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Full title: Objection (Limited) to Joint Motion for Conditional Approval of Disclosure Statement for Joint Chapter 11 Plan of Professional Financial Investors, Inc. and Its Affiliated Debtors Proposed by the Debtors and the Official Committee of Unsecured Creditors (RE: related document(s)513 Motion to Approve Document, Motion to Set Hearing, Motion Miscellaneous Relief, 556 Disclosure Statement). Filed by Creditor Tri Counties Bank (Gorton, Mark) (Entered: 04/13/2021)

Document posted on Apr 12, 2021 in the bankruptcy, 9 pages and 0 tables.

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That said, the proposed Disclosure Statement, with virtually n28 disclosure of any claim or the factual basis thereof, purports to identify in Exhibit D a host of litigatio 2 of Exhibit D, “All financial institutions that maintained deposit accounts for, or made loans to, th3 Debtors or their affiliates, including, without limitation, Umpqua Bank, Avid Bank, Poppy Bank, Tr4 Counties Bank, Five Star Bank, Banner Bank, First Foundation Bank, JP Morgan Chase Bank . . . 6 D. While failing to identify any claim or to disclose the factual basis thereof again7 the Non-Investor First-Priority Lenders or the other Potential Targets, the Debtors and Committee see8 to correspondingly avoid the potentially adverse consequences of their apparent decision to not mak9 full and adequate disclosures in the Schedules, Disclosure Statement or elsewhere in these Chapter 110 Section 1125(b) of the Bankruptcy Code requires that a disclosure statement contai16 “adequate information” regarding a proposed plan to holders of impaired claims and interests entitle17 to vote on such plan.It may be th6 adequate disclosure of potential claims against the Non-Investor First-Priority could result in 7 contested plan confirmation dispute (or a negotiated resolution), but the Bankruptcy Code does requir8 disclosure of adequate information to creditors so informed decisions can be made whether or not t9 support plan confirmation.As currently outlined, the Disclosure Statement fails to provide Non-Investor First11

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MARK GORTON (SBN 099312) 2 BOUTIN JONES INC. Attorneys at Law 3 555 Capitol Mall, Suite 1500 4 Sacramento, CA 95814 Phone: 916.321.4444 5 Fax: 916.441.7597 Email: tmouzes@boutinjones.com 6 mgorton@boutinjones.com 7 MARK H. ATKINS (SBN 122319) 8 BRUCE L. BELTON (SBN 114645) MARTHA EVENSEN OPICH (SBN 95117) 9 TRI COUNTIES BANK LEGAL DEPARTMENT 10 Post Office Box 992570 Redding, CA 96099-2570 11 Phone: (530) 879-4282 Fax: (530) 248-3300 12 Email: legalservice@tcbk.com 13 Attorneys for creditor Tri Counties Bank 14 15 UNITED STATES BANKRUPTCY COURT 16 NORTHERN DISTRICT OF CALIFORNIA 17 SAN FRANCISCO DIVISION 18 In re ) Case No. 20-30604 ) 19 ) (Jointly Administered) PROFESSIONAL FINANCIAL ) INVESTORS, INC., a California corporation; 20 ) Chapter 11 PROFESSIONAL INVESTORS SECURITY ) FUND, INC., a California corporation, 21 ) OBJECTION (LIMITED) TO JOINT ) MOTION FOR CONDITIONAL Debtors. 22 ) APPROVAL OF DISCLOSURE ) STATEMENT FOR JOINT CHAPTER 11 23 ) PLAN OF PROFESSIONAL FINANCIAL ) INVESTORS, INC. AND ITS AFFILIATED 24 ) DEBTORS PROPOSED BY THE ) DEBTORS AND THE OFFICIAL 25 ) COMMITTEE OF UNSECURED ) CREDITORS. 26 ) ) Date: April 15, 2021 27 ) Time: 11:00 a.m. ) Place: Telephonic/Video Appearances Only 28 ) Judge: Honorable Hannah L. Blumenstiel

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2 Conditional Approval of the Disclosure Statement of Debtors1 and the Committees as follows: 3 BACKGROUND 4 1. TCB is the holder of eight secured claims against these jointly administered Debtor5 three with Professional Financial Investors, Inc. (“PFI”) and five with the LLC/LP Debtors. The eig6 claims total more than $55.8 million and each claim is secured by a consensual first lien in collater7 valued by the Debtors in excess of the claim. TCB is oversecured. 8 2. TCB is one of what are referred to as the Non-Investor First-Priority Lenders. At lea9 70 Real Properties have been identified in which the Debtors have title or an interest. According to th10 information provided to TCB and the other Non-Investor First-Priority Lenders by the Debtor11 representatives to date, substantial equity exists in the Real Properties (the substantive assets of thi12 estate) that will be available under the Plan to pay the Creditors harmed by the pre-petition actions 13 the Debtors. The alleged equity is at least $246,948,171 after the senior liens of the Non-Investor First14 Priority Lenders of approximately $308,112,429 as of June 30, 2020. Stated differently, the 70 Re15 Properties have a value of at least $555,060,600, according to the Debtors. The Non-Investor Firs16 Priority Lenders are oversecured. 17 3. Since the filing of these Chapter 11 Cases, the Non-Investor First-Priority Lenders hav18 consented to the Debtors’ use of cash collateral and have been cooperating with the Debtors and th19 Committees as they conducted an investigation of the Debtors pre-petition business operations. Th20 Non-Investor First-Priority Lenders have voluntarily put any loan enforcement actions on a temporar21 hold and voluntarily provided loan information and documentation to the Debtors and Committee22 without any need for orders to compel or Bankruptcy Rule 2004 orders for examination. During thi23 time, the Debtors and the Committees have performed their investigations, including sorting o24 numerous issues among the Debtors and the constituencies of the Committees – the Investor25 (including the junior deed of trust holders) and the General Unsecured Claim holders. 26 4. Recently, the Non-Investor First-Priority Lenders, through their respective counse 27 1 Except as otherwise provided, capitalized terms have the meanings ascribed to them in the proposed Amended Joi28 Chapter 11 Plan of Professional Financial Investors, Inc. and Its Affiliated Debtors Proposed by the Debtors and OfficiCommittee of Unsecured Creditors and Supported by the Ad Hoc LLC Members Committee and the Ad Hoc DO

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2 concerns related to the Disclosure Statement and the Plan. Many of those concerns have been resolve3 by changes reflected in the amended Plan filed on April 9, 2021. While those discussions remai4 ongoing, TCB is hopeful that many of the remaining concerns can be resolved prior to confirmation5 5. Notwithstanding those productive discussions, TCB remains concerned that the lack 6 disclosure with respect to certain critical components of the Disclosure Statement. 7 A. The Debtors and the Committees have spent substantial time on numerou8 fronts to investigate the actions and activities of the principals and operators of the Debtors and thei9 alleged pre-petition crimes and Ponzi scheme. The results of the expansive investigation have not bee10 disclosed to the Non-Investor First-Priority Lenders or to other Creditors. Neither the Debtors nor th11 Committees have disclosed the factual basis for the assertion in the Disclosure Statement that th12 alleged Ponzi scheme commenced at least as of January 1, 2007 (over thirteen years ago). Nor hav13 the Debtors or the Committee disclosed the factual basis of the claims against the persons identifie14 in Exhibit D to the Disclosure Statement as “Potential Targets.” 15 B. Orderly liquidation of the Real Properties, including the payment of the No16 Investor First-Priority Lenders through sales and refinancing, has been identified as the primar17 method to generate net income to pay the administrative expenses and the Creditors of this estate aft18 payment of the secured claims of the Non-Investor First-Priority Lenders. 19 C. To date, the Debtors have not identified any existing claim(s) or cause(s) 20 action against any Non-Investor First-Priority Lenders. While impaired under the amended Plan a21 Class 1 Creditors (See Section 2 of the Plan), the impairment relates to non-payment covenants for th22 respective loans secured by the Real Properties and Collateral arising from the alleged pre-petitio23 wrongful actions of the Debtors. This impairment under the amended Plan seeks to provide that pre24 Effective Date non-payment covenant defaults may not serve as a basis for lenders to declare default25 and commence foreclosure proceedings. Otherwise the Non-Investor First-Priority Lenders loan26 remain unaltered, to be paid in full including by sale or refinancing or as provided under the terms 27 the applicable loan documents. That said, the proposed Disclosure Statement, with virtually n28 disclosure of any claim or the factual basis thereof, purports to identify in Exhibit D a host of litigatio

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2 of Exhibit D, “All financial institutions that maintained deposit accounts for, or made loans to, th3 Debtors or their affiliates, including, without limitation, Umpqua Bank, Avid Bank, Poppy Bank, Tr4 Counties Bank, Five Star Bank, Banner Bank, First Foundation Bank, JP Morgan Chase Bank . . . 5 and a number of other financial institutions. 6 D. While failing to identify any claim or to disclose the factual basis thereof again7 the Non-Investor First-Priority Lenders or the other Potential Targets, the Debtors and Committee see8 to correspondingly avoid the potentially adverse consequences of their apparent decision to not mak9 full and adequate disclosures in the Schedules, Disclosure Statement or elsewhere in these Chapter 110 Cases by trying to evade the preclusive impacts of a confirmation judgment, and the related advers11 case law related thereto. See Plan, Section 4.6.2. 12 LIMITED OBJECTION TO DISCLOSURE STATEMENT 13 6. The Disclosure Statement fails to provide adequate information within the meaning 14 section 1125 of the Bankruptcy Code and, therefore, should not be approved in its current form. 15 7. Section 1125(b) of the Bankruptcy Code requires that a disclosure statement contai16 “adequate information” regarding a proposed plan to holders of impaired claims and interests entitle17 to vote on such plan. 11 U.S.C. § 1125(b). “Adequate information” means “information of a kind, an18 in sufficient details, as far as is reasonably practicable in light of the nature and history of the debt19 and the condition of the debtor’s books and records . . . that would enable . . . a hypothetical investo20 of the relevant class to make an informed judgment about the plan.” Id. §1125(a)(1). This simpl21 mission is encapsulated in the legal requirement that the disclosure statement “provide adequat22 information” for “a hypothetical reasonable investor typical of the holders of the claims or interests 23 the relevant class to make an informed judgment about the plan . . . .” 11 U.S.C. §1125(a)(1) and (b24 7 Alan N. Resnick and Henry J. Somner, Collier on Bankruptcy, ¶ 1125.02 at pp. 1125-7-1125-125 (16th Ed. 2019). In other words, to satisfy the disclosure requirements of Section 1125, a debtor mu26 “adequately, not selectively, disclose fully and precisely all information a creditor would reasonabl27 want before voting on the plan.” Westland Oil Dev. Corp. v. MCorp. Mgmt. Solutions, Inc., 157 B. 28 100, 104 (S.D. Tex. 1993). The adequate information required is designed to help creditors in thei

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2 100 (3d Cir. 1988). 3 8. The determination of what constitutes “adequate information” is within the discretio4 of the bankruptcy court and made on a case-by-case basis. See In re Cajun Elec. Power Co-op., Inc5 150 F.3d 503, 518 (5th Cir. 1998). Courts consider numerous factors when determining the sufficienc6 of information provided in a disclosure statement, including, but not limited to: (a) financi7 information, data, and valuations relevant to a party in interest’s decision to accept or reject the chapte8 11 plan; (b) information relevant to the risks posed to creditors under the plan; (c) the actual 9 projected realizable value from recovery of preferential or otherwise voidable transfers; and (d) th10 relationship of the debtor with affiliates. See In re Divine Ripe, L.L.C., 554 B.R. 395, 401-402 (Bank11 S.D. Tex. 2016) (listing nineteen non-exhaustive factors set forth in In re Metrocraft Pub. Servs., Inc12 39 B.R. 567, 568 (Bankr. N.D. Ga.1984)). “In short, a proper disclosure statement must clearly an13 succinctly inform the average unsecured creditor what it is going to get, when it is going to get it, an14 what contingencies there are to getting its distribution.” In re Ferretti, 128 B.R. 16, 19 (Bankr. D.N. 15 1991). 16 9. In its current form, the Disclosure Statement fails to satisfy the disclosure requirement17 of section 1125 of the Bankruptcy Code for the following reasons: 18 A. Despite the time consuming investigation, few if any results of th19 investigation have been disclosed, including the factual basis asserted in the Disclosure Statement th20 the alleged Ponzi scheme commenced at least as of January 1, 2007, or the basis of any potential claim21 against the Non-Investor First-Priority Lenders or anyone else. The investigation reports and th22 determinations, conclusions and recommendations concerning the alleged pre-petition fraud an23 crimes of the Debtors, including the alleged Ponzi, should be meaningfully disclosed before 24 disclosure statement is approved. In these Chapter 11 Cases, this is important information to all partie25 and material to the factual basis and claims giving rise to the settlements encompassed by the propose26 Plan. No resolution or settlement of a dispute can occur in a vacuum in a bankruptcy case which ha27 as a goal a heightened level of transparency. 28 B. Although identifying the Non-Investor First-Priority Lenders as Potenti

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2 Real Properties for the benefit of the estate, and that the Non-Investor First-Priority Lenders are ove3 secured, with their respective loans to remain in place and paid upon sale and refinancing. Whil4 claims of “Ponzi” have been repeatedly referenced, the basis of claims, if any, against the over-secure5 Non-Investor First-Priority Lenders are unidentified and only generically disclosed. It may be th6 adequate disclosure of potential claims against the Non-Investor First-Priority could result in 7 contested plan confirmation dispute (or a negotiated resolution), but the Bankruptcy Code does requir8 disclosure of adequate information to creditors so informed decisions can be made whether or not t9 support plan confirmation. 10 C. As currently outlined, the Disclosure Statement fails to provide Non-Investor First11 Priority Lenders with the adequate information to decide whether to support plan confirmation. 12 disclosure statement should not be structured to restrict the disclosure of known information to p13 interested parties at risk post-confirmation while disclosing to those parties that no objections exi14 otherwise to their claims. Indeed, if such actions were commenced after the sale of Collateral, then th15 oversecured Non-Investor First-Priority Lenders’ interests could be substantially prejudiced witho16 ability to protect their positions by resort to their Collateral. The amended Plan fails to provid17 protection for the oversecured Non-Investor First-Priority Lenders. Indeed, as it now stands, th18 amended Plan provides a basis for a post-petition trust to remove any Non-Investor First-Priorit19 Lender’s Collateral, to put the net proceeds into a post-petition fund with no recovery rights to th20 applicable Non-Investor First-Priority Lender. If this is the goal of the amended Plan, the Disclosur21 Statement should be amended to make this “adequate disclosure.” 22 TCB reserves its rights to raise additional issues at the preliminary hearing. 23 CONCLUSION 24 TCB’s loans provided leverage for its borrower Debtors to obtain the benefit of th25 appreciation in those borrower Debtors’ Real Properties and other Collateral. The realizable net equit26 therefrom and the other properties financed by the Non-Investor First-Priority Lenders is the onl27 value available from disposable assets for the Investors, the junior deed of trust creditors and th28 unsecured creditors. Otherwise the only recovery is from litigation.

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2 going to get it, and what contingencies there are to getting its distribution.” In re Ferretti, supra, 123 B.R. at 19. Those contingencies should include the factual basis for the conclusion that the Pon4 commenced thirteen years ago and why TCB is on the Potential Target list. In light of the Debtor5 alleged massive fraud, the oversecured lenders who were also victims of the Debtors’ pre-petitio6 schemes are entitled to the full protection of and requirements of the law including concerning th7 proposed Disclosure Statement. 8 DATED: April 13, 2021 Mark H. Atkins TRI COUNTIES BANK LEGAL DEPARTMENT 9 -and- 10 11 BOUTIN JONES INC. Attorneys at Law 12 13 By: /s/ Mark Gorton 14 THOMAS G. MOUZES MARK GORTON 15 Attorneys for Creditor, Tri Counties Bank 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 PROOF OF SERVICE 2 I am employed in the County of Sacramento; my business address is 555 Capitol MallSuite 1500, Sacramento, California 95814. I am over the age of eighteen years and not a party t3 the foregoing action. 4 On April 13, 2021, I served the within: 5 (1) OBJECTION (LIMITED) TO JOINT MOTION FOR CONDITIONAL APPROVAL OF DISCLOSURE STATEMENT FOR JOINT CHAPTER 11 6 PLAN OF PROFESSIONAL FINANCIAL INVESTORS, INC. AND ITS AFFILIATED DEBTORS PROPOSED BY THE DEBTORS AND THE 7 OFFICIAL COMMITTEE OF UNSECURED CREDITORS 8 9 X (by e-mail transmission) based on a court order or an agreement of the parties to accepservice by e-mail or electronic transmission, I sent the document(s) to the person(s) a10 the e-mail address(es) as set forth below, or as stated on the attached service list. 11 David W. Baddley baddleyd@sec.gov 12 Jared A. Day jared.a.day@usdoj.gov, ankey.to@usdoj.gov Terri H. Didion terri.didion@usdoj.gov, patti.vargas@usdoj.gov 13 Darya Sara Druch ecf@daryalaw.com Cecily Ann Dumas cdumas@bakerlaw.com, hhammonturano@bakerlaw.com 14 John D. Fiero jfiero@pszjlaw.com, ocarpio@pszjlaw.com Debra I. Grassgreen dgrassgreen@pszjlaw.com, hphan@pszjlaw.com 15 Mitchell B. Greenberg mgreenberg@abbeylaw.com, mmeroney@abbeylaw.com 16 Thomas P. Griffin tgriffin@hsmlaw.com, tmitchell@hsmlaw.com Cameron Gulden cameron.m.gulden@usdoj.gov 17 Ryan A. Henderson Ryan@weltyweaver.com A. Kenneth Hennesay khennesay@allenmatkins.com, ncampos@allenmatkins.com 18 Robbin L. Itkin ritkin@sklarkirsh.com, cbullock@sklarkirsh.com 19 Ivan L. Kallick ikallick@manatt.com Ori Katz okatz@sheppardmullin.com, LSegura@sheppardmullin.com 20 Ivo Keller ivo@ssllawfirm.com Jeannie Kim jekim@sheppardmullin.com, dgatmen@sheppardmullin.com 21 Matthew Ryan Klinger mklinger@sheppardmullin.com, DGatmen@sheppardmullin.com Ian S. Landsberg ian@landsberg-law.com 22 Richard A. Lapping rich@trodellalapping.com 23 Adam A. Lewis alewis@mofo.com, adam-lewis-3473@ecf.pacerpro.com Mark A. Lightner MLightner@mofo.com 24 Mitchell B Ludwig mbl@kpclegal.com Patricia H. Lyon phlyon@frenchandlyon.com, mwoodward@frenchandlyon.com 25 J. Barrett Marum bmarum@sheppardmullin.com, egarcia@sheppardmullin.com Christopher M. McDermott ecfcanb@aldridgepite.com, CMM@ecf.inforuptcy.com 26 Dennis D. Miller dmiller@lubinolson.com 27 Kevin Harvey Morse kmorse@clarkhill.com Office of the U.S. USTPRegion17.SF.ECF@usdoj.gov 28 Trustee/SF

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1 Aron M. Oliner roliner@duanemorris.com, dmicros@duanemorris.com Joshua K. Partington jpartington@swlaw.com, idelgado@swlaw.com 2 Eric S. Pezold epezold@swlaw.com, knestuk@swlaw.com Douglas B. Provencher dbp@provlaw.com 3 Gregory A. Rougeau grougeau@brlawsf.com 4 Spencer P. Scheer sscheer@scheerlawgroup.com Michael A. Sweet msweet@foxrothschild.com, michael-sweet-6337@ecf.pacerpro.co 5 John A. Vos InvalidEMailECFonly@gmail.com, PrivateECFNotice@gmail.comDavid R. Zaro dzaro@allenmatkins.com, mdiaz@allenmatkins.com 6 7 I declare under penalty of perjury under the laws of the United States of America that thforegoing is true and correct. 8 Executed on April 13, 2021, at Sacramento, California. 9 10 /s/ Carmelia V. Domingo 11 Carmelia V. Domingo 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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