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Full title: Notice Regarding Redline of Disclosure Statement for the Amended Joint Chapter 11 Plan of Professional Financial Investors, Inc. and its Affiliated Debtors Proposed by the Debtors and Official Committee of Unsecured Creditors and Supported by the Ad Hoc LLC Members Committee and the Ad Hoc DOT Noteholders Committee (RE: related document(s)556 Disclosure Statement for the Amended Joint Chapter 11 Plan of Professional Financial Investors, Inc. and its Affiliated Debtors Proposed by the Debtors and Official Committee of Unsecured Creditors and Supported by the Ad Hoc LLC Members Committee and the Ad Hoc DOT Noteholders Committee Filed by Debtor Professional Financial Investors, Inc..). Filed by Debtor Professional Financial Investors, Inc. (Katz, Ori) (Entered: 04/09/2021)

Document posted on Apr 8, 2021 in the bankruptcy, 84 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

For the avoidance o18 doubt, the following are not Contributed Claims: (i) Causes of Action based upon loss of liens or19 lien priority, and (ii) Causes of Action by Investors against their own professionals, investmentadvisers, or investment managers related to their decision to invest in PFI, PISF or any of the20 LLC/LP Debtors or the handling of such investments; provided, however, that any recoveries on21 22 23 24 13 Such Causes of Action include those based on, arising out of, or related to: (a) the marketing, saleand issuance of any investments related to the Debtors; (b) unlawful dividend, fraudulent25 conveyance, fraudulent transfer, voidable transaction, or other avoidance claims under state orfederal law; (c) the misrepresentation of any of the Debtors’ financial information, business26 operations, or related internal controls; (d) any failure to disclose, or actual or attempted cover up or27 obfuscation of, any of the wrongful conduct described in the Disclosure Statement, including inrespect of any alleged fraud related thereto; and (e) aiding or abetting, entering into a conspiracy28 1 such Causes of Action shall be Collateral Source Recoveries, as provided and further described in2 the Plan.Investors may also choose to make such election because6 aggregating all Contributed Claims and similar PFI Trust Actions may enable the pursuit and7 settlement of such litigation claims in a more efficient and effective manner.The following summary is based in part on the assumption that, if the Plan is adopted, th10 Claims of the PFI LLC Members in the PFI-Managed LLCs will be recharacterized as Non-DOT11 Investor Claims, with such recharacterization to be retroactive on a case-by-case basis in each12 instance to the date or dates on which such PFI LLC Member tranferred funds in to the respective13 PFI-Managed LLC(s) in exchange for purported equity interests in such PFI-Managed LLCs, and14 that each PFI LLC Member should therefore be properly treated for U.S. federal tax purposes as15 never having owned any equity interest in any of the PFI-Managed LLCs.Assuming that the PFI Trust is validly characterized as a “liquidating trust” for U.S. federal15 income tax purposes, it will allocate any taxable income it may recognize following the Effective16 Date (other than taxable income allocable to a Distribution Reserve) among PFI Trust Beneficiaries17 in accordance with the manner in which an amount of cash equal to such taxable income would be18 distributed (were such cash permitted to be distributed at such time) if, immediately prior to such19 deemed distribution, the PFI Trust had distributed all of its assets (valued at their tax book value,and other than assets allocable to a Distribution Reserve) to the holders of the beneficial interests in20 the PFI Trust, adjusted for prior taxable income and loss and taking into account all prior and21 concurrent distributions from the PFI Trust.After the Effective Date, an

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Document Contents

1 Ori Katz (CA. Bar No. 209561) Debra I. Grassgreen (CA Bar No. 169978) J.Barrett Marum (CA Bar No. 228628) John D. Fiero (CA Bar No. 136557) 2 Matt Klinger (CA Bar No. 307362) Cia H. Mackle (admitted pro hac vice) SHEPPARD, MULLIN, RICHTER & PACHULSKI STANG ZIEHL & JONES LL3 HAMPTON LLP Four Embarcadero Center, 17th Floor 150 California Street, 15th Floor 4 San Francisco, CA 94111-4019 San Francisco, CA 94111 Telephone: (415) 434.9100 Telephone: (415) 263-7000 5 Facsimile: (415) 434.3947 Facsimile: (415) 263-7010Email: okatz@sheppardmullin.com E-mail: dgrassgreen@pszjlaw.com 6 bmarum@sheppardmullin.com jfiero@pszjlaw.com mklinger@sheppardmullin.com cmackle@pszjlaw.com 7 Counsel to the Official Committee of Unsecu Counsel to Debtors and Debtors in Possession Creditors 8 9 UNITED STATES BANKRUPTCY COURT 10 NORTHERN DISTRICT OF CALIFORNIA, SAN FRANCISCO DIVISION 11 In re Case No. 20-30604 12 (Jointly Administered) PROFESSIONAL FINANCIAL INVESTORS, INC., et al., Chapter 11 13 Debtors. NOTICE OF REDLINE DISCLOSURE 14 STATEMENT FOR THE AMENDED JOINT CHAPTER 11 PLAN OF 15 PROFESSIONAL FINANCIAL INVESTORS, INC. AND ITS 16 AFFILIATED DEBTORS PROPOSED B THE DEBTORS AND OFFICIAL 17 COMMITTEE OF UNSECURED CREDITORS AND SUPPORTED BY 18 THE AD HOC LLC MEMBERS COMMITTEE AND THE AD HOC DOT 19 NOTEHOLDERS COMMITTEE FILED APRIL 9, 2021 20 21 22 PLEASE TAKE NOTICE THAT attached hereto as Exhibit A is a redline 23 comparing the Disclosure Statement for the Joint Chapter 11 Plan of Professional 24 Financial Investors, Inc. and Its Affiliated Debtors Proposed by the Debtors and Official 25 Committee of Unsecured Creditors and Supported by the Ad Hoc LLC Members 26 Committee and the Ad Hoc DOT Noteholders Committee filed on March 21, 2021 as Dkt. 27 No. 490 with the Disclosure Statement for the Amended Joint Chapter 11 Plan of

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1 Professional Financial Investors, Inc. and Its Affiliated Debtors Proposed by the Debtors 2 and Official Committee of Unsecured Creditors and Supported by the Ad Hoc LLC 3 Members Committee and the Ad Hoc DOT Noteholders Committee filed on April 9, 2021 4 as Dkt. No. 556, each submitted by Professional Financial Investors, Inc. and its affiliated 5 debtors and debtors in possession and the Official Committee of Unsecured Creditors. 6 7 SUBMITTED BY: 8 Dated: April 9, 2021 9 SHEPPARD MULLIN RICHTER & HAMPTON LLP 10 By /s/ Ori Katz 11 ORI KATZ J. BARRETT MARUM 12 MATT KLINGER 13 Counsel for Debtors 14 15 Dated: April 9, 2021 16 PACHULSKI STANG ZIEHL & JONES LLP 17 By /s/ Debra Grassgreen 18 DEBRA GRASSGREEN JOHN D. FIERO 19 CIA H. MACKLE 20 Counsel for the Official Committee of Unsecure Creditors 21 22 23 24 25 26 27

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1 EXHIBIT A 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 THIS DOCUMENT IS NOT A SOLICITATION OF VOTES ON THE PLAN. VOTES MAY NOT BSOLICITED UNTIL THE BANKRUPTCY COURT HAS APPROVED A DISCLOSURE STATEMENT. THI 2 DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOT YET BEEAPPROVED BY THE BANKRUPTCY COURT. ALL OF THE INFORMATION IN THIS PROPOSEDISCLOSURE STATEMENT IS SUBJECT TO CHANGE. THIS DISCLOSURE STATEMENT IS NOT A 3 OFFER TO SELL ANY SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY ANY SECURITIES. 4 Ori Katz (CA Bar No. 209561) Debra I. Grassgreen (CA Bar No. 169978)J. Barrett Marum (CA Bar No. 228628) John D. Fiero (CA Bar No. 136557) 5 Matt Klinger (CA Bar No. 307362) Cia H. Mackle (admitted pro hac vice)Gianni Segretti (CA Bar No. 323645) PACHULSKI STANG ZIEHL & JONES LLP 6 SHEPPARD, MULLIN, RICHTER & 150 California Street, 15th FloorHAMPTON LLP San Francisco, CA 94111 7 (A Limited Partnership Including Professional Telephone: (415) 263-7000Corporations) Facsimile: (415) 263-7010 8 Four Embarcadero Center, 17th Floor E-mail: dgrassgreen@pszjlaw.comSan Francisco, CA 94111-4019 jfiero@pszjlaw.com 9 Telephone: (415) 434-9100 cmackle@pszjlaw.com Facsimile: (415) 434-3947 10 Email: okatz@sheppardmullin.com bmarum@sheppardmullin.com 11 mklinger@sheppardmullin.com Counsel to the Official Committee of Unsecur gsegretii@sheppardmullin.com Creditors12 Counsel to Debtors and Debtors in Possession 13 UNITED STATES BANKRUPTCY COURT 14 NORTHERN DISTRICT OF CALIFORNIA 15 SAN FRANCISCO DIVISION 16 Chapter 11 17 In re: Case No. 20-30604 18 PROFESSIONAL FINANCIAL INVESTORS, INC., et al.,1 (Jointly Administered) 19 Debtors. DISCLOSURE STATEMENT FOR THE 20 AMENDED JOINT CHAPTER 11 PLAN OF PROFESSIONAL FINANCIAL 21 INVESTORS, INC. AND ITS AFFILIATE DEBTORS PROPOSED BY THE 22 DEBTORS AND OFFICIAL COMMITTE OF UNSECURED CREDITORS AND 23 SUPPORTED BY THE AD HOC LLC MEMBERS COMMITTEE AND THE AD 24 HOC DOT NOTEHOLDERS COMMITTEE 25 26 27 1 A complete list of the Debtors, the last four digits of their federal tax identification numbers, and thei28

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1 DISCLAIMER 2 THIS DISCLOSURE STATEMENT PROVIDES INFORMATION REGARDING THE 3 AMENDED JOINT CHAPTER 11 PLAN OF PROFESSIONAL FINANCIAL INVESTORS,INC. AND ITS AFFILIATED DEBTORS PROPOSED BY THE DEBTORS AND OFFICIAL 4 COMMITTEE OF UNSECURED CREDITORS AND SUPPORTED BY THE AD HOC LLCMEMBERS COMMITTEE AND THE AD HOC DOT NOTEHOLDERS COMMITTEE, 5 WHICH BANKRUPTCY PLAN THE PLAN PROPONENTS ARE SEEKING TO HAVE 6 CONFIRMED BY THE BANKRUPTCY COURT. THE INFORMATION CONTAINED INTHIS DISCLOSURE STATEMENT IS INCLUDED FOR PURPOSES OF SOLICITIN 7 ACCEPTANCES TO, AND CONFIRMATION OF, THE PLAN AND MAY NOT BERELIED ON FOR ANY OTHER PURPOSE. APPROVAL OF THIS DISCLOSUR 8 STATEMENT DOES NOT CONSTITUTE A DETERMINATION O RECOMMENDATION BY THE BANKRUPTCY COURT REGARDING THE FAIRNESS 9 OR THE MERITS OF THE PLAN. 10 THIS DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAI11 PROVISIONS OF THE PLAN, CERTAIN STATUTORY PROVISIONS, AND CERTAINDOCUMENTS RELATING TO THE PLAN. IN THE EVENT OF ANY CONFLICT,12 INCONSISTENCY, OR DISCREPANCY BETWEEN THE TERMS AND PROVISIONS INTHE PLAN AND THIS DISCLOSURE STATEMENT, THE PLAN SHALL GOVERN FO13 ALL PURPOSES. ALL HOLDERS OF CLAIMS SHOULD READ THIS DISCLOSURE14 STATEMENT AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING ON THE PLAN15 THE STATEMENTS CONTAINED HEREIN HAVE BEEN MADE AS OF THE DATEHEREOF UNLESS OTHERWISE SPECIFIED. HOLDERS OF CLAIMS AND EQUIT16 INTERESTS REVIEWING THIS DISCLOSURE STATEMENT SHOULD NOT INFER ATTHE TIME OF SUCH REVIEW THAT THERE HAVE BEEN NO CHANGES IN THE17 FACTS SET FORTH HEREIN. ALTHOUGH THE DEBTORS HAVE MADE AN EFFORT18 TO DISCLOSE WHERE CHANGES IN PRESENT CIRCUMSTANCES COULREASONABLY BE EXPECTED TO AFFECT MATERIALLY THE RECOVERIES UNDE19 THE PLAN, THIS DISCLOSURE STATEMENT IS QUALIFIED TO THE EXTENTCERTAIN EVENTS DO OR DO NOT OCCUR. 20 THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH21 SECTION 1125 OF THE BANKRUPTCY CODE AND NOT NECESSARILY IACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR ANY OTHE22 NON-BANKRUPTCY LAW. THIS DISCLOSURE STATEMENT HAS NOT BEE23 APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES ANDEXCHANGE COMMISSION (THE “SEC”) OR ANY FEDERAL, STATE, LOCAL, O24 FOREIGN REGULATORY AGENCY, NOR HAS THE SEC OR ANY OTHER SUCAGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS25 CONTAINED IN THIS DISCLOSURE STATEMENT. ALL PERSONS OR ENTITIESSHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT O26 THE SPECIFIC PURPOSE FOR WHICH THE DOCUMENTS WERE PREPARED. 27 THE PLAN PROPONENTS MAKE STATEMENTS IN THIS DISCLOSURE STATEMENT28 THAT MAY BE CONSIDERED FORWARD-LOOKING STATEMENTS UNDER THE

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1 FEDERAL SECURITIES LAWS. STATEMENTS CONCERNING THESE AND OTHERMATTERS ARE NOT GUARANTEES AND REPRESENT THE DEBTORS’ ESTIMATES 2 AND ASSUMPTIONS ONLY AS OF THE DATE SUCH STATEMENTS WERE MADEAND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER 3 UNKNOWN FACTORS THAT COULD IMPACT THE PLAN PROPONENTS’ PLAN ODISTRIBUTIONS THEREUNDER. IN ADDITION TO STATEMENTS THAT 4 EXPLICITLY DESCRIBE SUCH RISKS AND UNCERTAINTIES, READERS ARE URGE 5 TO CONSIDER STATEMENTS LABELED WITH THE TERMS “BELIEVES,” “BELIEF,”“EXPECTS,” “INTENDS,” “ANTICIPATES,” “PLANS,” OR SIMILAR TERMS TO BE 6 UNCERTAIN AND FORWARD-LOOKING. CREDITORS AND OTHER INTERESTEDPARTIES SHOULD ALSO REVIEW THE SECTION OF THIS DISCLOSUR 7 STATEMENT ENTITLED “RISK FACTORS” FOR A DISCUSSION OF CERTAINFACTORS THAT MAY AFFECT THE PLAN AND DISTRIBUTIONS THEREUNDER. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 TABLE OF CONTENTS 2 Pag 3 4 GENERAL OVERVIEW AND SUMMARY 1 I. INTRODUCTION 5 5 A. Overview of the Plan 5 6 1. General Structure of the Plan 5 7 2. Summary of Treatment of Claims and Equity Interests Under the Plan 6 8 B. Plan Voting Instructions and Procedures 7 9 1. Voting Rights 7 10 2. Solicitation Materials 89 11 3. Election on Investor Ballots to Contribute Certain Claims 1112 13 4. Confirmation Hearing and Deadline for Objections to Confirmation 12II. BACKGROUND 12 14 A. Debtors’ Organizational Structure and Real Property Assets 1215 B. Debtors’ Ponzi Scheme 14 16 1. Initial Discovery of the Ponzi Scheme 14 17 2. Indictment of Louis Wallach and His Admissions of Guilt 141518 3. Further Confirmation of Debtors’ Fraudulent Business Operations19 from FTI and Anticipated Litigation By the Unsecured Creditors’Committee 1516 20 C. Commencement of the Chapter 11 Cases 1617 21 III. THE CHAPTER 11 CASES 1819 22 A. First Day and Other Routine Orders and Employment Applications 181923 B. Use of Cash Collateral 20 24 C. Appointment of the Unsecured Creditors’ Committee 2021D. Schedules and Statements of Financial Affairs 21 25 E. Claims Bar Dates 21 26 F. Post-Petition Operations 22 27 G. Wallach Related Agreements 22 28 H. Denial of the U.S. Trustee’s Motion to Appoint a Trustee or Examiner 23

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1 I. Motion for Authorization to File Involuntary Bankruptcy Petitions AgainstRelated Entities 2324 2 J. Extension of Exclusivity Periods 2425 3 K. Motion for Approval of the Committee Agreement with the Ad Hoc 4 Committees 25 L. Pending Investigations/Proceedings 26 5 M. Plan Negotiations and the Settlement Under the Plan 26 6 IV. OVERVIEW OF PROVISIONS RELATING TO THE GLOBAL COMPROMISE 7 AND SETTLEMENT SUPPORTING THE PLAN STRUCTURE 26 A. Comprehensive Compromise and Settlement Under the Plan 26278 9 1. Substantive Consolidation Issues 27 10 2. Ponzi Scheme Issues 28 11 3. Proposed Settlement Relating to DOT Noteholder Claims 3012 4. Proposed Settlement Relating to PFI LLC Members 3132 13 5. Proposed Settlement Relating to TIC Interests 32 14 56. Provisions Relating to Avoidance Actions and Other Causes of15 Actions 3233 B. The Settlement Provisions in the Plan are Fair and Reasonable and in the Best16 Interest of All Creditors. 33 17 V. RISK FACTORS 3334 18 A. Parties May Object to the Plan’s Classification of Claims and Equity Interests 34B. The Plan Proponents May Not Be Able to Obtain Confirmation of the Plan 343519 C. The Conditions Precedent to the Effective Date of the Plan May Not Occur 343520 D. Claims Estimation and Allowance of Claims 35 21 E. Potential Pursuit of PFI Trust Actions Against Creditors and Others 353622 F. Risks Regarding Real Estate 3637 23 G. Securities Law Considerations 3738 VI. CONFIRMATION OF the PLAN 3839 24 A. The Confirmation Hearing 3839 25 B. Requirements for Confirmation of the Plan 3940 26 C. Best Interests of Creditors 4041 27 D. Feasibility 4142 E. Acceptance by Impaired Classes 4142 28

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1 F. Confirmation Without Acceptance by All Impaired Classes 42432 1. No Unfair Discrimination 4243 3 2. Fair and Equitable Test 4344 4 G. Alternatives to Confirmation and Consummation of the Plan 4344 5 VII. CERTAIN SECURITIES LAW CONSEQUENCES OF THE PLAN 44 A. General 4445 6 7 1. Status as Securities 4445 8 2. Transfer Restrictions on PFI Trust Interests 44 B. Exemption From Offer and Sale of Securities Act and Blue Sky Laws 44459 1. Issuance of PFI Trust Interests under Plan 4445 10 2. Securities Issued in Reliance of Section 4(a)(2) of the Securities Act,11 Regulation D and/or Regulation S 4647 12 3. Resale of PFI Trust Interests After Plan Effective Date 474813 VIII. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF14 THE PLAN 4950 A. Certain U.S. Federal Income Tax Consequences of the PFI Trust 525315 B. Consequences to Holders of Claims Generally 55 16 C. Consequences to PFI Trust Beneficiaries 5657 17 D. Withholding on Distributions, and Information Reporting 596018 IX. RECOMMENDATION 6162 19 20 EXHIBITS & SCHEDULES 21 EXHIBIT A Joint Chapter 11 Plan 22 EXHIBIT B Corporate Organizational Chart 23 EXHIBIT C Liquidation Analysis / Plan Recovery Analysis 24 EXHIBIT D Non-Exclusive Description ofPreserved PFI Trust Actions25 SCHEDULE 1 Schedule of the Real Properties 26 SCHEDULE 2 Schedule of Excluded Parties 27 SCHEDULE 3 Schedule of Non-Investor First-Priority Lender Claims28

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1 SCHEDULE 4 Schedule of Properties Subject to DOT Noteholders’ Deeds of Trust 2 THE EXHIBITS AND SCHEDULES ATTACHED TO THIS 3 DISCLOSURE STATEMENT ARE INCORPORATED BY REFERENCE AS THOUGHFULLY SET FORTH HEREIN 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 GENERAL OVERVIEW AND SUMMARY 2 This disclosure statement (the “Disclosure Statement”) describes in detail the historical3 background that led to the bankruptcy cases of Professional Financial Investors, Inc. (“PFI”) and its4 affiliated debtors and debtors in possession (collectively with PFI, the “Debtors”), explains what has5 happened in the months since the commencement of the Chapter 11 Cases, and sets forth the6 treatment of creditors in the Amended Joint Chapter 11 Plan of Professional Financial Investors, 7 Inc. and its Affiliated Debtors Proposed by the Debtors and Official Committee of Unsecured 8 Creditors and Supported By the Ad Hoc LLC Members Committee and the Ad Hoc DOT 9 Noteholders Committee (as may be amended, the “Plan”).2 This overview and summary highlights10 the main points discussed in the Disclosure Statement, and should be read in conjunction with the11 remainder of the Disclosure Statement and the Plan. This general overview and summary is12 qualified by the express terms of the Plan. 13 Further, provided herewith as a separate document is a brief summary of the Plan,14 together with statements of the Ad Hoc Committees in support of the Plan, which should be15 reviewed by all Investors and other parties in interest. 16 Originally founded by Ken Casey (“Casey”), the Debtors comprise a group of related entities17 that directly or indirectly own, manage and/or otherwise control various real properties in California18 including Marin and Sonoma Counties in Northern California.3 Although touted and marketed t19 Investors as a premier real estate investment and management firm, in fact, the business was nothing20 more than a “Ponzi scheme.” After the death of Casey in May 2020, new management was installed21 and the Debtors’ prior fraudulent scheme was uncovered.4 22 23 2 A copy of the Plan is attached hereto as Exhibit A. All capitalized terms used but not defined24 herein shall have the meanings provided to such terms in the Plan. 25 3 Overall, the Debtors own either direct or indirect interests in approximately seventy (70) realproperty locations (collectively, the “Real Properties”), primarily consisting of apartment buildings26 and office parks. A Schedule of the Real Properties is attached hereto as Schedule 1. 27 4 The Debtors’ history, prepetition operations, and circumstances leading to the Debtors’ Chapter 11Cases, including further facts relating to the Ponzi scheme perpetrated by Casey and his cohorts, are28

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1 Following the revelation of the massive Ponzi scheme and the resulting bankruptcy filings,2 the Plan Proponents, together with the Ad Hoc Committees, have worked diligently to maximiz3 recoveries for the Debtors’ Investors and other creditors. Since even before the commencement of4 the Chapter 11 Cases, the investor body has played a critical role by organizing themselves to ensure5 that Investors’ interests are well-represented, and, through both the appointment of the Unsecured 6 Creditors’ Committee and the formation of the Ad Hoc Committees, Investors of all types are7 ensured an active and representative role in the bankruptcy process. To this end, the Debtors and th 8 Committees, through months of open cooperation, information gathering and negotiation for th9 benefit of all Investors, reached a global resolution, embodied in the proposed Plan, aimed at: (i)10 mitigating the damage inflicted by Casey’s (and others’) having operated the Debtors as a Ponzi11 scheme; and (ii) developing a level playing field that attempts to treat all aggrieved Investors equall12 and fairly. 13 Significantly, the proposed Plan is a “single pot” plan, meaning that under the Plan,14 generally, all of the assets and liabilities of all Debtors and non-debtor affiliates will be pooled and15 consolidated for distribution purposes. This is legally referred to under the Plan as “substantive16 consolidation.5 As a result of such substantive consolidation, among other things: 17  Creditors of any Debtor entity are treated as if they have a claim against the entire PFI18 enterprise, rather than a particular Debtor. 19  Any and all purported equity interests of an Investor in any Debtor shall be automaticallcancelled and extinguished as of the Effective Date, and deemed and treated as Investor20 Claims of the Investor pursuant to the Plan, regardless of the pre-petition designations21 used by the Debtors and/or Investors. 22  No certain type of Investors will receive a “premium” or other benefit based on the type o23 investment they held. Rather, each Investor’s Claim will be calculated in the same24 manner, and each Investor will receive a proportional recovery from the PFI Trust based25 26 27 5 By way of example, if Entity A holds $100 of assets and owes $0 of liabilities, and Entity B hold$0 of assets and owes $100 of liabilities, and if those two entities are substantively consolidated, the28

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1 on such Investor’s allowed claim amount, after netting and any clawbacks are taken into2 account as described in the Plan. 3 To effectuate distributions to Investors and other creditors, the Plan provides for the creation4 of the PFI Trust, which will own the Estates’ assets (including indirectly owning the Debtors’ Real 5 Properties through an operating company, referred to as the “OpCo”) and will sell or otherwise6 dispose of those assets to generate cash, and will distribute that (and other) cash to creditors7 (including to Investors). The PFI Trust also will own litigation claims against third parties and ma8 generate cash through prosecution or settlement of those claims. Cash will be distributed by the PFI 9 Trust to Investors and other creditors over time (as the PFI Trust collects on the PFI Trust Assets an10 the OpCo upstreams operating profits from and/or sale proceeds from the disposition of the Real11 Properties). 12 Critically, the Plan Proponents have ensured that creditors continue to have an advisory role13 in connection with certain key decisions that will be made by the PFI Trust by creating a board of14 volunteers (“BOV”) to serve in connection with the PFI Trust. The proposed PFI Trustee (Michael15 Goldberg) has been jointly selected by the Unsecured Creditors’ Committee and the two Ad Hoc16 Committees, and the three Committees are in the process of jointly selecting the members to serve17 on the BOV. 18 As further explained in the Plan Recovery Analysis included as part of Exhibit C attached19 hereto, the Debtors estimate the following recoveries for Investors and other general unsecuredcreditors under the Plan on account of such parties’ Class A PFI Trust Interests:620 21 Class 4 DOT Noteholder Claims 35%-50% of “netted” Claims 22 Class 5 Non-DOT Investor Claims 35%-50% of “netted” Claims 23 Class 6 TIC Claims 35%-50% of Allowed Claims 24 25 6 These estimated recoveries do not take into account potential proceeds of the PFI Trust Actions becaus26 such litigation recoveries are unpredictable and highly contingent. Among other things, although the Debtorbelieve that strong litigation claims may exist, the ability to collect any judgment on those claims remain27 unknown at this time. As such, the estimated recoveries set forth in this chart assumes recovery only oaccount of Class A PFI Trust Interests, and that the Class B PFI Trust Interests that comprise part of th28

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1 Class 67 Other Unsecured Claims 35%-50% of Allowed Claims 2 * * * 3 Investors will also receive additional consideration as set forth in further detail below and in4 the Investor Claims Special Provisions in Section 2.10.22.11.2 of the Plan. 5 The Debtors understand the precarious financial position that many Investors are in as a6 result of the Ponzi scheme. The Plan Proponents, together with the Ad Hoc Committees, believe tha7 the settlement reflected in the Plan, which is the result of extensive negotiations with significant 8 Investor input, represents the best outcome of these unfortunate circumstances, and importantly,9 provides the best prospect for Investors and other creditors to receive distributions as soon as10 reasonably possibl 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 2 I. 3 INTRODUCTION 4 The Debtors in the above-captioned Chapter 11 Cases and the Unsecured Creditors’ 5 Committee hereby submit this Disclosure Statement pursuant to sections 1125 and 1126(b) of the 6 Bankruptcy Code, in connection with the solicitation of votes on the Joint Chapter 11 Plan o 7 Professional Financial Investors, Inc. and Its Affiliated Debtors Proposed by the Debtors and 8 Official Committee of Unsecured Creditors and Supported By the Ad Hoc LLC Members Committee9 and the Ad Hoc DOT Noteholders Committee (as amended, modified, or supplemented from time to10 time pursuant to its terms, the “Plan”). A copy of the Plan is attached hereto as Exhibit A.7 Both11 the Ad Hoc DOT Noteholders Committee and the Ad Hoc LLC Members Committee support12 the Confirmation of the Plan. 13 The purpose of this Disclosure Statement is to enable creditors (including Investors) whose14 Claims are Impaired under the Plan and who are entitled to vote on the Plan to make an informed15 decision when exercising their right to accept or reject the Plan. This Disclosure Statement sets forth16 certain information regarding the Debtors’ prepetition operating and financial history, their reasons17 for seeking protection under chapter 11 of the Bankruptcy Code, the course of these Chapter 1118 Cases, and the anticipated disposition of the Estate Assets. This Disclosure Statement also19 describes certain terms and provisions of the Plan, certain effects of Confirmation of the Plan,certain risk factors associated with the Plan, and the manner in which Distributions will be made20 under the Plan. In addition, this Disclosure Statement discusses the Confirmation process and the21 voting and election procedures that creditors entitled to vote under the Plan must follow for their22 votes to be counted. 23 A. Overview of the Plan 24 25 26 27 7 The summary of the Plan provided herein is qualified in its entirety by reference to the Plan. In the case o28

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1 1. General Structure of the Plan 2 A bankruptcy plan is a vehicle for satisfying the rights of holders of claims against and equit3 interests in a debtor. Consummation of a plan is the overriding purpose of a chapter 11 case. Upon4 confirmation and effectiveness, a plan becomes binding on the debtor and all of its creditors and5 equity interest holders. 6 In these Chapter 11 Cases, the Plan contemplates a restructuring of the Debtors and the 7 Estate Assets into the PFI Trust and the OpCo operating company structure, and the orderl8 monetization and other disposition of Estate Assets through such structure. The Debtors’ assets9 largely consist of direct or indirect interests in the Real Properties, Cash, and the PFI Trust Actions10 under the Plan. The PFI Trust Actions include, but are not limited to, Causes of Action, Avoidance11 Actions, Claims, remedies, or rights that may be brought by or on behalf of the Debtors or the12 Estates under chapter 5 of the Bankruptcy Code and related statutes or common law, as well as any13 other Claims, rights, or Causes of Action held by the Debtors’ Estates, including, without limitation,14 Contributed Claims transferred and assigned to the Debtors and the PFI Trust as part of the Plan. 15 2. Summary of Treatment of Claims and Equity Interests Under the Plan16 The table below summarizes the classification and treatment of Claims and Equity Interests17 under the Plan. 18 THE PROJECTED RECOVERIES FOR CLAIMS IN CLASSES 4, 5 AND, 6, AND 7 SE19 FORTH IN THE TABLE BELOW ARE ESTIMATES ONLY AND ACTUAL RECOVERIEMAY DIFFER.8 FOR A COMPLETE DESCRIPTION OF THE CLASSIFICATION AN20 TREATMENT OF CLAIMS AND EQUITY INTERESTS, REFERENCE SHOULD BE MADE T21 THE PLAN. 22 23 CLASS DESCRIPTION IMPAIRED/ ENTITLED PROJECTE UNIMPAIRED TO VOTE? RECOVERY 24 None Administrative Claims Unimpaired No 100% None Professional Fee Claims Unimpaired No 100% 25 None Involuntary Gap Claims Unimpaired No 100% 26 None Priority Tax Claims Unimpaired No 100% 27 28 8

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1 CLASS DESCRIPTION IMPAIRED/ ENTITLED PROJECTE UNIMPAIRED TO VOTE? RECOVERY 2 Class 1 Non-Investor First-Priority Impaired Yes 100% Lender Claims9 3 Class 2 Non-Investor Other Secured Unimpaired No 100% 4 Claims10 5 Class 3 Priority Claims Unimpaired No 100% Class 4 DOT Noteholder Claims11 Impaired Yes 35%-50% 6 Class 5 Non-DOT Investor Claims Impaired Yes 35%-50% 7 Class 6 TIC Claims Impaired Yes 35%-50% Class 67 Other Unsecured Claims Impaired Yes 35%-50% 8 Class 78 Subordinated Claims Impaired No (deemed 0% to reject) 9 Class 89 Equity Interests Impaired No (deemed 0% 10 to reject) 11 THE PLAN PROPONENTS BELIEVE THAT THE PLAN IS FAIR AND EQUITABLEWILL MAXIMIZE RECOVERIES TO CREDITORS, AND IS IN THE BEST INTERESTS12 OF THE DEBTORS AND THEIR STAKEHOLDERS. THE PLAN ALSO IS THPRODUCT OF THE PLAN PROPONENTS’ EXTENSIVE NEGOTIATION WITH, AND IS13 SUPPORTED BY, BOTH THE AD HOC LLC MEMBERS COMMITTEE AND THE AD14 HOC DOT NOTEHOLDERS COMMITTEE. FOR THESE REASONS, THE PLAPROPONENTS, TOGETHER WITH THE AD HOC LLC MEMBERS COMMITTEE AND15 THE AD HOC DOT NOTEHOLDERS COMMITTEE, URGE HOLDERS OF CLAIMS ANINTERESTS WHO ARE ENTITLED TO VOTE TO TIMELY RETURN THEIR BALLOTS16 AND TO VOTE TO ACCEPT THE PLAN. 17 B. Plan Voting Instructions and Procedures 18 1. Voting Rights 19 Under the Bankruptcy Code, only classes of claims or interests that are “impaired” and that20 are not deemed as a matter of law to have rejected a plan under Bankruptcy Code section 1126 are21 entitled to vote to accept or reject such plan. Any class that is “unimpaired” is not entitled to vote to22 23 24 9 For voting purposes and to comply with Bankruptcy Code section 1122(a), each Allowed Non-InvestoFirst-Priority Lender Claim shall be deemed to be in its own subclass. A listing of Non-Investo25 First-Priority Lender Claims is attached hereto as Schedule 3. 10 For voting purposes and to comply with Bankruptcy Code section 1122(a), each Allowed Other Secure26 Claim shall be deemed to be in its own subclass. 27 11 For voting purposes and to comply with Bankruptcy Code section 1122(a), Allowed DOT NoteholdeClaims shall be deemed to be in their own subclass on a property by property basis. See Schedule 4 attache28

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1 accept or reject a plan and is conclusively presumed to have accepted such plan. As set forth in 2 Bankruptcy Code section 1124, a class is “impaired” if the legal, equitable, or contractual rights3 attaching to the claims or equity interests of that class are modified or altered by the proposed plan. 4 Holders of claims or interests within an impaired class are entitled to vote to accept or reject a plan i5 such claims or interests are “allowed” under Bankruptcy Code section 502. 6 Under the Bankruptcy Code, acceptance of a plan by a class of claims is determined b7 calculating the number and the amount of allowed claims voting to accept such plan. Acceptance by8 a class of claims requires more than one-half of the number of total allowed claims voting in the9 class to vote in favor of the plan and at least two-thirds in dollar amount of the total allowed claims10 voting in the class to vote in favor of the plan; only those non-insider holders that actually vote t11 accept or reject the plan are counted for purposes of determining whether these dollar and number12 thresholds are met. Thus, a Class of Claims will have voted to accept the Plan only if two-thirds in13 amount and a majority in number that actually vote cast their Ballots in favor of acceptance. 14 Pursuant to the Plan, Claims in Class 1, Class 4, Class 5, and Class 6, and Class 7 are15 Impaired by, and entitled to receive a Distribution under, the Plan, and only the Holders of Claims i16 those Classes that are Allowed Claims or have been deemed allowed for voting purposes are entitle17 to vote to accept or reject the Plan. Only Holders of Claims in the afore-mentionedaforementioned18 Classes as of the dates specific in the Solicitation Procedures Order (the “Voting Record Date”) may19 vote to accept or reject the Plan. Pursuant to the Plan, Claims in Class 2 and Class 3 are Unimpaired by the Plan, and such20 Holders are deemed to have accepted the Plan and are therefore not entitled to vote on the Plan. 21 The Plan Proponents have determined not to solicit the votes of Holders of any Othe22 Subordinated Claims in Class 78, and such Holders shall be deemed to have rejected the Plan and,23 therefore, such Holders are not entitled to vote on the Plan. Pursuant to the Plan, Equity Interests in24 Class 89 will not receive or retain any property under the Plan on account of such Equity Interests,25 and are therefore deemed to reject the Plan and are not entitled to vote on the Plan. 26 27 28

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1 2. Solicitation Materials 2 The Debtors, with the approval of the Bankruptcy Court, have engaged Donlin, Recano 3 Co., Inc. (the “Voting Agent”) to serve as the voting agent to process and tabulate Ballots and to4 generally oversee the voting process. The following materials constitute the solicitation package (th5 “Solicitation Package”): 6 • This Disclosure Statement, including the Plan and all other Exhibits and Schedules thereto;7 • The Bankruptcy Court order provisionally approving this Disclosure Statement (th8 “Solicitation Procedures Order”) (excluding exhibits); 9 • The notice of, among other things, (i) the date, time, and place of the hearing to considerConfirmation of the Plan and related matters and (ii) the deadline for filing objections t10 Confirmation of the Plan (the “Confirmation Hearing Notice”);11 • One or more Ballots, to be used in voting to accept or to reject the Plan and, in the case of12 Investors the applicable instructions to vote and instructions for the following additiona13 Ballot elections (the “Voting Instructions”): (i) to elect to contribute their ContributinClaims to the PFI Trust; and (ii) to either agree with the proposed amount of the Investo14 Claim FOR VOTING PURPOSES ONLY by taking no action with respect to the proposedInvestor Claim amount listed on the Ballot, OR object to such proposed Investor Claim FOR15 VOTING PURPOSES ONLY pursuant to the Voting Instructions;12 16 • A pre-addressed, postage pre-paid return envelope; and 17 • Such other materials as the Bankruptcy Court may direct or approve. 18 The Debtors, through the Voting Agent, will distribute the Solicitation Package i19 accordance with the Solicitation Procedures Order. The Solicitation Package, exclusive of Ballots20 for Investors, is also available without charge at the Debtors’ restructuring website at21 https://www.donlinrecano.com/Clients/pfi/Index. 22 On or before the date that is seven (7) days prior to the Voting Deadline (defined below), the23 Plan Proponents will File a Plan Supplement, which will contain additional information relating t24 the Plan and its implementation that you are encouraged to read, including, without limitation, the25 PFI Trust Agreement and a document further discussing certain tax implications of the Plan. As the26 27 12 The amount of the Investor Claim on the Ballot is for voting purposes only. Allowed Investor Claims fodistribution purposes shall be established separately in accordance with the process and procedures describe28

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1 Plan Supplement is updated or otherwise modified, it will be made available without charge at the 2 Debtors’ restructuring website at https://www.donlinrecano.com/Clients/pfi/Index. 3 If you are the Holder of a Claim and believe that you are entitled to vote on the Plan, but yo4 did not receive a Ballot or your Ballot is damaged or illegible, or if you have any questions5 concerning voting procedures, you should contact the Voting Agent by writing to: 6 Professional Financial Investors, Inc., et al. 7 c/o Donlin, Recano & Co., Inc. P.O. Box 199043 8 Blythebourne Station Brooklyn, NY 11219 9 Toll Free: 1-877-283-0316 Email: pfiinfo@donlinrecano.com 10 11 Copies of the Plan, Disclosure Statement, and other documents Filed in these Chapter 11 Cases12 (other than Ballots for Investors) also may be obtained free of charge at the Debtors’ restructuring13 website at https://www.donlinrecano.com/Clients/pfi/Index. 14 You are encouraged to read all of the materials in the Solicitation Package in their entirety,15 including, without limitation, the Solicitation Procedures Order and the Voting Instructions fo16 important information about how and when to cast your vote and special procedures for estimating17 the amount of your claim FOR VOTING PURPOSES ONLY, among other things. 18 The deadline to vote on the Plan is [•], 2021 at 4:00 p.m. (prevailing Pacific Time) (th“Voting Deadline”). In order for your vote to be counted, your Ballot must be properly complete19 in accordance with the Voting Instructions on the Ballot, and actually received no later than the20 Voting Deadline. 21 ALL BALLOTS ARE ACCOMPANIED BY VOTING INSTRUCTIONS. IT IS22 IMPORTANT THAT THE HOLDER OF A CLAIM ENTITLED TO VOTE FOLLOW THE23 SPECIFIC INSTRUCTIONS PROVIDED WITH EACH BALLOT. 24 The Voting Agent will process and tabulate Ballots for the Classes entitled to vote to accept25 or reject the Plan and will File a voting report (the “Voting Report”). The Voting Report will,26 among other things, describe every Ballot that does not conform to the Voting Instructions or that27 contains any form of irregularity, including, but not limited to, those Ballots that are late, illegible (i28

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1 whole or in material part), unidentifiable, lacking signatures, lacking necessary information, or2 damaged. 3 THE PLAN PROPONENTS, TOGETHER WITH THE AD HOC LLC MEMBER 4 COMMITTEE AND THE AD HOC DOT NOTEHOLDERS COMMITTEE, URGE 5 HOLDERS OF CLAIMS WHO ARE ENTITLED TO VOTE TO TIMELY RETURN THEIR 6 BALLOTS AND TO VOTE TO ACCEPT THE PLAN BY THE VOTING DEADLINE. 7 3. Election on Investor Ballots to Contribute Certain Claims 8 The Ballots also permit each Investor - Holder of a Class 4 Claim or a Class 5 Claim, or 9 Class 6 Claim if the Holder thereof makes the TIC Investor Treatment Election, to elect to assign its10 Contributed Claims to the PFI Trust. By electing such option on its Ballot, the applicable Investo11 agrees that, subject to the occurrence of the Effective Date and the formation of thePFI Trust, it will12 be deemed to have, among other things, assigned its Contributed Claims to the PFI Trust. Pursuant13 to the Plan, “Contributed Claims” are all Causes of Action (1) that are legally assignable (includin14 Causes of Action that are legally assignable solely because of the preemptive effect of the Plan) that15 an Investor has against any Person that is not a Released Party and that are related in any way to the16 Debtors, their predecessors, their respective affiliates, or any Excluded Parties;13 and (2) for which a17 Contributing Claimant elects to contribute such Causes of Action on its Ballot. For the avoidance o18 doubt, the following are not Contributed Claims: (i) Causes of Action based upon loss of liens or19 lien priority, and (ii) Causes of Action by Investors against their own professionals, investmentadvisers, or investment managers related to their decision to invest in PFI, PISF or any of the20 LLC/LP Debtors or the handling of such investments; provided, however, that any recoveries on21 22 23 24 13 Such Causes of Action include those based on, arising out of, or related to: (a) the marketing, saleand issuance of any investments related to the Debtors; (b) unlawful dividend, fraudulent25 conveyance, fraudulent transfer, voidable transaction, or other avoidance claims under state orfederal law; (c) the misrepresentation of any of the Debtors’ financial information, business26 operations, or related internal controls; (d) any failure to disclose, or actual or attempted cover up or27 obfuscation of, any of the wrongful conduct described in the Disclosure Statement, including inrespect of any alleged fraud related thereto; and (e) aiding or abetting, entering into a conspiracy28

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1 such Causes of Action shall be Collateral Source Recoveries, as provided and further described in2 the Plan. 3 The Allowed Investor Claim for any such electing Investor will be enhanced by the 4 Contributing Claimants Enhancement Multiplier (i.e., the applicable Investor’s Allowed Claim5 amount will be increased by 5%). Investors may also choose to make such election because6 aggregating all Contributed Claims and similar PFI Trust Actions may enable the pursuit and7 settlement of such litigation claims in a more efficient and effective manner. 8 In the event a Holder intends to apply certain IRS safe harbor procedures relating to the9 deduction of losses realized by investors in certain fraudulent investment schemes (discussed more10 fully below in Section VIII(C)), the transfer by such Holder of a claim against a third party to the11 liquidating trust may affect the manner in which such safe harbor procedures can be applied. 12 Accordingly, Holders are urged to consult with their own tax advisors regarding the potential tax13 consequences to them of transferring third party claims to the liquidating trust, including the effect14 of such transfer on the manner in which the IRS safe harbor procedures relating to the deduction of15 losses realized by investors in certain fraudulent investment schemes may be applied. 16 4. Confirmation Hearing and Deadline for Objections to Confirmation17 Objections to Confirmation of the Plan must be Filed and served on the Plan Proponents an18 certain other entities, all in accordance with the Confirmation Hearing Notice, so that such19 objections are actually received by no later than [•], 2021 at 4:00 p.m. (prevailing Pacific Time)Unless objections to Confirmation of the Plan are timely served and Filed in compliance with the20 Solicitation Procedures Order, they may not be considered by the Bankruptcy Court. For furthe21 information, refer to Section VI of this Disclosure Statement, “Confirmation of the Plan.”22 II. 23 BACKGROUND 24 A. Debtors’ Organizational Structure and Real Property Assets25 A corporate organizational chart showing the Debtors’ organizational structure is attached26 hereto as Exhibit B. 27 28

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1 The Debtor PFI is a privately held California corporation founded by Casey in August 1990. 2 Casey served as its sole officer, director and shareholder until 1998, when he relinquished his3 corporate positions and placed his shares of PFI in an irrevocable trust (for which his ex-wife, 4 Charlene Albanese (“Albanese”), is the current trustee and lifetime income beneficiary).14 Despite5 these actions, the Debtors believe that Casey maintained completede facto control over PFI until his6 death on May 6, 2020. Casey founded PISF on or about November 1, 1983 and served as its sole7 shareholder, officer, and director from that date until his death. The remaining Debtors were created8 at various times as special purpose entities to hold the Real Properties purchased by PFI and/or PSIF 9 The Debtors own either direct or indirect interests in approximately 70 Real Properties,10 primarily consisting of apartment buildings and office parks. A schedule of the Real Properties is11 attached hereto as Schedule 1. With respect to PFI’s and PISF’s interests in the Real Properties: (i)12 PFI holds fee title to approximately 28 Real Properties, (ii) PFI purports to hold an equity interes13 that typically ranges from 30% to 40% (with certain limited exceptions) in approximately 314 California limited liability companies (collectively, the “LLCs”) that themselves hold either fee title15 or an interest as a tenant-in-common in various Real Properties, (iii) PFI has a general partner16 interest in approximately 10 California limited partnerships (collectively, the “LPs”) that themselves17 hold fee title to various Real Properties, (iv) PFI holds an interest as a tenant-in-common in18 approximately 2 Real Properties, and (v) PISF has a significant limited partner interest in the LPs. 19 PFI also serves as the property manager for all of the Real Properties, as well as the operational armthat manages and accounts for the Debtors’ activities. 20 The Debtors believe that most of the Real Properties are subject to a first lien deed of trust in21 favor of a traditional third party bank lender. In addition, many of the Real Properties wer22 purported to be encumbered by a second lien deed of trust in favor of investors in one of the other23 Debtors (these purported second lien deeds of trust are fractionalized deeds of trust). In some24 instances, the Investors may assert that they have a first lien deed of trust. As of July 2020, the25 26 14 He did so after pleading guilty in federal court to one count of conspiracy to defraud the federal27 government, five counts of tax evasion, 41 counts of bank fraud and five counts of filing falsincome tax returns. Casey was, at that time, sentenced to 18 months in prison and three years of28

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1 aggregate outstanding debt secured by these first and second lien deeds of trust totaled more than2 $400 million. In addition, the Debtors believe that PISF owes more than $275 million of principa3 and estimated accrued and unpaid interest to Investors whose investments were purportedly secured4 by PISF’s interest in the LPs. 5 B. Debtors’ Ponzi Scheme 6 1. Initial Discovery of the Ponzi Scheme 7 The Debtors believe that the initial discovery of financial irregularities after Casey’s death8 related to the loans made by the PISF Straight Noteholders, which appear to have a current total9 outstanding principal balance of approximately $237 million. However, additional review has made10 it clear that virtually every other PFI-related investment vehicle was also impacted. One element of11 the fraudulent scheme involved having PISF Straight Noteholders loan money to PISF based upo12 assurances that their loaned funds would be used to make improvements to properties owned b13 PISF, pay off existing investors in PISF, purchase new real properties to be held by PISF, and to14 fund a reserve to cover PISF’s debt service on investors’ loans. While the loans made by PISF15 Straight Noteholders are ostensibly secured by PISF’s interests in the LPs, the investigation into the16 Debtors’ finances indicates this collateral is mostly exhausted and likely has been for some years. It17 is also unclear if any of these security interests were ever perfected. The properties owned by the18 LPs are subject to mortgages and junior deeds of trust that, based on current estimated values for19 those Real Properties, leave little or no equity in the individual LPs. Further, the Debtors believe that a substantial amount of the funds invested by the PIS20 Straight Noteholders appear to have been used to (i) make interest payments to pre-existing PISF21 Straight Noteholders, (ii) make interest payments to the DOT Noteholders, (iii) convert PISF22 Straight Noteholders’ principal and accrued interest into membership interests in PFI-managed23 LLCs, (iv) fund intra-company transactions with PFI that were effectively booked as payables and24 receivables, (v) make intra-company loans to LLCs for improvements and interest payments to PFI25 LLC Members, and (vi) enrich Casey and potentially others. 26 The Debtors’ finances are such that, without accepting new investment or monies from PISF27 Straight Noteholders, neither PISF nor PFI had sufficient cash flow to meet their monthly interest28

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1 obligations to the existing PISF Straight Noteholders or the DOT Noteholders, or pay promised2 quarterly returns to certain PFI LLC Members. 3 2. Indictment of Louis Wallach and His Admissions of Guilt 4 Lewis Wallach (“Wallach”) is the former CEO of PFI. On September 29, 2020, Wallach wa5 indicted in a criminal investigation in connection with the Debtors’ activities, and that indictment6 included one count of wire fraud, in violation of 18 U.S.C. § 1343, and one count of conspiracy t7 commit wire fraud, in violation of 18 U.S.C. § 1349. On December 16, 2020, Wallach presented 8 plea agreement to the Honorable Maxine M. Chesney, U.S. District Judge, in which he pleaded9 guilty on both counts. 10 According to his plea agreement, Wallach admitted that he was hired by Casey and that he11 was later named president and CEO of PFI. Wallach admitted that PFI and PISF Investors were told12 that the Investors’ regular interest and distribution payments would be paid from income on th13 residential and commercial properties owned and managed by PFI. In fact, as Wallach admitted, he14 knew that PFI was not profitable and that income from the Real Properties was not sufficient to pa15 both interest and distributions. In fact, both Wallach and Casey knew that PFI and PISF had to raise16 new investments to pay existing Investors. 17 Wallach admitted that he lied to Investors, including falsely telling Investors that PFI had18 significant reserves to allow it to survive and expand during the economic downturn caused by the19 COVID-19 pandemic. He admitted that he conspired with Casey to mislead Investors and solicitInvestor funds using false statements. 20 Wallach also admitted that he engaged in a years-long scheme to embezzle funds from PFI21 and PISF in which he took more than $26 million from 2015 until June 2020, including money h22 used for large investments, the purchase of real estate, and payment of personal expenses. 23 Under the plea agreement entered by Wallach and the United States Attorney’s Office,24 Wallach agreed to the entry of an order by the court requiring him to pay restitution of no less than25 $26.7 million. Pursuant to the agreement, Wallach also agreed to continue to cooperate in the26 criminal investigation and to assist prosecutors with identifying, securing, and transferring any asset27 derived from or related to the charged offense. 28

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1 3. Further Confirmation of Debtors’ Fraudulent Business Operations fro 2 FTI and Anticipated Litigation By the Unsecured Creditors’ Committee 3 The Debtors believe that, since at least January 1, 2007, Casey and Wallach operated a4 fraudulent scheme in which investors believed they were loaning funds to or investing in equity of5 the Debtors. However, in fact, a significant portion of those funds were used to service the debt6 owed to existing investors and to personally enrich Casey and Wallach. The fraudulent scheme only7 came to light upon Casey’s death. Several months later, the vast majority of the Debtors entered8 bankruptcy. 9 On September 3, 2020, the Debtors then in bankruptcy retained FTI as their financial advisor10 Since that time, an FTI forensics team has worked day and night to gather data, organize it, analyze11 it, and present its findings to the Debtors, the Unsecured Creditors’ Committee, and others. Based12 on communications with FTI, the Debtors believe that FTI would offer the following expert opinion13 at any trial in this matter, among others: 14  No later than January 1, 2007, the Debtors’ business records and other available evidenc15 presents attributes commonly seen in Ponzi schemes, and such attributes continued16 through Casey’s death. 17  Many Debtors had either negative equity or a disabling lack of liquidity that demanded18 the use of cash belonging to other related entities. 19  The “debt service” and investment returns paid to investors could never have been paid20 without the use of new capital from new investors because the Real Properties were not21 sufficiently profitable to have done so. 22  The Debtors’ cash flows were commingled, and this commingling was a prevalent featur23 of the Debtors’ operations. 24  Casey and Wallach removed millions of dollars from the Debtors. 25 The Plan Proponents believe that a formal judicial Ponzi finding from this Bankruptcy Cour26 will benefit the Debtors because it will be integral to future “netting” and claims allowance in the27 Chapter 11 Cases. It will also be one of the cornerstones of future clawback actions against persons28 who got more out of the Ponzi scheme than they put in. Similarly, a formal judicial Ponzi schem

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1 finding will benefit all Investors, as the finding will assist Investors with their U.S. federal income2 tax filings. 3 C. Commencement of the Chapter 11 Cases 4 After Casey’s death, the Debtors engaged new counsel, Ragghianti Freitas LLP (“Ragghianti 5 Freitas”), to help transition the business. Ragghianti Freitas learned troubling facts regarding PFI’s6 financial condition, and Albanese directed them to conduct an investigation into the Debtors’7 finances and operations. Upon learning of possible criminal behavior, Albanese directed the Debtor8 to inform certain government authorities, including the SEC, and to cease accepting any additional9 loans. The SEC initiated its investigation on May 28, 2020. Further, Ragghianti Freitas informed10 many of the Debtors’ investors of the SEC’s review via a communication sent to investors on June 411 2020 (the “June 4 Communication”). 12 In light of the malfeasance uncovered, in June 2020, Michael Hogan, a Managing Director13 with Armanino LLP (“Armanino”), was appointed as the Chief Restructuring Officer of PFI and14 PISF. Shortly thereafter, PFI asked for and received the resignations of all of PFI’s and PISF’s15 officers, so that PFI and PISF could work unimpeded on a game plan for restructuring their finances16 and operations. 17 Shortly after receiving the June 4 Communication, various Investors (“investor group(s)”18 began coordinating their efforts and organizing and holding regular meetings (which consistentl19 included hundreds of Investor participants). Various Investors created a Joinit website and aFacebook page, in an effort to track down Investors. Two ad hoc committees of investor groups20 were formed: The Ad Hoc LLC Members Committee and the Ad Hoc DOT Noteholders Committee21 By early July 2020, the investor groups grew to a few hundred Investor participants. The investor22 groups were also integral in the process of interviewing and selecting Michael Goldberg, an23 experienced Ponzi scheme bankruptcy professional, to oversee the Debtors for the benefit of the24 Investors and other stakeholders. 25 On July 16, 2020, Jacque Achsen, Samuel Goldberger, Elizabeth Goldblatt, Arthu26 Indenbaum, Andrew Michaels, Mary Michaels, and Joel Rubenzahl, each of whom assert they are27 creditors of PISF, commenced an involuntary chapter 11 bankruptcy action against PISF, Case No. 28

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1 20-30579 (the “PISF Case”). On July 26, 2020, PISF filed a consent to the entry of an order fo2 relief in the PISF Case, entered by the Bankruptcy Court on July 27, 2020. 3 On July 26, 2020, PFI (together with PISF, the “Original Debtors”) commenced it4 bankruptcy case, by filing a voluntary chapter 11 petition. On November 20, 2020, under authorit5 granted by the Bankruptcy Court, PFI commenced involuntary petitions and consented to orders for6 relief against twenty-nine (29) LLC/LP Debtors (the “November 2020 Debtors”). On December 11,7 2020, the Bankruptcy Court entered orders for relief against the November 2020 Debtors. Between 8 February 3-4, 2021, PFI filed involuntary chapter 11 petitions against ten (10) additional LLC 9 Debtors (the “February 2021 Debtors”), and the Bankruptcy Court subsequently entered orders for10 relief against these additional Debtors on February 18, 2021. All of the Debtors’ Chapter 11 Cases11 are jointly administered under Case No. 20-30604.15 12 PFI was unable to commence before the filing of the Plan involuntary petitions against two13 other affiliates involved in the Ponzi scheme: Professional Investors 28, LLC and PFI Glenwood14 LLC. Through the Plan, the Plan Proponents seek to have these two affiliates substantivel15 consolidated with the other Debtors, as discussed further herein and in the Plan. 16 Since the commencement of the Chapter 11 Cases, the Debtors have focused their attention17 on, among other things, (i) maintaining normal operations at their respective real property locations,18 (ii) responding to creditor inquiries about the Chapter 11 Cases, (iii) developing strategies to19 maintain the Debtors’ operations in bankruptcy and preserve their assets, and (iv) conferring withkey creditor constituencies regarding potential paths for resolving claims against PFI, PISF, and thei20 affiliated entities. 21 During the pendency of the Chapter 11 Cases, the Debtors, the Unsecured Creditors’22 Committee, and the Ad Hoc Committees each strived to achieve a global settlement for the benefit23 of the Estates and all stakeholders. After extensive discussions and negotiations undertaken in good24 25 26 15 An immediate effect of commencement of the Chapter 11 Cases was the imposition of the automatic staunder Bankruptcy Code section 362(a), which, with limited exceptions, enjoins the commencement o27 continuation of all collection efforts by Creditors, the enforcement of liens against property of the Debtorsand the continuation of litigation against the Debtors during the pendency of the Chapter 11 Cases. Th28

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1 faith and at arms’ length, the Debtors, the Unsecured Creditors’ Committee, and the Ad Hoc 2 Committees reached a settlement, the terms of which are incorporated into the Plan, as discussed3 more fully herein. III. 4 5 THE CHAPTER 11 CASES 6 A. First Day and Other Routine Orders and Employment Applications 7 The Debtors, as applicable, have filed motions and obtained approval for: 8 (i) joint administration of the cases [Docket Nos. 12, 302 and 412];169 (ii) payment to employees for prepetition obligations [Docket No. 186];10 (iii) maintenance of existing insurance policies and, in the LLC/LP Debtors’ cases,11 approval of postpetition financing of certain insurance premiums [Original Debtors - Docket Nos. 412 and 187; LLC/LP Debtors - Docket Nos. 309, 353, 385, 455];13 (iv) determining adequate assurance of payment for utility services [Docket Nos. 189,14 352 and 454]; and 15 (v) authorizing maintenance of existing bank accounts and continuity of cas16 management system, and authorizing certain intercompany transactions/transfers [Docket Nos. 232,17 354 and 453]. 18 The Debtors have obtained approval from the Bankruptcy Court to employ: 19 (i) Sheppard, Mullin, Richter & Hampton LLP as bankruptcy counsel [Docket Nos. 18and 345]; 20 (ii) Michael Hogan as Chief Restructuring Officer (until January 15, 2021) [Docket No. 21 202]; 22 (iii) Andrew Hinkelman as Chief Restructuring Officer, effective as of January 4, 202123 [Docket No. 442]; 24 (iv) Ragghianti Freitas LLP as special counsel [Docket No. 184];25 26 27 16 Unless otherwise stated, the docket numbers provided above are with respect to the Original Debtors ionly one item is listed and, if two or more items are listed, with respect to the Original Debtors, th28

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1 (v) Nardell Chitsaz & Associates as special real estate counsel [Docket Nos. 182 and2 348]; 3 (vi) Weinstein & Numbers LLP as special insurance coverage counsel [Docket No. 194];4 (vii) Trodella & Lapping LLP as conflicts counsel [Docket Nos. 181 and 346];5 (viii) Wilson, Elser, Moskowitz, Edelman & Dicker LLP as special litigation counsel6 [Docket No. 183]; 7 (ix) Michael Goldberg as the Debtors’ independent director [Docket No. 203];8 (x) FTI Consulting, Inc. as financial advisors [Docket No. 211];9 (xi) Silicon Valley Disposition, Inc. as auctioneer [Docket No. 231];10 (xii) Kimball, Tirey & St. John, LLP as special real estate counsel [Docket Nos. 285 and11 347]; 12 (xiii) Steven Kesten as special counsel for routine employment law matters [Docket No. 13 351]; and 14 (xiv) Armanino LLP, to provide transition services and tax advisory and accountin15 services, effective as of January 16, 2021 [Docket No. 436]. 16 B. Use of Cash Collateral 17 Upon a motion filed on July 30, 2020 [Docket No. 24], the Original Debtors requested an18 obtained permission to use cash collateral on an interim basis pursuant to order entered on August 7,19 2020 [Docket No. 47] and then on a final basis pursuant to an order entered on October 6, 2020[Docket No.178] (the “October 2020 Order”), to administer their Chapter 11 Cases and operate their20 businesses, including to pay taxes, maintain insurance, and pay other expenses in relation to the Rea21 Properties and other Estate Assets. The October 2020 Order continues to have effect, except to the22 extent inconsistent with or modified by the January 2021 Order (as defined below). 23 The November 2020 Debtors filed an emergency motion for use of cash collateral on24 December 16, 2020 [Docket No. 296], which was approved on an interim basis pursuant to an order25 entered on December 24, 2020 [Docket No. 311], and on a final basis pursuant to an order entered26 on January 19, 2021 [Docket No. 350] (“January 2021 Order”). 27 28

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1 On February 22, 2021, subsequent to the filing of the Chapter 11 Cases of the February 202 2 Debtors, all of the Debtors filed a motion [Docket No. 414] for interim and final orders authorizin3 the February 2021 Debtors to use cash collateral and for the other existing Debtors to continue to us4 cash collateral for payment of costs and expenses in the ordinary course of each Debtor’s business5 maintaining its real property assets. An interim order on this motion was entered on March 5, 20216 [Docket No. 452]. 7 C. Appointment of the Unsecured Creditors’ Committee 8 On August 19, 2020, the U.S. Trustee appointed the Unsecured Creditors’ Committee in th 9 Chapter 11 Cases of the Original Debtors [Docket No. 59]. The members of the Unsecured10 Creditors’ Committee are Peter and Anne Bagatelos Revocable Trust, Lisa de Mondesir, Elizabeth11 Goldblatt, Paul S. Greidanus, William Howard Levine, Keith Merron, and Pardi Revocable Trust. 12 The Unsecured Creditors’ Committee filed an application to employ Pachulski Stang Ziehl 13 Jones LLP as its bankruptcy counsel, which application was approved by an order entered on14 October 6, 2020 [Docket No. 185]. 15 D. Schedules and Statements of Financial Affairs 16 While the Debtors and their advisors have made their best effort to prepare the Schedules an17 Statements as accurately as possible, the Debtors stress that, in light of PFI’s prior mismanagement,18 the Schedules and Statements are incomplete and will likely contain information that will require19 revisions. Certain of the information contained in the Schedules and Statements are derived fromhistorical information maintained by former management, and substantial and material amounts of20 the information was generated as part of an ongoing forensic reconstruction of the Debtors’ books21 and records, which is not yet complete. 22 On August 18, 2020, PFI filed its Schedules and Statement of Financial Affairs [Docket Nos23 57 and 58]. On August 19, 2020, PISF filed its Schedules and Statement of Financial Affair24 [Docket Nos. 35 and 36]. Certain LLC/LP Debtors filed their respective Schedules and Statement25 of Financial Affairs in January 2021. The Schedules and Statements of Financial Affairs of the LLC26 Debtors’ whose Chapter 11 Cases were commenced in early February 2021 are anticipated to be27 28

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1 filed in March 2021. See https://www.donlinrecano.com/Clients/pfi/Static/soals (access to Filed 2 Schedules and Statements of Financial Affairs). 3 E. Claims Bar Dates 4 The initial deadline for non-governmental creditors to file proofs of claim against th 5 Original Debtors was November 23, 2020. Upon the Original Debtors’ motion filed on August 136 2020 [Docket No. 55], on August 14, 2020, the Bankruptcy Court entered an order temporaril7 suspending the claims bar date in order to give creditors reasonable time to file proofs of claim after8 review of the Debtors’ Schedules, pending further Bankruptcy Court order or notice [Docket No. 9 56]. Although no deadline(s) have yet been set for the filing of proofs of claim, contemporaneousl10 with the filing of the Plan and this Disclosure Statement, the Debtors are filing a motion with the11 Bankruptcy Court to establish a deadline for filing proofs of claim for all creditors, other tha12 Investors. 13 As of February 15, 2021, approximately 178 proofs of claim have been filed. The Debtor14 have not completed claim reconciliation work and do not anticipate doing so before the Effective15 Date of the Plan, including claim reconciliations necessary to prepare the Schedule of Allowed16 Netted Claims to determine each of the “netted” Investor Claim amounts. As set forth in the Plan,17 the Debtors or the PFI Trust, as applicable, will seek Bankruptcy Court approval to establish a bar18 date for Investors and special procedures for the allowance of Investor Claims for distribution19 purposes, including approval of the Schedule of Allowed Netted Claims, which will be filed as aseparate motion at a later date. 20 F. Post-Petition Operations 21 Following the filing of their respective Chapter 11 Case, the Debtors continued to operate22 their business and manage the Real Properties. However, the Debtors have ceased making23 distributions to Investors or making new investments. The Debtors’ revenue and financial results ar24 set forth in their monthly operating reports filed on September 21, 2020 [Docket No. 147], Octobe25 21, 2020 [Docket No. 216], November 23, 2020 [Docket No. 268], December 21, 2020 [Docket No. 26 304], January 26, 2021 [Docket No. 375], and February 26, 2021 [Docket No. 433]. 27 28

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1 G. Wallach Related Agreements 2 On November 19, 2020, the Debtors filed a Motion for an Order Authorizing the Debtors t3 (I) Assume Partial Restitution Agreements, (II) Enter Into Side Letters Regarding Partial Restitution 4 Agreements, and (III) Perform Obligations Thereunder (the “Restitution Motion”) [Docket No. 261]5 which was approved by an order entered on December 4, 2020 [Docket No. 281]. Pursuant to the6 order, the Bankruptcy Court approved (1) partial restitution agreements entered into on July 25, 2027 between the Debtors and Wallach regarding real properties located at (a) 3830 Hayvenhurst Drive, 8 Encino, California 91436 (the “Encino Property”) and (b) 19236 Pacific Coast Highway, Malibu 9 California 90265 (the “Malibu Property”), under which Wallach agreed to convey the Encino10 Property and the Malibu Property to PISF, to be credited towards any restitution judgment obtaine11 in any future criminal or civil proceedings against Wallach arising from his conduct as an employee12 of PFI; and (2) a separate side letter agreement entered into on November 16, 2020 between the13 Debtors and Wallach, clarifying the Debtors’ and Wallach’s shared understanding that the value14 credited toward any applicable restitution Wallach is determined to owe is based on the net amount15 PISF receives from the sale of each of the Encino Property and Malibu Property, and not on th16 gross sales price of each such property. 17 Upon their motion [Docket No. 389], the Debtors also sought approval of a separate Partial18 Restitution Agreement with Wallach, pursuant to which PFI and PISF would recover $645,500 i19 funds Wallach had disbursed from his 401(k) plan (then in Wallach’s counsel’s trust account) andany proceeds otherwise due to Wallach upon release of the $500,000 appearance bond posted in20 connection with federal criminal proceedings against Wallach. The parties’ agreement allows21 Wallach’s counsel to retain $75,000, only to be used to Wallach’s legal fees incurred in connection22 with his cooperation with the Debtors and their advisors to identify assets belonging to the Debtors23 or in which the Debtors may have an economic interest, to assist the Debtors and their attorneys in24 recovering assets for the Estates’ benefit, and to assist in the Debtors’ ongoing forensic25 investigation. The Bankruptcy Court entered an order on February 11, 2021 approving the Debtors26 motion [Docket No. 402]. 27 28

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1 H. Denial of the U.S. Trustee’s Motion to Appoint a Trustee or Examiner 2 On August 24, 2020, the U.S. Trustee filed a motion [Docket No. 71] for the appointment o3 a chapter 11 trustee for the Original Debtors, or alternatively, an examiner, so that a neutral person4 could investigate the fraudulent and other improper mismanagement of the Debtors’ affairs as5 discussed herein. The Original Debtors and the Unsecured Creditors’ Committee each argued that a6 trustee or examiner was not needed or appropriate, given, among other things, the Debtors are being7 operated with new independent and disinterested management, including Michael Hogan, the 8 Debtors’ Chief Restructuring Officer, who was installed in June 2020 following the resignations of9 the Debtors’ then-officers upon discovery of the Debtors’ fraudulent actions, and Michael Goldberg,10 who was chosen by a group of hundreds of the Debtors’ Investors after a lengthy creditor vetting11 process, as the Debtors’ independent director in early August 2020. Further, the Debtors, with12 replacement management, will have the forensic assistance of FTI, which had a similar role in the13 SIPA and chapter 11 cases, respectively, of Madoff and Woodbridge involving prepetition Ponz14 schemes. After a hearing on the motion on October 1, 2020, the Bankruptcy Court entered an order15 denying the U.S. Trustee’s motion [Docket No. 171]. 16 I. Motion for Authorization to File Involuntary Bankruptcy Petitions Against17 Related Entities 18 On October 29, 2020, the Original Debtors filed a motion (the “Related Entities Motion”) fo19 authorization for PFI to file involuntary bankruptcy petitions against limited partnerships and limiteliability companies in which PFI has an ownership interest and to consent to entry of orders for relie20 against such related entities. As explained in the Related Entities Motion, unless the related entities21 – the LLC/LP Debtors – become chapter 11 debtors, the Original Debtors would be severel22 hampered in their efforts to fully resolve their creditors’ claims and reorganize their affairs in a23 manner that would provide the framework for a global resolution for the benefit of the victims i24 these cases. As described herein, the fraud committed by the Debtors’ prior management pervaded25 both the Debtors and the related entities – which fraud has given rise to a thicket of claims against26 and among the Debtors and has likely rendered each related entities’ principal asset, a specific piece27 of real property, unmarketable under the existing circumstances. To successfully resolve their28

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1 bankruptcy cases, the claims against and among the Debtors must be dealt with, various pre-petition2 transfers must be addressed, and all of this, if it is to result in an equitable and value maximizing3 outcome for creditors, must be done in an organized and comprehensive manner. Such4 comprehensive relief can be achieved before the Bankruptcy Court once jurisdiction over all of the5 necessary entities is obtained. However, absent the relief requested in the motion, the Original 6 Debtors do not believe they would have the corporate authority to unilaterally commence voluntar7 bankruptcy filings for all of the related entities. Accordingly, the Original Debtors filed the motion,8 and it was granted pursuant to an order entered on November 19, 2020 (the “Affiliate Filing Order”)9 [Docket No. 260]. Pursuant to this order, the Original Debtors proceeded to commence the10 bankruptcy cases of certain LLC/LP Debtors, by filing involuntary petitions against the LLC/LP11 Debtors on November 20, 2020, February 3, 2021 and February 4, 2021, as applicable. A12 authorized under the Affiliate Filing Order, PFI consented to the entry of the orders for relief against13 the LLC/LP Debtors. 14 J. Extension of Exclusivity Periods 15 On November 23, 2020, the Original Debtors filed the Debtors’ Motion for Extension o16 Exclusive Periods to File a Plan and Solicit Acceptances Thereto [Docket No. 266] (the17 “Exclusivity Motion”). In light of the complexity of these cases, the effort to unravel years’ worth o18 fraud by prior management that affected over 1,000 creditors, rendered approximately 70 Real19 Properties owned directly or indirectly by the Debtors unmarketable, and encompassed dozens ofentities related to the Debtors, the Original Debtors requested 90-day extensions of the Debtors’20 exclusive periods to (i) file a proposed chapter 11 plan (the “Plan Period”), and (ii) solicit21 acceptances of the plan without competing plan filings (the “Solicitation Period”). On December 11,22 2020, the Bankruptcy Court entered an order granting the Exclusivity Motion and extending (i) th23 Plan Period for each Original Debtor to February 26, 2021, and (ii) the Solicitation Period for eac24 Original Debtor to April 30, 2021 [Docket No. 287]. 25 K. Motion for Approval of the Committee Agreement with the Ad Hoc Committees26 The Original Debtors filed a motion [Docket No. 112] for approval of an agreement (as27 updated and modified, in the form attached to a September 17, 2020 notice [Docket No. 126], th28

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1 “Committee Agreement”) by and among the Debtors (with the authorization of Debtors’ independen2 director, Michael Goldberg), the Unsecured Creditors’ Committee, the Ad Hoc LLC Members 3 Committee, and the Ad Hoc DOT Noteholders Committee, pursuant to which the Debtors agreed to4 pay, up to the amount of the agreed budgets or such other amounts as ordered by the Bankruptc 5 Court, subject to Bankruptcy Court approval and to the terms of the Committee Agreement, the6 reasonable and documented fees and expenses of the members of the two Ad Hoc Committees, any7 consultants they engage and their respective counsel (Sklar Kirsh, LLP, retained by the Ad Hoc LLC 8 Members Committee, and Baker & Hostetler LLP, retained by the Ad Hoc DOT Noteholders 9 Committee). 10 The Debtors recognized that it would be nearly impossible and prohibitively expensive fo11 the Debtors to engage in negotiations with the full body of Investors. The formation of the Ad Hoc12 Committees, in conjunction with the Unsecured Creditors’ Committee, provides the Debtors with a13 cost-effective opportunity to engage in meaningful and productive negotiations with much more14 manageably sized groups that advocate for the differing constituents that comprise nearly the whole15 investor group. The Bankruptcy Court approved the Committee Agreement pursuant to an amende16 order entered on October 9, 2020 [Docket No. 204]. 17 L. Pending Investigations/Proceedings 18 The Debtors continue to cooperate with the SEC; as noted, the SEC commenced in or abou19 May 2020 an investigation into the structure and investment history of the Debtors. The Debtorsanticipate, if necessary, cooperating with other government entities in their investigations of the20 Debtors in relation to the purportedly fraudulent scheme operated by Casey and others. 21 M. Plan Negotiations and the Settlement Under the Plan 22 With the installation of new management, the preferred path of the Debtors and thei23 professionals was to build consensus with the Unsecured Creditors’ Committee and other ke24 constituencies, including those represented by the two Ad Hoc Committees, and reach an agreement25 that would provide for a prompt and orderly path out of bankruptcy for the Debtors and woul26 conserve the Estates’ resources for the benefit of all Investors and other creditors. 27 28

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1 The negotiations were ultimately fruitful, as they resulted in the Debtors, the Unsecured 2 Creditors’ Committee, and the Ad Hoc Committees reaching an agreement in principle regarding th3 fundamental terms of a chapter 11 plan. After many weeks of further discussion and negotiations4 with the Ad Hoc Committees, the Debtors and the Unsecured Creditors’ Committee finalized and5 filed the Plan, which incorporates the parties’ settlement. IV. 6 7 OVERVIEW OF PROVISIONS RELATING TO THE GLOBAL COMPROMISE AND 8 SETTLEMENT SUPPORTING THE PLAN STRUCTURE 9 This section provides a brief summary of certain special provisions and elements of the Plan,10 and is qualified in its entirety by reference to the Plan (as well as the exhibits thereto and definitions11 therein). The statements contained in this Disclosure Statement do not purport to be precise or12 complete statements of all the terms and provisions of the Plan or documents referred to therein, and13 reference is made to the Plan and to such documents for the full and complete statement of such14 terms and provisions. 15 A. Comprehensive Compromise and Settlement Under the Plan16 Pursuant to Bankruptcy Code sections 1123(a)(5), 1123(b)(3), and 1123(b)(6), as well a17 Bankruptcy Rule 9019, and in consideration for the Distributions and other benefits provided unde18 the Plan, the provisions of the Plan will constitute a good faith compromise and settlement of all19 claims and controversies relating to the rights that a Holder of a Claim or an Equity Interest mahave against any Debtor with respect to any Claim, Equity Interest, or any Distribution on account20 thereof, as well as all potential Intercompany Claims, Liens, and Causes of Action against any21 Debtor. The entry of the Confirmation Order will constitute the Bankruptcy Court’s approval, as of22 the Effective Date, of the compromise or settlement of all such claims or controversies and the23 Bankruptcy Court’s finding that all such compromises or settlements are (i) in the best interest of th24 Debtors, the Estates, and their respective property and stakeholders; and (ii) fair, equitable, and25 reasonable. 26 The Plan Proponents believe that the comprehensive compromises and settlements to be27 effected by the Plan are appropriate for several reasons and intend to request that the Bankruptc28

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1 Court approve the compromises and settlements contemporaneously with the Confirmation Hearing. 2 In particular, the compromises and settlements are a critical component of the Plan and are designed3 to provide a resolution of myriad disputed intercompany and intercreditor Claims, Liens, and Cause4 of Action that otherwise could take years of protracted litigation to resolve, which would delay and5 reduce the Distributions that ultimately would be available for all Creditors. 6 Among those many disputed matters that will be resolved through the Plan are the followin7 complex matters, any one of which could be the subject of years of expensive, complicated, and8 uncertain litigation: 9 1. Substantive Consolidation Issues 10 Substantive consolidation is a construct of federal common law, emanating from equity11 which treats separate legal entities as if they were merged into a single survivor left with all the12 cumulative assets and liabilities, save for inter-entity liabilities, which are erased. In these Chapter13 11 Cases, a compelling argument could be made for complete substantive consolidation of all the14 Debtors and two non-debtor affiliates (the Plan-Consolidated Debtors). Although creditors generall15 may not have treated all of the Debtors and their non-debtor affiliates as one legal entity, there is16 very substantial scrambling and commingling of assets and liabilities among the Debtors and the tw17 non-debtor affiliates. See, e.g., In re Bonham, 229 F.3d 750, 764-65 (9th Cir. 2000) (consolidatin18 debtor and non-debtor entities in Ponzi scheme case). 19 The Plan here provides for substantive consolidation of the Debtors’ and their non-debtoaffiliates’ assets and liabilities for the purposes of distributions under the Plan. The Plan Proponents20 and the PFI Trustee, at their election and after considering various tax implications, may elect to ves21 the OpCo Assets (which includes all of the Real Properties) so that the OpCo holds them either22 directly or indirectly through one or more of the remaining Debtors, as to be set forth, if applicable,23 in the Alternative Restructuring Transactions Memorandum to be Filed with the Bankruptcy Court24 prior to the Confirmation Hearing. 25 Consistent with the substantive consolidation contemplated by the Plan and in order t26 reduce administrative costs, subject to any Alternative Restructuring Transactions, on the Effective27 Date, PFI and PISF, and at the election of the Plan Proponents and the PFI Trustee, some or all of th28

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1 other Debtors will be dissolved automatically without the need for any corporate action or approval,2 without the need for any corporate filings, and without the need for any other or further actions to be3 taken on behalf of such dissolving Debtor or any other Person or any payments to be made in4 connection therewith. The Debtors’ Real Properties and other OpCo Assets will be vested in a new5 entity, the OpCo or its wholly owned remaining Debtor subsidiaries, as applicable. 6 The substantive consolidation effected pursuant to the Plan shall not affect, withou7 limitation, (i) the defenses of the Debtors, the OpCo, any remaining Debtors as of the Effective Date8 (if applicable), or the PFI Trust to any Claim, Cause of Action or Avoidance Action, including the9 ability to assert any counterclaim; (ii) the setoff or recoupment rights of the Debtors, the OpCo, an10 remaining Debtors, or the PFI Trust; (iii) requirements for any third party to establish mutuality prio11 to substantive consolidation in order to assert a right of setoff against the Debtors, the OpCo, an12 remaining Debtors, or the PFI Trust; or (iv) distributions to the Debtors, the OpCo, any remainin13 Debtors, the Estates or the PFI Trust out of any insurance policies or proceeds of such policies. 14 2. Ponzi Scheme Issues 15 Additional disputes and possible litigation could arise regarding whether the Debtors were16 operating a Ponzi scheme, when that scheme began, and the implications of such conduct. 17 As discussed above, the Debtors’ advisors have preliminarily found that (i) no later than January 1,18 2007, the Debtors’ business records and other available evidence presents attributes commonly seen19 in Ponzi schemes, and such attributes continued through Casey’s death; (ii) many Debtors had eithernegative equity or a disabling lack of liquidity that demanded the use of cash belonging to other20 related entities; (iii) the “debt service” and investment returns paid to Investors could never have21 been paid without the use of new capital from new Investors because the Real Properties were not22 sufficiently profitable to have done so; (iv) the Debtors’ cash flows were commingled, and this23 commingling was a prevalent feature of the Debtors’ operations; and (v) Casey and Wallach24 removed millions of dollars from the Debtors. 25 Following a judicial determination that the Debtors were operating a Ponzi scheme, an26 payments of “interest” or other consideration that was transferred from any Person to an Investor27 during the period before the Petition Date, but typically excluding payments representing the return28

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1 of or repayment of principal owed on the applicable investment, could potentially be avoided and2 recovered as an “actual” fraudulent transfer. See, e.g., Donell v. Kowell, 533 F.3d 762, 770-72 (9th 3 Cir. 2008); AFI Holding, Inc. v. Mackenzie, 525 F.3d 700, 708-09 (9th Cir. 2008); Perkins v. Haines4 661 F.3d 623, 627 (11th Cir. 2011); Geltzer v. Barish (In re Geltzer), 502 B.R. 760, 770 (Bankr 5 S.D.N.Y. 2013); Fisher v. Sellis (In re Lake States Commodities, Inc.), 253 B.R. 866, 871-72 (Bankr 6 N.D. Ill. 2000). Because avoidance litigation would be a further hardship on the victims of the 7 Debtors’ fraudulent scheme, and to eliminate the significant litigation expense and inefficiency8 associated with seeking recovery from Investors of prepetition distributions on account of interest or9 the like (that would ultimately only reduce the aggregate amount available for distribution on10 account of allowable claims), the Plan incorporates a netting mechanism that will account for an11 Prepetition Distribution received by an Investor when calculating the net claim amounts that will in12 turn drive the specific Distributions that such Investor will receive under the Plan. 13 Specifically, the Plan incorporates a “netting” mechanism where distributions of PFI Trust14 Interests will be made based on the applicable Investor’s net claim – roughly, the total principal15 invested less all payments received from the Debtors since January 1, 2007, whether denominated as16 interest, principal, return of capital, referral fees or otherwise. The net claim also will be reduced to17 the extent an Investor recovers from a third party, such as insurance or litigation against an18 investment adviser. 19 The PFI Trust will be responsible for creating, based on the Debtors’ books and records, aSchedule of Allowed Netted Claims, and will cause such Schedule of Allowed Netted Claims, or an20 applicable portion thereof, to be served on Investors that indicates both the Outstanding Principal21 Amount and the Prepetition Distributions for each Investor that is not an Excluded Party. 22 If an Investor disputes the amount of his, her or its Outstanding Principal Amount and th23 Prepetition Distributions set forth in the Schedule of Allowed Netted Claims by following th24 applicable objection procedures and deadlines, such Investor shall be deemed a Disputing Claimant25 with a Disputed Claim, and shall be subject to the procedures, deadlines and treatment for Disputed26 Claims. The PFI Trust and the PFI Trustee reserve all rights to object to the validity, amount or an27 other aspect of a Claim held by a Disputing Claimant. In addition, the Debtors and the PFI Trust28

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1 reserve any and all Causes of Action and Avoidance Actions that may exist regarding a Disputing 2 Claimant, all of which the PFI Trust may pursue on or after the Effective Date in accordance with3 the Plan. 4 3. Proposed Settlement Relating to DOT Noteholder Claims 5 Prior to the filing of the Chapter 11 Cases, the Debtors extensively commingled cash6 generated from rents from the Real Properties, and used the cash wherever PFI decided cash was7 needed (see Article II.B.3, above). PFI also took cash-out refinancings of several properties that8 were encumbered by DOT Noteholders’ Deeds of Trust and used some loan proceeds to pa9 expenses on properties owned by LLCs and LPs that were not encumbered by DOT Noteholders’10 Deeds of Trust. The net result of PFI’s activities is that several million dollars of value in the11 properties securing the DOT Noteholders’ Deeds of Trust was diverted from the properties before12 bankruptcy leaving less equity value to satisfy DOT Noteholders’ claims on a property-by-propert13 basis. In addition, the Ad Hoc DOT Noteholders Committee conducted an investigation of DOT14 Noteholders’ Deeds of Trust, including examining the public real property records and15 documentation obtained from numerous DOT Noteholders. The investigation disclosed that PF16 engaged in improprieties with respect to the DOT Noteholders’ Deeds of Trust that may cause17 substantially all of the liens securing the DOT Noteholder Claims to be subject to avoidance18 pursuant to claims brought by the Debtors or PFI Trustee under 11 U.S.C. §§ 544 and 548. I19 particular, the Debtors appointed affiliates to serve as the trustee under the DOT Noteholders’ Deedof Trust for the purpose of enabling the Debtors to periodically remove the liens of the DO20 Noteholders from the record of title without the knowledge or informed consent of the DO21 Noteholders. Based on the foregoing, the Ad Hoc DOT Noteholders Committee concluded that22 DOT Noteholders collectively will receive a better recovery under a one-pot plan in which the23 proceeds of sales of all Real Properties and litigation recoveries are pooled together and all Investor24 receive equal distributions on account of their Allowed Claims. 25 As set forth more fully in the Plan, to the extent (a) the Real Properties securing the liens of26 DOT Noteholders have not been sold prior to the Effective Date, or (b) the liens of DO27 Noteholders have attached to the proceeds of the sale of any Real Properties and have not been28

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1 otherwise removed and expunged pursuant to an order of the Bankruptcy Court, the Plan proposes a2 compromise of DOT Noteholder Claims as follows: (1) DOT Noteholders will be treated as general3 unsecured creditors for purposes of distribution; and (2) the Confirmation Order shall includ4 provisions expunging the liens of the DOT Noteholders from the records of the Real Properties, or5 the proceeds of sales thereof, unless such expungement is challenged. 6 Any DOT Noteholder that wishes to challenge the expungement of its lien shall file an7 objection with the Bankruptcy Court no later than twenty (20) days after entry of the Confirmatio 8 Order. The PFI Trustee shall file its Avoidance Action in response to such an objection no later than9 thirty (30) days after service of the objection. 10 Expungement of the liens of the DOT Noteholders shall become effective with respect to11 each DOT Noteholder and Real Property, or sale proceeds thereof, on the later of (a) the thirtieth12 (30th) day after the occurrence of the Effective Date, or (b) in the event of a timely expungement13 challenge, entry of a final order adjudicating an Avoidance Action with respect to a lien on that Real14 Property. 15 During the pendency of the Avoidance Action, the Claim of such objecting DOT Noteholder16 shall be deemed to be a Disputed Claim. 17 Without the foregoing Plan compromise, the Debtors would have been required to spen18 hundreds of thousands of dollars prosecuting Avoidance Actions against hundreds of DOT19 Noteholders based on thousands of transfers involving thirty (30) Real Properties. Such AvoidanceActions would be necessary to clear title to the properties to facilitate sales or refinancings of the20 properties under the Plan. The compromise saves the expense to the Estates of pursuing such21 Avoidance Actions to judgment. 22 4. Proposed Settlement Relating to PFI LLC Members 23 The LLC/LP Debtors, which own over one-half of the Real Properties, were placed into24 bankruptcy protection prior to the filing of the Plan pursuant to a process negotiated among the Ad25 Hoc LLC Members Committee, the Debtors and the other Committees. This strategic decision was26 done, in part, to enable the LLC/LP Debtors to preserve the value of the Real Properties for the27 benefit of their Investors and creditors (including through the benefit of the automatic stay), and28

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1 facilitate a process to maximize the value of their real estate portfolio through the removal of an2 “taint” caused by the prepetition Ponzi scheme. Further, in order to ensure equal treatment for all 3 Investors who are victims of the Ponzi (since funds of each investor group were unknowingly used4 to fund the investments of other investor groups – see Article II.B.1, above), the Ad Hoc LLC 5 Members Committee, the Debtors and the other Committees collectively agreed to a compromise6 pursuant to which (1) all of the Real Properties, however title was held, will be consolidated and the7 proceeds of the income and/or disposition of the Real Properties will be distributed to all Investors8 and other creditors as provided in the Plan; and (2) all equity interests of Investors in the LLC/LP 9 Debtors will be elevated to debt relating back to the date of their investments so that such Investors10 will receive distributions under the Plan in the same ranking as PISF Straight Noteholders and DOT11 Noteholders. 12 5. Proposed Settlement Relating to TIC Interests 13 Holders of TIC Claims have the option of being treated as Holders of Class 7 Other14 Unsecured Claims and maintain their TIC Interest ownership in an amount equal to such the15 ownership percentage in the Real Property (as set forth in thegrant deed of the Real Property, unless16 there is an applicable TIC Agreement, in which case the ownership percentage in the TIC Agreemen17 will control). Such TIC Interests shall not be substantively consolidated under the Plan and will not18 be treated as Estate Assets, PFI Trust Assets or OpCo Assets. However, to the extent a TIC Interest19 was obtained using rolled over funds or funds that were otherwise commingled or traceable to PFI,the Debtors or PFI Trust, as applicable, reserves all rights in connection therewith. 20 Alternatively, Holders of TIC Claims may transfer their TIC Interests to the Debtors or PF21 Trust, as applicable, and elect to be treated as Investors. If such a election is made, the TIC Claim22 will be calculated using the same netting and aggregation principles applicable to Investors and set23 forth in the Special Provisions Relating to Investor Claims and Special Provisions Relating to24 Individual Investor-Specific Claims (Plan sections 2.11.2 and 2.11.3, respectively). 25 6. 5. Provisions Relating to Avoidance Actions and Other Causes of Actions26 To the extent, and only to the extent, an Investor’s Claim is Allowed, no Avoidance Actio27 may be brought, directly or indirectly, on account of a payment to an Investor outside the Investor28

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1 Lookback Period, unless such Investor is an Excluded Party. The PFI Trustee also shall have2 discretion, subject to the PFI Trust Agreement, in determining whether and how to make demand3 upon, or sue, Investors with a Net Prepetition Investor Recovery, including but not limited to th4 discretion not to bring suit or make a demand because of the Investor’s financial hardship. That5 discretion shall be exercised in accordance with guidelines (i) agreed to by the Committees before6 the Effective Date, or, if no such guidelines are agreed to (ii) developed by the PFI Trustee and7 approved by the BOV subject to the PFI Trust Agreement. 8 Finally, nothing in the Plan will impair the right of Investors to independently pursue claim9 in which they have independent legal standing against third parties that are unique to such Investors10 (“Individual Investor-Specific Claims”). By way of example, and not limitation, such unique claims11 include claims based on loss of lien or loss of lien priority, claims against investors’ professional12 advisors, claims against retirement servicers and similar claims that may be asserted based on such13 investors’ particular circumstances. The Individual Investor-Specific Claims do not include Investor14 Claims common to all Investors and/or claims to recover commissions or referral fees paid by the15 Debtors to third parties in connection with an Investor’s investment with the Debtors. 16 B. The Settlement Provisions in the Plan are Fair and Reasonable and in the Best17 Interest of All Creditors. 18 In sum, the Plan facilitates the near-term resolution of the myriad complex legal issues and19 disputes that have arisen in the Chapter 11 Cases. The proposed Plan resolves several major issuesthat would otherwise have to be judicially determined through lengthy, expensive, and inherentl20 uncertain litigation. Moreover, if such issues were litigated, it could be years before Investors21 received distributions, if any, from the PFI Trust. In contrast, the Plan provides a mechanism for22 significant Distributions to be made to these Creditors in a more timely and orderly fashion. 23 The Plan also is a vehicle to clear the “taint” of the prepetition fraudulent enterprise from the24 real estate assets. Absent the proposed restructuring, which includes substantive consolidation of th25 LLC Debtors’ valuable real estate assets and the removal of all Investor liens from the Real26 Properties, it would be impossible to monetize the assets without severely diminishing their value. 27 28

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1 Furthermore, the Plan Proponents are strongly of the view that all elements of th2 comprehensive compromise and settlement to be effected under the Plan are superior to the3 disorderly and uncertain alternatives. The terms of the global resolution under the Plan were heavil4 negotiated by the Debtors, the Unsecured Creditors’ Committee, and the two Ad Hoc Committees,5 each of which acted at arm’s length and had the benefit of sophisticated external advisers. 6 Here, the Plan Proponents believe that consideration of the foregoing factors demonstrates7 that the terms of the comprehensive compromise and settlement to be effected by the Plan are fair8 and reasonable, and that its approval is in the best interests of the Estates and all stakeholders. The 9 Plan Proponents will provide further evidence and argument supporting approval of thi10 comprehensive compromise and settlement, including the elements detailed above, at the11 Confirmation Hearing. V. 12 13 RISK FACTORS 14 Prior to voting on the Plan, each Holder of a Claim or Equity Interest entitled to vote shoul15 consider carefully the risk factors described below, as well as all other information contained in this16 Disclosure Statement, including the schedules and exhibits hereto. These risk factors should not be17 regarded as the only risks involved in connection with the Plan and its implementation. 18 A. Parties May Object to the Plan’s Classification of Claims and Equity Interests19 Bankruptcy Code section 1122 provides that a plan may place a claim or an interest in aparticular class only if such claim or interest is substantially similar to the other claims or interests i20 such class. The Plan Proponents believe that the classification of the Claims and Equity Interests21 under the Plan complies with this requirement. Nevertheless, there can be no assurance that the22 Bankruptcy Court will reach the same conclusion. 23 B. The Plan Proponents May Not Be Able to Obtain Confirmation of the Plan24 With regard to any proposed plan, the Plan Proponents may not receive the requisit25 acceptances to confirm a plan. In the event that votes with respect to Claims in the Classes entitled26 to vote are received in number and amount sufficient to enable the Bankruptcy Court to confirm the27 Plan, the Plan Proponents intend to seek Confirmation of the Plan by the Bankruptcy Court. If th28

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1 requisite acceptances are not received, the Plan Proponents may not be able to obtain Confirmation2 of the Plan. Even if the requisite acceptances of the proposed Plan are received, the Bankruptc 3 Court still might not confirm the Plan as proposed if the Bankruptcy Court finds that any of th4 statutory requirements for confirmation under Bankruptcy Code section 1129 have not been met. 5 If the Plan is not confirmed by the Bankruptcy Court, there can be no assurance that an6 alternative plan would be on terms as favorable to any Holders of Claims as the terms of the Plan. In7 addition, there can be no assurance that the Plan Proponents will be able to successfully develop,8 prosecute, confirm, and consummate an alternative plan that is acceptable to the Bankruptcy Court9 and the Debtors’ creditors. 10 C. The Conditions Precedent to the Effective Date of the Plan May Not Occur11 As more fully set forth in the Plan, the Effective Date is subject to several conditions12 precedent. There can be no assurance that any or all of such conditions will be satisfied (or waived). 13 If such conditions precedent are not met or waived, the Effective Date will not occur. Accordingly,14 even if the Plan is confirmed by the Bankruptcy Court, there can be no assurance that the Effective15 Date will occur. 16 D. Claims Estimation and Allowance of Claims 17 There can be no assurance that the estimated Claim amounts set forth in this Disclosure18 Statement are correct, and the actual amount of Allowed Claims may differ significantly from the19 estimates. The estimated amounts are subject to certain risks, uncertainties, and assumptions. Shoulone or more of these risks or uncertainties materialize, or should underlying assumptions prove20 incorrect, the actual amount of Allowed Claims may vary from those estimated herein. 21 Distributions to Holders of Allowed Class 4, Class 5, and Class 6, and Class 7 Claims will b22 affected by the pool of Allowed Claims in each respective Class. Upon completion of further23 analysis of Filed Claims, which will likely lead to Claims objection litigation and related matters, th24 total amount of Claims that ultimately become Allowed Claims in each Class may differ from the25 Debtors’ estimates, and such difference could be material. As a result, the amount of Distributions26 that may be received by a particular Holder of an Allowed Claim in Class 4, Class 5, or Class 6 or27 28

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1 Class 7 may be either adversely or favorably affected by the aggregate amount of Claims ultimately 2 Allowed. 3 E. Potential Pursuit of PFI Trust Actions Against Creditors and Others 4 In accordance with Bankruptcy Code section 1123(b), after the Effective Date, the PF 5 Trustee shall have and retain and may enforce any PFI Trust Actions. Accordingly, a Holder of a 6 Claim may be subject to one or more such PFI Trust Actions being asserted against it. 7 The failure to specifically identify in the Disclosure Statement or the Plan any potential or8 existing Avoidance Actions or Causes of Action as a PFI Trust Action is not intended to and shall9 not limit the rights of thePFI Trust to pursue any such Avoidance Actions or Causes of Action. The10 Debtors expressly reserve all Avoidance Actions and Causes of Action, other than those Avoidance11 Actions and Causes of Action that are expressly waived, relinquished, released, compromised, or12 settled in the Plan, pursuant to the Confirmation Order, or pursuant to any other order of th13 Bankruptcy Court, as PFI Trust Actions for later adjudication, and no preclusion doctrine (includin14 the doctrines of res judicata, collateral estoppel, judicial estoppel, equitable estoppel, issue15 preclusion, claim preclusion, and laches) shall apply to such Avoidance Actions or Causes of Action16 as PFI Trust Actions on or after the Effective Date. 17 Moreover, no Person may rely on the absence of a specific reference in the Plan, the18 Confirmation Order, the PFI Trust Agreement, or the Disclosure Statement to any Contribute19 Claims against such Person as any indication that the PFI Trust will not pursue any and all availableContributed Claims against such Person. The objection to the Allowance of any Claims will not in20 any way limit the ability or the right of the PFI Trust to assert, commence, or prosecute an21 Contributed Claims. Nothing contained in the Plan, the Confirmation Order, the PFI Trus22 Agreement, or the Disclosure Statement will be deemed to be a waiver, release, or relinquishment of23 any Contributed Claims which the Contributing Claimants had immediately prior to the Effectiv24 Date. The PFI Trust shall have, retain, reserve, and be entitled to assert all Contributed Claims full25 as if the Contributed Claims had not been contributed to the PFI Trust in accordance with the Plan26 and the PFI Trust Agreement. 27 28

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1 Without limiting the generality of the preceding two paragraphs and associated reservations,2 the Debtors note that all parties in interest should review Exhibit D, which is a non-exclusive3 analysis of the PFI Trust Actions that are being preserved under the Plan. 4 F. Risks Regarding Real Estate 5 Subject to any Alternative Restructuring Transactions, the Plan relies, in large part, on the 6 OpCo generating proceeds from rental operations and/or the sale of the Real Properties to produce 7 Cash for distribution to creditors. In the event that rental income is insufficient to cover costs8 incurred in maintaining and operating the Real Properties, sales are delayed, costs incurred with9 respect to the Real Properties prior to sale exceed estimates, or markets decline due to economic10 conditions or other constraints, payments may be correspondingly delayed. 11 The OpCo’s ability to monetize the OpCo Assets is subject to certain risks associated with12 the real estate industry in general, including: economic conditions; the supply and demand for13 properties, particularly of the sorts owned or controlled by the Debtors; the potential impact of14 COVID on demand for the types of properties owned by the Debtors; the financial conditions for15 tenants, buyers, and sellers of properties; changes in interest rates; changes in environmental laws or16 regulations, planning laws and other governmental roles and fiscal and monetary policies; changes i17 real property tax rates and related tax deductions; negative developments in the economy that18 depress travel and retail activity; uninsured casualties; force majeure acts, terrorist events,19 under-insured or uninsurable losses; and other factors that are beyond the reasonable control of theOpCo. In addition, real estate assets are subject to long-term cyclical trends that can give rise to20 significant volatility in values. Real estate investing and development may be subject to a higher21 degree of market risk because of concentration in a specific industry, sector, or geographic sector. 22 Real estate investments may be subject to other general and specific risks, including declines in the23 value of real estate generally, risks related to general and economic conditions, changes in the value24 of the comparable properties, and defaults by real estate borrowers within the particular market or25 the broader economy. 26 Also, a variety of work is projected to be undertaken with respect to the real estate to be sold27 the cost of which is not susceptible to precise determination. Unexpected conditions at the28

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1 properties, weather, labor issues and a variety of other variables may affect the actual cost of the2 projected work being undertaken and thus affect, potentially adversely, the net proceeds of the sales3 of the real estate. 4 G. Securities Law Considerations 5 There are several material securities law considerations, risks, and uncertainties associated6 with consummation of the Plan. Holders of Claims, Holders of Equity Interests, and other interested7 parties should read carefully the discussion set forth in Article VII for a discussion of certain8 securities law consequences of the transactions contemplated under the Plan. 9 Holders of Claims or Equity Interests should consult their own advisors regarding an10 securities law consequences of the treatment of their Claims or Equity Interests under the Plan. 11 Under the terms of the PFI Trust Agreement, the PFI Trust Interests initially will b12 uncertificated and subject to the Transfer Restrictions as set forth in the PFI Trust Agreement. 13 Under the Transfer Restrictions, the PFI Trust Interests cannot be assigned or transferred by any14 holder thereof other than by will or intestate succession upon the death of such holder or otherwise15 by operation of law. Accordingly, unless and until the Transfer Restrictions lapse or are terminated,16 Holders of Allowed Class 4 Claims, Allowed Class 5 Claims, or Allowed Class 6 Claims will be17 subject to substantial restrictions on their ability to sell or otherwise dispose of their PFI Trust18 Interests and should be prepared to retain their PFI Trust Interests. 19 The PFI Trust may, by reason of the amount of its total assets and the number of the holderof record of its PFI Trust Interests as of the last day of its first fiscal year, become subject to the20 registration requirements of the Exchange Act. It is likely that the PFI Trust will need to seek relief21 from or modification of certain technical requirements of the Exchange Act (such as the filing of22 pre-Effective Date financial information of the Debtors), which the PFI Trust intends to do i23 connection with such registration. While the Debtors have been advised that such relief and24 modifications have been granted by the SEC in the past with respect to other liquidating trusts25 formed in connection with chapter 11 bankruptcies, such relief and modification have not yet been26 obtained with respect to the PFI Trust and no assurance can be given that such relief or modification27 will become available. If the PFI Trust becomes required to register and fails to do so in accordance28

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1 with the requirements of the Exchange Act, it may become subject to civil fines, injunctive relief or2 other disciplinary action on the part of the SEC. 3 H. Tax Considerations 4 There are several material income tax considerations, risks, and uncertainties associated with5 consummation of the Plan. Holders of Claims, Holders of Equity Interests, and other interested6 parties should read carefully the discussion set forth in Article VIII for a discussion of certain U.S. 7 U.S. federal income tax consequences of the transactions contemplated under the Plan. VI. 8 9 CONFIRMATION OF THE PLAN 10 A. The Confirmation Hearing 11 Bankruptcy Code section 1128(a) requires the Bankruptcy Court, after notice, to hold 12 hearing regarding Confirmation of the Plan. Bankruptcy Code section 1128(b) provides that an13 party in interest may object to Confirmation of the Plan. 14 The Bankruptcy Court has scheduled the Confirmation Hearing to commence on [•], 2021, a15 __:____ __.m. (prevailing Pacific Time), before the Honorable Hannah L. Blumenstiel, United16 States Bankruptcy Judge, in the United States Bankruptcy Court for the Northern District o17 California, San Francisco, California 94102. The Confirmation Hearing Notice, which sets forth the18 time and date of the Confirmation Hearing, has been included along with this Disclosure Statement. 19 The Confirmation Hearing may be adjourned from time to time without further notice except for aannouncement of the adjourned date made at the Confirmation Hearing or any adjournment thereof. 20 Objections to Confirmation of the Plan must be Filed and served so that they are actuall21 received by no later than [•], 2021, at 4:00 p.m. (prevailing Pacific Time). Unless objections to22 Confirmation of the Plan, as well as objections to final approval of the Disclosure Statement,23 are timely served and Filed in compliance with the Solicitation Procedures Order, they may24 not be considered by the Bankruptcy Court. 25 B. Requirements for Confirmation of the Plan 26 Among the requirements for the Confirmation of the Plan is that the Plan (i) is accepted b27 all Impaired Classes of Claims, or, if rejected by an Impaired Class of Claims, that the Plan “does28

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1 not discriminate unfairly” and is “fair and equitable” as to such Impaired Class of Claims;2 (ii) is feasible; and (iii) is in the “best interests” of Holders of Claims. 3 At the Confirmation Hearing, the Bankruptcy Court will determine whether the Plan satisfies4 the requirements of Bankruptcy Code section 1129. The Plan Proponents believe that: (i) the Plan5 satisfies or will satisfy all of the necessary statutory requirements of chapter 11 of the Bankruptcy 6 Code; (ii) the Plan Proponents have complied or will have complied with all of the necessar7 requirements of chapter 11 of the Bankruptcy Code; and (iii) the Plan has been proposed in good8 faith. More specifically, the Plan Proponents believe that the Plan satisfies or will satisfy the9 following applicable Confirmation requirements of Bankruptcy Code section 1129: 10 • The Plan complies with the applicable provisions of the Bankruptcy Code. 11 • The Plan Proponents have complied with the applicable provisions of the Bankruptcy Code. 12 • The Plan has been proposed in good faith and not by any means forbidden by law. 13 • Any payment made or promised under the Plan for services or for costs and expenses in, or i14 connection with, the Chapter 11 Cases, or in connection with the Plan and incident to thChapter 11 Cases, has been disclosed to the Bankruptcy Court, and any such payment: (1)15 made before the Confirmation of the Plan is reasonable; or (2) is subject to the approval othe Bankruptcy Court as reasonable, if it is to be fixed after Confirmation of the Plan. 16 • Either each Holder of a Claim in an Impaired Class of Claims has accepted the Plan, or each17 such Holder will receive or retain under the Plan on account of such Claim property of 18 value, as of the Effective Date of the Plan, that is not less than the amount that such Holderwould receive or retain if the Debtors were liquidated on the Effective Date of the Plan unde19 chapter 7 of the Bankruptcy Code. 20 • The Classes of Claims that are entitled to vote on the Plan will have accepted the Plan, or atleast one Class of Impaired Claims will have accepted the Plan, determined without21 including any acceptance of the Plan by any insider holding a Claim in that Class, and the22 plan does not “discriminate unfairly” and is “fair and equitable” with respect to each Class oClaims that is impaired under, and has not accepted, the Plan. 23 • Except to the extent a different treatment is agreed to, the Plan provides that all Allowed24 Administrative Claims and Allowed Priority Claims will be paid in full on the EffectivDate, or as soon thereafter as is reasonably practicable. 25 • All accrued and unpaid fees of the type described in 28 U.S.C. § 1930, including the fees of26 the U.S. Trustee, will be paid through the Effective Date. 27 C. Best Interests of Creditors 28

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1 Often called the “best interests of creditors” test, Bankruptcy Code section 1129(a)(7)2 requires that a bankruptcy court find, as a condition to confirmation of a chapter 11 plan, that the3 plan provides, with respect to each impaired class, that each holder of a claim or an interest in such4 class either (i) has accepted the plan or (ii) will receive or retain under the plan property of a value5 that is not less than the amount that such holder would receive or retain if the debtor liquidated unde6 chapter 7 on the effective date of the plan. Based on their review, the Debtors and their advisors7 have prepared the liquidation analysis attached hereto as Exhibit C (the “Liquidation Analysis”). 8 The costs of liquidation under chapter 7 of the Bankruptcy Code would include the fee9 payable to a chapter 7 trustee, and the fees that would be payable to additional attorneys and other10 professionals that such a trustee may engage. 11 Conversion to chapter 7 of the Bankruptcy Code would mean the establishment of a ne12 claims bar date, which could result in new Claims being asserted against the Estates, thereby dilutin13 the recoveries of other Holders of Allowed Claims. 14 Significantly, the benefits of the Investor Claims Special Provisions, the terms of which are15 substantially incorporated into the Plan, are available only under the Plan. The Plan embodies a16 comprehensive, extensively negotiated settlement and compromise of myriad novel and complex17 legal and factual issues relating to the Investors of the Debtors. In the event of conversion, the18 chapter 7 trustee, Investors, and other creditors would have to confront the pursuit of extensive19 litigation to resolve these and other issues, or would need to try to negotiate an alternativesettlement, all without the benefit of committee representation for creditors. This process would be20 extremely time-consuming and costly, and would very likely reduce and delay any recoveries21 available for creditors of the Estates. 22 In addition, a chapter 7 trustee likely would act quickly to sell or otherwise monetize th23 Debtors’ assets, including because (i) a chapter 7 trustee probably would not have adequate staffing24 or funding to dispose of the Debtors’ Real Properties over an extended period of time, and (ii) a25 chapter 7 trustee would need to seek authorization to operate the Debtors’ remaining business, whic26 is relief that should be granted only “for a limited period” in any event, see 11 U.S.C. § 721. Such a27 28

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1 forced sale by a chapter 7 trustee would likely ultimately result in substantially lower recoveries2 from the sale of the Debtors’ assets, as set forth in the Liquidation Analysis. 3 On balance, the Plan Proponents believe that a chapter 7 trustee would be less likely to4 maximize the value available from all the Estate Assets and would be unable to obtain the benefits5 of the compromises and settlements available under the Plan. Therefore, the Plan Proponents believ6 that confirmation of the Plan will provide each Investor and other creditors with an equal or greater7 recovery than such party would receive pursuant to the liquidation of the Debtors under chapter 7 of8 the Bankruptcy Code. 9 D. Feasibility 10 Bankruptcy Code section 1129(a)(11) requires that confirmation of the plan is not likely to b11 followed by the liquidation, or the need for further financial reorganization of the Debtors, or an12 successor to the Debtors (unless such liquidation or reorganization is proposed in the plan). The Pla13 Proponents believe that this requirement is satisfied, and the Debtors believe the Debtors’ Cash and14 any additional proceeds from the PFI Trust Assets will be sufficient to allow the PFI Trustee to mak15 all payments required to be made under the Plan. Accordingly, the Plan Proponents believe that the16 Plan is feasible. 17 E. Acceptance by Impaired Classes 18 The Bankruptcy Code requires, as a condition to confirmation, that, except as described in19 the following section, each class of claims or interests that is impaired under a plan accept the plan. A class that is not “impaired” under a plan is deemed to have accepted the plan and, therefore,20 solicitation of acceptances with respect to such class is not required. 21 A class is “impaired” unless a plan: (a) leaves unaltered the legal, equitable, and contractual22 rights to which the claim or the interest entitles the holder of such claim or interest; or (b) cures an23 default, reinstates the original terms of such obligation, compensates the holder for certain damages24 or losses, as applicable, and does not otherwise alter the legal, equitable, or contractual rights to25 which such claim or interest entitles the holder of such claim or interest. 26 Bankruptcy Code section 1126(c) defines acceptance of a plan by a class of impaired claims27 as acceptance by holders of at least two-thirds in dollar amount and more than one-half in number of28

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1 allowed claims in that class, counting only those claims held by creditors that actually voted to2 accept or reject the plan. Thus, a Class of Impaired Claims will have voted to accept the Plan only if3 two-thirds in amount and a majority in number actually voting cast their Ballots in favor o4 acceptance. 5 F. Confirmation Without Acceptance by All Impaired Classes 6 Bankruptcy Code section 1129(b) allows a bankruptcy court to confirm a plan even if al7 impaired classes have not accepted that plan, provided that the plan has been accepted by at least on8 impaired class of claims, determined without including the acceptance of the plan by any insider. 9 Notwithstanding an impaired class’s rejection or deemed rejection of the plan, such plan will be10 confirmed, at the plan proponent’s request, in a procedure commonly known as “cramdown,” so11 long as the plan does not “discriminate unfairly” and is “fair and equitable” with respect to each12 class of claims or interests that is impaired under, and has not accepted, the plan. 13 To the extent that any Impaired Class rejects the Plan or is deemed to have rejected the Plan,14 the Plan Proponents will request Confirmation of the Plan under Bankruptcy Code section 1129(b)15 The Plan Proponents reserve the right to alter, amend, modify, revoke, or withdraw the Plan, th16 Plan Supplement, or any schedule or exhibit, including to amend or modify it to satisfy th17 requirements of Bankruptcy Code section 1129(b), if necessary. 18 1. No Unfair Discrimination 19 The “unfair discrimination” test applies to classes of claims or interests that reject or aredeemed to have rejected a plan and that are of equal priority with another class of claims or interests20 that is receiving different treatment under such plan. The test does not require that the treatment of21 such classes of claims or interests be the same or equivalent, but that such treatment be “fair” under22 the circumstances. In general, bankruptcy courts consider whether a plan discriminates unfairly in it23 treatment of classes of claims of equal rank (e.g., classes of the same legal character). Bankruptcy24 courts will take into account various factors in determining whether a plan discriminates unfairly,25 and, accordingly, a plan could treat two classes of unsecured creditors differently without unfairl26 discriminating against either class. The Plan Proponents submit that if they are required to27 28

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1 “cramdown” the Plan pursuant to Bankruptcy Code section 1129(b), the Plan is structured such that2 it does not “discriminate unfairly” against any rejecting Class. 3 2. Fair and Equitable Test 4 The “fair and equitable” test applies to classes that reject or are deemed to have rejected a5 plan and are of different priority and status vis-à-vis another class (e.g., secured versus unsecured6 claims, or unsecured claims versus equity interests), and includes the general requirement that no7 class of claims receive more than 100% of the amount of the allowed claims in such class, including8 interest. As to the rejecting class, the test sets different standards depending on the type of claims or9 interests in such rejecting class. The Plan Proponents submit that if they are required to “cramdown”10 the Plan pursuant to Bankruptcy Code section 1129(b), the Plan is structured such that the applicabl11 “fair and equitable” standards are met. 12 G. Alternatives to Confirmation and Consummation of the Plan13 The Plan Proponents believe that the Plan affords Holders of Claims the potential for 14 materially better realization on the Estate Assets than a chapter 7 liquidation, and, therefore, is in the15 best interests of all such Holders. If, however, the requisite acceptances of the voting Classes of16 Claims are not received, or no Plan is confirmed and consummated, the theoretical alternatives17 include: (a) formulation of an alternative chapter 11 plan or plans, or (b) liquidation of the Debtor18 under chapter 7 of the Bankruptcy Code. 19 If the requisite acceptances are not received or if the Plan is not confirmed, the PlanProponents or another party in interest could attempt to formulate and propose a different plan o20 plans. The Plan Proponents believe that the Plan enables creditors to realize the greatest possible21 value under the circumstances, and, as compared to any alternative plan, has the greatest chance to22 be confirmed and consummated. 23 The Chapter 11 Cases may also be converted to cases under chapter 7 of the Bankruptc24 Code, pursuant to which a statutory trustee would be elected or appointed to complete the liquidatio25 of the Estate Assets for distribution to creditors in accordance with the priorities established by the26 Bankruptcy Code. As described above, the Plan Proponents believe that the Plan will provide each27 28

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1 Investor and other creditor with an equal or greater recovery than it would receive pursuant to2 liquidation of the Debtors under chapter 7 of the Bankruptcy Code. 3 VII. 4 CERTAIN SECURITIES LAW CONSEQUENCES OF THE PLAN 5 A. General 6 1. Status as Securities 7 The Plan provides for the establishment of the PFI Trust and for the issuance of the PFI Trus 8 Interests to Holders of Allowed Class 4, Class 5 and, Class 6, and Class 7 Claims. In general,9 beneficial interests in trusts may sometimes be subject to regulation under applicable10 non-bankruptcy law, including federal and state securities laws. As discussed below, the Plan11 Proponents believe that the PFI Trust Interests will either (a) not constitute “securities” or (b) will b12 issued in compliance with such federal and state securities laws. 13 2. Transfer Restrictions on PFI Trust Interests 14 Under the terms of the PFI Trust Agreement, the PFI Trust Interests initially will b15 uncertificated and subject to transfer restrictions set forth in the PFI Trust Agreement (the “Transfer16 Restrictions”). Under the Transfer Restrictions, the PFI Trust Interests cannot be assigned or17 transferred by any holder thereof other than by will or intestate succession upon the death of such18 holder or otherwise by operation of law. 19 The Transfer Restrictions will be effective upon issuance of the PFI Trust Interests on theEffective Date of the Plan and will remain in effect during the initial and any renewal term of the PF20 Trust unless sooner terminated or modified by the PFI Trustee in accordance with the PFI Trust21 Agreement. 22 B. Exemption From Offer and Sale of Securities Act and Blue Sky Laws23 1. Issuance of PFI Trust Interests under Plan 24 Unless an exemption is available, the offer and sale of a security generally is subject to25 registration with the SEC under Section 5 of the Securities Act of 1933, as amended (the “Securities26 Act”). The Debtors believe that the PFI Trust Interests, regardless of whether they are certificated27 28

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1 and/or non-transferable, may be considered a “security” within the definition of Section 2(a)(1) of2 the Securities Act at the time of their issuance. 3 In the event that the PFI Trust Interests are deemed to constitute securities, under the Plan,4 the PIFPFI Trust Interests will be issued to holders of Allowed Class 4, Class 5 and, Class 6, and 5 Class 7 Claims in reliance upon section 1145 of the Bankruptcy Code, to the extent such exemption6 is available. 7 Section 1145 of the Bankruptcy Code provides that the securities registration requirements o8 federal and state securities laws do not apply to the offer or sale of stock, warrants or other securitie9 of a debtor, an affiliate participating in a joint plan with the debtor or a successor to the debtor under10 the plan if: (a) the offer or sale occurs under a plan of reorganization; (b) the recipients of the11 securities hold a claim against, an interest in or claim for administrative expense against the debtor12 or such affiliate of the debtor; and (c) the securities are issued in exchange for such a claim or13 interest or are issued principally in such exchange and partly for cash and property. 14 This exemption is not available for an “underwriter.” Section 1145(b)(1) of the Bankruptc15 Code defines an “underwriter” as any person who: 16 (A) purchases a claim against, an interest in, or a claim for an administrative expense17 against the debtor, if that purchase is with a view to distributing any security received in exchange18 for such a claim or interest; 19 (B) offers to sell securities offered under a plan of reorganization for the holders of thosesecurities; 20 (C) offers to buy those securities from the holders of the securities, if the offer to buy is21 (x) with a view to distributing those securities and (y) under an agreement made in connection with22 the plan of reorganization, the completion of the plan of reorganization or with the offer or sale o23 securities under the plan of reorganization; or 24 (D) is an issuer with respect to the securities, as the term “issuer” is defined in Section25 2(a)(11) of the Securities Act, which includes any person directly or indirectly controlling the issuer26 or any person under direct or indirect common control of the issuer. 27 28

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1 Persons will not be deemed underwriters under Section 1145(b)(1)(A)-(C) of the Bankruptc 2 Code by virtue of “ordinary trading transactions.” The staff of the SEC has stated that a person will3 be deemed to engage in ordinary trading transactions with respect to resales on a national securities4 exchange or in the over the counter market, so long as there is no concerted action among the sellers5 the only informational material used in connection with the sale is the disclosure statement, and6 there are no payments other than ordinary brokerage commissions. 7 For purposes of Section 1145(b)(1)(D) of the Bankrtupcy Code, “control” is assumed to hav8 its general meaning under the federal securities laws. A person controls an issuer if it possesses,9 directly or indirectly, the power to direct or cause the direction of the management and policies of10 the issuer, whether through the ownership of voting securities, by contract or otherwise. Officers11 and directors of an issuer, and persons holding a significant percentages of an issuer’s voting12 securities, may be deemed to “control” the issuer. 13 Securities received under a plan of reorganization by an underwriter as defined under Sectio14 1145(b)(1)(A)-(C) are “restricted securities” for purposes of the federal securities laws. According15 to the staff of the SEC, however, securities received under a plan of reorganization by an underwrite16 as defined under Section 1145(b)(1)(D) are “control securities” and not “restricted securities” for17 federal securities law purposes. The treatment of restricted securities and control securities for18 purposes of Rule 144 is described below.. 19 2. Securities Issued in Reliance of Section 4(a)(2) of the Securities Act,Regulation D and/or Regulation S 20 If the exemption provided by Section 1145(a) of the Bankruptcy Code in unavailable for the21 issuance of PFI Trust Interests under Plan, including for persons who are deemed “underwriters”22 under Section 1145(b)(1)(A)-(C) of the Bankruptcy Code, the PFI Trust Interests will be issued to23 24 Holders of Allowed Class 4, Class 5 and Class 6 Claims in reliance upon the federal securities law25 exemptions provided in Section 4(a)(2) of the Securities Act (“Section 4(a)(2)”) and/or Regulation 26 or Regulation S under the Securities Act. 27 28

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1 Section 4(a)(2) provides an exemption from the registration requirements under the 2 Securities Act for transactions not involving any public offering. Transactions meeting the3 requirements of Regulation D are deemed to qualify for the exemption provided for in Section4 4(a)(2). If PFI Trust Interests cannot be issued pursuant to Section 1145(a) of the Bankruptcy Code5 the PFI Trust Interests will be issued if possible pursuant to Regulation D, as securities issued in6 accordance with Regulation D will be exempt from the registration requirements of state securities7 laws. Otherwise, if the PFI Trust Interests are issued pursuant to the federal exemption provided by8 9 Section 4(a)(2) (and not Regulation D), such PFI Trust Interests will be issued pursuant to available10 exemptions under state securities laws. Holders of Allowed Class 4, Class 5 and, Class 6, and Class11 7 Claims receiving PFI Trust Interests issued pursuant to Section 4(a)(2) and/or Regulation D will b12 required to certify that they are “accredited investors,” as that term is defined by the SEC for the13 purposes of Regulation D. Such securities will be deemed “restricted securities” for purposes of the14 federal securities laws. 15 16 Regulation S promulgated under the Securities Act provides an exemption for offers and17 sales of securities in certain offshore transactions, and may be used to issue PFI Trust Interests unde18 the Plan to persons outside of the United States. 19 3. Resale of PFI Trust Interests After Plan Effective Date 20 (a) General 21 PFI Trust Interests that are issued pursuant to Section 1145(a) of the Bankruptcy Code may22 be resold without registration pursuant to section 4(a)(1) of the Securities Act and corresponding23 exemptions under state securities laws. 24 Holders of PFI Trust Interests that are “restricted securities” or “control securities” may be25 26 resold only in compliance with the registration requirements of, or pursuant to an available27 28

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1 exemption from registration under, federal and state securities laws. Among potential federal2 securities law exemptions is Rule 144, which is described further below. 3 Regulation S has its own provisions regarding resales and, among other restrictions, imposes4 certain “anti-flow back” rules which restrict the transfer of such securities back into the United 5 States for specified time periods. 6 7 (b) Rule 144 8 PFI Trust Interests that are restricted securities and/or control securities may be resold9 pursuant to the limited safe harbor resale provisions under Rule 144 under the Securities Act (“Rule10 144”), to the extent available, and in compliance with applicable state securities laws. 11 Generally, Rule 144 provides that persons who hold restricted securities or control securities12 may resell such securities, and will not be deemed to be an underwriter in connection with such13 resale, if certain conditions are met. Restricted securities are subject to a statutory holding period of14 six months, if the issuer is subject to the public reporting requirements of the Securities Exchange15 Act of 1934, and 12 months otherwise. Other than compliance with the applicable holding period,resales of restricted securities that are not also control securities, are not subject to any other16 limitations or qualifications under Rule 144. Resales under Rule 144 of control securities are17 subject to the public availability of certain information regarding the issuer, a limitation on the18 amount of securities that may be sold in any three-month period, the requirement that the securities19 be sold in a “brokers’ transaction” or in a transaction directly with a "market maker" and a20 requirement that notice of the resale be filed with the SEC on Form 144. 21 PERSONS WHO RECEIVE SECURITIES UNDER THE PLAN ARE URGED T 22 CONSULT THEIR OWN LEGAL ADVISOR WITH RESPECT TO THE RESTRICTIONS23 APPLICABLE UNDER THE FEDERAL OR STATE SECURITIES LAWS AND THE24 CIRCUMSTANCES UNDER WHICH SECURITIES MAY BE SOLD IN RELIANCE ON25 SUCH LAWS. THE FOREGOING SUMMARY DISCUSSION IS GENERAL IN NATURE26 AND HAS BEEN INCLUDED IN THIS DISCLOSURE STATEMENT SOLELY FOR27 INFORMATIONAL PURPOSES. THE DEBTORS MAKE NO REPRESENTATIONS28

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1 CONCERNING, AND DO NOT PROVIDE ANY OPINIONS OR ADVICE WITH RESPECT 2 TO, THE SECURITIES OR THE BANKRUPTCY MATTERS DESCRIBED IN THIS 3 DISCLOSURE STATEMENT. IN LIGHT OF THE UNCERTAINTY CONCERNING THE 4 AVAILABILITY OF EXEMPTIONS FROM THE RELEVANT PROVISIONS O 5 FEDERAL AND STATE SECURITIES LAWS, WE ENCOURAGE EACH RECIPIENT O 6 SECURITIES AND EACH OTHER PARTY IN INTEREST TO CONSIDER CAREFULLY 7 AND CONSULT WITH ITS OWN LEGAL ADVISORS WITH RESPECT TO ALL SUC 8 MATTERS. BECAUSE OF THE COMPLEX, SUBJECTIVE NATURE OF THE QUESTIO 9 OF WHETHER THE PFI TRUST INTERESTS ARE “SECURITIES” FOR SECURITIES10 LAW PURPOSES, WHETHER A SECURITY IS EXEMPT FROM THE REGISTRATIO11 REQUIREMENTS UNDER THE FEDERAL OR STATE SECURITIES LAWS O12 WHETHER A PARTICULAR RECIPIENT OF SECURITIES MAY BE AN13 UNDERWRITER, WE MAKE NO REPRESENTATION CONCERNING THE ABILITY O14 A PERSON TO DISPOSE OF THE SECURITIES ISSUED UNDER THE PLAN. VIII. 15 16 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PLA17 THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLE18 ALL HOLDERS OF CLAIMS AGAINST THE DEBTORS SHOULD CONSULT WITHTHEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO19 THEM OF THE TRANSACTIONS CONTEMPLATED BY THE PLAN, INCLUDING THAPPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR FOREIGN TAX LAWS20 AND OF ANY CHANGE IN APPLICABLE TAX LAWS 21 22 This discussion is provided for informational purposes only, and is based on provisions of th23 Internal Revenue Code of 1986, as amended (the “IRC”), Treasury Regulations promulgated24 thereunder, judicial authorities, and current administrative rulings and practice, all as in effect on the25 date hereof. Due to the complexity of certain aspects of the Plan, the lack of applicable legal26 precedent, the possibility of changes in the law, the differences in the nature of the Claims (includin27 Claims within the same Class) and Equity Interests, the holder’s status and method of accounting28

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1 matters with the IRS, the tax consequences described herein are subject to significant uncertainties. 2 No legal opinions have been requested from counsel with respect to any of the tax aspects of the 3 Plan and no rulings have been or will be requested from the IRS with respect to the any of the issues4 discussed below. Further, legislative, judicial or administrative changes may occur, perhaps with5 retroactive effect, which could affect the accuracy of the statements and conclusions set forth below6 as well as the tax consequences to the holders of Claims and Equity Interests. Any such changes or7 interpretations may be retroactive and could significantly, and adversely, affect the United States8 federal income tax consequences of the Plan. 9 The following summary is based in part on the assumption that, if the Plan is adopted, th10 Claims of the PFI LLC Members in the PFI-Managed LLCs will be recharacterized as Non-DOT11 Investor Claims, with such recharacterization to be retroactive on a case-by-case basis in each12 instance to the date or dates on which such PFI LLC Member tranferred funds in to the respective13 PFI-Managed LLC(s) in exchange for purported equity interests in such PFI-Managed LLCs, and14 that each PFI LLC Member should therefore be properly treated for U.S. federal tax purposes as15 never having owned any equity interest in any of the PFI-Managed LLCs. Holders should consult16 their own tax advisors for advice with respect to their particular situation and circumstances. 17 The following summary does not address the U.S. federal income tax consequences to the18 Holders of Claims or Equity Interests not entitled to vote to accept or reject the Plan. In addition, to19 the extent that the following discussion relates to the consequences to Holders of Claims entitled tovote to accept or reject the Plan, it is limited to Holders that are United States persons within the20 meaning of the IRC. For purposes of the following discussion, a “United States person”is any of the21 following: 22 23 • An individual who is a citizen or resident of the United States;24 • A corporation created or organized under the laws of the United States or any state orpolitical subdivision thereof; 25 • An estate, the income of which is subject to U.S. federal income taxation regardless of its26 source; or 27 • A trust that (a) is subject to the primary supervision of a United States court and which hasone or more United States fiduciaries who have the authority to control all substantial28

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1 decisions of the trust, or (b) has a valid election in effect under applicable TreasurRegulations to be treated as a United States person. 2 3 This discussion does not address all aspects of U.S. federal income taxation that may be4 relevant to a particular Holder in light of its particular facts and circumstances, or to certain types of 5 Holders subject to special treatment under the IRC. Examples of Holders subject to special treatmen6 under the IRC are governmental entities and entities exercising governmental authority, foreign7 companies, persons who are not citizens or residents of the United States, banks and certain otherfinancial institutions, broker-dealers, insurance companies, tax-exempt organizations, real estate8 investment trusts, small business investment companies, regulated investment companies, persons9 that have a functional currency other than the U.S. dollar, and persons holding Claims that are a10 hedge against, or that are hedged against, currency risk or that are part of a straddle, constructive11 sale, or conversion transaction. This discussion does not address the tax consequences to holders of12 Claims who did not acquire such Claims at the issue price on original issue. No aspect of foreign,13 state, local or estate and gift taxation is addressed. 14 The tax treatment of Holders of Claims and the character, amount, and timing of income15 gain, or loss recognized as a consequence of the Plan and the Distributions provided for by the Plan16 may vary, depending upon the following factors, among others: (i) whether the Claim or portio17 thereof constitutes a Claim for principal or interest; (ii) the type of consideration, if any, received b18 the Holder in exchange for the Claim, and whether the Holder receives Distributions under the Plan19 in more than one taxable year; (iii) whether the Holder is a citizen or resident of the United States fo20 tax purposes, is otherwise subject to U.S. federal income tax on a net basis, or falls into any special21 class of taxpayers, such as those that are excluded from this discussion as noted above; (iv) the22 manner in which the Holder acquired the Claim; (v) the length of time that the Claim has been held;23 (vi) whether the Claim was acquired at a discount; (vii) whether the Holder has taken theft loss24 deduction with respect to the Claim or any portion thereof in the current or prior taxable years; (viii)25 whether the Holder has previously included in gross income accrued but unpaid interest with respect26 to the Claim; (ix) the method of tax accounting of the Holder; (x) whether the Claim is a27 installment obligation for U.S. federal income tax purposes; and (xi) whether the “market discount”28

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1 tax advice with respect to that Holder’s particular situation and circumstances, and the particular tax2 consequences to such Holder of the transactions contemplated by the Plan. 3 A significant amount of time may elapse between the date of the Disclosure Statement and4 the receipt of a final Distribution under the Plan. Events occurring after the date of the Disclosure 5 Statement, such as new or additional tax legislation, court decisions, or administrative changes,6 could affect the U.S. federal income tax consequences of the Plan and the transactions contemplated7 thereunder. No representations are being made regarding the particular tax consequences of the8 confirmation or implementation of the Plan as to any Holder of a Claim. This discussion is no9 binding upon the IRS or other taxing authorities. No assurance can be given that the IRS or another10 authority would not assert, or that a court would not sustain, a different position from any discussed11 herein. 12 THE FOLLOWING DISCUSSION IS INTENDED ONLY AS A SUMMARY O13 CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN, AND IS NO14 A SUBSTITUTE FOR CAREFUL TAX PLANNING WITH A TAX PROFESSIONAL. THE15 FOLLOWING DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT16 TAX ADVICE. THE TAX CONSEQUENCES ARE IN MANY CASES UNCERTAIN AND17 MAY VARY DEPENDING ON A HOLDER’S PARTICULAR CIRCUMSTANCES. 18 ACCORDINGLY, EACH HOLDER IS STRONGLY URGED TO CONSULT SUC19 HOLDER’S INDEPENDENT TAX ADVISOR REGARDING THE FEDERAL, STATE,LOCAL, AND FOREIGN INCOME TAX CONSEQUENCES OF THE PLAN. 20 A. Certain U.S. Federal Income Tax Consequences of the PFI Trust21 Under the terms of the Plan, the PFI Trust Assets will be transferred to the PFI Trust, and the22 remaining assets (the OpCo Assets) to the OpCo, in a taxable disposition. For U.S. federal income23 tax purposes, the transfer of the PFI Trust Assets to the PFI Trust will be treated as a sale or other24 disposition of assets (except for the assets transferred to the Disputed Ownership Fund as provided25 in Section 6.9 of the Plan) to the PFI Trust Beneficiaries in exchange for their claims in the Chapter26 11 Cases. Any income or gain from the transfer of assets to thePFI Trust shall be recognized by the27 transferring Debtor (or, in the case of a Debtor that is classified as a partnership or “disregarded”28

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1 entity for U.S. federal income tax purposes, to the partners or sole owner of such Debtor), who will2 be responsible to pay any resulting tax liability. 3 The tax consequences of the Plan, however, are subject to many uncertainties due to the4 complexity of the Plan and the lack of interpretative authority regarding certain changes in the tax5 law. Uncertainties with regard to U.S. federal income tax consequences of the Plan also arise due to6 the inherent nature of estimates of value that will impact the determination of the amount of income7 or gain from the transfer of assets to the PFI Trust. 8 As of the Effective Date, the PFI Trust shall be established for the benefit of all PFI Trust 9 Beneficiaries. As soon as reasonably practicable after the PFI Trust Assets are transferred to the PFI10 Trust, the The PFI Trustee will make a good faith valuation of the PFI Trust Assets. In order to11 ensure that the PFI Trust can qualify as a “liquidating trust” for U.S. federal income tax purposes (as12 discussed further below), all parties (including, without limitation, the PFI Trustee and the PFI Trust13 Beneficiaries) must consistently use such valuation for all U.S. federal income tax purposes. 14 Assuming that the PFI Trust is validly characterized as a “liquidating trust” for U.S. federal15 income tax purposes, it will allocate any taxable income it may recognize following the Effective16 Date (other than taxable income allocable to a Distribution Reserve) among PFI Trust Beneficiaries17 in accordance with the manner in which an amount of cash equal to such taxable income would be18 distributed (were such cash permitted to be distributed at such time) if, immediately prior to such19 deemed distribution, the PFI Trust had distributed all of its assets (valued at their tax book value,and other than assets allocable to a Distribution Reserve) to the holders of the beneficial interests in20 the PFI Trust, adjusted for prior taxable income and loss and taking into account all prior and21 concurrent distributions from the PFI Trust. For U.S. federal income tax purposes, the PFI Trus22 Beneficiaries shall be treated as the grantors of the PFI Trust and deemed to be the owners of the23 assets of the PFI Trust. The transfer of the PFI Trust Assets to the PFI Trust shall be deemed a24 transfer to the PFI Trust Beneficiaries by the Debtors, followed by a deemed transfer by such PFI25 Trust Beneficiaries to the PFI Trust. The Debtors, the PFI Trust Beneficiaries, and the PFI Trust will26 consistently report the valuation of the assets transferred to the PFI Trust. Such consistent27 valuations and revised reporting will be used for all U.S. federal income tax purposes. Similarly,28

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1 taxable loss of the PFI Trust shall be allocated by reference to the manner in which an economic los2 would be borne immediately after a distribution in liquidation of the remaining PFI Trust Assets. 3 The tax book value of the PFI Trust Assets for this purpose shall be equal to the fair market value of4 the PFI Trust Assets on the Effective Date, adjusted in accordance with tax accounting principles5 prescribed by the IRC, applicable Treasury Regulations, and other applicable administrative and6 judicial authorities and pronouncements. Subject to definitive guidance from the IRS or a court o7 competent jurisdiction to the contrary (including the receipt by the PFI Trustee of an IRS private8 letter ruling if the PFI Trustee so requests one, or the receipt of an adverse determination by the IRS9 upon audit if not contested by the PFI Trustee), the PFI Trustee will (a) elect to treat any PFI Trust10 Assets allocable to a Distribution Reserve (a reserve for amounts and PFI Trust Interests retained on11 account of, Contingent Claims, Disputed Claims or Unliquidated Claims) as a “disputed ownership12 fund” governed by Treasury Regulation Section 1.468B-9, and (b) to the extent permitted b13 applicable law, report consistently with the foregoing for state and local income tax purposes. 14 Accordingly, the Distribution Reserves will be subject to tax annually on a separate entity basis on15 any net income earned with respect to the PFI Trust Assets in such reserves, and all distributions16 from such reserves will be treated as received by holders in respect of their Claims as if distributed17 by the Debtors. All parties (including, without limitation, the PFI Trustee and the holders o18 beneficial interests in the PFI Trust) will be required to report for tax purposes consistently with the19 foregoing. The PFI Trust is intended to qualify as a “liquidating trust” for U.S. federal income tax20 purposes within the meaning of Treasury Regulation section 301.7701-4(d). In general, a liquidatin21 trust is not a separate taxable entity but rather is treated for U.S. federal income tax purposes as a22 “grantor” trust (i.e., a pass-through entity) with respect to its beneficiaries. The Internal Revenue23 Service (“IRS”), in Revenue Procedure 94-45, 1994-28 I.R.B. 124, set forth the general criteria for24 obtaining an IRS ruling as to the grantor trust status of a liquidating trust under a chapter 11 plan. 25 The PFI Trust has been structured with the intention of complying with such general criteria. 26 Pursuant to the Plan, and in conformity with the guidelines set forth in Revenue Procedure 94-45, al27 parties (including the PFI Trustee and the holders of beneficial interests in the PFI Trust) are28

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1 required to treat for U.S. federal income tax purposes, the PFI Trust as a grantor trust of which the2 holders of PFI Trust Interests are the owners and grantors. Although the following discussion3 assumes that the PFI Trust would be so treated for U.S. federal income tax purposes, no ruling has4 been requested from the IRS concerning the tax status of the PFI Trust as a grantor trust. 5 Accordingly, there can be no assurance that the IRS would not take a contrary position to the6 classification of the PFI Trust as a grantor trust. lf the IRS were to challenge successfully such7 classification, the U.S. federal income tax consequences to the PFI Trust and the holders of PFI 8 Trust Interests could vary from those discussed herein, and, thus, there could be less Available Cash9 than projected, resulting in lower recoveries for holders of PFI Trust Interests. 10 B. Consequences to Holders of Claims Generally 11 In general, each Holder of an Allowed Claim will recognize gain or loss in an amount equal12 to the difference between (i) the “amount realized” by such Holder in satisfaction of its Claim, and13 (ii) such Holder’s adjusted tax basis in such Claim. The “amount realized” by a Holder will equal14 the sum of cash and the aggregate fair market value of the property received by such Holder pursuan15 to the Plan (such as a Holder’s undivided beneficial interest in the assets transferred to the PFI16 Trust). Where gain or loss is recognized by a Holder in respect of its Allowed Claim, the character17 of such gain or loss (i.e., long-term or short-term capital, or ordinary income) will be determined b18 a number of factors including the tax status of the Holder, whether the Claim constituted a capital19 asset in the hands of the Holder and how long it had been held, whether the Claim was originallissued at a discount or acquired at a market discount and whether and to what extent the Holder had20 previously claimed a theft loss in respect of the Claim. 21 Generally, a Holder of an Allowed Claim will realize gain or loss on the exchange under the22 Plan of its Allowed Claim for Cash or other property, in an amount equal to the difference between23 (i) the sum of the amount of any Cash and the fair market value on the date of the exchange of an24 other property received by the Holder, and (ii) the adjusted tax basis of the Allowed Claim25 exchanged therefor (other than basis attributable to accrued but unpaid interest previously included26 in the Holder’s taxable income). It is possible that any loss, or a portion of any gain, realized by a27 Holder of a Claim may have to be deferred until all of the Distributions to such Holder are received. 28

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1 When gain or loss is recognized by a Holder, such gain or loss may be long-term capital gain2 or loss if the Claim disposed of is a capital asset in the hands of the Holder and has been held for3 more than one year. Each Holder of an Allowed Claim should consult such Holder’s own tax adviso4 to determine whether gain or loss recognized by such Holder will be long-term capital gain or loss5 and the specific tax effect thereof on such Holder. 6 A Holder of an Allowed Claim who receives, in respect of the Holder’s Allowed Claim, an7 amount that is less than that Holder’s tax basis in such Allowed Claim may be entitled to a bad debt8 deduction under IRS Section 166 or a theft loss deduction under IRC Section 165(e). The rule9 governing the character, timing, and amount of a bad debt deduction place considerable emphasis o10 the facts and circumstances of the holder, the obligor, and the instrument with respect to which a11 deduction is claimed. Rules relating to theft loss deductions, which are described in more detail12 below, are also potentially complex, and the timing and amount of any such loss may be affected b13 whether a Holder elects to apply certain IRS safe harbor procedures relating to losses realized by14 investors in certain frauduletn investment schemes. Holders of Allowed Claims, therefore, are urge15 to consult their own tax advisors with respect to the ability to take either a bad debt or theft loss16 deduction. A Holder that has previously recognized a loss or deduction in respect of that Holder’s17 Allowed Claim may be required to include in gross income (as ordinary income) any amounts18 received under the Plan to the extent such amounts exceed the Holder’s adjusted basis in such19 Allowed Claim. Holders of Allowed Claims who were not previously required to include any accrued bu20 unpaid interest with respect to an Allowed Claim may be treated as receiving taxable interest incom21 to the extent any consideration they receive under the Plan is allocable to such interest. A Holder22 previously required to include in gross income any accrued but unpaid interest with respect to an23 Allowed Claim may be entitled to recognize a deductible loss to the extent such interest is not24 satisfied under the Plan. 25 A Holder of an Allowed Claim constituting an installment obligation for tax purposes may b26 required to currently recognize any gain remaining with respect to such obligation if, pursuant to the27 28

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1 Plan, the obligation is considered to be satisfied at other than at face value or distributed,2 transmitted, sold or otherwise disposed of within the meaning of IRC section 453B. 3 Holders of Disallowed Claims will not receive any Distribution as part of the Plan 4 Accordingly, because such a Holder may receive an amount that is less than that Holder’s tax basis5 in such Claim, such Holder may be entitled to a deduction, and are urged to consult with their own6 tax advisors with respect to the amount and character of any available deduction. 7 C. Consequences to PFI Trust Beneficiaries 8 After the Effective Date, any amount that a PFI Trust Beneficiary (as a Holder of a PFI Trust 9 Interest) receives as a distribution from the PFI Trust in respect of its beneficial interest in the PFI10 Trust should not be included, for U.S. federal income tax purposes, in the Holder’s amount realized11 in respect of its Allowed Claim but should be separately treated as a distribution received in respect12 of such Holder’s beneficial interest in the PFI Trust. In general, a Holder’s aggregate tax basis in its13 undivided beneficial interest in the assets transferred to the PFI Trust will equal the fair market valu14 of such undivided beneficial interest as of the Effective Date and the Holder’s holding period in suc15 assets will begin the day following the Effective Date. Distributions to any Holder of an Allowed16 Claim will be allocated first to the original principal portion of such Claim as determined for federal17 tax purposes, and then, to the extent the consideration exceeds such amount, to the remainder of18 such Claim. However, there is no assurance that the IRS will respect such allocation for U.S. federa19 income tax purposes. For all U.S. federal income tax purposes, all parties (including the PFI Trustee and the20 Holders of PFI Trust Interests) shall treat the transfer of the PFI Trust Assets to the PFI Trust, in21 accordance with the terms of the Plan, as a transfer of those assets directly to the Holders of Allowe22 Claims (and, with respect to the Contingent Claims, Disputed Claims and Unliquidated Claims, to23 the Distribution Reserve) followed by the transfer of such assets by such Holders to the PFI Trust. 24 Consistent therewith, all parties shall treat the PFI Trust as a grantor trust of which such Holders are25 to be the owners and grantors. Thus, such Holders (and any subsequent Holders of interests in the26 PFI Trust) shall be treated as the direct owners of an undivided beneficial interest in the assets of the27 PFI Trust. Accordingly, each Holder of a beneficial interest in the PFI Trust will be required to28

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1 report on its U.S. federal income tax return(s) the Holder’s allocable share of all income, gain, loss,2 deduction or credit recognized or incurred by the PFI Trust. The PFI Trust’s taxable income will be3 allocated to the Holders of PFI Trust Interests in accordance with each such Holder’s pro rata share4 of the PFI Trust Interests in the PFI Trust Assets. The character of items of income, deduction and5 credit to any Holder and the ability of such Holder to benefit from any deductions or losses ma6 depend on the particular situation of such Holder. The U.S. federal income tax reporting obligation7 of a Holder of a beneficial interest in the PFI Trust is not dependent upon the PFI Trust distributin8 any cash or other proceeds. Therefore, a Holder of a beneficial interest in the PFI Trust may incur a 9 U.S. federal income tax liability regardless of the fact that the PFI Trust has not made, or will not10 make, any concurrent or subsequent distributions to the Holder. If a Holder incurs a federal tax11 liability but does not receive distributions commensurate with the taxable income allocated to it in12 respect of its PFI Trust Interest in the PFI Trust, the Holder may be allowed a subsequent or13 offsetting loss. 14 The PFI Trustee will file with the IRS returns for the PFI Trust as a grantor trust pursuant t15 Treasury Regulations section 1.671-4(a). The PFI Trustee will also send to each Holder of a16 beneficial interest in the PFI Trust a separate statement setting forth the Holder’s share of items of17 income, gain, loss, deduction or credit and will instruct the Holder to report such items on its U.S. 18 federal income tax return. Events subsequent to the date of this Disclosure Statement, such as the19 enactment of additional tax legislation, could also change the U.S. federal income tax consequencesof the Plan and the transactions contemplated thereunder. 20 A PFI Trust Beneficiary who is a victim of a Ponzi scheme might be entitled to claim a loss21 dependent on such PFI Trust Beneficiary’s individual circumstances. Such losses that arise out of22 property used in a trade or business or a transaction entered into for profit are deductible in the year23 in which the loss is sustained and in an amount not to exceed the adjusted tax basis of the propert24 involved. A theft loss generally cannot be deducted in a tax year to the extent that there are25 reasonable prospects of a recovery of some or all of the loss. In that event, the deduction is26 postponed until it can be ascertained with reasonable certainty the likelihood and amount of an27 reimbursement that will be received. The loss generally must be deducted in the first year a28

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1 reasonable prospect of recovery no longer exists, and cannot be claimed in any subsequent year. Th2 reasonable prospect of reimbursement rule applies only to that part of the loss for which3 reimbursement is available. However, in 2009, the IRS issued Rev. Proc. 2009-20, 2009-14 I.R.B4 735, to provide an optional safe harbor treatment for taxpayers that experienced losses in certain5 investment arrangements discovered to be fraudulent and in which a lead figure has been charged6 with a crime. Under these safe harbor provisions, a qualified investor may deduct 95% of qualified7 investment in the discovery year (i.e., the year in which an indictment, information, or complain8 described in section 4.02 of Revenue Procedure 2009-20 is filed) if the qualified investor does not9 pursue any potential third-party recovery. A 75% deduction is available in the discovery year if a10 qualified investor is pursuing or intends to pursue any potential third-party recovery. The details for11 qualification for the safe harbor deduction are set forth in Rev. Proc. 2009-20. 12 In 2011, the IRS issued Rev. Proc. 2011-58, 2011-58 I.R.B. 849, which modified th13 provisions of Rev. Proc. 2009-20. Under Rev. Proc. 2011-58, the safe harbor provisions of Rev14 Proc. 2009-20 may be utilized if a lead figure, or an associated entity involved in the specified15 fraudulent arrangement, was the subject of one or more civil complaints or similar documents that a16 state or federal governmental entity filed with a court or in an administrative agency enforcement17 proceeding, and: 18 (a) The civil complaint or similar documents together allege facts that comprise substantiall19 all of the elements of a specified fraudulent arrangement conducted by the lead figure;(b) The death of the lead figure precludes a charge by indictment, information, or criminal20 complaint against that lead figure; and 21 (c) A receiver or trustee was appointed with respect to the arrangement or assets of the22 arrangement were frozen. 23 A strict reading of Rev. Proc. 2011-58 would require that, unless the lead figure’s death24 precludes the filing of a criminal indictment or criminal complaint, there must be an indictment or25 criminal complaint filed against the lead figure in order for safe harbor rules of Rev. Proc. 2009-2026 to be available to victims of a Ponzi scheme. As noted herein, Ken Casey, the founder of PFI, who27 maintained control over some or all of the Debtors during relevant times, died in May 2020. PF28

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1 Trust Beneficiaries should consult with their own tax advisors to determine if a theft loss deduction2 is permissible, as well as the timing, amount, and applicable limitations for any such theft loss3 deduction. 4 D. Withholding on Distributions, and Information Reporting 5 All Distributions to Holders of Allowed Claims under the Plan and any Distributions to th6 holders of beneficial interests in the PFI Trust are subject to any applicable tax withholding. Under 7 U.S. federal income tax law, interest, dividends, and other reportable payments may, under certain8 circumstances, be subject to “backup withholding” at the then applicable withholding rate (currently9 24%). Backup withholding generally applies if the payment recipient (i) fails to furnish the10 recipient’s social security number or other taxpayer identification number; (ii) furnishes an incorrect11 taxpayer identification number; (iii) fails to properly report interest or dividends; or (iv) unde12 certain circumstances, fails to provide a certified statement, signed under penalty of perjury, that the13 taxpayer’s identification number provided is the recipient’s correct taxpayer identification number14 and that such recipient is not subject to backup withholding. Backup withholding is not an additiona15 tax but merely an advance payment, which may be refunded to the extent it results in an16 overpayment of tax. Certain persons are exempt from backup withholding, including, in certain17 circumstances, corporations and financial institutions. 18 In addition, a Holder of an Allowed Claim that is a not a United States person may be subjec19 to additional withholding, depending on, among other things, the particular type of income anwhether the type of income is subject to a lower treaty rate. As to certain Claims, it is possible that20 withholding may be required with respect to distributions by the Debtor making such Distribution o21 by the PFI Trust, as applicable, even if no withholding would have been required if payment was22 made prior to the Chapter 11 Cases. A Holder that is not a United States person may also be subject23 to other adverse consequences in connection with the implementation of the Plan. As discussed24 above, the foregoing discussion of the U.S. federal income tax consequences of the Plan does not25 generally address the consequences to Holders that are not United States persons, and such Holders26 are urged to consult their own tax advisors regarding potential withholding on Distributions under27 the Plan. 28

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1 In addition, Treasury Regulations generally require disclosure by a taxpayer on its U.S. 2 federal income tax return of certain types of transactions in which the taxpayer participated,3 including, among other types of transactions, certain transactions that result in the taxpayer’s4 claiming a loss in excess of specified thresholds. Holders are urged to consult their own tax advisors5 regarding these Treasury Regulations and whether the transactions contemplated by the Plan would6 be subject to these Treasury Regulations and require disclosure on the Holder’s tax returns. 7 8 9 [Remainder of page intentionally left blank] 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 IX. 2 RECOMMENDATION 3 The Plan Proponents believe that confirmation and implementation of the Plan are the bes4 alternative under the circumstances and urge all Impaired Creditors entitled to vote on the Plan to5 vote in favor of and support confirmation of the Plan. Provided herewith as a separate document is 6 brief summary of the Plan, and the statements of the Ad Hoc Committees in support of the Plan,7 which all Investors are encouraged to read in their entirety. 8 9 Dated: April 9, 2021 10 SHEPPARD MULLIN RICHTER & HAMPTON LLP 11 By /s/ Ori Katz 12 ORI KATZ J. BARRETT MARUM 13 MATT KLINGER 14 Counsel for Debtors 15 16 Dated: April 9, 2021 17 PACHULSKI STANG ZIEHL & JONES LLP 18 By /s/ Debra Grassgreen 19 DEBRA GRASSGREEN 20 JOHN D. FIERO CIA H. MACKLE 21 Counsel for the Official Committee of Unsecured 22 Creditors 23 24 25 26 27 28

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1 EXHIBIT A 2 Joint Chapter 11 Plan 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 EXHIBIT B 2 3 Corporate Organizational Chart 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 EXHIBIT C 2 3 Liquidation Analysis / Plan Recovery 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 EXHIBIT D 2 3 Non-Exclusive Description of Preserved PFI Trust Actions 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 SCHEDULE 1 2 Schedule of Real Properties 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 SCHEDULE 2 2 3 Schedule of Excluded Parties 4 [to be filed later] 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 SCHEDULE 3 2 3 Schedule of Non-Investor First-Priority Lender Claims 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 SCHEDULE 4 2 3 Schedule of Properties Subject to DOT Noteholders’ Deeds of Trust4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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Summary report: Litera® Change-Pro for Word 10.10.0.103 Document comparison done on4/9/2021 6:55:45 PM Style name: SMRH Standard Intelligent Table Comparison: Active Original DMS: nd://4831-0125-6162/2/DOCS_LA-#336232-v12-draft_DS.docx Modified DMS: nd://4845-1742-1541/1/Amended Disclosure Statement filedApril 9, 2021.docx Changes: Add 80 Delete 68 Move From 1 Move To 1 Table Insert 2 Table Delete 0 Table moves to 0 Table moves from 0 Embedded Graphics (Visio, ChemDraw, Images etc.) 0 Embedded Excel 0 Format changes 0 Total Changes: 152

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