EX-99.1 2 dex991.htm MONTHLY OPERATING REPORT Monthly Operating Report

Exhibit 99.1

UNITED STATES DEPARTMENT OF JUSTICE

OFFICE OF THE UNITED STATES TRUSTEE

CENTRAL DISTRICT OF CALIFORNIA

 

In Re:

FirstFed Financial Corp

     CHAPTER 11 (BUSINESS)   
         
       Case Number:      2:10-bk-12927-ER   
       Operating Report Number:      17   
Debtor(s).      For the Month Ending:      May 31, 2011   

I. CASH RECEIPTS AND DISBURSEMENTS

A. (GENERAL ACCOUNT*)

 

1. TOTAL RECEIPTS PER ALL PRIOR GENERAL ACCOUNT REPORTS

        228,570.55   
           

2. LESS: TOTAL DISBURSEMENTS PER ALL PRIOR GENERAL ACCOUNT REPORTS

        781,304.93   
           

3. BEGINNING BALANCE:

        3,289,152.66   
           

4. RECEIPTS DURING CURRENT PERIOD:

     

Accounts Receivable—Post-filing

     
           

Accounts Receivable—Pre-filing

     
           

General Sales

     
           

**Other—Rent deposit refund

     0.00      
           

TOTAL RECEIPTS THIS PERIOD:

        0.00   
           

5. BALANCE:

        3,289,152.66   
           

6. LESS: TOTAL DISBURSEMENTS DURING CURRENT PERIOD

     

Transfers to Other DIP Accounts (from page 2)

     0.00      
           

Disbursements (from page 2)

     45,862.52      
           

TOTAL DISBURSEMENTS THIS PERIOD:***

        45,862.52   
           

7. ENDING BALANCE:

        3,243,290.14   
           

8. General Account Number(s):

  

xxxxxxxx

  

Union Bank

Depository Name & Location:

  

445 South Figueroa

  

Los Angeles, CA 90071

 

* All receipts must be deposited into the general account.
** Include receipts from the sale of any real or personal property out of the ordinary course of business; attach an exhibit specifying what was sold, to whom, terms, and date of Court Order or Report of Sale.
*** This amount should be the same as the total from page 2.

 

           
        Page 1 of 18         Principal for debtor-in-possession


TOTAL DISBURSEMENTS FROM GENERAL ACCOUNT FOR CURRENT PERIOD

 

Date

mm/dd/yyyy

  

Check
Number

    

Payee or DIP account

  

Purpose

   *Amount
Transfered
     **Amount
Disbursed
     Amount  
5/6/2011      1100       Landau, Gottfried, & Berger    Legal-Bankruptcy Counsel         23,197.82         23,197.82   
5/6/2011      1101       Carl W McKinzie    Professional Svcs. (May 2011)         16,000.00         16,000.00   
5/10/2011      1102       Chris Damore    Accounting Svcs-Apr-11         382.50         382.50   
5/11/2011      1103       Franchise Tax Board    Tax assessment-2009 tax year         100.27         100.27   
5/11/2011      1104       Franchise Tax Board    Tax assessment-2010 tax year         80.00         80.00   
5/20/2011      EFT       Hartford Insurance    payroll costs, workman’s comp         53.00         53.00   
5/31/2011      1105       RR Donnelley    8k Filing on May 17, 2011         889.00         889.00   
5/31/2011      1106       Manatt, Phelps & Phillips, LLP    Legal-Special Counsel         3,659.93         3,659.93   
5/31/2011      1107       Riordon, Lewis & Haden    Rent Jun-11         1,500.00         1,500.00   
                                   
        

TOTAL DISBURSEMENTS

THIS PERIOD:

     —           45,862.52         45,862.52   
                                   

 

* Fill in amounts in this column if they are TRANSFERS to another DIP account (e.g. Payroll or Tax); the “amount” column will

be filled in for you.

** Fill in amounts in this column if they are DISBURSEMENTS to outside payees; the “amount” column will be filled in for you.

 

           
        Page 2 of 18         Principal for debtor-in-possession


GENERAL ACCOUNT

BANK RECONCILIATION

 

Bank statement Date:

      5/31/2011      Balance on Statement:       $     3,249,339.07   
                   

Plus deposits in transit (a):

           
         

Deposit Date

   Deposit Amount         
           
                   
           
                   
           
                   
           
                   
           
                   
           
                         

TOTAL DEPOSITS IN TRANSIT

              0.00   
                 

Less Outstanding Checks (a):

           
    

Check Number

  

Check Date

  

Check Amount

        
   1105    5/31/2011      889.00      
                     
   1106    5/31/2011      3,659.93      
                     
   1107    5/31/2011      1,500.00      
                     
           
                     
           
                     
           
                     
           
                           

TOTAL OUTSTANDING CHECKS:

              6,048.93   
                 

Bank statement Adjustments:

           
                 

Explanation of Adjustments-

           
                             
           
                 

ADJUSTED BANK BALANCE:

            $ 3,243,290.14   
                 

 

* It is acceptable to replace this form with a similar form
** Please attach a detailed explanation of any bank statement adjustment

 

           
        Page 3 of 18         Principal for debtor-in-possession


I. CASH RECEIPTS AND DISBURSEMENTS

B. (PAYROLL ACCOUNT)

 

1.  

TOTAL RECEIPTS PER ALL PRIOR PAYROLL ACCOUNT REPORTS

        0.00   
             
2.  

LESS: TOTAL DISBURSEMENTS PER ALL PRIOR PAYROLL
ACCOUNT REPORTS

        375,516.60   
             
3.  

BEGINNING BALANCE:

        124,483.40   
             
4.  

RECEIPTS DURING CURRENT PERIOD:

     
             
5.  

BALANCE:

        124,483.40   
             
6.  

LESS: TOTAL DISBURSEMENTS DURING CURRENT PERIOD TOTAL DISBURSEMENTS THIS PERIOD:***

        10,820.67   
             
7.  

ENDING BALANCE:

        113,662.73   
             
8.  

PAYROLL Account Number(s):

     
       
       xxxxxxxxxxxx      
             
 

Depository Name & Location:

       Union Bank      
             
         445 South Figueroa      
             
         Los Angeles, CA 90071      
             

 

 

           
        Page 4 of 18         Principal for debtor-in-possession


TOTAL DISBURSEMENTS FROM PAYROLL ACCOUNT FOR CURRENT PERIOD

 

Date

mm/dd/yyyy

   Check
Number
    

Payee

  

Purpose

   Amount  

5/31/2011

     EFT       Brian Argrett    Jun 2011 Salary (net of payroll taxes)      7,343.34   

5/31/2011

     EFT       various governments    Payroll Taxes -Jun 2011      3,421.66   

5/31/2011

     EFT       CBIZ    Payroll Processing Charge      55.67   
         Jun 2011 payroll paid on 05/31/11 by payroll processor   
                 
         TOTAL DISBURSEMENTS THIS PERIOD:      10,820.67   
                 

 

           
        Page 5 of 18         Principal for debtor-in-possession


PAYROLL ACCOUNT

BANK RECONCILIATION

 

   Bank statement Date:       5/31/2011      Balance on Statement:       $ 113,662.73   
                      

Plus deposits in transit (a):

              
                

Deposit Date

   Deposit Amount         
              
                      
              
                      
              
                      
              
                      
              
                      
              
                            

TOTAL DEPOSITS IN TRANSIT

                 0.00   
                    

Less Outstanding Checks (a):

              
          Check Number     

Check Date

   Check Amount         
              
                            
              
                            
              
                            
              
                            
              
                            
              
                            
              
                                  

TOTAL OUTSTANDING CHECKS:

                 0.00   
                    

Bank statement Adjustments:

              
                    

Explanation of Adjustments-

              
                                      
                                      

ADJUSTED BANK BALANCE:

               $ 113,662.73   
                    

 

* It is acceptable to replace this form with a similar form
** Please attach a detailed explanation of any bank statement adjustment

 

           
        Page 6 of 18         Principal for debtor-in-possession


I. CASH RECEIPTS AND DISBURSEMENTS

C. (TAX ACCOUNT)

 

 

1.  

TOTAL RECEIPTS PER ALL PRIOR TAX ACCOUNT REPORTS

        0.00   
             
2.   LESS: TOTAL DISBURSEMENTS PER ALL PRIOR TAX ACCOUNT REPORTS         0.00   
             
3.  

BEGINNING BALANCE:

        10,000.00   
             
4.  

RECEIPTS DURING CURRENT PERIOD:

     
             
5.  

BALANCE:

        10,000.00   
             
6.  

LESS: TOTAL DISBURSEMENTS DURING CURRENT PERIOD TOTAL DISBURSEMENTS THIS PERIOD:***

        0.00   
             
7.  

ENDING BALANCE:

        10,000.00   
             
8.  

TAX Account Number(s):

   xxxxxxxxxxxx   
         
         Union Bank   
         
 

Depository Name & Location:

       445 South Figueroa   
         
         Los Angeles, CA 90071   
         

 

 

           
        Page 7 of 18         Principal for debtor-in-possession


TOTAL DISBURSEMENTS FROM TAX ACCOUNT FOR CURRENT PERIOD

 

Date

mm/dd/yyyy

  Check
Number
    

Payee

  

Purpose

  Amount  
    

NONE

       none   
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
         
                           
       

TOTAL DISBURSEMENTS THIS PERIOD:

    0.00   
               

 

 

 

           
        Page 8 of 18         Principal for debtor-in-possession


TAX ACCOUNT

BANK RECONCILIATION

 

   Bank statement Date:    5/31/2011    Balance on Statement:    $ 10,000.00   
                   

Plus deposits in transit (a):

           
         

Deposit Date

  

Deposit Amount

      
           
               
           
               
           
               
           
               
           
               
           
                     

TOTAL DEPOSITS IN TRANSIT

           0.00   
                 
           

Less Outstanding Checks (a):

           
    

Check Number

  

Check Date

  

Check Amount

      
           
                 
           
                 
           
                 
           
                 
           
                 

TOTAL OUTSTANDING CHECKS:

           0.00   
                 

Bank statement Adjustments:

           
                 

Explanation of Adjustments-

           
         
                         
           
                 

ADJUSTED BANK BALANCE:

         $ 10,000.00   
                 

 

* It is acceptable to replace this form with a similar form
** Please attach a detailed explanation of any bank statement adjustment

 

 

           
        Page 9 of 18         Principal for debtor-in-possession


I. D SUMMARY SCHEDULE OF CASH

ENDING BALANCES FOR THE PERIOD:

(Provide a copy of monthly account statements for each of the below)

 

   General Account:      3,243,290.14      
              
   Payroll Account:      113,662.73      
              
   Tax Account:      10,000.00      
              

*Other Accounts:

        
                
        
                
        
                

*Other Monies:

        
                
   **Petty Cash (see below):      0.00      
              
        
              

TOTAL CASH AVAILABLE:

        3,366,952.87   
              

Petty Cash Transactions:

        

Date

  

Purpose

   Amount         
   Opening balance      11.24      
                  

5/11/2011

   Purchase stamps      11.24      
                  
        
                  
        
                  
        
                  
        
                  
        
                  
        
                  
        
              

TOTAL PETTY CASH TRANSACTIONS:

        11.24   
              

ENDING PETTY CASH

        0.00   
              

 

* Specify the Type of holding (e.g. CD, Savings Account, Investment Security), and the depository name, location & account #
** Attach Exhibit Itemizing all petty cash transactions

 

 

 

           
        Page 10 of 18         Principal for debtor-in-possession


II. STATUS OF PAYMENTS TO SECURED CREDITORS, LESSORS

AND OTHER PARTIES TO EXECUTORY CONTRACTS

 

Creditor, Lessor, Etc.

   Frequency of Payments
(Mo/Qtr)
     Amount of Payment      Post-Petition
payments not made
(Number)
     Total Due  

Regus Mgt, lessor*

     monthly       $ 0.00         0         0.00   

Premier Business Centers**

     monthly       $ 0.00         0         0.00   

Riordon, Lewis & Haden ***

     monthly       $ 1,500.00         0         0.00   
           
           
           
           
           
           
           
           
           
           
                 
           TOTAL DUE:         0.00   
                 

 

* FirstFed Financial Corp. vacated offices managed by Regus Mgt. on 06/22/10.
** FirstFed Financial Corp vacated offices managed by Premier Business Centers prior to 09/30/10.
*** FirstFed Financial Corp entered into a new lease agreement effective 10/01/10.

The offices are managed by Riordan, Lewis & Haden.

III. TAX LIABILITIES

FOR THE REPORTING PERIOD:

     Gross Sales Subject to Sales Tax:         0.00   
              
     Total Wages Paid:         10,000.00   
              
     Total Post-Petition
Amounts Owing
     Amount Delinquent      Date Delinquent
Amount Due
 

Federal Withholding*

        

State Withholding*

        

FICA—Employer’s Share*

        

FICA—Employee’s Share*

        

Federal Unemployment*

        

Sales and Use

        

Real Property

        

Other-Delaware Franchise**

     3,125.00         0.00      
                    

TOTAL:

     3,125.00         0.00      
                    

 

* Amounts paid through the payroll account. See “Total Disbursements from Payroll Account Current Period”
** The State of Delaware is requesting additional information from the Debtor as the Debtor changed its methodology from the authorized share method to the capital method (using gross assets). See also “Aging of Accounts Receivable”

 

 

           
        Page 11 of 18         Principal for debtor-in-possession


IV. AGING OF ACCOUNTS PAYABLE AND RECEIVABLE

 

     *Accounts Payable
Post-Petition
     Accounts Receivable  
        Pre-Petition      Post-
Petition
 

30 days or less

     3,023.60         0.00         0.00   

31—60 days

     0.00         0.00         0.00   

61—90 days

     0.00         0.00         0.00   

91—120 days

     0.00         0.00         0.00   

Over 120 days

     0.00         124,600.00         0.00   
                          

TOTAL:

     3,023.60         124,600.00         0.00   
                          

Delaware receivable of $124,600 proposed by Debtor is still pending.

V. INSURANCE COVERAGE

 

Type

   Name of
Carrier
   Amount of
Coverage
     Policy Expiration
Date
     Premium Paid
Through (Date)
 

General Liability

   Hartford      1,000,000.00         6/11/2011         6/11/2011   

Worker’s Compensation

   Hartford      1,000,000.00         6/11/2011        
 
Paid with
Payroll
  
  

Casualty

   None         

Vehicle

   None         

The Debtor also maintains directors and officers liability coverage purchased pre-petition for the 2009/2010 coverage year and an extended reporting period for the policies covering the 2008/2009 coverage year also purchased pre-petition.

VI. UNITED STATES TRUSTEE QUARTERLY FEES

(TOTAL PAYMENTS)

 

Quarterly Period Ending (Date)

   Total
Disbursements
     Quarterly
Fees
     Date Paid      Amount
Paid
     Quarterly Fees
Still Owing
 

31-Mar-2010

     134,229.09         975.00         18-Apr-2010         975.00         0.00   

30-Jun-2010

     157,114.39         1,625.00         20-Jul-2010         1,625.00         0.00   

30-Sep-2010

     89,586.25         975.00         12-Oct-2010         975.00         0.00   

31-Dec-2010

     333,124.03         4,875.00         10-Jan-2011         4,875.00         0.00   

31-Mar-2011

     378,812.38         4,875.00         27-Apr-2011         4,875.00         0.00   
                 0.00   
                 0.00   
                 0.00   
                 0.00   
                                
        13,325.00            13,325.00         0.00   
                                

 

* Post-Petition Accounts Payable SHOULD NOT include professionals’ fees and expenses which have been incurred but not yet awarded by the court. Post-Petition Accounts Payable SHOULD include professionals’ fees and expenses authorized by Court Order but which remain unpaid as of the close of the period report

 

           
        Page 12 of 18         Principal for debtor-in-possession


VII SCHEDULE OF COMPENSATION PAID TO INSIDERS

 

Name of Insider

   Date of Order Authorizing
Compensation
  *Authorized Gross
Compensation
     Gross Compensation Paid
During the Month***
 

Babette Heimbuch

   **   $ 20,000/ month         0.00   

Vikas Arora

   **   $ 17,500/ month         0.00   

Brenda Battey

   ***   $ 20,000/month         0.00   

Brian Argrett

   ****   $ 10,000/month         10,000.00   

 

* Please indicate how compensation was identified in the order (e.g. $1,000/week, $2,500/month)
** Notice of Insider Compensation for Babette Heimbuch and Vikas Arora was filed and served on the UST and other necessary parties on January 7, 2010; no objections were filed.
*** Ms. Heimbuch and Mr. Arora no longer work for the Debtor. Ms. Battey works periodically for the Debtor at a rate of $150.00 per hour.
**** Notice of Insider Compensation for Brian Argrett was filed and served on the UST and other necessary parties on June 10, 2010; no objections were filed. Mr, Argrett was engaged by the Debtor upon the resignation of Ms. Heimbuch to provide Debtor with a second officer and to serve as its then Chief Executive Officer. Mr. Argrett currently serves as Corporate Secretary.

VIII. SCHEDULE OF OTHER AMOUNTS PAID TO INSIDERS

 

Name of Insider

   Date of Order Authorizing
Compensation
     Description      Amount Paid During
the Month
 

NONE

        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        

 

           
        Page 13 of 18         Principal for debtor-in-possession


IX. PROFIT AND LOSS STATEMENT

(ACCRUAL BASIS ONLY)

 

     Current Month     Cumulative Post-Petition  

Sales/Revenue:

    

Gross Sales/Revenue

     —          —     
                

Less: Returns/Discounts

     —          —     
                

Net Sales/Revenue

     —          —     
                

Cost of Goods Sold:

    

Beginning Inventory at cost

    
                

Purchases

    
                

Less: Ending Inventory at cost

    
                

Cost of Goods Sold (COGS)

     —          —     
                

Gross Profit

     —          —     
                

Other Operating Income (Itemize)

    
                

Operating Expenses:

    
                

Payroll—Insiders

     10,000.00        346,153.85   
                

Payroll—Other Employees

     —          —     
                

Payroll Taxes

     765.00        27,984.56   
                

Other Taxes (Itemize)

     —          —     
                

Legal & Professional-Special Counsel *

     3,659.93        303,659.93   
                

Legal & Professional-Bankruptcy Counsel **

     23,197.82        499,084.30   
                

Legal & Professional-Administration ***

     16,000.00        184,000.00   
                

Legal & Professional-Accounting & Auditing ****

     297.50        203,640.87   
                

Legal & Professional-Other *****

     —          50,000.00   
                

Depreciation and Amortization

     24.00        408.00   
                

Rent Expense—Real Property

     1,500.00        25,257.79   
                

Lease Expense—Personal Property

     —          —     
                

Insurance

     53.00        2,175.00   
                

Real Property Taxes

     —          —     
                

Telephone and Utilities

     —          1,194.20   
                

IT Expenses

     —          371.00   
                

Travel and Entertainment (Itemize)

       —     
                

Parking & Mileage

     —          1,320.75   
                

Miscellaneous Operating Expenses (Itemize)

       —     
                

Stock registrar fees

     684.10        8,811.42   
                

Delaware & Calif filing fees & franchise tax

     180.27        4,960.27   
                

Indentured Trustee Expenses

     —          600.00   
                

SEC 8K fees

     1,956.00        15,530.00   
                

Relocation Expenses

     —          1,605.88   
                

CSC fee for Delaware representation

     —          356.00   
                

US Trustee fees accrued

     650.00        14,300.00   
                

Office Supplies

     —          347.86   
                

Postage & Courier

     11.24        203.28   
                

Document Management

     —          12,869.20   
                

Payroll Processing Fees

     80.67        1,378.19   
                

Total Operating Expenses

     59,059.53        1,706,212.35   
                

Net Gain/(Loss) from Operations

     (59,059.53     (1,706,212.35
                

 

           
        Page 14 of 18         Principal for debtor-in-possession


IX. PROFIT AND LOSS STATEMENT

(ACCRUAL BASIS ONLY)

 

     Current Month     Cumulative Post-Petition  

Non-Operating Income:

    

Interest Income

    
                

Net Gain on Sale of Assets (Itemize)

    
                

Other (Itemize)

    
                

Total Non-Operating income

     —          —     
                

Non-Operating Expenses:

    

Interest Expense

    
                

Legal and Professional (Itemize)

    
                

Other (Itemize)

    
                

Total Non-Operating Expenses

     —          —     
                

NET INCOME/(LOSS)

     (59,059.53     (1,706,212.35
                

(Attach exhibit listing all itemizations required above)

 

Footnotes:
* Special counsel Manatt, Phelps & Phillips, LLP were paid pre-petition an initial retainer of $300,000. No Pre-petition fees and costs credited were used against the retainer. A $300,000 adjustment to Prepaid Legal Expense was made through Owners’ Equity. Costs and expenses incurred between the filing date and Mar-2011 were $304,574.92 exhausting the retainer. $82,345.60 in fees and costs through May-2011 remain incurred and unpaid.
** Bankruptcy counsel Landau, Gottfried & Berger, LLP were paid pre-petition an initial retainer of $250,000. Pre-petition fees and costs credited against the retainer were $50,810.31 leaving a remaining retainer of $199,189.69 as of the filing date. A $199,189.69 adjustment to Prepaid Legal Expense was made through Owners’ Equity. Costs and fees from the filing date until August 2010 were $210,461.44 exhausting the remaining retainer. Pending court approval, $49,223.47 in fees for April and May 2011 have been incurred but not accrued. Additionally, $72,314.27 in unpaid fees for August 2010 through March 2011 representing the 20% withheld amount per the Knudsen Order remain unpaid. See footnote ** on Schedule X -Balance Sheet.
*** June and July Professional fees totaling $40,000 for Delta Corps, Inc., hiring Donald Pelgrim as Chief Administrative Officer, were paid after approval for payment by the Bankruptcy court. September 2010 through May 2011 professional fees of $180,000 for Carl McKinzie as Chief Executive Officer were incurred. $144,000 was paid after approval for payment by the Bankruptcy Court.
**** Accounting & Auditing Professional fees in the amount of $13,356 for Hutchinson & Bloodgood, LLP were incurred and unpaid pending approval of the fee statement from Bankruptcy court. Hutchinson & Bloodgood is no longer providing services to the Debtor.
**** The Debtor engaged Crowe Horwath, LLP for assistance with various tax matters including a 2008 federal tax audit and the filing of the 2009 tax returns. May through October 2010 costs and professional fees of $194,416.62 for Crowe Horwath’s engagement were paid after court approval, Pending court approval $248,221.86 in costs and fees for November 2010 through May 2011 have been incurred but not accrued. Additionally, $48,450.90 in unpaid fees for May through October 2010 representing the 20% withheld amount per the Knudsen Order remain unpaid. See footnote ** on Schedule X -Balance Sheet.

 

           
        Page 15 of 18         Principal for debtor-in-possession


X. BALANCE SHEET

(ACCRUAL BASIS ONLY)

 

     Current Month End        

ASSETS

    

Current Assets:

    
          

Unrestricted Cash

     3,366,952.87     
          

Restricted Cash

    
          

Accounts Receivable (Itemized, see below)*

     124,600.00     
          

Inventory

    
          

Notes Receivable

    
          

Prepaid Expenses (Rent)

     1,500.00     
          

Prepaid Expense-Legal Special Counsel

     —       
          

Prepaid Expense-Legal Bankruptcy Counsel

     —       
          

Prepaid Expense-Other Legal Counsel

     —       
          

Other (Prepaid Payroll)

     10,820.67     
                

Total Current Assets

       3,503,873.54   
          

Property, Plant, and Equipment

     875.00     
          

Accumulated Depreciation/Depletion

     408.00     
                

Net Property, Plant, and Equipment

       467.00   
          

Other Assets (Net of Amortization):

    

Due from Insiders

    
          

Other (Rent Deposits)

     2,912.00     
                

Total Other Assets

       2,912.00   
          

TOTAL ASSETS

       3,507,252.54   
          

LIABILITIES

    
          

Post-petition Liabilities:

    
          

Accounts Payable (Itemized, see below)**

     3,023.60     
          

Taxes Payable—Delaware Franchise Tax 2010

     3,125.00     
          

Notes Payable

    
          

Professional fees

    
          

Secured Debt

    
          

Other (Itemize)

    
                

Total Post-petition Liabilities

       6,148.60   
          

Pre-petition Liabilities:

    

Secured Liabilities

    
          

Priority Liabilities

    
          

Unsecured Liabilities***

     159,617,187.50     
          

Other (Itemized, see below)****

     1,521.21     
                

Total Pre-petition Liabilities

       159,618,708.71   
          

TOTAL LIABILITIES

       159,624,857.31   
          

EQUITY:

    
          

1 Pre-petition Owners’ Equity (original amount)

     (155,177,680.00  
          

2 Direct Charges to Equity (Itemized, see below)*****

     766,287.58     
          

3 Post-petition Profit/(Loss)

     (1,706,212.35  
                

TOTAL EQUITY

       (156,117,604.77
          

TOTAL LIABILITIES & EQUITY

       3,507,252.54   
          

 

           
        Page 16 of 18         Principal for debtor-in-possession


       (0.00

* Itemization of Accounts Receivable:

    

Delaware Franchise Tax Refund Due (prior years)

     124,600.00     
          

Total

     124,600.00     
          

**Itemization of Post-Petition Liabilities:

    

Christopher Damore (Accounting Svcs-MOR Prep)

     297.50     

RR Donnelley (8-k Filing services)

     1,067.00     

Registrar & Transfer (Transfer Agent)

     684.10     

U.S. Quarterly Trustee Fees

     975.00     
          

subtotal

     3,023.60     
          
**Not included in the above table are the following incured and unpaid amount that are pending Bankruptcy Court approval:      

Carl McKinzie (Chief Executive Officer)

     36,000.00     

Hutchinson & Bloodgood, LLP (accounting & auditing)

     13,356.00     

Crowe Horwath, LLP (accounting & audit)

     296,672.76     

Landau, Gottfried, & Berger, LLP

     121,537.74     

Manatt, Phelps & Philips, LLP

     82,345.60     
          

subtotal

     549,912.10     
          

***Itemization of Pre-Petition Unsecured Liabilities

    

Senior Debt Due 2015

     53,429,687.56     

Senior Debt Due 2016

     53,244,791.61     

Senior Debt Due 2017

     52,942,708.33     
          

Total

     159,617,187.50     
          

****Itemization of Pre-Petition Other Liabilities

    

Nixon Peabody

     318.74     

Registrar & Transfer

     983.52     

DF King & Co

     218.95     
          

Total

     1,521.21     
          

*****Itemization of Direct Charges to Equity

    

Reduction in Delaware tax

     157,600.00     

Refund from Auditors

     110,883.44     

Legal Retainer—Manatt, Phelps & Phillips, LLP

     300,000.00     

Legal Retainer—Landau, Gottfried & Berger , LLP

     199,189.69     

Change in SEC Refund

     135.53     

Bills received and accrued after BK filing (see above)

     (1,521.21  

Change in Opening Cash Balance

     0.04     

Change in New Oak receivable

     0.09     
          

Total

     766,287.58     
          

The prepaid retainer of $250,000 for Bankruptcy Counsel-Landau, Gottfried & Berger was adjusted downward $50,810.31 as the activity occurred pre-petition. As of the petition date, the prepaid legal retainer for Bankruptcy Counsel was $199,189.69.

 

           
        Page 17 of 18         Principal for debtor-in-possession


XI. QUESTIONNAIRE

 

          No      Yes  
1.    Has the debtor-in-possession made any payments on its pre-petition unsecured debt, except as have been authorized by the court? If “Yes”, explain below:          x      
                    
        No         Yes   
2.    Has the debtor-in-possession during this reporting period provided compensation or remuneration to any officers, directors, principals, or other insiders without appropriate authorization? If “Yes”, explain below:          x      
                    
3.    State what progress was made during the reporting period toward filing a plan of reorganization:      
   The Debtor has negotiated the terms of a liquidating chapter 11 plan with its principal creditor, Wilmington Trust Company as Trustee for the bulk of its debt. That plan was filed with the Court on October 1, 2010. On November 12, 2010, the Debtor filed its disclosure statement and a motion seeking an order of the Court approving the same and setting plan solicitation and confirmation procedures.      
4.    Describe potential future developments which may have a significant impact on the case:      
   There is a potential refund of over $90 million relating to loss carrybacks from earlier tax years. The FDIC, in its capacity as Receiver for the Debtor’s bank subsidiary, has submitted a proof of claim which, among other things, claims that the FDIC is entitled to some or all of any such tax refund and may have other super priority claims. If the FDIC’s claim is successful, it will reduce or potentially eliminate any assets available for distribution to general unsecured creditors. The Debtor reserves its rights with respect to any such claims by the FDIC.      
   Debtor continues to investigate potential claims against third parties to determine potential for recovery. No Committee of Unsecured Creditors has been appointed in the case. However, the Debtor continues to work and communicate cooperatively with Wilmington Trust, its principal unsecured creditor, concerning all aspects of the case.      
5.    Attach copies of all Orders granting relief from the automatic stay that were entered duing the reporting period.      
   None      
        No         Yes   
6.    Did you receive any exempt income this month, which is not set forth in the operating report? If “Yes”, please set forth the amounts and sources of the income below.          x      
                    
  

 

     
  

I, Carl W. McKinzie, Chief Executive Officer,

 

declare under penalty of perjury that I have fully read and understood the foregoing debtor-in-possession operating report and that the information contained herein is true and complete to the best of my knowledge.

     

 

/s/ Carl W. McKinzie

     Dated: 06/15/2011
Carl W. McKinzie     
Chief Executive Officer     

 

           
        Page 18 of 18         Principal for debtor-in-possession