IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE __________________________________________ In re: : : MERVYNS HOLDINGS, LLC, et al.

, : : Debtors. : __________________________________________: Chapter 11 Case No. 08-11586(KG) Jointly Administered

Objection Deadline: March 2, 2012, at 4:00 p.m. Hearing Date: March 9, 2012, at 2:00 p.m.

MOTION OF BART M. SCHWARTZ, AS RECEIVER FOR GABRIEL CAPITAL, L.P., FOR AN ORDER (I) PROVIDING THAT THE AUTOMATIC STAY DOES NOT APPLY, OR IN THE ALTERNATIVE, (II) GRANTING RELIEF FROM THE AUTOMATIC STAY Bart M. Schwartz, the New York State Court-appointed receiver (the Receiver) for Gabriel Capital, L.P. (Gabriel Fund), in the action titled The People of the State of New York v. J. Ezra Merkin, et al., Index No. 450879/2009, which is pending in the Supreme Court for New York County (the Receivership Court), moves this Court for an Order (i) providing that the automatic stay does not prohibit the Receivership Court from authorizing the Receiver to make distributions to investors in Gabriel Fund, or (ii) in the alternative, granting relief from the automatic stay (the Motion), and in support hereof, states as follows: I. INTRODUCTION 1. In June 2009, at the request of the Attorney General of the State of New York (the

NYAG), Justice Richard B. Lowe, III, of the New York State Supreme Court entered an order (the Receivership Order) appointing the Receiver as the receiver of four investment funds, including Gabriel Fund and Ariel Fund, Ltd. (Ariel Fund). The NYAG had sought entry of the Receivership Order in connection with claims it was asserting against the funds investment manager, J. Ezra Merkin. In brief, the NYAG alleged that Mr. Merkin had invested a large percentage of the funds assets with Bernard L. Madoff Investment Securities, LLC (BLMIS), without the knowledge of the funds investors.

2.

The funds investors have suffered staggering damages from the funds undisclosed

investments with BLMIS, a Ponzi scheme. As set forth in the Receivership Order, the ultimate goal of the receivership is to distribute all available proceeds to the funds injured investors. 3. Pursuant to order of the Receivership Court in December 2010, the Receiver made a

first interim distribution of $167,000,000 to the injured Ariel Fund investors. The Receiver sought at that time to make a first interim distribution to the injured Gabriel Fund investors as well, but that motion was not decided by the Receivership Court. The Receiver has now sought approval, by motion filed in November 2011, to make a second interim distribution of $100,000,000 to the injured investors of each of the funds. 4. The Receiver has been unable to make either the first interim distribution proposed

for Gabriel Fund investors in 2010, or the second interim distribution to Gabriel Fund investors for which approval was sought in 2011, because the Official Committee of Unsecured Creditors (the Committee) in this case has argued to the Receivership Court that the proposed distribution of available cash would violate the automatic stay in this bankruptcy case. As a result of the uncertainty surrounding the Committees allegations, the Receivership Court will not authorize any distributions until the applicability of the automatic stay is resolved. 5. The Committee is wrong as a matter of law. Gabriel Funds assets (the Receivership

Assets) are not property of the Mervyns estate. Quite the contrary, they are property of the New York State Court. 6. It cannot be overemphasized that the Gabriel Fund investors, who have already been

twice victimized by Messrs. Madoff and Merkin, are suffering immense and immediate harm as a consequence of the Committees position. The Receiver is in the process of liquidating Gabriel Funds substantially illiquid asset portfolio, and over the past two years, has realized substantial

-2-

proceeds from those efforts. Such proceeds have in some instances constituted returns above previously marked values, resulting in the attribution of taxable income to Gabriel Fund investors all of whom are U.S. taxpayers. Thus, these injured investors are forced to bear heavy phantom income tax burdens, without any distributions with which to cover such payments. 7. The Receiver is aware of several Gabriel Fund investors who have been required to

borrow from family members and others in order to meet their tax obligations, and to cover other necessary expenses all while many millions of dollars sits in Receivership accounts, awaiting distribution. 8. To the extent that the automatic stay could be found to apply to the Receivership

Assets which the Receiver respectfully submits that it simply cannot this Court should grant the Receiver relief from the automatic stay, subject to Receivership Court approval, to distribute Gabriel Funds available cash to the funds injured investors. The Receiver already has committed in his filings before the Receivership Court to reserve $18,817,688 of Gabriel Funds available cash as security against the Committees claims. The Receiver respectfully submits that this reserve provides sufficient coverage for any award that could rationally be granted against Gabriel Fund, based upon the facts of the Committees case plus a cushion for any potential fee or interest awards for which Gabriel Fund could be held responsible. 9. Accordingly, even if this Court were to conclude that the automatic stay applies

which it should not this Court should grant the Receiver relief from the stay so that the Receiver can distribute Gabriel Funds available cash. 10. The Receiver has presented his arguments to the Receivership Court in response to

the Committees objections, but the Receivership Court has forborne for the past 13 months from resolving these issues regarding the interpretation of the United States Bankruptcy Code (the

-3-

Bankruptcy Code). The Receiver now believes that the Receivership Court likely will continue to hold decision on his motions for approval of first and second interim distributions of Gabriel Funds available cash to injured investors in abeyance pending resolution of the automatic stay question by this Court. Accordingly, by this Motion, the Receiver seeks an Order providing that the automatic stay is inapplicable to the distribution of Gabriel Funds available cash. Alternatively, the Receiver requests an Order granting stay relief for cause. II. FACTUAL BACKGROUND A. 11. Ariel and Gabriel Receivership Entities and the Receivership Order On April 6, 2009, the NYAG commenced an action1 (the NYAG Action) against

Mr. Merkin and Gabriel Capital Corp. (GCC). By later amendment, the NYAG Action named Gabriel Fund as one of several Relief Defendants.2 The NYAG alleged that Mr. Merkin had falsely represented to investors in Gabriel Fund and Ariel Fund (collectively, the Funds) that he actively managed investors capital when, in fact, he turned over a substantial portion of the Funds monies to be invested in BLMIS, which turned out to be a Ponzi scheme. See Amended Complaint 1-6, The People of the State of New York v. J. Ezra Merkin, et al., Index No. 450879/2009 (Sup. Ct. N.Y. Co. May 28, 2009). 12. It was only after public revelation that BLMIS was a Ponzi scheme that Mr. Merkin

disclosed the Funds investments with BLMIS to investors. Id. 2, 94. The NYAG further alleges that Mr. Merkin persistently and fraudulently concealed from investors the true nature of the Funds involvement with BLMIS. Id. 87.
1

The People of the State of New York v. J. Ezra Merkin, et al., Index No. 450879/2009 (Sup. Ct. N.Y. Co.).

The entities named as relief defendants were Ariel Fund, Gabriel Fund, Gabriel Alternative Assets, LLC, and Gabriel Assets, LLC (collectively, the Ariel & Gabriel Receivership Entities) with the Receiver appointed for all of the foregoing and Ascot Fund Limited and Ascot Partners, L.P., over which another receiver, David Pitofsky, was appointed.

-4-

13.

Shortly after the NYAG Action was commenced, the Receivership Court appointed

the Receiver pursuant to the Receivership Order, which sets forth the scope of the Receivers duties and responsibilities. 14. Pursuant to the Receivership Order, the Receivership Court directed the Receiver to

marshal and preserve the assets of the Ariel & Gabriel Receivership Entities, with the ultimate goal of distributing all available proceeds to the Funds investors. See, e.g., Receivership Order I.E. B. 15. The Mervyns Action On December 22, 2008, the Committee, acting derivatively on behalf of the above-

captioned debtors (the Debtors), commenced this adversary proceeding asserting approximately $1,000,000,000 in damages against some 45 defendants, including Gabriel Fund, jointly and severally, relating to allegedly fraudulent transfers (the Mervyns Action). 16. The Committees complaint in the Mervyns Action (the Complaint) does not

allege that Gabriel Fund engaged in any specific wrongful conduct. Rather, the Committee asserts that Gabriel Fund, along with each of the other 45 defendants, is jointly and severally liable for the alleged fraudulent transfers, in connection with the purchase and sale of substantially all of the Debtors assets. 17. The Complaint alleges that the defendants had utilized a transaction similar to a

leveraged buyout to acquire the Debtors and strip them of their valuable real estate assets, to the benefit of the defendants. The Committee alleges, inter alia, that this and related transfers of assets constituted avoidable transfers under Sections 544(b) and 550 of the Bankruptcy Code and, as a consequence, the Committee should be allowed to recover the assets. The Committee seeks to hold several defendants, including Gabriel Fund, jointly and severally liable for approximately $1,000,000,000 in damages.

-5-

18.

Gabriel Funds involvement in the transactions at issue in the Mervyns Action

consisted solely of its investment in a limited liability company (specifically, Gabriel Assets, LLC), which was an investor in another limited liability company, which in turn was the actual investor in the transaction. Gabriel Assets, LLCs initial investment was in the amount of $6,392,785, and its total profit over the life of its investment was $10,148,763.3 C. 19. The Receivers First Interim Distribution Motion In furtherance of the Receivership Court mandate to make distributions to the Funds

investors, on May 24, 2010, the Receiver moved for entry of an order setting a claims bar date; fixing the manner of notice of the claims bar date; and establishing procedures for resolution of disputed claims and objections to the proposed procedures and plan for a first interim distribution to investors (the First Interim Distribution Motion). Specifically, the Receiver sought authority to pay in full the trade creditors (i.e., the non-investor creditors) of the Funds and make an interim cash distribution of more than $200,000,000 to the investors. 1. 20. Gabriel Funds Assets and the First Interim Distribution Motion

When the Receiver filed the First Interim Distribution Motion, the estimated asset

value, as of March 31, 2010, of Gabriel Fund was $602,692,016, of which $84,650,000 was cash and cash equivalents.4 After providing for various reserves, the Receiver proposed to distribute $36,000,000 to Gabriel Funds investors (the Proposed Distribution). Id. 22.

See Affirmation Of Bart M. Schwartz, As Receiver For The Ariel & Gabriel Receivership Entities, In Support Of Motion For An Order (i) Approving A Second Interim Distribution To Investors Of Ariel Fund And Gabriel Fund; (ii) Eliminating Certain Reserves Previously Established To Cover Contingent Or Unliquidated Claims Against Gabriel Fund; And (iii) Modifying The Reserves And Other Protections Previously Established In Favor Of The Internal Revenue Service 22(ii), The People of the State of New York v. J. Ezra Merkin, et al., Index No. 450879/2009 (Sup. Ct. N.Y. Co. Oct. 31, 2011) (the Schwartz Second Affirmation). A true and correct copy of the Schwartz Second Affirmation is attached as Exhibit A. Affirmation of Bart M. Schwartz, as Receiver for the Ariel & Gabriel Receivership Entities, in support of the First Interim Distribution Motion, The People of the State of New York v. J. Ezra Merkin, et al., Index No. 450879/2009
4

Continued on following page -6-

21.

Among the reserves that the Receiver proposed was a reserve of $18,817,688 of

available cash specifically for the claims asserted in this adversary proceeding (the Mervyns Reserve). Id. 23. The Mervyns Reserve exceeded the total investment made and profit received by Gabriel Fund in connection with the transactions at issue in the Mervyns Action, and therefore exceeded the maximum liability that was theoretically attributable to Gabriel Fund, particularly given Gabriel Funds extremely limited role in the transactions, and afforded a substantial cushion against any possibility of damages in respect of the Mervyns Action. 22. In addition, of course, the full amount of Gabriel Funds remaining assets was

available to satisfy any liabilities in excess of the Mervyns Reserve. Id. 21. 2. 23. First Interim Distribution Motion Procedures Order

By Order dated July 30, 2010, the Receivership Court set September 20, 2010 as the

Bar Date, and established certain other claims procedures.5 The Receiver promptly sent notice to all known creditors of the First Interim Distribution Motion Procedures Order. D. The Committees Objection to the First Interim Distribution Motion and the Receivers Response On September 20, 2010, the Committee filed an Objection to the First Interim

24.

Distribution Motion, arguing that the $18,817,688 Mervyns Reserve of Gabriel Fund available cash

Continued from previous page

(Sup. Ct. N.Y. Co. May 24, 2010) (the Schwartz Affirmation) at 11-12. A true and correct copy of the Schwartz Affirmation is attached hereto as Exhibit B. Order Setting a Claims Bar Date; Fixing Manner of Notice of the Claims Bar Date; and Establishing Procedures for Resolution of Disputed Claims and Objections to Procedures and Plan, The People of the State of New York v. J. Ezra Merkin, et al., Index No. 450879/2009 (Sup. Ct. N.Y. Co. July 30, 2010) (the First Interim Distribution Motion Procedures Order).
5

-7-

was inadequate, and therefore the Receiver should not be permitted to make the $36,000,000 Proposed Distribution to Gabriel Funds injured investors.6 25. In the Mervyns Objection, the Committee argued that the Proposed Distribution

would constitute the impermissible exercise of control over property of the Debtors bankruptcy estate, in violation of the automatic stay. See Mervyns Objection (Exhibit C) at 10. 26. On November 12, 2010, the Receiver filed a response to the Mervyns Objection (the

Receivers Response) in which he argued, inter alia, that the automatic stay did not extend to Gabriel Funds assets. The Receiver further argued that the automatic stay does not apply to the cash of a defendant in a fraudulent transfer action because such cash is not property of the estate. A true and correct copy of the Receivers Response is attached as Exhibit D. E. 27. The Receivership Court Approves Distribution to Ariel Fund Investors, But Does Not Rule on Distribution to Gabriel Fund Investors Following the resolution of objections raised by several parties in interest, pursuant to

an Order entered by the Receivership Court dated December 16, 2010, the Receiver was authorized to make a $167,000,000 distribution to Ariel Funds investors. 28. The Receivership Court held argument through a Special Master on the Mervyns

Objection on December 9, 2010. The Receivership Court has not approved or disapproved of the proposed distribution to Gabriel Funds investors. F. 29. The Second Interim Distribution Motion On November 1, 2011, the Receiver filed a motion for an order, among other things,

approving a second interim distribution to Ariel Funds and Gabriel Funds respective investors (the
6

Objection of Mervyns LLC, Mervyns Holdings, LLC and Mervyns Brands, LLC to Receivers Proposed Procedures and Plan for First Interim Distribution to Investors 8-9, The People of the State of New York v. J. Ezra Merkin, et al., Index No. 450879/2009 (Sup. Ct. N.Y. Co. Sept. 20, 2010) (hereinafter, the Mervyns Objection). A true and correct copy of the Mervyns Objection is attached as Exhibit C.

-8-

Second Interim Distribution Motion). A true and correct copy of the Second Interim Distribution Motion is attached as Exhibit E. 30. In the Second Interim Distribution Motion, the Receiver seeks authority, among other

things, to make (i) the $36,000,000 Proposed Distribution to Gabriel Fund investors; and (ii) a $100,000,000 second interim distribution to Gabriel Fund investors (the Second Proposed Distribution and, together with the Proposed Distribution, the Proposed Distributions). 31. The Second Proposed Distribution, however, is conditioned upon the resolution of the

outstanding Mervyns Objection. 32. On November 2, 2011, the Committee filed a response to the Second Interim

Distribution Motion7 in which it reiterated the same objection it had raised to the First Interim Distribution Motion. 33. To date, the Receivership Court has not approved the Proposed Distributions to

Gabriel Funds investors. 34. 35. The Mervyns Objection is the only pending objection to the Proposed Distributions. The Gabriel Fund investors are suffering severe and immediate economic harm by

reason of the Receivers inability to make any distribution to them. III. LEGAL ARGUMENT 36. Section 362(a)(3) of the Bankruptcy Code stays the exercise of control over property

of the estate. 11 U.S.C. 362(a)(3). Under established Third Circuit precedent, property that is the subject of an avoidance action is not property of the estate. Gabriel Funds cash and other assets

Response of Mervyns LLC, Mervyns Holdings, LLC and Mervyns Brands, LLC to Receivers Second Interim Distribution Motion, The People of the State of New York v. J. Ezra Merkin, et al., Index No. 450879/2009 (Sup. Ct. N.Y. Co. Nov. 2, 2011) (the Mervyns Response). A true and correct copy of the Mervyns Response is attached as Exhibit F.

-9-

are not property of the Debtors estates. Therefore, the Receivers proposed distribution to Gabriel Funds investors does not violate the automatic stay. A. The Automatic Stay Is Inapplicable Because Gabriel Funds Property Is Not Property of the Estate. The Committee has argued to the Receivership Court that the automatic stay prohibits

37.

the Proposed Distributions because Gabriel Funds Receivership Property is subject to claims brought in this adversary proceeding. The plain language of Section 362(a)(3), however, applies only to property that is property of the estate, as defined by Bankruptcy Code Section 541(a). See 11 U.S.C. 362(a)(3). 38. Although Section 541 defines property of the estate broadly, that expansive definition

does not encompass property owned by defendants in fraudulent transfer actions. 39. Outside of bankruptcy, only a creditor can bring a fraudulent transfer action.

A debtor may not do so. In a bankruptcy case, however, Section 544(b) authorizes a debtor to file state law fraudulent transfer actions. See 11 U.S.C. 544(b). 40. A fraudulent transfer action is not property of the estate. The Third Circuit has

declared [t]he fact that section 544(b) authorizes a debtor in possession ... to avoid a transfer using a creditors fraudulent transfer action does not mean that the fraudulent transfer action is actually an asset of the debtor in possession. In re Cybergenics Corp., 226 F.3d 237, 243-44 (3d Cir. 2000) (The power to avoid the debtors prepetition transfers and obligations to maximize the bankruptcy estate for the benefit of creditors has been called a legal fiction by one court. It puts the debtor in possession in the overshoes of a creditor. This attribute is no more an asset of Cybergenics as debtor in possession than it would be a personal asset of a trustee, had one been appointed in this case.) (internal citations omitted); see also In re PWS Holding Corp., 303 F.3d 308, 315 (3d Cir. 2002).

- 10 -

41.

Of course, if (as the Third Circuit held), a fraudulent transfer claim is not property of

the estate, then the assets of the defendant in such action certainly are not property of the estate. Not surprisingly, it is clear that any property that is the subject of such an avoidance action does not become property of the bankruptcy estate unless and until the plaintiff recovers such property. See, e.g., 11 U.S.C. 541(a)(3) (property of the estate includes [a]ny interest in property that the trustee recovers under section 550 of this title); In re Tribune Co., No. 08-13141 (KJC), 2011 WL 6826407, at *3 (Bankr. D.Del. Dec. 29, 2011) (Bankruptcy Code 541(a)(3) provides that property of the estate includes any interest in property that the trustee recovers under section 550.); In re DVI, Inc., 306 B.R. 496, 502 n.5 (Bankr. D.Del. 2004) (MFW) ([I]t is section 541(a)(3) which provides that property of the estate includes any interest in property that the trustee recovers after the transfer of the property is avoided under, inter alia, section 544.). 42. In In re Mortgage Lenders Network, USA, Inc., 380 B.R. 131 (Bankr. D.Del. 2007),

the debtor, who held legal title to 26 foreclosed properties under a servicing arrangement, sought to bring the equitable interest in such properties within its estate by obtaining a determination that the equitable owner had no rights in the foreclosed properties. Id. at 133-35. The debtor fashioned its claim as one for the Avoidance of Liens Pursuant to 11 U.S.C. 544. Id. at 135. The debtor argued that the foreclosed properties were avoided properties brought into the estate under 541(a)(3). Id. at 136. Rejecting the debtors argument, the Court declared as follows: Section 541(a)(3) brings into the estate [a]ny interest in property that the trustee recovers under section 329(b), 363(n), 543, 550, 553, or 723 of this title. (emphasis added). All of the sections identified in 541(a)(3) relate to property coming into the estate following the petition as the result of action taken by the court or a trustee 550recovery of property or the value thereof where a transfer is avoided . Notably, 541(a)(3) does not identify 544 as being involved. The only relevant section here is 550. Section 550(a) provides: Except as otherwise provided in this section, to the extent that a transfer is avoided under section 544, 545, 547, 548, 549, 553(b), or

- 11 -

724(a) of this title, the trustee may recover, for the benefit of the estate, the property transferred . Id. at 136-37 (emphasis in original). 43. In short, [u]nder 541(a)(3) property that is the subject of a trustee recovery under

544, 547 or 548 only becomes property of the estate if and when the trustee recovers it. In re Loeffler, No. 10-39898 HRT, 2011 WL 6736066, at *3 (Bankr. D.Colo. Dec. 21, 2011) (emphasis in original); In re Feringa, 376 B.R. 614, 624-25 (Bankr. W.D.Mich. 2007) (Indeed, Section 541 is quite clear that it is only the property that is actually recovered or preserved as a consequence of a successful avoidance action that in fact becomes property of the estate.). 44. Where, as here, a debtor has asserted an avoidance claim and the Court has not yet

adjudicated the claim, let alone determined the remedy under Section 550, the automatic stay neither applies nor prohibits a defendant from dealing with its own property. See, e.g., In re Colonial Realty Co., 980 F.2d 125 (2d Cir. 1992) (automatic stay did not prevent creditors of debtor from seeking to recover property that debtor alleged had been fraudulently transferred, because judgment had not been entered in favor of debtor and the property thus did not constitute property of the estate); Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 192 B.R. 73, 77 (Bankr. S.D.N.Y. 1996) (holding that, where debtor sought to avoid certain security interests in accounts receivable, the accounts receivable cannot, at this time, be considered property of Debtors estate, and 11 U.S.C. 362(a)(3) does not apply). 45. The Committees argument that allegedly fraudulently transferred property

becomes property of the estate upon filing of the bankruptcy petition, and that the Receivership Court is therefore precluded from disposing of any Receivership Property cannot be correct because it impermissibly interferes with the subject matter jurisdiction of the Receivership Court. See In re CitX Corp., 302 B.R. 144, 154-61 (Bankr. E.D.Pa. 2003).

- 12 -

46.

The Supreme Court declared long ago that: Where a court of competent jurisdiction has, by appropriate proceedings, taken property into its possession through its officers, the property is thereby withdrawn from the jurisdiction of all other courts. Such possession of the res by the state court disenabled the federal court from exercising any control over it.

Fischer v. American United Life Ins. Co., 314 U.S. 549, 554 (1942) (internal quotations omitted). 47. The state courts authority to deal with property in its possession includes the

ancillary jurisdiction to hear and determine all questions respecting the title, possession, or control of the property. Murphy v. John Hofman Co., 211 U.S. 562, 569 (1909). Such jurisdiction arises out of the possession of the property, and is exclusive of the jurisdiction of all other courts. Id. 48. Today, the principles established by the Supreme Court are a well-established

common law rule that when a State Court has taken possession of or jurisdiction over property in an in rem or quasi in rem proceeding, the Federal Courts cannot exercise jurisdiction over the same property in such a way as to interfere with the orderly disposition of the litigation by the State Court. CitX, 302 B.R. at 155 (quoting Jacobs v. DeShetler, 465 F.2d 840, 842 (6th Cir. 1972)); see also Commonwealth Trust Co. of Pittsburgh v. Atwood, 78 F.2d 92, 94 (3d Cir. 1935) (A federal court cannot reach into the state court and take the res or enforce a right to specific property in possession of its receiver or trustee, except upon application to the court which appointed him.). 49. Accordingly, under well-established law, Gabriel Funds assets do not constitute

property of the estate, and Section 362(a)(3) does not prevent the Proposed Distributions to Gabriel Funds injured investors. B. 50. Alternatively, to the Extent the Automatic Stay Applies, This Court Should Grant the Receiver Relief From the Automatic Stay for Cause. As argued herein, under established law, the automatic stay clearly does not apply to

prohibit the Receiver from making the Proposed Distributions. To the extent, however, this Court - 13 -

determines that the automatic stay may apply to the Proposed Distributions, the Receiver respectfully requests that the Court use its authority, pursuant to 11 U.S.C. 362(d)(1), to modify the automatic stay to allow the Receivership Court to administer the property within its jurisdiction. 1. The Bankruptcy Code Permits Relief From the Automatic Stay for Cause.

51.

Section 362(d)(1) of the Code provides for relief from the automatic stay for cause.

11 U.S.C. 362(d)(1). Under Section 362(d)(1), the movant bears the burden of establishing a prima facie case of cause, at which point the burden of proof shifts to debtor to demonstrate the absence of cause. See In re Aardvark, Inc., No. 96 412 SLR, 1997 WL 129346, at *4 (D.Del. Mar. 4, 1997) (internal quotations omitted) (quoting In re Phoenix Pipe & Tube, L.P., 154 B.R. 197, 198 (Bankr. E.D.Pa. 1993)); In re Burger Boys, Inc., 183 B.R. 682, 687 (S.D.N.Y. 1994) (Section 362(d)(1) requires an initial showing of cause by the movant. Once the movant establishes cause, the burden of proof shifts to the debtor.); 11 U.S.C. 362(g). 52. Cause under Section 362(d)(1) is a flexible concept. In re SCO Group, Inc., 395

B.R. 852, 856 (Bankr. D.Del. 2007). Delaware courts have applied the following three-factor test in determining whether cause exists for relief from the automatic stay: a) [Whether] any great prejudice to either the bankruptcy estate or the debtor will result ; b) [Whether] the hardship to the [non bankrupt party] by maintenance of the stay considerably outweighs the hardship of the debtor; and c) [Whether] the creditor has a probability of prevailing on the merits. In re Integrated Health Servs., Inc., No. 00-389 (MFW), 2000 WL 33712483, at *1 (Bankr. D.Del. Aug. 11, 2000) (citing In re Rexene Prods. Co., 141 B.R. 574, 576 (Bankr. D.Del. 1992)).

- 14 -

2.

Cause Exists for Stay Relief so that the Receiver May Make the Proposed Distributions to Gabriel Fund Investors.

53.

In the instant case, cause clearly exists for relief from the automatic stay.8 First, as

discussed in the Receivers Response, the Mervyns Reserve and the full amount of Gabriel Funds remaining assets being held by the Receiver are more than sufficient to protect the Debtors interests if this Court grants the Debtors any relief in the instant adversary proceeding. Accordingly, the Debtors and their bankruptcy estate will suffer no prejudice if this Court grants the Receiver relief from the automatic stay. 54. Specifically, although the Mervyns Complaint seeks to hold the defendants jointly

and severally liable in the amount of $1,000,000,000, Gabriel Funds connection with the challenged transaction is two-times removed. Specifically, Gabriel Funds sole connection consists of an alleged investment in a limited liability company, which was an investor in another limited liability company, which was the actual investor in the transaction. The following facts are undisputed:

Gabriel Fund never invested directly in Mervyns, and never received any payment directly from Mervyns rather, it was an investor in an entity (Gabriel Assets, LLC, which is not a defendant in the Mervyns Action) that was a passive, small minority investor in yet another entity (Cerberus Mervyns Investors, LLC) that was one of a group of private equity investors in Mervyns. Thus, Gabriel Fund is two layers removed from any entity that interacted with Mervyns in any way; The joint and several liability claims against Gabriel Fund that are asserted here are predicated on the assertion that Gabriel Fund exerted direct control over Mervyns, but the Complaint does not identify a single fact that would support such a finding of control; and Gabriel Fund received approximately $10.1 million of profit on its investment from the limited liability company in which it had invested.

Given the unique nature of this case i.e., the lack of a claim being asserted by a creditor against the debtor only the first two factors of the three-factor test are applicable.

- 15 -

55.

The $18,817,688 Mervyns Reserve exceeds all amounts even arguably realized by

Gabriel Fund, thereby affording a substantial cushion against any possibility of damages in respect of the Mervyns Action. The adequacy of the Mervyns Reserve is even more obvious when considering that after the Proposed Distributions - Gabriel Fund will have assets in the approximate amount of $579,000,000. Schwartz Second Affirmation (Exhibit A) at 19. 56. Moreover, the Receivers inability to effectuate the Proposed Distributions has

caused, and will continue to cause, injury to the Gabriel Funds investors. Gabriel Funds investors have waited for a distribution for over three years since Mr. Merkin first revealed the extent of his alleged fraud. As set forth above, many of these investors have an urgent need for these distributions to pay taxes attendant to their investments in the fund or for medical emergencies or for other compelling reasons. The Committees arguments regarding the applicability of the automatic stay have caused confusion and delay for more than a year. 57. The stage of the Mervyns Action evidences that Gabriel Funds investors will suffer

prolonged injury absent stay relief (to the extent the stay applies). The Mervyns Action is in the earliest stages of discovery, which presently is stayed pending mediation, and pursuant to the current discovery plan, Gabriel Fund potentially will not have an opportunity to resolve the claims against it until 2014, thereby depriving injured Gabriel Fund investors of any distribution for approximately six years. 58. The very real harm that these victims will suffer by the Receivers continued inability

to make the Proposed Distributions far outweighs any theoretical harm that the Debtors would suffer if this Court lifts the automatic stay and later awards the Committee a judgment in the Mervyns Action. First, the Committee has available to it the assets of the other Defendants in the Mervyns Action. Second, the Mervyns Reserve and the value of the remaining Gabriel Fund assets are more

- 16 -

than sufficient to satisfy any judgment that could be imagined (let alone entered) against Gabriel Fund. Third, nothing prevents the Debtors from seeking in the Receivership Court to increase the amount of the Mervyns Reserve. 59. For the foregoing reasons, if this Court determines that the automatic stay is

applicable, cause exists to grant the Receiver relief from the automatic stay for the purpose of making the Proposed Distributions.

[Remainder of Page Intentionally Left Blank]

- 17 -

WHEREFORE, the Receiver respectfully requests that the Court enter an Order, in the form submitted, (i) declaring that the automatic stay does not prohibit the New York State Supreme Court from authorizing the Proposed Distributions or (ii) alternatively, granting the Receiver relief from the automatic stay so the New York State Supreme Court may authorize the Proposed Distributions, and (iii) granting such further relief to the Receiver as is appropriate. Dated: February 6, 2012 Wilmington, Delaware Respectfully submitted, REED SMITH LLP By: /s/ Kurt F. Gwynne Kurt F. Gwynne (No. 3951) 1201 Market Street, Suite 1500 Wilmington, DE 19801 Telephone: (302) 778-7550 Facsimile: (302) 778-7575 Email: kgwynne@reedsmith.com and James C. McCarroll, Esquire Lance Gotthoffer, Esquire Michael J. Venditto, Esquire 599 Lexington Avenue New York, NY 10022 Telephone: (212) 521-5400 Facsimile: (212) 521-5450 Attorneys for Bart M. Schwartz, Receiver of Ariel Fund Limited, Gabriel Capital, L.P., Gabriel Alternative Assets, LLC, and Gabriel Assets, LLC

- 18 -

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE __________________________________________ In re: : : MERVYNS HOLDINGS, LLC, et al., : : Debtors. : __________________________________________: Chapter 11 Case No. 08-11586(KG) Jointly Administered
Objection Deadline: March 2, 2012, at 4:00 p.m. Hearing Date: March 9, 2012, at 2:00 p.m.

NOTICE OF MOTION OF BART M. SCHWARTZ, AS RECEIVER FOR GABRIEL CAPITAL, L.P., FOR AN ORDER (I) PROVIDING THAT THE AUTOMATIC STAY DOES NOT APPLY, OR IN THE ALTERNATIVE, (II) GRANTING RELIEF FROM THE AUTOMATIC STAY PLEASE TAKE NOTICE that on February 6, 2012, Bart M. Schwartz, the New York State Court-appointed receiver (the Receiver) for Gabriel Capital, L.P., in the action titled The People of the State of New York v. J. Ezra Merkin, et al., Index No. 450879/2009, which is pending in the Supreme Court for New York County, filed the Motion of Bart M. Schwartz, as Receiver for Gabriel Capital, L.P., for an Order (I) Providing that the Automatic Stay Does Not Apply, or in the Alternative, (II) Granting Relief from the Automatic Stay (the Motion). A HEARING ON THE MOTION WILL BE HELD ON MARCH 9, 2012, AT 2:00 P.M. before the Honorable Kevin Gross, Chief United States Bankruptcy Judge, at the United States Bankruptcy Court for the District of Delaware, Marine Midland Plaza, 824 Market Street, Sixth Floor, Courtroom No. 3, Wilmington, Delaware 19801. You are required to file a response (and the supporting documentation required by Local Rule 4001-1(d)) to the Motion on or before March 2, 2012 at 4:00 p.m. (Eastern) with the Clerk of the United States Bankruptcy Court for the District of Delaware, Marine Midland Plaza, 824 Market Street, 3rd Floor, Wilmington, DE 19801. At the same time, you must also serve a copy of the response so as to be received by that time by undersigned counsel for the Receiver.

The hearing date specified above may be a preliminary hearing or may be consolidated with the final hearing, as determined by the Court. The attorneys for the parties shall confer with respect to the issues raised by the Motion in advance for the purpose of determining whether a consent judgment may be entered and/or for the purpose of stipulating to relevant facts such as value of the property, and the extent and validity of any security instrument. IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF REQUESTED BY THE MOTION WITHOUT FURTHER NOTICE OF HEARING. Dated: February 6, 2012 Wilmington, Delaware Respectfully submitted, REED SMITH LLP By: /s/ Kurt F. Gwynne Kurt F. Gwynne (No. 3951) 1201 Market Street; Suite 1500 Wilmington, DE 19801 Telephone: (302) 778-7550 Facsimile: (302) 778-7575 kgwynne@reedsmith.com and James C. McCarroll, Esquire Lance Gotthoffer, Esquire Michael J. Venditto, Esquire 599 Lexington Avenue New York, NY 10022 Telephone: (212) 521-5400 Facsimile: (212) 521-5450 Attorneys for Bart M. Schwartz, Receiver of Ariel Fund Limited, Gabriel Capital, L.P., Gabriel Alternative Assets, LLC, and Gabriel Assets, LLC

-2-

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE __________________________________________ In re: : : MERVYNS HOLDINGS, LLC, et al., : : Debtors. : __________________________________________: Chapter 11 Case No. 08-11586(KG) Jointly Administered

CERTIFICATE OF SERVICE I, Kurt F. Gwynne, Esquire, certify that I am over 18 years of age and that on this 6th day of February 2012, I caused a true and correct copy of the MOTION OF BART M. SCHWARTZ, AS RECEIVER FOR GABRIEL CAPITAL, L.P., FOR AN ORDER (I) PROVIDING THAT THE AUTOMATIC STAY DOES NOT APPLY, OR IN THE ALTERNATIVE, (II) GRANTING RELIEF FROM THE AUTOMATIC STAY to be served upon all parties on the attached service list via First Class United States Mail. By: /s/ Kurt F. Gwynne Kurt F. Gwynne (No. 3951)

EXHIBIT A

FILED: NEW YORK COUNTY CLERK 11/01/2011

NYSCEF DOC. NO. 251

INDEX NO. 450879/2009 RECEIVED NYSCEF: 11/01/2011

EXHIBIT B

FILED: NEW YORK COUNTY CLERK 05/24/2010

NYSCEF DOC. NO. 83

INDEX NO. 450879/2009 RECEIVED NYSCEF: 05/24/2010

EXHIBIT C

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: lAS PART 10

THE PEOPLE OF THE STATE OF NEW YORK

Plaintiff,
- against -

index No.

450879/09

J. EZRA MERKIN and GABRIEL CAPITAL

CORPORATION,

Defendants,
and
ARIEL FUND LIMITED, ASCOT FUND LIMITED, ASCOT PARTNERS, L. P., GABRIEL ALTERNATIVE ASSETS, LLC, GABRIEL ASSETS, LLC and

GABRIEL CAPITAL, L. P.
Relief Defendants.

OBJECTION OF MERVYN'S LLC, MERVYN'S HOLDINGS, LLC and MERVYN'S BRADS, LLC TO RECEIVER'S PROPOSED PROCEDURES AND PLAN FOR FIRST INTERIM DISTRIBUTION TO INVESTORS

Mervyn's LLC, Mervyn's Holdings, LLC and Mervyn's Brands,

LLC, collectively as Plaintiffs in the adversary proceeding
pending in the United States Bankruptcy Court for the District

of Delaware

(the "Bankruptcy Court")

against,

inter alia,

Gabriel Capital, L.P. ("Gabriel") (Chapter 11 Case No. 08-11586

(KG); Adv. Pro. No. 08 -51402 (KG)), hereby submit this obj ection
to the Receiver's proposed procedures and plan for first interim

distribution to investors (the "Distribution Procedures and

Plan") and respectfully represent as follows:

1664604 v2/NY

BACKGROUN

1. On July 29, 2008 (the "Petition Date"), Mervyn's LLC,

Mervyn's Holdings, LLC and Mervyn's Brands, LLC (collectively,

"Mervyn's" or "Plaintiffs") each filed voluntary petitions for

relief under chapter 11 of Bankruptcy Code in the Bankruptcy

Court.

Mervyn's is no longer operating, but continues to manage

its assets as debtor in possession pursuant to sections 1107 (a)

and 1108 of the Bankruptcy Code.

No trustee or examiner has

been appointed in Mervyn's chapter 11 cases.

2.

On September 2,
including

2008,

Mervyn's LLC1 commenced an

adversary proceeding in the Bankruptcy Court against various

defendants,

Gabriel,

seeking

to

avoid

certain

transfers and recover certain assets alleged to have been

fraudulently transferred out of Mervyn's in connection with Target Corporation's sale of Mervyn's to a group of private

equity funds in 2004

(the "2004 Transaction" or the "2004

(Adv. Pro. No.. 08-51402
(KG)

Transaction Litigation")

The

adversary complaint in the 2004 Transaction Litigation (the

"Complaint"), a copy of which is annexed hereto as "Exhibit A,"

alleges, inter alia:

The adversary proceeding complaint was subsequently amended to, among

other things, include Mervn's Holdings, LLC and Mervn's Brands, LLC as
additional plaintiffs. Plaintiffs are represented by counsel to the Official Committee of Unsecured Creditors (the "Committee") appointed in the Mervyn's

chapter 11 cases. The Committee is prosecuting the 2004 Transaction

Litigation (defined below) on behalf of the Mervyn's estate and creditors pursuant to standing granted to the Committee by Order of the Bankruptcy Court entered December 30, 2008 (as amended and modified by Order entered

March 26, 2009).

2
1664604 v2/NY

This is a fraudulent transfer action. In this case,

Mervyn's valuable real estate assets owned real

estate and various leases were stripped out of

Mervyn's and used to finance the September 2, 2004 acquisition of Mervyn's by a consortium of private equity players. Hundreds of millions of dollars of
loans were made against those real estate assets, with

Mervyn's. Moreover, by separating Mervyn's real

few or none of the proceeds of these loans going to

estate from its retail operations, the private equity players made sure that any residual value or upside in such real estate assets were reserved for themselves and not for Mervyn's and its creditors.

Complaint at ~ 1.
3. Plaintiffs allege that Gabriel, among certain other
Defendants, owns, directly or indirectly, all of the equity

and/or membership interests in Defendant Cerberus Mervyn's

Investors, LLC

one of the so-called "PE Sponsors" who

organized

and/or

participated

in

the

2004

Transaction.

Complaint at ~ 11, 18.

4. Sixteen causes of action sounding in actual and

constructive fraud have been asserted against Gabriel in

connection with its participation in the 2004 Transaction.
Complaint at Counts I-VIII, XVIII-XXV.

Plaintiffs seek monetary

judgment against Gabriel, jointly and severally with the other

Defendants included within these Counts, in an amount to be

determined at trial. Complaint at Wherefore Clause A-B, F-G.

5. Addi tionally, Plaintiffs have charged Gabriel with one

count of breach of fiduciary duty (Complaint at Count XXVI) and

one count seeking avoidance and recovery from Gabriel of a

3
1664604 v2/NY

preferential transfer (Complaint at Count XXXI) ~

Plaintiffs

likewise seek monetary judgment against Gabriel, jointly and

severally with the other Defendants included within these

Counts, in an amount to be determined at trial.

6. The value of the assets for which Plaintiffs seek to

recover from Gabriel, jointly and severally with the other

Defendants, is no less than $1 billion. Complaint at ~ 69-91.

7. The parties to the 2004 Transaction Litigation are

presently engaged in discovery, pursuant to a scheduling order

entered by the Bankruptcy Court, a copy of which is annexed

hereto as "Exhibit B." The parties to the 2004 Transaction have

yet to produce documents, exchange interrogatories or conduct

depositions.
Gabriel.

The Bankruptcy Court has made no findings with

respect to the allegations and causes of action asserted against

OBJECTION

8. Notwithstanding Plaintiffs' allegations in the 2004

Transaction

Litigation

that

Gabriel

participated

in

and

benefitted from a series of fraudulent transactions involving

the transfer of no less than $1 billion of Mervyn's assets, the

Receiver asks this Court to approve a reserve of only $18.8

million to satisfy Mervyn's allowed claims against Gabriel.
Incredibly, the Receiver asks this Court for what may amount to

a' release from all but a fraction of Gabriel's potential

4
1664604 v2/NY

liability in a pending federal bankruptcy court litigation,

without even providing Plaintiffs with documentary evidence

supporting

Gabriel's

enti tlement

to

the

relief

sought.

Moreover, for the reasons set forth herein, Gabriel's attempt to cap its liability to Mervyn's in the 2004 Transaction Litigation

and otherwise prejudice the potential recovery of Mervyn's

estate and creditors is well beyond the jurisdiction and

authority of this Court.

9. Not only does the Receiver seek to handcuff Mervyn's

to an arbitrary reserve amount, but he also proposes to

contemporaneously

distribute

approximately

$35

million

of

Gabriel's assets.

This distribution further prejudices Mervyn's

by reducing the pool of generally available assets from which

Mervyn's could recover.

The Receiver estimates the value of

Gabriel's total assets at just over $600 million - an amount

that is woefully insufficient to

satisfy a potential billion

in the
2004

dollar judgment

against

Gabriel

Transact ion

Li tigation.

Moreover, it is fundamentally inappropriate, if not.

unlawful, for the Receiver to make any distribution to Gabriel's

equity stakeholders prior to the full satisfaction of the higher

priority claims of Gabriel's creditors, including Mervyn's.

10. The Receiver's proposed Distribution Procedures and

Plan - which plainly seek to exercise control over property of

Mervyn's bankruptcy estate

1664604 v2/NY

violate the automatic stay of

5

section 362 (a) of the Bankruptcy Code.

Bankruptcy Code provides in part:

Section 362 (a) of the

362 Automatic Stay.

section, a

(a) Except as provided in subsection (b) of this petition filed under section 301, 302, or

303 of this title. . operates as a stay, applicable

to all entities, of(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate;

11 U.S.C. 362 (a).

The stay mandated by this provision is

automatic - the debtor need not make any formal request that it

be issued or that it apply to a particular proceeding. Rather,

the onus is on the party seeking to proceed to petition the

Bankruptcy Court for relief from the stay. See 11 U. S. C.

362(d).

The scope of the automatic stay is broad and covers all

proceedings against a debtor.

Ass'n. of St. Croix Condominium

Owners v. St. Croix Hotel Corp., 682 F.2d 446, 448 (3d Cir.

1982) (citing H.R. Rep. No. 95-595, at 340 (1977), reprinted in

1978 U.S.C.C.A.N. 5787, 5963, 6296-97). "Because the automatic
stay serves the interests of both debtors and creditors, it may

not be waived and its scope may not be i imi ted by a debtor."
Maritime Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1204
(3d Cir. 1992).

11. The

Receiver at tempts

to

exercise

control

over

property of Mervyn's bankruptcy estate by seeking authorization

6
1664604 v2/NY

to reserve for only a portion of Gabriel's potential liability

to Mervyn's and to distribute Gabriel's other assets before

Mervyn's

claims

against

Gabriel

are

adjudicated

by

the

Bankruptcy Court. It is well-settled that "a determination of

what is property of the estate and concurrently, of what is

available for distribution to creditors of that estate, is

precisely the type of proceeding over which the bankruptcy court

has exclusive jurisdiction." All American Laundry Service v. Ascher (In re Ascher), 128 B.R. 639, 643 (Bankr. N.D. Ill.
1991); see also In re Fisher, 67 B.R. 666, 668 (Bankr. D. Colo.

1986) ("The determination of what constitutes property of the

bankruptcy estate is inherently an issue to be determined by the

bankruptcy

court. ") .

This

is

so

even

though

such

determination may rest upon interpretation of state law. See

Pension Benefit Guaranty crporation v. Continental Airlines, et

aL. (In re Continental Airlines, et aL., 138 B.R. 442, 445 (D.

Del. 1992) ("The determination of each party's interest in the

property is made by reference to the applicable state's law,

Butner v. United States, 440 U.S. 48, 55-56 (1979), and the
Bankruptcy Code determines whether that particular interest may

properly be included in the property of the estate.") . 2

Furthermore, courts hold that fraudulently conveyed and recoverable property remains property of the estate despite the fact that the debtor or trustee has not yet recovered it. See Am. Nat' 1 Bank of Austin v. Mortgage America Corp. (In re Mortgage America Corp.), 714 F.2d 1266, 1277-78 (5th Cir. 1983) (explaining that "it makes the most sense to consider the debtor
7
1664604 v2/NY
2

12. The

Receiver

has

neither

sought

nor

obtained

Bankruptcy Court authorization to exercise control over property

of Mervyn's bankruptcy estate.

Accordingly, the Receiver's

proposed Distribution Procedures and Plan should be denied. See

In re Schwartz, 954 F.2d 569 (9th Cir. 1992) (holding that any

order or other action by a state court in violation of the

automatic stay is void)

13 . In sum, the Receiver asks this Court to ignore the

Supremacy

Clause,

circumvent

federal

bankruptcy

law

and

effectively release Gabriel from all but a fraction of its

potential liability in the 2004 Transaction Litigation.

Such

extraordinary' relief is well beyond this Court's jurisdiction

and

authority

to

fashion

and

the

Receiver's

proposed

Distribution Procedures and Plan should be denied.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

the trustee need not recover the debtor's equitable interest because it
it as though the debtor had never transferred it.") .
8
1664604 v2/NY

as continuing to have a \ legal or equitable interest (J' in the property fraudulently transferred within the meaning of section 541 (a) (1) ." Therefore,
"remains in the dehtor so that creditors may attach or execute judgment upon

WHEREFORE, for the reasons set forth herein, Mervyn's

respectfully requests entry of an Order sustaining this

obj ection and granting such relief as necessary to preserve
Mervyn's rights and interests consistent with the foregoing. Dated: September 20, 2010 New York, New York

By: /s/ Ian Shapiro

COOLEY LLP 1114 Avenue of the Americas New York, New York 01136 (212) 479-6000

(212) 479-6275 (Facsimile)

Ronald R. Sussman (RS 0641) Jay R. Indyke (JI 0353) Ian Shapiro (iS 5120) 'Seth Van Aalten (SV 2663)

9
1664604 v2/NY

EXHIBIT D

FILED: NEW YORK COUNTY CLERK 11/12/2010

NYSCEF DOC. NO. 179

INDEX NO. 450879/2009 RECEIVED NYSCEF: 11/12/2010

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK _____________________________________________________ : : : Index No. 450879/2009 Plaintiff, : : -- against -: : J. EZRA MERKIN and GABRIEL CAPITAL : CORPORATION, : : Defendants, : : and : : ARIEL FUND LIMITED, ASCOT FUND LIMITED, : ASCOT PARTNERS, L.P., GABRIEL ALTERNATIVE : ASSETS, LLC, GABRIEL ASSETS, LLC and : GABRIEL CAPITAL, L.P., : : Relief Defendants. : _____________________________________________________ : THE PEOPLE OF THE STATE OF NEW YORK RECEIVERS RESPONSE TO OBJECTION OF MERVYNS LLC, MERVYNS HOLDINGS, LLC AND MERVYNS BRANDS, LLC TO RECEIVERS PROPOSED PROCEDURES AND PLAN FOR FIRST INTERIM DISTRIBUTION TO INVESTORS Bart M. Schwartz, the Court-appointed receiver (the Receiver) for Ariel Fund Limited (Ariel Fund), Gabriel Capital, L.P. (Gabriel Fund and, together with Ariel Fund, the Funds), Gabriel Alternative Assets, LLC (Gabriel Alternative), and Gabriel Assets, LLC (Gabriel Assets and, together with the Funds and Gabriel Alternative, the Ariel & Gabriel Receivership Entities), by and through his undersigned counsel, hereby submits this response to the objection (the Mervyns Objection) submitted by Mervyns LLC, Mervyns Holdings, LLC and Mervyns Brands, LLC (collectively, Mervyns) to the Receivers Proposed Procedures and Plan for First Interim Distribution to Investors (the Procedures and Plan), and in support thereof, respectfully states as follows:

PRELIMINARY STATEMENT 1. Mervyns is the plaintiff in a bankruptcy court adversary proceeding in which its

second amended complaint alleges that more than 45 defendants one of whom is Gabriel Fund are all jointly and severally liable for more than $ 1 billion in damages (the Mervyns Action). 2. Mervyns argues that the Receivers proposed reserve against the Mervyns

Action of $18,817,688 of Gabriel Fund cash is inadequate, and therefore that the proposed distribution of approximately $36 million to Gabriel Funds injured investors should not be permitted to go forward. 3. Mervyns seeks to block the Receivers distribution to injured Gabriel Fund

investors notwithstanding the undeniable realities that: Gabriel Fund never invested in Mervyns, and never received any payment from Mervyns rather, it was a purely passive investor in an entity (Gabriel Assets, which is not a defendant in the Mervyns Action), that was a purely passive, small minority investor in yet another entity (Cerberus Mervyns Investors, LLC), that invested in Mervyns. Thus, Gabriel Fund is two layers removed from any entity that interacted with Mervyns in any way. Yet, Mervyns makes the facially absurd assertion that Gabriel Fund somehow exerted direct control over Mervyns, and therefore in respect of the approximately $18.3 million of distributions that Gabriel Fund ultimately received through two intermediaries (consisting of approximately $8.2 million of returned principal, and approximately $10.1 million of profit), Gabriel Fund somehow can be held liable for $1 billion of damages; The Receiver has agreed to reserve approximately $18.8 million in respect of the Mervyns Action which constitutes the full amount of Gabriel Funds passive profit, its returned principal, and an overage of approximately $500,000 to cover any theoretically possible award of attorneys fees and / or interest that could be entered against it. The Receiver also has affirmed that, following the first interim distribution to investors proposed in the Procedures and Plan, the full remaining estimated value of approximately $507 million in the Gabriel Fund estate will remain available as a further backstop for any creditor claims that ultimately could be allowed against Gabriel Fund; and The Mervyns Action is in the earliest stages of discovery, pursuant to a discovery plan that would not give Gabriel Fund an opportunity to present a Summary -2-

Judgment Motion until sometime in the second half of 2012, and would not give Gabriel Fund the opportunity to defeat the Mervyns Action at trial until 2013 all while saddling Gabriel Fund with hundreds of thousands of dollars of litigation costs in the interim, depriving injured Gabriel Fund investors of any distribution, and causing the Receiver to hold the Gabriel Fund estate open for years to come. 4. As set forth below, the Receivers proposed Procedures and Plan are fair and

reasonable given the contingent, unliquidated, unsupported and facially implausible nature of Mervyns claim against Gabriel Fund. It would, therefore, be inequitable and unnecessary to withhold distributions to the Gabriel Fund investors while Mervyns pursues its bankruptcy court litigation just because Mervyns chose to append a $1 billion damages claim to its allegations. 5. Accordingly, the Mervyns Objection should be overruled. BACKGROUND 6. On or about April 6, 2009, the New York State Attorney General (the Attorney

General) commenced the above-captioned action (the NYAG Action) against J. Ezra Merkin (Merkin) and Gabriel Capital Corp. (GCC), naming the Ariel & Gabriel Receivership Entities as relief defendants. 7. Thereafter, Bart M. Schwartz was appointed as Receiver of the assets of the Ariel

& Gabriel Receivership Entities pursuant to the Stipulation and Order Appointing Receiver, entered on June 10, 2009 (the Receivership Order). 8. Pursuant to the Receivership Order, the Court directed the Receiver to marshal

and preserve the assets of the Ariel & Gabriel Receivership Entities, with the ultimate goal of distributing the residual assets to Ariel Funds and Gabriel Funds investors. 9. On May 24, 2010, the Receiver moved for entry of an order setting a claims bar

date; fixing the manner of notice of the claims bar date; and establishing procedures for resolution of disputed claims and objections to the proposed procedures and plan for a first interim distribution to investors (the Distribution Motion). -3-

10.

In support of his motion, the Receiver averred that, as of March 31, 2010 (the

Calculation Date), the unaudited, estimated value of Gabriel Fund was $602,692,016, and the unaudited, estimated value of the Ariel Fund was $652,720,432. 11. The Receiver estimated that, as of the Calculation Date, the Receiver held roughly

$271,000,000 in available cash or cash equivalents (Presently Available Cash) for a first interim distribution to investors, in addition to approximately $1,000,000,000 of relatively illiquid investment positions (the Remaining Assets). 12. On August 2, 2010, the Court entered an order (the Distribution Motion

Procedures Order): (i) setting September 20, 2010 as the claims bar date (the Bar Date); (ii) fixing the manner of notice of the Bar Date; and (iii) establishing procedures for resolution of disputed claims and objections to the Procedures and Plan. Among other things, the Distribution Motion Procedures Order established procedures and a timeline for submission of objections to the Procedures and Plan. 13. The Distribution Motion Procedures Order also required any party who believed

that its Individual Bar Date Notice Exhibit did not accurately reflect the partys claim against the Funds to submit to the Receiver verified proof of its claim (a Proof of Claim) by no later than the Bar Date. The Mervyns Bankruptcy Proceeding 14. On July 29, 2008, Mervyns commenced jointly administered bankruptcy cases in

the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court) (Case No. 08-11586 (KG)). 15. On December 22, 2008, Mervyns, acting through its Official Committee of

Unsecured Creditors, commenced an avoidance action in the Bankruptcy Court (Adv. Pro. No.

-4-

08-51402 (KG)), asserting a damages claim of approximately $400 million against a number of defendants, including Gabriel Fund. That adversary proceeding was later amended to include, among other things, a claim for approximately $1 billion against substantially the same defendants, jointly and severally, including Gabriel Fund (as amended, the Mervyns Action). 16. The Mervyns Action alleges that the defendants utilized a transaction similar to a

leveraged buyout to acquire Mervyns and strip it of its valuable assets (the Mervyns Transaction). The Mervyns Action further alleges that the defendants proceeded to lease the real estate assets back to Mervyns at substantially increased rates, thus forcing Mervyns to finance the outstanding loan payments while stripping Mervyns of any residual value inherent in the assets. 17. Mervyns seeks to avoid the Mervyns Transaction (and related transactions)

under Sections 544(b), 548, and 550 of the United States Bankruptcy Code. 18. As Mervyns acknowledges in its complaint, Gabriel Fund was not a participant

in the Mervyns Transaction. Rather, the Second Amended Complaint in the Mervyns Action (the Complaint) alleges that Cerberus Mervyns Investors, LLC, is a limited liability company, which sponsored and/or participated in the [Mervyns] Transaction and the subsequent transactions and actions at issue in the Mervyns Action. Mervyns Objection, Exhibit A at 8. 19. Gabriel Assets (i.e., not Gabriel Fund, although Gabriel Fund is the named

defendant in the Mervyns Action) was a member of Cerberus Mervyns Investors, LLC (CMI).1 Notably, however, Gabriel Assets was a minority participant in CMI, with only a

As noted above, the only Ariel & Gabriel Receivership Entity named in the Complaint is Gabriel Fund, which the Complaint incorrectly alleges is one of four owners of defendant CMI. (See, Id. at 18). However, the only Ariel & Gabriel Receivership Entity with an interest in CMI was Gabriel Assets. Nevertheless, in the Mervyns Objection, Mervyns objects to distributions to investors in Gabriel Fund, which is a separate and distinct

Continued on following page -5-

17.11% membership interest, as reflected in the Amended and Restated Limited Liability Company Agreement of CMI, dated as of September 2, 2004 (the LLC Agreement). 20. The governance documents for CMI also make clear that Gabriel Assets was a

passive investor with no authority to manage or control any aspect of CMIs business generally, or, more specifically, CMIs participation in the Mervyns Transaction. The Managing Member of CMI, which was not Gabriel Assets, had the power and authority, on behalf of the Company, to take any action of any kind not inconsistent with the provisions of [the LLC agreement] and to do anything and everything it deem[ed] necessary or appropriate to carry on the business and purposes of the Company, including, but not limited to manag[ing] and direct[ing] the business affairs of the Company [and] direct[ing] the formulation of investment policies and strategies for, and perform all other acts on behalf of, the Company. See LLC Agreement 5(a), (h). 21. Gabriel Assets investment in CMI was in the initial amount of approximately

$6.4 million, and the total profit allocation attributed to its investment in CMI was $10,401,158. 22. On May 10, 2010, Gabriel Fund submitted an answer denying the substantive

allegations in the Complaint, and asserting numerous defenses. The parties in the Mervyns Action are currently engaged in pre-trial discovery. Mervyns Objections to the Proposed Distribution 23. Mervyns filed the Mervyns Objection on September 20, 2010, arguing that the

Receivers proposed reserve of $18,817,688 on account of any potential obligation arising out of the Mervyns Action is inadequate to cover the potential liability of Gabriel Assets in light of Continued from previous page
entity from Gabriel Assets. The Mervyns Objection blurs this distinction by interchangeably referring to both Gabriel Assets and Gabriel Fund by the simple appellation Gabriel.

-6-

Mervyns asserted damages claim of $1 billion, and the total value of Gabriel Funds assets estimated by the Receiver at $602,692,016 as of the Calculation Date would likewise be insufficient to satisfy the Mervyns claim. Mervyns Objection at 4. 24. Mervyns contends that, simply because it has asserted a $1 billion claim, it is

improper for the Receiver to distribute approximately $36 million of Gabriel Funds assets to injured Gabriel Fund investors prior to full satisfaction of the allegedly higher priority albeit, hotly disputed, and in the Receivers view, unsupportable claims of Mervyns. 25. Mervyns also argues that the Receiver, by proposing the distribution

contemplated by the Procedures and Plan, attempts to exercise control over property of Mervyns bankruptcy estates, in violation of the automatic stay provided for in section 362(a) of the Bankruptcy Code. 26. The arguments set forth in the Mervyns Objection should be rejected, and the

Receiver should be authorized to proceed with the Procedures and Plan for the reasons set forth below. LEGAL ARGUMENT 27. Mervyns right to participate in any distribution of receivership assets has not

been established. Nevertheless, the Receiver has proposed the creation of a reserve to ensure that, if it is eventually determined that Mervyns is a creditor, assets sufficient to cover any recovery to which it could realistically be entitled will be available for distribution to Mervyns. 28. The Receivers prudential judgment should be approved by the Court in the

exercise of its discretion. 29. While Mervyns is concerned with maximizing its own position, the primary

purpose of a receivership is to protect all parties interests in the receivership property. See

-7-

generally Varsames v. Palazzolo, 96 F. Supp. 2d 361, 366 (S.D.N.Y. 2000) (citing Citibank v. Nyland (CF8) Ltd., 839 F.2d 93, 96 (2d Cir. 1988)) (emphasis added). Another principal purpose of equity receiverships is to promote orderly and efficient administration of the estate. In re Michael S. Starbuck, Inc., 14 B.R. 134 (Bankr. S.D.N.Y. 1981); see also S.E.C. v. Hardy, 803 F.2d 1034, 1038 (9th Cir. 1986). 30. In furtherance of these purposes, courts customarily approve distribution plans

proposed by receivers which are fair and equitable to all parties. See 16 William Meade Fletcher, Fletcher Cyclopedia of the Law of Corporations 7931 (2010) (Upon proper application, notice to the parties, and proof, the court may order distribution of the assets in the hands of a receiver to the parties entitled to receive them.). 31. The appointing court in a receivership retains extremely broad discretion to

determine the most equitable remedy when approving a distribution plan presented by a receiver and in determining the appropriate procedures to be used in its administration. See FDIC v. Bernstein, 786 F. Supp. 170, 177 (E.D.N.Y. 1992).2 In the exercise of this broad discretion, a court may adopt any proposed plan of distribution that is fair and reasonable. S.E.C. v. Wang, 944 F.2d 80, 85 (2d Cir. 1991). I. The Proposed Distribution Procedures and Plan are Fair and Reasonable 32. The Procedures and Plan are fair and reasonable and represent the most

equitable remedy available for all parties in interest in light of the tragic circumstances surrounding the public revelation of Madoffs Ponzi scheme. As argued in the Distribution Motion:
2

See also S.E.C. v. Basic Energy & Affiliated Res., Inc., 273 F.3d 657, 670-71 (6th Cir. 2001) (upholding district courts approval of distribution plan upon concluding that receiver fashioned a distribution plan that was fair and equitable).

-8-

[A]n interim distribution is warranted, and should be approved for two principal reasons: first, creditors will be paid in full, or adequately protected by many millions of dollars of cash that will be reserved from the Presently Available Cash, as well as by approximately $1,000,000,000 (one billion dollars) estimated unaudited value of assets remaining to be liquidated; and second, equity dictates that the Funds investors, who have suffered great losses as a result of one of the most egregious frauds in our history (i.e., the Madoff fraud), compounded by the fraud alleged to have been perpetrated on them by Mr. Merkin, should regain access to their funds now, to redeploy them as they see fit, rather than having the full remaining amount of their assets continue in the hands of the Receiver until the last asset is sold, and the final claim against the Funds is fully resolved at such indeterminate future date as those milestones may occur. Distribution Motion at 4. A. 33. Mervyns is Not Entitled to Any Recovery from Gabriel Fund or Gabriel Assets If, in the future, Mervyns were to prevail in the Mervyns Action and obtain a

judgment, pursuant to Section 550 of the Bankruptcy Code, Mervyns would only be entitled to recover the alleged improper transfers at issue in the Mervyns Action from the initial transferee of such transfer(s) or the entity for whose benefit such transfer was made 11 U.S.C. 550(a)(1); see also Collier on Bankruptcy P 550.02 (Alan N. Resnick & Henry J. Sommer eds., 16th ed.).3 34. According to the Complaint, CMI (not Gabriel Assets, or Gabriel Fund) was the

participant in the Mervyns Transaction and, therefore, was the initial transferee of the alleged improper transfers at issue. Gabriel Assets, although not named as a defendant, can only be held liable to the extent it qualifies as an entity for whose benefit such transfer was made solely by virtue of its membership interest in CMI.

The Complaint does not plead a claim against Gabriel Fund for subsequent transferee liability. 11 U.S.C. 550(a)(2). But, even if it did, the liability would be limited to the amounts actually transferred to Gabriel Fund, which is far less than the amount the Receiver has reserved on account of the Mervyns claim.

-9-

35.

A shareholder or investor in an entity that receives a fraudulent transfer does not,

however, automatically become liable under section 550(a)(1), as Mervyns suggests. For example, in Turner v. Phoenix Financial, LLC (In re Imageset, Inc.), 299 B.R. 709 (Bankr. D. Me. 2003), the bankruptcy trustee argued that the individual members of a limited liability company (the LLC) which received allegedly fraudulent transfers should share liability for the transfers on par with the LLC, which was the initial transferee of the transfers. Id. at 718. In support of this contention, the trustee posited that the benefit received by the individual[] [members] was the right to receive the funds paid to [the LLC] as a result of their membership interests in [the LLC]. Id. 36. The Imageset court disagreed, and held that the individuals rights as interest

holders in the LLC [was] not alone sufficient to qualify them as persons for whose benefit [the] transfer[s were] made within 550(a)(1)s meaning. Id. As the Imageset court explained: While the logic of [the trustees] position is conspicuous in its simplicity, it also proves too much. If your interest in an entity makes you strictly liable (jointly and severally with the entity) under 550 every time the entity receives a fraudulent conveyance, wouldn't the same logic extend liability to every shareholder of a corporation to the same degree? Id. 37. The Imageset court instructed further that liability as an entity for whose benefit a

transfer was made may only attach under Section 550(a)(1) where the benefit derive[s] directly from the transfer, not from the use to which it is put by the transferee [, and] [s]omeone who receives the money later on is not an entity for whose benefit such transfer was made. Id. (quotation omitted); see also Schecter v. 5841 Building Corp. (In re Hansen), 341 B.R. 638, 645 (Bankr. N.D. Ill. 2006) (Nothing in section 550(a)(1) indicates that corporate form can be thrust

- 10 -

aside and all voidable transfers to a corporation recovered from its shareholders on the mere assumption that shareholders somehow automatically benefit from such transfers.).4 38. Further, CMI is a Delaware limited liability company, and the aforementioned

decisions are consistent with the Delaware Limited Liability Company Act, which provides, in relevant part, that: the debts, obligations and liabilities of a limited liability company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the limited liability company, and no member or manager of a limited liability company shall be obligated personally for any such debt, obligation or liability of the limited liability company solely by reason of being a member of the limited liability company. 6 Del. C. 18-303(a) (emphasis added). 39. As set forth above, CMI a limited liability company was the participant in the

Mervyns Transaction and the recipient of all the transfers from Mervyns. Gabriel Assets was a minority investor in CMI, and Gabriel Assets had no authority to manage or control any aspect of the Mervyns Transaction; and, a fortiori, Gabriel Fund clearly had no such authority. Consequently, under the Delaware Limited Liability Company Act and the holding in In re Imageset, neither Gabriel Assets nor Gabriel Fund can be held liable under Section 550(a)(1) as an entity for whose benefit any of the transfers at issue in the Mervyns Action were made. See In re Imageset, 299 B.R. at 718. B. 40. The Proposed Reserve Sufficiently Protects Mervyns Interests Despite the substantial lack of merit to the claim, the Receiver has nonetheless

proposed establishing a substantial cash reserve to preserve whatever potential claim Mervyns
As one court explained, [t]he quintessential example of the entity who benefits from the initial transfer is a guarantor of the debtor. He or she is relieved of the obligation to pay the lender which is the benefit while the lender receives the money. S.I.P.C. v. Stratton Oakmont, Inc., 234 B.R. 293, 314 (Bankr. S.D.N.Y. 1999) (citations omitted); see also Collier on Bankruptcy, supra, P 550.02.
4

- 11 -

might obtain in the future. That reserve is in excess of any reasonably possible claim that Mervyns could recover. Notably, the total profit allocation credited to Gabriel Assets investment in CMI was $10,401,158, so the proposed reserved amount of $18,817,688 exceeds by more than $8,000,000 any profit even arguably realized by any of the Ariel & Gabriel Receivership Entities, thereby affording a substantially outsized cushion against any possibility of damages in respect of the Mervyns Action. 41. Despite Mervyns assertion that Gabriel Fund is in some manner potentially liable

for the full $1 billion claim, it has provided neither facts nor law to establish the likelihood of obtaining a judgment in that amount; nor has it established how or why Gabriel Assets or Gabriel Fund could be jointly and severally liable for such damages. In fact, Gabriel Funds name appears in the Complaint only twice (in paragraphs 17 and 18) where it is improperly identified as one of the owners of CMI. 42. Neither the Complaint nor the Mervyns Objection explains how ownership of

limited liability membership interests would expose Gabriel Assets to liability that is joint and several with the other 45 defendants in the Mervyns Action. The request by Mervyns that the Court withhold distributions to ensure that Gabriel Fund will be able to fully satisfy the entire contingent claim is unjustified. 43. Indeed, Mervyns own arguments undercut its need for such a reserve in excess of

the one proposed by the Receiver. If, as Mervyns suggests, all of the defendants in the Mervyns Action are jointly and severally liable, no reserve would be required. Several of these defendants, which include Goldman Sachs, Bank of America, Cerberus Capital, Sun Capital and Greenwich Capital, are large financial firms that would be required, under Mervyns theory of

- 12 -

liability, to satisfy the entire amount of any joint and several award. In light of the foregoing, Mervyns concerns about distributions being made to Gabriel Funds investors rings hollow. 44. In light of the steps the Receiver has taken to ensure that adequate funds are

available to satisfy Mervyns contingent claim, and in light of the devastating losses that have been suffered by investors in Gabriel Fund, the Receiver respectfully submits that the Procedures and Plan are fair and reasonable and represent the most equitable approach to accommodating the legitimate interests of all parties. 45. II. Accordingly, the Mervyns Objection should be denied.

The Automatic Stay Does Not Prohibit the Proposed Distribution 46. Mervyns suggests further that this Court cannot exercise any control over the

assets of Gabriel Fund because the Procedures and Plan violate the automatic stay of section 362(a) of the Bankruptcy Code.5 This argument is predicated on a fundamental misunderstanding of the bankruptcy law and the scope of the Bankruptcy Courts jurisdiction. 47. Mervyns is only a putative creditor that may in the future have a claim against

one of the Receivership Entities. But, it presently has no interest in the assets under this Courts jurisdiction. 48. Mervyns theorizes that Gabriel Funds assets may possibly be required to satisfy

an adverse judgment in the Mervyns Action, and therefore those assets should be protected as if they were property of Mervyns bankruptcy estate. Extending this novel proposition further,

Section 362(a) of the Bankruptcy Code provides in pertinent part: 362 Automatic Stay. (a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this titleoperates as a stay, applicable to all entities, of (3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.

- 13 -

Mervyns argues that this Court therefore lacks the authority to approve the Procedures and Plan, and the Receiver is required to obtain the Bankruptcy Courts permission in order to distribute any of Gabriel Funds assets while the Mervyns Action is pending. Mervyns Objection at 6-7.6 49. These arguments fail, however, because: (i) property that is the subject of an

avoidance action, such as the Mervyns Action, is not property of the estate unless and until the alleged improper transaction has been avoided and the property is recovered; and (ii) a bankruptcy court cannot exercise control over property held by a state court receiver without first applying to the Court for permission to do so. A. Property that is the Subject of an Avoidance Action is Not Property of the Estate Unless and Until it is Recovered by the Trustee By its own terms, the automatic stay only applies to property that is property of

50.

the estate, as defined by 541(a). 11 U.S.C. 362(a)(3); see also Collier on Bankruptcy, supra, P 362.03. Although 541 defines property of the estate broadly, that expansive definition does not encompass all of the property owned by every party named as a defendant in an action commenced by a debtor. 51. The avoidance provisions of the Bankruptcy Code allow bankruptcy trustees to

seek the avoidance of certain pre-petition liens and transfers by the debtor. But, the property that is the subject of such an avoidance action does not become property of the bankruptcy estate until after the bankruptcy court has ruled that the transfer is avoidable and the property has been recovered. See 11 U.S.C. 550; see also H.R. 8200, H. Rep. No. 595, 95th Cong., 1st Sess. 376 (1977) (stating that section 550 enunciates the separation between the concepts of avoiding a transfer and recovering from the transferee); Collier on Bankruptcy, supra, P 541.12.

Notably, Mervyns has not taken this position (at least not formally) before the Bankruptcy Court.

- 14 -

52.

Indeed, under relevant Third Circuit case law, property that is the subject of an

avoidance action is not property of the estate until it has been recovered under Section 550 of the Bankruptcy Code. See, e.g., In re Wagner, 353 B.R. 106 (Bankr. W.D.Pa. 2006) (Transferred property subject to recovery in an avoidance action is not property of the estate until it is actually recovered).7 The Second Circuit Court of Appeals reached a similar conclusion in In re Colonial Realty Co., 980 F.2d 125 (2d Cir. 1992). 53. In Colonial Realty, the general partners of the debtor transferred ten million

dollars to the wife of one of the general partners just before filing for bankruptcy. Five banks, all creditors of the debtor, failed and went into receivership shortly thereafter. In a Florida state action, the Federal Deposit Insurance Corporation, as receiver for the banks, sought to avoid the transfer and recover the funds. The trustee for the debtor petitioned the U.S. Bankruptcy Court for the District of Connecticut to enjoin the Florida action on the grounds that it violated the automatic stay because the transfer was avoidable and the property was therefore property of the estate. 980 F.2d at 131. The court rejected this argument, stating that property that is the subject of an avoidance action does not become property of the estate until it has been recovered by the trustee.8 Id. (quoting In re Saunders, 101 B.R. 303, 304-306 (Bankr. N.D.Fla. 1989)). As the trustee had not yet successfully avoided the transfer at issue, the court held that it was not property of the estate and therefore was not subject to the protection of Section 362(a)(3).9
7

Because the Mervyns Action is pending in Delaware, the law of the Third Circuit is controlling.

The Colonial Realty decision reversed the Second Circuits previous reliance on In re MortgageAmerica Corp., 714 F.2d 1266 (5th Cir. 1983), the only case cited by Mervyns in support of its argument that property that is the subject of an avoidance action becomes property of the estate upon filing of the bankruptcy proceeding, because the debtor has a continuing legal or equitable interest in the property. Mervyns reliance on MortgageAmerica, which it buries in a footnote, is unavailing because courts in the Third Circuit have implicitly adopted the Colonial Realty rule, which directly conflicts with the MortgageAmerica decision.
9

The Colonial Realty Courts holding that Section 362(a)(1) applied in that case is irrelevant here.

- 15 -

54.

In In re CitX Corp., 302 B.R. 144 (Bankr. E.D.Pa. 2003), the court accepted the

reasoning of Colonial in addressing a fact pattern similar to the one before this Court. In that case, a Chapter 7 bankruptcy trustee brought an adversary proceeding asserting claims for preferences, improper post-petition transfers, and fraudulent conveyances against an out-of-state court-appointed receiver in his capacity as receiver. In assessing the scope of its jurisdiction to intercede in the state court proceeding to recover the allegedly fraudulently transferred funds, the Bankruptcy Court determined that, although it had jurisdiction to determine whether the trustee had a valid claim against the entity in receivership and, if so, the amount of that claim, it did not have jurisdiction to recover the funds from receivership property without first obtaining the consent of the state court. 302 B.R. at 152-54.10 55. Mervyns characterizes the Mervyns Action as an action seeking to avoid

certain transfers and recover certain assets alleged to have been fraudulently transferred out of Mervyns in connection with Target Corporations sale of Mervyns to a group of private equity funds in 2004. Mervyns Objection 2. However, as Mervyns concedes, [t]he parties to the [Mervyns Action] have yet to produce documents, exchange interrogatories or conduct depositions, and [t]he Bankruptcy Court has made no findings with respect to the allegations and causes of action asserted against Gabriel Fund. Id. 7. Accordingly, under applicable caselaw, Gabriel Funds assets are not property of the Mervyns estate, and Mervyns assertions to the contrary should be rejected.

10

Had the court accepted the premise of MortgageAmerica, upon which Mervyns relies i.e., that property that has been fraudulently transferred automatically becomes property of the estate regardless of the courts recovery of that property it would have been unnecessary to address the issue of the courts authority to recover or otherwise exercise control over the property.

- 16 -

B.

A Bankruptcy Court May Not Exercise Control Over Property Held by the Receiver Without First Applying to the State Court Further, the court in a receivership action has the power and duty to protect a

56.

receiver against interference by persons regardless of whether they: (i) are parties to the proceedings; or (ii) assert claims paramount to, or under, the right which the receiver was appointed to protect. Walling v. Miller, 108 N.Y. 173, 177, 15 N.E. 65, 66 (N.Y. 1888); Copeland v. Salomon, 451 N.Y.S.2d 682, 686, 436 N.E.2d 1284, 1288 (N.Y. 1982). 57. The In re CitX decision provides an example of the application of these principles

under a fact pattern similar to the one at issue. As described above, the bankruptcy trustee in that case sought to recover property from a state court receivership in an avoidance action. The bankruptcy court relied on the traditional Barton Doctrine for the proposition that before suit is brought against a receiver, leave of the court by which he was appointed must be obtained. 302 B.R. at 148 (citing Barton v. Barbour, 104 U.S. 126, 128 (1881)). 58. Notably, in assessing the scope of its jurisdiction to intervene in the state court

proceeding to recover allegedly fraudulently transferred funds, the CitX court held that, although it could determine the validity and amount of the trustees claims, it could not exercise control over property held by the receiver without first applying to the state court for permission to do so. Id. at 152 (citing, e.g., at 148, Barton v. Barbour; at 154, Morris v. Jones, 329 U.S. 545, 549 (1947) (No one can obtain part of the assets or enforce a right to specific property in the possession of the liquidation court except upon application to it); at 154, Commonwealth Trust Co. of Pittsburgh v. Atwood, 78 F.2d 92, 94 (3d Cir. 1935) (A federal court cannot reach into the state court and take the res or enforce a right to specific property in possession of its receiver or trustee, except upon application to the court which appointed him.). The bankruptcy court further relied on principles of comity, expressing its concern for the fair adjudication of property

- 17 -

in the control of the receivership court. Id. at 149 (citing Porter v. Sabin, 149 U.S. 473, 479-80 (1893)). 59. Thus, under In re CitX, even if the Bankruptcy Court determines that there is a

basis to avoid the Mervyns Transaction, Mervyns has limited capacity to recover from Gabriel Funds (or Gabriel Assets) assets without obtaining leave of this Court. 60. For the foregoing reasons, approving the Procedures and Plan would not violate

the automatic stay. Accordingly, the arguments in the Mervyns Objection should be rejected. CONCLUSION 61. Mervyns asks that this Court require the Receiver, who has been appointed to

distribute the remaining assets of Gabriel Fund in fairness and equity to all parties in interest, to set aside the entire corpus of Gabriel Fund as a reserve to satisfy Mervyns contingent claim, while denying investors a distribution of roughly $36 million that, although a small fraction of Gabriel Funds estimated value, could provide much-needed relief to investors who lost a significant portion of their savings in the frauds at the heart of the NYAG Action. 62. Mervyns would have $602,692,016 sit idly while it pursues claims of unknown

merit in the Bankruptcy Court, even though there is no viable basis for holding either Gabriel Fund or Gabriel Assets liable for any amount in excess of the Receivers proposed reserve under any circumstance.

- 18 -

WHEREFORE, the Receiver respectfully requests that the Court enter an Order: (i) denying the Mervyns Objection; (ii) approving the Procedures and Plan; and (iii) granting the Receiver such other and further relief as may be appropriate under the circumstances.

Dated: November 12, 2010 New York, New York REED SMITH LLP

/s/ James C. McCarroll James C. McCarroll Lance Gotthoffer Michael J. Venditto 599 Lexington Avenue New York, NY 10022 Telephone: (212) 521-5400 Facsimile: (212) 521-5450 Attorneys for Bart M. Schwartz, Receiver and Joint Voluntary Liquidator of Ariel Fund Limited, and Receiver of Gabriel Capital, L.P., Gabriel Alternative Assets, LLC, and Gabriel Assets, LLC; and for Geoffrey Varga, Joint Voluntary Liquidator of Ariel Fund Limited

By:

- 19 -

EXHIBIT E

FILED: NEW YORK COUNTY CLERK 11/03/2011

NYSCEF DOC. NO. 257

INDEX NO. 450879/2009 RECEIVED NYSCEF: 11/03/2011

EXHIBIT F

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE __________________________________________ In re: : : MERVYNS HOLDINGS, LLC, et al., : : Debtors. : __________________________________________: Chapter 11 Case No. 08-11586(KG) Jointly Administered Re: Docket No. _________

ORDER GRANTING MOTION OF BART M. SCHWARTZ, AS RECEIVER FOR GABRIEL CAPITAL, L.P., FOR AN ORDER (I) PROVIDING THAT THE AUTOMATIC STAY DOES NOT APPLY, OR IN THE ALTERNATIVE, (II) GRANTING RELIEF FROM THE AUTOMATIC STAY Upon consideration of the Motion of Bart M. Schwartz, as Receiver for Gabriel Capital, L.P., for an Order (i) Providing that the Automatic Stay Does Not Apply, Or in the Alternative, (ii) Granting Relief from the Automatic Stay (the Motion),1 and any timely response(s) in opposition to the Motion, and after notice and an opportunity for a hearing pursuant to 11 U.S.C. 102(1), and for the reasons set forth in the Motion and on the record at any hearing, it is hereby ORDERED THAT: 1. 2. The Motion is granted. The automatic stay imposed by 11 U.S.C. 362 does not prohibit the Receivership

Court from authorizing the Proposed Distributions (or any future distributions that the Receivership Court may authorize). 3. To the extent, if any, that the automatic stay applies, cause exists for relief from the

stay under 11 U.S.C. 362(d)(1). Therefore, the automatic stay is lifted so that the Receivership

Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.

Court may authorize the Proposed Distributions (and any future distributions that the Receivership Court may authorize). 4. The 14-day stay provided in Federal Rule of Bankruptcy Procedure 4001(a)(3) shall

not apply to this Order. Dated: March ___, 2012 Wilmington, Delaware KEVIN GROSS CHIEF U.S. BANKRUPTCY JUDGE

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE __________________________________________ In re: : : MERVYNS HOLDINGS, LLC, et al., : : Debtors. : __________________________________________: Chapter 11 Case No. 08-11586(KG) Jointly Administered

CERTIFICATE OF SERVICE I, Kurt F. Gwynne, Esquire, certify that I am over 18 years of age and that on this 6th day of February 2012, I caused a true and correct copy of the MOTION OF BART M. SCHWARTZ, AS RECEIVER FOR GABRIEL CAPITAL, L.P., FOR AN ORDER (I) PROVIDING THAT THE AUTOMATIC STAY DOES NOT APPLY, OR IN THE ALTERNATIVE, (II) GRANTING RELIEF FROM THE AUTOMATIC STAY to be served upon all parties on the attached service list via First Class United States Mail. By: /s/ Kurt F. Gwynne Kurt F. Gwynne (No. 3951)

SERVICE LIST

American Empire Surplus Lines Ins Co Jeff Schraer 580 Walnut St 10 W Cincinnati, OH 45202

Arch Insurance Company Rich Vallario 4 Embarcadero Ctr Ste 2000 San Francisco, CA 94111

Ashby & Geddes PA William P Bowden & Amanda M Winfree 500 Delaware Ave 8th Fl PO Box 1150 Wilmington, DE 19899

AWAC Pete Aeschliman 100 Pine St Ste 2100 San Francisco, CA 94111

Ballard Spahr Andrews & Ingersoll LLP David L Pollack & Jeffrey Meyers 1735 Market St 51st Fl Mellon Bank Ctr Philadelphia, PA 19103

Ballard Spahr Andrews & Ingersoll LLP Tobey M Daluz & Leslie Heilman 919 Market St 12th Fl Wilmington, DE 19801

Bankruptcy & Collections Division John Mark Stern Asst Attorney General PO Box 12548 Austin, TX 78711-2548

Bartlett Hackett Feinberg Frank McGinn 155 Federal St 9th Fl Boston, MA 02110

Bewley Lassleben & Miller LLP Ernie Zachary Park 13215 E Penn St Ste 510 Whittier, CA 90602-1797

Binder & Malter Michael Malter & Julie Rome-Banks 2775 Park Ave Santa Clara, CA 95050

Borges & Associates LLC Wanda Borges 575 Underhill Blvd Ste 118 Syosset, NY 11791

Broker & Associates PC Jeffrey W Broker 18191 Von Karman Ave Ste 470 Irvine, CA 92612-7114

Brown & Connery LLP Donald K Ludman 6 N Broad St Ste 100 Woodbury, NJ 08096

Buchalter Nemer PC Jeffrey K Garfinkle Shawn M Christianson 333 Market St 25th Fl San Francisco, CA 94105-2126

CNA David Williams 405 Howard St Ste 600 San Francisco, CA 94105

Cavazos Hendricks Poirot & Smitham PC Lyndel Anne Mason 900 Jackson St Founders Sq Ste 570 Dallas, TX 75202

Ciardi Ciardi & Astin PC Daniel Astin & Anthony Saccullo 919 N Market St Ste 700 Citizens Bank Ctr Wilmington, DE 19801

Brown McCarroll Kell C Mercer 111 Congress Ave Ste 1400 Austin, TX 78701-4043

Coman & Anderson David A Newby 2525 Cabot Dr Ste 300 Lisle, IL 60532

Connolly Bove Lodge & Hutz LLP Karen Bifferato & Christina Thompson Nemours Bldg 1007 N Orange St PO Box 2207 Wilmington, DE 19899

Cooch & Taylor PA Susan E Kaufman 1000 West St 10th Fl The Brandywine Bldg Wilmington, DE 19899

Cooley LLP Robert Sussman Cathy Hershcopf Jay Indyke 1114 Avenue of the Americas The Grace Bldg New York, NY 10036-7998

County of Santa Cruz Office of Treasurer Tax Collector 701 Ocean St Rm 150 Santa Cruz, CA 95060

Cox Castle Nicholson Randy P Orlik 2049 Century Park E 28th Fl Los Angeles, CA 90067-3284

Cozen OConnor Mark E Felger 1201 N Market St Ste 1400 Wilmington, DE 19801

Cross & Simon LLC Christopher Simon & Michael Joyce 913 Market St 11th Fl PO Box 1380 Wilmington, DE 19899-1380

Davis & Gilbert LLP Miles Baum 1740 Broadway New York, NY 10019

Day Pitney LLP Joshua W Cohen One Audubon St 6th Fl New Haven, CT 06511

Day Pitney LLP Ronald S Beacher 7 Times Sq New York, NY 10036-7311

DE Attorney General Joseph R. Biden III 820 N French Street Carvel State Office Building Wilmington, DE 19801

Delaware Dept of Justice Attn Bankruptcy Dept 820 N French St 6th Fl Wilmington, DE 19801

Delaware Secretary of the State Division of Corporations Franchise Tax PO Box 898 Dover, DE 19903

Delaware Secretary of the Treasury PO Box 7040 Dover, DE 19903

Developers Diversified Realty Corporation Eric C Cotton 3300 Enterprise Pkwy Beechwood, OH 44122

Dickenson Wright PLLC Trent B Collier 301 E Liberty Ste 500 Ann Arbor, MI 48104

DLA Piper LLP Erin Frazor 555 Mission St Ste 2400 San Francisco, CA 94105

DLA Piper US LLP Matt Covington 555 Mission St Ste 2400 San Francisco, CA 94105

Dobler Law Group Inc Craig Dobler & Michael Wolf 3850 Vine St Ste 230 Riverside, CA 92507

Duane Morris LLP Margery Reed & Wendy Simkulak 30 S 17th St Philadelphia, PA 19103-4196

Duane Morris LLP Richard W Riley 1100 N Market St Ste 1200 Wilmington, DE 19801

Eckert Seamans Cherin & Mellott LLC Michael G Busenkell & Margaret F England 300 Delaware Ave Ste 1210 Wilmington, DE 19801

Edwards Angell Palmer & Dodge LLP Stuart M Brown 919 N Market St 15th Fl Wilmington, DE 19801

Edwards Angell Palmer & Dodge LLP William E Chipman Jr 919 N Market St Ste 1500 Wilmington, DE 19801

Elliott Greenleaf Rafael Zahralddin-Aravena & Neil Lapinski 1105 N Market St Ste 1700 Wilmington, DE 19801

Endurance Sylvia Hammond 725 South Figueroa St Ste 2100 Los Angeles, CA 90017

Faegre & Benson LLP Dennis Ryan & Michael Stewart 2200 Wells Fargo Ctr 90 S 7th St Minneapolis, MN 55402-3901

Faegre & Benson LLP Wendy Wildung & Mike Doty 2200 Wells Fargo Ctr 90 S 7th St Minneapolis, MN 55402-3901

Felderstein Fitzgerald Willoughby & Pascuzzi LLP Paul J Pascuzzi 400 Capitol Mall Ste 1450 Sacramento, CA 95814

Fox Rothschild LLP Neal J Levitsky Seth A Niederman 919 N Market St Ste 1300 Citizens Bank Ctr PO Box 2323 Wilmington, DE 19899-2323

GE Money Bank Recovery Management Systems Corp 25 SE 2nd Ave Ste 1120 Ramesh Singh Miami, FL 33131-1605

General Growth Management Inc as Agent Samuel B Garber & Kristen N Pate 110 N Wacker Chicago, IL 60606

Golub & Golub LLP Steven M Golub & Remy J Ferrario 225 Broadway Ste 1515 New York, NY 10007

Gordon Law Firm Co LPA James H Gordon Fifth Third Ctr 21 E State St Ste 1700 Columbus, OH 43215

Great Lakes Munich Re Benedikt Knebruch Plantation Place 30 Fenchurch St London , EC3M 3AJ

Greenberg Traurig Alan J Brody 200 Park Ave PO Box 677 Florham Park, NJ 07932

Greenberg Traurig Victoria Counihan & Dennis Meloro 1007 N Orange St Ste 1200 The Nemours Bld Wilmington, DE 19801

Gust Rosenfeld PLC Madleine C Wanslee 201 E Washington Ste 800 Phoenix, AZ 85004-2327

Hahn & Hessen LLP Edward L Schnitzer 488 Madison Ave New York, NY 10022

Hamilton Beach Brands Inc William Ray 4421 Waterfront Dr Glen Allen , VA 23060

Hanesbrands Inc Catherine Meeker 1000 E Hanes Mill Rd Winston-Salem, NC 27105-1384

Hanson Bridgett Nancy J Newman 425 Market St 26th Fl San Francisco, CA 94105

Hartman Simons Spielman & Wood LLP Samuel R Arden 6400 Powers Ferry Rd Ste 400 Atlanta, GA 30339

Hellring Lindeman Goldstein & Siegal LLP John A Adler One Gateway Ctr Newark , NJ 07102

Hoge Fenton Jones & Apppel Inc Sblend A Sblendorio 4309 Hacienda Dr Ste 350 Pleasanton, CA 94588-2746

Husch Blackwell Sanders LLP Scott M Shaw 2030 Hamilton Place Blvd Ste 150 Chattanooga, TN 37421

IKON Financial Services Christine R Etheridge 1738 Bass Rd PO Box 13708 Macon, GA 31208-3708

Ikon Office Solutions Recovery & Bankruptcy Group 3920 Arkwright Rd Ste 400 Macon, GA 31210

Imperial County Treasurer Tax Collector 940 W Main St Ste 106 El Centro, CA 92243

Integon Specialty Strategic Risk Specialists Bill Johnston 841 Latour Ct Ste A Napa, CA 94558

Internal Revenue Service Centralized Insolvency Operation 11601 Roosevelt Blvd Mail Drop N781 Philadelphia, PA 19255

Internal Revenue Service Centralized Insolvency Operation PO Box 21126 Philadelphia, PA 19114-0326

Jackson Walker LLP Bruce Ruzinsky & D Elaine Conway 1401 McKinney St Ste 1900 Houston, TX 77010

Jackson Walker LLP Heather M Forrest 901 Main St Ste 6000 Dallas, TX 75202

Jacobs & Jacobs Tom Jacobs 114 E Meeker Ave PO Box 513 Puyallup, WA 98371

Jaspan Schlesinger Hoffman LLP Hale Yazicioglu 300 Garden City Plaza Garden City, NY 11530

Jaspan Schlesinger Hoffman LLP Laurie Schenker Polleck 913 Market St 12th Fl Wilmington, DE 19801

Jeffer Mangels Butler & Marmaro Caroline R Djang 1900 Avenue of the Stars 7th Fl Los Angeles, CA 90067

Jeffer Mangels Butler & Marmaro Robert Kaplan & Nicolas De Lancie 2 Embarcadero Ctr 5th Fl San Francisco, CA 94111

Jockey Intl Inc Ronald Kwasny VP Treasurer 2300 60th St Kenosha, WI 53141

John Marshall Collins PC John Marshall Collins 50 W San Fernando St Ste 400 San Jose, CA 95113

K&L Gates LLP Michael Heyman 10100 Santa Monica Blvd 7th Fl Los Angeles, CA 90067

Kane Kessler PC Robert Kolodney & Kane Kessler 1350 Avenue of the Americas 26th Fl New York, NY 10019-4896

Katten Muchin Rosenman LLP Thomas Leanse & Brian Huben & Dustin Branch 2029 Century Park East Ste 2600 Los Angeles, CA 90067-3012

Kazen Meurer & Perez George Meurer & Sigifredo Perez III 919 Washington St PO Box 6237 Laredo, TX 78042

Kelley Drye & Warren LLP James S Carr & Robert L LeHane 101 Park Ave New York, NY 10178

Kern County Treasurer & Tax Collector Bankruptcy Division co Linda Delgado PO Box 579 Bakersfield, CA 93302-0579

Kirkland & Ellis LLP Paul M Basta & Joshua A Sussberg 153 E 53rd St New York, NY 10022

Kirkland & Ellis LLP Douglas Gessner 300 N LaSalle Chicago, IL 60654

Kirkland & Ellis LLP Thomas Clare 655 15th St NW Washington, DC 20005-5793

Klehr Harrison Harvey Branzburg & Ellers LLP Domenic E Pacitti 919 Market St Ste 1000 Wilmington, DE 19801

Klehr Harrison Harvey Branzburg & Ellers LLP Morton R Branzburg 260 South Broad Street Philadelphia, PA 19102-5003

Kohner Mann & Kailas SC Samuel C Wisotzkey 4650 N Port Washington Rd Washington Bldg Barnabas Business Ctr Milwaukee, WI 53212-1059

Lamm Rubenstone Deirdre M Richards 3600 Horizon Blvd Ste 200 Trevose, PA 19053

Landis Rath & Cobb LLP Adam Landis Kerri Mumford Matthew McGuire 919 Market St Ste 1800 Wilmington, DE 19801

Landsberg Margulies LLP Ian S Landsberg 16030 Ventura Blvd Ste 470 Encino, CA 91436

Lazarus & Lazarus PC Gilbert A Lazarus 240 Madison Ave 8th Fl New York, NY 10016

Levi Strauss & Co Michael Stapleton 3125 Chad Dr Eugene, OR 97408

Li & Fung Trading Ltd Marc Compagnon 800 Cheung Sha Wan Rd 7F HK Spinners Industrial Bldg Phase I & II Kowloon, Hong Kong

Li & Fung USA Martin Leder 12 Princeton Dr Tappan, NY 10983

Liberty Mutual Sue Garvey 20 Riverside Rd Weston, MA 02493-2998

Linebarger Goggan Blair & Sampson LLP David G Aelvoet 711 Navarro Ste 300 Travis Bldg San Antonio, TX 78205

Linebarger Goggan Blair & Sampson LLP Diane W Sanders 1949 South IH 35 (78741) PO Box 17428 Austin, TX 78760-7428

Linebarger Goggan Blair & Sampson LLP Elizabeth Weller 2323 Bryan St Ste 1600 Dallas, TX 75201

Linebarger Goggan Blair & Sampson LLP John P Dillman PO Box 3064 Houston, TX 77253-3064

Lloyds Liberty Mutual Group Dean Pitts Plantation Place S 60 Great Tower St London , EC3R 5AZ Great Britain

Manatt Phelps & Phillips LLP Clayton B Gantz One Embarcadero Ctr 30th Fl San Francisco, CA 94111

Manatt Phelps & Phillips LLP Ivan L Kallick 11355 W Olympic Blvd Los Angeles, CA 90064-1614

Margolis Edelstein James Huggett & Sally Sobczyk 750 Shipyard Dr Ste 102 Wilmington, DE 19801

Mariscal Weeks McIntyre & Friedlander PA William Novotny 2901 N Central Ave Ste 200 Phoenix, AZ 85012-2705

McCalla Raymer LLC Whitney Groff 1544 Old Alabama Rd Roswell, GA 30076-2102

McCarter & English LLP Katharine L Mayer 405 N King St 8th Fl Renaissance Ctr Wilmington, DE 19801

McCarter & English LLP William F Taylor Jr 405 N King St 8th Fl Renaissance Ctr Wilmington, DE 19899

McCreary Veselka Bragg & Allen PC Michael Reed PO Box 1269 Round Rock, TX 78680

McGuireWoods LLP Sally Edison & Nicholas Meriwether 625 Liverty Ave 23rd Fl Pittsburgh, PA 15222

Meckler Bulger Tilson Marick & Pearson LLP Jack Carriglio & Eric Newman 123 N Wacker Dr Ste 1800 Chicago, IL 60606

Meland Russin & Budwick PA Peter D Russin 3000 Wachovia Financial Ctr 200 S Biscayne Blvd Miami, FL 33131

Messana Rosner & Stern Brian L Arban 1000 N West St Ste 1200 Wilmington, DE 19801

Messana Rosner & Stern Frederick B Rosner & Scott Leonhardt 1000 N West St Ste 1200 Wilmington, DE 19801

Michael E Braude 650 Dundee Rd Ste 456 Northbrook, IL 60062-2758

Mirman & Bubman Alan I Nahmias 21860 Burbank Blvd Ste 360 Woodland Hills, CA 91367-7406

Montgomery McCracken Walker & Rhoads Laurie A Krepto 1105 N Market St 15th Fl Wilmington, DE 19801

Montgomery McCracken Walker & Rhoads Natalie D Ramsey 123 S Broad St Avenue of the Arts Philadelphia, PA 19109

Monzack Mersky McLaughlin & Browder Brian McLaughlin 1201 N Orange St Ste 400 Wilmington, DE 19801

Monzack Mersky McLaughlin & Browder Rachel B Mersky 1201 N Orange St Ste 400 Wilmington, DE 19801

Morgan Lewis & Bockius LLP Wendy Walker & Neil Herman & Howard Beltzer & Kizzy Rosenblatt 101 Park Ave New York, NY 10178-0060

Murphy & Landon Jonathan L Parshall 1011 Centre Rd Ste 210 Wilmington, DE 19805

North 3 Holdings LLC John P Byrne 20969 Ventura Blvd Ste 230 Woodland Hills, CA 91364-2378

NSA Media President & Shannon Wagner 3025 Highland Pkwy Ste 700 PO Box 7063 Downers Grove, IL 60515-7063

Office of the US Trustee Delaware 844 King St Ste 2207 Lockbox 35 Wilmington, DE 19899-0035

Okeefe & Associates Law Corporation PC Sean A Okeefe 660 Newport Center Dr Ste 400 Newport Beach, CA 92660

Olshan Grundman Frome Rosenzweig & Wolosky Michael S Fox 65 E 55th St Park Avenue Tower New York, NY 10022

Ornelas Castillo & Ornelas PLLC Sylvia M Ornelas & Mario A Castillo Jr 401 E Hillside Rd 2nd Fl Laredo, TX 78041

Otterbourg Steindler Houston & Rosen PC Valerie S Mason 230 Park Avenue New York, NY 10169-0075

Otterbourg Stendler Houston & Rosen PC Jonathan N Helfat & Daniel Fiorillo 230 Park Avenue New York, NY 10169

Parker & Marks PC Tally F Parker Jr 1106 N IRVING HEIGHTS IRVING, TX 75061-5441

Paul Weiss Rifkind Wharton & Garrison LLP Claudia Tobler 2001 K St NW Washington, DC 20006-1047

Paul Weiss Rifkind Wharton & Garrison LLP Douglas R Davis 1285 Avenue of the Americas New York, NY 10019-6064

Paul Weiss Rifkind Wharton & Garrison LLP Steven J Williams 1285 Avenue of the Americas New York, NY 10019-6064

Pentiuk Couvreur & Kobiljak PC Kurt M Kobiljak 2915 Biddle Ave Edelson Bldg Ste 200 Wyandotte, MI 48192

Pepper Hamilton LLP David B Stratton 1313 Market St Ste 5100 Hercules Plz PO Box 1709 Wilmington, DE 19899-1709

Perdue Brandon Fielder Collins & Mott John T Banks 3301 Northland Dr Ste 505 Austin, TX 78731

Pima County Attorney Civil Division German Yusufov & Terri A Roberts 32 N Stone Ste 2100 Tucson, AZ 85701

Placer County Office of the Treasurer Tax Collector Ann M Dondro, Deputy Tax Collector 2976 Richardson Dr Auburn, CA 95603

Polis & Associates A Professional Law Corp Thomas J Polis 19800 MacArthur Blvd Ste 1000 Irvine, CA 92612-2433

Prickett Jones & Elliott PA Bruce Jameson 1310 King St PO Box 1328 Wilmington, DE 19899

Rashti & Mitchell Timothy T Mitchell 4422 Ridgeside Dr Dallas, TX 75244

Richards Layton & Finger PA Mark Collins Daniel DeFranceschi Christopher Samis Katherine Good One Rodney Sq 920 N King St Wilmington, DE 19801

Riddell Williams PS Joseph E Shickich Jr 1001 4th Ave Ste 4500 Seattle, WA 98154-1192

Riemer & Braunstein Paul Samson & Jeffrey Ganz 3 Center Plz 6th Fl Boston, MA 02108

Roetzel & Andress Diana M Thimmig One Cleveland Ctr Cleveland, OH 44114

Romero Law Firm Martha E Romero 6516 Bright Ave BMR Professional Law Bldg Whittier, CA 90601

RR Donnelley & Sons Co Dan Pevonka 3075 Highland Pkwy Downers Grove, IL 60515

RR Donnelley Global Headquarters General Counsel 111 S Wacker Dr Chicago, IL 60606-4301

Santa Cruz County District Attorneys Office William R Atkinson 701 Ocean St Rm 200 PO Box 1159 Santa Cruz, CA 95060

Schulte Roth & Zabel LLP Adam Harris David Hillman Meghan Breen Robert Ward 919 Third Ave New York, NY 10022

SEC Delaware Allen Maiza 3 World Financial Center Suite 400 New York, NY 10281-1022

SEC Delaware 100 F St NE Washington, DC 20549

Seitz Van Ogtrop & Green PA Patricia P McGonigle 222 Delaware Ave Ste 1500 PO Box 68 Wilmington, DE 19899

Seyfarth Shaw LLP William J Factor 131 S Dearborn St Ste 2400 Chicago, IL 60603

Shasta County District Attorneys Office Josh Lowery 1525 Court St Redding, CA 96001-1632

Sidley Austin LLP Alex R Rovira 787 Seventh Ave New York, NY 10019

Simon Property Group Inc Ronald M Tucker 225 W Washington St Indianapolis, IN 46204

Snell & Wilmer LLP Henry S David 350 S Grand Ave Ste 2600 Los Angeles, CA 90071

Sonoma County District Attorneys Office Matthew T Cheever 500 Administrative Dr Rm 212J Santa Rosa, CA 95403

Sparber Rudolph Annen APLC Todd R Gabriel 701 B St Ste 1400 San Diego, CA 92101

Starr Specialty Grant Saunders 3353 Peachtree Rd NE Atlanta, GA 30326

Stevens & Lee Joseph Grey 1105 N Market St 7th Fl Wilmington, DE 19801

Stinson Morrison Hecker LLP Darrell W Clark 1150 18th St Ste 800 Washington, DC 20036

Strauss & Troy William P Coley II The Federal Reserve Building 150 East Fourth St Cincinnati, OH 45202

Sullivan Hazeltine Allinson William Hazeltine 4 E 8th St Ste 400 Wilmington, DE 19801

The Beanstalk Group Miri Frankel 28 East 28th St New York, NY 10016

The Macerich Co David M Short 401 Wilshire Blvd Ste 700 Santa Monica, CA 90401-1452

The Reimann Law Group David W Reimann 1960 E Grand Ave Ste 1165 El Segundo, CA 90245

The Taubman Company Andrew S Conway 200 E Long Lake Rd Ste 300 Bloomfield Hills, MI 48304

Thompson Hine LLP Louis F Solimine 312 Walnut St Ste 1400 Cincinnati, OH 45202-4029

Todtman Nachamie Spizz & Johns PC Arthur Goldstein 425 Park Ave New York, NY 10022

Trainor Fairbrook Nancy Hotchkiss 980 Fulton Ave Sacramento, CA 95825

Travelers National Accounts Sal Marino 1 Tower Sq 5MN Hartford, CT 06183-4044

Tulare County Tax Collector John Whipple 221 S Mooney Blvd Rm 104E Visalia, CA 93291-4593

Tyler Cooper & Alcorn LLP Niclas A Ferland & Ilan Markus 20 Peck St Bldg 2 New Haven, CT 06473-2350

US Attorney General Delaware Charles M. Oberley III Esq 1007 N Orange St Ste 700 PO Box 2046 Wilmington, DE 19899

VF Outdoor Inc Peter J Rottier N850 County Hwy CB 54914 PO Box 1817 Appleton, WI 54912-1817

Warner Norcross & Judd LLP Stephen B Grow 900 5th 3rd Ctr 111 Lyon St NW Grand Rapids, MI 49503

Weir & Partners Kenneth E Aaron 824 Market St Ste 1001 PO Box 708 Wilmington, DE 19899

Weissmann Wolff Bergman et al Steven Glaser 9665 Wilshire Blvd 9th Fl Beverly Hills, CA 90212

Alston & Bird LLP David A Wender & Bess M Parrish 1201 W Peachtree St Atlanta, GA 30309-3424

Werb & Sullivan Duane Werb & Regina Iorii 300 Delaware Ave 13th Fl PO Box 25046 Wilmington, DE 19899

Werner Enterprises Inc Richard S Reiser PO Box 45308 Omaha, NE 68145-0308

Westchester Surplus Lines Ins Co Rand Payton 455 Market St 17th Fl San Francisco, CA 94105

Western Re Managers Inc John Knouse 1560 Sherman Ave Ste 980 Evanston, IL 60201

Whiteford Taylor Preston Margaret Manning 1220 N Market St Ste 608 Wilmington, DE 19801

Womble Carlyle Sandridge & Rice PLLC Francis A Monaco Jr Michael G Busenkell Kevin J Mangan 222 Delaware Ave Ste 1501 Wilmington, DE 19801

Womble Carlyle Sandridge & Rice PLLC William B Sullivan & Julie B Pape One W Fourth St Winston-Salem, NC 27101

Woodbury & Kesler PC David A Nill 265 E 100 S Ste 300 Salt Lake City, UT 84111

Young Conaway Stargatt & Taylor LLP Pauline K Morgan & Sharon M Zieg 1000 West St 17th Fl Wilmington, DE 19801

Zuckerman Spaeder LLP Thomas Macauley & Virginia Guldi 919 Market St Ste 990 PO Box 1028 Wilmington, DE 19899

Zurich Agnes Laurel 560 Mission Ste 2400 San Francisco, CA 94105