EX-99.1 2 d443076dex991.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:        CHAPTER 11 (BUSINESS)      

FirstFed Financial Corp

         
       Case Number:    2:10-bk-12927-ER  
       Operating Report Number:    34
Debtor(s).      For the Month Ending:    October 31, 2012  

I. CASH RECEIPTS AND DISBURSEMENTS

A. (GENERAL ACCOUNT*)

 

1.      TOTAL RECEIPTS PER ALL PRIOR GENERAL ACCOUNT REPORTS

         

     278,640.86   

2.      LESS: TOTAL DISBURSEMENTS PER ALL PRIOR GENERAL

         

     2,373,961.88   

ACCOUNT REPORTS

     

3.      BEGINNING BALANCE:

         

     1,750,439.52   

4.      RECEIPTS DURING CURRENT PERIOD:

     

Accounts Receivable - Post-filing

           

Accounts Receivable - Pre-filing

           

General Sales

           

Other - Rent Deposit Refund

     907.18      
     

TOTAL RECEIPTS THIS PERIOD:

        907.18   
     

5.      BALANCE:

        1,751,346.70   

6.      LESS: TOTAL DISBURSEMENTS DURING CURRENT PERIOD

         

  

Transfers to Other DIP Accounts (from page 2)

     0.00      

Disbursements (from page 2)

     89,342.87      
     

TOTAL DISBURSEMENTS THIS PERIOD:***

        89,342.87   
     

7.      ENDING BALANCE:

        1,662,003.83   

8.      General Account Number(s):

     XXXXXX3933   
  

 

 

 
     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 16


TOTAL DISBURSEMENTS FROM GENERAL ACCOUNT FOR CURRENT PERIOD

 

Date mm/

dd/yyyy

  

Check
Number

  

Payee or DIP account

 

Purpose

   *Amount
Transfered
     **Amount
Disbursed
     Amount  
  10/4/2012    1236    Landau, Gottfried & Berger, LLP   Legal-Bankruptcy Counsel (Aug-12)         53,605.40         53,605.40   
  10/4/2012    1237    Carl McKinzie   Professional Administration (Oct-12)         16,000.00         16,000.00   
  10/5/2012    1238    RR Donnelly   8-k dated 09/18/12         1,731.00         1,731.00   
  10/8/2012    1239    releVenture, LLC   Accounting Svcs (Sep-12)         276.25         276.25   
10/12/2012    1240    Manatt, Phelps & Phillips, LLP   Legal-Special Counsel (Aug-12)         9,505.20         9,505.20   
10/15/2012    1241    Office of US Trustee   Quarterly US Trustee Fee (Q3-2012)         4,875.00         4,875.00   
10/23/2012    1242    RR Donnelly   8-k dated 10/11/12 (Plan Confirmation)         551.00         551.00   
10/25/2012    EFT    Union Bank   Bank Fees         94.02         94.02   
10/29/2012    1243    RR Donnelly   8-k dated 10/16/12 (MOR Sept-12)         1,205.00         1,205.00   
10/30/2012    1244    Riordon, Lewis & Haden   Office Rent (Nov-12)         1,500.00         1,500.00   
          

 

 

    

 

 

    

 

 

 
        TOTAL DISBURSEMENTS THIS PERIOD:      —           89,342.87         89,342.87   
          

 

 

    

 

 

    

 

 

 

 

* 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 16


GENERAL ACCOUNT

BANK RECONCILIATION

 

  Bank statement Date:     10/31/2012      Balance on Statement:     $1,663,503.83
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

       
  1244     10/30/2012      1,500.00    
                    
                    
                    
                    
                    
                    
              
TOTAL OUTSTANDING CHECKS:              1,500.00
Bank statement Adjustments:               
Explanation of Adjustments-             

 

 

ADJUSTED BANK BALANCE:          $1,662,003.83

*       It is acceptable to replace this form with a similar form

    0.00

**     Please attach a detailed explanation of any bank statement adjustment

   

 

Page 3 of 16


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

     451,363.89   
     

3.    BEGINNING BALANCE:

     48,636.11   

4.    RECEIPTS DURING CURRENT PERIOD:

        
     

5.    BALANCE:

     48,636.11   
     

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

     0.00   
     

7.    ENDING BALANCE:

     48,636.11   

8.    PAYROLL Account Number(s):

        
   XXXXXX3941         

        Depository Name & Location:

   Union Bank   
   445 South Figueroa         
   Los Angeles, CA 90071         

 

Page 4 of 16


TOTAL DISBURSEMENTS FROM PAYROLL ACCOUNT FOR CURRENT PERIOD

 

Date

mm/dd/yyyy

   Check
Number
  

Payee

  

Purpose

   Amount  
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           

 

 

 
      TOTAL DISBURSEMENTS THIS PERIOD:                      0.00   
           

 

 

 

 

Page 5 of 16


PAYROLL ACCOUNT

BANK RECONCILIATION

 

   Bank statement Date:       10/31/2012       Balance on Statement:       $48,636.11

 

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:

   $ 48,636.11   

*       It is acceptable to replace this form with a similar form

     0.00   

**     Please attach a detailed explanation of any bank statement adjustment

  

 

Page 6 of 16


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

     0.00   
ACCOUNT REPORTS   

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):

       XXXXXX3968   
  

 

 
       Union Bank   
  

 

 

Depository Name & Location:

       445 South Figueroa   
  

 

 
       Los Angeles, CA 90071   
  

 

 

 

Page 7 of 16


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 16


TAX ACCOUNT

BANK RECONCILIATION

 

   Bank statement Date:      10/31/2012      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 16


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:        1,662,003.83      
     Payroll Account:        48,636.11      
     Tax Account:        10,000.00      

*Other Accounts:

                    
                    
                    

    *Other Monies:

                    
     **Petty Cash (see below):        0.00      
            

TOTAL CASH AVAILABLE:

               1,720,639.94   
            

Petty Cash Transactions:

            
Date        Purpose        Amount         
       Opening balance        0.00      
                      
                      
                      
                      
                      
                      
                      
            

TOTAL PETTY CASH TRANSACTIONS:

          0.00   

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 16


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:            

     0.00   
        

 

 

 
      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**

     0.00         0.00      
  

 

 

    

 

 

    

 

TOTAL:

     0.00         0.00      
  

 

 

    

 

 

    

 

* Amounts paid through the payroll account. See “Total Disbursements from Payroll Account Current Period”
** It has been determined that prior year tax liabilities have been applied to tax receivable due from the State of Delaware.

 

Page 11 of 16


IV. AGING OF ACCOUNTS PAYABLE AND RECEIVABLE

 

 

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

30 days or less

     2,629.97         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         113,650.00         0.00   
  

 

 

    

 

 

    

 

 

 

TOTAL:

     2,629.97         113,650.00         0.00   
  

 

 

    

 

 

    

 

 

 

Delaware receivable of $124,600 has been adjusted down to $118,250 after acceptance of change in methodology from the authorized share method to the capital method (using gross assets). The receivable was further reduced by $4,600 due to the 2011 Delaware Franchise Tax and filing fee resulting in a balance due of $113,650.

V. INSURANCE COVERAGE

 

Type

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

General Liability

   Hartford      1,000,000.00         1/11/2012         1/11/2013   

Worker’s Compensation

   No employees         

Casualty

   None         
           

Vehicle

   None         
           

The Debtor also maintained 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. The extended reporting period expired on October 22, 2010.

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   

30-Jun-2011

     173,135.33         1,625.00         25-Jul-2011         1,625.00         0.00   

30-Sep-2011

     229,206.02         1,950.00         26-Oct-2011         1,950.00         0.00   

31-Dec-2011

     250,827.80         1,950.00         24-Jan-2012         1,950.00         0.00   

31-Mar-2012

     458,817.09         4,875.00         30-Apr-2012         4,875.00         0.00   

30-Jun-2012

     254,642.87         1,950.00         24-Jul-2012         1,950.00         0.00   

30-Sep-2012

     454,198.70         4,875.00         15-Oct-2012         4,875.00         0.00   
     

 

 

       

 

 

    

 

 

 
        30,550.00            30,550.00         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 16


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         0.00   
       
       
       
       
       
       
       

 

* 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 has worked 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 (i.e. Corporate Secretary) and to serve as its then Chief Executive Officer. Mr Argrett resigned as Corporate Secretary and as an employee effective 12/31/2011.

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 16


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

     —             416,153.85   
  

 

 

      

 

 

 

Payroll - Other Employees

     —             —     
  

 

 

      

 

 

 

Payroll Taxes

     —             33,141.16   
  

 

 

      

 

 

 

Other Taxes (Itemize)

     —             —     
  

 

 

      

 

 

 

Legal & Professional-Special Counsel *

     9,505.20           558,424.66   
  

 

 

      

 

 

 

Legal & Professional-Bankruptcy Counsel **

     53,605.40           1,171,445.86   
  

 

 

      

 

 

 

Legal & Professional-Administration ***

     16,000.00           456,000.00   
  

 

 

      

 

 

 

Legal & Professional-Accounting & Auditing ****

     255.00           562,190.90   
  

 

 

      

 

 

 

Legal & Professional-Other *****

     —             50,000.00   
  

 

 

      

 

 

 

Depreciation and Amortization

     24.00           816.00   
  

 

 

      

 

 

 

Rent Expense - Real Property

     3,504.82           52,762.61   
  

 

 

      

 

 

 

Lease Expense - Personal Property

     —             —     
  

 

 

      

 

 

 

Insurance

     34.42           3,464.20   
  

 

 

      

 

 

 

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

     892.97           17,906.89   
  

 

 

      

 

 

 

Delaware & Calif filing fees & franchise tax

     —             14,414.27   
  

 

 

      

 

 

 

Indentured Trustee Expenses

     —             840.00   
  

 

 

      

 

 

 

SEC 8K fees

     2,588.00           33,887.00   
  

 

 

      

 

 

 

Relocation Expenses

     —             1,605.88   
  

 

 

      

 

 

 

CSC fee for Delaware representation

     —             727.00   
  

 

 

      

 

 

 

US Trustee fees accrued

     650.00           31,200.00   
  

 

 

      

 

 

 

Office Supplies

     —             347.86   
  

 

 

      

 

 

 

Postage & Courier

     —             203.28   
  

 

 

      

 

 

 

Document Management

     —             12,869.20   
  

 

 

      

 

 

 

Payroll Processing Fees

     —             2,068.88   
  

 

 

      

 

 

 

Banking Fees

     94.02           673.07   
  

 

 

      

 

 

 

Total Operating Expenses

     87,153.83           3,424,028.52   
  

 

 

      

 

 

 

Net Gain/(Loss) from Operations

     (87,153.83        (3,424,028.52
  

 

 

      

 

 

 
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)      (87,153.83        (3,424,028.52
  

 

 

      

 

 

 

    (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. Pending court approval, $58,371.68 in fees for September and October 2012 have been incurred but not accrued. Additionally, $64,294.84 unpaid fees for March 2011 through August 2012 representing the 20% withheld amount per the Knudsen Order remain unpaid. See Footnote ** on Schedule X - Balance Sheet.
** 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, $174,756.71 in fees for September and October 2012 have been incurred but not accrued. Additionally, $236,686.37 in unpaid fees for August 2010 through August 2012 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 October 2012 professional fees of $520,000 for Carl McKinzie as Chief Executive Officer were incurred. $416,000 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 2010 through January 2012 costs and professional fees of $548,354.15 for Crowe Horwath’s engagement were paid after court approval, Pending court approval $58,568.39 in costs and fees for February through October 2012 have been incurred but not accrued. Additionally, $135,798.40 in unpaid fees for May 2010 through January 2012 representing the 20% withheld amount per the Knudsen Order remain unpaid. See footnote ** on Schedule X -Balance Sheet.
***** In June, the Debtor engaged the firm of Rus Miliband & Smith, LLP to investigate potential claims which may be brought by the Debtor. The initial engagement was on an hourly basis with a $50,000 cap. An application for employment was submitted and approved by the bankruptcy court. This amount has been fully utlized by Rus Miliband & Smith, LLP.

 

Page 14 of 16


X. BALANCE SHEET

(ACCRUAL BASIS ONLY)

 

     Current Month End             

ASSETS

       

Current Assets:

             

Unrestricted Cash

     1,720,639.94        

Restricted Cash

             

Accounts Receivable (Itemized, see below)*

     113,650.00        

Inventory

             

Notes Receivable

             

Prepaid Expenses (Rent)

     1,500.00        

Prepaid Expense-Legal Special Counsel

     —          

Prepaid Expense-Legal & Professional-Administration

     —          

Prepaid Expense-Other Legal Counsel

     —          

Prepaid-Other

     68.80        

Total Current Assets

          1,835,858.74   

Property, Plant, and Equipment

     875.00        

Accumulated Depreciation/Depletion

     816.00        

Net Property, Plant, and Equipment

          59.00   

Other Assets (Net of Amortization):

       

Due from Insiders

             

Other (Rent Deposits)

     —          

Total Other Assets

          —     
       

TOTAL ASSETS

          1,835,917.74   

LIABILITIES

             

Post-petition Liabilities:

             

Accounts Payable (Itemized, see below)**

     2,629.97        

Taxes Payable

             

Notes Payable

             

Professional fees

             

Secured Debt

             

Other (Itemize)

             

Total Post-petition Liabilities

          2,629.97   
       

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

          159,621,338.68   

EQUITY:

             

1 Pre-petition Owners’ Equity (original amount)

     (155,177,680.00     

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

     816,287.58        

3 Post-petition Profit/(Loss)

     (3,424,028.52     

TOTAL EQUITY

          (157,785,420.94
       

TOTAL LIABILITIES & EQUITY

          1,835,917.74   
          (0.00

* Itemization of Accounts Receivable:

       

Delaware Franchise Tax Refund Due (prior years)

     113,650.00        
       

Total

     113,650.00        
       

**Itemization of Post-Petition Liabilities:

       

Christopher Damore (Accounting Svcs-MOR Prep)

     255.00        

U.S. Quarterly Trustee Fees

     650.00        

Registrar and Transfer

     892.97        

RR Donnelley

     832.00        

subtotal

     2,629.97        

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

       

Carl McKinzie (Chief Executive Officer)

     104,000.00        

Hutchinson & Bloodgood, LLP (accounting & auditing)

     13,356.00        

Crowe Horwath, LLP (accounting & audit)

     194,366.79        

Landau, Gottfried, & Berger, LLP

     411,443.08        

Manatt, Phelps & Philips, LLP

     122,666.52        

subtotal

     845,832.39        

***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 refund—Arnold & Porter

     50,000.00        

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

     816,287.58        

 

Page 15 of 16


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 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. That liquidating plan was rejected by creditors entitled to vote and could not be confirmed. The Debtor and Holdco advisors, L.P. have proposed a new reorganization plan. On July 3, the Court approved the Disclosure Statement to accompany that reorganization plan. On November 13 2012 the Court entered its Order confirming the reorganization plan.      
4.   Describe potential future developments which may have a significant impact on the case:      
  There is a potential refund of over $130 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.      
5.   Attach copies of all Orders granting relief from the automatic stay that were entered during 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: 11/20/2012
  Carl W. McKinzie      
  Chief Executive Officer      

 

Page 16 of 16