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TARTER KRINSKY & DROGIN LLP Attorneys for The Christian Brothers Institute, et al. Debtors and Debtors-in-Possession 1350 Broadway, 11th Floor New York, New York 10018 (212) 216-8000 Scott S. Markowitz, Esq. Eric H. Horn, Esq. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------------------- x In re: : : THE CHRISTIAN BROTHERS INSTITUTE, et al. : : Debtors. : ------------------------------------------------------------------- x

Chapter 11 Case No.: 11-22820 (RDD) (Jointly Administered)

DEBTORS APPLICATION FOR RETENTION OF RAKOW COMMERCIAL REALTY GROUP, INC. AS DEBTORS REAL ESTATE BROKER TO: THE HONORABLE ROBERT D. DRAIN UNITED STATES BANKRUPTCY JUDGE The Christian Brothers Institute (CBI or the Debtor), one of the above-captioned debtors and debtors-in-possession, hereby files this application (the Application) to retain Rakow Commercial Realty Group, Inc. (Rakow Commercial) as its real estate broker with respect to the marketing and sale of a certain piece of real property located at 173 Stratton Road, New Rochelle, New York as well as a certain vacant parcel of land across therefrom. In support of this Application, the Debtor relies upon and incorporates by reference the Affidavit of Rick Rakow (the Rakow Affidavit) attached hereto as Exhibit A. In further support of the Application, the Debtor respectfully represents as follows: JURISDICTION 1. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. 157

and 1334 and the Order of Reference, dated July 10, 1984 (Ward, C.P.J.). This is a core

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proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. The statutory bases for the relief requested herein are 11 U.S.C. 101(14), 327(a) and 328, Rule 2014 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules) and Rule 2014-1 of the Local Bankruptcy Rules for the Southern District of New York (the Local Rules). GENERAL BACKGROUND 2. On April 28, 2011 (the Petition Date), CBI and The Christian Brothers of

Ireland, Inc. (CBOI and together with CBI, the Debtors) each commenced their respective Chapter 11 case by filing a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code). Pursuant to 1107(a) and 1108 of the

Bankruptcy Code, the Debtors continue to operate as debtors-in-possession. No trustee has been appointed. 3. The Debtors cases were consolidated for administrative purposes only, by order

dated May 2, 2011. Thereafter, by order dated May 18, 2011, the Debtors were authorized to retain Tarter Krinsky & Drogin LLP as bankruptcy counsel. 4. On May 11, 2011, the United States Trustee appointed an Official Committee of

Unsecured Creditors (the Committee). The Committee retained Pachulski Stang Ziehl & Jones LLP as its counsel which was approved by an order of this Court dated July 14, 2011. 5. CBI is a domestic not-for-profit 501(c)(3) corporation organized under

102(a)(5) of the New York Not-for-Profit Corporation Law. CBI was formed in 1906 pursuant to Section 57 of the then existing New York Membership Law. The Not-for-Profit Corporation Law replaced the Membership Law effective September 1, 1970. The purpose for which CBI was, and continues to be, formed was to establish, conduct and support Catholic elementary and

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secondary schools principally throughout New York State. As a not-for-profit corporation, the assets, and/or income are not distributable to, and do not inure to, the benefit of its directors or officers. CBI depends upon grants and donations to fund a portion of its operating expenses. 6. The cause for the filing of these cases has been extensively detailed in the affidavit

pursuant to Local Bankruptcy Rule 1007-2 filed with the original petitions, and is referred to as if fully set forth herein. In short, the Debtors Chapter 11 cases were filed in an effort to resolve in one forum, an onslaught of litigation and claims asserted by alleged sexual abuse plaintiffs against the Debtors. Additionally, through the Chapter 11 process, the Debtors hope to reorganize their financial affairs so as to enable them to provide for their aged Brothers and continue their educational and outreach missions. RELEVANT BACKGROUND 7. The Debtors are continuing to review their real estate portfolio to determine

which properties may be sold as part of their efforts to reorganize and propose a plan to creditors in these cases. In that regard, CBI is filing this Motion to retain Rakow Commercial to market and sell the real property located at 173 Stratton Road, New Rochelle, New York (the 173 Property) as well as a certain vacant parcel of land across therefrom (the Vacant Property and together with the 173 Property, the Property). 8. The 173 Property is currently occupied by Iona Grammar School (Iona

Grammar) and consists of approximately six acres and various improvements. For instance, the 173 Property contains (i) an approximate 24,000 square foot building currently being used as the main school building for Iona Grammar, (ii) an approximate 8,600 square foot, two story building currently used as a residence for Brothers, (iii) an approximate 1,400 square foot structure currently used as a nursery school, (iv) a two car garage, (v) various recreational fields,

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and (vi) parking for approximately 40 vehicles. 9. The Vacant Property, which is across from the 173 Property, consists of

approximately five acres and is currently being used as a recreational field in connection with the operation of Iona Grammar. 10. CBI currently has a stalking horse offer to purchase the Property received from

Iona Preparatory School (Iona Prep). The terms of the offer are memorialized in that certain Agreement of Purchase and Sale dated January 20, 2012 (together with the related sale documents, the Purchase Agreement). On January 30, 2012, CBI filed a motion to (i) establish certain sale procedures (the Sale Procedures) relative to the sale of the Property and (ii) to approve the sale to Iona Prep or another party submitting a higher or better offer. The hearing on the Sale Procedures is scheduled for February 15, 2012. The proposed hearing date to approve the sale to Iona Prep (or another buyer submitting a higher and better offer) is April 4, 2012. 11. Although CBI believes the terms of the Purchase Agreement are fair and

reasonable and reflect the highest and best value for the Property as of the date of this Application, it nevertheless desires to place the Purchase Agreement to the test of the broader public marketplace in the hope that higher and better offers are generated for the Property. In that regard, CBI is requesting that it be permitted to retain Rakow Commercial as its real estate agent to market for sale the Property. RELIEF REQUESTED 12. By this Application, CBI seeks entry of an order pursuant to Bankruptcy Code

327(a) and Bankruptcy Rule 2014(a) authorizing the retention and employment of Rakow Commercial with respect to the marketing and sale of the Property. A copy of the commercial exclusive right to sell agreement, dated February 10, 2012 (the Agreement) is annexed hereto

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as Exhibit B. BASIS FOR RELIEF 13. Bankruptcy Code 327(a) provides that a debtor, subject to Court approval may employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the [debtor] in carrying out the [debtor]s duties under this title. 11 U.S.C. 327(a). 14. Bankruptcy Rule 2014(a) requires that an application for retention include specific facts showing the necessity for the employment, the name of the [firm] to be employed, the reasons for the selection, the professional services to be rendered, and proposed arrangement for compensation, and, to the best of the applicants knowledge, all of the [firms] connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee. Fed. R. Bankr. P. 2014. 15. CBI submits that the retention of Rakow Commercial is warranted under

Bankruptcy Code 327 and Bankruptcy Rule 2014(a). Indeed, in order to achieve the highest and best value for the Property, CBI submits that the assistance of highly qualified brokers is necessary. QUALIFICATIONS 16. CBI has selected Rakow Commercial because the firm has considerable

experience in representing sellers of commercial real estate in the Westchester, New York area. Rick Rakow, president and chief executive officer of Rakow Commercial, will be primarily responsible for the marketing and sale of the Property. Mr. Rakow has considerable experience

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in selling and marketing large parcels of property in the Westchester, New York area. Rakow Commercial has indicated its willingness to serve as CBIs exclusive real estate broker under the Agreement and in accordance with the terms of this Application. SCOPE OF SERVICES & COMPENSATION 17. The professional services that Rakow Commercial will provide are specifically set

forth in the Agreement,1 but in general include marketing the Property to obtain prospective, well qualified purchasers that are ready, willing and able to purchase the Property. Rakow

Commercial will use its own staff to advertise and promote the sale of the Property through its extensive database of real estate investors and end-users in the tri-State area. All costs associated with the marketing of the Property including, but not limited to, advertisements, public relations, marketing brochures, etc. will be borne by Rakow Commercial. Rakow Commercial intends to distribute marketing materials regarding the Property to over 2,000 brokers in the tri-State area. Additionally, Rakow Commercial will, among other things, (i) vet any potential buyers, (ii) conduct all property tours, and (iii) assist in price negotiations. 18. Under the Agreement, in the event Rakow Commercial procures an acceptable,

qualified buyer for the Property and the sale is approved by the Court pursuant to Bankruptcy Code 363, it will receive a commission equal to four percent (4%) of the total sale price of the Property (the Commission).2 To the extent that the Property is ultimately sold to Iona Prep (the current stalking horse bidder) Rakow Commercial will receive a reduced commission of two (2%) percent of the purchase price.

This summary of the Agreement is descriptive only and is qualified in its entirety by the provisions of the Agreement. The terms of the Agreement will control in the event of any inconsistency between this Application and the Agreement.
2

In the event that another licensed real estate broker produces a buyer for the Property, Rakow Commercial will pay such broker a fee by separate agreement. In no event shall the fee for services paid by CBI exceed the Commission.

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19.

Notwithstanding payment of Rakow Commercials commission paid at closing of

the sale of the Property, all compensation and reimbursement of expenses (if any) sought by Rakow Commercial, as CBIs retained real estate broker, will be subject to Court approval under the terms of the Agreement and upon application to this Court in accordance with the requirements of the Bankruptcy Code. 20. Since it is acting as real estate broker and will be paid a commission only, it will

be burdensome for Rakow Commercial to comply with the requirements of the Bankruptcy Code with respect to maintenance of time records. Its sale efforts will not affect CBIs cash flow. Based upon these factors, CBI respectfully requests that Rakow Commercial (i) be exempted from the requirements to maintain time records; and (ii) be exempted from the monthly record keeping and notice requirements set forth in this Courts Order Establishing Procedures for Monthly Compensation and Reimbursement of Expenses of Professionals (the Interim Compensation Order) (Docket No. 64). DISINTERESTEDNESS 21. To the best of CBIs knowledge, and except as otherwise as disclosed in the

Rakow Affidavit, the members and employees of Rakow Commercial do not hold or represent an interest materially adverse to CBIs estate with respect to any matter upon which it is to be engaged. 22. To the best of CBIs knowledge, Rakow Commercial is a disinterested person

as that term is defined in 101(14) of the Bankruptcy Code, as modified by 1107(b) of the Bankruptcy Code, in that their members and employees (a) (b) are not creditors, equity security holders or insiders of the Debtor; and are not and were not, within 2 years before the date of the filing of the petition, a director, officer, or employee of the Debtor.

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23.

Rakow Commercial has not entered into any agreement prohibited by 155 of

Title 18 of the United States Code or 504 of the Bankruptcy Code. NOTICE 24. CBI respectfully submits that no notice of this Application is necessary inasmuch

as the requested relief does not affect the substantive rights of any party. A copy of this Application, the Rakow Affidavit, and the proposed order of retention has been submitted to the United States Trustee and counsel for the Committee for review. NO PRIOR REQUEST 25. other court. WHEREFORE, CBI respectfully requests that the prefixed order be entered pursuant to 327(a) and 328 of the Bankruptcy Code, Bankruptcy Rule 2014 and Local Bankruptcy Rule 2014-1(a), authorizing CBI to employ and retain Rakow Commercial as its exclusive real estate agent to market the Property on the terms set forth in the Agreement, and that it have such other and further relief as is just and proper. Dated: New York, New York February 3, 2012 THE CHRISTIAN BROTHERS INSTITUTE By: /s/ Brother Kevin Griffith Brother Kevin Griffith Vice-President No prior application for the relief requested herein has been made to this or any

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TARTER KRINSKY & DROGIN LLP Attorneys for The Christian Brothers Institute et al. Debtors and Debtors-in-Possession 1350 Broadway, 11th Floor New York, New York 10018 (212) 216-8000 Scott S. Markowitz, Esq. Eric H. Horn, Esq. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------------------- x In re: : : THE CHRISTIAN BROTHERS INSTITUTE, et al. : : Debtors. : ------------------------------------------------------------------- x

Chapter 11 Case No.: 11-22820 (RDD) (Jointly Administered)

AFFIDAVIT OF RICK RAKOW IN SUPPORT OF DEBTORS APPLICATION FOR RETENTION OF RAKOW COMMERCIAL REALTY GROUP, INC. AS DEBTORS REAL ESTATE BROKER STATE OF NEW YORK COUNTY OF WESTCHESTER ) ) ss.: )

Rick Rakow, being duly sworn, states as follows: 1. I am the president and chief executive officer of Rakow Commercial Realty

Group, Inc. (Rakow Commercial) with an office located at 10 King Street, Suite 212, White Plains, New York 10604. Among other things, Rakow Commercial is a New York licensed real estate brokerage firm. 2. I submit this affidavit in support of the application (the Application) of The

Christian Brothers Institute (CBI), the above-captioned debtor and debtor-in-possession (the Debtor), for an order authorizing it to retain Rakow Commercial as its exclusive real estate agent to market and sell the real property located at 173 Stratton Road, New Rochelle, New York (the 173 Property) as well as a certain vacant parcel of land across therefrom (the Vacant Property and together with the 173 Property, the Property) under the terms of a commercial
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exclusive right to sell agreement, dated February 10, 2012 (the Agreement), annexed as Exhibit B to the Application. 3. Rakow Commercial is experienced and qualified to represent the Debtor in its

effort to sell the Property in this Case. The services to be rendered include all of those services summarized in the Application and set forth in the Agreement.1 4. Neither I, Rakow Commercial, nor any officer, director, shareholder or employee

of Rakow Commercial, insofar as I have been able to ascertain, has any connection with the Debtor, its creditors or any other interested party or their respective attorneys and accountants, except that Rakow Commercial, its officers, directors, shareholders and employees: (a) may have represented in the past, and may represent in the future, entities in matters wholly unrelated to the Debtors Case, where one or more of the said parties may have been, or may be or become involved in this Case; and (b) may represent or may have represented, certain of the Debtors creditors in matters wholly unrelated to its Case. 5. Neither I Rakow Commercial nor any officer, director, shareholder or employee

of Rakow Commercial, insofar as I have been able to ascertain, holds or represents any interest adverse to that of the estate in the matters upon which Rakow Commercial is to be engaged and I believe Rakow Commercial to be a disinterested person within the meaning of 101(14) of the Bankruptcy Code. 6. I have advised the Debtor of Rakow Commercials willingness to serve as its

exclusive real estate agent under the Agreement, consistent with the provisions of the Bankruptcy Code and Rules for professional services rendered and expenses incurred in accordance with the provisions of 328, 330 and 331 of the Bankruptcy Code.

Capitalized terms otherwise undefined herein shall have the meaning set forth in the Application.

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7.

The four (4%) percent commission rate to be paid upon the closing of the sale of

the Property is competitive with the rates charged by other firms and the services to be rendered are also comparable to those provided by other brokerage firms. Additionally, because of the time, effort and expense involved in marketing for sale the Property, I submit that the two (2%) percent commission Rakow Commercial will receive if the Property is sold to Iona Prep (the current stalking horse bidder) is fair and reasonable. 8. While employed by the Debtor, Rakow Commercial will not represent any other

entity having an adverse interest in connection with this Case. 9. To the best of my knowledge, information and belief, Rakow Commercial has not

entered into any agreement prohibited by 155 of Title 18 of the United States Code or 504 of the Bankruptcy Code. 10. I have read the Application for an order approving the retention of Rakow

Commercial as the Debtors exclusive real estate agent to sell the Property and, to the best of my knowledge, information and belief, the contents of said Application are true and correct.

/s/ Rick Rakow Rick Rakow Sworn to before me this 6th day of February, 2012 /s/ Wendy C. Young Wendy C. Young Notary Public, State of New York No. 01YO6183839 Qualified in Westchester County Term Expires March 31, 2012

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