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Dear Victim, Creditor or Other Interested Party,
A major milestone was passed with the completion of the voting on the plan on September 25.
The results of the balloting were as follows:
Voting in Favor of Plan 243 Creditors $162,634,178
Voting against Plan 2 Creditors $ 894,184
I personally would like to thank everyone for their involvement in the voting process. It is extremely unusual for a plan with this many victims in a Ponzi scheme to be so embraced.
The hearing for the plan confirmation and class settlements approval is now scheduled for October 7 at 11:00 AM EST and 8:00 AM PST and will be held simultaneous in the Bankruptcy Court and in San Francisco in the Federal District Court in the class-action matters. The bankruptcy hearing will be held in the courtroom of the Honorable Judge Martin Glenn and the Class Action matter held in the courtroom of the Honorable Judge James Ware. We have made arrangements for telephonic attendance as we have in the past. Because of the joint hearings in the geographically separated court rooms we will be using a different service provider for that call. PLEASE SEE THE COURT ORDER AND INSTRUCTIONS ATTACHED THERETO WHICH ARE ALSO POSTED ON THIS WEB PAGE.
I understand that many in the California area would like to attend that hearing which will be held beginning at 8:00 AM Pacific Time (11:00 Eastern Time) at:
San Francisco District Court
Ceremonial Courtroom
19th Floor
450 Golden Gate Avenue
San Francisco, CA 94102
I know that Anita Hunter who has served as lead plaintiff in the class action matter will be attending and if you do plan to attend you may want to contact her via email at
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Certainly anyone interested can attend either the New York or the San Francisco hearing.
Please note that we recently completed another major settlement. The Trustee, the Putative Class, and Lockton have resolved all of their differences, claims and potential claims, in consideration of the payment by Lockton of the sum of $12 million, subject to approval by the Bankruptcy Court and the Class Action Court. The Trustee and Putative Class acknowledge that the payment is not an admission of liability or wrongdoing by Lockton, but instead reflects a business decision to achieve closure in light of the expense and uncertainty of litigation. The settlement will not affect your immediate distribution, however certainly there will be future distributions and that amount will be distributed in the future distributions. We and the class attorneys continue to have productive discussions with other defendants or potential defendants as we move forward in recovery efforts.
As I'm sure you are aware, through extensive negotiations, fees of the pre-trustee professionals have now been subordinated to the claims of all the unsecured creditors, the vast majority of whom are victims. This is to say that the pre-trustee professionals will be paid fees only after the unsecured creditor classes received 100% recovery of their claims.
Additionally, in discussions with the creditors’ committee, all of our professionals have agreed to an overall reduction of 5% in their fees if there are no objections to the fees applications. Additionally, as trustee, I will not seek the potentially allowable 3% of disbursements provided in the bankruptcy code, but will seek an amount equal to approximately 85% of my potentially allowable claim. (a reduction of 15% from that which might be otherwise allowable).
On other matters, I would like to thank the committee and Mark Felger of the Cozen, O'Connor firm who now represents the committee for the efforts that have been expended recently in assisting the trustee in various matters. This relationship has been refreshing.
I'd like to assure all creditors that the professionals continue to strive for maximum recovery for the creditor base.
Best regards,
The 1031 Tax Group Inc.
/s/
Gerard A. McHale, Jr.
Chapter 11 Bankruptcy Trustee
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