United States of America v. Pacesetter SBIC Fund

Filing 2

Copy of ORDER from USDC-Northern District of Texas, Case # 3:11cv3343-L appointing United States Small Business Administration as Receiver for Pacesetter SBIC Func, Inc. (MKR)

Case 3: 11-cv-03343-L Document 5

Filed 12/20/11

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II DEC 23 Pi'! 12: 45

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
UNITED STATES OF AMERICA,
Plaintiff,

v.
PACESETTER SBIC FUND, INC.,
Defendant.

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OF ThE CLERK

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Civil Action No. 3:1l-CV-3343-L

ORDER
Before the court is the parties' agreed Consent Order of Receivership, filed December 19,
2011, requesting that the United States Business Administration be appointed as Receiver of
Pacesetter SBIC Fund, Inc. pursuant to 15 U.S.C. § 687c. The court determines that the Consent
Order of Receivership (Doc. 4). should be and is hereby granted.
It is so ordered this 20th day of December, 2011.

7~a~p

~ Sam A. Lindsay
United States District Judge

Order - Solo Page

Case 3: 11-cv-03343-L Document 4

Filed 12/19/11

Page 1 of 7 PagelD 13

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
UNITED STATES OF AMERICA,

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Plaintiff,

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vs.

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Civil Action No.

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PACESETTER SBIC FUND, INC.

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Related Case: 09-cv-0851-L

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Defendant.

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CONSENT ORDER OF RECEIVERSIDP
IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
1.

Pursuant to the provisions 15 U.S.C. §687c, this Court hereby takes

exclusive jurisdiction of Pacesetter SBIC Fund, Inc. ("Pacesetter"), and all of its assets
and property, of whatever kind and wherever located, and the United States Small
Business Administration ("SBA") is hereby appointed Receiver of Pacesetter
("Receiver") to serve without bond until further order of this Court. The Receiver is
appointed for the purpose of marshaling and liquidating all of Pacesetter's assets and
satisfying the claims of creditors therefrom in the order of priority as determined by this
Court.
2.

The Receiver shall have all powers, authorities, rights and privileges

heretofore possessed by the officers, directors, managers and general and limited partners
of Pacesetter under applicable state and federal law, by the Articles of Limited
Partnership, and By-Laws of said limited partnership, in addition to all powers and
authority of Ii receiver at equity, and all powers and authority conferred upon the

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Case 3:11-cv-03343-L Document 4

Filed 12/19/11

Page 2 of 7 PagelD 14

Receiver by the provisions of 15 U.S.C. § 687c and 28 U.S.C. § 754. The trustees,
directors, officers, managers, employees, investment advisors, accountants, attorneys and
other agents of Pacesetter are hereby dismissed and the powers of any manager are
hereby suspended. Such persons and entities shall have no authority with respect to
Pacesetter's operations or assets, except to the extent as may hereafter be expressly
granted by the Receiver. The Receiver shall assume and control the operation of
Pacesetter and shall pursue and preserve all of its claims.
3.

The Receiver is entitled to take immediate possession of all assets, bank:

accounts or other financial accounts, books and records and all other documents or
instnunents relating to Pacesetter. The past andlor present officers, directors, agents,
managers, shareholders, trustees, attorneys, accountants, and employees of Pacesetter, as
welJ as aU those acting in their place, are hereby ordered and directed to tum over to the
Receiver forthwith all books, records, documents, accounts and all other instruments and
papers of and relating to Pacesetter and all of Pacesetter's assets and all other assets and
property of the limited partnership, whether real or personal. The current managers of
Pacesetter shall furnish a written statement within five (5) days after the entry oftbis
Order, listing the identity, location and estimated value of all assets of Pacesetter, a list of
all employees (and job titles thereot), other personnel, attomeys, accountants and any
other agents or contractors of Pacesetter, as well as the names, addresses and amounts of
claims of all known creditors of Pacesetter. Within thirty (30) days following the entry of
this Order, the general partner of Pacesetter shall also furnish a written report describing·
all assets. All persons and entities having control, custody or possession of any assets or

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Case 3:11-cv-03343-L Document 4

Filed 12/19/11

Page 3 of 7 PagelD 15

property of Pacesetter are hereby directed to tum such assets and property over to the
Receiver.
4.

The Receiver shall promptly give notice of its appointment to all known

officers, directors. agents. employees, shareholders, creditors. debtors and managers of
Pacesetter, as the Receiver deems necessary or advisable to effectuate the operation of the
receivership. All persons and entities owing any obligation, debt, or distribution with
respect to a partnership interest to Pacesetter shall, until further ordered by this Court, pay
all such obligations in accordance with the terms thereof to the Receiver and its receipt
for such payments shall have the same force and effect as if Pacesetter had received such
payments.
5.

The Receiver is hereby authorized to open such Receiver's accounts at

banking or other financial institutions to extend credit on behalf of Pacesetter, to utilize
SBA personnel. and to employ such other personnel as it may deem necessary to
effectuate the operation of the receivership including, but not limited to, attorneys,
accountants, consultants and appraisers, and is further authorized to expend receivership
funds to compensate such personnel in such amounts and upon such terms as the
Receiver shall deem reasonable in light of the usual fees and billing practices and
procedures of such personnel. The Receiver is not required to obtain Court approval
prior to the disbursement of receivership funds for payments to personnel employed by
the Receiver or for expenses that the Receiver deems advantageous to the orderly
administration and operation of the receivership. In addition, the Receiver is authorized
to reimburse the SBA for travel expenses incurred by SBA personnel in the establishment
and administration of the receivership. The Receiver may, without further order oftbis

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Case 3:11-cv-03343-L Document 4

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Page 4 of 7 PagelD 16

Court, transfer, compromise, or otherwise dispose of any claim or asset in the ordinary
course of business, other than real estate.
6.

Pacesetter's past andlor present officers, directors, agents, attorneys,

managers, shareholders, employees, accountants, debtors, creditors and managers of
Pacesetter, and other appropriate persons or entities (including without limitation, the
defendant's portfolio of small business concerns and fmancial institutions doing business
with defendant and/or defendant's portfolio of smaIl business concerns) shall answer

under oath to the Receiver all questions which the Receiver may put to them and produce
any documents as required by the Receiver regarding the business of said limited
partnership, or any other matter relevant to the operation or administration of the
receivership or the collection of funds due to Pacesetter. In the event that the Receiver
deems it necessary to require the appearance of the aforementioned persons or entities,
the Receiver shall make its discovery request(s) in accordance with the Federal Rules of
Civil Procedure.
7.

The parties or prospective parties to any and all civil legal proceedings

wherever located. including, but not limited to arbitration proceedings, bankruptcy or
foreclosure actions, defauh proceedings, or any other proceedings involving (i) Pacesetter
ii) any assets of Pacesetter, (iii) the Receiver for Pacesetter or (iv) Pacesetter's present or

past officers, directors ormanagers, to 'the extent said civil legal proceedings involve any
action taken by them while acting in their official capacity with Pacesetter. are enjoined
from taking any action, including discovery, commencing or continuing any legal
proceeding of any nature without further order of this Court.

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Case 3: 11-cv-03343-l Document 4

8.

Filed 12/19/11

Page 5 of 7 PagelD 17

All civil legal proceedings wherever located, including arbitration

proceedings, foreclosure activities. bankruptcy actions, or default proceedings, but
excluding the instant proceeding, involving (i) Pacesetter, (ii) any of assets of Pacesetter,
(iii) the Receiver for Pacesetter or (iv) Pacesetter's present or past officers, directors or

managers to the extent said civil Jegal proceedings involve any action taken in their official
capacity for Pacesetter are stayed in their entirety, and all Cowts having any jurisdiction
thereof are enjoined from taking or pennitting any action in such proceedings until further .
Order of this Court.
9.

As to a cause of action accrued or accruing in favor of Pacesetter against a

third person or party, any applicable statute of limitation is tolled to the extent allowed by
applicable law during the period in which this injunction against commencement of legal
proceedings is in effect as to that cause of action.
10.

Pacesetter and its past and/or present directors, officers, managers, agents,

employees and other persons or entities acting in concert or participating therewith be,
and they hereby are, enjoined from either directly or indirectly taking any actions or
causing any such action to be taken which would dissipate the assets and/or property of
Pacesetter to the detriment of Pacesetter or of the Receiver appointed in this cause~
including but not limited to destruction of corporate records, or which would violate the
Small Business Investment Act of 1958, as amended, J5 U.S.C. 661 et. ~ or the
regulations promulgated thereunder. ("Regulations"), 13 C.F.R. §107.J et. mI.

11.

The Receiver is authorized to borrow on behalf of Pacesetter, from the

SBA. up to $1,000,000 and is authorized to cause Pacesetter to issue Receiver's

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Case 3: 11-cv-03343-L Document 4

Filed 12/19/11

Page 6 of 7 Page/D 18

Certificates of Indebtedness in the principal amounts of the sums borrowed, which
certificates will bear interest at or about 10 percent per annum and will have a maturity
date no later than 18 months after the date of issue. Said Receiver's Certificates of

Indebtedness shall have priority over all other debts and obligations of Pacesetter,
excluding administrative expenses of the Receivership, whether currently existing or
hereinafter incurred, including without limitation any claims of general or limited
partners of Pacesetter.
12.

Judgment for failure to pay accelerated Debentures is entered against

Pacesetter and in favor of the United States Small Business Administration in the amount
of 552,049,482. 10, consisting of principal in the amount of 547,988,960.67 plus interest
of $4,060,521.43 through October 17, 2011 with a daily rate of $9,517.30 for each day
thereafter until the date ofjudgment, together with post judgment interest pursuant to 28
U.S.C. § 1961 as of the date judgment is entered.
13.

Judgment for failure to redeem matured Preferred Securities is entered

against Pacesetter and in favor of the United States Small Business Administration in the
amount of$6,923,592.00 in outstanding Preferred Securities Leverage consisting of
$5,121,000 in principal plus $1,802,592 in accrued dividends as of October 17,2011 with
a daily rate of $567.24 for each day thereafter until the date of judgment plus post
judgment interest pursuant to 28 U.S.C. § 1961 as of the date judgment is entered;
14.

This Court detennines and adjudicates that SBA has made a sufficient

showing that Pacesetter bas violated the Act and the Regulations, as alleged in the
Complaint filed against Pacesetter in the instant action, to obtain the relief so requested.

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Case 3: 11-cv-03343-L Document 4

15.

Filed 12/19/11

Page 7 of 7 PagelD 19

After completing its activities in accordance with this Order. 1he Receiver

may recommend that Pacesetter's license as III SBle be revoked.
DATED this _day of

• 201 •

UNITED STATES DISTRICT COURT JUOOE
SEEN, STIPULATED AND AGREED:
UNITED STATES SMALL BUSINESS ADMINISTRATION
By:

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Date

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Date

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