George L. Miller, Trustee

Eight Penn Center, Suite 950

1628 John F. Kennedy Boulevard

Philadelphia, PA 19103

 

Phone: (215) 561-0950

Fax: (215) 561-0330

Email: [email protected]

 

 

April 1, 2008

 

STATUS UPDATE #18

 

NOTE: The Status Updates are cumulative.  Please read all eighteen updates.

 

LITIGATION

 

I will not comment on pending litigation other than to describe the procedural status of such matters.  Please review updates #1 through #17 for additional information.

 

STATE COURT ACTION

 

In October 2007, the Defendants submitted a motion to the Federal Court again seeking to transfer the State Court action to the Federal Court.  The Federal Court again rejected this second transfer attempt ruling that a transfer was not proper and returned the State Court Action to the Philadelphia Court of Common Pleas (“The State Court”) for a jury trial.

 

On January 19, 2006, the Trustee commenced an action against Bradley Weber, a former ABFS’s Senior Vice President for Servicing/Collection Operations (“Weber Lawsuit”).  On February 15, 2008, the Trustee filed a lawsuit against the ABFS’s former general counsel law firm (“Law Firm Lawsuit”).  On March 24, 2008, the Defendants in the State Court Action requested the State Court to combine the Weber Lawsuit and the Law Firm Lawsuit with the State Court Action.

 

The Trustee has begun the discovery process in the State Court Action.  Trial is currently scheduled to begin no earlier than  April 2009.  Except for procedural matters, I do not anticipate any quick resolution of the State Court Action, the Weber Lawsuit or Law Firm Lawsuit.

 

BANKRUPTCY COURT ACTIONS

 

The major litigation in Bankruptcy Court is the Disbursement Motion, the Greenwich et al Adversary and Preferences.

 

Disbursement Motion

 

Trial was held and concluded in August 2007.  Post trial pleadings have been filed.  The Bankruptcy Trustee has resolved his claims against the Indenture Trustees and the Bankruptcy Court approved the resolution in December, 2007.  The resolution of the claims against the Indenture Trustees are described in the Indenture Trustees Settlement.  Please read Status Update #17 for the description.

 

 

Greenwich is the only remaining party opposing the Bankruptcy Trustee’s Disbursement Motion.  All post-trial briefs on the Disbursement Motion were filed in November 2007.  I am awaiting a decision from the Bankruptcy Court on the Disbursement Motion.

 

Greenwich et al Adversary

 

In July 2007, Greenwich, Ocwen, Berkshire Group and Michael Trickey each filed Motions to Dismiss requesting the Bankruptcy Court to dismiss the Trustee’s Adversary proceedings for various reasons.

 

The Bankruptcy Court DENIED Berkshire Group and Michael Trickey’s Motions to Dismiss in November 2007 and DENIED Greenwich’s and Ocwen’s Motions to Dismiss on March 20, 2008.  Pretrial discovery and depositions have begun.  A trial date has not been set by the Bankruptcy Court.

 

Preferences

 

See status Update #13 for more information.

 

Other Matters

 

In January 2008, Anthony Santilli died.  Mr. Santilli is the former President and Chairman of the Board.  I do not expect a major impact on the litigation because of his death.

 

Summary

 

I still receive numerous telephone calls regarding the same issues.  I will try to summarize these issues in plain language.