McFarland v. Carter et al
Bankruptcy

Eastern District of California (Bankruptcy), caeb-2:2015-ap-02122

Exhibit(s) to 91 Declaration [IWC-3] (lbef)

Interested in this case?

Current View

Full Text

Filed 10/25/17 Case 15-02122 Doc 92 1 54 ALLAN B. DIAMOND (Pro Hac Vice) 2 CHRISTOPHER D. SULLIVAN (148083) LESLEY ANNE HAWES (117101) 3 KAREN DIEP (305587) DIAMOND McCARTHY, LLP 4 150 California Street, Suite 2200 San Francisco, CA 94111 5 Phone: (415) 692-5200 6 Email:adiamond@diamondmccarthy.com csullivan@diamondmccarthy.com 7 lhawes@diamondmccathy.com kdiep@diamondmccarthy.com 8 Special Litigation Counsel for 9 International Manufacturing Group, Inc., a Liquidating Debtor, by and through 10 The Beverly Group, Inc., Plan Administrator 11 UNITED STATES BANKRUPTCY COURT 12 EASTERN DISTRICT OF CALIFORNIA 13 SACRAMENTO DIVISION 14 15 In re Case No. 14-25820-D11 16 INTERNATIONAL MANUFACTURING Adv. Proc. No. 15-02122 17 GROUP, INC., DCN: IWC-3 18 Debtor. Chapter 11 19 BEVERLY N. McFARLAND, Chapter 11 Trustee for International Manufacturing 20 Group, Inc., 21 Plaintiff, 22 v. 23 LARRY A. CARTER, JACK T. SWEIGART, VICTORIA J. SWEIGART, JTS 24 COMMUNITIES, INC., C.I.M.G. JV, LLC, BRISTOL INSURANCE COMPANY, AND 25 SCB INVESTMENTS, 26 Defendant. 27 EXHIBITS TO DECLARATION OF CHRISTOPHER D. SULLIVAN IN SUPPORT OF PLAINTIFF’S OPPOSITION TO DEFENDANTS’ MOTION FOR PROTECTIVE ORDER 28 STAYING DISCOVERY PENDING DECISION ON DISPOSITIVE MOTION AND/OR LIMITING THE SCOPE OF DISCOVERY 1 Exhibits Filed 10/25/17 Case 15-02122 Doc 92 1 Exhibit Description 2 Notice of Deposition of Jack T. Sweigart with Requests for Production of Documents 1 in Bridge Bank, N.A. v. International Manufacturing Group, Inc., et al. 3 IMG Proof of Claim No. 21 filed by John and Diane Banchero 4 2 5 3 IMG Proof of Claim No. 38 filed by Gary Dix 6 E-mail dated July 19, 2010 from Jeff March apparently to Deepal Wannakuwatte, 4 Larry Carter and Michael Kennedy 7 Copy of letter dated January 23, 2010 with handwritten notes referred to as "Jack’s 8 5 Deal" 9 6 Inter-Estate Agreement dated November 19, 2014 10 11 Dated: October 25, 2017 DIAMOND MCCARTHY LLP 12 13 By:/s/Christopher D. Sullivan Christopher D. Sullivan 14 Special Litigation Counsel for International Manufacturing Group, Inc., a Liquidating Debtor, by 15 and through The Beverly Group, Inc., Plan 16 Administrator 17 18 19 20 21 22 23 24 25 26 27 28 2 Exhibits Filed 10/25/17 Case 15-02122 Doc 92 Exhibit 1 Filed 10/25/17 Case 15-02122 Doc 92 Stephen J. Kottmeier (State Bar No. 077060) Michaeline H. Correa (State Bar No. 215215) 2 HOPKINS & CARLEY A Law Corporation 3 The Letitia Building 70 S First Street 4 San Jose, CA 95113-2406 5 mailing address: P.O. Box 1469 6 San Jose, CA 951 09-1469 Telephone: (408) 286-9800 7 Facsimile: (408) 998-4 790 8 Attorneys for Plaintiff BRIDGE BANK, National Association 9 IO SUPERIOR COURT OF THE ST A TE OF CALIFORNIA 11 COUNTY OF SANTA CLARA 12 BRIDGE BANK, National Association, CASE NO. l 13CV243064 Plaintiff, 13 NOTICE OF DEPOSITION OF JACK T. v. SWEIGART WITH REQUESTS FOR 14 PRODUCTION OF DOCUMENTS INTERNATIONAL MANUFACTURING 15 GROUP, INC., a California corporation; DEEPAL WANNAKUWATTE, an 16 individual; DEEPAL WANNAKUWATTE, as Trustee of the 17 DEEPAL WANNAKUWATTEAND BETSY WANNAKUW ATTE 1998 18 FAMILY TRUST; BETSY WANNAKUW ATTE, as Trustee of the 19 DEEPAL WANNAKUWATTE AND BETSY WANNAKUWATTE 1998 20 FAMILY TRUST; and DOES I-25, inclusive, 21 Defendants. 22 23 TO ALL PARTIES HEREIN AND THEIR ATTORNEYS OF RECORD: 24 PLEASE TAKE NOTICE that, pursuant to Code of Civil Procedure §2025.010, et seq., 25 on August 8, 2013 at 9:30 a.m. at the offices of Golden State, 1776 March Lane, Stockton, CA 26 95207, Plaintiff Bridge Bank, National Association, ("Plaintiff" or "Bridge Bank") will take the 27 deposition of third party Jack T. Sweigart, whose address is 813 Lake Oak Court, Sacramento, 28 CA 95864. HOPKl:-15 & CARLEY 43611024443.! 1\TTC.>~NE\'S AT LAW NOTJCE OF DEPOSJTION OF JACK T. SWEIGART WITH REQUESTS FOR PRODUCTION OF SA>J josr DOCUMENTS IMGC_0180406 Filed 10/25/17 Case 15-02122 Doc 92 Said deposition will be taken on oral examination before an officer authorized to 2 administer oaths under the laws of the State of California wd the United States of America. The 3 deposition shall proceed from day to day or, in the alternative, on a mutually convenient day, 4 during normal business hours until completed, weekends and holidays excluded. 5 PLEASE TAKE FURTHER NOTICE that, pursuant to Code of Civil Procedure 6 §2025.220(a)(4), deponent is requested to bring with him any and all documents that are in his 7 possession, custody or control, described below. 8 The following definitions apply to, are incorporated into, and are intended to define the 9 identified terms contained in the Requests for Production of Documents below. 10 DEFINITIONS 11 1. The terms "DOCUMENT" or "DOCUMENTS" have the meaning of the term 12 "Writing" as set forth in Evidence Code§ 250, including without limitation electronically stored 13 information. 14 2. The te1ms "YOU" or "YOUR" refer to Jack T. Sweigart. 15 3. The term "JTS COMMUNITIES" refers to JTS Communities, Inc., a California 16 corporation. 17 4. The term "IMO" shall mean and refer to Defendant International Manufacturing 18 Group, Inc., a California corporation, and shall include any and all of its officers, directors, 19 employees, subsidiaries, divisions, affiliates, attorneys, parents, agents, representatives, 20 predecessors, successors in interest, and/or any person or entity acting on its behalf. 21 5. The term "IMO BANK ACCOUNT" refers to that certain bank account number 22 1250094841 held at California Bank & Trust in the name of International Manufacturing Group, 23 Inc. 24 6. The term "RELATING TO" is used in its broadest sense and includes referring to, 25 containing, alluding to, responding to, evidencing, supporting, proving, disproving, concerning, 26 connected with, commenting on, in respect of, about, regarding, discussing, showing, describing, 27 reflecting, analyzing, constituting, modifying, describing, pertaining to, mentioning, and 28 embodying. HorK!NS & CARLEY 436\1024443.1-2-ATHJKN'-" AT LAW NOTICE OF DEPOSlTION OF JACK T. SWEIGART WITH REQUESTS FOR PRODUCTION OF S•N)oSE DOCUMENTS IMGC_0180407 Filed 10/25/17 Case 15-02122 Doc 92 REQUESTS FOR PRODUCTION OF DOCUMENTS 2 REQUEST FOR PRODUCTION NO. l: 3 All DOCUMENTS constituting or evidencing any contractual relationship between either 4 YOU or JTS COMMUNITIES on the one hand, and either IMG, Deepal Wrumakuwatte or any 5 other entity owned by Deepal Wannakuwatte, on the other hand, during the past five years. 6 REQUEST FOR PRODUCTION NO. 2: 7 All DOCUMENTS which evidence the contractual basis or other business reason for each 8 of the transfers of funds l1Y YOU or JTS COMMUNITIES to the IMG BANK ACCOUNT, as 9 shown on the schedule attached hereto as Exhibit 1. IO REQUEST FOR PRODUCTION NO. 3: 11 All DOCUMENTS which evidence the contractual basis or other business reason for each 12 of the transfers of funds to YOU or JTS COMMUNITIES from the IMG BANK ACCOUNT, as 13 shown on the schedule attached hereto as Exhibit 1. 14 REQUEST FOR PRODUCTION NO. 4: 15 All DOCUMENTS which constitute, evidence or record any communication during the 16! period January 1, 2011 through the date of YOUR deposition between YOU and Deepal 17 Wannakuwatte or any other IMG representative RELATING TO any financings, loans or need 18 1 for financing or loans of any entity owned by Deepal Wannakuwatte, including, without 19 limitation, IMO. 20 All the parties on whom this notice is served are set forth in the attached proof of service. 21 Dated: July ~2013 22 23 24 e. ottme1er ev. for Plaintiff 25 BANK, National Association 26 27 28 H OPKI NS & C ARLEY 436\10244·13.l-3-l\TldflNf.YS AT I. AW NOTICE OF DEPOSIT10N OF JACK T. SWEIGART WITH REQUESTS FOR PRODUCTION OF SAN j ~f. DOCUMENTS IMGC_0180408 Filed 10/25/17 Case 15-02122 Doc 92 TRANSACTIONS POSTED TO IMG WHOLESALE ACCOUNT AT CALIFORNIA BANK & TRUST INVOLVING JTS COMMUNITIES ~~Ci(-.SWj!QE-\~T-1 r=-=~--------L-:--~~~~==-r I---H-~----------------·--·---~-~=-----_~~-~--. _ __ IDate 1 Posted 1 Debit.l~;--===---=~L= Credit I Wire fr(J!l1_J~:~<:;om_lllll_l1_i!iC's___ ', _i _ _51~1'.2_Q l 0, $985,846 I Wire from JTS Communities Wire from JTS Co;;;;;~;;iti;s... I. I Wlre from Jack T. S;,;~ig,;-rt 5/14/2010; 5/25/20101. _12/21~21)10[_-+. _~ J I-$J,006):lij-$975,744]______ _ $984,6441 ___ _ \Vire from Jack!' 1_8w_eijl_a_rt. _ i1 _ 12/21/2010' _____ $1,84_8,505: _ __ 1 ',!lire from Jack T.S\V_e~'1_rt__ j___j_ 12/21120101 $1,988,420' 1 ChecktoJackT,Sweigart, i 12112/20111 $188,429-,---~----Ch-c~k to Jack T. Sweigart----;;-12/28/2011 i..--$221~656-j ~~~ck~i~'J;ck:T~s~eig~rt----.---1212812011 $222,893-~----·-check to JTS Communities:---l/2J/201Zr-$219,872----------·--+·-·---·-·., Wirefrom_!a_ck_!'· Sweigart \\fi!~from Jack 1:-S\\'.eigar(2/16/2012 2/16/2012' _jl~Ji6}2[i--f. ~-:=:-~ ~~_[_~ $1,595,446___ _ $1616426t l Check to JTS Co111munities, $220,968-;-' ' __-_-Check to Jack T. Sweigart ___ L 2/22/201_'.2_i __, ___ $219,87_2 _ __31'.2_0130J2 _; ____ _ _ 1 Wire from Jack T. ~\Veigart, $1,544,628 Check to JTS---Commumties ~---~-----------3/5/2012-----1 I-$183,476--------r~---Check to Jack T. Sweigart:_ 1 __ 3/19/2012 I $188,429 _________-~ ~~:~~i~-jf~ ~~!~~~f~~--_______________________,_ 1+--~~~~i~iir-'···-·--$1if:~~~:-i-----· I _J---------------t--1------------.--t--Wire from Jack T. Sweigart I, 4/30/20121! $1,588,7461. ·-·-'.--·-'---------, 1----------,-------· 1 Check to JTS Cornmuml!es-·--~-----------I 4/9/2012[$220,5601---·---------------------!-----------·-·-------------~-,!------------;::': ~;:; ~::~::~::: Check to JTS Communities' cilil~ 4/30/2012J.-:;;::;; $222,893'---------! Chec~tcJ_JT~Corn111\lnities 1 5/22/20121 $219,872,, ChecktoJTSCornmunities, 5/31/2012 $117,106: ' Ch~~klo-frS Cort1munities-1 i 5/31/2012 i--$]] 9,()(j9j Check to_JI~<::():nmun:itie_;_=---6/4i20T2t--$33~.~6_8j_!------~-------·· Check to JTS Communities 6/25/2012 1 $219,872i I Check to JTS Communities 7117/20121 $18J,476I l. Ch~~kroJTS Co~~-~~i\f,;--7;3012012 ~ s2-----,-I I9.8721--t---Check to JTS Communities 8/2/20i2 1 $113,427iT ___ _ check to-ns co;nmu;ities--3;14/20!2)-I--$204,0971----1---____,_____-------··-----..-..·-----··-!---r... _________. _____ j _--------------------Check to JTS_Com!llunities--'---+---~6i3Ql21: $220,560:! C~eck to JTS Communities _ ___ 8/30/201~-l-$221,656:.l _ _ _ ___ _ Che_(Ol<_toJTS_Communi~e~-------,-_ 9/6/2012!! _$219,87~.-~-------~~--------· Check to JTS Communities 9/26/~~~f-' $219,872 =· _'.--_9114/~_'. Check to JTS Comm-unities $222,893 I' _ _ ~~:~~:: ~~~ ~::=::::: c::~'-r~~;~~iI1-,---~H~-'-=--==~==+==--! 1025740 IMGC_0180409 Filed 10/25/17 Case 15-02122 Doc 92 1025740 IMGC_0180410 Filed 10/25/17 Case 15-02122 Doc 92 Exhibit 2 Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 B 10 (Official Form 10) (04/13 UNITED STATES BANKRUPTCY COURT Name of Debtor: Eastern District of California Case Number: (,'c) PROOF OF CLAIM International Manufacturing Group, Inc. 1425820D 11 so AUG 202014 NOTE: Do not use this form to make a claim for an administrative expense that arises after the ban/o-uptcy filing. You may file a request for payment of an administrative expense according to 11 Us. C. § 503. Name of Creditor (the person or other entity to whom the debtor owes money or property): L NITED STATES BANKRUPTCY COUR John and Diane Banchero Name and address where notices should be sent: 0 Check this box if this claim amends a John Banchero previously filed claim. 3345 Sierra Oaks Drive Sacramento, CA Court Claim Number:____________ (If known) Telephone number: email: johnbanchero.net (916)4259177 Filed on:______________________ Name and address where payment should be sent (if different from above): 0 Check this box if you are aware that anyone else has filed a proof of claim relating to this claim. Attach copy of statement giving particulars. Telephone number: email: Amount of Claim as of Date Case Filed: $ 3,049.349.79 If all or part of the claim is secured, complete item 4. If all or part of the claim is entitled to priority, complete item 5. 'Check this box if the claim includes interest or other charges in addition to the principal amount of the claim. Attach a statement that itemizes interest or charges. Basis for Claim: seeattachedaireementsandpromissorynotes (See instruction #2) Last four digits of any number 3a. Debtor may have scheduled account as: 3b. Uniform Claim Identifier (optional): by which creditor identifies debtor: 8 9 2 0 (See instruction #3a) (See instruction #3b) Amount of arrearage and other charges, as of the time case was filed, Secured Claim (See instruction #4) included in secured claim, if any: Check the appropriate box if the claim is secured by a lien on property or a right of setoff, attach required redacted documents, and provide the requested information. $___________________ Nature of property or right of setoff: ORealEstate OMotorVehicle 00ther Basis for perfection: Describe: Value of Property: $ Amount of Secured Claim: $___________________ Annual Interest Rate% OFixed or OVariable Amount Unsecured: (when case was filed) Amount of Claim Entitled to Priority under 11 U.S.C. § 507 (a). If any part of the claim falls into one of the following categories, check the box specifying the priority and state the amount. Domestic support obligations under 11 0 Wages, salaries, or commissions (up to $12,475*) J Contributions to an U.S.C. § 507 (a)(1)(A) or (a)(I)(B). eamed within 180 days before the case was filed or the employee benefit plan-debtor's business ceased, whichever is earlier-11 U.S.C. § 507 (a)(5). 11 U.S.C. § 507 (a)(4). Amount entitled to priority: Up to $2,775* of deposits toward 0 Taxes or penalties owed to govemmental units-J Other-Specify $______________________ purchase, lease, or rental of property or 11 U.S.C. § 507 (a)(8). applicable paragraph of services for personal, family, or household 11 U.S.C. § 507 (a)(J. use-11 U.S.C. § 507 (a)(7). *A moun ts are subject to adjustment on 411116 and every 3 years thereafter with respect to cases canzmenced on or after the date of adjustment. Credits. The amount of all payments on this claim has been credited for the purpose of making this proof of claim. (See instruction #6) Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 thU (Utticsal J.orm Documents: Attached are redacted copies ofany documents that support the claim, such as promissoiy notes, purchase orders, invoices, itemized statements of running accounts, contracts, judgments, mortgages, security agreements, or, in the case of a claim based on an open-end or revolving consumer credit agreement, a statement providing the information required by FRBP 3001 (c)(3)(A). If the claim is secured, box 4 has been completed and redacted copies of documents providing evidence of perfection of a security interest are attached. If the claim is secured by the debtor's principal residence, the Mortgage Proof of Claim Attachment is being filed with this claim. (See instruction #7, and the definition of "redacted") DO NOT SEND ORIGINAL DOCUMENTS. ATTACHED DOCUMENTS MAY BE DESTROYED AFTER SCANNING. If the documents are not available, please explain: Signature: (See instruction #8) Check the appropriate box id Jam the creditor. 0 I am the creditor's authorized agent. Ll Jam the trustee, or the debtor, or their 0 I am a guarantor, surety, indorser, or other authorized agent. codebtor. (See Bankruptcy Rule 3005.) (See Bankruptcy Rule 3004.) I declare under penalty of perjury that the information provided in this claim is true and correct to the best of my knowledgq.trmation, and reasonable belief. Print Name: John Banchero Title: Company: Address and telephone number (if different from notice address above): ii43 sierra uaKs urive (Date) Telephone number: email: frihe,0 e71 I-'enalty for presenting fraudulent claim: tine of up to 13UU.UUU or impnsonment for up to 5 years, or both. 18 U.S.C. 152 and 3571. INSTRUCTIONS FOR PROOF OF CLAIM FORM The instructions and definitions below are general explanations of the law. In certain circumstances, such as bankruptcy cases not filed voluntarily by the debtor, exceptions to these general rules may apply. Items to be completed in Proof of Claim form Court, Name of Debtor, and Case Number: claim is entirely unsecured. (See DEFINITIONS AND INFORMATION.) If the claim Fill in the federal judicial district in which the bankruptcy case was filed (for example, is secured, check the box for the nature and value of the property that secures the claim, Central District of Califomia), the name of the debtor's full name, and the case number, attach copies of lien documentation, and state, as of the date ofthe bankruptcy filing, the If the creditor received a notice of the case from the court, all of this information is near annual interest rate (and whether it is fixed or variable), and the amount past due on the the top of the notice, claim. Creditor's Name and Address: Amount of Claim Entitled to Priority Under 11 U.S.C. §507(a): Fill in the name of the person or entity asserting a claim, and the name and address of the If any portion of your claim falls into any category shown, check the appropriate box(es) person who should receive notices issued in the bankruptcy case, A separate space is and state the amount entitled to priority. (See DEFINITIONS AND INFORMATION.) provided for the payment address if it differs from the notice address. The creditor has A claim may be partly priority and partly non-priority. For example, in some of the a continuing obligation to keep the court informed of its current address. See Federal categories, the law limits the amount entitled to priority Rule of Bankruptcy Procedure (FRBP) 2002(g). Credits: Amount of Claim as of Date Case Filed: An authorized signature on this proof of claim serves as an acknowledgment that when State the total amount owed to the creditor on the date of the bankruptcy filing. Follow calculating the amount of the claim, the creditor gave the debtor credit for any payments the instructions conceming whether to complete items 4 and 5. Check the box if interest received toward the debt. or other charges are included in the claim. Documents: Basis for Claim: Attach redacted copies of any documents that show the debt exists and a lien secures the State the type of debt or how it was incurred. Examples include goods sold, money debt. You must also attach copies of documents that evidence perfection of any security loaned, services performed, personal injury/wrongful death, car loan, mortgage note, and mterest and documents required by FRBP 300 1(c) for claims based on an open-end or credit card. If the claim is based on the delivery of health care goods or services, limit revolving consumer credit agreement or secured by a security interest in the debtor's the disclosure of the goods or services so as to avoid embarrassment or the disclosure.of principaLresidence. You may also attach a summary in addition to the documents confidential health care information. You may be required to provide additional themselves. FRBP 300 1(c) and (d). If the claim is based on delivering health care goods disclosure if an interested party objects to the claim. or services, limit disclosing confidential health care information. Do not send original documents, as attachments may be destroyed after scanning..3. Last Four Digits of Any Number by Which Creditor Identifies Debtor: State only the last four digits of the debtor's account or other number used by the creditor Date and Signature: to identify the debtor. The individual completing this proof of claim must sign and date it. FRBP 9011. If the claim is filed electronically, FRBP 5005(a)(2), authorizes courts to establish local rules Debtor May Have Scheduled Account As: specifying what constitutes a signature. If you sign this form, you declare under penalty Report a change in the creditor's name, a transferred claim, or any other information that of perjury that the information provided is true and correct to the best of your knowledge, clarifies a difference between this proof of claim and the claim as scheduled by the information, and reasonable belief. Your signature is also a certification that the claim debtor. meets the requirements FRBP 9011(b). Whether the claim is filed electronically or in person, if your name is on the signature line, you are responsible for the declaration. Print Uniform Claim Identifier: the name and title, if any, of the creditor or other person authorized to file this claim. If you use a uniform claim identifier, you may report it here. A uniform claim identifier State the filer's address and telephone number if it differs from the address given on the is an optional 24-character identifier that certain large creditors use to facilitate electronic top of the form for purposes of receiving notices. If the claim is filed by an authorized payment in chapter 13 cases. agent, provide both the name of the individual filing the claim and the name of the agent. If the authorized agent is a servicer, identify the corporate servicer as the company. 4. Secured Claim: Criminal penalties apply for making a false statement on a proof of claim. Check whether the claim is fully or partially secured. Skip this section if the Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 iu i uinciai rorm, 10) u'I/1.i) DEFINITIONS INFORMATION_______ Debtor A debtor is the person, corporation, or other entity A claim also may be secured if the creditor owes Acknowledgment of Filing of Claim that has filed a bankruptcy case. the debtor money (has a right to setoff). To receive acknowledgment of your filing, you may either enclose a stamped self-addressed envelope and Creditor Unsecured Claim a copy of this proof of claim or you may access the A creditor is a person, corporation, or other entity to An unsecured claim is one that does not meet the court's P A C E R system whom debtor owes a debt that was incurred before requirements of a secured claim. A claim may be (www.pacer.psc.uscourts.gov) for a small fee to view the date of the bankruptcy filing. See 11 U.S.C. partly unsecured if the amount of the claim your filed proof of claim. §101 (10). exceeds the value of the property on which the creditor has a lien. Offers to Purchase a Claim Claim Certain entities are in the business of purchasing A claim is the creditor's right to receive payment on Claim Entitled to Priority Under 11 U.S.C. claims for an amount less than the fact value of the a debt owed by the debtor that arose on or before §507(a) claims. One or more of these entities may contact the the date of the bankruptcy filing. See 11 U.S.C. Priority claims are certain categories of unsecured creditor and offer to purchase the claim. Some of the §101 (5). A claim may be secured or unsecured. claims that are paid from the available money or written communications from these entities may property in a bankruptcy case before other easily be confused with official court documentation Proof of Claim unsecured claims. or communications from the debtor. These entities do A proof of claim is a form used by the creditor to not represent the bankruptcy court or the debtor. The indicate the amount of the debt owed by the debtor Redacted creditor has no obligation to sell its claim. However, on the date of the bankruptcy filing. The creditor A document has been redacted when the person if the creditor decides to sell its claim, any transfer of must file the form with the clerk of the same filing it has masked, edited out, or otherwise such claim is subject to FRBP 3001(e), any bankruptcy court in which the bankruptcy case was deleted, certain information. A creditor must show applicable provisions of the Bankruptcy Code (11 filed. only the last four digits of any social-security, U.S.C. § 101 et seq.), and any applicable orders of individual's tax-identification, or financial-account the bankruptcy court. Secured Claim Under 11 U.S.C. §506(a) number, only the initials of a minor's name, and A secured claim is one backed by a lien on property only the year of any person's date of birth. If the of the debtor. The claim is secured so long as the claim is based on the delivery of health care goods creditor has the right to be paid from the property or services, limit the disclosure of the goods or prior to other creditors. The amount of the secured services so as to avoid embarrassment or the claim cannot exceed the value of the property. Any disclosure of confidential health care information. amount owed to the creditor in excess of the value of the property is an unsecured claim. Examples of Evidence of Perfection liens on property include a mortgage on real estate Evidence of perfection may include a mortgage, or a security interest in a car. A lien may be lien, certificate of title, fmancing statement, or voluntarily granted by a debtor or may be obtained other document showing that the lien has been through a court proceeding. In some states, a court filed or recorded. judgment is a lien. A claim also may be secured if the creditor owes the debtor money (has a right to setoff). Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 Amounts due John & Diane Banchero (see attached agreements and promissory notes) $1,000,000.00 note principal plus $78,902.40 interest at 12% annual from 10-2-13 to 5-30-14 $270,000.00 note principal plus $11,538.80 interest at 12% annual from 1-21-14 to 5-30-14 $805,136.50 note principal plus $31,499.30 interest at 12% annual from 2-1-14 to 5-30-14 $439,281.07 note principal plus $34,227.54 interest at 12% annual from 10-5-14 to 5-30-14 $352,568.25 note principal plus $26,196.33 interest at 12% annual from 10-16-14 to 5-30-14 $1,000,000.00 +$270,000.00 +$805,136.50 +$439,281.07 +$352,568.25 = $2,866,985.82 (principal) Plus +$78,902.00+ $11,538.80+ $31,499.30 +$34,227.54+ $26,196.33 = $182,363.97 (interest) $2,866,985.82 (principal) plus $182,363.97 (12% interest per attached notes) = $3,049,349.79 total I)I •'• &:.,-,-Prepared by John Banchero, August 19, 2014 Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 Amounts due John & Diane Banchero (see attached agreements and promissory notes) $1,000,000.00 note principal plus $78,902.40 interest at 12% annual from 10-2-13 to 5-30-14 $270,000.00 note principal plus $11,538.80 interest at 12% annual from 1-21-14 to 5-30-14 $805,136.50 note principal plus $31,499.30 interest at 12% annual from 2-1-14 to 5-30-14 $439,281.07 note principal plus $34,227.54 interest at 12% annual from 10-5-14 to 5-30-14 $352,568.25 note principal plus $26,196.33 interest at 12% annual from 10-16-14 to 5-30-14 $1,000,000.00 +$270,000.00 +$805, 136.50 +$439,281.07 +$352,568.25 = $2,866,985.82 (principal) Plus +$78,902.00+ $11,538.80+ $31,499.30 +$34,227.54+ $26,196.33 = $182,363.97 (interest) $2,866,985.82 (principal) plus $182,363.97 (12% interest per attached notes) = $3,049,349.79 I total Prepared by John Banchero, August 19, 2014-, 1 iI1 IU-IL JI U, Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 Amounts due John & Diane Banchero (see attached agreements and promissory notes) $1,000,000.00 note principal plus $78,902.40 interest at 12% annual from 10-2-13 to 5-30-14 $270,000.00 note principal plus $11,538.80 interest at 12% annual from 1-21-14 to 5-30-14 $805,136.50 note principal plus $31,499.30 interest at 12% annual from 2-1-14 to 5-30-14 $439,281.07 note principal plus $34,227.54 interest at 12% annual from 10-5-14 to 5-30-14 $352,568.25 note principal plus $26,196.33 interest at 12% annual from 10-16-14 to 5-30-14 $1,000,000.00 +$270,000.00 +$805, 136.50 +$439,281.07 +$352,568.25 = $2,866,985.82 (principal) Plus +$78,902.00+ $11,538.80+ $31,499.30 +$34,227.54+ $26,196.33 = $182,363.97 (interest) $2,866,985.82 (principal) plus $182,363.97 (12% interest per attached notes) = $3,049,349.79 total Prepared by John Banchero, August 19, 2014 Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 AGREEMENT This Agreement is made on February 15, 2012 between International Manufacturing Group, Inc., a California corporation, and Deepal S. Wannakuwatte and Larry Carter (herein called "1MG Wholesale") and John & Diane Banchero of Sacramento, California (herein called "Bancheros"). RECITALS I. [MG Wholesale will be obtaining bids from the Federal Government for two years, beginning February 15, 2012. Any extensions will be made 30 days prior to expiration. 2. 1MG Wholesale will deliver goods and get paid every 120 days. THE PARTIES AGREE AS FOLLOWS Bancheros will lend 1MG Wholesale $1,000,000.00 to fulfill the bid. 1MG Wholesale will pay Bancheros three payments of $66,300.00 annually, plus the principal payment of $1,000,000.00 on February 15, 2014. In the event 1MG Wholesale fails to make the payment, it shall pay an interest rate of 12% per annum until paid in full. In the event of litigation, the prevailing party shall be entitled to reasonable costs and attorney fees. California law shall govern this Agreement. This Agreement shall inure to the benefit and bind the successors, heirs, executors and administrators of the parties hereto. Deepal S. Wannakuwatte will guarantee all liability of 1MG Wholesale unconditionally. Carter will guarantee all liability of 1MG Wholesale unconditionally. Agreed this 15th day of February, 2012. MANUFACTURING GROUP, INC. ILLLQOXQ O21t5\ President & Chief Executive Officer (_LLLuA.M 09. \ S Wannakuwatte, Individually Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 PROMISSORY NOTE $1,000,000.00 February 15, 2012 For value received, the undersigned promises to pay to John & Diane Banchero, of 3620 American River Drive, Suite 230, Sacramento, California 95864, the sum of One Million Dollars & 00/1 00 ($1,000,000.00). Three profit payments in the amount of $66,300.00 will be made annually. Principal and will be due and payable on February 15, 2014. If litigation arises on this note, the prevailing party shall be entitled to attorney's fees determined by the court. Executed in Sacramento, California on February 15, 2012. MAKER INTERNATIONAL MANUFACTURING GR INC. Dee S. Wannakuwatte President and Chief Executive Officer pL$). Wannakuwatte Individually Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 AGREEMENT This Agreement is made on September 3,2013 between International Manufacturing Group, Inc., a California corporation, and Deepal S. Wannakuwatte and Larry Carter (herein called "1MG Wholesale") and John & Diane Banchero of Sacramento, California (herein called "Bancheros"). RECITALS 1MG Wholesale will be obtaining bids from the Federal Government for 120 days, beginning September 3,2013. Any extensions will be made 30 days prior to expiration. 1MG Wholesale will deliver goods and get paid in 130 days. THE PARTIES AGREE AS FOLLOWS Bancheros will lend 1MG Wholesale $270,000.00 to fulfill the bid. 2. 1MG Wholesale will pay Bancheros one payment of $18,877.07, plus the principal payment of $270,000.00 on January 11, 2014. In the event 1MG Wholesale fails to make the payment, it shall pay an interest rate of 12% per annum until paid in full. In the event of litigation, the prevailing party shall be entitled to reasonable costs and attorney fees. California law shall govern this Agreement. This Agreement shall inure to the benefit and bind the Successors, heirs, executors and administrators of the parties hereto. Deepal S. Wannakuwatte will guarantee all liability of 1MG Wholesale unconditionally. Carter will guarantee all liability of 1MG Wholesale unconditionally. Agreed this 3rd day of September, 2013. AL MANUFACTURING GROUP, INC. QoQAJat(e O\\1? President & Chief Executive Officer Individually Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92.1 PROMISSORY NOTE $270,000.00 September 3, 2013 For value received, the undersigned promises to pay to John & Diane Banchero, of 3620 American River Drive, Suite 230, Sacramento, California 95864, the sum of Two Hundred Seventy Thousand Dollars & no/I 00 ($270,000.00). A single profit payment will be made in the amount of $18,877.07. Principal and profit will be due and payable on January II, 2014. If litigation arises on this note, the prevailing party shall be entitled to attorney's fees determined by the court. Executed in Sacramento, California on September 3, 2013. MAKER INTERNATIONAL MANUFACTURING O9 3 h3 Wannakuwatte and Chief Executive Officer Ke oc3h3 Wannakuwatte This note replaces the notes dated December 4, 2012 and Apnl 18, 2013 Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 AGREEMENT This Agreement is made on January 8, 2014 between International Manufacturing Group, Inc., a California corporation, and Deepal S. Wannakuwatte and Larry Carter (herein called "1MG Wholesale") and John & Diane Banchero of Sacramento, California (herein called "Bancheros"). RECITALS 1MG Wholesale will be obtaining bids from the Federal Government for 120 days, beginning January 8, 2014. Any extensions will be made 30 days prior to expiration. 1MG Wholesale will deliver goods and get paid in 130 days. THE PARTIES AGREE AS FOLLOWS Bancheros will lend 1MG Wholesale $805,136.50 to fulfill the bid 2. 1MG Wholesale will pay Bancheros one payment of $57,175.16, plus the principal payment of $805,136.50 on June 18, 2014. In the event 1MG Wholesale fails to make the payment, it shall pay an interest rate of 12% per annum until paid in full. In the event of litigation, the prevailing party shall be entitled to reasonable costs and attorney fees. California law shall govern this Agreement. This Agreement shall inure to the benefit and bind the successors, heirs, executors and administrators of the parties hereto. Deepal S. Wannakuwatte will guarantee all liability of 1MG Wholesale unconditionally. Carter will guarantee all liability of 1MG Wholesale unconditionally. Agreed this 8th day of January, 2014. AL MANUFACTURING GROUP, INC. (3 'b Lkuwatte, President & Chief Executive Officer Individually Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 PROMISSORY NOTE $805, 136.50* January 8, 2014 For value received, the undersigned promises to pay to John & Diane Banchero, of 3620 American River Drive, Suite 230, Sacramento, California 95864, the sum of Eight Hundred Five Thousand One Hundred Thirty-Six Dollars & 501100 ($805,136.50). A single profit payment will be made in the amount of $57,175.16. Principal and profit will be due and payable on June 18, 2014. If litigation arises on this note, the prevailing party shall be entitled to attorney's fees determined by the court. Executed in Sacramento, California on January 8, 2014. MAKER INTERNATIONAL MANUFACTURING GROUP, INC. Deepal S. Wannakuwatte President and Chief Executive Officer Deepal S. Wannakuwatte Individually *This note replaces the notes dated July 5, 2011 & November 7, 2011 & March 9, 2012 & July 18, 2012 & November 28, 2012 & April 26, 2013 & August 26, 2013. Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 AGREEMENT This Agreement is made on October 7, 2013 between International Manufacturing Group, Inc., a California corporation, and Deepal S. Wannakuwatte and Larry Carter (herein called "1MG Wholesale") and John & Diane Banchero of Sacramento, California (herein called "Bancheros"). RECITALS 1MG Wholesale will be obtaining bids from the Federal Government for 120 days, beginning October 7, 2013. Any extensions will be made 30 days prior to expiration. 1MG Wholesale will deliver goods and get paid in 130 days. THE PARTIES AGREE AS FOLLOWS Bancheros will lend 1MG Wholesale $439,281.07 to fulfill the bid. 1MG Wholesale will pay Bancheros one payment of $30,691.10, plus the principal payment of $439,281.07 on February 14, 2014. In the event 1MG Wholesale fails to make the payment, it shall pay an interest rate of 12% per annum until paid in full. In the event of litigation, the prevailing party shall be entitled to reasonable costs and attorney fees. California law shall govern this Agreement. This Agreement shall inure to the benefit and bind the successors, heirs, executors and administrators of the parties hereto. Deepal S. Wannakuwatte will guarantee all liability of 1MG Wholesale unconditionally. Carter will guarantee all liability of 1MG Wholesale unconditionally. Agreed this 7th day of October, 2013. MANUFACTURJNG GROUP, INC. President & Chief Executive Officer 3annakuwatte, Individually Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 PROMISSORY NOTE $439,281 Ø7* October 7, 2013 For value received, the undersigned promises to pay to John & Diane Banchero, of 3620 American River Drive, Suite 230, Sacramento, California 95864, the sum of Four Hundred Thirty-Nine Thousand Two Hundred Eighty-One Dollars & 07/100 ($439,281.07). A single profit payment will be made in the amount of $30,691.10. Principal and profit will be due and payable on February 14, 2014. If litigation arises on this note, the prevailing party shall be entitled to attorney's fees determined by the court. Executed in Sacramento, California on October 7, 2013. MAKER INTERNATIONAL MANUFACTURJNG vçepai. Wannakuwafte President and Chief Executive Officer annakuwatte Individually *Thjs note replaces the notes dated April 25, 2012 and August 24, 2012 and January 7, 2013 and May 24, 2013. Filed 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 AGREEMENT This Agreement is made on October 16, 2013 between International Manufacturing Group, Inc., a California corporation, and Deepal S. Wannakuwatte and Larry Carter (herein called "1MG Wholesale") and John & Diane Banchero of Sacramento, California (herein called "Bancheros"). RECITALS 1MG Wholesale will be obtaining bids from the Federal Government for 120 days, beginning October 16, 2013. Any extensions will be made 30 days prior to expiration. 1MG Wholesale will deliver goods and get paid in 130 days. THE PARTIES AGREE AS FOLLOWS Bancheros will lend 1MG Wholesale $352,568.25 to fulfill the bid. 1MG Wholesale will pay Bancheros one payment of $23,769.05, plus the principal payment of $352,568.25 on February 23, 2014. In the event 1MG Wholesale fails to make the payment, it shall pay an interest rate of 12% per annum until paid in full. In the event of litigation, the prevailing party shall be entitled to reasonable costs and attorney fees. California law shall govern this Agreement. This Agreement shall inure to the benefit and bind the successors, heirs, executors and administrators of the parties hereto. Deepal S. Wannakuwatte will guarantee all liability of 1MG Wholesale unconditionally. Carter will guarantee all liability of 1MG Wholesale unconditionally. Agreed this 16th day of October, 2013. MANUFACTURING GROUP, INC. aCz I b 5113 President & Chief Executive Ofticer Wannakuwatte, Individually Filed I, 10/25/17 Case 14-25820 Case Filed 15-02122 08/20/14 Claim 21 Doc 92 PROMISSORY NOTE $352,568.25* October 16, 2013 For value received, the undersigned promises to pay to John & Diane Banchero, of 3620 American River Drive, Suite 230, Sacramento, California 95864, the sum of Three Hundred Fifty-Two Thousand Five Hundred Sixty-Eight Dollars & 25/1 00 ($352,568.25). A single profit payment will be made in the amount of $23,769.05. Principal and profit will be due and payable on February 23, 2014. If litigation arises on this note, the prevailing party shall be entitled to attorney's fees determined by the court. Executed in Sacramento, California on October 16, 2013. MAKER tSMUft GROUP, INC. 1 ee. Wannakuwatte President and Chief Executive Officer OLCQ oJsJ Wannakuwatte *This note replaces the notes dated April 25, 2012 and August 24, 2012 and January 7, 2013 and May 24, 2013. Filed 10/25/17 Case 15-02122 Doc 92 Exhibit 3 Filed 10/25/17 Case 14-25820 Case Filed 15-02122 09/28/14 Claim 38 Doc 92 B10 (Official Form 10) (04/13) UNITED STATES BANKRUPTCY COURT Eastern District of California PROOF OF CLAIM Name of Debtor: Case Number: International Manufacturing Group, Inc. 14−25820 FILED NOTE: Do not use this form to make a claim for an administrative expense that arises after the bankruptcy filing. U.S. Bankruptcy Court You may file a request for payment of an administrative expense according to 11 U.S.C. § 503. Eastern District of California Name of Creditor (the person or other entity to whom the debtor owes money or property): 9/28/2014 Gary Dix Wayne Blackwelder, Clerk COURT USE ONLY Name and address where notices should be sent: Check this box if this claim Gary Dix amends a previously filed 30100 Town Center Dr Apt 4 claim. Costa Mesa CA 92627 Court Claim Number: (If known) Telephone number: 949−285−7176 email: dix501@cox.net Filed on: Name and address where payment should be sent (if different from above): Gary Dix Check this box if you are aware that anyone else has 30100 town center dr O−449 filed a proof of claim relating to this claim. Attach laguna niguel, CA 92677 copy of statement giving Telephone number: 949−285−7176 email: dix501@cox.net particulars. 1. Amount of Claim as of Date Case Filed: $ 750000.00 If all or part of the claim is secured, complete item 4. If all or part of the claim is entitled to priority, complete item 5. Check this box if the claim includes interest or other charges in addition to the principal amount of the claim. Attach a statement that itemizes interest or charges. 2. Basis for Claim: money loan (See instruction #2) 3. Last four digits of any number 3a. Debtor may have scheduled account as: 3b. Uniform Claim Identifier (optional): by which creditor identifies debtor: 8920 (See instruction #3a) (See instruction #3b) 4. Secured Claim (See instruction #4) Amount of arrearage and other charges, as of the time case was filed, Check the appropriate box if the claim is secured by a lien on property or a right of included in secured claim, if any: setoff, attach required redacted documents, and provide the requested information. $ Nature of property or right of setoff: Real Estate Motor Vehicle Other Describe: Basis for perfection: Value of Property: $ Amount of Secured Claim: $ Annual Interest Rate (when case was filed)% Fixed or Variable Amount Unsecured: $ 0.00 5. Amount of Claim Entitled to Priority under 11 U.S.C. §507(a). If any part of the claim falls into one of the following categories, check the box specifying the priority and state the amount. Domestic support obligations under 11 Wages, salaries, or commissions (up to $12,475*) Contributions to an Amount entitled to U.S.C. §507(a)(1)(A) or (a)(1)(B). earned within 180 days before the case was filed employee benefit plan − priority: or the debtor's business ceased, whichever is earlier − 11 11 U.S.C. §507(a)(5). U.S.C. §507(a)(4). Up to $2,775* of deposits toward Taxes or penalties owed to governmental units − 11 U.S.C. Other − Specify $ 750000.00 purchase, lease, or rental of property or §507(a)(8). applicable paragraph of services for personal, family, or 11 U.S.C. §507(a)(). household use − 11 U.S.C. §507(a)(7). *Amounts are subject to adjustment on 4/01/16 and every 3 years thereafter with respect to cases commenced on or after the date of adjustment. 6. Credits. The amount of all payments on this claim has been credited for the purpose of making this proof of claim. (See instruction #6) Filed 10/25/17 Case 14-25820 Case Filed 15-02122 09/28/14 Claim 38 Doc 92 7. Documents: Attached are redacted copies of any documents that support the claim, such as promissory notes, purchase orders, invoices, itemized statements of running accounts, contracts, judgments, mortgages, security agreements, or, in the case of a claim based on an open−end or revolving consumer credit agreement, a statement providing the information required by FRBP 3001(c)(3)(A). If the claim is secured, box 4 has been completed, and redacted copies of documents providing evidence of perfection of a security interest are attached. If the claim is secured by the debtor's principal residence, the Mortgage Proof of Claim Attachment is being filed with this claim. (See instruction #7, and the definition of "redacted".) DO NOT SEND ORIGINAL DOCUMENTS. ATTACHED DOCUMENTS MAY BE DESTROYED AFTER SCANNING. If the documents are not available, please explain: 8. Signature: (See instruction #8) Check the appropriate box. I am the creditor. I am the creditor's authorized agent. I am the trustee, or the debtor, I am a guarantor, surety, indorser, or or their authorized agent. other codebtor. (See Bankruptcy Rule 3004.) (See Bankruptcy Rule 3005.) I declare under penalty of perjury that the information provided in this claim is true and correct to the best of my knowledge, information, and reasonable belief. Print Name: Gary R Dix Title: self Company: self Address and telephone number (if different from notice address above): s/Gary R Dix 9/28/2014 (Signature) (Date) Telephone number: email: Penalty for presenting fraudulent claim: Fine of up to $500,000 or imprisonment for up to 5 years, or both. 18 U.S.C. §§ 152 and 3571. Filed 10/25/17 Case 14-25820 Case Filed 15-02122 09/28/14 Claim 38 Part 2 Doc 92 Filed 10/25/17 Case 14-25820 Case Filed 15-02122 09/28/14 Claim 38 Part 2 Doc 92 Filed 10/25/17 Case 14-25820 Case Filed 15-02122 09/28/14 Claim 38 Part 2 Doc 92 Filed 10/25/17 Case 15-02122 Doc 92 Exhibit 4 Filed 10/25/17 Case 15-02122 Doc 92 From: Jeff March <jm@editpros.com> Sub]fJct: Brochure text draft and payment. Date; July 19, 2010 10:24:47 AM PDT To; Deepal Wannakuwatte <wannas@comcast.net>, Larry Carter <lcarter44@~mai l.com:>, Michael Kennedy <mkennedy7@sbcglobal.net> Cc: Marti Childs <mc@editpros.com> Hello, Deepal, Larry and Michael, As you may have seen in a ·11 be in the office only today and tomorrow, before beginning a medical eave or surgery on ednesday. Please let me know today if you have any changes you want me to make to the brochure text that I sent to you on June 7. Also, could you please check on payment status for our invoice to you dated June 10? We issued an invoice at the time we submitted our fi rst draft to you, per t he terms of our April 23 agreement. Payment was due on July 10. Please send payment to the attention of my.business partner, Marti Childs (copied on t his message). Many thanks. I hope the brochure helps achieve.your objectives. Best regards, Jeff *******•** 111*'***'***** Jeff March, partner EditPros LLC (est. 1993): writing I editing J proofreading 423 F Street, suite 206 Davis, CA 95616-4144 (530) 759-20.00 Earn a reward: http://V'NJW.§di·toros.corn/news.html#FINDERSFEE Linkedln profile: http://www.linkedin.com/in/radarjeff On Jul 1, 2010, at 5:53 PM, Michael Kennedy wrote: Jeff: I'm meeting with Deepal on Friday and will send you changes on Friday afternoon or T uesday. Sorry tor the delay. Michael Kennedy 916-73 1-5144 On. Jul 1, 2010, at 8:49 AM, Jeff March wrote: Hello, Deepal, Larry and Michael, I'm checking in again regarding your review of the JMG I RelyAid prospectus brochure text t hat I sent to you on June 7. After today, with an intervening vacation, I have only eight more w orking days left before I'll begin my extended medical leave fo r surgery and recovery. I'm focusing on typing up loose ends and completing projects now in progress. I would like to make whatever text revisions need to be done for the brochure. Do you think you can send me your comments or discuss them on the phone by, say, next Tuesday or Wednesday? Thank IMGC_0180202 Filed 10/25/17 Case 15-02122 Doc 92 f rom; Jeff March <jm@editpros.com> Subject: My medical leave begins this Wednesday Date: July 19, 201010:1 1:30 AM PDT To; James Goodchap <james@goodchap.com>, Diane Mothersell <diane@leonardconsulting.net>, David Ong <david.ong@ucdmc.ucdavis.edU>, "Niels C. Pedersen" <ncpedersen@ucdavis.edU>, Doug Rietz <doug@artofmarketing.com>, Deborah Rice <djrice@ucdavis.edu>, Gregg Servis <greg9.:sentis@ucdmc,.l:lcdavis..e.dU>,.Michelle Silva <Michelle.Silva@chw.edu>, Vicki Smith <VSmith@cimh.org>, Todd Sosna <tmq@verizon.net>, Linda Stanfel <linda@sterlingresearch.net>, Joe Starrett <js@peakdesign.net>,,Deepal Wannakuwatee <wannas@comcast.net>, Alice Washington <awashin9ton@cimb.org>. Dear clients and friends, I will be out of the office for several weeks beginning this Wednesday, when I will undergo surgery. I expect to be hospitalized for two to four days. I hope to be able to do some work during my recovery at home, perhaps beginning a couple of weeks after the surgery--depending upon my level of pain and other considerations. lf all goes well,. l may be abte to re.turn. ta the office in ~~~. Marti. Childs will be in the office and available to accept assignments. During my absence, p lease contact her by phooe at (530) 759-2000 or e-mail at < mc@editpros.com>. Feel free to "cc" me, although I may not be able to check e-mail regularly until the latter part of my recuperation. Marti. and I thank. you far your understanding. I look forward to my return to the office. Best regards, Jeff. ********** *********"' Jeff March, partner EditPros LLC (est. 1993): writing I editing I proofreading 4.Z.3. F Street,. suite 206 Davis, CA 95616-4144 (530) 759-2000 Earn a reward: httfil/www.eclitpros.com/nevvs.html#EINDERSFF E Unkedln profile: http://www.linkedin.com/in/radarjeff IMGC_0180203 Filed 10/25/17 Case 15-02122 Doc 92 Exhibit 5-·... ··---~~-..·->•.···-·..............-.......,_._....... 1 • • • • •,..............·~-·.,.,,,.............~.........-•.--......-....................... _....__J, ~ ~ •.,,,......................).!.. ~..............;o......................,.,...._............. ~.•• ~.............____• _ ___._.,..... _ _ _ _ _.: • ••.... ·:.•....;~-""' Filed 10/25/17 Case 15-02122 Doc 92 Cf/{LjS'fo ~r.f! I (ct Lt'\] Lt'tb-\ 95 l January 23, 2010 Larrr. Here are my thoughts on Jack's deal: 1. 'tour pledged assets as collat.enl! must have a release c1,.use. 2. There ~ustbe a sn~ymentdefaw~on ate in~~nt..L. Payments,!P-~~tl;e 1s~e ~ I #a-vi,,, ~/?v.-cr~r 3. Specific time period l\e will keep the funds. 4. Exit time period of ~ne year from written notke by either party. This also mcludes the death of any party./II.~ s. Mo involvement in o.d' business es caat phKi ta moire f1mecu4 iR thfscombigjtiJ (the new ~&Rtal deal and lheglove factoly}. 'fbese ptU1ir5 sltouhi go di1 edit w I.aft';'. 6. Interest rate of20% on all funds. c;/{. LJ.b-. 1 CuLf 7. l suggest a rounded number for the funds. a. Letters of credit $6.2 Mllllon b. Cash $2.6 Million Total $8.8 Million Keep loan at $10 Million 8. Who keeps the CD funds and who pays for..... th~ L/C fees? JM &(r'L' Jlo;_ OC--Y:Nt fr:-v.-r (~ ·f4r! 5 9..,f m l::t Jle m11g);i a i1:er$transfer lett~rs of credit if w e need tad ~ A-A/that:. 10. Larry will be the person who will communicate wi~ Jack at all times. All other documents signed by Deepal antt JMG to Jade a:~ null and void·. ssv ~..:1 •:>N I ·!liJ t: WO~.:! tlli'9 9t6: ·t::JN IMGC_0180405 ~~gg 966 9L6 Filed 10/25/17 Case 15-02122 Doc 92 Exhibit 6 Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 1 THOMAS A. WILLOUGHBY, State Bar No. 137597 JENNIFER E. NIEMANN, State Bar No. 142151 2 FELDERSTEIN FITZGERALD WILLOUGHBY & PASCUZZI LLP 3 400 Capitol Mall, Suite 1750 Sacramento, CA 95814 4 Telephone: (916) 329-7400 Facsimile: (916) 329-7435 5 e-mail: twilloughby@ffwplaw.com 6 Attorneys for the Chapter 11 Trustee, Beverly N. McFarland 7 UNITED STATES BANKRUPTCY COURT 8 EASTERN DISTRICT OF CALIFORNIA 9 SACRAMENTO DIVISION 10 In re: CASE NO.: 14-25820-D-11 11 INTERNATIONAL Chapter 11 12 MANUFACTURING GROUP, DCN: FWP-16 INC., 13 Date: January 21, 2015 14 Time: 10:00 a.m. Courtroom: 34 15 501 I Street, 6th Floor Sacramento, CA 16 EXHIBITS TO CHAPTER 11 TRUSTEE’S MOTION (I) TO APPROVE 17 SETTLEMENT WITH WANNAKUWATTE ESTATES AND (II) FOR SUBSTANTIVE CONSOLIDATION WITH CERTAIN NON-DEBTOR ENTITIES AS PART OF THE 18 SETTLEMENT 19 Exhibit Title 20 1 Settlement Agreement 21 2 Chart 22 3 Memorandum Letter, Number 199952016, dated December 30, 1999, from the Internal Revenue Service Assistant Chief Counsel 23 Dated: December 2, 2014 24 FELDERSTEIN FITZGERALD 25 WILLOUGHBY & PASCUZZI LLP 26 By:/s/Thomas A. Willoughby______ THOMAS A. WILLOUGHBY 27 Attorneys for Beverly N. McFarland, Chapter 11 Trustee 28 EXHIBITS TO MOTION (1) TO APPROVE SETTLEMENT WITH WANNAKUWATTE ESTATES AND (II) FOR-1-SUBSNTATIVE CONSOLIDATION Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 EXHIBIT 1 Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 INTER-ESTATE AGREEMENT This Inter-Estate Agreement ("Agreement"), dated November 19th, 2014, is made by and among: Beverly N. McFarland, as Trustee ("IMG Trustee") of the Chapter 11 estate (the "IMG Estate") of International Manufacturing Group, Inc. ("IMG") before the United States Bankruptcy Court for the Eastern District of California ("Court"), Case No. 14-25820-D-11 ("IMG Case"); Hank Spacone, as Trustee ("DW Trustee") of the Chapter 11 estate (the "DW Estate") of Deepal Sunil Wannakuwatte ("Wannakuwatte") in Case No. 14-25816-D-11 before the Court ("DW Case"); Alan S. Fukushima, as Trustee ("BW Trustee") of the Chapter 7 estate (the "BW Estate") of Betsy Kathryn Wannakuwatte ("Betsy") in Case No. 14-27645-D-7 before the Court ("BW Case"); and Douglas M. Whatley, as Trustee ("SW Trustee") of the Chapter 7 estate (the "SW Estate") of Sarah Kathryn Wannakuwatte ("Sarah") in Case No. 14-25678-D-7 before the Court ("SW Case"). In this Agreement, (i) IMG Trustee, DW Trustee, BW Trustee and SW Trustee are sometimes collectively referred to as the "Trustees" and each as a "Trustee," (ii) IMG Estate, DW Estate, BW Estate, SW Estate, Consolidated IMG Estate (as defined below), and Consolidated DW Estate (as defined below) are sometimes collectively referred to as the "Estates" and each as an "Estate," and (iii) IMG Case, DW Case, BW Case and SW Case are sometimes collectively referred to as the "Cases" and each as a "Case." RECITALS A. IMG is engaged in the retail sale and distribution of consumable or disposable medical supplies for dentists and supplies and equipment for tattoo artists. The United States Attorney’s Office has alleged that IMG was involved in a massive Ponzi scheme with its president, Wannakuwatte, by channeling an amount in excess of $120 million in investor funds through IMG and related-entity bank accounts over several years, and defrauding approximately 200 victims consisting primarily of individual investors. B. Prior to the filing of the IMG case, Wannakuwatte entered into a plea agreement with the United States Attorney’s Office in which he admitted to engaging in criminal activity, agreed to the filing of a Chapter 11 case for himself and related business entities, and stipulated to the appointment of a trustee in each case. C. On May 30, 2014, IMG initiated the IMG Case by filing a voluntary petition for relief under chapter 11 of Title 11 of the United States Code (the "Code"). On June 25, 2014, IMG Trustee was appointed in the IMG Case and remains in that capacity. D. On May 30, 2014, Wannakuwatte initiated the DW Case by filing a voluntary petition for relief under chapter 11 of the Code. On June 24, 2014, DW Trustee was appointed in the DW Case and remains in that capacity. E. On May 29, 2014, Sarah initiated the SW Case by filing a voluntary petition for relief under chapter 7 of the Code. The SW Trustee was appointed in the SW Case and remains in that capacity. 1 Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 F. On July 25, 2014, Betsy initiated the BW Case by filing a voluntary petition for relief under chapter 7 of the Code. The BW Trustee was appointed in the BW Case and remains in that capacity. G. On November 13, 2014, Wannakuwatte confirmed his plea agreement and was sentenced to a term of 20 years’ imprisonment by the United States District Court for the Eastern District of California. H. Based on their review of the claims asserted against their respective Estates, the Trustees have concluded that, apart from protective inter-estate claims filed by the Trustees themselves, the general unsecured claims scheduled in the IMG Case and the DW Case, as well as the general unsecured claims filed in the IMG Case, the DW Case and the BW Case, are substantially identical and consist almost entirely of claims asserted by or on behalf of victims of the Ponzi scheme. I. The IMG Trustee, DW Trustee and their respective counsel have conducted a preliminary analysis of the sources of potential recovery on general unsecured claims asserted in the Cases. The IMG Trustee and DW Trustee have concluded that any such recovery is likely to require litigation against third parties based on rights, claims and causes of action that may constitute the property of one or more of the Estates or of affiliated non-debtor entities. J. The Trustees have discussed the above and related matters with respect to the potential substantive consolidation of the Estates and certain non-debtor affiliates. On November 11, 2014, the Trustees became party to an inter-estate term sheet arising from a mediation session conducted at JAMS on that date by the IMG Trustee and DW Trustee with the Honorable Judge Randall Newsome (Ret.). The Trustees thus concurred in a mutual resolution of the matters addressed by this Agreement as detailed below. AGREEMENT NOW, THEREFORE, in consideration of the following and the mutual covenants and conditions set forth below, the Trustees agree as follows: 1. Incorporation of Recitals. The foregoing recitals are true and are a part of this Agreement. 2. Condition – Court Approval. The effectiveness of this Agreement is conditioned on entry of (a) an order in the IMG Case approving the compromise under Federal Rule of Bankruptcy Procedure 9019, or such other procedure as may be directed by the Court (collectively, "Approval Procedure"), and authorizing the IMG Trustee to enter into and carry out the terms of this Agreement (the "IMG Approval Order"), (b) an order in the DW Case approving the compromise under an Approval Procedure and authorizing the DW Trustee to enter into and carry out the terms of this Agreement (the "DW Approval Order"), and (c) to the extent and in the manner directed by the Court, orders in each of the BW and SW Cases approving the compromise under an Approval Procedure and authorizing the BW and SW Trustees to enter into and carry out the terms of this Agreement (the "Additional Approval Orders" and, collectively with the IMG Approval Order and the DW Approval Order, the 2 Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 "Approval Orders"). Promptly after execution of this Agreement, the IMG Trustee shall file and diligently prosecute a motion seeking the IMG Approval Order, the DW Trustee shall file and diligently prosecute a motion seeking the DW Approval Order, and the BW and SW Trustees shall, if so directed by the Court, file and diligently prosecute motions seeking the Additional Approval Orders. The Trustees shall support the motions seeking the Approval Orders. 3. Effective Date. The effective date ("Effective Date") of this Agreement shall be the earlier of (a) the date on which the last of the Approval Orders becomes final and non-appealable and (b) if a timely appeal is filed from one or more of the Approval Orders but no stay is obtained pending such appeal, the date on which the Trustees reasonably agree that the Agreement shall become effective. 4. Creation of Consolidated DW Estate. As of the Effective Date, the BW and SW Estates shall be substantively consolidated into the DW Estate, creating the "Consolidated DW Estate." The Consolidated DW Estate shall also substantively consolidate and include all ownership interests in all entities in which DW, BW, and SW hold an ownership interest (collectively, "DW Affiliates"). The compensation payable to the BW and SW Trustees shall be determined by the Court pursuant to applicable provisions of the Code in the BW Case and the SW Case, respectively, and such amounts shall be allowed as Chapter 11 administrative expenses of the Consolidated DW Estate. The compensation allowed the DW Trustee in the DW Case shall be subordinated to the compensation so allowed the BW Trustee and SW Trustee. 5. Creation and Potential Expansion of Consolidated IMG Estate. As of the Effective Date, or on such later date or dates as are determined by the IMG Trustee consistent with orders of the Court (each an "Applicable Later Date"), all DW Affiliates that are selected for consolidation by the IMG trustee ("Selected Entities") shall be substantively consolidated into the IMG Estate, creating the "Consolidated IMG Estate." Upon the Effective Date or Applicable Later Date, all assets of the Selected Entities shall become property of the Consolidated IMG Estate, and creditors of the Selected Entities shall be afforded notice and opportunity to file timely proof(s) of claim against the Consolidated DW Estate and the Consolidated IMG Estate, as applicable. 6. Administration of Other Property. The DW and IMG Trustees shall separately administer, for the benefit of their respective Consolidated Estates, all other scheduled and unscheduled real and personal property of such Estates ("Other Property"). 7. Litigation Rights. As of the Effective Date and any Applicable Later Date, except to the extent necessary to administer the Other Property, all claims, causes of action and legal rights of the Consolidated DW Estate and the Consolidated IMG Estate under both non-bankruptcy and bankruptcy law, including the provisions of Sections 502, 522, 542, 543, 544, 545, 547, 548, 549, 550, 553, 723 and 724 of the Code, or arising from the creation of the Consolidated DW Estate or the creation or expansion of the Consolidated IMG Estate (collectively, "Litigation Rights"), shall be combined into a common pool over which the IMG Trustee shall have exclusive right of control. 8. Allocation of Certain Proceeds. The gross proceeds from liquidation of the assets of the Selected Entities and gross recoveries made on account of the Litigation Rights shall be 3 Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 distributed 75% to the Consolidated IMG Estate and 25% to the Consolidated DW estate, with the associated broker commissions and special counsel fees and costs allocated and paid pro rata by the respective Consolidated Estates. Concomitantly, the contractual payment obligations (including, without limitation, obligations to IMG Funding, LLC, under its pending settlement with certain Trustees) and contingent fee obligations associated with the foregoing gross proceeds and gross recoveries shall be incurred in the same proportions, i.e., 75% by the Consolidated IMG Estate and 25% by the Consolidated DW Estate. 9. Withdrawal of Inter-Estate Claims. As of the Effective Date, the proofs of claim filed by the DW Trustee and IMG Trustee against the other Estates shall be deemed withdrawn. 10. Allowance of General Unsecured Claims. All general unsecured claims allowed against the Estates shall be paid without duplication from a single claim pool, funded by the Consolidated DW Estate and Consolidated IMG Estate from the funds that remain after separate payment by the DW Trustee and IMG Trustee of the administrative and priority claims allowed against their respective Consolidated Estates. 11. Tax Matters. With respect to the formal tax structure or reporting status of any asset, liability, entity, or claim under the direct or indirect control of the Consolidated DW Estate or the Consolidated IMG Estate, the DW Trustee and IMG Trustee may take action that may alter such status only upon mutual agreement unless otherwise ordered by the Court. 12. Binding Effect of Agreement. This Agreement is binding upon the Trustees and may be modified in writing upon the written agreement of both Trustees, or by bankruptcy court approval, if necessary. However The Agreement cannot be modified or rescinded by any plan of reorganization or plan of liquidation that may be subsequently confirmed in the IMG Case or the DW Case, and is binding upon any Chapter 7 trustee that may be subsequently appointed in the IMG Case or the DW Case. 13. Law and Jurisdiction. The Court shall retain exclusive jurisdiction to enforce the terms of this Agreement. 14. Attorneys’ Fees and Costs. Should any dispute arise out of this Agreement, each party shall be responsible to pay for its losses and damages, including attorneys’ fees, expert fees, litigation expenses, and costs, unless the lawsuit is voluntarily dismissed. 15. Entire Agreement. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties. No supplement, modification, waiver or termination of this Agreement, or any provision hereof, shall be binding, unless executed in writing by the parties to be bound thereby. The terms of this Agreement are contractual and not merely a recital. 16. Joint Drafting. The Trustees and their counsel have reviewed this Agreement, and agree that any rule of construction to the effect that any ambiguity in the interpretation of an agreement is to be resolved against the drafting party shall not apply. This Agreement shall be construed as if drawn and prepared by all parties hereto jointly. Any uncertainty and ambiguity shall not be interpreted for or against any one party. 4 Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 17. No Third Party Beneficiaries. Except as otherwise specifically provided for in this Agreement, nothing contained in this Agreement shall create any rights, remedies or defenses in favor of any party of interest that is not a party to this Agreement. 18. Counterparts. This Agreement may be executed in counterparts and a facsimile signature shall be deemed an original signature for purposes of executing this Agreement. 19. Additional Performance. The Trustees further agree to execute such documents or take such as actions as may reasonably be required to fully implement this Agreement. 20. Trustees’ Execution in Representative Capacity Only. The Trustees are executing this Agreement solely in their representative capacities. Nothing in this Agreement creates any liability of any kind directly against the Trustees or their individual or business assets. In the event of any breach of this Agreement, the party seeking a remedy therefor shall look solely to the applicable Estates for any damages or specific performance. [SIGNATURE BLOCKS APPEAR ON THE FOLLOWING PAGE] 5 Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 EXHIBIT 2 Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 DEPARTMENT OF THE TREASURY I N T E R N AL R E V E N U E S E R V I C E WASHINGTON, D.C. 20224 September 24, 1999 Number: 199952016 Release Date: 12/30/1999 CC:DOM:FS:PROC UILC: 6231.07-00 INTERNAL REVENUE SERVICE NATIONAL OFFICE FIELD SERVICE ADVICE MEMORANDUM FOR FROM: Deborah A. Butler Assistant Chief Counsel (Field Service) CC:DOM:FS SUBJECT: Tax Court Appointment of TMP or Class Representative This Field Service Advice responds to your memorandum dated September 22, 1999. Field Service Advice is not binding on Examination or Appeals and is not a final case determination. This document is not to be cited as precedent. LEGEND Mr. A = Mr. B = Date 1 = Date 2 = Date 3 = State Law Cites = X = ISSUES 1. Whether the substantive consolidation of a group of related partnerships for purposes of a bankruptcy proceeding serves to merge or consolidate the Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 2 partnerships such that a partner in a single partnership is deemed to be a partner in all of the partnerships. 2. Whether the Tax Court may appoint a nonpartner to serve as tax matters partner in a case that is pending before it. CONCLUSIONS 1. The substantive consolidation of a group of related partnerships for purposes of a bankruptcy proceeding does not merge or consolidate the partnerships. A partner in one of the substantively consolidated partnerships is not deemed to be a partner in all of the partnerships. 2. The Tax Court may not appoint a nonpartner to serve as tax matters partner in a case that is pending before it. The Tax Court may, however, appoint a representative for a party who may fulfill a role analogous to the role of the TMP. FACTS Mr. A is a general partner in each partnership within a group of related tax shelter partnerships. Mr. A is also designated as the tax matters partner of each of these partnerships. On Date 1, all partnerships were substantively consolidated into a single entity for purposes of an ongoing bankruptcy proceeding. On Date 2, Mr. A was indicted for matters relating to the tax shelter partnerships. In a related partnership item proceeding before the Tax Court, the Service filed a motion pursuant to T.C. Rule 250(b) to remove Mr. A as TMP. In response to the Service’s motion to remove the TMP, counsel for Mr. A filed a response indicating that Mr. A would resign as TMP if Mr. B were substituted as TMP. Mr. B is a partner in some, but not all, of the related partnerships. LAW AND ANALYSIS The position of the tax matters partner (TMP) is statutorily created and does not exist outside of the TEFRA partnership proceeding context. Specifically, I.R.C. § 6231(a)(7) establishes the position of the TMP, who is imbued with certain rights and responsibilities as set forth throughout the TEFRA partnership provisions. Section 6231(a)(7) also imposes certain limitations on who may be designated to serve as TMP. To be designated by the partnership, the TMP must be a general partner. I.R.C. § 6231(a)(7)(A). Absent a valid designation by the partnership, the general partner with the largest profits interest is the TMP by operation of law. Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 3 I.R.C. § 6231(a)(7)(B). If it is impracticable to apply the largest profits interest rule, then the Service may select any partner as TMP, regardless of whether the partner is a general or limited partner. TMP Designation by the Parties With regard to designations made by the partnership, the regulations provide that the partner must have been a general partner either at any time during the taxable year at issue or at the time the designation was made. Treas. Reg. § 301.6231(a)(7)-1(b). The largest profits interest rule is only applied, however, based upon the partner's interests at the close of the taxable year at issue. Treas. Reg. § 301.6231(a)(7)-1(m)(2). Similarly, a selection by the Service may include any partner who was a partner at any time during the taxable year at issue. Treas. Reg. §§ 301.6231(a)(7)-1(p)(1) and-1(q)(1). In the instant case, Mr. A has been indicted, and as a result, the Service has sought his removal as TMP. The representative of the current TMP has suggested Mr. B as a replacement; yet for a majority of the partnerships, Mr. B is not a partner. The statute and the regulations promulgated thereunder are clear and unambiguous: a TMP designated by the partnership must be a general partner. To the extent that Mr. B is not a partner in some of the partnerships, he may not be designated to be the TMP for those partnerships. It has been suggested that the substantive consolidation of the partnerships in the bankruptcy proceeding may, in effect, make Mr. B a current partner in all of the consolidated partnerships. If correct, Mr. B could be designated as TMP because he would be a general partner at the time the designation was made. See Treas. Reg. § 301.6231(a)(7)-1(b)(1)(ii). The Judgment for Substantive Consolidation in the bankruptcy proceeding states as follows: 7. Neither the order granting the motion for summary judgment for substantive consolidation nor this judgment shall be dispositive of the effects of this consolidation on the rights and liabilities of any partner not named as a defendant in this adversary proceeding, which rights and liabilities shall be determined later as necessary. The Order is clear that the Judgment for Substantive Consolidation alone does not alter the rights of the partners. Thus, though the partnerships have been consolidated for purposes of the bankruptcy proceeding, the Judgment for Substantive Consolidation, on its face, does not alter the legal structure of the partnerships. This conclusion is further strengthened when viewed in light of the state law regarding the merger or consolidation of partnerships in each of the jurisdictions in which the partnerships were formed. Under each provision, a Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 4 merger or consolidation of partnerships must be approved by the partners in order for it to be effective. See State Law Cites. In light of the foregoing, we conclude that the substantive consolidation of the partnerships for purposes of the bankruptcy proceeding did not serve to merge or consolidate the partnerships for any purpose other than the bankruptcy proceeding. Accordingly, Mr. B is not deemed to be a partner of all of the partnerships and thus may not be designated to serve as the TMP of all related partnerships that are docketed before the Tax Court. Similarly, because Mr. B is not a partner in several of the entities, he would not be the TMP under the largest profits interest rule. Lastly, as a nonpartner, Mr. B cannot be selected to serve as TMP by the Service. Appointment of a TMP by the Court Once a partnership item proceeding is docketed before the Tax Court, the court "draw[s] upon its inherent powers as a Court to appoint a tax matters partner...." Computer Programs Lambda, Ltd. v. Commissioner, 90 T.C. 1124, 1127 (1990). Under that inherent power, the Tax Court promulgated T.C. Rule 250(b), which provides that "the Court may appoint another partner as the tax matters partner if the partnership fails to designate a successor tax matters partner within such period as the Court may direct." Though this rule expressly sets forth the Tax Court’s authority to designate a TMP, the comment states that "Rule 250(b) is declarative of the Court’s inherent supervisory authority under existing law...." 90 T.C. at 1379. In Computer Programs Lambda, the court stated that it can draw upon its inherent powers "in order to protect the rights of partners interested in the partnership proceeding before us and to assure the fair, efficient, and consistent disposition of partnership litigation pursuant to section 6221 et. seq...." Expanding on this point, the court noted that the power to appoint a TMP is analogous to the power of a federal court under Fed. R. Civ. P. 23(d) to issue an "order to fulfill its responsibilities as guardians of the rights of absentee class members and to ensure the orderly progress of the action." Computer Programs Lambda, 90 T.C. at 1127. The power to appoint a lead counsel to represent a class is not expressly set forth in Fed. R. Civ. P. 23(d), yet the Tax Court cited to several cases in which Federal courts have made such appointments. In Cullen v. New York State Civil Service Comm’n, 566 F.2d 846, 849 (2d Cir. 1977), the court explained: Since absent class members are conclusively bound by the result of an action prosecuted by a party alleged to represent their interests, the court’s selection of counsel for the absent class should be guided by the best interests of those members, not the entrepreneurial initiative of the named plaintiffs’ counsel. In making a class certification decision, a district court must frequently select as lead counsel for the class the attorney who will best serve the interests of its members. And the court may also find it necessary Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 5 to appoint additional counsel to protect the interests of subclasses. See 7 Wright & Miller, Federal Practice and Procedure, Civil § 1765 at 617-623 (1972); 1 Moore's Federal Practice, Part 2, § 1.44 at 50-51 (2d ed. 1977). The TMP, though serving a vital role, has far less influence on the litigation than the lead counsel in a class action suit. The primary function of the TMP is to keep the nonparticipating partners apprised of the ongoing proceeding. As a mere conduit for information, clearly the court would have the authority to appoint a representative to serve in this capacity even though this person may not technically qualify to serve as TMP. The inherent powers of federal courts are those which "are necessary to the exercise of all others." Roadway Express, Inc. v. Piper, 447 U.S. 752 (1980), quoting United States v. Hudson, 7 Cranch 32, 34 (1812). These powers are those "deemed necessary to protect the efficient and orderly administration of justice and those necessary to command respect for the court's orders, judgments, procedures, and authority." In re Stone, 986 F.2d 898, 902 (5th Cir. 1993). Furthermore, inherent powers include "those reasonably useful to achieve justice." This category of powers recognizes that the legislature cannot foresee every tool the courts might need to employ to reach a result in all cases. Where it appears that a court cannot adequately and efficiently carry out its duties without employing some special device, the court has inherent power to do so. Id. In the instant case, there are over X docketed cases in which the TMP will ultimately need to be removed. A motion is presently pending in several of those cases, and to protect the orderly and efficient administration of justice, it would be appropriate for the court to appoint a single representative for all of these cases. That representative may not qualify under section 6231(a)(7) to serve as TMP; however, under the court's inherent powers, it may appoint a representative outside of this provision. Pursuant to the court's inherent powers, Mr. B may be appointed as a representative in these related TEFRA partnership cases. CASE DEVELOPMENT, HAZARDS AND OTHER CONSIDERATIONS Filed 10/25/17 12/03/14 Case 15-02122 14-25820 Doc Doc335 92 6 If you have any further questions, please call the branch telephone number. DEBORAH A. BUTLER By: HENRY S. SCHNEIDERMAN Technical Assistant to the Assistant Chief Counsel (Field Service) cc: Patricia Donahue Assistant Regional Counsel CC:WR Steven J. Mopsick Northern California Associate District Counsel CC:WR:NCA:SAC