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2706449.1 CRO MOTION

SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen

ter Drive, Suite 250

Costa Mesa, California 92626

Tel 714 445‐1000 • Fax 714 445‐1002

SMILEY WANG-EKVALL, LLP Lei Lei Wang Ekvall, State Bar No. 163047 [email protected] Robert S. Marticello, State Bar No. 244256 [email protected] Michael L. Simon, State Bar No. 300822 [email protected] 3200 Park Center Drive, Suite 250 Costa Mesa, California 92626 Telephone: 714 445-1000 Facsimile: 714 445-1002 Proposed Attorneys for Debtors and Debtors-in-Possession

UNITED STATES BANKRUPTCY COURT

CENTRAL DISTRICT OF CALIFORNIA

SANTA ANA DIVISION

In re WJA ASSET MANAGEMENT, LLC,

Debtor and Debtor-in-Possession.

Case No. 8:17-bk-11996-SC Chapter 11 (Jointly Administered with Case Nos. 8:17-bk-11997-SC; 8:17-bk-11998-SC; 8:17-bk-11999-SC; 8:17-bk-12000-SC; 8:17-bk-12001-SC; 8:17-bk-12002-SC; 8:17-bk-12003-SC; 8:17-bk-12004-SC; 8:17-bk-12005-SC; 8:17-bk-12006-SC; 8:17-bk-12008-SC; 8:17-bk-12009-SC; 8:17-bk-12010-SC; 8:17-bk-12011-SC; 8:17-bk-12012-SC; 8:17-bk-12013-SC; 8:17-bk-12014-SC; 8:17-bk-12015-SC; 8:17-bk-12016-SC; 8:17-bk-12018-SC; and 8:17-bk-12019-SC) DEBTORS' MOTION FOR ENTRY OF AN ORDER PURSUANT TO 11 U.S.C. § 363(b) OR 11 U.S.C. § 105(a) AUTHORIZING RETENTION OF (1) HOWARD B. GROBSTEIN AS CHIEF RESTRUCTURING OFFICER AND (2) GROBSTEIN TEEPLE LLP TO ASSIST THE CRO; MEMORANDUM OF POINTS AND AUTHORITIES; AND DECLARATIONS OF HOWARD B. GROBSTEIN AND WILLIAM JORDAN IN SUPPORT [No Hearing Required Pursuant to Local Bankruptcy Rule 9013-1(o)]

Affects 5827 WINLAND HILLS DRIVE DEVELOPMENT FUND, LLC

Affects ALABAMA HOUSING FUND, LLC

Affects CA EXPRESS FUND, LLC

Affects CA SEE JANE GO FUND, LLC

Affects CA WHIRL FUND, LLC

Affects CLAIRTON RESIDENTIAL RENEWAL, LLC

Affects EQUITY INDEXED MANAGED FUND, LLC

Affects LUXURY ASSET PURCHASING INTERNATIONAL, LLC

Affects LVNV MULTI FAMILY LLC

Affects PMB MANAGED FUND, LLC

Affects PROSPER MANAGED FUND, LLC

Affects TD OPPORTUNITY FUND,

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2706449.1 2 CRO MOTION

SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

LLC

Affects TD REO FUND, LLC

Affects URBAN PRODUCE FUND, LLC

Affects WHIRL FUND, LLC

Affects WJA EXPRESS FUND, LLC

Affects WJA REAL ESTATE OPPORTUNITY FUND I, LLC

Affects WJA REAL ESTATE OPPORTUNITY FUND II, LLC

Affects WJA SECURE REAL ESTATE FUND, LLC

Affects WJA SECURE INCOME FUND, LLC

Affects WILLIAM JORDAN INVESTMENTS, INC.

Affects All Debtors

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2706449.1 i TABLE OF CONTENTS/AUTHORITIES

SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

TABLE OF CONTENTS Page

I. INTRODUCTION .................................................................................................... 1

II. BACKGROUND FACTS.......................................................................................... 2

A. Organization and Background of the Debtors .............................................. 2

B. Summary of the Assets of the Debtors ......................................................... 3

C. TD Opportunity Fund and TD REO .............................................................. 4

D. Events Leading to the Instant Case ........................................................................ 6

III. The Debtors' Chapter 11 Strategy........................................................................... 7

IV. MR. GROBSTEIN'S PROPOSED RETENTION ..................................................... 8

V. DISINTERESTEDNESS OF GROBSTEIN TEEPLE ............................................. 10

VI. LEGAL ARGUMENT ............................................................................................. 11

VII. CONCLUSION ...................................................................................................... 14

DECLARATION OF HOWARD GROBSTEIN .................................................................. 15

DECLARATION OF WILLIAM JORDAN .......................................................................... 18

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2706449.1 ii TABLE OF CONTENTS/AUTHORITIES

SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

TABLE OF AUTHORITIES

Page

CASES

In re America West Airlines, 166 B.R. 908, 912 (Bankr. D. Ariz. 1994) .............................................................. 12

In re Continental Air Lines, Inc., 78 F.2d 1223 (5th Cir. 1986) ................................................................................. 11

In re Ernst Home Center, Inc., 209 B.R. 974, 979 (Bankr. W.D. Wash. 1997) ...................................................... 11

In re Lionel Corporation, 722 F.2d 1063, 1066 (2d Cir. 1983) ................................................................ 11, 12

In re Montgomery Ward Holding Corp., 242 B.R. 147, 153 (Bankr. D. Del. 1999) .............................................................. 11

In re Walter, 83 B.R. 14, 17 (BAP 9th Cir. 1998) ....................................................................... 11

STATUTES

11 U.S.C. § 101(14) ......................................................................................................... 11

11 U.S.C. § 105(a) ................................................................................................... passim

11 U.S.C. § 327 ............................................................................................................... 10

11 U.S.C. § 330 ............................................................................................................... 10

11 U.S.C. § 331 ............................................................................................................... 10

11 U.S.C. § 363 ............................................................................................................... 12

11 U.S.C. § 363(b) ................................................................................................. 1, 11, 13

11 U.S.C. §§ 1107(a) ....................................................................................................... 11

11 U.S.C. §§ 1108 ........................................................................................................... 11

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SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

TO THE HONORABLE SCOTT CLARKSON, UNITED STATES BANKRUPTCY

JUDGE:

WJA Asset Management, LLC, et al., the debtors and debtors-in-possession in the

above-captioned cases (collectively, the "Debtors"), hereby submit this motion for an

order pursuant to either 11 U.S.C. § 363(b) or 105(a) authorizing the continued retention

of Mr. Grobstein as their Chief Restructuring Officer ("CRO") and Grobstein Teeple LLP

("Grobstein Teeple") to assist him as CRO (the "Motion"). In support of the Motion, the

Debtors submit the following memorandum of points and authorities and the declarations

of Howard B. Grobstein and William Jordan in support thereof.

I. INTRODUCTION

By this Motion the Debtors seek an order authorizing the continued retention of

Howard B. Grobstein as CRO and Grobstein Teeple to assist him as CRO as of May 18,

2017 (the "Petition Date"). Mr. Grobstein will oversee and direct all aspects of the

Debtors' operations and guide the Debtors through the bankruptcy process quickly and

efficiently.

The retention of Mr. Grobstein is important and appropriate for multiple reasons.

The Debtors commenced these cases to liquidate their assets in an orderly fashion and

maximize the return for creditors and investors while also enfranchising such parties in

the process. Given Mr. Grobstein's extensive bankruptcy-related experience and

knowledge as a panel bankruptcy trustee, his retention should help to preserve and

optimize value available for the Debtors' creditors and investors. Also, prior to the

petition date, the Securities and Exchange Commission ("SEC") began to investigate the

Debtors. The installation of a neutral third party (who is also a bankruptcy trustee) to

oversee the Debtors' operations is meant to address any concerns of the SEC or other

parties.

The Debtors seek approval of the retention of Mr. Grobstein and Grobstein Teeple

and the terms of their employment pursuant to 11 U.S.C. § 363(b), or, alternatively,

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SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

§ 105(a). Mr. Grobstein and Grobstein Teeple were retained prior to the Debtors' petition

date to assist the Debtors in the orderly liquidation of their assets. Mr. Grobstein was

selected by the Debtors because of his unique experience as a chief restructuring officer,

bankruptcy trustee, and accountant to court appointed receivers in SEC regulatory

actions, as well as his background in real estate, forensic accounting, and judicial

receiverships. The Debtors' collective goal is to propose a chapter 11 plan permitting the

controlled disposition of their assets at optimal value.

Accordingly, the Debtors respectfully request that the Court enter an order

authorizing the continued retention of Mr. Grobstein as the Debtors' CRO and Grobstein

Teeple to assist him as CRO.

II. BACKGROUND FACTS

On May 18, 2017, the Debtors filed voluntary petitions under Chapter 11 of the

United States Bankruptcy Code. The Debtors continue to operate their businesses and

manage their affairs as debtors and debtors-in-possession.

The Debtors are part of a network of entities or "Funds" formed to offer a range of

investment opportunities to individuals. Many of the existing Funds are performing and

some Funds had substantial gains. However, as discussed in further detail below,

certain Funds, i.e., those invested in private trust deeds secured by real estate, suffered

losses. These cases were commenced to liquidate the Debtors' holdings and close out

the Funds in an orderly fashion to maximize the return for creditors and investors and to

distribute the proceeds in a manner consistent with the Bankruptcy Code's priority

scheme.

A. Organization and Background of the Debtors

William Jordan Investments, Inc. ("Advisor"), is a registered investment advisor.

WJA Asset Management, LLC ("Manager"), is the managing member of the Debtors, with

the exception of itself and Advisor. William Jordan is the President and sole owner of

Advisor and is the sole member and manager of Manager. (See Jordan Decl. ¶ 3.)

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SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

In 2010, Advisor began creating opportunities for its clients to invest in real estate

related assets and, in particular, private mortgages. The creation of new real estate

investment funds, as opposed to investing in existing third party funds, had several

benefits for the investors. First, it enabled the clients to invest in real estate without

having to personally purchase rental property or make a loan. Second, Advisor found it

difficult to vet existing funds to ensure that their assets did not suffer from lingering issues

arising from the 2008 financial crisis. Third, the creation of new funds could avoid the

hidden fees and costs included in other existing offerings and Manager could charge

lower fees. (See Jordan Decl. ¶ 4.)

Advisor's clients pursued investment opportunities by acquiring membership units

in one or more of the Funds.1 Each Fund is a limited liability company formed to pursue

a particular type of investment. The Funds typically raised investments by offering

membership units in the Funds through Private Placement Memoranda. Investors who

acquired membership units are members of the corresponding Debtor or Fund. Some

Funds invested in other Funds if, for example, the assets of such Funds were consistent

with the business purpose of the investing Fund and the investment could help to

diversify and reduce the risk of the investors' overall portfolio. Thus, there are Funds

owned by only individual investors and other Funds in which the investors are individuals

and other Funds. Some Funds and investors also participated in certain Funds by

making loans and receiving promissory notes in exchange. (See Jordan Decl. ¶ 5.)

Organizational charts of the Debtors are collectively attached hereto as Exhibit "1."

B. Summary of the Assets of the Debtors

Collectively, the Debtors hold the following types of assets: (1) cash; (2) real

estate; (3) deeds of trust; (4) promissory notes; and (5) stock or membership units in third

1 The term "Fund" refers to a Debtor other than Advisor, Manager, and TD REO, LLC. Funds with

"California" in its name are for California qualified purchasers and the similarly named Fund with "WJA" in its name is for SEC accredited investors.

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SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

party companies, which, in turn, either operate a business or own a real estate

development project. (See Jordan Decl. at ¶ 7.)

The Funds hold a variety of diverse and performing assets. For example, Urban

Produce Fund, LLC, holds stock in a third party entity called Urban Produce, Inc. Urban

Produce, Inc., is a vertical farming company that sells leafy greens and wheat grass to

companies such as PepsiCo and Jamba Juice. WJA Express Fund, LLC, also invested

in Urban Produce, Inc. Another notable investment for certain Funds is See Jane Go.

See Jane Go is a ride-hail service designed for women (i.e., women driving women),

which was conceived by Mr. Jordan's daughter. (See Jordan Decl. at ¶ 7.); see also Ex.

2.)

Other Funds invested in commercial real estate development products. WJA Real

Estate Opportunity I, LLC, holds a 38% ownership in a special purpose entity named

Boulder At Nellis, LLC, which, in turn, owns a retail shopping center in Las Vegas. WJA

Real Estate Opportunity II, LLC, purchased a vacant Ralphs in Long Beach, California,

invested $1.3 million in the project, re-developed the property and secured new retail

tenants, and then sold the property for a profit that was more than twice the amount

invested within 19 months. WJA Real Estate Opportunity Fund II, LLC, also holds

ownership interests in companies that own real property located at 902 State Street,

Lemont, IL 60539, which is in the process of being refinanced, and 418 apartment units in

Las Vegas, Nevada, which was rehabilitated and is in the process of being sold. WJA

Express Fund, LLC, and California Express Fund II, LLC, own 50% and 8%, respectively,

in Gothard Partners, L.P., which owns a car wash and retail buildings in Huntington

Beach, California. These are only a few of the types of assets owned by some of the

Funds. (See Jordan Decl. at ¶ 8.)

C. TD Opportunity Fund and TD REO

The losses experienced by some Funds are traceable to certain trust deed

investments. These losses are largely concentrated in the assets held by TD Opportunity

Fund, LLC ("TD Opportunity Fund"), and TD REO, LLC ("TD REO"). The first six Funds

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SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

created were WJA Secure Real Estate Fund, WJA Secure Income Fund, California

Indexed Growth Fund, Equity Indexed Managed Fund, PMB Managed Fund, and Secure

California Income Fund (collectively, the "Original Six Funds"). The Original Six Funds

each held a small pool of deeds of trust secured by real estate as well as other assets.

(See Jordan Decl. at ¶ 9.)

In June 2013, TD Opportunity Fund was formed. TD Opportunity Fund was

created and raised funds in order to make new loans secured by first-position deeds of

trust on real estate. The Original Six Funds invested in TD Opportunity Fund, which both

diversified and lessened the risk of the investors in the Original Six Funds by giving them

an interest in a larger pool of trust deeds. TD Opportunity Fund also issued promissory

notes to individuals. Initially, the loan opportunities were selected with the assistance of

a third party, Purchase Money Bank ("PMB"), and almost all of the loans made by TD

Opportunity Fund were accompanied by an appraisal from a licensed professional or by a

broker price opinion indicating a loan-to-value ratio that was typically between 60% to

70%. (See Jordan Decl. at ¶ 10.)

TD REO was created in August 2013. TD REO was formed to manage the

foreclosure process for loans in default. As a borrower defaulted, the loan and deed of

trust were assigned by the Fund that was the original lender, such as TD Opportunity, to

TD REO pursuant to a foreclosure agreement and/or a buyout agreement. TD REO

would foreclose on the collateral and sell it, or would reach a more favorable

accommodation. TD REO's obligations to repay the loans assigned to it are reflected as

loans to TD REO from the assigning Fund. The formation of TD REO centralized the

process for handling defaulted loans for TD Opportunity Fund and the Original Six Funds.

(See Jordan Decl. at ¶ 11.)

TD REO also has individual noteholders. Each individual noteholder of TD REO is

the product of a buyout agreement, which is essentially a form of guaranty. Generally

speaking, under the buyout agreement, TD REO would acquire a defaulted loan from the

individual who made the loan. TD REO would guaranty the payment of the principal of

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SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

the defaulted loan and would absorb any losses, and TD REO would be entitled to any

profits in excess of the principal amount. (See Jordan Decl. at ¶ 12.)

D. Events Leading to the Instant Case

A series of events led to losses for the Funds that invested in trust deeds and,

ultimately, these bankruptcy cases. First, the real property collateral securing the largest

single loan was condemned and the building was demolished. TD Opportunity Fund was

owed roughly $6,000,000 with principal and interest secured by real property in the city of

Baytown, Texas. The building on the property was a 100,000 square foot hospital that

was to be redeveloped into an assisted living facility. The valuations of the property

indicated a value between approximately $9,000,000 and $13,000,000. (See Jordan

Decl. at ¶ 13.)

The borrower defaulted on the Baytown loan. The borrower purportedly secured

take-out financing and Manager received repeated assurances from the new lender that it

would fund the take-out loan. In the meantime, the city sued the borrower in order to

force repairs to the building or have it torn down. Due to the borrower's default, TD REO

commenced foreclosure proceedings, however, by the time that TD REO foreclosed, the

city had already obtained a judgment against the borrower. The city subsequently had

the building demolished. TD REO is pursuing its options to recoup as much as possible

from this investment, but, at this time, the Baytown property has been marked down to

the value of the land. (See Jordan Decl. at ¶ 14.)

Second, the loans secured with the help of PMB generally underperformed. PMB

focused on smaller loans in less serviced areas of the country. Over the years, Manager

has found that these smaller loans have a higher rate of default. Moreover,

notwithstanding an otherwise meaningful equity cushion, the foreclosure costs, unpaid

taxes and, sometimes, damage to the property, create a potential for loss when these

smaller types of loans go into default. (See Jordan Decl. at ¶ 15.)

Third, the SEC and the California Department of Business Oversight ("CDOBO")

began investigating and/or auditing Advisor and other Debtors. The SEC and CDOBO

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SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

raised that annual audits were required by all of the Funds. As a result, Manager began

working proactively to secure the appropriate reviews and audits for the Funds involved.

SEC also raised concerns regarding documented loans between certain Funds. As of

the filing of the bankruptcy petition, an audit for TD REO is close to completion. The

Debtors will be seeking to employ audit firms to continue the audit process for the Funds

post-petition. (See Grobstein Decl. at ¶ 8.)

III. The Debtors' Chapter 11 Strategy

The Debtors commenced these cases to protect creditors and investors. The

Debtors are in the process of liquidating their assets in an orderly fashion. The Debtors

have discontinued creating additional funds, raising monies from investors, or making

new investments. (See Grobstein Decl. at ¶ 7; see also Jordan Decl. at ¶ 17.) A neutral

party and panel trustee, Mr. Grobstein of Grobstein Teeple, was retained as the CRO for

the Debtors pre-petition and is now overseeing and directing the Debtors' operations and

guiding the Debtors in bankruptcy. Mr. Grobstein's continued retention as CRO is the

subject of this Motion.

The Debtors' strategy is simple. The Debtors intend to confirm a plan that permits

them to continue the process they commenced pre-petition, i.e., the orderly liquidation of

their assets to maximize the return for investors and creditors, and to distribute the

proceeds in a manner consistent with the priority scheme in the Code. (See Grobstein

Decl. at ¶ 7.) The alternative, a "fire sale" of the Funds' assets through a receivership,

could severely impair the value available for investors and creditors.

A controlled liquidation of the Debtors' assets is important and could significantly

impact the return for investors and creditors. As discussed above, the assets of certain

Funds are performing and a forced sale could unnecessarily reduce the return for the

investors of those Funds. Also, the amount of losses in other Funds could be potentially

minimized by the additional time and value that an orderly process provides. For

example, TD REO holds an interest in a 10 acre piece of real property located at 5827

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SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

Winland Hills Dr., Rancho Santa Fe, California. Manager is working on entitlements to

enable the property to be developed as a senior care facility. The value of the Winland

Hills property is approximately $7.5 million but if certain entitlements are obtained the

value has been estimated to be as high as $15.4 million by Colliers International, and the

entitlement process is ongoing. (See Jordan Decl. at ¶ 18.) Thus, investors and

creditors should benefit greatly from the protections bankruptcy provides.

IV. MR. GROBSTEIN'S PROPOSED RETENTION

As set forth in the engagement letter attached as Exhibit "2," Mr. Grobstein is

proposed to be retained as the Debtors' CRO in order to oversee all aspects of the

Debtors' operations and the Debtors' bankruptcy proceedings with the goal of guiding the

Debtors towards a successful exit to their bankruptcy cases. As set forth in the

engagement letter, Mr. Grobstein shall have the sole and absolute authority and

discretion to direct and manage the operations of the Debtors and to direct the Debtors'

counsel in connection with the Debtors' bankruptcy cases as well as litigation and other

matters involving the Debtors. Mr. Grobstein shall be authorized to utilize the services of

Grobstein Teeple as necessary or appropriate to fulfill his duties as CRO, including,

without limitation, accounting services. (See Ex. 2 at 1.)

Mr. Grobstein and his staff will be paid on an hourly basis at their normal hourly

rates for their services, plus be reimbursed for costs. The current hourly rates are as set

forth in Exhibit "3" hereto. Mr. Grobstein's hourly rate is $425. The biographical

information for Mr. Grobstein and Grobstein Teeple is attached as Exhibit "4." Subject to

compliance with the "Jay Alix Protocol" implemented by the Office of the United States

Trustee and detailed below, Mr. Grobstein and Grobstein Teeple will invoice the Debtors

and be paid on a monthly basis without further notice, motion, or order of the Court.

Further, the Debtors are permitted to indemnify and hold harmless, including legal

defense costs, Grobstein Teeple and its representatives from any claim brought by a third

party asserting that Grobstein Teeple or any of its representatives were negligent in

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SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

providing the services covered by this letter. (See Ex. 2 at 2.) The Debtors submit that

the terms and conditions of the engagement letter were negotiated by the Debtors and

Mr. Grobstein at arm's length and in good faith.

Irrespective of any contrary provisions of the engagement letter or the foregoing,

Mr. Grobstein and Grobstein Teeple agree to comply with the "Jay Alix Protocol"

implemented by the Office of the United States Trustee, attached as Exhibit "5", including

the following provisions:

(a) In the event the Debtors, Mr. Grobstein or Grobstein Teeple seek to have any additional personnel assume executive officer positions other than Mr. Grobstein, or to materially change the terms of the engagement by modifying the functions of the executive officer personnel, a motion to modify the employment as such will be filed.

(b) No principal, employee, or independent contractor of Grobstein Teeple

and its affiliates will serve as a director of the Debtors during the pendency of the Debtors' chapter 11 cases.

(c) For a period of three (3) years after the conclusion of the engagement,

neither Grobstein Teeple nor any of its affiliates will make any investments in the Debtors.

(d) Grobstein Teeple shall file with the Court, with copies to the United

States Trustee and all official committees, a monthly report of staffing on the engagement for the previous month. Such report shall include the names and functions filled on the individuals assigned. All staffing shall be subject to review by the Court in the event an objection is filed.

(e) Grobstein Teeple shall file with the Court and provide notice to the

United States Trustee and any official committees, reports of compensation earned and expenses incurred on at least a quarterly basis. Such reports shall summarize the services provided, identify the compensation earned by each executive officer and staff employee provided, and itemize the expenses incurred. The notice shall provide a time period for objections. All compensation shall be subject to review by the Court in the event an objection is filed (i.e., a "negative notice procedure). The United States Trustee and any official committees will have 14 days from service of a report of compensation to file and serve on counsel for the Debtors any objection to such report.

Time records for all Grobstein Teeple personnel other than Mr. Grobstein shall (i) be

appended to the reports, (ii) contain detailed time entries describing the task(s) performed,

and (iii) be organized by project category. When Grobstein Teeple provides services at an

hourly rate, such personnel shall record their time entries in increments of no greater than

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2706449.1 10 CRO MOTION

SMILEY W

ANG‐EKVALL, LLP

3200 Park Cen



Tel 714 445‐1000 • Fax 714 445‐1002

one-half hour (.5). All compensation shall be subject to review by the Court in the event an

objection is filed. The first quarterly report will be submitted forty-five (45) days from the end

of the first calendar quarter after the Petition Date and will cover the period to and including

the last day of the first quarter after the Petition Date. This procedure will continue at three

month intervals thereafter.

Because Grobstein Teeple is not being employed as a professional under § 327, it will

not be submitting regular fee applications pursuant to §§ 330 and 331. However, Grobstein

Teeple will submit certain reports as described above.

V. DISINTERESTEDNESS OF GROBSTEIN TEEPLE

Although the Debtors do not propose to retain Grobstein Teeple under § 327,

Grobstein Teeple has nonetheless performed a conflict check and, to the best of its

knowledge, does not hold any interest adverse to the interests of the Debtors' estates.

(See Grobstein Dec at ¶ 10.)

Grobstein Teeple has agreed not to share with any person or entity any

compensation received by it in the Debtors' cases, except as among the members,

associates and employees of Grobstein Teeple. Other than as disclosed herein, neither

Grobstein Teeple, nor any of its principals, employees, agents or affiliates has any

connection with the Debtors, its creditors, the United States Trustee or any other party

with an actual or potential interest in the Debtors' cases or their respective attorneys or

accounts. If Grobstein Teeple discovers information that contradicts such, Grobstein

Teeple will file a supplemental disclosure with the Court. (See Grobstein Dec at ¶ 11.)

Grobstein Teeple has not been retained to assist any entity or person other than

the Debtors on matters relating to, or in connection with, the Debtors' cases. If this Court

approves the proposed retention of Grobstein Teeple by the Debtors, Grobstein Teeple

will not accept any engagement or perform any services for any entity or person other

than the Debtors in their cases. (See Grobstein Dec at ¶ 12.)

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2706449.1 11 CRO MOTION

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The Debtors paid Grobstein Teeple a $70,000.00 retainer prior to the Petition

Date. Grobstein Teeple has returned the unused portion of the pre-petition retainer to the

Debtors. The Debtors do not owe Grobstein Teeple any unpaid balance for prepetition

services. (See Grobstein Dec at ¶ 3.)

Accordingly, the Debtors believe that Grobstein Teeple is a "disinterested person"

as defined in § 101(14).

VI. LEGAL ARGUMENT

The Debtors are operating their businesses as debtors-in-possession, which give

them the rights, powers and duties of a trustee serving in a chapter 11 case, including to

investigate the assets, liabilities, and financial condition of the Debtors. See 11 U.S.C.

§§ 1107(a), 1108. Based thereupon, the Debtors seek to retain Mr. Grobstein as their

chief restructuring officer with Grobstein Teeple to assist him as CRO as of May 18, 2017

pursuant to 11 U.S.C. §§ 105(a) or 363(b). See Timothy W. Bring and James R. Irving,

Emerging Trends and Lingering Criticisms, a CRO Retention Update, ABI Journal (Sept.

2013) (stating that it has become increasingly common for bankruptcy courts to authorize

the retention of chief restructuring officers under these provisions). A copy of this article

is attached as Exhibit "6."

Section 363(b) of the Bankruptcy Code empowers a trustee to "use . . . other than

in the ordinary course of business, property of the estate." 11 U.S.C. § 363(b). In

deciding whether to approve the use of estate property by a debtor-in-possession, courts

typically consider whether the proposed use is based on a sound business justification.

See, e.g., In re Walter, 83 B.R. 14, 17 (BAP 9th Cir. 1998); In re Ernst Home Center, Inc.,

209 B.R. 974, 979 (Bankr. W.D. Wash. 1997); (In re Continental Air Lines, Inc., 78 F.2d

1223 (5th Cir. 1986); In re Lionel Corporation, 722 F.2d 1063, 1066 (2d Cir. 1983); In re

Montgomery Ward Holding Corp., 242 B.R. 147, 153 (Bankr. D. Del. 1999). Courts also

look at whether the transaction is in the best interests of the estate based on the facts

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2706449.1 12 CRO MOTION

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and history of the case. In re America West Airlines, 166 B.R. 908, 912 (Bankr. D. Ariz.

1994), citing, In re Lionel Corp., 722 F.2d 1063, 1071 (2d Cir. 1983).

Additionally, the Court's general equitable powers under § 105(a) provide ample

authority for employment of a chief restructuring officer. Section 105(a) authorizes the

Court to "issue any order, process, or judgment that is necessary or appropriate to carry

out the provisions of this title." Bankruptcy courts in the Central District have authorized a

debtor's employment of a corporate restructuring officer under §§ 105(a) and 363 on

several occasions. See, e.g., In re DF Real Estate Holdings, LLC, Case No. 8:15-10913

(Bankr. C.D. Cal. March 17, 2015) [Docket No. 28]; In re Fatburger Restaurants of

California, Inc., Case No. 1:09-13964 (Bankr. C.D. Cal. Feb 16, 2011) [Docket No. 506];

In re Westcliff Medical Laboratories, Inc., Case No. 8:10-16743 (Bankr. C.D. Cal. June

25, 2010) [Docket No. 151].2

Here, the retention of Mr. Grobstein as CRO is supported by a valid business

justification and is in the estates' best interests. The Debtors are part of a group of

affiliated entities. Mr. Grobstein's experience and familiarity with bankruptcy, forensic

accounting, and the management of the debtors as a fiduciary will aid in the sound and

capable administration of these Debtors' estates. The Debtors are not creating new

funds, making new investments, or raising additional monies from investors. The

appointment of a neutral third party to oversee the orderly liquidation of the Debtors'

assets is meant to address any concerns of the SEC and CDOBO. Mr. Grobstein is well-

familiar with his duties as a fiduciary given his years of experience as a panel bankruptcy

trustee. His accounting experience will also assist the Debtors in providing information to

and responding to inquiries from the SEC, CDOBO, creditors, and investors.

The retention of Mr. Grobstein will help move the Debtors towards the successful

conclusion of their cases. The Debtors filed these cases to continue the controlled

2 Because of the voluminous nature of these orders and the Motion, the orders are not annexed to

the Motion. Nonetheless, copies of these orders are available upon request to the Debtor's proposed counsel.

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disposition of their assets and the closing of the Funds, and to distribute the proceeds in

a manner consistent with the Code. As a trustee and turnaround consultant, Mr.

Grobstein has extensive bankruptcy expertise. Thus, the retention of Mr. Grobstein

should help to maximize the return for creditors and investors by having an experienced

bankruptcy professional guiding the process in an efficient manner.

Mr. Grobstein will be a source of information for investors and he intends to

enfranchise the Debtors' creditors and investors into the bankruptcy process so that the

outcome is the result of a consensual effort. Mr. Grobstein has many years of experience

as a turnaround consultant and has served as a chief restructuring officer, receiver and

trustee in similar cases. He is well-suited for this role, and the Debtors believe that his

retention will pave the way for a successful resolution of the Cases. Further, as a result

of their prepetition work, Mr. Grobstein and Grobstein Teeple have acquired significant

knowledge of the Debtors' financial affairs, debt structures, operations and related

matters. Because of his status as a neutral third party, his experience, and his familiarity

with the Debtors, Mr. Grobstein's retention will substantially enhance the Debtors' ability

to operate and propose confirmable plans.

Thus, the Debtors believe that Mr. Grobstein and Grobstein Teeple are well-

qualified and able to advise the Debtors in a cost-effective, efficient, and timely manner.

The Debtors have been advised by Mr. Grobstein that he will endeavor to coordinate with

the other professionals retained in the Debtors' cases to eliminate unnecessary

duplication of work. Therefore, the continued retention of Mr. Grobstein as CRO with

Grobstein Teeple to assist him as CRO is in the best interests of the Debtors' estates,

creditors, and other parties in interest to these bankruptcy cases.

Accordingly, the Debtors request that the Court approve his employment and the

terms of his retention pursuant to 11 U.S.C. § 363(b) or § 105(a).

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VII. CONCLUSION

Based on the foregoing, the Debtors respectfully request that the Court enter an

order:

1. Granting the Motion;

2. Subject to compliance with the "Jay Alix Protocol" implemented by the

Office of the United States Trustee, as detailed above, approving the Debtors' retention

of Mr. Grobstein as the Debtors' chief restructuring officer and of Grobstein Teeple

pursuant to the terms and conditions of the engagement letter attached as Exhibit "2" and

as set forth herein, including, but not limited to, that Mr. Grobstein shall have sole check

signing authority for the Debtors and shall have sole and absolute discretion and

authority to direct the Debtors and to direct and instruct counsel for the Debtors on the

Debtors' behalf; and

3. Granting such other relief as the Court may deem just and appropriate.

Respectfully submitted,

DATED: May 24, 2017 SMILEY WANG-EKVALL, LLP By: /s/ Robert S. Marticello ROBERT S. MARTICELLO

Proposed Attorneys for Debtor and Debtor-in-Possession

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2706449.1 15 DECLARATION

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DECLARATION OF HOWARD GROBSTEIN

I, Howard Grobstein, declare as follows:

1. I am a founder and partner of Grobstein Teeple, LLP. I know each of the

following facts to be true of my own personal knowledge, except as otherwise stated and,

if called as a witness, I could and would competently testify with respect thereto. I make

this declaration in support of the Debtors' Motion for Entry of an Order Pursuant to

11 U.S.C. § 363(b) or 11 U.S.C. § 105(a) Authorizing Retention of (1) Howard B.

Grobstein as Chief Restructuring Officer and (2) Grobstein Teeple LLP to Assist the CRO

(the "Motion"). Unless otherwise defined in this declaration, all terms defined in the

Motion are incorporated herein by reference.

2. I was approached prior to the filing of the Debtors' bankruptcy cases to

serve as their chief restructuring officer to provide the Debtors with advice and guidance

about their bankruptcy options and to oversee their daily operations.

3. I have agreed to serve as the Debtors' chief restructuring officer, and

Grobstein Teeple has agreed to be retained, pursuant to the terms of the engagement

letter attached hereto as Exhibit "2." Prepetition, Grobstein Teeple received $70,000.00

from the Debtors as a retainer. Grobstein Teeple has returned the unused portion of the

pre-petition retainer to the Debtors. The Debtors do not owe Grobstein Teeple any

unpaid balance for prepetition services.

4. Attached hereto as Exhibit "1" is a true and correct copy of organizational

charts prepared by Grobstein Teeple at my direction and under my supervision.

5. Attached hereto as Exhibit "3" are Grobstein Teeple's current hourly rates

and attached hereto as Exhibit "4" are my biography and the biographical information for

employees of Grobstein Teeple who may assist me in performing my duties as needed.

6. Attached hereto as Exhibit "5" is a copy of the "Jay Alix Protocol"

implemented by the Office of the United States Trustee, which I agree to comply with.

7. Based on my involvement to date, I believe that the overall strategy for the

Debtors' cases is to confirm a plan that permits the Debtors to continue the process they

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commenced pre-petition, i.e., the orderly liquidation of their assets to maximize the return

for investors and creditors, and to distribute the proceeds in a manner consistent with the

priority scheme in the Code.

8. As of the filing of the bankruptcy petition, I have been informed that an audit

for TD REO is close to completion. The Debtors will be seeking to employ audit firms to

continue the audit process for the Funds post-petition.

9. I have reviewed the Debtors' respective lists of investors and creditors and

verified that I have no connections with any of them. I also have no connection to any

former or current principals of the Debtors and neither I nor my firm have been a director,

officer, or employee of the Debtors. Neither my firm nor I hold any interest materially

adverse to the interest of the Debtors' bankruptcy estates or any of their investors or

creditors by reason of any direct or indirect relationship to, connection with, or interest in

the Debtors.

10. Grobstein Teeple has performed a conflict check and, to the best of its

knowledge, does not hold any interest adverse to the interests of the Debtors' estates.

11. Grobstein Teeple has agreed not to share with any person or entity any

compensation received by it in the Debtors' cases, except as among the members,

associates and employees of Grobstein Teeple. Other than as disclosed herein, neither

Grobstein Teeple, nor any of its principals, employees, agents or affiliates has any

connection with the Debtors, its creditors, the United States Trustee or any other party

with an actual or potential interest in the Debtors' cases or their respective attorneys or

accounts. If Grobstein Teeple discovers information that contradicts such, Grobstein

Teeple will file a supplemental disclosure with the Court.

12. Grobstein Teeple has not been retained to assist any entity or person other

than the Debtors on matters relating to, or in connection with, the Debtors' cases. If this

Court approves the proposed retention of Grobstein Teeple by the Debtors, Grobstein

Teeple will not accept any engagement or perform any services for any entity or person

other than the Debtors in their cases.

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DECLARATION OF WILLIAM JORDAN

I, William Jordan, declare as follows:

1. I am the sole owner of Advisor and the sole member and manager of WJA

Asset Management, LLC. I know each of the following facts to be true of my own

personal knowledge, except as otherwise stated and, if called as a witness, I could and

would competently testify with respect thereto. I make this declaration in support of the

Debtors' Motion for Entry of an Order Pursuant to 11 U.S.C. § 363(b) or 11 U.S.C.

§ 105(a) Authorizing Retention of (1) Howard B. Grobstein as Chief Restructuring Officer

and (2) Grobstein Teeple LLP to Assist the CRO (the "Motion"). Unless otherwise

defined in this declaration, all terms defined in the Motion are incorporated herein by

reference.

2. I have reviewed the Motion and agree and consent to the retention of Mr.

Grobstein as CRO upon the terms and conditions stated in the Motion. I agree that, due

to Mr. Grobstein's retention, I have no authority to direct the Debtors or their counsel, and

I agree that I cannot take any action on the Debtors behalf. I agree to the foregoing

being included in the order granting the Motion.

3. With a few exceptions, each Debtor is a limited liability company formed to

pursue a particular type of investment. Manager is the managing member of all the

Debtors, with the exception of itself and Advisor. Howard Grobstein is the Chief

Restructuring Officer for all of the Debtors, including Manager and Advisor.

4. In 2010, Advisor began creating opportunities for its clients to invest in real

estate related assets and, in particular, private mortgages. In my opinion, the creation of

new real estate investment funds, as opposed to investing in existing third party funds,

had several benefits for the investors. First, it enabled the clients to invest in real estate

without having to personally purchase rental property or make a loan. Second, Advisor

found it difficult to vet existing funds to ensure that their assets did not suffer from

lingering issues arising from the 2008 financial crisis. Third, the creation of new funds

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could avoid the hidden fees and costs included in other existing offerings and Manager

could charge lower fees.

5. The Debtors typically raised investments by offering membership units

through Private Placement Memoranda. Investors who acquired membership units are

members of the corresponding Debtor. Certain investors are members of more than one

Debtor. Also, some Debtors invested in other Debtors if doing so was consistent with the

business purpose of the investing Debtor and the investment could help to diversify and

reduce the risk of the investing Debtors' overall portfolio. Thus, there are Debtors owned

by only individual investors and other Funds in which the investors are individuals and

other Debtors. Some Funds and investors also participated in certain Funds by making

loans and receiving promissory notes in exchange.

6. Collectively, the Debtors hold the following types of assets: (1) cash; (2)

real estate; (3) deeds of trust; (4) promissory notes; and (5) stock or membership units in

third party companies, which, in turn, either operate a business or own a real estate

development project.

7. The Funds hold a variety of diverse and performing assets. For example,

Urban Produce Fund, LLC, holds stock in a third party entity called Urban Produce, Inc.

Urban Produce, Inc., is a vertical farming company that sells leafy greens and wheat

grass to companies such as PepsiCo and Jamba Juice. WJA Express Fund, LLC, also

invested in Urban Produce. Another notable investment for certain Funds is See Jane

Go. See Jane Go is a ride-hail service designed for women (i.e., women driving women),

which was conceived by my daughter.

8. Other Funds invested in commercial real estate development projects.

WJA Real Estate Opportunity I, LLC, holds a 38% ownership in a special purpose entity

named Boulder At Nellis, LLC, which, in turn, owns a retail shopping center in Las Vegas.

WJA Real Estate Opportunity II, LLC, purchased a vacant Ralphs in Long Beach,

California, invested $1.3 million in the project, re-developed the property and secured

new retail tenants, and then sold the property for a profit that was more than twice the

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amount invested within 19 months. WJA Real Estate Opportunity Fund II, LLC, also

holds ownership interests in companies that own real property located at 902 State

Street, Lemont, IL 60539, which is in the process of being refinanced, and 418 apartment

units in Las Vegas, Nevada, which was rehabilitated and is in the process of being sold.

WJA Express Fund, LLC, and California Express Fund II, LLC, own 50% and 8%,

respectively, in Gothard Partners, L.P., which owns a car wash and retail buildings in

Huntington Beach, California. These are only a few of the types of assets owned by

some of the Funds.

9. The losses experienced by some Funds are traceable to certain trust deed

investments. These losses are largely concentrated in the assets held by TD Opportunity

Fund, LLC ("TD Opportunity Fund"), and TD REO, LLC ("TD REO"). The first six Funds

created were WJA Secure Real Estate Fund, WJA Secure Income Fund, California

Indexed Growth Fund, Equity Indexed Managed Fund, PMB Managed Fund, and Secure

California Income Fund (collectively, the "Original Six Funds"). The Original Six Funds

each held a small pool of deeds of trust secured by real estate as well as other assets.

10. In June 2013, TD Opportunity Fund was formed. TD Opportunity Fund was

created and raised funds in order to make new loans secured by first-position deeds of

trust on real estate. The Original Six Funds invested in TD Opportunity Fund, which both

diversified and lessened the risk of the investors in the Original Six Funds by giving them

an interest in a larger pool of trust deeds. TD Opportunity Fund also issued promissory

notes to individuals. Initially, the loan opportunities were selected with the assistance of

a third party, Purchase Money Bank ("PMB"), and almost all of the loans made by TD

Opportunity Fund were accompanied by an appraisal from a licensed professional or by a

broker price opinion indicating a loan-to-value ratio that was typically between 60% to

70%.

11. TD REO was created in August 2013. TD REO was formed to manage the

foreclosure process for loans in default. As a borrower defaulted, the loan and deed of

trust were assigned by the Fund that was the original lender, such as TD Opportunity or

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the Original Six Funds, to TD REO pursuant to a foreclosure agreement and/or a buyout

agreement. TD REO would foreclose on the collateral and sell it, or would reach a more

favorable accommodation. TD REO's obligations to repay the loans assigned to it are

reflected as loans to TD REO from the assigning Fund. The formation of TD REO

centralized the process for handling defaulted loans for TD Opportunity Fund and the

Original Six Funds.

12. TD REO also has individual noteholders. Each individual noteholder of TD

REO is the product of a buyout agreement, which is essentially a form of guaranty.

Generally speaking, under the buyout agreement, TD REO would acquire a defaulted

loan from the individual who made the loan. TD REO would guaranty the payment of the

principal of the defaulted loan and would absorb any losses, and TD REO would be

entitled to any profits in excess of the principal amount.

13. A series of events led to losses for the Funds that invested in trust deeds

and, ultimately, these bankruptcy cases. First, the real property collateral securing the

largest single loan was condemned and the building was demolished. TD Opportunity

Fund was owed roughly $6,000,000 with principal and interest secured by real property in

the city of Baytown, Texas. The building on the property was a 100,000 square foot

hospital that was to be redeveloped into an assisted living facility. The valuations on the

property indicated a value between approximately $9,000,000 and $13,000,000.

14. The borrower defaulted on the Baytown loan. The borrower purportedly

secured take-out financing and Manager received repeated assurances from the new

lender that it would fund the take-out loan. In the meantime, the city sued the borrower in

order to force repairs to the building or have it torn down. Due to the borrower's default,

TD REO commenced foreclosure proceedings, however, by the time that TD REO

foreclosed, the city had already obtained a judgment against the borrower. The city

subsequently had the building demolished. TD REO is pursuing its options to recoup as

much as possible from this investment, but, at this time, the Baytown property has been

marked down to the value of the land.

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15. Second, the loans secured with the help of PMB generally underperformed.

PMB focused on smaller loans in less serviced areas of the country. Over the years,

Manager has found that these smaller loans have a higher rate of default. Moreover,

notwithstanding an otherwise meaningful equity cushion, the foreclosure costs, unpaid

taxes and, sometimes, damage to the property, create a potential for loss when these

smaller types of loans go into default.

16. Third, the Securities & Exchange Commission ("SEC") and the California

Department of Business Oversight began investigating and/or auditing Advisor and other

Debtors.

17. The Debtors commenced this case to protect creditors and investors. The

Debtors are in the process of liquidating their assets in an orderly fashion. The Debtors

have discontinued creating additional funds, raising monies from investors, or making

new investments.

18. A controlled liquidation of the Debtors' assets is important and could

significantly impact the return for investors and creditors. As discussed above, the assets

of certain Funds are performing and a forced sale could unnecessarily reduce the return

for the investors of those Funds. Also, the amount of losses in other Funds could be

potentially minimized by the additional time and value that an orderly process provides.

For example, TD REO holds an interest in a 10 acre piece of real property located at

5827 Winland Hills Dr., Rancho Santa Fe, California. Manager is working on entitlements

to enable the property to be developed as a senior care facility. The value of the Winland

Hills property is approximately $7.5 million, but if certain entitlements are obtained the

value has been estimated to be as high as $15.4 million by Colliers International, and the

entitlement process is ongoing.

I declare under penalty of perjury under the laws of the United States of America

that the foregoing is true and correct.

Executed on this 24th day of May, 2017, at Laguna Hills, California.

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EXHIBIT "1"

5827 Winland Hills Drive

Development Fund, LLC

9971 Valley View St H2GO Express Fund,

LLC *

Alabama Housing Fund,

LLC

CA Express Fund II, LLC

CA Express Fund, LLC

CA Real Estate Opportunity Fund I, LLC

CA Real Estate Opportunity Fund II, LLC

CA Real Estate Opportunity Fund III, LLC

CA See Jane Go Fund, LLC

CA Whirl Fund, LLC

California Indexed

Growth Fund, LLC

Clairton Residential

Renewal, LLC

Equity Indexed Managed Fund, LLC

LVNV Multi Family, LLC

PMB Managed Fund, LLC

Prosper Managed Fund, LLC

Secure California

Income Fund, LLC

See Jane Go Fund I, LLC *

TD Opportunity

Fund, LLC

TD REO Fund, LLC

Urban Produce Fund, LLC

Whirl Fund, LLC

WJA Asset Management

Trust *

WJA Express Fund, LLC

WJA Real Estate

Opportunity Fund I, LLC

WJA Real Estate

Opportunity Fund II, LLC

WJA Secure Income Fund,

LLC

WJA Secure Real Estate Fund, LLC

Consumer Debt Fund

Hedge Fund

Real Estate Investment

Fund

REO Forecolsures

Venture Capital Fund

WJA Asset Management, LLC

William Jordan Investments, Inc.

(Registered Advisory Firm)

William Jordan

President and Sole Shareholder

Manager andSole Member

Manager

LEGEND

WJA ASSET MANAGEMENT, LLC ET AL.Master Organization Chart

Loans

3rd Party Member

Investment

WJA Beachfront Fund I, LLC

(Dissolved) *

Real Property

Luxury Asset Purchasing

International, LLC

* Not a debtor entity PRELIMINARY DRAFT SUBJECT TO CHANGE

EXHIBIT "1," PAGE 24

WJA ASSET MANAGEMENT, LLC ET AL.5827 Winland Hills Drive Development Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

5827 Winland Hills Drive

Development Fund, LLC

32.50%

Individual Member Investors

100.00%

Residential Property


International, LLC

PRELIMINARY DRAFT SUBJECT TO CHANGE


WJA ASSET MANAGEMENT, LLC ET AL.9971 Valley View St H2GO Express Fund, LLC Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

9971 Valley View St H2GO Express Fund,

LLC


100.00%




WJA ASSET MANAGEMENT, LLC ET AL.Alabama Housing Fund, LLC Ownership Structure


LLC

2055 Web Ave.

2351 Dukes Ave.

2451 Gulf Terra Dr. S

Individual Member Investors 67.54%

204 Geronimo St.

1709 Belfast

1511 Devonshire

Dr.

2514 Pineway Dr. N

2608 Pollard Lane

1478 Houston St.

1415 Goodman

626 Mohwak St.

6454 Barker Dr. S

461 Forth Ave.

4101 Ridgedale Rd.

3916 Prima Vera Lane

658 Rickarby St.

907 Victory Dr. W

3704 Martha Ct.

2726 Moot Ave.


32.46%



WJA ASSET MANAGEMENT, LLC ET AL.CA Express Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

ents



5.88%


100.0%



WJA ASSET MANAGEMENT, LLC ET AL.CA Express Fund II, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

CA Express Fund II, LLC

Texas Capital Holdings, LP

50%

Gothard Express

Partners, LP

8.00%

The Padova Trust

50%

H2GO Express Car Wash



WJA ASSET MANAGEMENT, LLC ET AL.CA Real Estate Opportunity Fund I, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

WJA Real Estate



5.49%


100.00%



WJA ASSET MANAGEMENT, LLC ET AL.CA Real Estate Opportunity Fund II, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

WJA Real Estate



15.73%


100.00%



WJA ASSET MANAGEMENT, LLC ET AL.CA Real Estate Opportunity Fund III, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

CA Real Estate Opportunity Fund III, LLC


100.00%

32.50%



International, LLC



WJA ASSET MANAGEMENT, LLC ET AL.CA See Jane Go Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

entsCA See Jane Go

Fund, LLC


100.00%

See Jane Go

0.99%



WJA ASSET MANAGEMENT, LLC ET AL.CA Whirl Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

entsCA Whirl Fund,

LLC


100.00%

See Jane Go

0.52%%

Urban Produce, LLC

0.45%




Renewal, LLC

WJA ASSET MANAGEMENT, LLC ET AL.Clairton Residential Renewal, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

TD REO Fund, LLC


100.00%



WJA ASSET MANAGEMENT, LLC ET AL.California Indexed Growth Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

Loan

s R

ecei

vab

le

TD Opportunity

Fund, LLC

WJA Real Estate


California Indexed

Growth Fund, LLC

Private Money Bank First

Trust Deeds

TD REO Fund, LLC


100.00%

9.27%14.28%



WJA ASSET MANAGEMENT, LLC ET AL.Equity Indexed Managed Fund, LLC Ownership Structure

SB Capital

Member Investments

Loans Receivable

WJA Real Estate


WJA Beachfront Fund I, LLC (Dissolved)

Newport Investments


Coast Angels LC Fund I, LLC

TD REO Fund, LLC

College Resource

Center

Secured Investment

Corp.

TD Opportunity

Fund, LLC



27.79%

9.81%

31.04%

96.71%



WJA ASSET MANAGEMENT, LLC ET AL.LVNV Multi Family LLC, Ownership Structure

Me

mb

er

Inve

stm

ents

Alpha Wave Residential Fund I, LP

LVNV Multi Family, LLC

26.13%


100.00%




WJA ASSET MANAGEMENT, LLC ET AL.PMB Managed Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

Loan

s R

ecei

vab

le


WJA Real Estate



TD REO Fund, LLC

6.65%


100.00%



WJA ASSET MANAGEMENT, LLC ET AL.Prosper Managed Fund, LLC Ownership Structure

TD Opportunity

Fund, LLC

Loan

s R

ecei

vab

le

Prosper Managed Fund, LLC

Prosper, Inc. Note Pool

TD REO Fund, LLC


100.00%



WJA ASSET MANAGEMENT, LLC ET AL.Secure California Income Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

Loan

s R

ecei

vab

leTD

Opportunity Fund, LLC

WJA Real Estate



Secure California

Income Fund, LLC

Allianz Life Insurance

TD REO Fund, LLC


100.00%


LLC

6.65%30.09%



WJA ASSET MANAGEMENT, LLC ET AL.See Jane Go Fund I, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

See Jane Go Fund I, LLC


100.00%

See Jane Go

8.60%



WJA ASSET MANAGEMENT, LLC ET AL.TD Opportunity Fund, LLC Ownership Structure

WJA Real Estate Opportunity Fund I,

LLC

Loan

s R

ecei

vab

le


Trust

TD Opportunity

Fund, LLC


TD REO Fund, LLC

WJA Real Estate Opportunity Fund II,

LLC


LLC

California Indexed

Growth Fund, LLC


Secure California

Income Fund, LLC


27.85%27.79% 30.09%14.28%

14.28%



WJA ASSET MANAGEMENT, LLC ET AL.TD REO Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

TD REO Fund, LLC



Renewal, LLC


Loan

s R

ecei

vab

leVarious

Residential Properties

Various Trust Deeds

WJA Asset Management,

LLC

100.00%


International, LLC


35.00%


International, LLC

100.00%



WJA ASSET MANAGEMENT, LLC ET AL.Urban Produce Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

entsUrban Produce

Fund, LLC


100.00%

Urban Produce, LLC

8.75%



WJA ASSET MANAGEMENT, LLC ET AL.Whirl Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

Whirl Fund, LLC


100.00%

See Jane Go

3.14%



WJA ASSET MANAGEMENT, LLC ET AL.WJA Asset Management Trust Ownership Structure


Trust

12266 B; 12322 C; 12211B; 12231 C

5033 Clavel Ct., Woodland Hills,

CA

6962 Lake Joanne Dr.,

Pensacola, FL

TD Opportunity

Fund, LLC

100.00%



WJA ASSET MANAGEMENT, LLC ET AL.WJA Express Fund, LLC Ownership Structure

Me

mb

er

Inve

stm

ents

Loan

s R

ecei

vab

le


Urban Produce, LLC


Gothard Express

Partners, LP

Urban Produce, LLC

Crowdfunding, LLC



WJA Real Estate


31.04%

50.00% 31.06%16.00%

25.06%5.88% 38.02%




WJA Real Estate


WJA Real Estate


WJA ASSET MANAGEMENT, LLC ET AL.WJA Real Estate Opportunity Fund I, LLC Ownership Structure

TD REO Fund, LLC

Boulder At Nellis, LLC

Texas Capital Holding Fund,

LLC

Me

mb

er

Inve

stm

ents

Loan

s R

ecei

vab

le

Commercial Property




LLC


California Indexed

Growth Fund, LLC




Secure California

Income Fund, LLC

12.28% 6.65%

73.2% 24.00%25.06% 8.3%

6.88%5.49% 9,27% 6.65%42.97%9.81%



WJA Real Estate


WJA ASSET MANAGEMENT, LLC ET AL.WJA Real Estate Opportunity Fund II, LLC Ownership Structure

TD Opportunity

Fund, LLC

CSO Opportunity Fund II, LLC

Me

mb

er

Inve

stm

ents

Loan

s R

ecei

vab

le

902 State St., Lemont, IL


15.73%


75.97%

2021 North Town E. Blvd., Mesquite, TX

Bixby Knolls Commercial

Property

Alpha Wave Residential Fund I, LP


Commercial Property

Texas Capital Holding Fund

III, LLC

TD REO Fund, LLC

WJA Real Estate


8.30%

26.77% 24.00% 90.00%



WJA ASSET MANAGEMENT, LLC ET AL.WJA Secure Income Fund, LLC Ownership Structure

Investors Prime Fund

Member Investments

Loans Receivable

JM Rollout, LLC

WJA Real Estate



Urban Produce, LLC

Secured Investment

Corp.


LLC

Cornerstone Realty

Advisors, LLC

South Port Asset Mgmt.,

Inc.

Western Credit, Inc. Debenture

TD REO Fund, LLC

Crowdfunding, LLC

Eric Dubin

Apartments in

Sacramento


100.00%

Urban Produce, LLC 2.50%

6.88%

100.00%



WJA ASSET MANAGEMENT, LLC ET AL.WJA Secure Real Estate Fund, LLC Ownership Structure

Newport Investments,

LLC

Me

mb

er

Inve

stm

ents

Loan

s R

ecei

vab

le


LLC

TD Opportunity

Fund, LLC

WJA Real Estate




Several First Trust Deeds

TD REO Fund, LLC 1541 E 51st St,

Los Angeles, CA


32.46% 27.85% 12.28%



EXHIBIT "2"

2705066.1

May 10, 2017 Mr. William Jordan WJA Asset Management, LLC William Jordan Investments, Inc. 23046 Avenida De La Carlota, suite 150 Laguna Hills, CA 92653

Re: Chief Restructuring Officer Services for WJA Asset Management, LLC, William Jordan Investments, Inc. and related entities

Dear Mr. Jordan: We are pleased that you have given Grobstein Teeple LLP (“GT”) the opportunity to provide consulting services in the above‐referenced matter effective May 8, 2017. This letter confirms the scope and terms of our retention by WJA Asset Management, LLC, William Jordan Investments, Inc. and related entities (hereinafter collectively referred to as “WJAAM”). Howard Grobstein, through his consulting firm, Grobstein Teeple LLP (“GT”) will act as the Chief Restructuring Officer (“CRO”) of WJAAM prior to and during the pendency of its Chapter 11 bankruptcy proceeding. This Engagement Agreement (“Agreement”) is governed by the terms and conditions set forth in this letter. Accordingly, you should carefully read the Agreement. As the CRO of WJAAM, the CRTO will oversee the bankruptcy filings and proceedings, work with management and counsel to ensure proper compliance and reporting to the Bankruptcy Court and the Office of the United States Trustee, and oversee all aspects of WJA’s operations with the assistance of WJA’s management and employees. Additionally, GT will assist the CRO by providing accounting and other related services including, but not limited to, preparation of bankruptcy schedules, preparation of Monthly Operating Reports, preparation of budgets and cash projections, analysis of financial transactions and income tax return preparation. CRO shall have sole check signing authority for WJAAM and shall be authorized to direct and instruct counsel for WJAAM on WJAAM's behalf, in CRO's sole and absolute discretion. The fee for services as the CRO will be based on GT’s normal hourly rate and any services provided by GT in assisting CRO in fulfilling his duties will be based on GT's normal hourly rates. After the bankruptcy filing, CRO's continued retention and the fees for CRO and GT are subject to approval of Insider Compensation or order by the Bankruptcy Court. The obligation for the payment of the fees is the direct responsibility of WJAAM. We agree to abide by any court orders provided to us in writing and signed by us regarding confidentiality. We will, at your request, transmit information to you by facsimile, e‐mail, or over the Internet. If any confidentiality


Mr. William Jordan May 10, 2017 Page | 2

2705066.1

breaches occur because of data transmission over the Internet pursuant to your request, you agree that this will not constitute a breach of any obligation of confidentiality. If you wish to limit such transmission to information that is not highly confidential, or seek more secure means of communication for highly confidential information, you will need to inform us. The scope of this engagement does not constitute the provision by GT, its partners, or staff of any legal advice. Moreover, because our engagement is limited in nature and scope, it cannot be relied upon to discover all documents and other information or provide all analyses which may have importance to this matter. This engagement does not anticipate the compilation, review, or audit of financial records or financial statements as defined by generally accepted auditing standards. We have undertaken an inquiry of our records to determine conflicts with this engagement and have not noted any such conflicts. In the event that additional relationships or potential conflicts come to our attention, we will promptly notify you. Neither WJAAM, nor any other party acting on their behalf shall hold GT or any of its affiliates or representatives legally responsible for any loss or liability that may result from the non‐disclosure of facts or information that could otherwise have influenced the outcome or interpretation of our findings and/or testimony. Furthermore, WJAAM agrees to indemnify and hold harmless, including legal defense costs, GT and its representatives from any claim brought by a third party asserting that GT or any of its representatives were negligent in providing the services covered by this letter. This agreement shall be governed by the laws of the State of California. Any controversy or claim arising out of or relating to this letter or the services provided by GT pursuant hereto (including any such matter involving any parent, subsidiary, affiliate, successor in interest, or agent of the Company or of GT) shall be submitted first to voluntary mediation, and if mediation is not successful, then to binding arbitration, in accordance with the dispute resolution procedures set forth in Attachment A to this letter (prior to the bankruptcy filing) or the US Bankruptcy Court (after the bankruptcy filing). Judgment on any arbitration award may be entered in any court having proper jurisdiction. If any portion of this letter is held to be void, or otherwise unenforceable, in whole or part, the remaining portions of this letter shall remain in effect. We appreciate the opportunity to assist you in this matter. If this letter meets with your approval and your client’s approval, please sign below, have your client sign as well, and return the signed letter to us, retaining a copy for yourself and your client. Very truly yours, Howard Grobstein, CPA Partner Grobstein Teeple LLP


Mr. W冊am 」o「dan

MaY lO, 2017

Page l 3

Accepted By:



2705066.1

Attachment A Dispute Resolution Procedures The following procedures shall be used to resolve any controversy or claim (“dispute”) as provided in our engagement letter of May 8, 2017. If any of these provisions are determined to be invalid or unenforceable, the remaining provisions shall remain in effect and binding on the parties to the fullest extent permitted by law. Mediation A dispute shall be submitted to mediation by written notice to the other party or parties. The mediator shall be selected by agreement of the parties. If the parties cannot agree on a mediator, a mediator shall be designated by the CPR Institute for Dispute Resolution at the request of a party. Any mediator so designated must be acceptable to all parties. The mediation shall be conducted as specified by the mediator and agreed upon by the parties. The parties agree to discuss their differences in good faith and to attempt, with facilitation by the mediator, to reach an amicable resolution of the dispute. The mediation shall be treated as a settlement discussion and therefore shall be confidential. The mediator may not testify for either party in any later proceeding relating to the dispute. No recording or transcript shall be made of the mediation proceedings. Each party shall bear its own costs in the mediation. The parties shall share the fees and expenses of the mediator equally. Arbitration If a dispute has not been resolved within 90 days after the written notice beginning the mediation process (or a longer period, if the parties agree to extend the mediation), the mediation shall terminate and the dispute shall be settled by arbitration. The arbitration will be conducted in accordance with the procedures in this document and the Rules for Non‐Administered Arbitration of the CPR Institute for Dispute Resolution (“Rules”) as in effect on the date of the engagement letter, or such other rules and procedures as the parties may designate by mutual agreement. In the event of a conflict, the provisions of this document will control. The result of the arbitration will be binding on the parties, and judgment on the arbitration award may be entered in any court having jurisdiction. The arbitration will be conducted before a panel of three arbitrators, two of whom are to be designated by the parties from the CPR Panels of Distinguished Neutrals using the screened selection process provided in the Rules. Any issue concerning the extent to which any dispute is subject to arbitration, or concerning the applicability, interpretation, or enforceability of these procedures, including any contention that all or part of these procedures are invalid or unenforceable, shall be governed by the Federal Arbitration Act and resolved by the arbitrators. No potential arbitrator shall be appointed unless he or she has agreed in writing to abide and be bound by these procedures. The arbitration panel shall have no power to award nonmonetary or equitable relief of any sort. It shall also have no power to award (a) damages inconsistent with any applicable agreement between the parties or (b) punitive damages or any other damages not measured by the prevailing party’s actual damages; and the parties expressly waive their right to obtain such damages in arbitration or in any other forum. In no event, even if any other portion of these provisions is held to be invalid or unenforceable, shall the arbitration panel have power to make an award or impose a remedy that could not be made or imposed by a court deciding the matter in the same jurisdiction.



2705066.1

In no event shall the arbitration panel have power to award or impose damages in excess of actual fees paid to GT in connection with this engagement. Discovery shall be permitted in connection with the arbitration only to the extent, if any, expressly authorized by the arbitration panel upon a showing of substantial need by the party seeking discovery. All aspects of the arbitration shall be treated as confidential. The parties and the arbitration panel may disclose the existence, content, or results of the arbitration only as provided in the Rules. Before making any such disclosure, a party shall give written notice to all other parties and shall afford such parties a reasonable opportunity to protect their interests.


EXHIBIT "3"

GROBSTEIN TEEPLE LLP

FIRM BILLING RATES

Partners and Directors

Name Rate Boffill, Kermith Grobstein, Howard

$300.00 $425.00

Howard, Benjamin $350.00 Leonard, Jeffrey $340.00 Rachmanony, Alex $325.00 Stake, Kurt $375.00 Teeple, Joshua $375.00

Managing Consultants

Name Rate Kaufman, Matthew $250.00 Lundeen, Brian $255.00 Roopenian, Steven $255.00 Shamas, Eddie $200.00 Wright, Kailey $255.00

Consultants

Name Rate Allen, Ryan $185.00 Bird, Kimberly $100.00 Chun, Jessie $165.00 Godoy, Steven $185.00 Meacham, Kevin $185.00 Mier, Lucia $175.00 Muga, Tracey $175.00 Nicoll, Jacquelyn $100.00 Siegel, Brian $200.00 Solares, Kenneth $175.00


Administrators

Rate $100.00 $100.00 $100.00

Name Carranza, Wendi Pierce, Monica Skuro, Sheena


EXHIBIT "4"


FIRM BIOGRAPHIES

2706287.1

PARTNERS

HOWARD B. GROBSTEIN, CPA/CFF, CFE, California State University Northridge

(B.S. Accountancy, 1994) is a Partner in the Firm. He has acted as a Chapter 7 and Chapter 11

Trustee and Chapter 11 Examiner in the Central and Northern Districts of California. He has

testified as an expert witness in District, Bankruptcy and State court cases. Mr. Grobstein has

conducted numerous fraud investigations. He is a member of the Board of Directors and past chair

of the Los Angeles/Orange County Chapter of the California Receiver’s Forum. He was President

of the Los Angeles Bankruptcy Forum for 2013. Mr. Grobstein was the Treasurer of the Los

Angeles/Orange County chapter of the Turnaround Management Association.

BENJAMIN L. HOWARD, CPA, University of Denver (M.A. Accountancy and B.S.

Accountancy) is a Partner in the Firm. Mr. Howard has over 10 years of experience in bankruptcy,

litigation support and forensic accounting services.

JOSHUA TEEPLE, CPA/CFF, CFE, CISA, CITP, University of Colorado, Boulder

(B.S. Business Administration, 1997) is a Partner in the Firm. Mr. Teeple specializes in providing

forensic accounting and forensic technology services. He has testified as an expert witness in such

matters. Mr. Teeple has conducted multiple fraud investigations and regularly provides litigation

consulting services.

ALEX RACHMANONY, CPA, California State University, Los Angeles (B.S. in

Accountancy, 1988) is a Partner in the Firm. Mr. Rachmanony has over 20 years of experience

providing financial reporting for audits and reviews, obtaining financing, financial benchmarking,

profitability studies and reconciliations, financial forecasting and projecting, tax planning and

compliance, and tax audit representation.

KERMITH BOFFILL, CPA, California State University Northridge (B.S. in

Accountancy, 2007) is a Senior Tax Consultant with the Firm. Mr. Boffill worked in private

accounting for thirteen years before starting his career in public accounting in March 2006. Mr.

Boffill has worked on a variety of audit and taxation engagements specializing in taxation of

entities and individuals. Mr. Boffill has experience in bankruptcy matters including individual

liquidations, corporate reorganizations and liquidations.



FIRM BIOGRAPHIES

2706287.1

PROFESSIONALS

RYAN ALLEN, California Lutheran University, (B.S., Accounting) is a Senior Consultant

in the Firm.

KIM BIRD, California State, Fullerton (BA, Communications), is a consultant in the firm.

Ms. Bird has experience in Business Management, payroll preparation, and book reconciliation.

JESSIE CHUN, The University of California, Los Angeles (Accounting) and University

of San Diego (B.A., History) is a Consultant in the Firm. Ms. Chun has experience in payroll

preparation, sales reconciliations, and preparing financial statements.

STEVEN GODOY, MSA, San Diego State University (M.S. Accountancy- Accounting

Information Systems) and San Diego State University (B.S. Business Administration-Accounting)

is a Consultant with the firm. Mr. Godoy has experience with not-for-profit accounting,

accounting information systems, and process improvements. He is a member of the American

Institute of CPAs, the Association of Latino Professionals For America, and the California Society

of CPAs. He is currently a CPA Candidate with the California Board of Accountancy.

BRIAN LUNDEEN, M.A.S., CFE Northern Illinois University (Master of Accountancy

Sciences, Accountancy, 2009) and Northern Illinois University (B.S., Accountancy, 2008) is a

Manager with the Firm. Mr. Lundeen specializes in providing forensic accounting, litigation

support, and fraud investigation services. He is a member of the Association of Certified Fraud

Examiners, the Turnaround Management Association, the California Receivers Forum, and the

Los Angeles Bankruptcy Forum.

KEVIN MEACHAM, California State University, Northridge (B.S. Information Systems

with an Option in Business) is a Consultant in the Firm. Mr. Meacham is knowledgeable in

network technologies, database management, application development, business intelligence, IT

audit, enterprise resource planning, project management, and IT security. He has experience in

bank record reconstructions for numerous accounts related to fraudulent transactions. He is a

member of the Information Systems Audit and Control Association (ISACA) and Management

Information Systems Association (MISA) at California State University, Northridge.



FIRM BIOGRAPHIES

2706287.1

LUCIA MIER, Santa Monica Community College (AA, Accounting, 2009) is a

Consultant in the Firm. Ms. Mier has experience with assisting in preparation of tax return for

entities and individuals.

TRACEY MUGA, California State University, Northridge (B.S. Family and

Environmental Studies with an Option in Business, 1994) is a Consultant with the Firm. Ms. Muga

currently is an Auditor for the California Parent Teacher Association. She is bilingual in English

and Spanish.

JACQUELYN NICOLL, California State University, Northridge (Masters of Public

Administration with emphasis in Management & Leadership) is a Consultant in the Firm.

STEVEN ROOPENIAN, CFE, California State University, Long Beach (B.S. Business

Management) is a Manager in the Firm. Mr. Roopenian has experience in bankruptcy, forensic

accounting, and litigation support. He is a member of the Association of Certified Fraud

Examiners, the Turnaround Management Association, the Association of Insolvency and

Restructuring Advisors, and the Los Angeles Bankruptcy Forum. Additionally, Mr. Roopenian

assisted the treasurer of the Los Angeles/Orange County chapter of the Turnaround Management

Association during his tenure.

EDDIE SHAMAS, CPA, California State University, Northridge (B.S. Accountancy and

B.S. Finance) is a Senior Consultant in the Firm. Mr. Shamas has experience in providing

assurance services to a variety of publicly traded and privately held companies in the

manufacturing, distribution, retail, and service industries. He is a member of California Certified

Public Accountants.

BRIAN SIEGEL, is a Forensic Technology Consultant with the Firm. Mr. Siegel has 10

years experience in the technology field. He is currently pursuing his Bachelor of Science degree

in Information Technology-Information Security Systems at the University of Phoenix.

KENNETH SOLARES, California State University, Northridge (B.S. Finance) is a

Consultant in the Firm. Mr. Solares has experience in accounting, bookkeeping, financial

statement analysis and office management. Mr. Solares is a CPA Candidate with the California

Board of Accountancy.



FIRM BIOGRAPHIES

2706287.1

KAILEY WRIGHT, CIRA, University of California, Santa Barbara (B.A., Economics,

emphasis in Accounting) is a Manager with the Firm. Ms. Wright specializes in providing

accounting services related to bankruptcy, forensic accounting, and litigation support for her

clients. She is currently the Secretary of the Los Angeles Bankruptcy Forum. She is an active

member of the Orange County Bankruptcy Forum and International Women’s Insolvency &

Restructuring Confederation.

PARAPROFESSIONALS

WENDI CARRANZA, Southern California College of Business and Law (A.A., Paralegal

Studies) is an Assistant Trustee Administrator in our Riverside office.

SHEENA SKURO, West Los Angeles College, (A.A., Paralegal Studies) is a Trustee

Administrator with the Firm.

DEBRA DYNABURSKY, Los Angeles Valley College, (A.A., Business Administration:

Accounting) is an Administrator with the Firm.


EXHIBIT "5"

2706214.1 1

Protocol for Engagement of Jay Alix & Associates and Affiliates I. Retention Guidelines

A. Jay Alix & Associates (“JA&A”) is a firm that provides turnaround and crisis management services, financial advisory services, management consulting services, information systems services and claims management services. In some cases the firm provides these services as advisors to management, in other cases one or more of its staff serve as corporate officers and other of its staff fill positions as full time or part time temporary employees (“crisis manager”), and in still other cases the firm may serve as a claims administrator as an agent of the Bankruptcy Court. JA&A and its affiliates1 will not act in more than one of the following capacities in any single bankruptcy case: (i) crisis manager retained under Sec. 363, (ii) financial advisor retained under Sec. 327, (iii) claims agent/claims administrator appointed pursuant to 28 U.S.C. § 156(c) and any applicable local rules or (iv) investor/acquirer; and upon confirmation of a Plan may only continue to serve in a similar capacity. Further, once JA&A or one of its affiliates is retained under one of the foregoing categories it may not switch to a different retention capacity in the same case. However, with respect to subsequent investments by Questor this prohibition is subject to the time limitations set forth in IV.B below.

B. Engagements involving the furnishing of interim executive officerss2

whether prepetition or postpetition (hereinafter "crisis management" engagements) shall be provided through JA&A Services LLC ("JAS").

C. JAS shall seek retention under section 363 of the Bankruptcy Code. The

application of JAS shall disclose the individuals identified for executive officer positions as well as the names and proposed functions of any additional staff to be furnished by JAS. In the event the Debtor or JAS seeks to assume additional or different executive officer positions, or to modify materially the functions of the persons engaged, a motion to modify the retention shall be filed. It is often not possible for JAS to know the extent to which full time or part time temporary employees will be required when beginning an engagement. In part this is because the

1 Affiliates of JA&A presently are System Advisory Group (an organization that provides information services), JA&A Services LLC (an entity that provides temporary employees), Questor Management Company LLC, an organization that manages Questor Partners Fund, Questor Partners Fund II, and various Side-by-Side entities, which are limited partnerships that invest in underperforming and troubled companies, and ACT Two (an entity that owns and operates a private airplane). Future affiliates of JA&A, if any, will be subject to the limitations set forth herein. 2 "Executive officers" shall include but is not necessarily limited to Chief Executive Officer, President, Chief Operating Officer, Treasurer, Chief Financial Officer, Chief Restructuring Officer, Chief Information Officer, and any other officers having similar roles, power or authority, as well as any other officers provided for in the company’s bylaws.


2706214.1 2

extent of the tasks that need to be accomplished is not fully known and in part it is because JAS is not yet knowledgeable about the capability and depth of the client’s existing staff. Accordingly, JAS shall file with the Court with copies to the UST and all official committees a report of staffing on the engagement for the previous month. Such report shall include the names and functions filled of individuals assigned. All staffing shall be subject to review by the Court in the event an objection is filed.

D. Persons furnished by JAS for executive officer positions shall be retained

in such positions upon the express approval thereof by an independent Board of Directors whose members are performing their duties and obligations as required under applicable law ("Board"), and will act under the direction, control and guidance of the Board and shall serve at the Board’s pleasure (i.e. may be removed by majority vote of the Board).

E. The application to retain JAS shall make all appropriate disclosures of any

and all facts that may have a bearing on whether JAS, its affiliates, and/or the individuals working on the engagement have any conflict of interest or material adverse interest, including but not necessarily limited to the following:

1. Connection, relationship or affiliation with secured creditors,

postpetition lenders, significant unsecured lenders, equity holders, current or former officers and directors, prospective buyers, or investors.

2. Involvement as a creditor, service provider or professional of any

entity with which JA&A or any affiliate has an alliance agreement, marketing agreement, joint venture, referral arrangement or similar agreement.

3. Any prepetition role as officer, director, employee or consultant,3

but service as a pre-petition officer will not per se cause disqualification.

4. Any prepetition involvement in voting on the decision to engage

JA&A or JAS in the bankruptcy case, and/or any prepetition role

3 In no case shall any principal, employee or independent contractor of JA&A, JAS and affiliates serve as a director of any entity while JA&A, JAS or any affiliate is rendering services in a bankruptcy proceeding, and JA&A, JAS and their affiliates shall not seek to be retained in any capacity in a bankruptcy proceeding for an entity where any principal, employee or independent contractor of JA&A, JAS and affiliates serves or has previously served as a director of the entity or an affiliate thereof within two years prior to the petition date. During such two year period, neither JA&A, JAS or affiliates shall have provided any professional services to the entity nor shall any individuals associated with JA&A, JAS and affiliates have served as an Executive Officer.


2706214.1 3

carrying the authority to decide unilaterally to engage JA&A or JAS.

5. Information regarding the size, membership and structure of the

Board so as to enable the UST and other interested parties to determine that the Board is independent.

6. Whether the executive officers and other staff for the engagement

are expected to be engaged on a full time or part time basis, and if part-time whether any simultaneous or prospective engagement exists that may be pertinent to the question of conflict or adverse interest.

7. The existence of any unpaid balances for prepetition services.

8. The existence of any asserted or threatened claims against JA&A,

JAS or any person furnished by JA&A/JAS arising from any act or omission in the course of a prepetition engagement.

F. Disclosures shall be supplemented on a timely basis as needed throughout

the engagement.

G. Where JA&A does not act as a crisis manager its retention will be sought as a financial advisor under section 327 of the Code or as a Court appointed claims representative.

II. Compensation

A. Compensation in crisis management engagements shall be paid to JAS.

B. The application to retain JAS shall disclose the compensation terms including hourly rates and the terms under which any success fee or back-end fee may be requested.

C. JAS shall file with the Court, and provide notice to the UST and all

official committees, reports of compensation earned and expenses incurred on at least a quarterly basis. Such reports shall summarize the services provided, identify the compensation earned by each executive officer and staff employee provided, and itemize the expenses incurred. The notice shall provide a time period for objections. All compensation shall be subject to review by the Court in the event an objection is filed (i.e., a "negative notice" procedure).

D. Success fees or other back-end fees shall be approved by the Court at the

conclusion of the case on a reasonableness standard and shall not be pre-approved under section 328(a). No success fee or back-end fee shall


2706214.1 4

be sought upon conversion of the case, dismissal of the case for cause or appointment of a trustee.

III. Indemnification

A. Debtor is permitted to indemnify those persons serving as executive officers on the same terms as provided to the debtor’s other officers and directors under the corporate bylaws and applicable state law, along with insurance coverage under the debtor’s D&O policy.

B. There shall be no other indemnification of JA&A, JAS or affiliates.

IV. Subsequent Engagements

A. Pursuant to the "one hat" policy as stated above, after accepting an engagement in one capacity, JA&A and affiliates shall not accept another engagement for the same or affiliated debtors in another capacity.

B. For a period of three years after the conclusion of the engagement,

Questor shall not make any investments in the debtor or reorganized debtor where JA&A, JAS or another affiliate has been engaged.

DET_C\442365.4


EXHIBIT "6"

The Essential Resource for Today’s Busy Insolvency Professional

FeatureBY TIMOTHY W. BRINK AND JAMES R. IRVING

Emerging Trends and Lingering Criticisms: A CRO Retention Update

Since the use of chief restructuring officers (CROs) in chapter 11 cases first became prevalent in the 1990s, the process of

retaining a CRO has evolved, and while § 327(a) of the Bankruptcy Code had long been the tradi-tional statutory basis for CRO retention, it had never been used exclusively.1 In his October 2011 Journal article, Kevin M. Baum (Katten Muchin Rosenman LLP; Rockville Centre, N.Y.) described four alternative statutory bases for retaining a CRO: §§ 327(a), 327(b), 363(b)(1) and 363(c)(1).2 In the last several years, how-ever, a trend appears to have emerged under which most CRO retention applications are made pursuant to §§ 105(a) and 363(b)(1), rather than § 327(a) or (b), or § 363(c)(1).

retention pursuant to §§ 105(a) and 363(b)(1), and describe the expansion of this approach from the Southern District of New York to jurisdictions throughout the country. Next, this article will describe the advantages that CRO retention pursu-ant to §§ 105(a) and 363(b)(1) offers compared with

concerns with CRO retention pursuant to §§ 105(a) and 363(b)(1) that have been raised in certain juris-dictions, and identify steps that debtors can take to increase the likelihood of successfully retaining a CRO pursuant to §§ 105(a) and 363(b)(1).

CRO Retention Pursuant to §§ 105(a) and 363(b)(1) Traditionally, CROs were retained in the same fashion as other professionals in chapter 11 cases, pursuant to § 327(a), which provides that a debtor, subject to court approval, “may employ

one or more attorneys, accountants, appraisers, auctioneers or other professional persons that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to repre-sent or assist [the debtor].”3 Recently however, a trend appears to have emerged under which most CRO retention applications are made pursuant to §§ 105(a) and 363(b)(1). The argument for CRO retention pursuant to §§ 105(a) and 363(b)(1) is straightforward. Paying a CRO is a use of the debtor’s funds other than in the ordinary course of business permitted by § 363(b) (1), which provides that a debtor, “after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate.”4 Further, pursuant to § 105(a), the “court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.”5 In considering a debtor’s application to retain a CRO pursuant to § 363(b)(1), a court will evaluate whether there is a sound business purpose for the CRO retention.6 Courts that approve a debtor’s application to retain a CRO pursuant to §§ 105(a) and 363(b) (1) will often require the debtor to comply with the so-called “Jay Alix Protocols.”7 These protocols were developed in 2001 as part of a settlement between the U.S. Trustee and Jay Alix & Associates con-cerning applications by debtors in two chapter 11 cases in the District of Delaware to retain one of the

James R. Irving

1 , 110 B.R. 141, 142 (Bankr. D. Del. 1989).2 Kevin M. Baum, “The Basics for Retaining a CRO,” , 8, 50-51, 71,

October 2011.

3 11 U.S.C. § 327(a); , 120 B.R. 507, 512 (Bankr. D. Minn. 1990).

4 11 U.S.C. § 363(b)(1). 5 11 U.S.C. § 105(a). Although most CRO retention applications filed pursuant to § 363(b)

also rely on § 105(a), this is not always the case. , No. 10-11963 (Bankr. S.D.N.Y. 2010) (filed pursuant to §§ 363(b) and

105(a)), , No. 09-14337 (Bankr. W.D. Wis. 2009) (filed pursuant to § 363(b)).

6 , 242 B.R. 147, 153 (Bankr. D. Del. 1999) (consid-ering whether to approve key officer- and employee-incentive programs).

7 Kelly Beaudin Stapleton, John D. Penn and Andrew R. Vara, “Business Ethics: Maginot Lines? Examining and Enforcing the Duties Owed by Officers, Financial Advisors and Counsel,” 100110 ABI-CLE 285, *9-11 (2010).

Timothy W. Brink


8 The key elements of the protocols include the following:

i.e.,

or investor);

board or have served on the board within the two years prior to the petition date;

interested parties; and

under a reasonableness standard at the end of the case;

fee application, and any success fees payable to the pro-fessional must be approved at the conclusion of the case.9

Despite the fact that they are not binding law, the Jay Alix Protocols have become de facto requirements for CRO retention pursuant to §§ 105(a) and 363(b) (1) in the Southern District of New York and the District of Delaware,10 and in recent years, the practice of approving CRO retentions pursuant to §§ 105(a) and 363(b) (1) and adopting the Jay Alix Protocols in CRO retention orders has expanded to other jurisdictions throughout the country.11 Considering the advantages that CRO retention pursuant to §§ 105(a) and 363(b)(1) offers as compared to § 327(a), it is no surprise that many debtors seeking to retain a CRO now take this approach.12

Advantages of CRO Retention Pursuant to §§ 105(a) and 363(b)(1) CRO retention pursuant to §§ 105(a) and 363(b)(1) offers several advantages as compared to retention of a CRO as a “professional person” pursuant to § 327(a). Perhaps the most notable is that a CRO retained pursuant to §§ 105(a)

to §§ 330 and 331 of the Bankruptcy Code. Nevertheless, frequently at the U.S. Trustee’s urging, courts that approve CRO retention pursuant to §§ 105(a) and 363(b)(1) will

--

ees have spent on various aspects of the debtor’s engage--

some than preparing a typical fee application that complies

may be imposed by the U.S. Trustee and bankruptcy courts in various jurisdictions. Nor is a CRO retained pursuant to §§ 105(a) and 363(b) (1) required to be disinterested.13 Accordingly, the CRO is not

required to disclose its connections with the debtor, credi-tors and other parties in interest, as a professional seeking to be employed pursuant to § 327(a) would be.14 Nevertheless, CROs often make such disclosures voluntarily in order to overcome potential objections by the U.S. Trustee or other parties in interest.15 By voluntarily making such disclosures, CROs might also be able to reduce exposure to claims based

-closures are voluntary, they may be made only to the extent and in the manner that the CRO desires, unless ordered oth-erwise by the court. Finally, a CRO retained pursuant to §§ 105(a) and 363(b) (1) may obtain additional protections from liability not afforded to professionals retained pursuant to § 327(a). For example, a CRO retained pursuant to §§ 105(a) and 363(b) (1) may be covered under the debtors’ directors and officers liability insurance policy. Further, a debtor may indemnify a CRO retained pursuant to §§ 105(a) and 363(b) (1) to the same extent that it indemnifies its other

-sional retained pursuant to § 327(a).

Lingering Criticisms of CRO Retention Pursuant to §§ 105(a) and 363(b)(1) Although the trend is to retain CROs pursuant to §§ 105(a) and 363(b)(1), this practice is not without its crit-ics. At least two courts that have granted CRO retention applications made pursuant to §§ 105(a) and 363(b)(1) have questioned the wisdom of permitting a CRO to be retained on that basis rather than pursuant to § 327(a). In Mirant, the court reviewed and approved a fee applica-

whose employee served as the debtor’s CRO.16 The court noted that “AP was retained pursuant to Code § 363 because part of its role was to provide the Debtors with a [CRO].”17 The court then observed that “[t]he [U.S. Trustee] and other parties acquiesced in this method of retention (which was intended to avoid application to AP of the disinterestedness test of 11 U.S.C. § 101(14) due to AP’s personnel serving as

of Code § 363 is appropriate for such a purpose, but need not here reach that issue.”18 The court in Blue Stone was similarly critical of CRO retention pursuant to §§ 105(a) and 363(b)(1).19 In that case, the debtor sought the authority to retain a CRO while the U.S. Trustee sought conversion of the case from chapter 11 to chapter 7.20 The court granted the debtor’s CRO retention application, but in so doing stated:

8 , No. 99-2171 (Bankr. D. Del. 1999); , No. 00-02303 (Bankr. D. Del. 2000).

9 See “Business Ethics: Maginot Lines?”10 , No. 13-10738 (Bankr. D. Del. 2013); ,

No. 12-10069 (Bankr. D. Del. 2012); , No. 12-11661 (Bankr. D. Del. 2012); In , No. 12-22052 (Bankr. D. Del. 2012); , No. 12-12321

(Bankr. S.D.N.Y. 2012); , No. 11-14006 (Bankr. D. Del. 2011); LLC, No. 11-10688 (Bankr. D. Del. 2011); , No. 11-13122 (Bankr. D. Del. 2011);

, No. 11-13010 (Bankr. D. Del. 2011);, No. 10-11963 (Bankr. S.D.N.Y. 2010).

11 , No. 11-48903 (Bankr. N.D. Ill. 2011); , No. 11-51077 (Bankr. W.D. Ky. 2011); , No. 10-43624 (Bankr. N.D. Tex. 2010);

, No. 10-43625 (Bankr. N.D. Tex. 2010); , No. 09-02140 (Bankr. D.S.C. 2009); , No. 09-14337 (Bankr. W.D. Wis. 2009);

, No. 08-35994 (Bankr. E.D. Va. 2008).12 The ABI Winter Leadership Conference (Dec. 5-7, 2013, at the Terranea Resort in Rancho Palos Verdes,

Calif.) will feature a panel on the Jay Alix Protocol. To register, visit www.abiworld.org/WLC13/.

13 Daniel F. Dooley, Brian J. Fox, Edward T. Gavin, Melissa A. Hager, Allen G. Kadish, Edward A. Phillips, Kenneth A. Rosen, Jarrett K. Vine and Christopher A. Ward,

, page 10 (ABI, 2013). This book is available for purchase at bookstore.abi.org (members must log in first to receive the member-only discount).

14 Fed. R. Bankr. P. 2014(a).15 , No. 13-10738 (Bankr. D. Del. 2013);

LLC, No. 12-11661 (Bankr. D. Del 2012); , No. 11-51077 (Bankr. W.D. Ky. 2011); In , No. 09-02140 (Bankr. D.S.C. 2009).

16 , 354 B.R. 113, 127 (Bankr. N.D. Tex. 2006).17 .18 . at 127 n.29. Notably, despite the reservations expressed in Mirant, the U.S. Bankruptcy Court for the

Northern District of Texas has subsequently approved CRO retention applications pursuant to §§ 105(a) and 363(b)(1). , No. 10-43624 (Bankr. N.D. Tex. 2010);

, No. 10-43625 (Bankr. N.D. Tex. 2010).19 , 392 B.R. 897, 907 n.14 (Bankr. M.D. Fla. 2008).20 . at 900-01.


The two main purposes of section 327 are to permit the Court to control administrative expenses in the form of professionals’ compensation and ensure that

such judicial oversight and the opportunity for con-tinuing party-in-interest scrutiny of both a profes-sional’s retention and compensation, these important goals of the Bankruptcy Code cannot be met. The so-called “Jay Alix” protocol that depends upon section

-vide the Court the same ability to meet the twin goals of section 327 when the candidate for employment is also a professional.21

Based on this rationale, the court employed its equitable powers under § 105(a) and granted the application pursuant to § 327(a) rather than § 363(b)(1).22

In two recent cases outside of the Southern District of New York and the District of Delaware, the U.S. Trustee has voiced similar concerns about CRO retention pursu-ant to §§ 105(a) and 363(b)(1). In Miles Properties,23 the debtors sought to retain a CRO pursuant to § 327(a), and the U.S. Trustee objected to the debtor’s application on multiple grounds, including that the application should be filed pursuant to § 327(a) because the CRO was a “pro-fessional person.”24 The debtors noted that the retention

that they did this because in order to retain the CRO pursu-

to comply with the Jay Alix Protocols, which would have been impractical.25

the debtor’s responses to the U.S. Trustee’s objection and granted the retention application.26 In Nesbitt Portland Property,27 -tion to retain a CRO pursuant to §§ 105(a) and 363(b)(1), and the U.S. Trustee objected that the debtor’s passing reference in its application to §§ 105(a) and 363(b)(1) did not provide

28 The debtor explained the business purpose for its proposed CRO retention and cited Blue Stone as authority for its reliance on §§ 105(a) and 363(b)(1).29 The court granted the retention application, but as in Blue Stone, it did so pursuant to § 327(a) rather than §§ 105(a) and 363(b)(1).30

Specific Steps to Strengthen CRO Retention Applications

some bankruptcy courts and the U.S. Trustees in some jurisdictions continue to have with CRO retention pursuant to §§ 105(a) and 363(b)(1) rather than § 327(a). Given the advantages of retaining a CRO pursuant to §§ 105(a) and 363(b)(1), however, a debtor will want to make the stron-gest case possible for this approach. To do so, several steps are recommended.

First, the proposed CRO retention should — at a mini-mum — comply with the Jay Alix Protocols. Second, the retention application should explain how compliance with the Jay Alix Protocols mitigates the concerns raised by the Blue Stone court about lack of court oversight over the dis-interestedness and compensation of CROs retained pursuant to §§ 105(a) and 363(b)(1). Finally, the retention applica-tion should be explicit about the statutory basis for the relief it seeks and cite the numerous cases in which courts have granted similar relief. abi

21 . at 907 n.14.22 . at 907 n.15.23 , No. 10-60797 (Bankr. N.D. Ga. 2010). Docket No. 33.24 ., Docket No. 182.25 .26 ., Docket No. 457.27 , No. 12-12883 (Bankr. C.D. Cal. 2012). Docket Nos. 265 and 296.28 .29 ., Docket No. 301.30 ., Docket No. 322.


This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012 F 9013-3.1.PROOF.SERVICE

PROOF OF SERVICE OF DOCUMENT I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is:

3200 Park Center Drive, Suite 250, Costa Mesa, CA 92626 A true and correct copy of the foregoing document entitled (specify): DEBTORS' MOTION FOR ENTRY OF AN ORDER PURSUANT TO 11 U.S.C. § 363(B) OR 11 U.S.C. § 105(A) AUTHORIZING RETENTION OF (1) HOWARD B. GROBSTEIN AS CHIEF RESTRUCTURING OFFICER AND (2) GROBSTEIN TEEPLE LLP TO ASSIST THE CRO; MEMORANDUM OF POINTS AND AUTHORITIES; AND DECLARATIONS OF HOWARD B. GROBSTEIN AND WILLIAM JORDAN IN SUPPORT will be served or was served (a) on the judge in chambers in the form and manner required by LBR 5005-2(d); and (b) in the manner stated below: 1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): Pursuant to controlling General Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On (date) May 24, 2017, I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined that the following persons are on the Electronic Mail Notice List to receive NEF transmission at the email addresses stated below: •Lei Lei Wang Ekvall [email protected], [email protected];[email protected];[email protected] •Michael J Hauser [email protected] •Mark S Horoupian [email protected], [email protected];[email protected];[email protected];[email protected] •Christopher J Langley [email protected], [email protected];[email protected] •Robert S Marticello [email protected], [email protected];[email protected];[email protected] •Michael Simon [email protected], [email protected];[email protected];[email protected] •Philip E Strok [email protected], [email protected];[email protected];[email protected] • United States Trustee (SA) [email protected] Service information continued on attached page 2. SERVED BY UNITED STATES MAIL: On (date) , I served the following persons and/or entities at the last known addresses in this bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the United States mail, first class, postage prepaid, and addressed as follows. Listing the judge here constitutes a declaration that mailing to the judge will be completed no later than 24 hours after the document is filed. The Hon. Scott C. Clarkson United States Bankruptcy Court 411 West Fourth Street, Suite 5130 Santa Ana, CA 92701-4593 Service information continued on attached page 3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL (state method for each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on (date) May 24, 2017, I served the following persons and/or entities by personal delivery, overnight mail service, or (for those who consented in writing to such service method), by facsimile transmission and/or email as follows. Listing the judge here constitutes a declaration that personal delivery on, or overnight mail to, the judge will be completed no later than 24 hours after the document is filed.

Service information continued on attached page I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. May 24, 2017 Carol Sheets /s/ Carol Sheets Date Printed Name Signature

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