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Full title: Notice Regarding Redline of Amended 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 April 16, 2021 Filed by Debtor Professional Financial Investors, Inc. (Katz, Ori) (Entered: 04/16/2021)

Document posted on Apr 15, 2021 in the bankruptcy, 10 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

As discussed above, the Debtors’ advisors have preliminarily found that (i) no later than January 1,21 2007, the Debtors’ business records and other available evidence presents attributes commonly seen22 in Ponzi schemes, and such attributes continued through Casey’s death; (ii) many Debtors had either23 negative equity or a disabling lack of liquidity that demanded the use of cash belonging to other24 related entities; (iii) the “debt service” and investment returns paid to Investors could never havebeen paid without the use of new capital from new Investors because the Real Properties were not25 sufficiently profitable to have done so; (iv) the Debtors’ cash flows were commingled, and this26 commingling was a prevalent feature of the Debtors’ operations; and (v) Because avoidance litigation would be a further hardship on the18 victims of the Debtors’ fraudulent scheme, and to eliminate the significant litigation expense and19 inefficiency associated with seeking recovery from Investors of prepetition distributions on account20 of interest or the like (that would ultimately only reduce the aggregate amount available for21 distribution on account of allowable claims), the Plan incorporates a netting mechanism that will22 account for any Prepetition Distribution received by an Investor when calculating the net claim23 amounts that will in turn drive the specific Distributions that such Investor will receive under the24 Plan. Hoc LLC17 Members Committee, the Debtors and the other Committees collectively agreed to a compromise18 pursuant to which (1) all of the Real Properties, however title was held, will be consolidated and the19 proceeds of the income and/or disposition of the Real Properties will be distributed to all Investors20 and other creditors as provided in the Plan; and (2) all equity interests of Investors in the LLC/LP21 Debtors will be elevated to debt relating back to the date of their investments so that such Investors22 will receive distributions under the Plan in the same ranking as PISF Straight Noteholders and DOT23 Noteholders.In such case, if2 the Holder of the TIC Interest also asserts a separate Claim against the Debtors, such TIC Claim will3 be treated in the same manner as Class 7 Other Unsecured Claims.However, to the extent a TIC Interest was obtained using rolled over funds or6 funds that were otherwise commingled or traceable to PFI, the Debtors or PFI Trust, as applicable,7 reserves all rights in connection therewith.

List of Tables

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) 263-7010 Email: 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 AMENDED 14 DISCLOSURE STATEMENT FOR THE AMENDED JOINT CHAPTER 11 PLAN 15 OF 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 16, 2021 20 21 22 PLEASE TAKE NOTICE THAT attached hereto as Exhibit A is a redline 23 comparing the Disclosure Statement for the Amended Joint Chapter 11 Plan of 24 Professional Financial Investors, Inc. and Its Affiliated Debtors Proposed by the Debtors 25 and Official Committee of Unsecured Creditors and Supported by the Ad Hoc LLC 26 Members Committee and the Ad Hoc DOT Noteholders Committee filed on April 9, 2021 27 as Dkt. No. 556 with the Amended Disclosure Statement for the Amended Joint Chapter 1

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1 Plan of Professional Financial Investors, Inc. and Its Affiliated Debtors Proposed by the 2 Debtors and Official Committee of Unsecured Creditors and Supported by the Ad Hoc 3 LLC Members Committee and the Ad Hoc DOT Noteholders Committee filed on April 4 16, 2021 as Dkt. No. 572, each submitted by Professional Financial Investors, Inc. and its 5 affiliated debtors and debtors in possession and the Official Committee of Unsecured 6 Creditors. 7 8 SUBMITTED BY: 9 Dated: April 16, 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 16, 2021 17 PACHULSKI STANG ZIEHL & JONES LLP 18 By /s/ Debra Grassgreen 19 DEBRA GRASSGREEN JOHN D. FIERO 20 CIA H. MACKLE 21 Counsel for the Official Committee of Unsecure Creditors 22 23 24 25 26 27

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EXHIBIT A EXHIBIT A

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1 THIS DOCUMENT IS NOT A SOLICITATION OF VOTES ON THE PLAN. VOTES MAY NOT BESOLICITED UNTIL THE BANKRUPTCY COURT HAS APPROVED A DISCLOSURE STATEMENT. THIS 2 DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOT YET BEENAPPROVED BY THE BANKRUPTCY COURT. ALL OF THE INFORMATION IN THIS PROPOSEDDISCLOSURE STATEMENT IS SUBJECT TO CHANGE. THIS DISCLOSURE STATEMENT IS NOT AN 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)Gianna 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 gsegretti@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. AMENDED DISCLOSURE STATEMENT 20 FOR THE AMENDED JOINT CHAPTER 11 PLAN OF PROFESSIONAL 21 FINANCIAL INVESTORS, INC. AND ITS AFFILIATED DEBTORS PROPOSED BY 22 THE DEBTORS AND OFFICIAL COMMITTEE OF UNSECURED 23 CREDITORS AND SUPPORTED BY THE AD HOC LLC MEMBERS COMMITTEE 24 AND THE AD 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 their28 addresses is attached as Exhibit 1 to the Plan (as defined herein).

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1 I. Motion for Authorization to File Involuntary Bankruptcy Petitions AgainstRelated Entities 24 2 J. Extension of Exclusivity Periods 25 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 8 A. Comprehensive Compromise and Settlement Under the Plan 279 1. Substantive Consolidation Issues 27 10 2. Ponzi Scheme Issues 28 11 3. Proposed Settlement Relating to DOT Noteholder Claims 30 12 4. Proposed Settlement Relating to PFI LLC Members 32 13 5. Proposed Settlement Relating to TIC Interests 3233 14 6. Provisions Relating to Avoidance Actions and Other Causes of Actions 3315 B. The Settlement Provisions in the Plan are Fair and Reasonable and in the BestInterest of All Creditors. 3334 16 V. RISK FACTORS 3435 17 A. Parties May Object to the Plan’s Classification of Claims and Equity Interests343518 B. The Plan Proponents May Not Be Able to Obtain Confirmation of the Plan 3519 C. The Conditions Precedent to the Effective Date of the Plan May Not Occur 3520 D. Claims Estimation and Allowance of Claims 3536 E. Potential Pursuit of PFI Trust Actions Against Creditors and Others 3621 F. Risks Regarding Real Estate 37 22 G. Securities Law Considerations 38 23 VI. CONFIRMATION OF the PLAN 39 24 A. The Confirmation Hearing 39 25 B. Requirements for Confirmation of the Plan 40 C. Best Interests of Creditors 41 26 D. Feasibility 42 27 E. Acceptance by Impaired Classes 42 28

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1 1. No Unfair Discrimination 43 2 2. Fair and Equitable Test 44 3 G. Alternatives to Confirmation and Consummation of the Plan 44 4 VII. CERTAIN SECURITIES LAW CONSEQUENCES OF THE PLAN 44 5 A. General 45 6 1. Status as Securities 45 7 B. Exemption From Offer and Sale of Securities Act and Blue Sky Laws 458 1. Issuance of PFI Trust Interests under Plan 45 9 2. Securities Issued in Reliance of Section 4(a)(2) of the Securities Act,Regulation D and/or Regulation S 47 10 3. Resale of PFI Trust Interests After Plan Effective Date 4811 VIII. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF12 THE PLAN 5049 13 A. Certain U.S. Federal Income Tax Consequences of the PFI Trust 53B. Consequences to Holders of Claims Generally 55 14 C. Consequences to PFI Trust Beneficiaries 57 15 D. Withholding on Distributions, and Information Reporting 6016 IX. RECOMMENDATION 62 17 18 EXHIBITS & SCHEDULES 19 EXHIBIT A Joint Chapter 11 Plan 20 EXHIBIT B Corporate Organizational Chart 21 EXHIBIT C Liquidation Analysis / Plan Recovery Analysis 22 EXHIBIT D Non-Exclusive Description ofPreserved PFI Trust Actions23 24 SCHEDULE 1 Schedule of the Real Properties 25 SCHEDULE 2 Schedule of Excluded Parties 26 SCHEDULE 3 Schedule of Non-Investor First-Priority Lender Claims27 SCHEDULE 4 Schedule of Properties Subject to DOT Noteholders’ Deeds of Trust28

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1 Consistent with the substantive consolidation contemplated by the Plan and in order to reduce2 administrative costs, subject to any Alternative Restructuring Transactions, on the Effective Date, 3 PFI and PISF, and at the election of the Plan Proponents and the PFI Trustee, some or all of the4 other Debtors will be dissolved automatically without the need for any corporate action or approval,5 without the need for any corporate filings, and without the need for any other or further actions to be6 taken on behalf of such dissolving Debtor or any other Person or any payments to be made in7 connection therewith. The Debtors’ Real Properties and other OpCo Assets will be vested in a new8 entity, the OpCo or its wholly owned remaining Debtor subsidiaries, as applicable. 9 The substantive consolidation effected pursuant to the Plan shall not affect, without10 limitation, (i) the defenses of the Debtors, the OpCo, any remaining Debtors as of the Effective Date11 (if applicable), or the PFI Trust to any Claim, Cause of Action or Avoidance Action, including the12 ability to assert any counterclaim; (ii) the setoff or recoupment rights of the Debtors, the OpCo, any13 remaining Debtors, or the PFI Trust; (iii) requirements for any third party to establish mutuality prior14 to substantive consolidation in order to assert a right of setoff against the Debtors, the OpCo, any15 remaining Debtors, or the PFI Trust; or (iv) distributions to the Debtors, the OpCo, any remaining16 Debtors, the Estates or the PFI Trust out of any insurance policies or proceeds of such policies. 17 2. Ponzi Scheme Issues 18 Additional disputes and possible litigation could arise regarding whether the Debtors were19 operating a Ponzi scheme, when that scheme began, and the implications of such conduct. 20 As discussed above, the Debtors’ advisors have preliminarily found that (i) no later than January 1,21 2007, the Debtors’ business records and other available evidence presents attributes commonly seen22 in Ponzi schemes, and such attributes continued through Casey’s death; (ii) many Debtors had either23 negative equity or a disabling lack of liquidity that demanded the use of cash belonging to other24 related entities; (iii) the “debt service” and investment returns paid to Investors could never havebeen paid without the use of new capital from new Investors because the Real Properties were not25 sufficiently profitable to have done so; (iv) the Debtors’ cash flows were commingled, and this26 commingling was a prevalent feature of the Debtors’ operations; and (v) Casey and Wallach27 removed millions of dollars from the Debtors. 28

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1 On April 13, 2021 the Official Committee of Unsecured Creditors filed a complaint for2 declaratory relief against the Debtors and Plan-Consolidated Debtors seeking a declaration that the 3 Debtors and Plan-Consolidated Debtors were operated as a Ponzi scheme beginning at least as of 4 January 1, 2007. The Debtors and Plan-Consolidated Debtors have reviewed that complaint and5 intend to file an answer admitting the vast majority of its allegations before the deadline to file the 6 Plan Supplement. In addition, the Debtors also plan to file a detailed declaration from their financial7 advisor that contains testimony regarding the conclusions the financial advisor has reached based on8 its investigation to date prior to the deadline to file the Plan Supplement. 9 Following a judicial determination that the Debtors were operating a Ponzi scheme, any10 payments of “interest” or other consideration that was transferred from any Person to an Investor11 during the period before the Petition Date, but typicallyexcluding payments representing the return12 of or repayment of principal owed on the applicable investment, could potentially be avoided and13 recovered as an “actual” fraudulent transfer. See, e.g., Donell v. Kowell, 533 F.3d 762, 770-72 (9th14 Cir. 2008); AFI Holding, Inc. v. Mackenzie, 525 F.3d 700, 708-09 (9th Cir. 2008); Perkins v. 15 Haines, 661 F.3d 623, 627 (11th Cir. 2011); Geltzer v. Barish (In re Geltzer), 502 B.R. 760, 77016 (Bankr. S.D.N.Y. 2013); Fisher v. Sellis (In re Lake States Commodities, Inc.), 253 B.R. 866,17 871-72 (Bankr. N.D. Ill. 2000). Because avoidance litigation would be a further hardship on the18 victims of the Debtors’ fraudulent scheme, and to eliminate the significant litigation expense and19 inefficiency associated with seeking recovery from Investors of prepetition distributions on account20 of interest or the like (that would ultimately only reduce the aggregate amount available for21 distribution on account of allowable claims), the Plan incorporates a netting mechanism that will22 account for any Prepetition Distribution received by an Investor when calculating the net claim23 amounts that will in turn drive the specific Distributions that such Investor will receive under the24 Plan. Specifically, the Plan incorporates a “netting” mechanism where distributions of PFI Trust25 Interests will be made based on the applicable Investor’s net claim – roughly, the total principal26 invested less all payments received from the Debtors since January 1, 2007, whether denominated as27 interest, principal, return of capital, referral fees or otherwise. The net claim also will be reduced to28

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1 Without the foregoing Plan compromise, the Debtors would have been required to spend2 hundreds of thousands of dollars prosecuting Avoidance Actions against hundreds of DOT 3 Noteholders based on thousands of transfers involving thirty (30) Real Properties. Such Avoidance 4 Actions would be necessary to clear title to the properties to facilitate sales or refinancings of the5 properties under the Plan. The compromise saves the expense to the Estates of pursuing such 6 Avoidance Actions to judgment. 7 4. Proposed Settlement Relating to PFI LLC Members 8 The LLC/LP Debtors, which own over one-half of the Real Properties, were placed into9 bankruptcy protection prior to the filing of the Plan pursuant to a process negotiated among the Ad10 Hoc LLC Members Committee, the Debtors and the other Committees. This strategic decision was11 done, in part, to enable the LLC/LP Debtors to preserve the value of the Real Properties for the12 benefit of their Investors and creditors (including through the benefit of the automatic stay), and13 facilitate a process to maximize the value of their real estate portfolio through the removal of any14 “taint” caused by the prepetition Ponzi scheme. Further, in order to ensure equal treatment for all15 Investors who are victims of the Ponzi (since funds of each investor group were unknowingly used to16 fund the investments of other investor groups – see Article II.B.1, above), the Ad Hoc LLC17 Members Committee, the Debtors and the other Committees collectively agreed to a compromise18 pursuant to which (1) all of the Real Properties, however title was held, will be consolidated and the19 proceeds of the income and/or disposition of the Real Properties will be distributed to all Investors20 and other creditors as provided in the Plan; and (2) all equity interests of Investors in the LLC/LP21 Debtors will be elevated to debt relating back to the date of their investments so that such Investors22 will receive distributions under the Plan in the same ranking as PISF Straight Noteholders and DOT23 Noteholders. 24 5. Proposed Settlement Relating to TIC Interests Holders of TIC ClaimsInterests have the option ofbeing treated as Holders of Class 7 Other25 Unsecured Claims and maintainmaintaining their TIC Interest ownership interest in an amount equal26 to such the ownership percentage in the Real Property (as set forth in the grant deed of the Real27 Property, unless there is an applicable TIC Agreement, in which case the ownership percentage in the28

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1 TIC Agreement will control), unless otherwise ordered by the Bankruptcy Court). In such case, if2 the Holder of the TIC Interest also asserts a separate Claim against the Debtors, such TIC Claim will3 be treated in the same manner as Class 7 Other Unsecured Claims. Such TIC Interests shall not be4 substantively consolidated under the Plan and will not be treated as Estate Assets, PFI Trust Assets5 or OpCo Assets. However, to the extent a TIC Interest was obtained using rolled over funds or6 funds that were otherwise commingled or traceable to PFI, the Debtors or PFI Trust, as applicable,7 reserves all rights in connection therewith. 8 Alternatively, Holders of TIC Claims may transfer their TIC Interests to the Debtors or PFI 9 Trust, as applicable, and elect to be treated as Investors. If such a election is made, the TIC Claim10 will be calculated using the same netting and aggregation principles applicable to Investors and set11 forth in the Special Provisions Relating to Investor Claims and Special Provisions Relating to12 Individual Investor-Specific Claims (Plan sections 2.11.2 and 2.11.3, respectively). 13 6. Provisions Relating to Avoidance Actions and Other Causes of Actions14 To the extent, and only to the extent, an Investor’s Claim is Allowed, no Avoidance Action15 may be brought, directly or indirectly, on account of a payment to an Investor outside the Investor16 Lookback Period, unless such Investor is an Excluded Party. The PFI Trustee also shall have17 discretion, subject to the PFI Trust Agreement, in determining whether and how to make demand18 upon, or sue, Investors with a Net Prepetition Investor Recovery, including but not limited to the19 discretion not to bring suit or make a demand because of the Investor’s financial hardship. That20 discretion shall be exercised in accordance with guidelines (i) agreed to by the Committees before21 the Effective Date, or, if no such guidelines are agreed to (ii) developed by the PFI Trustee and22 approved by the BOV subject to the PFI Trust Agreement. 23 Finally, nothing in the Plan will impair the right of Investors to independently pursue claims in24 which they have independent legal standing against third parties that are unique to such Investors(“Individual Investor-Specific Claims”). By way of example, and not limitation, such unique claims25 include claims based on loss of lien or loss of lien priority, claims against investors’ professional26 advisors, claims against retirement servicers and similar claims that may be asserted based on such27 investors’ particular circumstances. The Individual Investor-Specific Claims do not include Investor28

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