Securities and Exchange Commission v. Aequitas Management, LLC et al

Filing 614

ORDER GRANTING RECEIVER'S MOTION TO SELL PERSONAL PROPERTY TO SILVERMINE MEDIA HOLDINGS, LLC, FREE AND CLEAR OF LIENS, INTERESTS, CLAIMS AND ENCUMBRANCES (Syncronex, LLC): The Motion 600 is Granted and the Purchase Agreement is approved in its entirety. The Final Hearing to approve the sale, scheduled for 6/12/2018 at 10:00AM, is cancelled. Signed on 5/17/18 by Magistrate Judge Paul Papak. (gm)

Troy D. Greenfield, OSB #892534
Email: [e-mail]
Lawrence R. Ream (Pro Hae Vice)
Email: [e-mail]
Alex I. Poust, OSB #925155
Email: [e-mail]
Schwabe, Williamson & Wyatt, P.C.
Pacwest Center
1211SW5th Ave., Suite 1900
Portland, OR 97204
Telephone: [phone]
Facsimile: 503.796.2900
Ivan B. Knauer (Admitted Pro Hae Vice)
Email: [e-mail]
Snell & Wilmer LLP
1101 Pennsylvania Ave., N.W., Suite 300
Washington, DC 20004
Telephone: [phone]
Facsimile: 202.688.2201
Attorneys for the Receiver for Defendants
AEQUITAS 1V1ANAGEJVIENT, LLC; AEQUITAS HOLDINGS,
LLC; AEQUITAS COMMERCIAL FINANCE, LLC; AEQUITAS
CAPITAL MANAGEMENT, INC.; AEQUITAS INVESTJVIENT
MANAGEMENT, LLC

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAl'ID DIVISION
No. 3: l 6-cv-00438-PK

SECURITIES AND EXCHANGE
COMMISSION,

WP ? CFBJ ORDER GRANTING
0

Plaintiff,

v.
AEQUITAS MANAGEMENT, LLC;
AEQUITAS HOLDINGS, LLC;
Page 1 -

2

RECEIVER'S MOTION TO SELL
PERSONAL PROPERTY TO SILVERMINE
lVIEDIA HOLDINGS, LLC, FREE AND
CLEAR OF LIENS, INTERESTS, CLAIMS
AND ENCUMBRANCES
(Syncronex, LLC)

afi'ROI 03£§] ORDER GRANTING RECEIVER'S MOTION
TO SELL PERSONAL PROPERTY TO SIL VERlvlINE
HOLDINGS, LLC (Syncronex, LLC)

PDX\1299121215141 \AP\22755994.4

SCHWABE, 'MLUAMSON & WYATT, P.C.
Attorneys at law
PacNest Center

1211 SW5thAve.. Sufte1900

Portland, OR 97204
Telephone: [phone]
Fax: [phone]

AEQUITAS COMMERCIAL FINANCE,
LLC; AEQUITAS CAPITAL
J\/lANAGEJV!ENT, INC.; AEQUIT AS
INVESTMENT wlANAGEMENT, LLC;
ROBERT J. JESENIK, BRIAN A. OLIVER;
and N. SCOTT GILLIS,
Defendants.
This matter having come before the Honorable Paul Papak on Receiver's Motion for
Orders: (1) Scheduling Hearing to Approve Sale of Assets; (2) Approving Silvermine Media
Holdings, LLC, as Stalking Horse Bidder; (3) Approving Break-Up Fee; (4) Approving Bidding
Procedures; and (5) Approving the Sale of Assets Free and Clear of All Liens, Claims,
Encumbrances and Interests (Syncronex, LLC) (the "Motion") 1 [Dkt. 600), which Motion is
unopposed, and the Court, having considered the Declarations of Brad Foster in support of the
Motion [Dkt. 601 and 612), and further having considered the other records and files herein, and
the Court being fully advised in the premises, now, therefore,
THE COURT FINDS as follows:
A.

On March 10, 2016, the Securities and Exchange Collllnission ("SEC") filed a

complaint in this Court against the five entity defendants, Robe1t J. Jesenik, Brian A. Oliver, and
N. Scott Gillis.
B.

On March 16, 2016, pursuant to the Stipulated Interim Order Appointing

Receiver, the Receiver was appointed as receiver for the entity defendants and 43 related entities
on an interim basis (the "Interim Receivership Order"). On April 14, 2016, pursuant to the Order
Appointing Receiver, the Receiver was appointed as receiver of the entity defendants and 43
related entities on a final basis (the "Final Receivership Order").
C.

Due, timely, and adequate notice of the Motion was given, and such notice was

1

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

Page 2 -

[Jif 21 UBL!fFORDER GRANTING RECEIVER'S MOTION

TO SELL PERSONAL PROPERTY TO SIL VERtvl!NE
HOLDINGS, LLC (Syncronex, LLC)
PDX\!299 !2121514 !\AP\22755994.4

SCHWABE, '/\.1LUAMSON & W'fATT, P.C.
Attorneys at Law

Pacv/est Center

1211 SW 5th Ave., Suite 1900
Portland, OR 97204
Telephone: [phone]
Fax: [phone]

good, sufficient, and appropriate under the circumstances. No other or fmther notice of the
Motion is or shall be required.
D.

On April 16, 2018, pursuant to the Motion, the Court entered the Order Granting

Receiver's Motion (I) to Schedule Final Sale Hearing, (2) to Approve Silvermine Media
Holdings, LLC, as Stalking Horse Bidder, (3) to Approve Break-Up Fee, (4) to Approve Bidding
Procedures, and (5) for Related Relief (the "Bid Procedures Order") [Dkt. 603].
E.

Pursuant to the Bid Procedures Order, the Court authorized the Receiver to

consider Alternative Bids and, if necessary, hold an auction for the sale of the Assigned Interests,
all on the terms described therein. Pursuant to the Bid Procedures Order, Alternative Bids were
due by the Bid Deadline of 12:00 Noon Pacific Time, on May 16, 2018.
F.

No Qualified Alternative Bids were submitted to the Receiver prior to expiration

of the Bid Deadline or otherwise.
G.

Approval of the Sale and the Purchase Agreement is in the best interests of the

Receivership Entity and its estate.
H.

The Sale of the Assigned Interests on the terms contemplated by the Purchase

Agreement, including but not limited to the conduct of the sales process by the Receiver pursuant
to the Bidding Procedures, was conducted in a fair and commercially reasonable manner under
the circumstances. There is no evidence that the Receivership Entity, Receiver or Silvermine
Media Holdings, LLC ("Purchaser"), engaged in any conduct (including but not limited to
collusion or fraud of any kind) that would cause or permit the Sale transaction to be avoided.
I.

The Sale is an arm's-length transaction, proposed in the sound exercise of the

Receiver's business judgment, in good faith and for fair value. The Sale is in the best interests of
the Receivership Entity, and its creditors and investors. Purchaser has at all times acted in good
faith in connection with the sales process conducted by the Receiver and therefore is entitled to
all the protections afforded good faith purchasers under applicable law.

Page 3 -

#"flllF @!JEE] ORDER GRANTING RECEIVER'S MOTION
TO SELL PERSONAL PROPERTY TO SIL VERMINE
HOLDINGS, LLC (Syncronex, LLC)

PDX\1299121215141\AP\22755994.4

SCHWABE, '/\.1LLIAMSON & WYATT, P.C.
Attorneys at Law

PaC1Nest Center
1211SW5th Ave., Suite 1900
Portland, OR 97204

rerra~~'&~~~~s1

J.

Purchaser, on the one hand, and the Receivership Entity, on the other hand, are

not insiders or affiliates of each other. The transactions contemplated under this Order and the
Purchase Agreement do not amount to a consolidation, merger, or de facto merger of Purchaser
and any Receivership Entity. There is no substantial continuity between Purchaser and the
Receivership Entity, and Purchaser is not a successor to the Receivership Entity or its estate.
K.

At all times prior to the entry of this Order, the Assigned Interests has been the

property of Receivership Entity's estate, title thereto is vested in the Receivership Entity, and the
Receivership Entity is the sole and lawful owner thereof. Pursuant to the Final Receivership
Order, the Receiver has full power and authority to convey and deliver the Assigned Interests to
Purchaser.

L.

The Court having reviewed the Motion, and having considered the presentations

of counsel, and having considered any objections filed to the Motion, and it appearing that the
Sale is in the best interest of the Receivership Entity and its estate, and for good cause shown,
IT IS HEREBY ORDERED AND DECREED as follows:
1.

The Motion is granted and the Purchase Agreement is approved in its entirety.

2.

All objections to the Motion that have not been withdrawn, waived, settled, or

expressly reserved pursuant to the terms of this Order are overruled.
3.

The Sale of the Assigned Interests to Purchaser on the terms set forth in the

Purchase Agreement, and as reasonably amended by agreement of the parties, is approved.
Pursuant to the Motion and the Final Receivership Order, the transfer of the Assigned Interests to
Purchaser shall be free and clear of any and all liens, claims, interests, and encumbrances
("Liens"), including but not limited to those that are or may be alleged by Terrell Group
Management, LLC ("TGM"). All Liens recorded or not as of the date of the closing of the Sale,
if any, shall be released as against the Assigned Interests, and shall attach to the proceeds of Sale
to the same extent, validity, and priority as they attached to the Assigned Interests, subject to use

Page 4 -

[I itCI ®SEC] ORDER GRANTING RECEIVER'S MOTION

TO SELL PERSONAL PROPERTY TO SIL VERLvlINE
HOLDINGS, LLC (Syncronex, LLC)
PDX\ 129912\215141 IAP\22755994.4

SCHWABE, 'A1LUAMSON & 1NYATT, P.C.
Attorneys at law
Pacwest Center
1211 SW 5th Ave., Suite 1000
Portland, OR 97204

Telif~~~3~~~~i981

of such proceeds by the Receivership Entity pursuant to the terms of the Final Receivership
Order or upon further order of this Court.
4.

Without limiting the foregoing paragraph number three, TGM shall hold a

replacement security interest in the proceeds of the ACL Loans in the principal amount of
$4,383, 723.00, plus accrued interest as of January 31, 2017, in the amount of $413,334.87, plus
interest accruing thereafter at the rate of $1,049.89 per diem (the "ACL Loans Proceeds") of the
same extent, validity, perfection and priority that it holds a security interest in the ACL Loans,
(2) the Receiver shall deposit the ACL Loans Proceeds in a segregated, non-interest bearing bank
deposit account, and (3) the Receiver shall not withdraw or use the ACL Loans Proceeds for any
purpose other than payment ofTGM's claims without either TGM's consent or fmther order of
this Court.
5.

The provisions of this Order declaring the sale of the Assigned Interests free and

clear of Liens shall be self-executing, and neither the Receiver, Purchaser, nor any other party
shall be required to execute or file releases, termination statements, assignments, cancellations,
consents, or other instruments to effectuate, consummate, and/or implement the provisions
hereof with respect to the Sale.
6.

The Receiver and Purchaser are authorized to execute, deliver, and perform all

obligations and related documents as deemed necessary or appropriate by the Receiver to close
the transactions contemplated by this Order and the Purchase Agreement, including the Sale and
any other transactions required by the Sale.
7.

Each of the Receivership Entity's creditors is directed to execute such documents

and take all other actions as may be necessary to release its Liens in and to the Assigned
Interests, if any, as such may have been recorded, filed, or otherwise exist. Purchaser is hereby
authorized to execute and file such documents solely with respect to the Assigned Interests and
related Liens should the Receivership Entity's creditors fail to do so. No person or entity shall

Page 5 -

[I Ad 6366] ORDER GRANTING RECEIVER'S MOTION

TO SELL PERSONAL PROPERTY TO SIL VERJ'v!INE
HOLDINGS, LLC (Syncronex, LLC)
PDX\ 1299121215141\AP\22755994. 4

SCHWABE, 1i\1ll!MlSON & 'NfATT, P.C.
Attorneys at Law

Pac.vest Cent tr

1211 SW 5th Ava., Surte 1SOO
Portland, OR 97204

Telephooe: 503.222.9981
Fax: [phone]

interfere with the Sale and the transactions contemplated by the Purchase Agreement or take any
other actions that would diminish the value to be received or retained by the Receivership Entity.
8.

Purchaser is not a successor to the Receivership Entity or its estate by reason of

any theory of law or equity, and Purchaser, and its respective affiliates and subsidiaries, shall not
assume, nor be deemed to assume, nor in any way be responsible for, any liability or obligation
of the Receivership Entity and/or its estate, including, but not limited to, any successor liability
or similar liability.
9.

Neither Purchaser, Receiver, nor the Receivership Entity shall have any liability

with respect to brokers' fees, if any, incurred in connection with the Sale and the Purchase
Agreement.
10.

The Final Hearing to approve the Sale, scheduled for June 12, 2018, at 10:00 a.m.

Pacific Time, is cancelled.
11.

This Court shall retain exclusive jurisdiction over any issues relating to the Sale

of the Assigned Interests to Purchaser, to enforce this Order, and over any action arising from or
in any way related to the Sale, including but not limited to any actions asse1ied against the
Purchaser.

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Page 6 •

[HCQF IJ? ] ORDER GRANTING RECEIVER'S MOTION
TO SELL PERSONAL PROPERTY TO SIL VERtv!INE
HOLDINGS, LLC (Syncronex, LLC)

PDX\ 1299121215141 \AP\22755994.4

SCHWABE, 1MLUMlSON & WYATT, P.C.
Attcmeys at Law
Pao.>.·est Center
1211SW5th Ave., Suite 1900
Portland, OR 97204

Te!~~oo~~~~~~81

12.

This Order shall be binding in all respects on all creditors and interest holders of

the Receivership Entity, Purchaser, TGM, and their successors and assigns.

""'" <hle

J1"'-<,, of ~\8

SUB!vfITTED BY:
SCHWABE, WILLIAMSON & WYATT, P.C.

By:

s/ Alex l Poust OSB #925155
Troy D. Greenfield, OSB #892534
[e-mail]
Lawrence R. Ream (Pro Hae Vice)
[e-mail]
Alex I. Poust, OSB #925155
[e-mail]
Telephone: [phone]
Facsimile: 503.796.2900
Ivan B. Knauer (Admitted Pro Hae Vice)
[e-mail]
SNELL & WILMER I.LP
Telephone: [phone]
Facsimile: 202.688.2201
Attorneys for the Receiver for Defendants
Aequitas Management, I.LC, Aequitas
Holdings, I.LC, Aequitas Commercial Finance,
LLC, Aequitas Capital Management, Inc., and
Aequitas Investment Management, LLC

Page 7 -

fPKBF !ll!l'llii] ORDER GRANTING RECEIVER'S MOTION

TO SELL PERSONAL PROPERTY TO SILVERivllNE
HOLDINGS, LLC (Syncronex, LLC)
POX\ 129912\215141\AP\22755994.4

SCHWABE, 'MLUAMSCN & 1NYATT, P.C.
Attorneys at Law

Pacv•est Center

1211 SW 5th Ave., Suite 1900
Portland, OR 97204
TeJephone: 503.222.9981
Fax: [phone]