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]

 

 

October 15, 2009

 

STATUS UPDATE #24

 

NOTE: The Status Updates are cumulative.  Please read all twenty-four updates.

 

BANKRUPTCY COURT ADVERSARY

 

Each Defendant has filed a summary judgment motion seeking judgment in its favor.  In layman’s terms this means that the Defendants are attempting to avoid a trial at which the court would hear the facts as presented through the witnesses and the documents on which we base our claims.  If the court were to grant those motions we would not have a trial on the facts that support our claims, meaning in essence that we would lose.  The Trustee is opposing those summary judgment motions and his response in opposition will be filed by November 2, 2009.  The Defendants have until January 14, 2010 to file a response to the Trustee’s opposition to summary judgment.

 

No additional distribution to creditors can occur unless the Trustee favorably resolves this lien dispute with Greenwich.

 

STATE COURT LITIGATIONS

 

            The last remaining segment of the State Court Litigation has been settled for $100,000,000.  That segment involved the claims asserted against the Financial Institution Defendants.  Because of this settlement, the trial scheduled for October 26, 2009 has been cancelled.  A hearing seeking the Bankruptcy Court approval of the settlement with the Financial Institution Defendants has been scheduled for November 4, 2009.

 

            Greenwich Capital Financial Products, Inc. has asserted a lien against the entire amount of the $100,000,000 settlement, claiming that Greenwich has a right to these funds as part of its security agreement.  The Trustee vigorously disputes Greenwich’s assertions.  The Trustee’s position is that the proceeds of the settlement with the Financial Institution Defendants should be made available for the benefit of the Estate’s creditors.  The Indenture Trustees have not yet filed any pleading in support of the Trustee’s opposition to Greenwich’s lien position.

 

ARBITRATION

 

            The Trustee has filed an Arbitration Claim against the Debtor’s former independent certified public accountants (“CPA Firm”) alleging damages were caused by the CPA Firm.  The Arbitration process is on-going and the Arbitration date has not been scheduled. 

 

DISTRIBUTION TO CREDITORS

 

            The Trustee has paid $5,411,047 to the Indenture Trustees pursuant to the IT Settlement.

 

            The Indenture Trustee for Senior Collateralized Notes dated June 30, 2004 is Wells Fargo Bank N.A., Corporate Trust Services, MAC N9303-120, Sixth Street and Marquette Ave, Minneapolis, MN 55479. 

 

            The Indenture Trustee for Senior Collateralized Notes dated December 31, 2003 is Law Debenture Trust Company of New York, 767 Third Ave, 31st Floor, New York, New York 10017.
           

            Distribution to creditors on the Trust Indentures identified above are handled by the respective Indenture Trustee identified above.  Please contact the Indenture Trustees regarding the status of your distribution.

 

            There was a Class Action Lawsuit brought by the Berger and Montague Law Firm, Philadelphia, PA.  The Class Action Lawsuit is separate and distinct from the Chapter 7 bankruptcy proceeding.  The Chapter 7 Trustee was advised that a distribution to members of the class could approximately 5%.  The Chapter 7 Trustee does not have information on the amount or timing of the distribution.  Please contact Berger and Montague with any questions.