Entered: I 1/08/201 8)

l1108/2018 I4

11/08/2018 15 NOTICE of Attorney Appearance by Joshua Howard Threadcraft on behalf of Kaplan,Inc., Kaplan Higher Education, LLC Attorney Joshua Howard Threadcraft added to partyKaplan, Inc.(pty:ip), Attomey Joshua Howard Threadcraft added topafi Kaplan HigherEducation, LlC(pty:ip) (Threadcraft, Joshua) (Entered: 1 1/08/20 1 8)

tu08l20t8 16 ***DISRFGARD - FILED IN ERROR*** MOTION Admission Pro Hac Vice for Joe A.Joseph by Kaplan Higher Education, LLC, Kaplan, Inc. frled by Joshua HowardThreadcraft. (Attachments: # ! Exhibit A Certificate of Good Standing)(Threadcraft,Joshua) Modified on ll I 13 120 1 8 (ggs). (Entered: I I /08/20 I 8)

tU09l20r8 17 NOTICE of Attorney Appearance by BRENDA T CUBBAGE on behalf of KenningtonValley View LLC Attorney BRENDA T CUBBAGE added to party Kennington ValleyView LlC(pty:ip) (CUBBAGE, BRENDA) (Entered: I I /09/20 I 8)

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'U27t2020

lyr6l20t8 29

CM/ECF LIVE. GAMD

ALEXANDER) (Enter ed: ll I 09 12018)

NOTICE of Attorney Appearance by STUART WALKER on behalf of National RetailProperties, LP Attorney STUART WALKER added to party National Retail Properties,

rUt3l20r8 19 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Metby OLLIE A CLEVELAND, III (nop) (Entered: Illl3l20l8)

Notice of Deficiency (related document(s): 16 Motion for Miscellaneous Relief filed byKaplan Higher Education, LLC, Kaplan, Inc. ); Petitions to Plead and Practice Pro HacVice are not to be docketed as a motion. Instructions for submitting the petition are

located on the Court's website. In this instance the admissions clerk has been notified that

the petition has been filed as a motion in this case, and it will be processed. The motionhas been terminated. NO NEED TO RESUBMIT THE PETITION. (ggs) (Entered:

r1lt3l20L8)

ryr3l20r8

RESPONSE filed by VC MACON GA LLC re 10 MOTION to Appoint Receiver(GOTTLIEB, JON) (Entered: ll I 13 12018)

ty13/20t8 20

RESPONSE filed by Southem Plaza, LLC re 10 MOTION to Appoint Receiver(WOLGAST, LISA) (Entered: Il I 13 12018)

lUt3/20t8 2l

tUr4l20l8 22 NOTICE of Attorney Appearance by JOE A JOSEPH on behalf of Kaplan HigherEducation, LLC, Kaplan, Inc. Attorney JOE A JOSEPH added to party Kaplan HigherEducation, LlC(pty:ip), Attorney JOE A JOSEPH added to party Kaplan, Inc.(pty:ip)(JOSEPH, JOE) (Entered: lI I l4l20l8)

412018IIIT 23 AMENDED NOTICE of Attorney Appearance by JOE A JOSEPH on behalf of KaplanHigher Education, LLC, Kaplan, Inc. (JOSEPH, JOE) Modified on llll4l20l8 to add

additional docket text. (ggs). (Entered: 1Ill4l20l8)

412018tUl 24 NOTICE of Attorney Appearance by Cater C. Thompson on behalf of Kaplan HigherEducation, LLC, Kaplan, Inc. Attorney Cater C. Thompson added to party Kaplan HigherEducation, LlC(pty:ip), Attorney Cater C. Thompson added to party Kaplan, Inc.(pty:ip)(Thompson , Cater) (Entered: IIll4l20I8)

412018nlr 25 *'F*DISRF.GARD - FILED IN ERROR*** NOTICE Proposed Order AppointingReceiver by EDUCATION CORPORATION OF AMERICA, VIRGINIA COLLEGELLC (STEWART, WALKER) Modified onllll4l2Ol8 (ggs). (Entered: llll4l20l8)

4120t8tllr Notice of Deficiency (related document(s): 25 Notice (Other) filed by VIRGINIACOLLEGE LLC, EDUCATION CORPORATION OF AMERICA ); Proposed orders are

not to be filed on the docket, but are to be e-mailed in a word processing format to the

appropriate divisional clerks office. Please submit the proposed order via e-mail tomacon. [email protected]. gov. (ggs) (Entered : I I I | 4 I 20 I 8)

4120t8tyr 26 ORDER APPOINTING RECEIVER AND PRELIMIINARYINJUNCTION granting 10 Motion to Appoint Receiver. It is Ordered that JOHN F.

KENNEDY of Macon, Georgia is hereby appointed Receiver. Ordered by US DISTRICTruDGE TILMAN E SELF,III on llll4l20l8. (ggs) (Entered: llll4l2018)

412018tUt 27 Minute Entry for proceedings held before US DISTRICT ruDGE TILMAN E SELF, III:Status Conference held on llll4l20l8 Court Reporter: Sally Gray. (vs) (Entered:

rUt5l20r8)

4120r8tUt 28 Defendant's Exhibit List (Attachments: # I Exhibit I - Student Declarations, # 2 Exhibit 2-StudentDeclarations,#3Exhibit3-StudentDeclarations,#4Exhibit4-StudentDeclarations,#5Exhibit5-StudentDeclarations,#6Exhibit6-StudentDeclarations,#Z Exhibit 7 - Student DeclarationsXvs) (Entered: llll5l20l8)

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tUt612018 30 NOTICE of Attorney Appearance by IVY NEAL CADLE on behalf of Monroe CapitalManagement Advisors, LLC Attorney IVY NEAL CADLE added to party MonroeCapital Management Advisors, LlC(pty:ip) (CADLE, IVY) (Entered: 1111612018)

3l ORDER concerning pro hac vice admission. Ordered by US DISTRICT JUDGETILMAN E SELR III on 1111612018. (chc) (Entered: 1111612018)

rUt6l20r8

NOTICE OF HEARING: Status Conference set for l2l5l20l8 at 10:00 AM in Maconbefore US DISTRICT ruDGE TILMAN E SELF IIL(chc) (Entered: 1111612018)

|11612018

NOTICE of Attorney Appearance by CHESLEY S MCLEOD on behalf of FEDERALREALTY INVESTMENT TRUST Attomey CHESLEY S MCLEOD added to partyFEDERAL REALTY INVESTMENT TRUST(pty : ip) (MCLEOD, CHESLEY) (Entered:

rU27l2o18)

ly27l20l8 32

tU27l20t8 JJ NOTICE of Attorney Appearance by CHESLEY S MCLEOD on behalf of PIONEERINDUSTRI ALLLC, PIONEER PARKING LOT LLC AItOTNEY CHESLEY S MCLEODadded to party PIONEER INDUSTRIAL Llc(pty:ip), Attorney CHESLEY S MCLEODadded to party PIONEER PARKING LOT Llc(pty:ip) (MCLEOD, CHESLEY)(Entered: lll2ll20l8)

tU27l20l8 v NOTICE Oath and Acceptance by John Flanders Kennedy (BANTER, JAMES) (Entered

t!2712018)

nl27l20t8 35 NOTICE Notice of Compliance by John Flanders Kennedy (BANTER, JAMES)(Entered: LIl27l20T8)

1281201811 REMARK: Call in instructions will be sent via email to all counsel of record forl2l5l20l8 telephone conference to begin at 10:00 a.m. before Judge Tilman E. Self, III.(chc) (Entered: I 112812018)

129120r811 36 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Metby J LELAND MURPHREE (nop) (Entered: lll29l20l8)

1291201811 31 NOTICE of Attorney Appearance by BRET PATRICK SHAFFER on behalf of LEBOREALTY LR ELECTRA REALTY COMPANY INC AttOTNEY BRET PATRICKSHAFFER added to party LEBO REALTY LP(pty:ip), Attorney BRET PATRICKSHAFFER added to party ELECTRA REALTY COMPANY INC(pty:ip) (Attachments:

# 1 Certificate of Service)(SHAFFER, BRET) (Entered: lll29l20l8)

lU29l2018 38 Corporate Disclosure Statement by LEBO REALTY LP (Attachments: # I Certificate ofS ervice)( SHAFFER, BRET) (Entered : I I I 29 I 20 I 8)

129120t811 39 Corporate Discloswe Statement by ELECTRA REALTY COMPANY INC (Attachments

# 1 Certificate of Service)(SHAFFER, BRET) (Entered: lIl29l20l8)

tll29l20r8 40 *'T'.*DISRFGARD (Document incomplete) - REFILED AT TAB 4lt""r' NOTICE Noticeof Filing Bond of Receiver by John Flanders Kennedy (KENNEDX JOHN) Modified on

ll 13012018 (ggs). (Entered: ll 129 12018)

NOTICE Notice of Filing Bond of Receiver by JOHN FLANDERS KENNED\(KENNEDY, JOHN) (Entered: ll 130 12018)

nl30l20t8 4l

112712020

rTl30l20t8 42

CM/ECF LIVE- GAMD

LP(pty:ip) (WALKER, STUART) (Entered: I I I 16 12018)

TRANSCRIPT of Proceedings held on Illl4l20l8, before Judge TILLMAN E. SELF,

III. Court Reporter SALLY GRAY The transcriptmay be inspected at the court orpurchased through the court reporter for a period of 90 days. After 90 days, the transcriptmay be obtained via PACER. REDACTION OF TRANSCRIPTS: Complete redactionpolicy available on the courts website. (slg) (Entered: l1130/2018)

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ly30l20r8 B NOTICE of Attorney Appearance by PATRICK L LOWTHER on behalf of Las Vegas

Associates, LLLP Attorney PATRICK L LOWTHER added to party Las Vegas

Associates, LLLP(pty: ip) (LOWTHER, PATRICK) (Entered: tl 130 12018)

tU30l20t8 44 NOTICE of Afforney Appearance by STUART WALKER on behalf of Valley PIaza

Mall, LP, Chula Vista Center,LLC, Pierre Bossier Anchor Acquisition,LLC AttorneySTUART WALKER added to party Valley PlazaMall, LP(pty:ip), Attorney STUART\MALKER added to party Chula Vista Center, LlC(pty:ip), Attorney STUART V/ALKERadded to party Pierre Bossier Anchor Acquisition, LlC(pty:ip) (WALKER, STUART)(Entered: 1113012018)

tU30l2018 45 MOTION to Vacate 26 Order on Motion to Appoint Receiver, by Chula Vista Center,

LLC, National Retail Properties, LP, Pierre Bossier Anchor Acquisition,LLC, ValleyPlazaMall, LP filed by STUART WALKER. (Attachments: # I Memorandum in Support

of Motion to Vacate or, in the alternative, to Modiff the Novembet 14,2018,Receivership Order)(WALKER, STUART) (Entered: I I I 30 I 20 I 8)

tU30l20r8 46 MOTION for Attorneys Fees filed by JOHN FLANDERS KENNEDY (KENNEDY,JOHN) Modified on 121312018 to correct event type. (ggs). (Entered: Ill30l20l8)

rU30l20r8 47 MEMORANDUM in Support of 26 Order on Motion to Appoint Receiver, (Attachments:

# 1 Exhibit Declaration of Yael D. Aufgang,# 2 Exhibit Ipenn v. Mrginia College

Complaint, # 3 Exhibit Bumham Properties v. Virginia College Complaint, # 4 ExhibitLas Vegas letter)(Thre aduaft., Joshua) (Entered: I I 130 I 20 18)

1210212018 48 MEMORANDIIM in Opposition to 26 Order on Motion to Appoint Receiver, LimitedOpposition of Las Vegas Associates, LLLP (Attachments: # 1 Exhibit 1- Lease Agreement

bef,veen Las Vegas Associates LLLP and Heritage-Khec, Inc. as of 91112009,# zExhlbit2 - Guaranty of Lease, # 3 Exhibit 3 - Acknowledgment and Consent to Transfer UnderLease Agreement and Second Amendment to Lease and Amendment to Guaranty)(LOWTHER, PAIRICK) Modifie d on 12141201 8 to add description of exhibits. (gg0.(Entered: 1210212018)

1210312018 49 RESPONSE to Court Order filed by Southern Plaza, LLC re 26 Order on Motion toAppoint Receiveq (Attachments: # 1 Proposed revisions to Receivership Order)(WOLGAST, LISA) (Entered: 12103 12018)

1210312018 50 NOTICE Joinder to Motion to Vacate the Injunctionand Receivership Order by Southern

Plaza, LLC re 45 MOTION to Vacate 26 Ordet on Motion to Appoint Receiver,(WOLGAST, LISA) (Entered: 12103 12018)

12103/2018 51 MEMORANDUM in Oppositionto 26 Order on Motion to Appoint Receiver,(Attachments: # 1 Certificate of Service)(SHAFFER, BRET) (Entered: 1210312018)

12/0312018 52 NOTICE Withdrawal Without Prejudice of Petition to Intervene by SouthemPlaza,LLC(WOLGAST, LISA) (Entered: 12103 12018)

t2/03120t8 Notice of Deficiency (related document(s): 46 Report; Wrong event used, the correct

event is "MOTION FOR ATTORNEYS FEES" - No need to refile, for future reference

only. This docket entry has been corrected by the case manager. (ggs) (Entered:

t210312018)

1210312018 53 RESPONSE to Court Order filed by FEDERAL REALTY INVESTMENT TRUST rc 26

Order on Motion to Appoint Receiver, (Attachments: # 1 Exhibit A - Redlined Copy ofOrder)(MCLEOD, CHESLEY) (Entered: l2l 03 12018)

1210312018 54 RESPONSE filed by VC MACON GA LLC re 46 MOTION for Attorney Fees

(GOTTLIEB, JON) (Entered: 12103 12018)

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112712020

1210312018 55

CM/ECF LIVE- GAMD

NOTICE of Attorney Appearance by ERIC J LORENZINI on behalf of THOMAS D.

6ORDON, THOMAS P. GALLAGHER Attorney ERIC J LORENZINI added to party

THOMAS D. GORDON(pry:3pd), Afforney ERIC J LORENZINI added to partyTHOMAS P. GALLAGHER(pty:3pd) (Attachments: # I Petition for Admission to Plead

and Practice Pro Hac Vic, # 2 Certificate of Good Standing)(LORENZINI, ERIC)Modified on 121412018 to include description of exhibits. (ggs). (Entered: 1210312018)

56 **{'TEIU\4INATED - REFILED AT TAB 62>t>r'r MOTION to Vacate by THOMAS P.

6ALLAGHER, THOMAS D. GORDON filed by ERIC J LORENZINI. (Attachments: #

I Memorandum in Support, #ZBxhlbit, # 3 ExhibitXLORENZINI, ERIC) Modified on

I2l4l20I8 (ggs). (Entered: 12103 12018)

t210312018

r210312018 NOTICE OF RESETTING Status Conference previously set for l2l5l20l8 is now reset

for 1211212018 at 10:00 AM in Macon before US DISTRICT ruDGE TILMAN E SELF

III. Call in instructions will be emailed to all counsel of record.(chc) (Entered:

t210312018)

1210312018 57 RESPONSE to Court Order filed by CKS-VCC,LLC re 26 Order on Motion to AppointReceiver, (KURTZ, RYAN) (Entered: 12 I 03 I 2018)

58 NOTICE of Attorney Appearance by Gregory K. Smith on behalf of LBA BALBOA,LLC, LBA FUND IV LLC Attorney Gregory K. Smith added to party LBA BALBOA,LlC(pfy:ip), Attorney Gregory K. Smith added to party LBA FUND IV, LlC(pty:ip)(Smith, Gregory) (Entered: 12103 12018)

1210312018

59 NOTICE of Attorney Appearance by LEX ERWIN on behalf of R&W Rentals, LLCAttorney LEX ERWIN added to party R&W Rentals, LlC(pty:ip) (ERWIN, LEX)(Entered: 1210312018)

1210312018

60 RESPONSE to Court Order and Joinder of Motion to Vacate filed by R&W Rentals, LLCre26 Order on Motion to Appoint Receiver, 45 MOTION to Vacate 26 Order on Motionto Appoint Receiver, (ERWIN, LEX) Modified on 1212712018 to edit docket text. (ggs).

(Entered: 1210312018)

1210312018

Notice of Deficiency (related document(s): 56 Motion to Vacate filed by THOMAS D.

GORDON, THOMAS P. GALLAGHER ); Document must be refiled to include adescription of exhibit(s). Generic descriptions of exhibits (i.e. Exhibit or Exhibit A) are

not permitted. (ggs) (Entered: 1210412018)

1210412018

6I NOTICE of Attorney Appearance by ERIC J LORENZINI on behalf of THOMAS P.

GALLAGHER, THOMAS D. GORDON (Attachments: # I Exhibit Petition forAdmission to Plead and Practice Pro Hac Vice, # 2 Exhibit Certificate of Good Standing

usDC central District of GA)(LoRENZINI, ERIC) (Entered: 1210412018)

1210412018

1210412018 Q ***TERIv{INATED TO FILER*** MOTION to Vacate by THOMAS P. GALLAGHER,THOMAS D. GORDON filed by ERIC J LORENZINI. (Attachments: # 1 Memorandumin Support Memo of Law in Suppoert of Don Levin Trust to Vacate the PreliminaryInjunction and Receivership Order, # 2 Exhibit Virginia College Alabama Order DenyingPreliminary Injunction and Receivership, # 3 Exhibit St. Louis Order AppointingReceiver)(LORENZINI, ERIC) Modified on2ll9l2019 (ggs). (Entered: 1210412018)

12105120t8 63 NOTICE ERRATA by THOMAS P. GALLAGHER, THOMAS D. GORDON re 62

MOTION to Vacate (LORENZINI, ERIC) (Entered: 1210512018)

64 AFFIDAVIT in Support filed by THOMAS P. GALLAGHER re 62 MOTION to Vacate

(Attachments: # I Exhibit Initial Lease Agreement dated April 12, 2012, # 2 Exhibit FirstAmendment to Lease Agreement, # 3 Exhibit Notice of Assignment of Lease Agreement

dated April 12, 20 I 2XLORENZINI, ERIC) (Entered: l2l 05 12018)

t210512018

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1t27t2020

1210612018 ffiCM/ECF LIVE- GAMD

ORDER granting 46 Motion for Attorney Fees. Ordered by US DISTRICT JUDGETILMAN E SELR III on 121612018 (chc) (Entered:1210612018)

12106120r8 66 AFFIDAVIT re 62 MOTION to Vacate of Thomas D. Gordon in Support of the Don LevinTrust Motion to Vacate by THOMAS P. GALLAGHER, THOMAS D' GORDON(LORENZINI, ERIC) (Entered: l2l 061 2018)

67 NOTICE of Attorney Appearance by Beth A. Moeller onbehalf of FOAMZONE,LLC,AMERICAN AUTO WASH, LLC, AMERICAN AUTO WASH EXPRESS,LLCAttorney Beth A. Moeller added to party FOAMZONE, LlC(pty:ip), Attorney Beth A.Moeller added to party AMERICAN AUTO WASH, LlC(pty:ip), Attorney Beth A.Moeller added to party AMERICAN AUTO WASH EXPRESS, LlC(pty:ip) (MoelleaBeth) (Entered: 12107 12018)

1210712018

1210712018 Notice of Deficiency (related document(s): 67 Notice of Afforney Appearance, filed byAMERICAN AUTO WASH EXPRESS,LLC,AMERICAN AUTO WASH, LLC,FOAMZONE, LLC ); Notice to Counsel - (BETH A. MOELLER) Your contact

information (ADDRESS AND TELEPHONE (case manager updated your e-mail

address)) in CM/ECF is not current. Please login as soon as possible and update your user

account via Utilities - Your Account. (ggs) (Entercd: 1210712018)

@ NOTICE of Attorney Appearance by MICHAEL J THOMERSON on behalf of CMSEDU II SPARIANBURG, L.P. Attomey MICHAEL J THOMERSON added to party

CMS EDU II SPARTANBURG, L.P.(pty:ip) (THOMERSON, MICHAEL) (Entered:

t2lo7l2or8)

1210712018

69 MOTION for Joinder by CMS EDU II SPARIANBURG, L.P. re: MOTION toYacate 26

Order on Motion to Appoint Receiver filed by MICHAEL J THOMERSON.(THOMERSON, MICHAEL) Modified onl2l27l20l8 to link documents. (ggs)'

(Entered: 1210712018)

12107120t8

70 AFFIDAVIT in Support filed by National Retail Properties, LP re 45 MOTION to Vacate

26 Order on Motion to Appoint Receiver, (V/ALKER, STUART) (Entered: l2ll0l20l8)t2lt0l20l8

t2lr0l20r8 7l NOTICE of Attorney Appearance by RYAN T WAGGONER on behalf of 15350/15400

Sherman Reverse, LLC Attorney RYAN T WAGGONER added to party 15350/15400

Sherman Reverse, LlC(pty:3pd) (Attachments: # l Exhibit A - Petition for Admission toPractice Pro Hac Vice, # 2 Exhibit B - Certificate of Good Standing)(WAGGONER,RYAN) (Entered: l2l l0 12018)

12 NOTICE of Attorney Appearance by BRIAN P WELCH on behalf of Southern Plaza,

LLC (WELCH, BRIAN) (Entered: I2llll20l8)1 I 82t /2011

7-1 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by FREDERICK H SCHUTT (nop) (Entered: l2lIll2018)

12/tv20r8

74 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by ANGELA M BUTCHER (nop) (Entered: l2llll20l8)

t2tnl20r8

75 Order grantingPetition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by ERIC J LORENZINI (nop) (Entered: l2llll20l8)

t2ltv20r8

r2lnl20L8 16 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by HOWARD C RUBIN (nop) (Entered: l2llll20l8)

Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by BONNIE H ROTHELL (nop) (Entered: l2lIll20l8)

t2lrU20L8 77

t2ltt/20t8 ZE Order granting Petition for Admission Pro Hac Vice (Petition Attached); Attorney

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79 AFFIDAVIT in Support f,rled by Chula Vista Center,LLC, Pierre Bossier AnchorAcquisition,LLC,Valley PlazaMall, LP re 45 MOTION to Vacate 26 Order on Motionto Appoint Receiver, (WALKER, STUART) (Entered: l2llll20l8)

I ,,/120I 811

I2l 1201 81l 80 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by BRET P SHAFFER (nop) (Entered: I2ltll20l8)

&l NOTICE of Attorney Appearance by THOMAS EDWARD AUSTIN, JR on behalf ofPalisades Birmingham,LLc Attorney THOMAS EDWARD AUSTIN, JR added to party

Palisades Birmingham, LlC(pty:dft) (AUSTIN, THOMAS) (Entered: l2l I I 12018)

1 2t 120I 811

NOTICE of Order granting Pro Hac Vice Admission for Attorneys Drew M Dillworthand Kristopher E Pearson. Parties need to efile notices of appearance. (Attachments: # 1

Pro Hac Vice Admission)(nop) (Entered: l2lIIl20l8)

t2lrv20t8 82

MOTION for Joinder by LBA BALBOA, LLC, LBA FUND IV, LLC re: MOTION to

Vacate 26 Order on Motion to Appoint Receiver filed by Gregory K. Smith.(Smith,

Gregory) Modified onl2l27l2018 to link documents. (ggs). (Entered: l2llll20I8)

r2try20t8 83

Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by JOE A JOSEPH (nop) (Enteted: I2lIIl20l8)

t2lrv20t8 84

NOTICE of Attorney Appearance by JOHN D ELROD on behalf of DenGar Belt, LLLPAttomey JOHN D ELROD added to party DenGar Belt, LLLP(pty:ip) (ELROD, JOHN)(Entered: l2llIl20l8)

t2ltu20t8 85

AFFIDAVIT re 60 RESPONSE to Court Orderby R&W Rentals, LLC (Attachments: # 1

Exhibit Guaranty)(ERWIN, LEX) (Entered: 12 I I I I 20 18)r2ltv20t8 86

w RESPONSE to Court Order frled by BSF RICHMOND, L.P. re 26 Order on Motion to

Appoint Receiver, 50 Notice (Other), 49 RESPONSE to Court Order, 21 Response to

Motion (WOLGAST, LISA) (Entered: l2llll20l8)

12/tv20l8

l2ltv20t8 88 *X*WITHDRAWN - SEE WITHDRAWAL AT TAB IO3**'I' MEMORANDUM iNOpposition to 26 Order on Motion to Appoint Receivel Supplemental Memorandum inSupport of Limited Objection to Order Appointing Receiver and Preliminary Iniunction48 (Attacltnents: # I Exhibit Leffer from Receiver)(SCHUTT, FREDERICK) Modifiedon l2l 12120 I 8 (ggs). (Entered: l2l l1l20l8)

Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Metby STUART M BROWN (nop) (Enteted: I2llll2018)

1I2l 120 8l1 89

Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by LEX M ERWIN (nop) (Entered: l2lIll2018)

1 8I2t 12011 90

NOTICE of Attorney Appearance by WILLIAM J HOLLEY,II on behalf ofNationalUniversity Attomey WILLIAM J HOLLEY, II added to party National University(pty:ip)(HOLLEY, WLLIAM) (Entered: l2l Il 12018)

1 2l 120I 811 9I

92 NOTICE of Attorney Appearance by DANA S PLON on behalf of 3000 Market LPAttomey DANA S PLON added to party 3000 Market LP(pty:ip) (PLON, DANA)(Entered: l2llll2018)

t2ltu20t8

93 NOTICE of Attomey Appearance by DANA S PLON on behalf of BH Franklin LLLPAttorney DANA S PLON added to party BH Franklin LLLP(pty:ip) (PLON, DANA)(Entered: l2llIl20l8)

t2ltl/2018


Admission Fee Met by RYAN T V/AGGONER (nop) (Entered: l2llll20l8)

t2llv20r8 94 NOTICE of Attorney Appearance by J ruLIUS BOLOCK on behalf of iPenn

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1 0/35



Ventures,L.P. Attorney J ruLIUS BOLOCK added to party iPenn Ventures,L.P.(pty:dft)(BOLOCK, J ruLIUS) (Entered: l2llll20l8)

t2lt7l20t8 Appeal Instructions re 106 Notice of Appeal,. The Transcript Information Form and

95 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by J JULIUS BOLOCK (nop) (Entered: I2llll20l8)

t2lrv20r8

96 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by JONATHAN M KAMIN (nop) (Entered: l2llll20l8)

t2lrv20t8

NOTICE of Attorney Appearance by CHRISTINE MH WELLONS on behalf ofMaryland Higher Education Commission Attorney CHRISTINE MH WELLONS added

to party Maryland Higher Education Commission(pty:ip) (Attachments: # I ExhibitPetition for Admission Pro Hac Vice)(WELLONS, CHRISTINE) (Entered: l2llIl20l8)

r2lnl20t8 97

r2lrv20l8 98 MEMORANDUM in Support of 45 MOTION to Vacate 26 Order on Motion to AppointReceiver, (DenGar Belt LLLP's Joinder to Motion to Vacate Injunction and Receivership

Order) (ELROD, JOHN) (Entered: l2llll20l8)

t2lt2/2018 w RECEIVER'S INITIAL REPORT filEd bY JAMES F BANTER (BANTER, JAMES)Modified onl2ll2l20l8 to add document description. (ggs). (Entered: l2lI2l20l8)

l2lt2l20t8 100 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by ALLISON H ROGERS (nop) (Entered: l2ll2l20l8)

12lt2l2018 101 MOTION Obtain Secured Financing by JOHN FLANDERS KENNEDY filed by JAMESF BANTER. (Attachments: # I Exhibit Executed Ninth Amendment Agreement)(BANTER, JAMES) (Entered: I2ll2l20l8)

t2lt2l20T8 102 NOTICE of Attorney Appearance by Matthew Stewart Cathey on behalf of Eagle

Cleaning Service, Inc. Attorney Matthew Stewart Cathey added to party Eagle Cleaning

Service, Inc. (pty: ip) (Cathey, Matthew) (Entered: 12 I 12 I 2018)

1211,212018 103 NOTICE Withdrawal of Limited Objection by Las Vegas Associates, LLLP re 48

Memorandum in Oppositiofl,,88 Memorandum in Opposition, (SCHUTT, FREDERICK)(Entered: l2ll2l20l8)

t2lt2l20t8 r20 Minute Entry for proceedings held before US DISTRICT ruDGE TILMAN E SELF, III:Status Conference held on l2ll2l20l8 Court Reporters: Sally Gray and Tammy DiRocco(ggs) (Enter ed: t2 I 19 I 201 8)

r04 ORDER Supplemental Order rc26 Order on Motion to Appoint Receiver. Ordered byUS DISTRICT JUDGE TILMAN E SELF,III on l2lI2l20l8. (Attachments: # l Exhibit)(ech) (Entered: I2l 13 12018)

tzlt3l20I8

t2l13l2018 105 ORDER: The Court grants 101 Receiver's Assented to Motion for Authority to BorrowFunds. Accordingly, the Court authorizes the Receiver to obtain Ninth Amendment Term

Loans and grants security interests and liens. Ordered by US DISTRICT JUDGETILMAN E SELR III on l2ll2l20l8. (Attachments: # I Exhibit) (ech) (Entered:

r2lr3l20t8)

t2lt3l20l8 106 NOTICE OF APPEAL as to 26 Order on Motion to Appoint Receiver, by Chula VistaCenter, LLC, National Retail Properties, LP, Pierre Bossier Anchor Acquisition,LLC,Valley PlazaMall, LP. Filing fee $ 505, ReceiptNo.: 113G-3043341. (WALKER,STUART) (Entered: l2l 13 12018)

Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Metby BRIAN P WELCH (nop) (Entered: l2ll7l20l8)

t2lt7l20t8 w_

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112712020

1213012018 r23

CM/ECF LIVE- GAMD

instructions are available on the District Court website under Forms & Guides.**PLF.ASE NOTE** Separate forms must be filed for each court reporter. Transcript

Order Form due by ll7l20I9 (ggs) (Entered: l2ll7l20l8)

TRANSCRIPT of Proceedings of Status Conference 4:00 p.m. held on I2-12-lS,beforeJudge Self. Court Reporter Tammy W. DiRocco. Volume Number: I of 1. The transcript

tzlr7l20t8 108 Transmission of Notice of Appeal and Docket Sheet to US Court of Appeals re:26 Order

on Motion to Appoint Receiver, 106 Notice of Appeal, Judge Appealed: Tilman E. Self,

IIL Court Reporters: Sally Gray, Darlene Fuller. Fee: PAID. (ggs) (Entered:1211712018)

109 NOTICE of Attorney Appearance by BRENTON K MORRIS on behalf of LAKD HQ,LLC Attorney BRENTON K MORRIS added to party LAKD HQ, Llc(pty:cr)(MORRIS, BRENTON) (Entered: l2l l7 12018)

tztr7l20t8

110 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Metby CHRISTINE MH WELLONS (nop) (Entered: l2ll7l20l8)

t2l17l20l8

111 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by BRENTON K MORzuS (nop) (Entered: l2ll7l20l8)

t2lr7l20l8

112 NOTICE of Attorney Appearance by JOHN F MASSOUH on behalf of TX Lubbock

50th Street,LLC Attorney JOHN F MASSOUH added to party TX Lubbock 50th Street,

LlC(pty:ip) (MASSOUH, JOHN) (Entered: l2l 17 12018)

l2lt7l20l8

113 TRANSCRIPT INFORMAIION FORM by Chula Vista Center, LLC, National RetailProperties, LP, Pierre Bossier Anchor Acquisition,LLC, Valley Plaza Mall, LP. re 106

Notice of Appeal, 11-7-18 Hearing (WALKER, STUART) (Entered: I2lI8l20I8)

t2tr8l20t8

II4 TRANSCRIPT INFORMAIION FORM by Chula Vista Center, LLC, National RetailProperties, LP, Pierre Bossier Anchor Acquisition,LLC, Valley Plaza Mall, LP. re 106

Notice of Appeal, 12-12-18 Hearing (V/ALKER, STUART) (Entered: I2ll8l20l8)

L2l18l20r8

115 TRANSCRIPT INFORMAIION FORM by Chula Vista Center,LLC, National RetailProperties, LP, Pierre Bossier Anchor Acquisition,LLC, Valley Plaza Mall, LP. re 106

Notice of Appeal, 12-12-18 Hearing (WALKER, STUART) (Entered: l2ll8l20l8)

t2lr8l20t8

116 TRANSCRIPT ORDER ACKNOWLEDGMENT re 106 Notice of Appeal, (Tammy W.

DiRocco) (Entered: l2l l8l20l8)t2lt8l20t8

t17 TRANSCRIPT ORDER ACKNOWLEDGMENT re 106 Notice of Appeal, (ddf)(Entered: I2ll9l20l8)

t2t19l20t8

TRANSCRIPT of Hearing on Motion for Temporary Injunctive Relief, Motion to AdoptReceiver, and Motion to Consolidate Cases held on Ill07l20l8, before Judge Tilman E.

Self IIL Court Reporter Darlene D. Fuller. The transcript may be inspected at the court orpurchased through the court reporter for a period of 90 days. After 90 days, the transcriptmay be obtained via PACER. REDACTION OF TRANSCRIPTS: Complete redaction

policy available on the courts website. (ddf) (Entered: 1211912018)

l2lt9l20r8 118

Notice of Filing Offrcial Transcript to all parties re 118 Transcript of Hearing on Motionfor Temporary Injunctive Relief, Motion to Adopt Receiver and Motion to Consolidate

Cases held 1110712018. (ddf) (Entered: I2ll9l20l8)

t2l19l20l8 119

USCA Case Number l8-15183-K re 106 Notice of Appeal, filed by National RetailProperties, LP, Piene Bossier Anchor Acquisition,LLC, Chula Vista Center,LLC, ValleyPlazaMall, LP. (ggs) (Entered: l2l2ll20t8)

t2l2U20t8 I2T

122 TRANSCRIPT ORDER ACKNOWLEDGMENT re 106 Notice of Appeal, (GRAY,

SALLY) (Entered: 12127 I 2018)1212712018

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124 This is a text only entry; no document issued. ORDER granting 69 Motion of CMS

EDU II Spartanburg, L.P. and CMS EDU II Huntsville, L.P. to Join Motions docketed at

45 and62 . Ordered by US DISTRICT ruDGE TILMAN E SELR III on ll4ll9 (TES)

(Entered: 0110412019)

0U0412019

0U0412019 t25 This is a text only entry; no document issued. ORDER granting 83 Motion of LBABalboa, LLC, LBA Fund IV LLC,andDavid Thomas and Tina R. Thomas, as Trustees

of the Thomas Family trust Dated June 9, 1997 to Join Motions docketed at 45 and 62 .

Ordered by US DISTRICT ruDGE TILMAN E SELB III on ll4lL9. (TES) (Entered:

0U04l20t9)

126 NOTICE of Creditor Claim by BEN'S GLASS AND METAL (Attachments: # 1 Cover

Letteq # 2 Business Card for Colin B. Ellis, Campus President, Brightwood College, # 3

Letter dated lll20l20l8 from James F. Banter, Counsel for Receiver,# 4Bnvelopexggs)(Entered: 0lll0l20l9)

01201901/1

t27 MOTION Expedited Hearing, Receiver's Approval of Sale Procedures by JOHNFLANDERS KENNEDY filed by JAMES F BANTER.(BANTER, JAMES) (Entered:

oUrv2ot9)

120I 901/11

128 This is a text only entry; no document issued. ORDER granting IN PART l2'7 Motionfor Expedited Hearing and Receiver's Approval of Sale Procedures. At this time, the

Court GRANTS only "part (a)" of the Recevier's Prayer for Relief and schedules the

Sales Procedure Hearing for Tuesday, January 22,2019, at 10:00 a.m. See Doc.l27 atp9. Ordered by uS DISTRICT ruDGE TILMAN E SELF, III on 1llll20l9. (ech)(Entered: 0lllll20l9)

1201 901/11

0U1U20r9 NOTICE OF SETTING Status Conference set for 0112212019 at 10:00 AM in Maconbefore US DISTRICT ruDGE TILMAN E SELF III. (chc) (Entered: 0111112019)

t29 ORDER seffing briefing schedule re: Motions to Vacate 45 and 62 . Defendants'

Response due by 21412019. Movants'Reply due by 211812019. Ordered by US DISTRICTruDGE TILMAN E SELF,III on 0lllll20l9. (chc) (Entered: 0lllIl20l9)

0Urv20r9

130 REPORT of Receiver filed by JoHN FLANDERS KENNEDY (BANTER, JAMES)Modified onll15l2019 to correct filing party. (ggs). (Entered: 0llt4l20l9)

0r/1412019

l3_L SECOND MOTION for Attorney Fees by JOHN FLANDERS KENNEDY filed byJAMES F BANTER.(BANTER, JAMES) (Entered: 0lll5l20l9)

0U15l20t9

r32 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Metby GURTIS J THOMAS (nop) (Entered: 0tll6l20l9)

0Ut6l20l9

0Ut6l20l9 r33 EMERGENCY MOTION Expedited Motion for Order Clariffing Court's Injunction does

not apply to insurance policy by JOHN FLANDERS KENNEDY filed by JAMES F

BANTER. (BANTER, JAMES) (Entered: 0l I I 6 I 2019)

8120t90Ur 134 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by RANDALL L MORzuSON, JR (nop) (Entered: 0lll8l20I9)

135 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Metby JAMES S CARR (nop) (Entered: 01/1812019)

8120190lll

1t27t2020

0Ur8l20r9

CM/ECF LIVE- GAMD

may be inspected at the court or purchased through the court reporter for a period of 90

days. After 90 days, the transcriptmay be obtained via PACER. REDACTION OF

TRANSCRIPTS: Complete redaction policy available on the courts website. (Tammy WDiRocco) (Entered: 12130 12018)

Order granting Petition for Admission Pro Hac Vice (signed petition has been misplaced);

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136 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by NEIL M MERKL (nop) (Entered: 01/18/2019)

8120190l/1

NOTICE of Attorney Appearance by RION M VAUGHAN on behalf of Assessment

Technologies Institute,LLC d.b.a. National Healthcareer Association Attomey RION MVAUGHAN added to party Assessment Technologies Institute,LLC d.b.a. NationalHealthcareer Association(pty : cr) (VAUGHAN, RION) (Entered : 0 | I | 8 I 20 19)

8120t90Ut r37

NOTICE of Attorney Appearance by STEPHEN G GUNBY on behalf of COLUMBUSGEORGIA Attorney STEPHEN G GUNBY added to party COLUMBUSGEORGIA(pIy: ip) (GUNBY, STEPHEN) (Entered: 0l 122 I 2019)

0y22120t9 138

0112212019 r39 Minute Entry for proceedings held before US DISTRICT ruDGE TILMAN E SELF, IIIStatus Conference held on 112212019. Court Reporter: Darlene Fuller. Time in Court: 8

minutes. (chc) (Entered: 0I l22l2ol9)

0U2212019 NOTICE OF SETTING Status Conference set for 31412019 at 10:00 AM in Macon before

US DISTRICT JUDGE TILMAN E SELF III. (chc) (Entered: 0112212019)

0U2212019 140 EMERGENCY MOTION to Amend/Correct 127 MOTION Expedited Hearing,

Receiver's Approval of Sale Procedures by JOHN FLANDERS KENNEDY filed byJAMES F BANTER.(BANTER, JAMES) (Entered: 0112212019)

141 ORDER granting 133 Motion to Clariff That Court's Injuction Does not Apply toInsurance Policy. Ordered by US DISTRICT ruDGE TILMAN E SELF, III on ll22l20l9(ggs) (Entered: Ol 12212019)

0U2212019

142 ORDER granting 140 Amended Expedited Motion to Approve Sale Procedures and

TERMINATING the remaining requested relief sought in the Receiver's initial127Expedited Motion to Approve Sale Procedures as moot. Ordered by US DISTRICTruDGE TILMAN E SELF, III on 112212018. (Attachments: # 1 Exhibit Sale Procedures,

# zBxhlbitAnticipated Timeline, # 3 Exhibit Notice of Public Auction) (ech) (Entered:

0U22120r9)

0U22120r9

ORDER granting 131 Motion for Attorney Fees (Second Application forCompensation). Ordered by US DISTRICT JUDGE TILMAN E SELF, III on ll23l20I9(ech) (Enter ed 0 | I 23 I 20t9)

0U2312019 t43

oU29l20I9 r44 TRANSCRIPT of Proceedings held on I2lI2l20l810:00 a.m. before Judge TILMAN E..

SELR III. Court Reporter SALLY GRAY. The transcript may be inspected at the court orpurchased through the court reporter (229-431-2515) for a period of 90 days. After 90

days, the transcript may be obtained via PACER. REDACTION OF TRANSCRIPTS:Complete redaction policy available on the courts website. (slg Modified on ll29l20l9 tocorrect date (cma). (Entered: 0112912019)

0210412019 145 RESPONSE filed by EDUCATION CORPORATION OF AMERICA, VIRGINIACOLLEGE LLC re 62 MOTION to Vacate, 45 MOTION to Vacate 26 Order on Motionto Appoint Receiver, (CLEVELAND, OLLIE) (Entered: 0210412019)

MOTION for Leave to File LegalAction Against Receiver by Eagle Cleaning Service,Inc. filed by Matthew Stewart Cathey.(Cathey, Matthew) (Entered: 0210612019)

0210612019 wr47 MOTION Briefing Schedule by JOHN FLANDERS KENNEDY filed by JAMES F

BANTER. (BANTER, JAMES) (Entered: 02 I 07 I 20T9)0210712019

1t27t2020

02ltv20t9 148

CM/ECF LIVE- GAMD

Attorney Admission Fee Met by ROBERT L LEHANE. (nop) (Entered: 0lll8l20l9)

ORDER granting 147 Motion for Entry of Scheduling Order Goveming Proposed

Claims Administration Process. The Receiver shall move the Court to approve a

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1t27t2020

02ltsl20t9 157

CM/ECF LIVE'GAMD

proposed claims administration process by February 15,2019; All interested parties must

file any objections to the Receivers proposed claims administration process by February22,2019; and The Receiver shall file any Reply to the objections, if any, by March 1,

2019. The Court will hold a hearing regarding any objections to the Receivers proposed

claims administration process on March 4,2019. Ordered by US DISTRICT ruDGETILMAN E. SELR III on 2lIIl20l9. (ech) Modified on 2lItl20I9 to include deadlines.

(ggs). (Entered: 02llll20l9)

MOTION Appointing Claims and Noticing Agent by JOHN FLANDERS KENNEDYfiled by JAMES F BANTER. (Attachments: # I Exhibit Proposed Order, # 2 Exhibit

02lnl20r9 !p. NOTICE of Attorney Appearance by TRACY A MARION on behalf of CMS EDU IIHuntsville, L.P. Attomey TRACY A MARION added to party CMS EDU II Huntsville,L.P. (pty:ip) (MARION, TRACY) (Entered: 021 I I 12019)

150 {.{.*DISRFGARD - TO BE REFILED. THIS MOTION HAS BEENTERMINATED.'<'** MOTION for Attomey Fees by JOHN FLANDERS KENNEDYfiled by JAMES F BANTER.(BANTER, JAMES) Modified on2ll3l2019 (ggs).

(Entered: 0211312019)

0211312019

MOTION for Attorney Fees by JOHN FLANDERS KENNEDY filed by JAMES FBANTER. (Attachments: # 1 Exhibit Exhibit A - January Invoice)(BANTER, JAMES)(Entered: 0211312019)

021t312019 l5L

021t412019 152 MOTION to Amend/Correct 1,42Order on Motion to Amend/Cortect, by JOHNFLANDERS KENNEDY filed by JAMES F BANTER. (Attachments: # 1 Exhibit, # 2

Exhibit, # 3 Exhibit,# 4Exhibit,# 5 Exhibit, # 6 Exhibit)(BANTER, JAMES) (Entered:

02tr4120r9)

0211412019 ll3 REPORT filed by JAMES F BANTER (Attachments: # I Exhibit, # 2Exhibit, # 3ExhibitXBA.NTER, JAMES) (Entered: 02 I | 4 I 2019)

o2lt5/2019 Notice of Deficiency (related document(s): 152 Motion to Amend/Correct filed by JOHNFLANDERS KENNEDX 153 Report ); Generic descriptions of exhibits (i.e. Exhibit A,etc.) are not permitted. Documents must be refiled to include a description of exhibit(s).(ggs) (Entered: 021 I 5 12019)

r54 MOTION to Amend Sale Procedures and Extend Deadlines re 142 Order on Motion toAmend/Correct, by JOHN FLANDERS KENNEDY filed by JAMES F BANTER.(Attachments:#lExhibitA-ReceiverDeclaration,#2ExhibitB-JDADeclaration,#3Exhibit C - Proposed Amended Order, # 4 Exhibit D - Amended Sale Procedures, # 5ExhibitE-AmendedDeadlines,#6ExhibitF-AmendedPublicationNotice)(BANTER,JAMES) Modified on2ll9l2019 (ggs). (Entered: 0211512019)

02ltsl20t9

155 REPORT (Receiver's Third Report) filed by JAMES F BANTER. (Attachments: # 1

ExhibitA-AmendedTimeline,#2ExhibitB-ApprovedDisbursements,#3ExhibitC-Cash Forecast)(BANTER, JAMES) Modified on2ll5l2019 to correct event and toremove document relationship. (ggs). (Entered: 021 I 5 12019)

0211512019

Notice of Deficiency (related document(s): 155 Motion to Amend/Correct re 153 Report

filed by JOHN FLANDERS KENNEDY ); Wrong event used - NO NEED TO REFILE.A motion to amend was not necessary to file the corrected report. Motion terminated and

docket entry correct reflect that the document is a Report. (ggs) (Entered: 0211512019)

02lrsl20t9

156 XX*TERMINATED - MUST BE REFILED PURSAUNT TO NOTICE OFDEFICIENCY{"I"I'. MOTION to Intervene by SALLIE MAE BANK frled by ChristopherJ. Willis. (Attachments: # 1 Exhibit A - Declaration of Kelly Christianao)(Willis,Christopher) Modifi ed on 2l 19 I 201 9 (ggs). (Entered: 021 I 5 12019)

o2lt5l20r9

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Deutch Declaration, # 3 Exhibit Engagement Letter Omni)(BANTER, JAMES) (Entered:

021t512019)

02ltsl20l9 158 MOTION To Approve Claim Procedures by JOHN FLANDERS KENNEDY filed byJAMES F BANTER. (Attachments: # ! Exhibit Claims Process Notice, # 2 Exhibit Proofof Claim Form, # 3 Exhibit Publication Notice to File Claims, # 4 Exhibit Proposed

Order)(BANTER, JAMES) (Enter ed: 021 I 5 12019)

ltg WITHDRAWAL of Motion re 45 MOTION to Vacate 26 Order on Motion to AppointReceiver, filed by National Retail Properties, LP, Pierre Bossier Anchor Acquisition,LLC, Chula Vista Center, LLC, Valley PlazaMall, LP (MORRISON, RANDALL)(Entered: 0211812019)

021r8120r9

160 NOTICE of Withdrawal of Motion by THOMAS P. GALLAGHER, THOMAS D.

GORDON re 62 MOTION to Vacate (LORENZINI, ERIC) (Entered: 0211812019)02t1812019

Notice of Deficiency (related document(s): 160 Notice of Withdrawal of Motion filed byTHOMAS D. GORDON, THOMAS P. GALLAGHER ); Wrong event used, the correct

event is "WITHDRAWAL OF MOTION". When this event is used the applicable motionis automatically terminated. NO NEED TO REFILE - The motion has been terminated bycase manager re: 62 Motion to Vacate. (ggs) (Enteted:02119120L9)

02t19120t9

Notice of Deficiency (related document(s): J-ff Motion to Intervene filed by SALLIEMAE BANK ); Document must be refiled using correct events. A motion requesting

more than one type of relief requires that EACH TYPE OF RELIEF be selected duringthe filing process. This is accomplished by selecting each type of relief from the list ofoptions. Document must be refilled and the correct motion events selected (Intervene,

Leave to File and select Miscellaneous Relief for the request for release of certain

property. The Motion at docket entry #156 has been terminated. (ggs) (Entered:

0211912019)

0211912019

MOTION to Intervene, MOTION for Leave to File Complaint, MOTION for Release ofCertain Property by SALLIE MAE BANK filed by Christopher J. Willis. (Attachments: #

l Exhibit A - Declaration of Kelly Christianao)(Wil1is, Christopher) Modified on

2ll9l20l9 to edit docket text. (ggs). (Entered: 0211912019)

0211912019 161

021t912019 r62 ORDER granting 151 Receiver's Third Motion for Fees. Ordered by US DISTRICTruDGE TILMAN E. SELR III on 211912019. (ech) (Enteted:0211912019)

re ORDER granting 154 Receiver's Expedited Motion to Amend/Correct Sale Procedures

and Extend Deadlines. Ordered by US DISTRICT JTIDGE TILMAN E. SELF, III on

2llgl20l9. (Attachments: # 1 Exhibit - Amended Sale Procedures,# 2 Exhibit - Amended

Anticipated Timeline for Completing Sale Procedures, # 3 Exhibit - Notice of PublicAuction). (ech) Modified on 2lI9l20t9 to edit docket text. (ggs). (Entered: 0211912019)

021r9120t9

Pursuant to F.R.A.P 11(c) the Clerk of the District Court for the Middle District ofGeorgia certifies that the record is complete for purposes of this appeal re: 106 Notice ofAppeal,. The entire record on appeal is available electronically (ggs) (Entered:

o2l20l2ot9)

0212012019

r64 MOTION for Protective Order by JOHN FLANDERS KENNEDY filed by JAMES FBANTER. (Attachments: # I Exhibit A - Alabama AG Subpoena, # 2 Exhibit B -Proposed Protective Order)(BANTER, JAMES) (Enter ed 02121 12019)

0212U2019

ORDER granting 164 Motion for Protective Order regarding 1164-ll subpoena from the

Office of the Alabama Attomey General. Ordered by US DISTRICT ruDGE TILMANE. SELR III on 212112019. (ech) (Entered:0212112019)

0212U20r9 165

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1t27t2020

02125120t9 r66

CM/ECF LIVE- GAMD

MANDATE of USCA DISMISSING appeal as to 106 Notice of Appeal, filed by NationalRetail Properties, LP, Pierre Bossier Anchor Acquisition,LLC, Chula Vista Center,LLC,Valley PIaza Mall, LP (ggs) (Enter ed: 02 I 25 I 2019)

t67 MOTION (EXPEDITED) to Sell Semmes Property by JOHN FLANDERS KENNEDYfiled by JAMES F BANTER. (Attachments: # I Exhibit Listing Agreement, # 2 Proposed

Order Proposed Order)(BANTER, JAMES) Modified on 212612019 to add docket text.(ggs). (Entered: 0212512019)

02125120t9

This is a text only entry; no document issued. ORDER granting IN PART 167

Expedited Motion to Sell Semmes Property. At this time, the Court GRANTS only "part(1)" of the Receiver's Prayer for Relief and schedules a hearing regarding the approval ofthe Private Sales Process, or in the alternative, the Public Sales Process for the propertyowned by VCLLC for Monday, March 4,2019, at 10:00 a.m. See Doc. 167 at p. 8.

Ordered by US DISTRICT ruDGE TILMAN E. SELF, III on 212612019. (ech) (Entered:

o2l26l2ot9)

0212612019 168

RESPONSE filed by JOHN FLANDERS KENNEDY re 146 MOTION for Leave to FileLegalAction Against Receiver (BANTER, JAMES) (Entered: 0212712019)

0212712019 169

0310U20r9 170 NOTICE of Attorney Appearance by CHRISTOPHER J MADAIO on behalf ofConsumer Protection Division of the Office of the Attorney General of MarylandAttorney CHRISTOPHER J MADAIO added to party Consumer Protection Division ofthe Office of the Attorney General of Maryland(pty:ip) (Attachments: # 1 Exhibit Petitionfor Admission Pro Hac Vice)(MADAIO, CHRISTOPHER) (Entered: 0310112019)

0310412019 t74 Minute Entry for proceedings held before US DISTRICT ruDGE TILMAN E SELF, IIIStatus Conference held on 31412019. Court Reporter: Tammy DiRocco. (ggs) (Entered:

03losl2ot9)

ORDER re 16l MOTION to Sell the Property filed by JOHN FLANDERS KENNEDY.

This ORDER GRANTS the remaining relief from Receiver's 167 Motion not previouslyruled upon by the Court. See Doc. 168 . Ordered by US DISTRICT JUDGE TILMAN E.

SELF, III on 3 I 5 12019 . (ech) (Enter ed: 03 I 05 12019)

03105120t9 ru

r72 ORDER AUTHORIZING AND APPOINTING NOTICE AND CLAIMSAGENT GRANTING 157 Motion Appointing Omni Management Group as Claims and

Noticing Agent. Ordered by US DISTRICT ruDGE TILMAN E. SELF, III on 31512019.

(ech) Modified on 31512019 to edit document title. (ggs). (Entered: 0310512019)

0310s12019

***DISRFGARD - INCORRECT DOCUMENT ATTACHED*** Minute Entry forproceedings held before US DISTRICT JUDGE TILMAN E SELF,III: Status

Conference held on 31512019 Court Reporter: Tammy DiRocco.Time in Court: 23

minutes. (chc) Modified on 315120L9 (ggs). (Entered: 0310512019)

0310s12019 173

Notice of Deficiency (related document(s): 173 Minute Sheet for Status Conference;Case Administrator Deficiency: Incorrect document attached. Document to be refiled.(ggs) (Entercd: 03 I 05 I 2019)

03t0s12019

ORDER granting 158 Motion for Entry of an Order Approving Proposed Claims

Administration Procedures. Ordered by US DISTRICT ruDGE TILMAN E. SELF, III on

31612019. (Attachments: # I Exhibit Claims Process Notice, # zBxhibit Claim Form, # 3Exhibit USA Today Publication) (ech) (Ente r ed: 03 I 0 6 I 20 I 9)

0310612019 t75

176 NOTICE of Attorney Appearance by TAYLOR C BARTLETT on behalf of KevenRobinson Attorney TAYLOR C BARTLETT added to party Keven Robinson(pty:dft)(BARTLETT, TAYLOR) (Entere d: 03 I 0612019)

0310612019

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178 RESPONSE filed by EDUCATION CORPORATION OF AMERICA, JOHNFLANDERS KENNEDY, VIRGINIA COLLEGE LLC re 161 MOTION toInterveneMOTION for Leave to File ComplaintMOTION for Release of Certain Property(BANTER, JAMES) (Entered: 03 I l2l20l9)

031t212019

179 This is atextonly entry; no document issued. ORDER terminating 146 Motion forLeave to File Suit against the Receiver. The Court has entered an order setting forth the

Claims Process 175 andthe Movant has agreed to participate in that process. Therefore,

the Court terminates this motion as moot and the Movant may file its claim on

accordance with the process found in Doc. 175. Ordered by US DISTRICT ruDGETILMAN E SELR III on 0311412019 (TES) (Entered: 0311412019)

031t4120r9

180 NOTICE Certificate of Compliance by JOHN FLANDERS KENNEDY (BANTER,JAMES) (Entered: 03 I 15 12019)

031t512019

181 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by CHRISTOPHER J MADAIO (ttop) (Entered: 0311812019)

031t812019

r82 NOTICE of Continuance of Auction by JOHN FLANDERS KENNEDY (BANTER,JAMES) (Entered: 03 I 19 12019)

031t912019

183 MOTION for Attorney Fees by JOHN FLANDERS KENNEDY filed by JAMES FBANTER. (BANTER, JAMES) (Entered: 03 I 2l I 2019)

0312U2019

03t2212019 184 NOTICE Second Notice of Continuance and Related Relief by JOHN FLANDERSKENNEDY (BANTER, JAMES) (Entered: 03 I 22 I 2019)

03122120t9 185 NOTICE of Change of Address by ERIC J LORENZINI (LORENZINI, ERIC) (Entered:

03122120t9)

0312512019 Notice of Deficiency (related document(s): 185 Notice of Change of Address filed byTHOMAS D. GORDON, THOMAS P. GALLAGHER ); The case number is incorrect on

the document. The correct case number is 5:18-cv-388. NO NEED TO REFILE - forinformation purposes only. (ggs) (Entered: 03 I 25 I 2019)

1_86 MOTION for Clarification re 175 Order on Motion for Miscellaneous Relief, by KevenRobinson filed by TAYLOR C BARTLETT. (Attachments: # 1 Proposed Order Exh. A -Proposed Order Redgarding AIG Policy and Receivership Estate)(BARTLETT,TAYLOR) Modified on312712019 to edit docket text. (ggs). (Entered: 0312712019)

0312712019

r87 REPORT of Receiver by JOHN FLANDERS KENNEDY f,rled by JAMES F BANTER.(Attachments:#lExhibitA-RequestedDisbursementsAuthorization,#2ExhibitB-Revised Cash-Flow Projection)(BANTER, JAMES) Modified on312812019 to correct

event type. (ges). (Entered: 03128120L9)

0312812019

Notice of Deficiency (related document(s): 187 Motion for Attorney Fees filed by JOHNFLANDERS KENNEDY ); Wrong event used, the correct event is "REPORT" - No need

to refile, docket entry corrected by case manager. Motion has been terminated.(ggs)(Entered: 0312812019)

0312812019

188 ORDER granting 183 Motion for Attorney Fees. Ordered by US DISTRICT JUDGETILMAN E. SELF,III on 312912019. (ech) (Entered:0312912019)

03t2912019

1t27t2020

0310712019 wCM/ECF LIVE- GAMD

REPLY to Response filed by Eagle Cleaning Service, Inc. re 146 MOTION for Leave to

File Legal Action Against Receiver; RESPONSE re 158 MOTION To Approve ClaimProcedures, (Cathey, Matthew) Modified on3l8l20l9 to edit docket text for clarity. (gg9.(Entered: 0310712019)

NOTICE OF SETTING Status Conference set for 41812019 at 02:00 PM in Macon04/0U20t9

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0410512019 1_89 ORDER denying 161 Motion to Intervene, for Release of Certain Property, and forLeave to File Complaint. Ordered by US DISTRICT JUDGE TILMAN E. SELF, III on

41 5 12018. (ech) (Entered: 041 05 12019)

04108120t9 NOTICE OF RESETTING Status Conference set for 41812019 at 4230 PM in Maconbefore US DISTRICT ruDGE TILMAN E SELF III. (chc) (Entered: 0410812019)

0410812019 190 NOTICE of Successtul Bidder by JOHN FLANDERS KENNEDY (BANTER, JAMES)(Entered: 0410812019)

t9r NOTICE of Proposed Final Sale Order by JOHN FLANDERS KENNEDY(Attachments: # I Proposed OrderNECB Proposed Final Sale Order)(BANTER,JAMES) (Entered: 0410812019)

0410812019

t92 Minute Entry for proceedings held before US DISTRICT ruDGE TILMAN E SELF, III:Status Conference held on 41912019. Court Reporter: Tammy DiRocco.Time in Courl: 51

minutes. (chc) (Entered: 041 09 l20l9)

0410912019

w NOTICE of Proffer of Testimony of JOHN F. KENNEDY by JOHN FLANDERSKENNEDY re26 Order on Motion to Appoint Receiver. (ggs) Modified on 41912019 to

edit docket text. (ggs). (Entered: 04109120t9)

04109120t9

194 NOTICE of Proffer of Testimony of JOSEPH R. D'ANGELO by JOHN FLANDERSKENNEDY (ggs) (Entered: 041 09 l20l9)

0410912019

NOTICE OF SETTING Status Conference set for 4llIl20l9 at 10:30 AM in Maconbefore US DISTRICT ruDGE TILMAN E SELF IIL (chc) (Entered: 0411012019)

041r0120r9

ls RESPONSE filed by EDUCATION CORPORATION OF AMERICA, JOHNFLANDERS KENNEDY, VIRGINIA COLLEGE LLC re 186 MOTION Clarification re

175 Order on Motion for Miscellaneous Relief, (Attachments: # I Proposed Order)(CLEVELAND, OLLIE) (Entered: 041 l0 12019)

041r012019

196 NOTICE of Proposed Final APA by JOHN FLANDERS KENNEDY (Attachments: # IExhibit Executed NECB APAXBANTER, JAMES) (Enter ed: 04 I 10 12019)

041r0120r9

197 ORDER granting in part and denying in part 186 Motion for Clarification re 175 Order

Ordered by US DISTRICT ruDGE TILMAN E SELF, III on 04lIll20l9 (vs) (Entered:

04lnl20t9)

04lnl20r9

04lrv20t9 198 Sale Authoization ORDER re 196 Notice (Other) filed by JOHN FLANDERSKENNEDY. Ordered by US DISTzuCT ruDGE TILMAN E. SELE III on 4llll20I9.(ech) (Entered: 04 I I I I 20 19)

041t2120r9 r99 MOTION for Attorney Fees by JOHN FLANDERS KENNEDY frled by JAMES FBANTER. (Attachments: # 1 Exhibit A - JBBG March 2019 Statement,# 2 Exhibit B -MCG Feb. March 2019 Statement)(BANTER, JAMES) (Entered:0411212019)

041t512019 200 NOTICE of Attorney Appearance by Fred Bradford Wilson, Jr on behalf of VC MACONGA LLC Afforney Fred Bradford Wilson, Jr added to party VC MACON GALlC(pty:pla) (Wilson, Fred) (Entered: 04 I I 5 I 2019)

Notice of Deficiency (related document(s): 200 Notice of Attorney Appearance filed byVC MACON GA LLC ); Incorrect party selected. New parties should have been added as

"Interested Party". DEBORAH SANTOS and PAMALA MILLER added. Attorneyremoved from representation of VC MACON GA, LLC. NO NEED TO REFILE, docket

corrected by case manager.(ggs) (Entere d: 041 | 5 12019)

04lrsl20t9

1t2712020 CM/ECF LIVE- GAMD

before US DISTRICT ruDGE TILMAN E SELF IIL (chc) (Entered: 0410112019)

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NOTICE of Attorney Appearance by Fred Bradford Wilson, Jr on behalf of PAMALAMILLER (Wilson, Fred) (Entered: 0411512019)

04ltsl20r9 202

o4l15l20l9 203 NOTICE of Attorney Appearance by JULIAN ARI HAMMOND on behalf ofDEBORAH SANTOS Attorney ruLIAN Azu HAMMOND added to party DEBORAHSANTOS(pty: ip) (HAMMOND, ruLIAN) (Entered: 04 I I 5 I 2019)

n4 MOTION Order allowing Proof of Claim to proceed on behalf of a class by DEBORAHSANTOS and PAMALA MILLER filed by JULIAN ARI HAMMOND. (Attachments: #

l Exhibit Proof of Claim and supporting documentation, # 2 Affidavit Decl. of J.

Hammond)(HAMMOND, JULIAN) Modified on 411612019 to add party name. (ggs).

(Entered: 0411512019)

041t512019

205 Minute Entry for proceedings held before US DISTRICT ruDGE TILMAN E SELF, III:Status Conference held on 4lIll20l9. Court Reporter: Sally Gray.Time in Court: 5minutes. (chc) (Entercd: 041 1612019)

o4tr6l20t9

041r8120r9 M ORDER granting 199 Motion for Attorney Fees. Ordered by US DISTRICT JUDGE

TILMAN E. SELF,III on 411812019. (ech) (Entered:0411812019)

NOTICE of Proof of Claim by TABRIEA D BOWERS (Attachments: # 1 Envelopexges)Modified on 51612019 to correct filing date. (ggs). (Entered: 0510612019)

041t912019 w.

NOTICE of Proof of Claim by KADARRYL BROWN (Attachments: # 1 Envelope)(ggs)(Entered: 0510612019)

041t912019 2t0

REPORT filed by JAMES F BANTER (Attachments: # 1 Exhibit ECA Cash FlowForecast, # 2 Exhibit NECB cash Flow Forecast)(BANTER, JAMES) (Entered:

04128120t9)

04128120t9 ru

208 REPORT filed by JAMES F BANTER (Attachments: # I Exhibit A - Requested

Disbwsements Authorization)(BANTER, JAMES) (Entered : 0 5 I 02 I 20 I 9)0510212019

0510612019 2n RESPONSE filed by EDUCATION CORPORATION OF AMERICA, JOHNFLANDERS KENNEDY, VIRGINIA COLLEGE LLC re 204 MOTION Order allowingProof of Claim to proceed on behalf of a class (Attachments: # 1 Exhibit 1 - ArbitrationAgreement,#2Bxhlbit2-SantosNotice,#3Exhibit3-LigonDeclaration,#4Exhibit4 - Oyekan Order, # 5 Exhibit 5 - Walker Order, # 6 Exhibit 6 - Scarbrough Order)(CLEVELAND, OLLIE) (Entered: 05 I 0612019)

0s10712019 ru NOTICE ofProof of Claim by ROSA CIIRTIS (Attachments: # 1 2017 & 2018Statements,# 2 Correspondence, # 3 Student Loan Info, # 4 Proof of Claim)(ggs)(Additional attachment(s) added on 51912019: # 5 Envelope) (ggs). (Entered: 0510912019)

0512012019 213 REPLY to Response filed by PAMALA MILLER re 204 MOTION Order allowing Proofof Claim to proceed on behalf of a class (Attachments: # I Exhibit AXHAMMOND,ruLIAN) (Entered: 05 120 12019)

0512U20r9 214 MOTION for Attorney Fees by JOHN FLANDERS KENNEDY filed by JAMES F

BANTER. (Attachments: # I Exhibit A - JBBG April2019 Statement, # 2 Exhibit MCGApril 20 I 9 Statement)(BANTER, JAMES) (Entered: 05 I 21 12019)

1t27t2020

0411512019 207

0512U2019 215

CM/ECF LIVE- GAMD

NOTICE of Attorney Appearance by Fred Bradford Wilson, Jr on behalf of DEBORAHSANTOS (Wilson, Fred) (Entered: 0411512019)

NOTICE of Attorney Appearance by JOHN LOUIS CESARONI on behalf ofAssessment Technologies Institute,LLC d.b.a. National Healthcareer AssociationAttorney JOHN LOUIS CESARONI added to party Assessment Technologies Institute,

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2t6 MOTION to Withdraw as Attorney by Maryland Higher Education Commission filed by

CHRI STINE MH WELLON S. (WELLON S, CHRI S TINE) (Ente r ed 0 5 I 28 I 20 I 9)0s12812019

217 REPORT filed by JAMES F BANTER (Attachments: # I Exhibit A ECA Cash Forecast,

# Z EyJnlbit B Approved Disbursements)(BANTER, JAME S) (Enter ed: 0 5 I 28 I 20 | 9)0s12812019

ORDER granting2l4 Motion for Attorney Fees. Ordered by US DISTRICT JUDGE

TILMAN E. SELB III on 512912019. (ech) (Entered:0512912019)0s129120t9 218

219 This is a text only entry; no document issued. ORDER granting Attorney Christine

M.H. Wellons'216 Motion to Withdraw as Attorney for Maryland Higher Education

Commission. Attomey CHRISTINE MH WELLONS terminated. Ordered by US

DISTRICT ruDGE TILMAN E. SELR III on 512912019. (ech) (Entered:0512912019)

0512912019

220 MOTION to Withdraw as Attorney by ASSESSMENT TECHNOLOGIES INSTITUTELLC filed by JOHN LOUIS CESARONI.(CESARONI, JOHN) (Entered: 0513112019)

0s13U20t9

0610U2019 22r This is a text only entry; no document issued. ORDER granting 220 Motion toWithdraw as Attomey. Attorney RION M VAUGHN terminated. Orderedby US

DISTRICT ruDGE TILMAN E SELF, III on 61112019. (TES) Modified on61412019 to

correct the docket entry. (ggs). (Entered: 0610112019)

222 ORDER denying 204 Claimant's Application for Class Treatment. Ordered by US

DISTRICT ruDGE TILMAN E SELF,III on 0610412019. (chc) (Entered: 0610412019)0610412019

223 MOTION to Expedite Sale of Collectible Accounts Receivable by JOHN FLANDERSKENNEDY frled by JAMES F BANTER. (Attachments: # 1 Exhibit A - Proposed Order)

(BANTER, JAMES) Modified on611812019 to edit docket text (ggs). (Entered:

06l17l2ot9)

0611712019

224 MOTION for Attorney Fees by JOHN FLANDERS KENNEDY filed by JAMES FBANTER. (Attachments: # I Exhibit A - JBBG May 2019 Statement, # 2 Exhibit B -Maynard Cooper Gale Apr 17 -May 31,2019 Statement)(BANTER, JAMES) (Entered:

061t812019)

0611812019

NOTICE OF SETTING HEARING ON MOTION re 223 MOTION Motion to Expedite

Sale of Collectible AR: Motion Hearing set for 612712019 at 10:00 AM in Macon before

us DISTRICT JUDGE TILMAN E SELF III. (chc) (Entered: 0611812019)

061t812019

225 WITHDRAWAL of Claim by 3000 Market LP. (PLON, DANA) (Entered: 0611812019)0611812019

226 EMERGENCY MOTION for Receiver to Secure Funding by JOHN FLANDERSKENNEDY frled by JAMES F BANTER. (Attachments: # l Exhibit Promissory Note, #

2 Exhibit Proposed Order)(BANTER, JAMES) (Enter ed: 06 I 19 I 2019)

0611912019

SCHEDULING/DISCOVERY ORDER:Discovery to be complete by 313112020.

Dispositive motions due by 413012020. Ordered by US DISTRICT ruDGE TILMAN E

SELF, III on 611812019. (ggs) (Entered:0612012019)

0612012019 227

NOTICE OF SETTING HEARING ON MOTION re 226 MOTION for RECEiVET tO

Secure Funding: Motion Hearing set for 612112019 at 10:00 AM in Macon before US

DISTRICT ruDGE TILMAN E SELF III. (chc) (Entered: 0612012019)

0612012019

1t2712020

0612U20l9 228

CM/ECF LIVE- GAMD

LLC d.b.a. National Healthcareer Association(pty:cr) (CESARONI, JOHN) (Entered:

0sl2U20r9)

This is a text only entry; no document issued. ORDER terminating 226Motiontosecure funding based upon withdrawal of motion at hearing. Ordered by US DISTRICTJUDGE TILMAN E SELR III on 612112019 (TES) (Entered: 0612112019)

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229 Minute Entry for proceedings held before US DISTRICT ruDGE TILMAN E SELF, III:Motion Hearing held on 612112019 re 226 MOTION for Receiver to Secure Funding filedby JOHN FLANDERS KENNEDY (Court Reporter Darlene Fuller.) Court Reporter:

Darlene Fuller.Time in Court: 3 minutes. (chc) (Entered:0612112019)

0612112019

0612112019 230 PETITION TO THE CLERK FOR ADMISSION TO PLEAD AND PRACTICE PRO

HAC VICE by Commonwealth of Pennsylvania, Office of Attorney General AttorneyAdmission Fee (Pro Hac Vice) paid by Receipt # AGAMDC-3193038, $100(Affachments: # I Certificate of Good Standing)(HARVEY, JESSE) (Entered:

0612U2019)

231 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by Jesse F Harvey on behalf of The Commonwealth of Pennsylvania.(nop) (Entered: 0612112019)

0612U2019

232 NOTICE of Attorney Appearance by JESSE F HARVEY on behalf of Commonwealth ofPennsylvania, Office of Attorney General (Attachments: # 1 PHV Admission Order and

Cert of Good Standing)(HARVEY, JESSE) (Entered: 0612112019)

06121120t9

233 MOTION To Postpone Hearing and Set Briefing Schedule by JOHN FLANDERSKENNEDY frled by JAMES F BANTER.(BANTER, JAMES) (Entered: 0612412019)

0612412019

0612612019 NOTICE OF CANCELLATION OF HEARING SET FOR 612712019 at 1O:OO A.M.

(chc) (Enter ed: 06 I 26 I 2019)

234 This is a text only entry; no document issued. ORDER finding as moot 233 Motion topostpone hearing. Ordered by US DISTRICT JUDGE TILMAN E SELF, III on

612612019 (TES) (Entered: 0612612019)

0612612019

0612712019 m ORDER granting 224Motion for Attorney Fees. Ordered by US DISTRICT JUDGE

TILMAN E. SELR III on 612712019. (ech) (Entered: 0612712019)

06128120t9 236 REPORT filed by JAMES F BANTER (Attachments: # 1 Exhibit A - Revised Cash-FlowProjection, # ZBxhibitB - Requested Disbursements Authorization)(BANTER, JAMES)(Entered: 0612812019)

0710512019 237 NOTICE of Attorney Appearance by JOEL W RUDERMAN on behalf of Pension

Benefit Guaranty Corporation Attorney JOEL W RUDERMAN added to party Pension

Benefit Guaranty Corporation(pty:cr) (Attachments: # 1 Certificate of Service)(RUDERMAN, JOEL) (Entered: 07 105 12019)

071t212019 238 WITHDRAWAL of Claim by SKY FILIPPINI. (Attachments: # 1 EnvelopeXggs)(Entered: 0711212019)

0712412019 u9 AMENDED MOTION Amending 223 MOTION Motion to Expedite Sale of CollectibleAR by JOHN FLANDERS KENNEDY filed by JAMES F BANTER. (Attachments: # IExhibit A - Proposed Order on Amended Motion to Sell ARXBANTER, JAMES)(Entered: 0712412019)

0712412019 240 MOTION To Set Briefing Schedule re 239 AMENDED MOTION Amending223MOTION Motion to Expedite Sale of Collectible AR by JOHN FLANDERS KENNEDYfiled by JAMES F BANTER.(BANTER, JAMES) (Entered: 0712412019)

NOTICE OF SETTING In Chambers Conference set for 712612019 at2:30 PM in Maconbefore US DISTRICT ruDGE TILMAN E SELF III. (chc) (Entered: 0712512019)

0712512019

NOTICE OF CANCELLATION OF in Chambers Conference set for 712612019. Noticeentered in error. (chc) (Entered: 0712512019)

0712512019

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***VACATED***' ORDER GRANTING 239 Amended Motion to Expedite Sale ofCollectible AR. Ordered by US DISTRICT ruDGE TILMAN E. SELF, III on 712612019

(ech) Modified on 7126120t9 (ggs). (Entered: 0712612019)

0712612019 242

243 This is a text only entry; no document issued. ORDER VACATING 242 Amended

Motion to Expedite Sale of Collectible AR. Ordered by US DISTRICT ruDGE TILMANE. SELF,III on 712612019. (ech) (Entered:0712612019)

0712612019

0712612019 244 ORDER GRANTING 240 Motion to Set Briefing Schedule. A HEARING on

Receiver's 239 Motion to Expedite Sale of Collectible AR will be set for Thursday,

September 5,2019. Ordered by uS DISTRICT ruDGE TILMAN E. SELF, III on

7 126 12019. (ech) (Entered: 07 126 12019)

0712612019 w REPORT filed by JAMES F BANTER (Attachments: # I Exhibit A - Cash Forecast forEighth Receiver's Report, # }Exhibit B - ECA Receivership Disbursements 062219-

07 19 19 for Eighth Receiver's Report)(BANTER, JAMES) (Enter ed: 07 I 26 I 2019)

246 NOTICE OF SETTING HEARING ON MOTION TE 239 AMENDED MOTIONAmending 223 MOTION Motion to Expedite Sale of Collectible AR: Motion Hearing set

for 91512019 at2:00 PM in Macon before US DISTRICT ruDGE TILMAN E SELF III'Requests for call-in instructions shall be emailed to [email protected].(chc) (Entered: 07 129 12019)

0712912019

ORDER granting 241 Motion for Attorney Fees. Ordered by US DISTRICT JUDGE

TILMAN E. SELR III on 81212019. (ech) (Entercd:0810212019)0810212019 247

0811212019 ru MOTION (EXPEDITED) to Enforce Court Order by JOHN FLANDERS KENNEDYfiled by JAMES F BANTER. (Attachments: # l Exhibit A- Notice of Filing in Maryland,

# 2 Exhibit B- Maryland Proofs of Claims, # 3 Exhibit C- Maryland Subpoena,# 4

Exhibit D- Petition to Enforce Subpoena)(BANTER, JAMES) Modified on8ll3l20l9(ggs). (Entered: 081 l2l20l9)

249 MOTION to Extend Briefing Schedule on Motion to Sell Collectible AR re 244 Ordet on

Motion for Miscellaneous Relief, by JOHN FLANDERS KENNEDY filed by JAMES F

BANTER. (Attachments: # I Exhibit A- Proposed Order on Motion to Extend)(BANTER, JAMES) Modified on8ll4l20l9 to correct motion event. (ggs). (Entered:

o8lt3l20t9)

08113120t9

ORDER granting 249MOTION to Extend Briefing Schedule as set in the Court's

previous 244 Order re 239 MOTION to Expedite Sale of Collectible AR. Ordered by US

DISTRICT ruDGE TILMAN E. SELF, III on 811412019. (ech) (Entered:0811412019)

0811412019 2s0

251 NOTICE OF RESETTING HEARING ON MOTION TE 239 AMENDED MOTIONAmending 223 MOTION to Expedite Sale of Collectible AR: Motion Hearing set for9ll7l20l9 at 10:00 AM in Maconbefore US DISTRICT JUDGE TILMAN E SELF III(chc) (Entered: 08 I I 4 12019)

081t412019

252 SECOND MOTION to Enforce Court Order by JOHN FLANDERS KENNEDY filed byJAMES F BANTER. (Attachments: # I Exhibit A - Notice ofFiling, # 2 Exhibit B -Proof of Claim,# 3 Exhibit C - Subpoena)(BANTER, JAMES) Modifiedon9l5l20l9(ggs). (Entered: 081 l4l20l9)

081r4120t9


MOTION for Anorney Fees by JOHN FLANDERS KENNEDY filed by JAMES FBANTER. (Attachments: # 1 Exhibit A - JBBG June l-30, 2019 Statement,# 2 Exhibit B- Maynard Cooper Gale June l-30,2019 Statement)(BANTER, JAMES) (Entered:

0712s12019)

0712512019 24r

08t2312019 253 ORDER setting hearing on Tuesday, September 17 ,2019 at 10:00 a.m. re: lDoc. 2521

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254 ORDER, Setting Hearing on Motion 248 MOTION to Enforce CourtOrder: (Motion llearing set for 9ll7l20l9 at 10:00 AM in Macon beforeUS DISTRICT JUDGE TILMAN E SELF III.) Ordered by US DISTRICTJUDGE TILMAN E SELB III on 812312019. (chc) (Entered: 0812312019)

0812312019

NOTICE OF RESETTING HEARING ON MOTION TE 239 AMENDED MOTIONAmending 223MOTION Motion to Expedite Sale of Collectible AR: Motion Hearingpreviously set for 9lI7l20L9 at 10:00 AM is now reset for 9lI7 12019 at 11 :00 AM inMacon before US DISTRICT ruDGE TILMAN E SELF III. (chc) (Entered: 0812312019)

0812312019

255 REPORT filed by JAMES F BANTER (Attachments: # 1 Exhibit A - Cash Forecast toReceiver JFKs Ninth Report 08.28.2019,# zBxhibit B - ECA ReceivershipDisbursements 072219-082319 to Receiver JFKs Ninth Report 08.28.2019XBANTER,JAMES) (Entered: 08 128 12019)

0812812019

256 MOTION for Attorney Fees by JOHN FLANDERS KENNEDY filed by JAMES FBANTER. (Attachments: # I Exhibit A- JBBG Invoice, # 2 Exhibit B- MCG Invoice)(BANTER, JAMES) (Entered: 08 12812019)

0812812019

257 NOTICE of Potential Purchaser by JOHN FLANDERS KENNEDY re 239 AMENDEDMOTION Amending 223 MOTION Motion to Expedite Sale of Collectible AR(Attachments: # 1 Exhibit Asset Sale Agreement)(BANTER, JAMES) (Entered:

0813012019)

0813012019

0910312019 258 RESPONSE filed by CONSIIMER PROTECTION DIVISION OF THE OFFICE OF

THE ATTORNEYGENERAL OF MARYLAND re 248 MOTION to Enforce CourtOrder(Attachments: # 1 Exhibit 1 - BrightwoodCatalog,#ZExhibit2 -ACCETDenialLetter, # 3 Exhibit 3 - ACICS Withdrawal Letter, # 4 Exhibit 4 -Maryland CPDAdministrative Subpoena,# 5 Exhibit 5 - Maryland CPD Proof of Claim)(MADAIO,CHRISTOPHER) (Entered: 09 I 03 I 2019)

0910412019 259 RESPONSE filed by COMMONWEALTH OF PENNSYLVANIA te 252 MOTION toEnforce Court Order (Attachments: # I Exhibit Brightwood Catalog, # ZExhibit ACCETLetter, # 3 Exhibit ACICS Letter)(HARVEY, JESSE) (Entered: 0910412019)

0910512019 260 ORDER granting 256 Motion for Attorney Fees. Ordered by US DISTRICT JUDGE

TILMAN E. SELF,III on 91512019. (ech) (Entered:0910512019)

26r RESPONSE filed by COMMONWEALIH OF PENNSYLVANIA, CONSUMERPROTECTION DIVISION OF THE OFFICE OF THE ATTORNEYGENERAL OF

MARYLAND re 239 AMENDED MOTION Amending223 MOTION Motion to

Expedite Sale of Collectible AR (Attachments: # I Exhibit I - States' Letter to Receiver,

# 2 Exhibit 2 - Tuition AgreementXMADAIO, CHRISTOPHER) (Entered: 0910912019)

0910912019

'v27t2020

0911012019 262

CM/ECF LIVE- GAMD

Receiver's Second Expedited Motion to Enforce Court Order. Ordered by US DISTRICTruDGE TILMAN E SELF, III on 812312019. (chc) (Entered:0812312019)

PETITION TO THE CLERK FOR ADMISSION TO PLEAD AND PRACTICE PRO

HAC VICE by Reinaldo Acevedo, Jessica Aguilar, Luz Aldai4 Crystal Allen, MarivelAlmorejo, alvarez, Tom Ankeney,Elizabeth Arcand, Hydie Auzenne, Jessica Baca,Jessica Bailey, Jesusita Baldonado, Bria Baldwin, Lauren Barringer, Rahkia Baynes,

Michael Bergman, Gintare Bernotas, Starr Blane, Chloe Brooks, Tenishia Broussard,Breanna Brown, Marlene Burch, Laura Burgos, Cecilia Camacho, Courtney Campos,

Ashley Canales, Mary Cardenas, Carias, Karlene Carpenter, TarzaniaCarr, DorothyCarrasco, Victoria Carrera-Rosalez, Christopher Carrion, Kayla Cirka, Elizabeth Cocotl,

Jessica Cofer, Hailey Cormier, Patricia Cornelison, Rachel Couturier-Ollila, AmuniqueCrawford, Edward Cruz, WILLIAM CUNNINGHAM, Marc Davis, Alyssa De La Rosa,

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'U2712020

091t012019 263

CM/ECF LIVE- GAMD

Jacob De Leon, Sara Denton, Casey Dick, Vinh Dinh, Shawda Dixon, OluwabukunolaDomingos, Megan Doughtery Janice Elliot, Krystal Ferguson, Julianna Figueroa, AngelForrest, Sarah Friedman, April Godinez, Pricila Godinez, Elda Godinez, Norma Graham,

Antonio Granados, Daniel Green, Deja Green, Brianna Griggs, Jennifer Haggerty, MarthaHamilton, Tarrance Harden, Beverly Heinzelman, Jason Heldt, Anna Henderson, Hanna

Henderson, Regina Hernandez, Hailey Hertera, Dequieta Hill, Heather Hill, VictorHinojosa, Hung Hoang, Whitney Holt, Tabitha Hoodye, Brittany Hutchinson, AshleyIbana,Aissa lzcano,Juan Jasso, Kamisha Jayasundara, Rozephyr Jean, Lillianaliminez,Darniece Johnson, Lucas Johnson, Abrisha Jones, Debra Kaiser, Tiffany Kindberg,Kathryn Knapp, Mandy Knott-Hobson, Christi Landa, John Laye, Ashley LayIon,Beverly Lerma, Denise Lindsey, Nahja Livings, Madge Long, Geraldine Longoria, TINALOPEZ, Gregory Lord, Kelley Lough, Linh Luong, Nena Mann, Emma Manuel, Agnes

Marquez, Crystal Marroquin, Brianda Martinez,Deborah Mattinez,Zachary McEwen,Porschea McGee, Jesse Meis, John Midkiff, Vanessa Miranda, Kassandra Moreno, NancyMoreno, Sergio Moriel, Jr., Wilmer Moten, Jr., Bianca Motley, Brian Mulvihill, LatoyaNeblett, Labrina Nettles, Delaian Odom, Clpriam Okeze, Crystal Olivarcz, DanielleOliver, Jessica Pagan,Wiltiam Palmer, Sebastian Palmero, Shahkaram Pantea, VickieParkhurst, Datoya Patterson, Jeffrey Pena, Kabrina Perez, Karina Perez, Brice Perry, sara

Pledger, Ashley Puente, Nicholas Rado, Blanca Ramos, Greg Reiter, Jessica Reyes, Laura

Reyes, Lorena Rhody, Bianca Rios, Liliana Rivera, Anneliese Roa, Adan Rodriguez,

Arianna Rodriguez, David Rodriguez, YaritzaRodriguez, Kari Rosa, Valerie Rossel,

Angelica Salas, Teresa Saldana, Erika Samayoa, Turquoise Sanders, Laurie Sauceda,

Leslie Sauceda, Shannon Schroeder, Alyssa Schwind, John Shaw, Alethia Sherrill, BettySimmons, Jessica Smith, Claudia Solis, Roxanne Solis, Ldlanya Spikes, Jennifer

Stevens, Destiny Sullivan, Courtney Swor, Comlita Taylor, Jessika Teeples, Solange

Teneck, Meghan Thomas, Samuel Torres, Anita Trevino, Leslie Vanderheiden, MariaVargas, Anessa Vega, Cynthia Vela, Stephanie Vidaure, Stephanie Wakefield, AngelaWeary-Hinton, Peri Wesson, Castina Williams, JENNIFER WILLIAMS, Otisha

Williams, Tanisha Williams, Emma Winn, Kaleisha Woody, Stephanie Ybarra, MarianaYoussef, CarlaZapata,IrmaZatarain, Amelia ZapedaAttorney Admission Fee (Pro Hac

Vice) paid by Receipt # AGAMDC-3258407, $100 (Attachments: # 1 Certificate of Good

Standing Certificate of Good Standing)(SPARKS, MARK) (Entered: 0911012019)

PETITION TO THE CLERK FOR ADMISSION TO PLEAD AND PRACTICE PRO

HAC VICE by Reinaldo Acevedo, Jessica Aguilar, Luz Aldaiz, Crystal Allen, MarivelAlmorejo, Tom Ankeney,Elizabeth Arcand, Hydie Auzenne, Jessica Baca, Jessica

Bailey, Jesusita Baldonado, Bria Baldwin, Lauren Barringer, Rahkia Baynes, MichaelBergman, Gintare Bernotas, Starr Blane, Chloe Brooks, Tenishia Broussard, Breanna

Brown, Marlene Burch, LauraBurgos, Cecilia Camacho, Courtney Campos, AshleyCanales, Mary Cardenas, Carias, Karlene Carpenter, Tanzania Carr, Dorothy Carrasco,

Victoria Carrera-Ro salez, Christopher Carrion, Kayla Cirka, Elizabeth Cocotl, Jessica

Cofer, Hailey Cormier, Patricia Cornelison, Rachel Couturier-Ollila, AmuniqueCrawford, Edward Cruz, Marc Davis, Alyssa De La Rosa, Jacob De Leon, Sara Denton,

Casey Dick, Vinh Dinh, Shawda Dixon, Oluwabukunola Domingos, Janice Elliot, KrystalFerguson, Julianna Figueroa, Angel Forrest, Sarah Friedman, April Godinez,EldaGodinez, Pricila Godinez, Norma Graham, Antonio Granados, Daniel Green, Deja Green,

Brianna Griggs, Jennifer Haggerty, Martha Hamilton, Tarrance Harden, BeverlyHeinzelman, Jason Heldt, Anna Henderson, Hanna Henderson, Regina Hernandez,

Hailey Herrera, Dequieta Hill, Heather Hill, Victor Hinojosa, Hung Hoang, WhitneyHolt, Tabitha Hoodye, Brittany Hutchinson, Ashley Ibana, Aissa lzcano, Juan Jasso,

Kamisha Jayasundara, Rozephyr Jean, Lilliana Jiminez, Darniece Johnson, Lucas

Johnson, Abrisha Jones, Debra Kaiser, Tiffany Kindberg, Kathryn Knapp, Mandy Knott-Hobson, TINA LOPEZ, Christi Landa, John Laye, Ashley Layton, Beverly Lerma,Denise Lindsey, Nahja Livings, Madge Long, Geraldine Longoria, Gregory Lord, Kelley

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'U27t2020

0911812019 210

CM/ECF LIVE- GAMD

Lough, Linh Luong, Nena Mann, Emma Manuel, Agnes Marquez, Crystal Marroquin,Brianda Martinez,Deborah Martinez,Zachary McEwen, Porschea McGee, Jesse Meis,

John Midkiff, Vanessa Miranda, Kassandra Moreno, Nancy Moreno, Sergio Moriel, Jr.,

Wilmer Moten, Jr., Bianca Motley, Brian Mulvihill, LatoyaNeblett, LabrinaNettles,Delaian Odom, Cypriam Okeze, Crystal Olivarez, Danielle Oliver, Jessica Pagan,

William Palmer, Sebastian Palmero, Shahkaram Pantea, Vickie Parkhurst, Datoya

Patterson, Jeffrey Pena, Kabrina Perez,Karina Perez, Brice Perry, sara Pledger, Ashley

Puente, Nicholas Rado, Blanca Ramos, Greg Reiter, Jessica Reyes, Laura Reyes, Lorena

Rhody, Bianca Rios, Liliana Rivera, Anneliese Roa, Adan Rodriguez, AriannaRodriguez, David Rodriguez, YaritzaRodriguez, Kari Rosa, Valerie Rossel, Angelica

Salas, Teresa Saldana, Erika Samayoa, Turquoise Sanders, Laurie Sauceda, LeslieSauceda, Shannon Schroeder, Alyssa Schwind, John Shaw, Alethia Sherrill, Betty

Simmons, Jessica Smith, Claudia Solis, Roxanne Solis, L{lanya Spikes, Jennifer


Teneck, Meghan Thomas, Samuel Torres, Anita Trevino, Leslie Vanderheiden, Maria

vargas, Anessa vega, cynthia vela, Stephanie vidaure, JENNIFER WILLIAMS,Stephanie Wakefield, Angela Weary-Hinton, Peri Wesson, Castina Williams, Otisha

Williams, Tanisha Williams, Emma Winn, Kaleisha Woody, Stephanie Ybarra, MarianaYoussef, Carla Zapata,Amelia Zapeda,hmaZatarain Attorney Admission Fee (Pro Hac

Vice) paid by Receipt # AGAMDC-3259121, $100 (Attachments: # 1 Certificate of Good

Standing Certificate fo Good Standing)(FERGUSON, TIMOTHY) (Entered:0911012019)

NOTICE of Attorney Appearance by JOHN CHRISTOPHER CLARK on behalf ofReinaldo Acevedo, Jessica Aguilar, Luz.Lldaiz. Crystal Allen, Marivel Almorejo, Tom

Ankeney, ElizabethArcand, Hydie Auzenne, Jessica Baca, Jessica Bailey, Jesusita

Baldonado, Bria Baldwin, Lauren Barringer, Rahkia Baynes, Michael Bergman, Gintare

Bernotas, Starr Blane, Chloe Brooks, Tenishia Broussard, Breanna Brown, Marlene

Burch, LavraBurgos, WILLIAM CUNNINGHAM, Cecilia Camacho, Courtney Campos,

Ashley Canales, Mary Cardenas, Carias, Karlene Carpenter, Taruania Carr, DorothyCarrasco, Victoria Carrera-Rosalez, Christopher Carrion, Kayla Cirka, Ehzabeth Cocotl,

ru Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by MARK SPARKS (nop) (Entered:0911012019)

0911012019

091t012019 265 Order granting Petition for Admission Pro Hac Vice (Petition Attached); AttorneyAdmission Fee Met by TIMOTHY FERGUSON (nop) (Entered: 0911012019)

091t312019 266 REPLY to Response filed by JOHN FLANDERS KENNEDY re 239 AMENDEDMOTION Amending 223 MOTION Motion to Expedite Sale of Collectible AR(Attachments: # 1 Exhibit A - Amended Proposed Order)(BANTER, JAMES) (Entered:

0911312019)

267 REPLY to Response filed by JOHN FLANDERS KENNEDY te 252 MOTION to

Enforce Court Order, 248 MOTION to Enforce Court Order (Attachments: # 1 Exhibit A- Proposed Order on Motions to Enforce)(BANTER, JAMES) (Entered: 0911612019)

091t6120r9

268 ORDER GRANTING 239 Amended Motion to Expedite Sale of Collectible Accounts

Receivable. Ordered by US DISTRICT JUDGE TILMAN E. SELF, III on 911712019.

(ech) (Entered: 09 I 17 12019)

09lt7l20l9

09n712019 269 Minute Entry for proceedings held before US DISTRICT ruDGE TILMAN E SELF IIIMotion Hearing held on 9ll7l20l9 re239 AMENDED MOTION Amending223MOTION Motion to Expedite Sale of Collectible AR filed by JOHN FLANDERSKENNEDY (Court Reporter Darlene Fuller.) Court Reporter: Darlene Fuller.(Attachments:#lExhibitA-ProfferofTestimonyofJohnF.Kennedy,#2ExhibitB-Proffer of Testimony of Steven F. Agran) (ggs) (Enteted:0911712019)

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1t2712020

hftps://ecf.gamd.uscourts.gov/cgi-bin/DktRpt. pl?72171514734736-L-1-1-1 27t35

CM/ECF LIVE- GAMD

Jessica Cofer, Hailey Cormier, Patricia Cornelison, Rachel Couturier-Ollila, AmuniqueCrawford, Edward Cruz,Marc Davis, Alyssa De La Rosa, Jacob De Leon, Sara Denton,

Casey Dick, Vinh Dinh, Shawda Dixon, Oluwabukunola Domingos, Megan DoughteryJanice Elliot, Krystal Ferguson, Julianna Figueroa, Angel Forrest, Sarah Friedman, AprilGodinez, Elda Godinez,PricllaGodinez, Norma Graham, Antonio Granados, DanielGreen, Deja Green, Brianna Griggs, Jennifer Haggerty, Martha Hamilton, Ta:rance

Harden, Beverly Heinzelman, Jason Heldt, Anna Henderson, Hanna Henderson, Regina

Hernandez, Hailey Herrera, Dequieta Hill, Heather Hill, Victor Hinojosa, Huttg Hoang,

Whitney Holt, Tabitha Hoodye, Brittany Hutchinson, Ashley lbarra,Aissa Izcano, Juan

Jasso, Kamisha Jayasundara, Rozephyr Jean, Lilliana Jiminez, Darniece Johnson, Lucas

Johnson, Abrisha Jones, Debra Kaiser, Tiffany Kindberg, Kathryn Knapp, Mandy Knott-Hobson, TINA LOPEZ, Christi Landa, John Laye, Ashley Layton, Beverly Letma,Denise Lindsey, Nahja Livings, Madge Long, Geraldine Longoria, Gregory Lord, KelleyLough, Linh Luong, Nena Mann, Emma Manuel, Agnes Marquez, Crystal Marroquin,Brianda Martinez,Deborah Martinez,Zachary McEwen, Porschea McGee, Jesse Meis,

John Midkiff, Vanessa Miranda, Kassandra Moreno, Nancy Moreno, Sergio Moriel, Jr.,

Wilmer Moten, Jr., Bianca Motley, Brian Mulvihill, LatoyaNeblett, Labrina Nettles,

Delaian Odom, Cypriam Okeze, Crystal OIivarez, Danielle Oliver, Jessica Pagan,

William Palmer, Sebastian Palmero, Shahkaram Pantea, Vickie Parkhurst, Datoya

Patterson, Jeffrey Pena, Kabrina Perez,Karina Perez, Brice Perry, sara Pledger, AshleyPuente, Nicholas Rado, Blanca Ramos, Greg Reiter, Jessica Reyes, Laura Reyes, Lorena

Rhody, Bianca Rios, Liliana Rivera, Anneliese Roa, Adan Rodriguez, AriannaRodriguez, David Rodriguez, YaitzaRodriguez, Kari Rosa, Valerie Rossel, AngelicaSalas, Teresa Saldana, Erika Samayoa, Turquoise Sanders, Laurie Sauceda, LeslieSauceda, Shannon Schroeder, Alyssa Schwind, John Shaw, Alethia Sherrill, BettySimmons, Jessica Smith, Claudia Solis, Roxanne Solis, LaTanya Spikes, Jennifer


Teneck, Meghan Thomas, Samuel Torres, Anita Trevino, Leslie Vanderheiden, MariaVargas, Anessa Vega, Cynthia Vela, Stephanie Vidaure, JENNIFER WILLIAMS,Stephanie Wakefield, Angela Weary-Hinton, Peri Wesson, Castina Williams, Otisha

Williams, Tanisha Williams, Emma Winn, Kaleisha Woody, Stephanie Ybarra, MarianaYous s ef, C arla Zap ata, Ame li a Zap eda, Irma Z atar ain, alv ar ez Attorney JOHNCHRISTOPHER CLARK added to party Reinaldo Acevedo(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Jessica Aguilar(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Lttz Aldaiz(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party crystal Allen(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to parfy Marivel Almorejo(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Tom Ankeney(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Elizabeth Arcand(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Hydie Auzenne(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Jessica Baca(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Jessica Bailey(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Jesusita Baldonado(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Bria Baldwin(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Lauren Barringer(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Rahkia Baynes(pty:c1m), Afforney JOHNCHRISTOPHER CLARK added to party Michael Bergman(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Gintare Bernotas(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to parly Starr Blane(pty:c1m), Attorney JOHNCHRISTOPHER CLARK added to party chloe Brooks(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Tenishia Broussard(pty:clm), Attorney JOHNCHRISTOPHER CLARK added toparty Breanna Brown(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Marlene Bwch(pty:clm), Attorney JOHNCHRISTOPHER CLARK added topafi Laura Burgos(pty:clm), Attorney JOHN


1t27t2020

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CM/ECF LIVE- GAMD

CHRISTOPHER CLARK added to party WILLIAM CUNNINGHAM(pty:clm),Attomey JOHN CHRISTOPHER CLARK added to party Cecilia Camacho(pty:clm),Attomey JOHN CHRISTOPHER CLARK added to party Courtney Campos(pty:clm),Attomey JOHN CHRISTOPHER CLARK added to party Ashley Canales(pty:clm),Attorney JOHN CHRISTOPHER CLARK added to parry Mary Cardenas(pty:clm),Attorney JOHN CHRISTOPHER CLARK added to party Carias(pty:clm), AttorneyJOHN CHRISTOPHER CLARK added to party Karlene Carpenter(pty:clm), AfforneyJOHN CHRISTOPHER CLARK added to party TanzaniaCan(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Dorothy Carrasco(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Victoria Carrera-Rosalez(pty:clm), AttorneyJOHN CHRISTOPHER CLARK added to party Christopher Canion(pty:clm), AfforneyJOHN CHRISTOPHER CLARK added to party Kayla Cirka(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Elizabeth Cocotl(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Jessica Cofer(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Hailey Cormier(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Patricia Cornelison(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Rachel Couturier-Ollila(pty:clm), AttorneyJOHN CHRISTOPHER CLARK added to party Amunique Crawford(pty:clm), AttomeyJOHN CHRISTOPHER CLARK added to party Edward Cruz(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Marc Davis(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Alyssa De La Rosa(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Jacob De Leon(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to pafi Sara Denton(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Casey Dick(pty:c1m), Attorney JOHNCHRISTOPHER CLARK added to party Vinh Dinh(pty:clm), Attomey JOHNCHRISTOPHER CLARK added topafi Shawda Dixon(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to pafi Oluwabukunola Domingos(pty: clm), AttorneyJOHN CHRISTOPHER CLARK added to party Megan Doughtery$ty:dft), AttorneyJOHN CHRISTOPHER CLARK added to party Janice Elliot(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Krystal Ferguson(pty:clm), Afforney JOHNCHRISTOPHER CLARK added to party Julianna Figueroa(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Angel Fonest(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Sarah Friedman(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party April Godinez(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Elda Godinez(pty:clm), Afforney JOHNCHRISTOPHER CLARK added to party Pricila Godinez(pty:c1m), Attorney JOHNCHRISTOPHER CLARK added to party Norma Graham(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Antonio Granados(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Daniel Green(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Deja Green(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Brianna Griggs(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to parly Jennifer Haggerty(pty:clm), Afforney JOHNCHRISTOPHER CLARK added to party Martha Hamilton(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to parfy Tarrance Harden(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Beverly Heinzelman(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Jason Heldt(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Anna Henderson(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Hanna Henderson(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Regina Hernandez(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Hailey Herrera(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Dequieta Hill(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to pafi Heather Hill(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Victor Hinojosa(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to parfy Hung Hoang(pty:clm), Attorney JOHN


1t2712020

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CM/ECF LIVE- GAMD

CHRISTOPHER CLARK added to party Whitney Holt(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Tabitha Hoodye(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Brittany Hutchinson(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Ashley Ibarra(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Aissa Izcano(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Juan Jasso(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Kamisha Jayasundara(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Rozephyr Jean(pty:clm), Attorney JOHNCHRISTOPHER CLARK added topafi Lilliana Jiminez(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Darniece Johnson(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Lucas Johnson(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Abrisha Jones(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Debra Kaiser(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Tiffany Kindberg(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Kathryn Knapp(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Mandy Knott-Hobson(pty:clm), AttorneyJOHN CHRISTOPHER CLARK added to party TINA LOPEZG,ty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Christi Landa(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party John Laye(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Ashley Layton(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Beverly Lerma(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Denise Lindsey(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to partyNahja Livings(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Madge Long(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Geraldine Longoria(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Gregory Lord(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Kelley Lough(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Linh Luong(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Nena Mann(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Emma Manuel(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Agnes Marquez(pty:clm), Attorney JOHNCHRISTOPHER CLARK added toparty Crystal Marroquin(pty:clm), Attorney JOHNCHRISTOPHER CLARK added toparty Brianda Martinez(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Deborah Martinez(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Zachary McEwen(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Porschea McGee(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Jesse Meis(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party John Midkiff(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Vanessa Miranda(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to parfy Kassandra Moreno(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to partyNancy Moreno(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Sergio Moriel, Jr.(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Wilmer Moten, Jr.(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Bianca Motley(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Brian Mulvihill(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party LatoyaNeblett(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party LabrinaNettles(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Delaian Odom(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Cypriam Okeze(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Crystal Olivarez(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Danielle Oliver(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Jessica Pagan(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party William Palmer(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Sebastian Palmero(pty:clm), Attorney JOHN


1t27t2020

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CHRISTOPHER CLARK added to party Shahkaram Pantea(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Vickie Parkhurst(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Datoya Patterson(pty:clm), Afforney JOHNCHRISTOPHER CLARK added to party Jeffrey Pena(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Kabrina Perez(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Karina Perez(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Brice Perry@ty:clm), Attomey JOHNCHRISTOPHER CLARK added to party sara Pledger(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Ashley Puente(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to partyNicholas Rado(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Blanca Ramos(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Greg Reiter(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Jessica Reyes(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Laura Reyes(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Lorena Rhody(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Bianca Rios(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Liliana Rivera(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Anneliese Roa(pty:c1m), Attorney JOHNCHRISTOPHER CLARK added to parfy Adan Rodriguez(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Arianna Rodriguez(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party David Rodriguez(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party YaitzaRodriguez(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Kari Rosa(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Valerie Rossel(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Angelica Salas(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Teresa Saldana(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to parfy Erika Samayoa(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Turquoise Sanders(pty:clm), Afforney JOHNCHRISTOPHER CLARK added to party Laurie Sauceda(pty:clm), Afforney JOHNCHRISTOPHER CLARK added to party Leslie Sauceda(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Shannon Schroeder(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Alyssa Schwind(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party John Shaw(pty:c1m), Attorney JOHNCHRISTOPHER CLARK added to party Alethia Sherrill(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Betty Simmons(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Jessica Smith(pfy:clm), Attorney JOHNCHRISTOPHER CLARK added to party Claudia Solis(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to parfy Roxanne Solis(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party LaTanya Spikes(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Jennifer Stevens(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Destiny Sullivan(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Courtney Swor(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Comlita Taylor(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Jessika Teeples(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Solange Teneck(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to pafi Meghan Thomas(pty:clm), Attomey JOHNCHRISTOPHER CLARK added to party Samuel Torres(pty:clm), Attorney JOHNCHzuSTOPHER CLARK added to party Anita Trevino(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Leslie Vanderheiden(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Maria Vargas(pty:clm), Afforney JOHNCHRISTOPHER CLARK added to party Anessa Vega(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party Cynthia Vela(pty:c1m), Attorney JOHNCHRISTOPHER CLARK added to party Stephanie Vidaure(pty:clm), Attorney JOHNCHRISTOPHER CLARK added to party JENNIFER WILLIAMS(pty:clm), Attorney


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JOHN CHRISTOPHER CLARK added to party Stephanie Wakefield(pty:clm), AttomeyJOHN CHRISTOPHER CLARK added to party Angela weary-Hinton(pty:clm),Attorney JOHN CHRISTOPHER CLARK added to party Peri Wesson(pty:clm),

Attorney JOHN CHRISTOPHER CLARK added to party Castina Williams(pty:c1m),Attorney JOHN CHRISTOPHER CLARK added to party Otisha Williams(pty:clm),Attorney JOHN CHRISTOPHER CLARK added to party Tanisha Williams(pty:clm),Attorney JOHN CHRISTOPHER CLARK added to party Emma Winn(pty:clm),Attorney JOHN CHRISTOPHER CLARK added topatty Kaleisha Woody(pty:clm),Attorney JOHN CHRISTOPHER CLARK added to party Stephanie Ybarra(pty:clm),Attorney JOHN CHRISTOPHER CLARK added to party Mariana Youssef(pty:clm),Attorney JOHN CHRISTOPHER CLARK added to party CarlaZapata(pty:clm),Attorney JOHN CHRISTOPHER CLARK added to party Amelia Zapeda(pfiy:clm),

Attorney JOHN CHRISTOPHER CLARK added to party kmaZatarain(pty:clm),Attorney JOHN CHRISTOPHER CLARK added to party alvatez(pty:clm) (CLARK,JOHN) (Entered: 09 I 1812019)

This is a text only entry; no document issued. ORDER granting 219 Motion for hearing

and notice of potential purchaser. Ordered by US DISTRICT ruDGE TILMAN E SELRIII on l0l2ll20l9. (chc) (Entered: l0l2ll20l9)

0911912019 UJ ORDER GRANTING 248 and,252 Motion to Enforce Court Order. Ordered by US

DISTRICT ruDGE TILMAN E. SELB III on 911912019, (ech) (Entercd:0911912019)

0912012019 272 MOTION for Attorney Fees by JOHN FLANDERS KENNEDY filed by JAMES FBANTER. (Attachments: # 1 Exhibit A- JBBG Invoice, # 2 Exhibit B- MCG Invoice)(BANTER, JAMES) (Entered: 09 120 12019)

0912712019 273 REPORT filed by JAMES F BANTER (Attachments: # I Exhibit A - Cash Forecast

092719-122019,# }ExhrbitB - Receivership Disbursements 082419-092019)(BANTER,JAMES) (Entered: 09 127 12019)

274 ORDER GRANTING 212 Motion for Attorney Fees. Ordered by US DISTRICTruDGE TILMAN E. SELB III on l0lll20l9. (ech) (Enteted:1010112019)

t0l0U20l9

275 JOINT MOTION for Protective Order by EDUCATION CORPORATION OF

AMERICA, VIRGINIA COLLEGE LLC f,TlEd bY OLLIE A CLEVELAND, III.(Attachments: # I Exhibit A - Proposed Protective Order)(CLEVELAND, OLLIE)(Entered: 1010212019)

r010212019

PROTECTM ORDER granting 275 Motion for Protective Order. Ordered by US

DISTRICT ruDGE TILMAN E SELB III on 101212019. (ggs) (Entered:1010312019)r0t03120t9 276

MOTION for Judgment on the Pleadings by EDUCATION CORPORATION OF

AMERICA, VIRGINIA COLLEGE LLC filcd bY ALEXANDER B FEINBERG(FEINBERG, ALEXANDER) (Entered: l0l ll 12019)

tOltv20l9 uL

tDltu20r9 ru MOTION to Stay Discovery by EDUCATION CORPORATION OF AMERICA,VIRGINIA COLLEGE LLC fTlEd bY ALEXANDER B FEINBERG.(FEINBERG,ALEXANDER) (Entered: 1 0/1 | 12019)

r0lt7l20l9 279 MOTION for Hearing and Notice of Potential Purchaser by JOHN FLANDERSKENNEDY filed by JAMES F BANTER. (Attachments: # I Exhibit A - Contract ofPurchase and SaIe)(BANTER, JAMES) (Entered: 1011712019)

MOTION to Vacate 271 Order on Motion for Miscellaneous Relief, by CONSUMERPROTECTION DIVISION OF THE OFFICE OF THE ATTORNEYGENERAL OF

MARYLAND filedby CHRISTOPHER J MADAIO. (Attachments: # 1 Proposed Order)

(MADAIO, CHRISTOPHER) (Entered: I0l l7 12019)

t0lt7l20l9 280

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Notice of Deficiency (related document(s):292 Motion for Extension of Time to Filefiled by JOHN FLANDERS KENNEDY ); Wrong event used. MDGA Local Rule 6.2

authorizes the CLERK to grant up to a l4-day extension for filing responses, replies and

NOTICE OF SETTING HEARING ON MOTION 279 Motion for hearing and notice ofpotential purchaser set for 10129120t9 at9:30 AM in Macon before US DISTRICTruDGE TILMAN E SELF III. (chc) (Entered: 1012112019)

t0l2U20l9

MOTION for Attorney Fees by JOHN FLANDERS KENNEDY filed by JAMES FBANTER.(Attachments:#lExhibitA-JBBGSeptBillforllthfeeapp,#2ExhibitB-Sept Bill for 1lth fee app)(BANTER, JAMES) (Entered: 1012412019)

t0t24120t9 282

1012512019 & EMERGENCY MOTION Expedited Ruling on Motion to Stay Discovery rc278MOTION to Stay Discovery by EDUCATION CORPORATION OF AMERICA,VIRGINIA COLLEGE LLC frled by OLLIE A CLEVELAND, III. (Attachments: # IExhibit A - Deposition Notices)(CLEVELAND, OLLIE) (Entered: t012512019)

t012512019 284 This is a text only entry; no document issued. ORDER granting 283 Motion forExpedited Ruling on Motion for Stay. All discovery in the matter referenced in 283 shall

be stayed until the Court issues a ruling on the pending Partial Motion to Dismiss.

Ordered by US DISTRICT ruDGE TILMAN E SELR III on 10125120t9 (TES) (Entered

tolzsl2ote)

285 This is a text only entry; no document issued. ORDER granting 278 Motion to Stay

Discovery until the Court issues a ruling on the pending Partial Motion to Dismiss.

Ordered by US DISTRICT ruDGE TILMAN E SELF, III on 1012512019 (TES (Entered:

r0t2sl2ot9)

1012512019

286 REPORT filedby JAMES F BANTER (Attachments: # 1 Exhibit A - ECA Cash Forecast

10.28.2019, # 2 Exhibit B - ECA Receivership Disbursements 0923 19 -101 8 1 9)(BANTER, JAMES) (Entered: 1012812019)

r012812019

Minute Entry for proceedings held before US DISTRICT ruDGE TILMAN E SELF, III:Motion Haring & Notice of Potential Pruchaser held on 1012912019 Court Reporter:

Tammy DiRocco. (Attachments: # 1 Exhibit 1 - Proffer of Testimony of John F. Kennedy,

# ZByhIbit 2 - Proffer of Testimony of Jay Roberds, lI, # 3 Exhibit 3 - Proposed Order)(ans) (Enter ed: I 0 I 29 I 20 19)

1012912019 287

288 ORDER Approving Receiver's Expedited Motion for Order (1) to Sell the Property

Other Than In The Ordinary Course of Business Free and Clear of Liens, Claims,

Encumbrances, and Other Interests, and (2) for Related Relief. Ordered by US

DISTRICT ruDGE TILMAN E SELF,III on l0l29l|9. (ans) (Entered:1012912019)

1012912019

ru MOTION to Amend/Correct 1 Notice of Removal, by VC MACON GA LLC filed byJON A GOTTLIEB. (Attachments: # l Exhibit Amendment to Complaint (part I of 3), #

2 Exhibit Amendment to Complaint (part 2 of 3), # 3 Exhibit Amendment to Complaint(part3 of 3))(GOTTLIEB, JON) (Entered: I1l0ll20I9)

tU0U20t9

290 RESPONSE filed by VC MACON GA LLC re 277 MOTION for Judgment on the

Pleadings (GOTTLIEB, JON) (Entered: I I I 0l 12019)tU0U2019

29r ORDER GRANTING 282 Motion for Attorney Fees. Ordered by US DISTRICTruDGE TILMAN E. SELF, III on lll1l20l9. (ech) (Entered: 1ll0ll20l9)

rU0U20t9

292 Rule 6.2 Request for Extension of Time to File To File a Response. by JOHNFLANDERS KENNEDY filed by JAMES F BANTER.(BANTER, JAMES) Modified on

ll1612019 to edit docket text. (ggs). (Entered: 1110612019)

106120191l

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t061201911 Notice of Clerk's Granting of Extension Pursuant to Local Rule 6.2 re: 280 MOTION to

Vacate 271 Order on Motion for Miscellaneous Relief, filed by CONSUMERPROTECTION DIVISION OF THE OFFICE OF THE ATTORNEYGENERAL OF

MARYLAND. The response and reply deadlines have been reset. (ggs) (Entered:

tU06l2ot9)

293 REPLY to Response filed by EDUCATION CORPORATION OF AMERICA,VIRGINIA COLLEGE LLC re 277 MOTION for Judgment on the Pleadings(CLEVELAND, OLLIE) (Entered: ll I l4l20l9)

412019nlt

294 MOTION for Atrorney Fees by JOHN FLANDERS KENNEDY filed by JAMES F

BANTER. (Attachments: # 1 Exhibit A - JBBG Oct. bill for l2th Fee App, # 2 Exhibit B- MCG Oct. bill for l2thFee App)(BANTER, JAMES) (Entered: Itl20l20l9)

t20120t911

295 SECOND MOTION for Extension of Time to File Receiver to respond to Division'sMotion re 280 MOTION to Vacate. by JOHN FLANDERS KENNEDY filed by JAMESF BANTER.(BANTER, JAMES) Modified onlll22l2019 to link to applicable motion.(ggs). (Entered: ll l2l 12019)

tU2y2019

296 This is a text only entry; no document issued. ORDER granting 295 Motion forExtension of Time to respond to Consumer Division of Maryland's Motion to Vacate re

280 MOTION to Vacate. The Receiver shall have an additional 14 days to file his

response.Ordered by US DISTRICT JUDGE TILMAN E SELR III on lll2ll20l9 (TES)

Modified onlll22l2019 to link to applicable motion. (ggs). (Entered: lll2ll20l9)

lU2U2019

DL RESPONSE filed by EDUCATION CORPORATION OF AMERICA, VIRGINIACOLLEGE LLC re 289 MOTION to Amend/Correct 1 Notice of Removal,(CLEVELAND, OLLIE) (Entered: ll 12212019)

nl22l20r9

298 MOTION for Hearing re 277 MOTION for Judgment on the Pleadings, 289 MOTION to

Amend/Correct I Notice of Removal, by VC MACON GA LLC filed by JON AGOTTLIEB.(GOTTLIEB, JON) (Entered: I I 12212019)

12212019t1

299 RESPONSE filed by EDUCATION CORPORATION OF AMERICA, VIRGINIACOLLEGE LLC re 298 MOTION for Hearing rc277 MOTION for Judgment on the

Pleadings,289 MOTION to Amend/Correct 1 Notice of Removal, (CLEVELAND,OLLIE) (Entered: ll 12612019)

126120191l

300 REPORT filed by JAMES F BANTER (Attachments: # 1 Exhibit ECA l3-week Cash

Forecast, # 2 Exhibit Approved Disbursements)(BANTER, JAMES) (Entered:

nl27l2or9)

tv27l20r9

ORDER GRANTING ry.Motion for Attorney Fees. Ordered by US DISTzuCT

ruDGE TILMAN E. SELR III on 121212019. (ech) (Entered:1210212019)r210212019 301

w JOINT MOTION to Stay ruling on Motion to Vacate Court's Order re 280 MOTION to

Vacate 2lI Order on Motion for Miscellaneous Relief, by JOHN FLANDERSKENNEDY filed by JAMES F BANTER.(BANTER, JAMES) (Entered: 12105120t9)

1210512019

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briefs. The request is to be made in the form of a letter placed on the docket, and not a

motion. The instant motion is construed as a request to the Clerk for an extension as is

terminated. No need to refile, docket entry corrected by case manager.(ggs) (Entered:

It0612019)

This is a text only entry; no document issued. ORDER GRANTING 289 Motion toAmend/Correct 1 Notice of Removal/Complaint in light of Defendants'consent;TERMINATING 277 Motion for Judgment on the Pleadings as moot; and

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TERMINATING 298 Motion for Hearing as moot. Ordered by US DISTRICT JUDGETILMAN E. SELF, III on 121512019. (ech) (Entered:1210512019)

304 MOTION to Vacate 285 Order on Motion to Stay, by VC MACON GA LLC filed byJON A GOTTLIEB.(GOTTLIEB, JON) (Entered: t210612019)

r210612019

305 MOTION for Instruction to Terminate 401(k) Plan by JOHN FLANDERS KENNEDYf,rled by JAMES F BANTER. (Attachments: # I Exhibit A - Proposed Order forInstruction to Terminate the P1an)(BANTER, JAMES) (Entered: I2ll3l20l9)

t2lL3l20l9

This is atext only entry; no document issued. ORDER granting 302 Motion to Stay

ruling on {2711Motion to Vacate.Ordered by US DISTRICT ruDGE TILMAN E SELF,

III on l2lt3l20l9 (TES) (Entered: I2ll3l20l9)

r2lt3l20l9 306

307 This is atextonly entry; no document issued. ORDER defening ruling on 280 Motion

to Vacate pursuant to 306 . Ordered by US DISTRICT JUDGE TILMAN E SELF, III on

l2l 13 12019 (TES) (Entered: l2l 13 12019)

121t312019

309 RESPONSE filed by EDUCATION CORPORATION OF AMERICA, VIRGINIACOLLEGE LLC re 304 MOTION to Vacate 285 Order on Motion to Stay,

(CLEVELAND, OLLIE) (Entered: I2l 1612019)

t2lt6l2019

309 MOTION for Attorney Fees by JOHN FLANDERS KENNEDY filed by JAMES F

BANTER. (Attachments: # I Exhibit A - JBBG Nov. bill for l3th Fee App, # 2 Exhibit B- MCGNov. bill for 13th Fee App)(BANTER, JAMES) (Entered: I2lt8l20l9)

t2lt8l20l9

310 REPLY to Response filed by VC MACON GA LLC re 304 MOTION to Vacate 285

Order on Motion to Stay, (GOTTLIEB, JON) (Entered: 1212312019)t212312019

311 REPORT filedby JAMES F BANTER (Attachments: # I Exhibit A - ECA cash Forecast

ll22l9-122019, # 2 Exhibit B - ECA Receivership Disbursements 112219-122019)(BANTER, JAMES) (Entered: 12127 12019)

12127120t9

ORDER granting 305 Motion to terminate to 401(k) plan. Ordered by US DISTRICTruDGE TILMAN E. SELF III on 12127 12019 (tlf). (Entered: 12127 12019)

t212712019 312

1212712019 313 ORDER granting 309 Motion for Attorney Fees. Ordered by US DISTRICT JUDGE

TILMAN E. SELF III on 1212712019 (tlf). (Entered: 1212712019)

REPORT filedby JAMES F BANTER (BANTER, JAMES) (Entered: 0111012020)0vr012020 lA315 MOTION to Amend/Correct 227 Scheduling/Discovery Orderby VC MACON GA LLC

frled by JON A GOTTLIEB.(GOTTLIEB, JON) (Entered: 0111412020)0U1412020

316 This is a text only entry; no document issued. ORDER terminating 315 Motion toAmend/Correct current scheduling order as premature. The Plaintiff may refile at aLater

date. Ordered by US DISTRICT ruDGE TILMAN E. SELF, III on 111512020. (TES)(Entered: 0111512020)

0U1512020

317 This is a text only entry; no document issued. ORDER denying 304 Motion to Vacate

Stay. Ordered by US DISTRICT ruDGE TILMAN E. SELF, III on 111512020. (TES)(Entered: 0111512020)

0111512020

318 MOTION to Clariff Court's Order Appointing Receiver by JOHN FLANDERSKENNEDY filed by JAMES F BANTER. (Attachments: # ! Exhibit A- InvoluntaryPetition, # 2 Exhibit B- Email from Receiver to Montoe, # 3 Exhibit C- ECA BoardResolution,# 4Exhlbit D- Proposed Order)(BANTER, JAMES) (Entered: 0112712020)

0U2712020

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PACER Service Center

Transaction Receipt

0l/27 /2020 I7:49:13

Login Client Code: 16.0001

Search Criteria: 18-cv-00388-TES

ble Pages: Cost: .00

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RLF1 22814964v.1

EXHIBIT C

Receiver Reports


of 5


MACON DIVISON

VC MACON, GA LLC, : :

Plaintiff, : : v. : CIVIL ACTION NO. : 5:18-cv-00388-TES VIRGINIA COLLEGE LLC, : :

Defendant. : :

RECEIVER’S TENTH REPORT

COMES NOW, John F. Kennedy, Receiver in the above-styled action pursuant to the

Order Appointing Temporary Receiver and Granting Preliminary Injunction (Doc. 26,

“Appointment Order”) filed on November 14, 2018, and hereby files his Tenth Receiver’s report

(“Tenth Report”) pursuant the Appointment Order, respectfully showing the Court as follows:

I. INTRODUCTION

On November 14, 2018, the Court entered the Appointment Order which appointed John

F. Kennedy, Esq. as the receiver (the “Receiver”)1 for Education Corporation of America,

Virginia College, LLC (“VCLLC”), and New England College of Business and Finance, LLC

(“NECB,” together with Education Corporation of America and VCLLC, “ECA”), with respect

to all the business, business interests, and property of ECA (the “Receivership Estate”). The

Appointment Order required the Receiver to report to this Court and the parties information

regarding and describing the Receivership Estate and the Receiver, here, has now properly filed

this Tenth Report within the requirements set forth in the Appointment Order.

1 Receiver may refer to Mr. Kennedy or a member of his receivership team.


of 5

II. DISCUSSION

1. Continued Operations and Wind Down of the Receivership Estate

The Receiver submitted the required close-out audits regarding the 22 ECA institutions

that closed in December of 2018 to the federal Department of Education (“ED”) by ED’s

imposed deadline. The Receiver, and his professionals, have continued to answer questions ED

has posed concerning the audits post submission, and have provided some supplemental

information.

Pursuant to the Court’s Order to sell VCLLC’s property in Semmes, Alabama [Doc. 171],

the Receiver has continued working with NAI-Mobile, LLC (“NAI”) to market the property.

NAI is providing weekly updates and recommendations regarding the sale process for the

property, and is currently continuing to pursue a private sale of the property at this time. The

potential purchasers are performing their due diligence on the property. When a potential

purchaser has been identified, the Receiver will provide such notice to the Court and interested

parties. See Doc. 171, p. 3.

The Receiver, with assistance of Omni Management Group (“Omni”), is continuing his

review of the almost 1,900 proof of claims that have been filed. The process requires the

Receiver to review the validity of the filed claims, noting any possible omnibus objections. See

Doc. 175. Omni and the Receiver are currently reconciling the submitted claims, and are

beginning to draft and prepare a Claims Report. Pursuant to the Court’s Order [see Doc. 175] the

Claims Report will outline the Receiver’s recommendation as to the allowable amount and

priority of each claim within a defined categorical group.

On September 17, 2019, following a hearing on the issue, the Court granted the

Receiver’s Amended Motion to Sell Certain Accounts Receivable (Doc. 239, the “AR Motion”)


of 5

to Elevation Capital Partners, LLC (“Elevation”). Doc. 268. As described in the Asset Sale

Agreement that was attached as an exhibit to the Notice of Successful Bidder [Doc. 257], the

Receiver and Elevation are closing the Court-approved transaction.

Additionally, the Receiver has continued to oversee numerous additional wind-down

activities. The Receiver has contacted and communicated with the board of directors for VCLLC

for instruction and direction to wind down and terminate the ECA 401(k) plan. The Receiver’s

wind-down activities have also included, but are not limited to: drafting of demand letters to

former ECA employees that owe funds to ECA due to violations of retention bonus agreements;

interactions with insurance companies regarding policies; communications with state tax

departments, specifically Texas and Florida, concerning state levies on ECA; communications

with potential creditors; and oversight of ECA’s electronic data and digital servers, and

preservation of such.

2. Approved Disbursements and Cash Flow Forecast

Attached to the Tenth Report as “Exhibit A” is a revised cash-flow projection for ECA.

This thirteen-week projection illustrates the funds available to continue funding the ordinary

wind-down expenses of the Receivership Estate.

The Receiver has approved certain disbursements since the filing of the Receiver’s Ninth

Report. From August 24, 2019 through September 20, 2019, the Receiver has authorized

$480,493 in approved requested disbursements. These disbursements are broken down into three

categories: payables, student stipends, and payroll. The approved payables consisted of fees for

the Receivership Estate’s restructuring and legal professionals, the necessary support and auditor

service fees for ED’s close-out audit, claims management fees, NECB military funds return, and

Blue Cross Blue Shield insurance claims. The requested disbursements were calculated by


of 5

ECA’s financial department, and then reviewed by the Receiver’s financial professionals before

being approved. Attached to the Tenth Report as “Exhibit B” is the Requested Disbursements

Authorization.

RECOMMENDATION

It is the Receiver’s recommendation that ECA continue to remain in federal

receivership. The Receiver has finalized and submitted the required close-out audits for ED.

The Receiver is reviewing the proof of claims that have been filed to prepare a Claims Report

for the Court. The wind down of ECA is continuing, including closing of the Collectable AR

transaction, and the Receiver is continuing his efforts to sell the property in Semmes, Alabama.

Respectfully submitted this 27th day of September, 2019.

/s/ James F. Banter JOHN F. KENNEDY, Court Appointed Receiver Georgia Bar No. 414830 JAMES F. BANTER Georgia Bar No. 581797

Counsel to John F. Kennedy, Receiver JAMES-BATES-BRANNAN-GROOVER-LLP 231 Riverside Drive P. O. Box 4283 Macon, Georgia 31208-4283 (478) 742-4280 telephone (478) 742-8720 facsimile [email protected] [email protected]


of 5


The undersigned certifies that on 27th day of September, 2019, a true and exact copy of

the foregoing document has been served on the counsel to the parties by way of filing on

CM/ECF.

This 27th day of September, 2019. /s/ James F. Banter JAMES F. BANTER Georgia Bar No. 581797 Counsel to John F. Kennedy, Receiver JAMES-BATES-BRANNAN-GROOVER-LLP 231 Riverside Drive P. O. Box 4283 Macon, Georgia 31208-4283 [email protected]


ECA

WeeklyCashFo

recast

($in000's)

Week#

12

34

56

78

910

1112

13WeekEn

ding

9/27

10/4

10/11

10/18

10/25

11/1

11/8

11/15

11/22

11/29

12/6

12/13

12/20

Total

REC

EIPT

STitle

IV-

$Non

Title

IV-

$Other/Ins

-420

--

-300

--

--

--

-720

$TO

TALREC

EIPT

S-

420

--

-300

--

--

--

-720

DISBURSE

MEN

TSAccountsPa

yable

(10)

(10)

(10)

(10)

(2)

(2)

(2)

(2)

(2)

(2)

(2)

(2)

(2)

(57)

$Other

(10)

(20)

(10)

(25)

(35)

(100)

$TotalO

peratingExpenses

(10)

(20)

(10)

(30)

(2)

(12)

(2)

(27)

(2)

(2)

(2)

(37)

(2)

(157)

Operatin

gCashFlow

(10)

400

(10)

(30)

(2)

288

(2)

(27)

(2)

(2)

(2)

(37)

(2)

563

Restructure

CashUtilization

ProfessionalFees

-(147)

(55)

-(80)

(50)

(5)

(75)

(50)

(30)

(5)

(65)

(58)

(620)

$NEC

BWorking

Capital

-$

TotalR

estructure

CashUtilizatio

-(147)

(55)

-(80)

(50)

(5)

(75)

(50)

(30)

(5)

(65)

(58)

(620)

Beginning

CashBalance

5949

302

238

208

126

364

357

255

203

171

164

6259

Plus/Minus

NetCashFlow

(10)

253

(65)

(30)

(82)

238

(7)

(102)

(52)

(32)

(7)

(102)

(60)

(57)

Ending

CashBalance

49$

302

$238

$208

$126

$364

$357

$255

$203

$171

$164

$62

$2

$2

$

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Education Corporation of AmericaRequested Disbursements AuthorizationAugust 24, 2019 through September 20, 2019

Total Payments Paid PAYABLES CATEGORY TOTAL PAIDPayables 480,493$ RESTRUCURING PROFESSIONAL FEES (170,730)$

LEGAL FEES (62,294)$Student Stipends -$ CLOSE-OUT AUDITORS (130,000)$

ED CLOSE-OUT SUPPORT (41,447)$Payroll -$ BCBS INSURANCE CLAIMS (58,867)$

OTHER EXPENSES (17,155)$Grand Total (480,493)$

Total Authorized Payments 480,493$


of 5


MACON DIVISON



Defendant. :

RECEIVER’S ELEVENTH REPORT



“Appointment Order”) filed on November 14, 2018, and hereby files his Eleventh Receiver’s

report (“Eleventh Report”) pursuant the Appointment Order, respectfully showing the Court as

follows:

I. INTRODUCTION








this Eleventh Report within the requirements set forth in the Appointment Order.



of 5

II. DISCUSSION




imposed deadline. On October 7, 2019, ED requested that the Receiver perform a full file review

of ECA’s former students. The Receiver has had subsequent discussions with ED concerning

additional documents ED has requested, and is in discussions with ED concerning the timeline

and scope of the requested full-file review.

Pursuant to the Court’s Order to sell VCLLC’s property in Semmes, Alabama [Doc. 171],

the Receiver, with assistance from NAI-Mobile, LLC (“NAI”), the Court-approved property

broker, has identified a potential purchaser for the property. On October 17, 2019, the Receiver

filed his notice of the potential purchaser of the property with the Court, identifying Mr. Wyatt

Johnson (“Johnson”) as the potential purchaser of the property. This notice included the executed

Contract of Purchase and Sale with Johnson. Furthermore, on October 13, 2019, and in

compliance with 28 U.S.C. § 2001(b), the terms of the Contract of Purchase and Sale for the

Property were published in a newspaper of general circulation. The Court has scheduled a

confirmation hearing for October 29, 2019, as required by 28 U.S.C. § 2001, whereas the

Receiver will move the Court to confirm the sale of the property to Johnson.




Doc. 175. Omni and the Receiver are currently reconciling the submitted claims, and are

beginning to draft and prepare a Claims Report. Pursuant to the Court’s Order [see Doc. 175] the


of 5

Claims Report will outline the Receiver’s recommendation as to the allowable amount and

priority of each claim within a defined categorical group.


activities. The Receiver has contacted and communicated with the board of directors for VCLLC

for instruction and direction to wind down and terminate the VCLLC 401(k) plan. The Receiver

is waiting further direction form the board of directors concerning how to promptly and properly

terminate the 401(k) plan. The Receiver has also completed and submitted ECA’s annual

business report (the “Business Report”) for the United States Census Bureau. The Business

Report required that the total number of workers, estimated annual revenue, and first quarter

revenue be reported to the Census Bureau for every former ECA campus for 2018.

The Receiver’s wind-down activities have also included, but are not limited to: continued

interactions with the state Attorney Generals’ offices for Pennsylvania and Maryland concerning

the production of certain documents; communications with numerous creditors for status updates

concerning the Receivership; interactions with the Mobile County Tax Commissioner’s Office

concerning outstanding taxes on the Semmes property and other outstanding matters to enable to

the Receiver to sell the property; communications with Public Benefit Guaranty Corporate

concerning the termination of NECB’s 401(k); and oversight of ECA’s electronic data and

digital servers, and preservation of such documents.


Attached to the Eleventh Report as “Exhibit A” is a revised cash-flow projection for

ECA. This thirteen-week projection illustrates the funds available to continue funding the

ordinary wind-down expenses of the Receivership Estate.


of 5

The Receiver has approved certain disbursements since the filing of the Receiver’s Tenth

Report. From September 23, 2019 through October 18, 2019, the Receiver has authorized

$172,366 in approved requested disbursements. The approved payables consisted of fees for the

Receivership Estate’s restructuring and legal professionals, the necessary support and auditor

service fees for ED’s close-out audits, claims management fees, NECB military funds return, tax

professional fees, and the payment of outstanding ad valorem taxes in connection with the

Semmes, Alabama property. The requested disbursements were calculated by ECA’s financial

department, and then reviewed by the Receiver’s financial professionals before being approved.

Attached to the Eleventh Report as “Exhibit B” is the Requested Disbursements Authorization.

III. RECOMMENDATION


receivership. The Receiver is working with ED concerning ED’s request for a full-file review

of the former ECA student files. The Receiver is reviewing the proof of claims that have been

filed to prepare a Claims Report for the Court. The wind down of ECA is continuing, including

the upcoming sale of the property located in Semmes, Alabama.

Respectfully submitted this 28th day of October, 2019. /s/ James F. Banter JOHN F. KENNEDY, Court Appointed Receiver Georgia Bar No. 414830 JAMES F. BANTER Georgia Bar No. 581797



of 5


The undersigned certifies that on 28th day of October, 2019, a true and exact copy of the

foregoing document has been served on the counsel to the parties by way of filing on CM/ECF.

This 28th day of October, 2019. /s/ James F. Banter JAMES F. BANTER Georgia Bar No. 581797 Counsel to John F. Kennedy, Receiver JAMES-BATES-BRANNAN-GROOVER-LLP 231 Riverside Drive P. O. Box 4283 Macon, Georgia 31208-4283 [email protected]


ECA

WeeklyCashFo

recast

($in000's)

Week#

12

34

56

78

910

1112

13WeekEn

ding

10/25

11/1

11/8

11/15

11/22

11/29

12/6

12/13

12/20

12/27

1/3

1/10

1/17

Total

REC

EIPT

STitle

IV-

$NEC

BMilitary

1616

$Other/Ins

-315

--

--

--

--

--

-315

$TO

TALREC

EIPT

S16

315

--

--

--

--

--

-331

DISBURSE

MEN

TSAc

countsPa

yable

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(130)

$Other

-$

TotalO

peratingExpenses

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(130)

Operatin

gCashFlow

6305

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

(10)

201

Restructure

CashUtilization

ProfessionalFees

(161)

(50)

(20)

-(50)

(80)

(5)

(65)

(50)

-(15)

(50)

(42)

(588)

$NEC

BWorking

Capital

(54)

(54)

$To

talR

estructure

CashUtilization

(215)

(50)

(20)

-(50)

(80)

(5)

(65)

(50)

-(15)

(50)

(42)

(642)

Beginning

CashBalance

443

234

489

459

449

389

299

284

209

149

139

114

54443

Plus/Minus

NetCashFlow

(209)

255

(30)

(10)

(60)

(90)

(15)

(75)

(60)

(10)

(25)

(60)

(52)

(441)

Ending

CashBalance

234

$489

$459

$449

$389

$299

$284

$209

$149

$139

$114

$54

$2

$2

$

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Education Corporation of AmericaRequested Disbursements AuthorizationSeptember 23, 2019 through October 18, 2019

Total Payments Paid PAYABLES CATEGORY TOTAL PAIDPayables 172,366$ RESTRUCURING PROFESSIONAL F (49,844)$

LEGAL FEES (15,650)$Student Stipends -$ TAX PROFESSIONALS (20,000)$

ED CLOSE-OUT SUPPORT (35,274)$Payroll -$ NECB MILITARY FUNDS (21,797)$

AD VALOREM TAXES (15,802)$OTHER EXPENSES (14,000)$Grand Total (172,366)$



of 5


MACON DIVISON



Defendant. :

RECEIVER’S TWELFTH REPORT



“Appointment Order”) filed on November 14, 2018, and hereby files his Twelfth Receiver’s

report (“Twelfth Report”) pursuant the Appointment Order, respectfully showing the Court as

follows:

I. INTRODUCTION











of 5

II. DISCUSSION




imposed deadline. ED has requested updates and additional reports to reconcile the statuses of

certain files. The Receiver is also providing ED, as requested, with the information regarding the

dates of closure and shutdown for students and employees. The Receiver, and his professionals,

are remaining in constant communication and dialog with ED concerning a resolution of the

outstanding requests.




Doc. 175. Omni and the Receiver are currently reconciling the submitted claims, in addition to

new proof of claims that have been submitted outside of the bar date, and are beginning to draft

and prepare a Claims Report. Pursuant to the Court’s Order [see Doc. 175] the Claims Report

will outline the Receiver’s recommendation as to the allowable amount and priority of each

claim within a defined categorical group.


activities. The Receiver has communicated with the VCLLC board of directors for instruction

and direction for the Receiver to wind down and terminate the VCLLC 401(k) plan. The VCLLC

board of directors, however, is inactive and unable to provide the Receiver any instruction. The

Receiver is evaluating all options to properly and efficiently terminate the 401(k) plan, including


of 5

the potential filing a motion for instruction for the Court to instruct the Receiver to terminate the

plan.

The Receiver has also been in communication with several governmental entities

concerning the Receivership. The Receiver has communicated with the Public Benefit Guaranty

Corporate (“PBGC”) concerning the termination of NECB’s 401(k). The PBGC has requested

certain documents and information concerning NECB, which the Receiver has provided.

Additionally, the Receiver has recently been contacted by the Attorney General’s Office for the

State of Massachusetts concerning NECB. The Receiver has and will continue to answer

questions from the Attorney General’s Office in regards to NECB and the NECB transaction.

The Receiver’s wind-down activities have also included, but are not limited to: continued

interactions with the Attorney Generals’ offices for Pennsylvania and Maryland concerning the

resolution of the certain requested documents; communications with numerous creditors for

status updates concerning the Receivership; review and investigation concerning any possible

causes of action that would benefit the Receivership Estate; review of professional fees and cash

forecast; and oversight of ECA’s electronic data and digital servers, and preservation of such

documents.


Attached to the Twelfth Report as “Exhibit A” is a revised cash-flow projection for ECA.

This thirteen-week projection illustrates the funds available to continue funding the ordinary

wind-down expenses of the Receivership Estate.

The Receiver has approved certain disbursements since the filing of the Receiver’s

Eleventh Report. From October 21, 2019 through November 22, 2019, the Receiver has

authorized $338,439 in approved requested disbursements. The approved payables consisted of


of 5

fees for the Receivership Estate’s restructuring and legal professionals, the necessary support and

auditor service fees for ED’s close-out audits, claims-management fees, and transfer of NECB

military funds return. The requested disbursements were calculated by ECA’s financial


Attached to the Twelfth Report as “Exhibit B” is the Requested Disbursements Authorization.

III. RECOMMENDATION


receivership. The Receiver is working with ED to provide the requested information and

updates for the requested full-file review of the former ECA student files. The Receiver, with

support and assistance from Omni, is reviewing the proof of claims that have been filed to

prepare a Claims Report for the Court. The Receiver is also continuing to interact and

communicate with governmental entities on behalf of the Receivership Estate.

Respectfully submitted this 27th day of November, 2019. /s/ James F. Banter JOHN F. KENNEDY, Court Appointed Receiver Georgia Bar No. 414830 JAMES F. BANTER Georgia Bar No. 581797



of 5


The undersigned certifies that on 27th day of November, 2019, a true and exact copy of


CM/ECF.

This 27th day of November, 2019.

/s/ James F. Banter JAMES F. BANTER Georgia Bar No. 581797 Counsel to John F. Kennedy, Receiver JAMES-BATES-BRANNAN-GROOVER-LLP 231 Riverside Drive P. O. Box 4283 Macon, Georgia 31208-4283 [email protected]


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MACON DIVISON



Defendant. :

RECEIVER’S THIRTEENTH REPORT



“Appointment Order”) filed on November 14, 2018, and hereby files his Thirteenth Receiver’s

report (“Thirteenth Report”) pursuant the Appointment Order, respectfully showing the Court as

follows:

I. INTRODUCTION











of 5

II. DISCUSSION


The Receiver, and his professionals, are continuing to work with the federal Department

of Education (“ED”) to complete the updating and reconciliation of certain student files. The

remaining file updates and reconciliations are expected to be completed within the next two

weeks. Due to the documents and information the Receiver and his professionals have provided

to date, ED informed the Receiver on December 16, 2019 that ED would be rescinding ED’s

prior request for a file review.




Doc. 175. Omni and the Receiver are currently reconciling the submitted claims, in addition to

new proof of claims that have been submitted outside of the bar date, and are beginning to draft

and prepare a Claims Report. Pursuant to the Court’s Order [see Doc. 175] the Claims Report

will outline the Receiver’s recommendation as to the allowable amount and priority of each

claim within a defined categorical group.

On December 13, 2019, the Receiver filed a Petition for Instruction Concerning

Termination of the 401(k) Plan (the “Petition”, Doc. 305). Termination of the 401(k) plan is a

necessary step in the proper wind down of ECA, and the proper wind down of the plan would be

in the best interest of the Receivership Estate, its creditors, and the plan participants and

beneficiaries. In the Petition, the Receiver moves the Court for instruction and direction to

terminate the 401(k) plan as the termination of the plan may not be considered as an activity


of 5

within the ordinary course of business of the Receivership. Doc. 305. The Receiver has engaged

Fidelity Investments (“Fidelity”) to assist with the plan termination process and procedures. If

the Court grants the Petition, Fidelity will proceed to terminate the plan pursuant to a letter of

direction the Receiver, upon consultation with his legal and financial professionals, has prepared.

The Receiver’s wind-down activities have also included, but are not limited to:

interactions with the Attorney Generals’ offices for Pennsylvania and Maryland concerning the

resolution of the administrative subpoenas and production of documents; communications with

numerous creditors for status updates concerning the Receivership; review and investigation

concerning any possible causes of action that would benefit the Receivership Estate; review of

professional fees and cash forecast; and oversight of ECA’s electronic data and digital servers,

preservation of such documents.


Attached to the Thirteenth Report as “Exhibit A” is a revised cash-flow projection for

ECA. This thirteen-week projection illustrates the funds available to continue funding the

ordinary wind-down expenses of the Receivership Estate.

The Receiver has approved certain disbursements since the filing of the Receiver’s

Twelfth Report. From November 22, 2019 through December 20, 2019, the Receiver has

authorized $68,179 in approved requested disbursements. The approved payables consisted of

fees for the Receivership Estate’s restructuring and legal professionals, the necessary support and

auditor service fees for ED’s close-out audits, claims-management fees, and transfer of NECB

military funds return. The requested disbursements were calculated by ECA’s financial


Attached to the Thirteenth Report as “Exhibit B” is the Requested Disbursements Authorization.


of 5

III. RECOMMENDATION


receivership. The Receiver is continuing to work with ED to provide the requested information

and updates, and ED is no longer requiring a file review for the former ECA students. The

Receiver is continuing to interact and communicate with governmental entities on behalf of the

Receivership Estate, and respond to inquiries from creditors concerning the Receivership. The

Receiver and his professionals are also examining and investigating any possible causes of

action that may benefit the Receivership Estate. Furthermore, the Receiver, with support and

assistance from Omni, is reviewing the proof of claims that have been filed to prepare a Claims

Report for the Court.

Respectfully submitted this 27th day of December, 2019. /s/ James F. Banter JOHN F. KENNEDY, Court Appointed Receiver Georgia Bar No. 414830 JAMES F. BANTER Georgia Bar No. 581797



of 5


The undersigned certifies that on 27th day of December, 2019, a true and exact copy of


CM/ECF.

This 27th day of December, 2019. /s/ James F. Banter JAMES F. BANTER Georgia Bar No. 581797 Counsel to John F. Kennedy, Receiver JAMES-BATES-BRANNAN-GROOVER-LLP 231 Riverside Drive P. O. Box 4283 Macon, Georgia 31208-4283 [email protected]


ECA

WeeklyCashFo

recast-V

ariance

($in000's)

Week#

12

34

56

78

910

1112

13WeekEn

ding

12/27

1/3

1/10

1/17

1/24

1/31

2/7

2/14

2/21

2/28

3/6

3/13

3/20

Total

REC

EIPT

STitle

IV-

$NEC

BMilitar y

-$

Other/Ins

--

--

--

--

--

--

--

$TO

TALREC

EIPT

S-

--

--

--

--

--

--

-

DISBURSE

MEN

TSAc

countsPa

yable

(23)

(8)

(8)

(5)

(5)

(4)

(4)

(2)

(2)

(2)

(2)

(2)

(1)

(67)

$Other

-$

TotalO

peratingExpenses

(23)

(8)

(8)

(5)

(5)

(4)

(4)

(2)

(2)

(2)

(2)

(2)

(1)

(67)

Operatin

gCashFlow

(23)

(8)

(8)

(5)

(5)

(4)

(4)

(2)

(2)

(2)

(2)

(2)

(1)

(67)

Restructure

CashUtilization

ProfessionalFees

(61)

(35)

(15)

-(30)

(50)

(15)

-(30)

(50)

-(15)

(20)

(321)

$NEC

BWorking

Capital

(7)

(7)

$To

talR

estructure

CashUtilization

(61)

(42)

(15)

-(30)

(50)

(15)

-(30)

(50)

-(15)

(20)

(328)

Beginning

CashBalance

396

312

262

239

234

199

145

126

124

9240

3821

396

Plus/Minus

NetCashFlow

(84)

(50)

(23)

(5)

(35)

(54)

(19)

(2)

(32)

(52)

(2)

(17)

(21)

(395)

Ending

CashBalance

312

$262

$239

$234

$199

$145

$126

$124

$92

$40

$38

$21

$0

$0

$

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Education Corporation of AmericaRequested Disbursements AuthorizationNovember 22, 2019 through December 20, 2019

Total Payments PaidPayables 68,179$ PAYABLES CATEGORY TOTAL PAID

RESTRUCURING PROFESSIONAL FEE (34,289)$Student Stipends -$ ED CLOSE-OUT SUPPORT (19,875)$

NECB MILITARY FUNDS (13,835)$Payroll -$ OTHER EXPENSES (181)$

Grand Total (68,179)$



RLF1 22814964v.1

EXHIBIT D

Claims Procedure Order



MACON DIVISION

VC MACON GA, LLC

Plaintiff,

v.

VIRGINIA COLLEGE, LLC; andEDUCATION CORPORATION OFAMERICA,

Receivership Entities.

Civil Action No. 5:18-cv-00388-TES

ORDER APPROVING RECEIVER’S MOTION FOR ENTRY OF AN ORDER (1) APPROVING PROPOSED CLAIMS ADMINISTRATION PROCEDURES AND

(2) GRANTING RELATED RELIEF

Upon consideration of the Receiver’s Motion for Entry of an Order (1) Approving

Proposed Claims Verification Procedures and (2) Granting Related Relief (the “Motion”) (Doc.

158);1 and upon consideration of any and all responses to the Motion; and upon finding that due

and sufficient notice of the Motion was given, all parties in interest have received notice and have

been heard or had the opportunity to be heard, and that no other or further notice is required; and

upon finding that the relief sought in the Motion is in the best interests of the Receivership Estate

and creditors; and upon due deliberation and finding good and sufficient cause for the relief sought

in the Motion; it is hereby

1. ORDERED that the Motion is GRANTED; and it is further

2. ORDERED that, all Claimants holding or wishing to assert any claim, cause of action,

or other right against the Receiver or Receivership Estate whether a Post-Receivership

1 Capitalized terms used in this Order and not otherwise defined shall have the meanings ascribed to them in the Motion.


2

Claim, Pre-Receivership Claim or otherwise, collectively, the “Claims”) must file their

Claims pursuant to the Claims Process established by this Order; and it is further

3. ORDERED that:

a. With the exception of the Excluded Entities, all Claimants holding Claims

against the Receivership Estate shall file a Claim Form with Omni on or before the

applicable Bar Date. Any Claimant that fails to timely file a Claim Form in

accordance with the Claims Process shall be deemed to have waived any such

Claims against the Receiver and the Receivership Estate and such Claims shall be

and hereby are forever barred. As set forth below in more detail, Claimants shall be

enjoined from pursuing or otherwise asserting Claims against the Receiver or

Receivership Estate other than through the Claims Process;

b. Except as otherwise set forth herein, the Receiver, with the assistance of

Omni and his other professionals, is authorized and directed by this Order to

transmit the Notice of Claims Process and Claims Bar Dates attached hereto as

Exhibit 1 (the “Claims Notice”) to all Claimants, along with the Claim Verification

Form attached hereto as Exhibit 2 (the “Claim Form”), which Claim Notice and

Claim Form are approved by this Order, on all known Claimants holding actual or

potential Claims against the Receivership Estate within three (3) business days after

the date of entry of this Order, together with a copy of this Order (the Claims Notice,

Claim Form and this Order collectively referred to herein as the “Claims Package”);

c. The Receiver is authorized and directed to transmit the Claims Package to

the Claimants as follows:

A. Students: The Receiver shall transmit a postcard to all students who


3

attended schools of the Receivership Entities from January 1, 2017 to

December 31, 2018, with information directing them to resources to file

Claims. The post card will be sent to their last known mailing address.

Students who attended schools of the Receivership Entities from January

1, 2016 to December 31, 2018, will also get electronic notice at their last

email address and cell phone number of record. The Receiver shall only

be required to send electronic notice under this Order via the email

addresses and cell phone numbers of which it is currently in possession.

Any notice sent to students shall include the date of the deadline for

students to file claims, as described in Paragraph 6.

B. Employees: The Receiver shall transmit the Claims Package to current

and former employees at their last email address and/or cell phone

number of record.

C. Vendors and Trade Creditors; Secured Lenders; Government,

Regulatory and Accreditor Entities; and Other Claimants: The Receiver

shall transmit the Claims Package to vendors, trade creditors, secured

lenders, government, regulatory and accreditor entities and all other

known or potential Claimants via U.S. Mail to their last address of

record.

d. The Receiver shall publish the Notice to File Claims attached hereto as Exhibit 3

(the “Publication Notice”) with USA Today as soon as practicable after the entry

of this Order;

e. The Receiver shall post a link to Omni’s website on ECA’s website;


4

f. The Receiver will disseminate notice of the Claims Process through social media,

referring Claimants to Omni’s website;

g. All persons and entities who receive the Claims Package or are otherwise imputed

with notice as a result of the Receiver’s compliance with the notice procedures set

forth herein, together with their respective agents and attorneys, have an

affirmative duty to obtain and review this Order and the Claim Notice and timely

file a Claim Form in accordance with this Order if they possess a valid Claim;

h. The notice and claims procedures set forth in the Claims Process constitute due

and sufficient notice of the Claims Process and procedures and satisfies the

requirements of all applicable laws and shall be deemed the exclusive means of

providing sufficient notice to Claimants, regardless of whether any potential

Claimant actually receives notice. No cause of action shall be lie against the

Receiver or his professionals for a Claimant’s alleged lack of notice even if any

such Claimant had prior correspondence with the Receiver or his professionals

prior to the entry of this Order; and it is further

4. ORDERED that:

a. Claimants who desire to assert a Claim against the Receivership Estate shall

submit a completed Claim Form, with supporting documentation and information

required in the Claim Form, to Omni by the Claims Bar Dates and in accordance

with the Claims Process. All Claim Forms must be legible, include a Claim

amount in U.S. dollars or, if the Claim is contingent and unliquidated, shall state

the basis for the Claim and the amount of damages set forth in the Claim Form,

signed by the Claimant or their legally authorized representative, and attest to the


5

completeness and accuracy of the Claim Form;

b. Each Claim Form must clearly identify the Receivership Entity against which a

Claim is asserted. Any Claim Form filed without identifying a specific

Receivership Entity, will be deemed as filed only against ECA;

c. Each Claim Form must include supporting documentation evidencing the validity

and amount of the Claim. If, however, such documentation is voluminous, such

Claim Form may include a summary of such documentation or an explanation as

to why such documentation is not available; provided that any such Claimant that

shall be required to transmit such documentation to Omni upon request no later

than ten (10) days after the date of such request;

d. The Receiver’s rights to object to any Claim, among other things, for failure to

comply with any requirement set forth in the Claims Process shall be fully

preserved. Any Claimant with any Claim against the Receiver or Receivership

Estate that fails to comply with the Claims Process, including without limitation,

the timely, complete and accurate submission of a Claim Form and supporting

documentation, shall be deemed to have waived any such Claims against the

Receiver and the Receivership Estate and such Claims shall be deemed waiver

and forever barred. Claimants shall be enjoined from pursuing or otherwise

asserting Claims against the Receiver or Receivership Estate other than through

the Claims Process; and it is further

5. ORDERED that:

a. All Pre-Receivership Claims must be submitted or received on or before the

Pre-Receivership Claims Bar Date. All Claim Forms and accompanying


6

documentation must be received by Omni on or before the Pre-Receivership Claims

Bar Date. Any Pre-Receivership Claims submitted after the Pre-Receivership

Claims Bar Date shall not be allowed and no distribution shall be made on such

Claims. The Receiver shall have authority, for good cause, to extend the Pre-

Receivership Claims Bar Date in his sole discretion as to any particular Claimant.

Any such extension must be requested from the Receiver in writing prior to the Pre-

Receivership Claims Bar Date applicable to such requesting Claimant;

b. All Post-Receivership Claims must be submitted on or before the applicable

Post-Receivership Claims Bar Date, as set forth in the Claims Process. All Claim

Forms and accompanying documentation must be received by Omni on or before

the Post-Receivership Claims Bar Date. Any Post-Receivership Claims submitted

or received after the Post-Receivership Claims Bar Date shall not be allowed and

no distribution shall be made on such Claims. The Receiver shall have authority,

for good cause, to extend the Post-Receivership Claims Bar Date in his sole

discretion as to any particular Claimant. Any such extension must be requested

from the Receiver in writing prior to the Post-Receivership Claims Bar Date

applicable to such requesting Claimant;

c. Any creditor who fails to file a Claim in the form and manner set forth in

this Order, or that fails to do so on or before the applicable Claims Bar Date, shall

be forever barred, estopped and enjoined from asserting such Claim against the

Receivership Estate or the Receiver, and shall not be treated as a creditor with

respect to such Claim for the purposes of any distributions from the Receivership

Estate, and the Receiver and Receivership Estate shall be forever discharged from


7

any and all indebtedness or liability with respect to such Claim; and it is further

6. ORDERED that:

a. The Receiver will transmit notices to Students no later than March 11, 2019.

Students will then have seventy (70) days after the third day after notice is mailed

to file Claims (the “Student Claims Bar Date”). As an example only, if the mailing

is postmarked March 11, 2019 the seventy-day filing period begins March 14,

2019and the Student Claims Bar Date would be May 23, 2019.

b. The Receiver shall file a certificate of compliance with the Court after

completing the notice requirements set forth in this Order. Omni shall then update

its website to state the specific Student Claims Bar Date.

c. All student Claims must be submitted on or before the Student Claims Bar

Date. All student Claims and accompanying documentation must be received by

Omni (for any claim filed using Omni’s website) or postmarked (for any claim sent

via mail to Omni) on or before the Student Claims Bar Date. Any Student Claims

submitted after the Student Claims Bar Date shall not be allowed and no distribution

shall be made on such Claims. The Receiver shall have authority, for good cause,

to extend the Student Claims Bar Date in his sole discretion as to any particular

Student. Any such extension must be requested from the Receiver in writing prior

to the Student Claims Bar Date applicable to such requesting Student;

d. Any Student who fails to file a Claim in the form and manner set forth in

this Order, or that fails to do so on or before the Post-Receivership Claims Bar Date,

shall be forever barred, estopped and enjoined from asserting such Claim against

the Receivership Estate or the Receiver, and shall not be treated as a creditor with


8

respect to such Claim for the purposes of any distributions from the Receivership

Estate, and the Receiver and Receivership Estate shall be forever discharged from

any and all indebtedness or liability with respect to such Claim; and it is further

7. ORDERED that:

a. Once the Claims Bar Dates have passed, or at such other time as determined by

the Receiver, the Receiver shall consult with Omni and his professionals regarding

the reconciliation of filed Claims. The Receiver shall file with the Court a Claims

Report outlining the Receiver’s recommendation as to the allowable amount and

priority of each Claim. All distributions made to Claimants will be calculated

based upon the amounts and priorities set forth in the Claims Report. The Claims

Report may be amended from time to time as determined by the Receiver. To the

extent that any Claim is objectionable, as determined by the Receiver in his sole

discretion, the Claims Report will set forth the basis for the Receiver’s objection

to any such Claim;

b. Each Claimant will have the opportunity to object only to the Receiver’s proposed

treatment such Claimant’s Claim by filing a written objection or response to the

Claims Report within fourteen (14) days after the filing of the Claims Report, and

serving a copy upon counsel for the Receiver, James F. Banter, Esq., James, Bates,

Brannan, Groover LLP, 231 Riverside Drive, Macon, Georgia 31201, telephone

(478) 742-4280, facsimile (478) 742-8720, email [email protected];

c. The Receiver will attempt to negotiate with any objecting or responding Claimant.

If the Receiver and objecting Claimant cannot resolve their objections by consent,

the objections will be resolved by the Court. If no objection is timely filed to the


9

Claims Report with respect to a particular Claim, the Claims Report shall be the

final, binding determination on each non-objecting Claimant with respect to such

Claims. If an objection to the Claims Report is filed and the Receiver and such

objecting Claimant cannot resolve the objection by consent, then the Court’s order

resolving any such Claim dispute will be a final determination as to such Claims;

d. The Receiver is hereby authorized, but not directed, to petition the Court to resolve

any Omnibus Objections in one consolidated proceeding. The Court’s order

resolving any such Omnibus Objections will be a final determination as to all such

Claims; and it is further

8. ORDERED that:

a. the Receiver, in its sole discretion, shall be allowed to make interim

distributions (the “Interim Distributions”) to Claimants in accordance with the

Claims Report, as modified by any subsequent order of the Court, based on the

amount of available funds, current and future costs and expenses for administering

and winding down the Receivership Estate and any other factor deemed relevant by

the Receiver, in its sole discretion;

b. Any subsequent amendment to the Claims Report shall not affect any prior

distribution made by the Receiver pursuant to and in reliance on a prior Claims

Report;

c. The Receiver shall bear no liability to any person or entity as a result of its

payment of the Interim Distributions in accordance with the Claims Report, and

shall be discharged of any liability or further obligation to any person or entity with

respect to such Interim Distributions;


10

d. After the Receivership Estate’s remaining assets are liquidated and/or the

Receiver otherwise determines that the Receivership Estate shall be wound down

and closed, the Receiver will request authority from the Court to make a final

distribution of assets of the Receivership Estate; and it is further

9. ORDERED that the Receiver is authorized to take all actions, as he deems reasonable

and necessary in its sole discretion, to comply with and/or further the purposes of this

Order, the Receivership Order and other orders of the Court; and it is further

10. ORDERED that this Court retains jurisdiction with respect to all matters arising from or

related to the implementation of this Order.

SO ORDERED, this 6th day of March, 2019.

S/ Tilman E. Self, IIITILMAN E. SELF, III, JUDGEUNITED STATES DISTRICT COURT



MACON DIVISION

VC MACON GA, LLC

Plaintiff,

v.

VIRGINIA COLLEGE, LLC; andEDUCATION CORPORATION OFAMERICA,

Defendants.

)))))))))))

Civil Action No.5:18-cv-00388-TES

NOTICE OF CLAIMS PROCESS AND CLAIMS BAR DATES

To All Potential Holders of Claims (defined below) Against Virginia College, LLC (“VC”), Education Corporation of America (“ECA”), and New England College of Business and Finance, LLC (“NECB”, together with VC and ECA, the “Receivership Entities”).

YOU ARE RECEIVING THIS NOTICE BECAUSE YOU MAY HAVE OR ASSERT A CLAIM AGAINST THE RECEIVERSHIP ESTATE IN THE ABOVE-

CAPTIONED CASE. THEREFORE, YOU SHOULD READ THIS NOTICE CAREFULLY AND DISCUSS IT WITH YOUR ATTORNEY. IF YOU DO NOT HAVE

AN ATTORNEY, YOU MAY WISH TO CONSULT ONE.

Please take notice that on November 14, 2018 (the “Appointment Date”), the United States District Court for the Middle District of Georgia, Macon Division (the “Court”), entered an Order Appointing Receiver and Preliminary Injunction (the “Receivership Order”), John F. Kennedy (the “Receiver”) as Receiver over certain assets owned by or in the possession or control of the Receivership Entities (collectively, the “Receivership Estate”). Having exclusive jurisdiction over the Receivership Estate, the Court entered an order dated March 4, 2019 establishing a process and procedure for the determination and allowance of all claims against the Receivership Estate (the “Claims Order”), which is incorporated herein by reference. A copy of the Claims Order is enclosed for your reference. The Court has approved Omni Management Group, Inc. (“Omni”) as the claims agent for the Receiver.

Pursuant to the Claims Order, April 15th, 2019 at 5:00 p.m. (Prevailing Eastern Time) (the “Pre-Receivership Claims Bar Date”) is the last date and time for each person or entity, except students, to file a claim against the Receivership Estate based on any claim against the Receivership Entities arising before the Appointment Date (the “Pre-Receivership Claims”). May 23th, 2019 at 5:00 p.m. (Prevailing Eastern Time), is the last date and time for each student to


2

file a claim against the Receivership Estate based on any claim against the Receivership Entities.

Other than students, all claims against the Receivership Estate and Receiver based on claims against the Receivership Entities or the Receiver arising on or after the Appointment Date (the “Post-Receivership Claims”, together with the Pre-Receivership Claims, the “Claims”) must be submitted by the later of the Pre-Receivership Claims Bar Date (if such Post-ReceivershipClaim arose on or before the date of the Claims Order) or thirty (30) days after the day on which such claim accrued (the “Post-Receivership Claims Bar Date”, together with the Pre-ReceivershipClaims Bar Date, the “Claims Bar Dates”).

The Claims Order, the Claims Bar Dates, and the procedures set forth in the Claims Order for the filing of Claims apply to all claims against the Receivership Estate and Receiver.

A CLAIMANT SHOULD CONSULT AN ATTORNEY IF THE CLAIMANT HAS ANY QUESTIONS, INCLUDING WHETHER SUCH CLAIMANT SHOULD FILE A CLAIM.

1. Persons or Entities Who Must File a Claim. Any person or entity that has or asserts a Claim against the Receivership Estate, except as otherwise set forth in the Receiver Order or Claims Order, must file a Claim on or before the applicable Claims Bar Date to share in any distributions from the Receivership Estate.

Acts or omissions of the Receivership Entities and Receiver may give rise to Claims against the Receivership Estate that must be filed by the applicable Claims Bar Date notwithstanding that such Claims may not have matured or become fixed or liquidated prior to such Claims Bar Date.

As used in this Notice and the Claims Order, the word “Claim” includes both Pre-Receivership Claims and Post-Receivership Claims and means a: (a) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or (b) right to an equitable remedy for breach or performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.

THE FACT THAT YOU RECEIVED THIS NOTICE DOES NOT MEAN THAT YOU HAVE A CLAIM OR THAT THE RECEIVERSHIP ENTITIES, THE RECEIVER, OR THE COURT BELIEVE THAT YOU HAVE A CLAIM. YOU SHOULD NOT FILE A CLAIM IF YOU DO NOT HAVE A CLAIM AGAINST THE RECEIVERSHIP ENTITIES, RECEVIER OR THE RECEIVERSHIP ESTATE

2. When and Where to File. Each Claim Form must be filed, including supportingdocumentation so as to be actually received no later than 5:00 p.m. (prevailing Eastern Time) on


3

or before the applicable Claims Bar Date.

If submitted electronically, submission is to occur through the interface located at:

https://www.omnimgt.com/__________________/

If submitted through non-electronic means, by U.S. Mail or other hand delivery system at the following address:

If sent by U.S. mail, send to:

Education Corporation of America Claims Processingc/o Omni Management Group5955 DeSoto Ave., Suite 100Woodland Hills, CA 91367

If sent by Overnight Courier or Hand Delivery, send to:

Education Corporation of America Claims Processingc/o Omni Management Group5955 DeSoto Ave., Suite 100Woodland Hills, CA 91367

CLAIMS SUBMITTED BY FACSIMILE OR ELECTRONIC MAILWILL NOT BE ACCEPTED

3. Contents of a Claim. If you intend to file a Claim, you must complete and submit the Court-approved Claim Form enclosed herewith (the “Claim Form”). Your Claim Form must: (a) be signed and notarized; (b) be legible and written in the English language; (c) be denominated in lawful currency of the United States; and (d) be submitted with copies of any supporting documentation or an explanation of why any such documentation is not available.

4. Consequences of Failure to Properly File Proof of Claim by Applicable Bar Date. Any creditor who fails to file a Claim in the form and manner set forth in the Claims Order and this Notice, or that fails to do so on or before the applicable Claims Bar Date, will forever be barred, estopped and enjoined from asserting such Claim against the Receivership Estate and the Receiver, and shall not be treated as a creditor with respect to such Claim for the purposes of any distributions from the Receivership Estate, and the Receiver and Receivership Estate shall be forever discharged from any and all indebtedness or liability with respect to such Claim.

5. Contingent Claims. Acts or omissions of the Receivership Entities, if any, that occurred prior to the Appointment Date, including, without limitation, acts or omissions related to any indemnity agreement, guarantee, services provided to or rendered by the Receivership Entities, or goods provided to or by the Receivership Entities, may give rise to claims against the Receivership Entities or the Receivership Estate notwithstanding the fact that such Claims (or any injuries on which they may be based) may be contingent or may not have matured or become fixed or liquidated prior to the Appointment Date. Therefore, any person or entity that holds a claim or potential claim against the Receivership Entities, no matter how remote, contingent, or


4

unliquidated must file a Claim on or before the applicable Claims Bar Date.

6. Reservation of Rights. Nothing contained in this Notice is intended or should be construed as a waiver of any of the Receiver’s rights, including without limitation, its rights to dispute, or assert offsets or defenses against, any Claim as to the nature, amount, liability or classification of such Claim.

7. Additional Information. If you have questions concerning the submission or processing of Claims, you may contact Omni at: ___________________________________.


UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF GEORGIA PROOF OF CLAIM

VC Macon, GA LLC v. Virginia College, LLC and Education Corporation of America

Case Number: 5:18-cv-00388-TES

RECEIVER USE ONLY

Claim is asserted against (check appropriate box):

Education Corporation of AmericaVirginia College, LLC d/b/a:

Brightwood CollegeEcotech InstituteGolf Academy of America

New England College of BusinessOther: ______________________________

Name of Creditor:________________________________Name and address where notices should be sent:

Telephone number:

Email:

Check this box if this claim amends a previously filed claim.Claim Number:________________

(If known) Filed on:

Name and address where payment should be sent (if different from above):

Telephone number:

Email:

Check this box if you are aware that anyone else has filed a proof of claim relating to this claim. Attach copy of statement giving particulars.

1.Amount of Claim: $_____________________________________2.Date Claim Accrued:____________________________________If all or part of the claim is secured, complete item 4.If claim is asserted by a government, regulatory agency or accreditor, complete item 5.If all or part of the claim is or has been asserted in any legal or administrative proceeding, complete item 6.3.Basis for Claim (e.g., contract, employment, student): __________________________________________ ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4.Secured Claims.Basis for Perfection:_______________________________________________________________________Amount of Secured Claim: $___________________________________Annual Interest Rate:_____________________________Description of Collateral:_____________________________


5.Government, Regulatory and Accreditor Claims.Name:___________________________________________________________________________________Basis for Claim (including applicable laws and regulations): _____________________________________Amount Owed: $______________________________Penalties Owed: $_____________________________Annual Interest Rate:___________________________6.Legal or Administrative Proceedings.Name of Proceeding: ______________________________________________________________________Case or Action Number: ____________________________________________________________________Forum of Proceeding: _______________________________________________________________________Name and Contact Information of Attorney or Advocate, if any: _____________________________________ ________________________________________________________________________________________

7.Supporting Documents: Attached are redacted copies of any documents evidencing or supporting the claim, such as promissory notes, purchase orders, invoices, statements of accounts, legal pleadings, contracts, judgments, mortgages, etc. DO NOT SEND ORIGINAL DOCUMENTS. ATTACHED DOCUMENTS MAY BE DESTROYED. If the documents are not available, please explain:_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

8.Signature.

I declare under penalty of perjury that (i) I am the holder of the claim asserted herein or the duly and legally authorized representative with the power to submit this claim on behalf of the holder* and (ii) the information provided in this claim is true and correct to the best of my knowledge, information and reasonable belief.

Print Name:Title:Company:Address:

Telephone Number:Email Address:

(Signature)

Date: ________________________________________

*If the claim is being submitted by and duly and legallyauthorized representative of the holder, proof of suchrepresentative’s authority MUST be provided as a part of the supporting documentation.


NOTICE TO FILE CLAIMS

John F. Kennedy (the “Receiver”), acting solely in its capacity as the Court-appointed

receiver for certain assets owned by or in the possession or control of Virginia College, LLC,

Education Corporation of America, and New England College of Business and Finance, LLC

(collectively, the “Receivership Entities”), appointed by the US District Court for the Middle

District of Georgia (the “Court”) in Case No. 5:18-CV-00388-TES by the Court’s order (the

“Receivership Order”) dated November 14, 2018 (the “Appointment Date”), hereby provides

notice to any person having a claim against the Receivership Estate (as created by and defined in

the Receivership Order) based on claims against the Receivership Entities or the Receiver to

present such claim in accordance with the procedures established by the Court. Pursuant to the

Court’s order dated March 6th, 2019 (the “Claims Order”), the Court has established a procedure

for the allowance of claims against the Receivership Estate (the “Claims Process”), including

without limitation the submission of claims using a Court-approved “Claim Form,” and the setting

of application bar dates. Any claim that is not timely submitted in the form and manner set forth

in the Claims Order, by the applicable bar dates, will forever be barred as provided in the Claims

Order. For a copy of the Claims Order and Claim Form, or for other additional information

regarding the Claims Process, please contact: __________________________.

Dated: March 6th, 2019John F. Kennedy, as Receiver

JAMES BATES BRANNAN & GROOVER231 Riverside Dr., Ste. 100Macon, GA 31201Tel: (478) 742-4280Fax: (478) 742-8720

To be published in USA Today in its issue of March _____, 2019.


EXHIBIT E

Petitioning Creditors’ Proofs of Claim

The Petitioning Creditors’ Proofs of Claim (Claims 48, 61, and 718) can be found online at

https://cases.omniagentsolutions.com/claimdocket?clientid=CsgAAncz%2b6ZIjznx4bOsj5

kvekSk%2bUUGapaxwc1JrMCLO2ISvvyb8VNk%2b6hYmHXhiA1sDsKjkCk%3d.


https://cases.omniagentsolutions.com/claimdocket?clientid=CsgAAncz%2b6ZIjznx4bOsj5kvekSk%2bUUGapaxwc1JrMCLO2ISvvyb8VNk%2b6hYmHXhiA1sDsKjkCk%3d

https://cases.omniagentsolutions.com/claimdocket?clientid=CsgAAncz%2b6ZIjznx4bOsj5kvekSk%2bUUGapaxwc1JrMCLO2ISvvyb8VNk%2b6hYmHXhiA1sDsKjkCk%3d

RLF1 22814964v.1

EXHIBIT F

August Email


James Banter

From:Sent:To:Cc:

Subject:

John F. Kennedy

Friday, August 30,2019 2:55 PM

tkoenig@ monroecap.com; [email protected]

James BanterPotential PartnershiP

Dear Ted

Thank you for the opportunity to have met with you this past Monday to discuss the Receivership, and the possibility of

us partnering together on future litigation. The meeting was extremely productive, and helped narrow the issues and

questions that are presented before us as we evaluate how to proceed.

pursuant to the court's Appointment order, I have the full power and authority to assert any rights and claims of ECA

that are part of the Receivership Property. I agree with you that the insurance policy for ECA's directors and officers

offers a great avenue remaining in which to obtain a substantial recovery for the Receivership Estate. I have a duty and

an obligation, to examine any and all avenues in which to potentially pursue these alleged claims. For these reasons, I

am committed to pursuing any and all potential claims against the directors and officers, as well as any other claims, for

the benefit of the entire Receivership Estate.

To satisfy my fiduciary duties to the Receivership Estate, any potential split agreement between us must demonstrate

that the agreement is entered into for the benefit of the entire Receivership Estate. ln our previous conversations, you

have offered recovery split terms whereas the first $8 million recovered, after all litigation expenses are paid, would go

directly to Monroe. The funds remaining from a recovery would then be split pursuant to an agreement that you and I

would have previously agreed to. I am concerned, however, about the proposed terms to date, and want to ensure that

the Receivership Estate is properly protected and represented in any possible litigation partnership. For example,

applying the current terms, a 520 million dollar recovery (such number used to show calculations only; I believe the

recovery will be substantially higher) would only reasonably translate to a Sz million recovery that would then be

subject to an agreed upon recovery split after you subtract litigation costs and professionals (estimated 55 million) and

Monroe,s first Sg million out. Even if the remaining 57 million is split 50/50 between Monroe and the Receivership

Estate, the Receivership Estate would only reasonably recover S3.5 million on an original S20 recovery. ECA, the

Receivership Estate, and l, bring substantial value to any potential litigation against the ECA directors and officers, which

should be more fairly and adequately represented in any potential split agreement with Monroe.

ln our meeting on Monday, you mentioned that you had previously entered into recovery agreements with previous

trustees and/or receivers that had similar or more favorable terms for Monroe than what has been offered to date.

please share such cases and agreements with me, as such information and precedence will be important as we continue

to discuss and negotiate regarding a possible recovery agreement, and aid in obtaining any needed approval of such

terms upon which we agree.

I firmly believe that we are both aligned and incentivized in the same outcome, the highest possible recovery. I also

believe the Receivership Court is the best avenue to achieve such a recovery for the benefit of the Receivership Estate,

rather than filing for bankruptcy and requesting that a trustee be appointed as you have proposed.

We have asked Mike Egan and Tom Cronin for the fee contract that is proposed for Tom's services. Although Mike

quickly admitted and said he understood that l, as Receiver, must have these details before I can enter into any

agreement, no such details have been provided. Please provide this as soon as practicable.


jbanter

Highlight

jbanter

Highlight

jbanter

Highlight

jbanter

Highlight

I look forward to our continued and prompt discussions regarding a potential partnership, as we examine ways to

maximize recovery for the Receivership Estate'

Thanks,

John

John F. KennedyPartner

JAMES-BATES.BRANNAN-GROOVER.LLPjamesbatesllp.com231 Riverside DriveMacon, GA 31201O:478-749-9981F:478-742-8720

Confidentiality Notice:This message is intended exclusively for the individual or entity to which it is addressed. This communication may contain information that is proprietary, privileged or

confidentiaior otherwise legally exemp from disclosure. If you are not the named addressee of this message, this message was not intended for you, and your receipt of this

message was ail inadvertent-disclosure ofthe information and contents herein. Ifyou are not the named addressee, you are not authorized to read, print, retain, copy, or

disseminate this message or any part of it. If you have received this message in error, please notiry the sender immediately by email and delete all copies of the message. The

respond to this email with any confidential information because your communication may not be treated as privileged or confidential' Thank you.

2


RLF1 22814964v.1

EXHIBIT G

Proposed Order


RLF1 22814964v.1



Alleged Debtor.

_____________________________________

) ) ) ) ) ) )

Chapter 11 Case No. 20-10034 (___)

RE: D.I. 1, ___

ORDER GRANTING MOTION OF JOHN F. KENNEDY, SOLELY

IN HIS CAPACITY AS RECEIVER FOR THE RECEIVERSHIP ESTATE OF EDUCATION CORPORATION OF AMERICA, VIRGINIA COLLEGE, LLC,

AND NEW ENGLAND SCHOOL OF BUSINESS AND FINANCE, FOR ABSTENTION FROM INVOLUNTARY PETITION PURSUANT TO 11 U.S.C. § 305

Upon consideration of the motion (the “Motion”) of the Receiver1 in the above-captioned

bankruptcy case (the “Bankruptcy Case”) for abstention from the involuntary petition pursuant to

11 U.S.C. § 305, or alternatively dismissal pursuant to 11 U.S.C. § 303 and 1112; the Court

having jurisdiction over the Motion pursuant to 28 U.S.C. §§ 1334 and 157(b) and the Amended

Standing Order of Reference from the United States District Court for the District of Delaware

dated February 29, 2012; and the Motion being is a core matter pursuant to 28 U.S.C. §

157(b)(2) and that the Court can enter a final order consistent with Article III of the United

States Constitution; the Court having found that notice of the Motion was appropriate; and it

appearing that the relief requested in the Motion is in the best interests of the Alleged Debtor, the

Alleged Debtor’s estate, and the Alleged Debtor’s creditors, and that the legal and factual bases

set forth in the Motion establish just cause for the relief granted herein; and after due deliberation

thereon, it is hereby:

ORDERED THAT the Motion is GRANTED; and it is further

1 Unless otherwise defined herein, capitalized terms used in this Order shall have the meanings ascribed to them in the Motion.


2 RLF1 22814964v.1

ORDERED THAT the Bankruptcy Case is dismissed; and it is further

ORDERED THAT the Bankruptcy Court shall retain jurisdiction over all matters

involving the interpretation or enforcement of this Order.

Dated: __________________, 2020 Wilmington, Delaware

THE HONORABLE BRENDAN LINEHAN SHANNON UNITED STATES BANKRUPTCY JUDGE


Exhibit “C” to Motion for Sanctions

Voluntary Dismissal Email


1

-----Original Message----- From: Ryan, Jeremy W. <[email protected]> Sent: Thursday, February 13, 2020 8:13 AM To: [email protected] Cc: McNeill, R. Stephen <[email protected]>; Noble, J. Zachary <[email protected]>; Kandestin, Cory D. <[email protected]> Subject: 20-10034 Education Corporation of America

Dear Rachel,

We wanted to inform the Court and the Receiver’s counsel that the Petitioning Creditors took to heart Judge Shannon’s concerns about proceeding forward with the Involuntary Petition. After reflection on the Court’s letters and comments at the telephonic hearings, the Petitioning Creditors intend to withdraw the Involuntary Petition. We wanted to let the Court know now so that it was not expecting a response to the Motion to Abstain


2

today and that there is no need for a hearing on the Motion to Abstain next week.

We will be filing a Motion for a Voluntary Dismissal of the Involuntary Petition by this Friday<x-apple-data-detectors://5>. A hearing is required for that motion pursuant to section 303(j). We would ask the Court for a hearing date on for that motion which, unless time is shortened, is a twenty-one day motion pursuant to Bankruptcy Rule 2002.

We greatly appreciate the Court’s time and attention to this matter.

Respectfully,

Jeremy

[cid:[email protected]]<http://www.potteranderson.com> Jeremy W. Ryan | Partner Potter Anderson & Corroon LLP | 1313 N. Market Street, 6th Floor | Wilmington, DE 19801-6108 T 302.984.6108 | F 302.658.1192 [email protected]<mailto:[email protected]> | potteranderson.com<http://www.potteranderson.com>

The information contained in this email message and any attachments is intended only for the addressee and is privileged, confidential, and may be protected from disclosure. Please be aware that any other use, printing, copying, disclosure or dissemination of this communication may be subject to legal restriction or sanction. If you think that you have received this email message in error, please do not read this message or any attached items. Please notify the sender immediately and delete the email and all attachments, including any copies. This email message and any attachments have been scanned for viruses and are believed to be free of any virus or other defect that might affect any computer system into which they are received and opened. However, it is the responsibility of the recipient to ensure that the email and any attachments are virus-free, and no responsibility is accepted by Potter Anderson & Corroon LLP for any loss or damage arising in any way from their use.


Exhibit “D” to Motion for Sanctions

Dismissal Order


Exhibit “E” to Motion for Sanctions

Certifications of Counsel


RLF1 22924068v.1



Alleged Debtor.

_____________________________________

) ) ) ) ) ) )


RE: D.I. 1

CERTIFICATION OF COUNSEL

REGARDING PROPOSED ORDER DISMISSING CASE The undersigned certify as follows:

1. We are counsel to John F. Kennedy, the Receiver for the receivership estate of

Education Corporation of America and its affiliates in the receivership action (the “Receivership

Action”) pending in the United States District Court for the Middle District of Georgia (Case No.

5:18-cv-00388-TES) (the “District Court”).

2. On January 27, 2020, the Receiver moved to dismiss this involuntary bankruptcy

case under Bankruptcy Code § 305(a), or alternatively under Bankruptcy Code §§ 303 and 1112

[D.I. 10] (the “Motion to Abstain”). No party has objected to the Motion to Abstain, and as the

Court is aware from communications with Chambers last week, the petitioning creditors no longer

seek to pursue the involuntary petition. The unopposed Motion to Abstain is scheduled for hearing

tomorrow, February 19 at 1:30 pm (ET).

3. On February 14, 2020, the petitioning creditors filed a motion to dismiss the

involuntary petition [D.I. 34]. The motion also is scheduled to be heard at tomorrow’s hearing.

4. Because a dismissal of this case is now certain and the motion to abstain is

unopposed, on February 15, the Receiver circulated to the petitioning creditors a proposed order

dismissing this case under Bankruptcy Code § 305(a) and resolving all pending motions (the


2 RLF1 22924068v.1

Motion to Abstain, the motion to dismiss, and the Receiver’s motion under Bankruptcy Code §

543). The proposed order also provides that nothing in the order will affect whatever rights the

Receiver may have in the Receivership Action. A copy of the proposed order is attached as Exhibit

A (the “Proposed Order”). The U.S. Trustee does not object to entry of the Proposed Order.

5. After this case is dismissed and returned to the District Court, the Receiver will

consider whether to file a motion in the District Court to sanction one or more of the petitioning

creditors, pursuant to the District Court’s inherent power to sanction litigants in the Receivership

Action for bad faith conduct that has damaged the receivership. If filed, this motion would not be

a motion for sanctions under the Bankruptcy Code, but rather a motion for sanctions under the

District Court’s broad inherent authority to remedy harms to the receivership.

6. The petitioning creditors have informed the Receiver that they will not agree to the

Proposed Order dismissing the case unless it provides that any request for sanctions related to the

involuntary petition be brought before this Court only and not the District Court. In other words,

the petitioning creditors want the Receiver to waive any right to seek sanctions in the District Court

under whatever avenues are available to the Receiver in that court under non-bankruptcy law. The

Receiver does not agree to this. Indeed, the Receiver does not have the power to waive the District

Court’s authority to sanction even if he wanted to.

7. The petitioning creditors’ request is inappropriate, both procedurally (it was never

made by motion and was raised for the first time over the weekend), and substantively. If the

petitioning creditors object to the District Court’s authority to issue sanctions (including on the

basis that the District Court somehow cannot exercise that authority in light of this dismissal), then

they can raise that argument at the appropriate time in the District Court. Nothing in this Court’s


3 RLF1 22924068v.1

order dismissing this case should affect whatever rights the Receiver may hold in the District

Court, or the District Court’s ability to consider and resolve those rights.

8. The Receiver intends to address this issue at the hearing, and will ask the Court to

enter the Proposed Order dismissing this case.

[Signature page follows]


4 RLF1 22924068v.1


Respectfully submitted, /s/ Cory D. Kandestin Daniel J. DeFranceschi (No. 2732) Cory D. Kandestin (No. 5025) J. Zachary Noble (No. 6689) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 N. King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Facsimile: (302) 651-7701 Email: [email protected] [email protected] [email protected] -and- MAYNARD, COOPER & GALE, P.C. J. Leland Murphree Ryan Thompson 1901 Sixth Avenue North Suite 2400 Birmingham, AL 35203 (205) 254-1000 [email protected] [email protected] -and- John F. Kennedy, Court Appointed Receiver James F. Banter, counsel to Receiver JAMES-BATES-BRANNAN-GROOVER-LLP 231 Riverside Drive P.O. Box 4283 Macon, Georgia 31208-4283 (478) 742-4280 telephone (478)742-8720 facsimile [email protected] [email protected] Attorneys for Receiver


RLF1 22924068v.1

EXHIBIT A

Proposed Order


RLF1 22894136v.1



Alleged Debtor.

_____________________________________

) ) ) ) ) ) )


RE: D.I. 1

ORDER DISMISSING CASE

The Court having considered the motion (the “Motion”) of the Receiver1 in the above-

captioned bankruptcy case (the “Bankruptcy Case”) for abstention from the involuntary petition

pursuant to 11 U.S.C. § 305, or alternatively to dismiss under 11 U.S.C. § 303 or 1112; and the

Court having considered the Petitioning Creditors’ motion to dismiss the involuntary chapter 11

petition (the “Petitioning Creditors’ Motion”); the Court having jurisdiction over the Motion and

Petitioning Creditors’ Motion pursuant to 28 U.S.C. §§ 1334 and 157(b) and the Amended


dated February 29, 2012; the Court having determined that this is a core matter pursuant to 28

U.S.C. § 157(b)(2) and that the Court can enter a final order consistent with Article III of the

United States Constitution; the Court having found that notice of the Motion and Petitioning

Creditors’ Motion was appropriate; and after notice and a hearing having been held on February

19, 2020, on the Motion and Petitioning Creditors’ Motion; after due deliberation and sufficient

cause appearing therefor it is hereby:

ORDERED THAT the Bankruptcy Case is dismissed pursuant to 11 U.S.C. § 305(a);

and it is further



2 RLF1 22894136v.1

ORDERED THAT this Order resolves all pending motions in the Bankruptcy Case; and

it is further

ORDERED THAT this Order shall be effective immediately upon its entry; and it is

further

ORDERED THAT for the avoidance of doubt, nothing in this Order shall affect the

District Court’s ability to grant any relief in the Receivership Case as the District Court may

deem appropriate; and it is further

ORDERED THAT the Court shall retain jurisdiction over all matters involving the

interpretation or enforcement of this Order.






) ) ) ) ) ) )


CERTIFICATION OF COUNSEL RE: PETITIONING CREDITORS’ MOTION

TO DISMISS INVOLUNTARY CHAPTER 11 PETITION

The undersigned, counsel to Monroe Capital Credit Fund II LP (“Monroe”), Reputation Partners

LLC, and BSF Richmond, LP (collectively, the “Petitioning Creditors”) hereby certifies as follows:

1. On January 27, 2020, the Receiver filed the Receiver’s Motion for Abstention from

Involuntary Petition under 11 U.S.C. § 305, or Alternatively Dismissal under 11 U.S.C. §§ 303 and

1112(b) [D.I. 10] (the “Receiver Motion”). On January 29, 2020, the Court held an initial status

conference on the involuntary petition and the Receiver Motion (the “January 29 Status Conference”).

2. On February 4, 2020, the Petitioning Creditors filed their Motion of Petitioning Creditors

for Appointment of a Chapter 11 Trustee [D.I. 26] (the “Trustee Motion”).

3. On February 5, 2020, the Court, via a letter to counsel, requested a status conference on

both motions, and in a footnote, noted the availability of sanctions as a remedy if the involuntary petition

were unsuccessful (the “February 5 Letter”).

4. On February 6, 2020, the Court held another status conference (the “February 6 Status

Conference” and, with the January 29 Status Conference, the “Status Conferences”). After the February

6 Status Conference on the Receiver Motion and the Trustee Motion, the Court, in a letter ruling (the

“February 6 Letter” and, with the February 5 Letter, the “Letters”), scheduled a hearing with respect to

only the abstention portion of the Receiver Motion for February 19, 2020 at 1:30 p.m (the “February 19


Hearing”). Subsequently the Court set an objection deadline to the abstention portion of the Receiver

Motion for February 13, 2020.

5. As stated on the record at the February 19 Hearing, the Petitioning Creditors considered

the Court’s Letters and the Court’s statements at the Status Conferences and understood the Court’s

reluctance to get involved in this matter given the pending receivership in Georgia (the “Receivership

Proceeding”). Further, the Petitioning Creditors understood that dismissing the involuntary petition

promptly would be conduct consonant with the Court’s guidance and would greatly reduce the likelihood

of the Court awarding sanctions under section 303 of title 11 of the United States Code, 11 U.S.C. § 101

et seq., (the “Bankruptcy Code”).

6. Once that decision was made, it was communicated promptly to the Court and the

Receiver’s counsel with the intent that all parties could stop incurring unnecessary fees and expenses

with respect to the Receiver Motion. Thus, the Petitioning Creditors did not file what was then an

unnecessary response to the abstention portion of the Receiver Motion.

7. In addition, not filing a response to the abstention portion of the Receiver Motion allowed

the parties to stop making inflammatory and accusatory statements against each. Because the Petitioning

Creditors strongly disagreed with many of the factual allegations in the Receiver Motion, they were

prepared to file a fulsome objection disputing those allegations and contesting the legal grounds on which

the Receiver requested abstention. Further, the Petitioning Creditors intended to take the limited

discovery afforded by the Court in advance of the February 19 Hearing.

8. Instead, because section 303 of the Bankruptcy Code requires a motion for a petitioning

creditor to dismiss an involuntary petition, the Petitioning Creditors filed the Petitioning Creditors’


Motion to Dismiss Involuntary Chapter 11 Petition [D.I. 34] (the “Dismissal Motion”)1 on February 14,

2020. The Dismissal Motion sought dismissal pursuant to section 303(j) of the Bankruptcy Code.

9. The Petitioning Creditors’ decision not to reply to the abstention portion of the Receiver

Motion and to file the Dismissal Motion was a good faith effort to end the disputes before this Court and

allow all parties to walk away from unnecessary and heated litigation. It would have been antithetical

to those good faith efforts to file a vigorous opposition to make a record of opposition to the abstention

portion of the Receiver Motion.

10. It is for those foregoing reasons the Petitioning Creditors take issue with the Receiver’s

proposed order the (“Receiver Order”). First, the Receiver Order seeks to have this Court order dismissal

under section 305 of the Bankruptcy Code. As a procedural matter, the Petitioning Creditors did not

have a response date to the dismissal portion of the Receiver Motion nor had any hearing been set by the

Court on that portion of the motion.

11. More importantly, as was disclosed on the record at the February 19 Hearing, the Receiver

wants an order entered under section 305 of the Bankruptcy Code so that he can aver in the Receivership

Proceeding that this Court granted the Receiver Motion and that the Petitioning Creditors did not oppose

the Receiver Motion. Presumably the Receiver will further argue that the Petitioning Creditors agree to,

and are bound by the Receiver’s allegations of fact in the Receiver Motion because the Petitioning

Creditors did not file any opposition.

12. Thus, the Receiver seeks to use the Petitioning Creditors’ good faith efforts against them.

While knowing full well that the Petitioning Creditors disagreed with the facts and opposed abstention

on the merits, the Receiver’s Counsel admitted the Receiver will seek to create a false record of consent

in the Receivership Action.

1 Capitalized terms used herein but not otherwise defined shall have the meaning ascribed to them in the Dismissal Motion.


13. This Court instead dismissing the involuntary petition pursuant to section 303(j) of the

Bankruptcy Code, the section pursuant to which the Petitioning Creditors moved, protects the Petitioning

Creditors from the Receiver misrepresenting in the Receivership Action the Petitioning Creditors’

positions in this proceeding.

14. Further, while the Court indicated on the record that it was granting both motions in

dismissing the involuntary petition, the Petitioning Creditors believe it appropriate to deny all pending

motions as moot, including the Receiver Motion and the Trustee Motion. Denying both motions will

ensure that no party in the Receivership Action can argue that the Receiver Motion or Trustee Motion

were granted by this Court, and that no party agreed to any of the factual allegations set forth in those

motions. The record in the Receivership Action will thus remain neutral.

15. The Petitioning Creditors also object to the Receiver Order’s proposed provisions

regarding the authority of the district court in the Receivership Action. If the Petitioning Creditors agree

to that provision, it creates the implication that the Petitioning Creditors agree that the district court has

the jurisdiction and authority to issue sanctions related to this proceeding. As stated clearly on the record

at the February 19 Hearing, the Petitioning Creditors are not seeking to have this Court in any way or

fashion rule as to the district court’s jurisdiction or authority to sanction the Petitioning Creditors.

However, the Petitioning Creditors cannot agree to any provision that may imply their consent to

whatever jurisdiction the district court in the Receivership Action may choose to exercise with respect

to Sanctions.

16. Further, with respect to sanctions under the Bankruptcy Code, as stated at the February

19 Hearing, the Petitioning Creditors believe this Court has the exclusive jurisdiction to order sanctions

under the Bankruptcy Code. The Petitioning Creditors believe that there is a sufficient record before the

Court to find that sanctions are inappropriate, and unwarranted under the circumstances based on the

limited nature of the proceedings, the Petitioning Creditors’ voluntary withdrawal of the involuntary


petition, and the Petitioning Creditors’ good faith efforts to avoid further, unnecessary litigation efforts.

Should the Court reason that it is not appropriate to make such a ruling, the Petitioning Creditors believe

one of two other rulings are appropriate. The Court, based on the Receiver’s pleadings that state the

Petitioning Creditors’ did not oppose dismissal, can rule that the Receiver has consented to dismissal

and, consequently, that sanctions are not awardable under section 303(i) of the Bankruptcy Code.

Finally, the Court can rule that it will retain jurisdiction over any motion seeking sanctions under the

Bankruptcy Code.

17. The Petitioning Creditors have prepared a form of order (the “Proposed Order”) granting

the Dismissal Motion, dismissing all other motions as moot, and providing the Court with its choice of

the three above options with respect to sanctions. The Petitioning Creditors consent to the entry of the

Proposed Order containing any of those three provisions. A copy of the Proposed Order is attached as

Exhibit A.


WHEREFORE, the Petitioning Creditors respectfully request that, unless the Court has questions

or concerns, the Court enter the Proposed Order and select any of the three bracketed provisions that it

finds most appropriate.


POTTER ANDERSON & CORROON LLP /s/ Jeremy W. Ryan Jeremy W. Ryan (DE Bar No. 4057) R. Stephen McNeill (DE Bar No. 5210) 1313 North Market Street, Sixth Floor P.O. Box 951 Wilmington, Delaware 19801 Telephone: (302) 984-6000 Facsimile: (302) 658-1192 Email: [email protected] [email protected] -and- VEDDER PRICE P.C. Michael M. Eidelman 222 N. LaSalle Street, Suite 2600 Chicago, Illinois 60601 Telephone: (312) 609-7500 Facsimile: (312) 609-5005 Email: [email protected] Attorneys for the Petitioning Creditors


EXHIBIT A




) ) ) ) ) ) )

Chapter 11 Case No. 20-10034 (BLS) Re: Docket No. 1







Petitioning Creditors’ Motion pursuant to 28 U.S.C. §§ 1334 and 157(b) and the Amended Standing

Order of Reference from the United States District Court for the District of Delaware dated

February 29, 2012; the Court having determined that this is a core matter pursuant to 28 U.S.C.

§ 157(b)(2) and that the Court can enter a final order consistent with Article III of the United States

Constitution; the Court having found that notice of the Motion and Petitioning Creditors’ Motion

was appropriate; and after notice and a hearing having been held on February 19, 2020, on the

Motion and Petitioning Creditors’ Motion; after due deliberation and sufficient cause appearing

therefor it is hereby:

ORDERED THAT the Petitioning Creditors’ Motion is GRANTED as set forth herein;

and it is further



9

ORDERED THAT the Bankruptcy Case is dismissed pursuant to 11 U.S.C. § 303(j); and

it is further

ORDERED THAT all other pending motions in the Bankruptcy Case are dismissed as

moot; and it is further


further

ORDERED THAT because the Receiver has consented to the relief requested in the

Petitioning Creditors’ Motion, no sanctions are warranted pursuant to 11 U.S.C. § 303(i); and it is

further

ORDERED THAT based upon the record before the Court and the conduct of the

Petitioning Creditors, sanctions are not appropriate or warranted pursuant to 11 U.S.C. § 303(i);

and it is further

ORDERED THAT the Court shall retain exclusive jurisdiction over sanctions arising

from or relying upon the Bankruptcy Code or the Bankruptcy Rules, including 11 U.S.C. § 303(i);

and it is further]




RLF1 22942014v.1



Alleged Debtor.

_____________________________________

) ) ) ) ) ) )


CERTIFICATION OF COUNSEL

REGARDING PROPOSED ORDER DISMISSING CASE The undersigned certify as follows:

1. We are counsel to John F. Kennedy, the Receiver for the receivership estate of

Education Corporation of America and its affiliates in the receivership action (the “Receivership

Action”) pending in the United States District Court for the Middle District of Georgia (Case No.

5:18-cv-00388-TES) (the “District Court”).

2. At the hearing held on February 19 (the “Hearing”), the Court directed the parties

to confer on a proposed order dismissing the case, and to submit dueling proposed orders under

certification of counsel if they could not agree on a proposed order. The parties have been unable

to reach agreement on a proposed form of order, for the reasons expressed more fully below, as

the Petitioning Creditors seek an order that dismisses the case on grounds that are inconsistent with

the Court’s ruling from the bench at the hearing and further containing provisions that appear

designed to affect future proceedings in the Receivership Action, including an affirmative finding

from this Court that they have not acted in bad faith.

3. Attached hereto as Exhibit A is the Receiver’s proposed form of order (the

“Proposed Order”). It is the same Proposed Order that the Receiver circulated to the Petitioning

Creditors on February 15 and that the Receiver shared with the Court at the Hearing, with one


2 RLF1 22942014v.1

revision to the recital paragraph to reflect that the Court held the Hearing and incorporating the

Court’s ruling at the Hearing. A redline reflecting the changes made to the proposed form of order

is attached hereto as Exhibit B.

4. The order is straightforward: it dismisses this case under Bankruptcy Code § 305(a)

and resolves all pending motions (the Receiver’s motion to abstain/dismiss and motion under

Bankruptcy Code § 543, and the Petitioning Creditors’ motion to dismiss and motion for a chapter

11 trustee). Dismissal under Bankruptcy Code § 305(a) is appropriate because the Receiver

requested such a dismissal in his unopposed motion to abstain and dismiss, and the Court found at

the hearing that the Receiver carried his burden of proof. See Audio File of Hearing [D.I. 41], at

22:40–22:55 (“I am satisfied that the parties have carried their burden with respect to the need for

abstention and frankly ultimately dismissal, both of which are unopposed here.”).1

5. The Proposed Order also provides that “for the avoidance of doubt, nothing in this

Order shall affect the District Court’s ability to grant any relief in the Receivership Case as the

District Court may deem appropriate.” The purpose of this language is to ensure that nothing in

the order affects any non-bankruptcy rights that the Receiver may have in the Receivership Action,

including a motion for sanctions or other relief sought in the Receivership Action under the District

Court’s inherent powers and jurisdiction. The Receiver agrees that a motion for sanctions arising

under the Bankruptcy Code, such as a motion seeking sanctions under Bankruptcy Code § 303(i),

would be within this Court’s jurisdiction. However, the Receiver does not intend to pursue such

a motion in the District Court, and instead intends to pursue relief for damages caused to the

Receivership, as a result of the filing of, and subsequent proceedings in, the involuntary bankruptcy

1 As of the time of filing this certification of counsel, the transcript was not yet available

and thus citations are of the audio file located at D.I. 41.


3 RLF1 22942014v.1

cases, under the non-bankruptcy avenues available to him in the District Court. Further, the

Receiver’s Proposed Order does not make any jurisdictional predetermination, as the District Court

has the inherent power to sanction a party sua sponte without a motion from the Receiver.

6. Prior to the Hearing, the Petitioning Creditors took the position that any motion for

sanctions must be brought in this Court. See Exhibit C (email from Petitioning Creditors’ counsel

on 2/18 at 11:29 am: “the Petitioning Creditors maintain that any request for sanctions related to

the involuntary petition must be brought before the bankruptcy court”). This broad language

appeared to include even motions for sanctions in the District Court under non-bankruptcy law.

At the Hearing, Petitioning Creditors’ counsel stated that the Petitioning Creditors were insisting

that only motions for sanctions under the Bankruptcy Code be heard in this Court. See Audio File

of Hearing [D.I. 41], at 7:03–7:15 (Petitioning Creditors’ counsel: “[O]ur concern is that sanctions

to be awarded under the Bankruptcy Code we believe are in your [the Court’s] exclusive authority

and your exclusive jurisdiction”); id. at 7:20–7:30 (“[S]anctions under the Code [should be] before

your Court”); id. at 7:30–7:40 (“We don’t contest their right to run down to Georgia on whatever

theory they can come up with outside of the Code”). If that is the case, then the parties are in

agreement. Motions under Bankruptcy Code § 303(i) are within this Court’s jurisdiction. Motions

under the District Court’s inherent powers as the overseer of the Receivership Action are within

that court’s jurisdiction. To eliminate any doubt, the Receiver has no intention of filing a motion

for sanctions or relief under Bankruptcy Code § 303(i) in the District Court, and instead will seek

relief there under non-bankruptcy avenues within that court’s jurisdiction.

7. However, in their own proposed order, the Petitioning Creditors have laid

landmines that appear to be designed to affect future proceedings in the Receivership Action and

would open the door for a jurisdictional quagmire that will inevitably force this Court to continue


4 RLF1 22942014v.1

dealing with a proceeding that is to be dismissed. First, they ask for their own motion to be granted

and the Receiver’s motion to abstain to be denied as moot. Although the Petitioning Creditors

filed a motion under § 303, this motion did not supplant the Receiver’s motion (the Court had two

pending motions), and the Court has found that the Receiver has carried his burden of showing an

entitlement to dismissal under § 305(a). Further, the Petitioning Creditors’ request for a dismissal

under § 303 appears to be a thinly veiled trap designed to help them in any future actions taken in

the Receivership Action, including without limitation, sanctions, whether on motion of the

Receiver or sua sponte by the District Court. The narrative that the Petitioning Creditors set forth

in their motion to dismiss is one-sided and portrays their acts in filing this case in an unreasonably

rosy-hued light. The Receiver is concerned that the Petitioning Creditors would attempt to use the

granting of their motion and denial of the Receiver’s motion as a sword in the Receivership Action,

by claiming that by approving their motion, this Court has stamped their narrative with its

approval. The Receiver disagrees with any such narrative.

8. Second, the petitioning creditors have not specified in their voluntary motion to

dismiss or proposed order whether their proposed dismissal is under § 303(j)(1) (dismissal on

motion of petitioner) or § 303(j)(2) (dismissal on consent of parties), instead stating that the

dismissal is under “303(j).” The Receiver is concerned that the Petitioning Creditors would

attempt to portray any order under § 303(j) as a “consent” order under § 303(j)(2) that they will

wield as a sword in future proceedings in the Receivership Court. For the avoidance of doubt, the

Receiver has not “consented” to dismissal nor, by extension, extinguishment of his rights under §

303(i), should the Court dismiss on Petitioning Creditors’ proposed § 303(j) grounds. The

Receiver has sought a dismissal under § 305(a) pursuant to his motion to abstain, and if there is to

be a dismissal under § 303(j), then it is under § 303(j)(1) (on motion of the petitioning creditor),


5 RLF1 22942014v.1

with the Receiver’s rights under § 303(i) preserved in full. However, all of this is completely

unnecessary. Dismissal under § 305(a) renders the issues of consent versus non-consent under §§

303(j)(1) and (2), as well as sanctions or damages under § 303(i), moot and brings a clean and

efficient end to this case so that the proceedings in the District Court can continue. In reality, by

filing their motion to dismiss, the Petitioning Creditors have conceded that the Receiver was

correct in that the involuntary petitions should never have been filed in the first place.

9. Third, the Petitioning Creditors’ request for a finding that no sanctions are

warranted under Bankruptcy Code § 303(i) or that no bad faith has occurred is completely

unsupported and wholly inappropriate. That issue was not before the Court and is not ripe. There

has been no motion under § 303(i), and thus the Court should not make findings on this non-

existent motion. Again, this request appears to be designed to affect any sanctions proceedings in

the District Court, because to obtain sanctions in the District Court under its inherent power to

sanction, the Receiver may need to show bad faith. Thus, if the order dismissing this case includes

a finding that sanctions are not warranted under § 303(i) (which likewise is based on bad faith),

then the Petitioning Creditors likely would argue that this Court’s order is res judicata on bad faith

and precludes the District Court in any proceedings under its non-bankruptcy power to sanction.

Any order dismissing this case should not prejudice the Receiver in future proceedings in the

Receivership Action, particularly on an issue that has yet to be raised and litigated, and for which

there is no record. The Petitioning Creditors cannot institute involuntary chapter 11 proceedings,

cause the Receiver to incur substantial costs and expenses to defend against it including seeking

its dismissal, and then when they see the inevitable result that the involuntary petition will be

dismissed, turn around and file their own motion to voluntarily dismiss along with a subsequent

order seeking to shield themselves from sanctions in the Bankruptcy Court and use that very same


6 RLF1 22942014v.1

order as a sword against damages or sanction in the District Court. This is the same kind of

behavior by the Petitioning Creditors that resulted in the District Court opinion issued on February

3, 2020.

10. Finally, the Petitioning Creditors’ reservation of jurisdiction language is vague.

Their proposed order provides that “the Court shall retain exclusive jurisdiction over sanctions

arising from or relying upon the Bankruptcy Code or the Bankruptcy Rules.” If this language

means that this Court is retaining jurisdiction over sanctions motions arising under the Bankruptcy

Code, but is not taking away jurisdiction from the District Court on any motion for sanctions under

non-bankruptcy sources of authority such as the District Court’s inherent powers, then that is

consistent with the Receiver’s understanding. But the words “relying upon” the Bankruptcy Code

are vague, because they could be construed to mean that this Court is taking jurisdiction over any

sanctions issues relating in any way to the Bankruptcy Code, which broadly construed could mean

the District Court’s inherent powers to sanction sua sponte or pursuant to a motion. Indeed, shortly

before sending their motion, the Petitioning Creditors stated that in their view, “the bankruptcy

court retains exclusive jurisdiction over sanction[s]”. Exhibit C (email from Petitioning Creditors’

counsel on 2/20 at 11:11 am). This is why the Receiver’s Proposed Order contains the reservation

of rights about the District Court’s power: because the petitioning creditors have been vague about

exactly which sanctions this Court is reserving jurisdiction over. To be clear, the Receiver does

not believe that this Court can hamstring the inherent powers of the District Court by ruling on the

District Court’s jurisdictional reach.

11. In sum, the Receiver’s Proposed Order simply dismisses under § 305(a), resolves

all motions, and makes clear that it is not affecting the District Court’s powers under non-

bankruptcy law. And the Receiver agrees he will not move under Bankruptcy Code § 303(i) in the


7 RLF1 22942014v.1

District Court, which should allay the Petitioning Creditors’ concerns. At the Hearing, the Court

provided the Petitioning Creditors with the opportunity to explain why the Receiver’s Proposed

Order would not work. Rather than doing so, the Petitioning Creditors have created a whole new

order that they perceive would be best for them in future proceedings in the Receivership Action

or otherwise would create a procedural and jurisdictional quagmire that is not in the best interests

of creditors or the judicial economy of this Court and the District Court. For the foregoing reasons,

the Receiver requests that the Court enter the Proposed Order under § 305(a) at its earliest

convenience.

[Signature page follows]


8 RLF1 22942014v.1


Respectfully submitted, /s/ Cory D. Kandestin Daniel J. DeFranceschi (No. 2732) Cory D. Kandestin (No. 5025) J. Zachary Noble (No. 6689) RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 N. King Street Wilmington, Delaware 19801 Telephone: (302) 651-7700 Facsimile: (302) 651-7701 Email: [email protected] [email protected] [email protected] -and- MAYNARD, COOPER & GALE, P.C. J. Leland Murphree Ryan Thompson 1901 Sixth Avenue North Suite 2400 Birmingham, AL 35203 (205) 254-1000 [email protected] [email protected] -and- John F. Kennedy, Court Appointed Receiver James F. Banter, counsel to Receiver JAMES-BATES-BRANNAN-GROOVER-LLP 231 Riverside Drive P.O. Box 4283 Macon, Georgia 31208-4283 (478) 742-4280 telephone (478)742-8720 facsimile [email protected] [email protected] Attorneys for Receiver


RLF1 22942014v.1

EXHIBIT A Proposed Order


RLF1 22894136v.1



Alleged Debtor.

_____________________________________

) ) ) ) ) ) )


RE: D.I. 1













19, 2020, on the Motion and Petitioning Creditors’ Motion; and the Court being satisfied that

good grounds exist for abstention and dismissal for the reasons stated at the hearing; after due

deliberation and sufficient cause appearing therefor it is hereby:



2 RLF1 22894136v.1


and it is further


it is further


further









RLF1 22942014v.1

EXHIBIT B Redline


RLF1 22894136v.1



Alleged Debtor.

_____________________________________

) ) )))))


RE: D.I. 1













19, 2020, on the Motion and Petitioning Creditors’ Motion; and the Court being satisfied that

good grounds exist for abstention and dismissal for the reasons stated at the hearing; after due

deliberation and sufficient cause appearing therefor it is hereby:



2 RLF1 22894136v.1


and it is further


it is further


further









RLF1 22942014v.1

EXHIBIT C Correspondence


1

Jerominski, Ann

From: Ryan, Jeremy W. <[email protected]>Sent: Thursday, February 20, 2020 1:23 PMTo: Kandestin, Cory D.; McNeill, R. Stephen; Eidelman, Michael M.

([email protected])Cc: DeFranceschi, Daniel J.; Noble, J. Zachary; Tres Cleveland; Leland Murphree; James

BanterSubject: RE: ECA - Proposed Dismissal OrderAttachments: ECA - Petitioning Creditors_ Proposed Dismissal Order.DOCX

Attached is our proposed order. We intend to offer Judge Shannon the option of which of the three paragraphs related to sanctions under the Bankruptcy Code that he deems appropriate should he choose to enter the Petitioning Creditors’ proposed order.

Jeremy W. Ryan | Partner Potter Anderson & Corroon LLP | 1313 N. Market Street, 6th Floor | Wilmington, DE 19801-6108 T 302.984.6108 | F 302.658.1192 [email protected] | potteranderson.com


From: Kandestin, Cory D. <[email protected]> Sent: Thursday, February 20, 2020 12:29 PM To: Ryan, Jeremy W. <[email protected]>; McNeill, R. Stephen <[email protected]>; Eidelman, Michael M. ([email protected]) <[email protected]> Cc: DeFranceschi, Daniel J. <[email protected]>; Noble, J. Zachary <[email protected]>; Tres Cleveland <[email protected]>; Leland Murphree <[email protected]>; James Banter <[email protected]> Subject: [EXT] RE: ECA ‐ Proposed Dismissal Order Jeremy,

1. Given that the Court already granted the motion to abstain, the dismissal should be under 305, and the receiver’s motion cannot (and should not) be denied as moot. The Bankruptcy Court already decided this issue and stated findings of fact and conclusions of law in open court.

2. Yesterday at the hearing you told the Court that you were asking the Court to retain jurisdiction only

over sanctions brought under the Bankruptcy Code or Rules, which to us means, for example, a motion under Bankruptcy Code § 303(i). Are you now reverting to your original pre-hearing position that the Bankruptcy Court should retain jurisdiction over any motion for sanctions (which would appear to include a motion for sanctions brought in the district court under non-bankruptcy law, such as under theDistrict Court’s inherent powers)? The Bankruptcy Court yesterday indicated it was not willing to tell the District Court what it could and couldn’t consider or do.


2

1. Your request for a finding that no bad faith occurred/a finding that sanctions are not warranted under 303(i) is not appropriate to include in an order dismissing the case. There has been no motion under 303(i), the issue was not before Judge Shannon, and the issue is not even ripe – Judge Shannon is not dismissing under 303(j). It also appears designed to affect future sanctions proceedings in the district court.

2. Do you have an order that we can look at before 1:30 pm, as we will need to get orders to the Court shortly thereafter if there is no agreement. We would like to see the order that you are proposing.

Cory

Cory D. Kandestin Richards, Layton & Finger, P.A. (302) 651‐7802 | [email protected]

The information contained in this electronic communication is intended only for the use of the individual or entity named above and may be privileged and/or confidential. If the reader of this message is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution or copying of this communication is strictly prohibited by law. If you have received this communication in error, please immediately notify us by return e-mail or telephone (302-651-7700) and destroy the original message. Thank you.

From: Ryan, Jeremy W. <[email protected]> Sent: Thursday, February 20, 2020 11:11 AM To: Kandestin, Cory D. <[email protected]>; McNeill, R. Stephen <[email protected]>; Eidelman, Michael M. ([email protected]) <[email protected]> Cc: DeFranceschi, Daniel J. <[email protected]>; Noble, J. Zachary <[email protected]>; Tres Cleveland <[email protected]>; Leland Murphree <[email protected]>; James Banter <[email protected]> Subject: RE: ECA ‐ Proposed Dismissal Order

Cory, As stated at the hearing yesterday we believe dismissal should be under section 303 and that the bankruptcy court retains exclusive jurisdiction over sanction, if not a finding that based on the conduct that occurred before the bankruptcy court, sanctions under 303(i) are not warranted. In addition we believe all other motions should be moot in light of such dismissal under section 303. Please confirm whether such revisions are acceptable to the Receiver. Jeremy


3



From: Kandestin, Cory D. <[email protected]> Sent: Thursday, February 20, 2020 10:30 AM To: Ryan, Jeremy W. <[email protected]>; McNeill, R. Stephen <[email protected]>; Eidelman, Michael M. ([email protected]) <[email protected]> Cc: DeFranceschi, Daniel J. <[email protected]>; Noble, J. Zachary <[email protected]>; Tres Cleveland <[email protected]>; Leland Murphree <[email protected]>; James Banter <[email protected]> Subject: [EXT] RE: ECA ‐ Proposed Dismissal Order Jeremy et al., I am following up about the below. This is the same order that we have been asking for comments on since last Saturday (Feb. 15). The Court encouraged us to work together to come up with an order to submit today, and to accomplish that we sent you our order again immediately after the hearing yesterday. The order is short and straightforward, but we still have not heard back from you. Please let us know your status. Cory



From: Kandestin, Cory D. Sent: Wednesday, February 19, 2020 2:57 PM To: 'Ryan, Jeremy W.' <[email protected]>; '[email protected]' <[email protected]>; Eidelman, Michael M. ([email protected]) <[email protected]> Cc: DeFranceschi, Daniel J. <[email protected]>; Noble, J. Zachary <[email protected]>; 'Tres Cleveland' <[email protected]>; Leland Murphree <[email protected]>; James Banter <[email protected]> Subject: RE: ECA ‐ Proposed Dismissal Order Jeremy et al.,


4

Attached please find a copy of the Receiver’s proposed order dismissing the case. Based on the Court’s granting of the motion to abstain and its comments at the hearing, the Receiver stands by this order, which has not changed from what we circulated on Saturday. Per the Court’s comments at the hearing, please send us the petitioning creditors’ proposed form of order, and a redline against ours, so that we can see if there is a path forward or whether dueling orders will be necessary. Many thanks, Cory


From: Kandestin, Cory D. Sent: Tuesday, February 18, 2020 12:06 PM To: 'Ryan, Jeremy W.' <[email protected]> Subject: RE: ECA ‐ Proposed Dismissal Order Jeremy, There are numerous motions pending all of which the proposed order resolves, and I’m just trying to understand what tomorrow’s hearing will be focused on. Is there anything in the proposed order other than the fourth paragraph (nothing affect’s receiver’s rights in receivership court) that your side objects to? Cory


From: Ryan, Jeremy W. <[email protected]> Sent: Tuesday, February 18, 2020 11:53 AM To: Kandestin, Cory D. <[email protected]>; McNeill, R. Stephen <[email protected]> Cc: DeFranceschi, Daniel J. <[email protected]>; Noble, J. Zachary <[email protected]> Subject: RE: ECA ‐ Proposed Dismissal Order

Cory, You have our moving papers. If you object, you should file an objection with your grounds for objection. Jeremy


5



From: Kandestin, Cory D. <[email protected]> Sent: Tuesday, February 18, 2020 11:39 AM To: Ryan, Jeremy W. <[email protected]>; McNeill, R. Stephen <[email protected]> Cc: DeFranceschi, Daniel J. <[email protected]>; Noble, J. Zachary <[email protected]> Subject: [EXT] RE: ECA ‐ Proposed Dismissal Order Jeremy, Thank you. We want to make sure that we fully understand what the petitioning creditors oppose. Can you please confirm that the issue identified in your email below is petitioning creditors’ only dispute with the proposed order? Cory



From: Ryan, Jeremy W. <[email protected]> Sent: Tuesday, February 18, 2020 11:29 AM To: Kandestin, Cory D. <[email protected]>; McNeill, R. Stephen <[email protected]> Cc: DeFranceschi, Daniel J. <[email protected]>; Noble, J. Zachary <[email protected]> Subject: RE: ECA ‐ Proposed Dismissal Order

Cory, As I stated yesterday, the Petitioning Creditors maintain that any request for sanctions related to the involuntary petition must be brought before the bankruptcy court. Regards, Jeremy


6



From: Kandestin, Cory D. <[email protected]> Sent: Tuesday, February 18, 2020 10:41 AM To: Ryan, Jeremy W. <[email protected]>; McNeill, R. Stephen <[email protected]> Cc: DeFranceschi, Daniel J. <[email protected]>; Noble, J. Zachary <[email protected]> Subject: [EXT] RE: ECA ‐ Proposed Dismissal Order Jeremy, Steve, Just following up about the proposed order. Jeremy, based on our call yesterday, it sounds like the petitioning creditors may have an issue. We’d like to know formally what the issues are, if any, in advance of the hearing, so that we can identify them for the Court and so the judge is not blind‐sided. Cory



From: Kandestin, Cory D. Sent: Saturday, February 15, 2020 12:57 PM To: [email protected]; '[email protected]' <[email protected]> Cc: DeFranceschi, Daniel J. <[email protected]>; Noble, J. Zachary <[email protected]> Subject: ECA ‐ Proposed Dismissal Order

Jeremy, Steve,

In light of the Receiver’s motion to abstain and the petitioning creditors’ motion to dismiss, it makes sense to have one order dismissing this case and resolving all pending motions. Attached please find such an order, which we will ask the Court to enter. Please let us know if the petitioning creditors have any comments to it.


7

Cory

Cory D. Kandestin Richards, Layton & Finger, P.A. 302‐651‐7802


Exhibit “F” to Motion for Sanctions

Proposed Order


IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF GEORGIA

MACON DIVISION

VC MACON GA, LLC

Plaintiff,

v.

VIRGINIA COLLEGE, LLC; and

EDUCATION CORPORATION OF

AMERICA,

Defendants.

)

)

)

)

)

)

)

)

)

)

)

Civil Action No.

5:18-cv-00388-TES

ORDER GRANTING RECEIVER’S EXPEDITED MOTION FOR

SANCTIONS; ENTRY OF AN INJUNCTION AND RELATED RELIEF

This matter came to be heard upon the Receiver’s1 Expedited Motion for Sanctions; Entry

of an Injunction and Related Relief (Doc. __) (the “Motion”); and it appearing that notice of the

Motion provided is appropriate and sufficient under the circumstances and that no other or further

notice need be given; and it appearing that the relief requested is in the best interests of the

Receivership Estate, its creditors, and other parties in interest; and after due deliberation and

sufficient cause appearing therefor,

IT IS HEREBY FOUND, DETERMINED, AND CONCLUDED THAT:

1. The findings and conclusions set forth herein constitute the Court’s findings of fact

and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure (the “Rules”).

2. To the extent any of the following findings of fact constitute conclusions of law,

they are adopted as such. To the extent any of the following conclusions of law constitute findings

of fact, they are adopted as such.

1 Capitalized terms not defined herein shall have the meanings ascribed to such terms in the Motion.


2

3. The Court has jurisdiction over this matter and over the property of the

Receivership Estate pursuant to 28 U.S.C. §§ 2001, 2002, and 2004, Rule 66 of the Rules, and this

Court’s broad equitable powers.

4. Having determined that an urgent need exists for the relief requested in the Motion,

the Court hereby orders the following briefing schedule for the Motion:

All responses to the Motion shall be filed before 12:00 p.m. EST, March 2,

2020;

All replies to any responses to the Motion shall be filed before 12:00 p.m. EST,

March 6, 2020;

A hearing on the Motion and any other documents filed related to the Motion

shall be held at 10:00 a.m. EST, March 10, 2020.

5. The terms and conditions of this Order shall be immediately effective and

enforceable upon its entry.

6. This Court shall retain all jurisdiction over any and all matters arising from or

related to the interpretation or implementation of this Order.

Dated:

U.S. District Court Judge
