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Full title: Motion For Order (I)Authorizing Professional Investors 49, Llc To Consummate The Non-Ordinary Course Of Business Sale Of Certain Commercial Real Property And (Ii) Granting Related Relief Filed by Debtor Professional Financial Investors, Inc (Attachments: # 1 Declaration of Andrew Hinkelman # 2 Declaration of Scott Gerber # 3 Declaration Tom Neville) (Marum, J.)CORRECTIVE ENTRY: : Clerk modified docket text to reflect the information contained in the PDF. Modified on 5/7/2021 (lb). (Entered: 05/06/2021)

Document posted on May 5, 2021 in the bankruptcy, 16 pages and 0 tables.

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512-1 includes language that the 18 Property would be listed on a multiple listing service, Mr. Gerber and LLC 49 chose not t19 market the Property on any multiple listing service or other commercial real estate 20 websites like LoopNet and Costar as the full extent of the repairs the Property needed 21 became clear due to (i) the high-profile nature of the proposed sale of the Property since 22 many parties without actual interest in purchasing the Property have been seeking 23 information on the real estate portfolio held by PFI and its affiliated entities; (ii) the need 24 to quickly close a sale of the Property given its dire physical condition and the financial 25 implications of LLC 49 having to continue operating the Property; (iii) the fact that deals 26 not listed for the public typically result in much stronger responses from well-qualified an27 serious buyers; and (iv) the substantial repairs the Property needs limited the potential poo 1 of buyers, such that marketing the Property on publicly available listing services did not 2 make sense.By way of this Motion, LLC 49 seeks an order from this Court (the “Sale Order”) 6 (i) authorizing LLC 49 to consummate the Proposed Sale of the Property to the Buyer, 7 pursuant to the Purchase Agreement; (ii) authorizing LLC 49 to enter into the Escrow 8 Instructions after making any modifications that are necessary in light of LLC 49’s 9 bankruptcy case; (iii) granting the protections afforded by Section 363(m) to the Buyer; 10 (iv) authorizing the sale of the Property free and clear of liens, claims, encumbrances and 11 other interests of any persons or entities listed as creditors on LLC 49’s schedules or who 12 have filed a proof of claim or request for notice in LLC 49’s case or any other persons or 13 entities with unknown liens, claims, encumbrances, or other interests against or in the 14 Property, excepting those liens and claims of (a) Homestreet pursuant to the Deed of Trust15 recorded against the Property in the amount of $4.15 million and (b) the Marin County Ta16 The reversal or modification on appeal of an authorization under subsection (b) or (c) of this section of a sale or lease of property does not affect the 22 validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the 23 pendency of the appeal, unless such authorization and such sale or lease were 24 stayed pending appeal.The Sale Satisfies the Requirements of Section 363(f) of the Bankruptcy Code 13 Under Section 363(f) of the Bankruptcy Code, a debtor-in-possession may sell all o14 any part of its property free and clear of any and all liens, claims or interests in such 15 property if: (1) such a sale is permitted under applicable non-bankruptcy law; (2) the party16 asserting such a lien, claim or interest consents to such sale; (3) the interest is a lien and 17 the purchase price for the property

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1 SHEPPARD, MULLIN, RICHTER & Richard A. Lapping (SBN: 107496) HAMPTON LLP TRODELLA & LAPPING LLP 2 A Limited Liability Partnership 540 Pacific Avenue Including Professional Corporations San Francisco, CA 94133 3 ORI KATZ, Cal. Bar No. 209561 Telephone: (415) 399-1015 J. BARRETT MARUM, Cal. Bar No. 228628 Facsimile: (415) 651-9004 4 MATT KLINGER, Cal. Bar No. 307362 Email: Rich@TrodellaLapping.com GIANNA SEGRETTI, Cal. Bar No. 323645 5 Four Embarcadero Center, 17th Floor Conflicts Counsel for the Debtors San Francisco, California 94111-4109 6 Telephone: 415.434.9100 Facsimile: 415.434.3947 7 Email: okatz@sheppardmullin.com bmarum@sheppardmullin.com 8 mklinger@sheppardmullin.com gsegretti@sheppadmullin.com 9 Counsel for the Debtors 10 UNITED STATES BANKRUPTCY COURT 11 NORTHERN DISTRICT OF CALIFORNIA , SAN FRANCISCO DIVISION 12 In re Case No. 20-30604 13 PROFESSIONAL FINANCIAL (Jointly Administered) 14 INVESTORS, INC., et al.,1 Chapter 11 15 Debtors. MOTION FOR ORDER (I) 16 AUTHORIZING PROFESSIONAL INVESTORS 49, LLC TO CONSUMMAT 17 THE NON-ORDINARY COURSE OF BUSINESS SALE OF CERTAIN 18 COMMERCIAL REAL PROPERTY AND (II) GRANTING RELATED RELIEF 19 Hearing Requested on Shortened Time for: 20 Date: May 20, 2021 21 Time: 10:00 a.m. Place: Telephonic/Video Appearances Only 22 450 Golden Gate Avenue 16th Floor, Courtroom 19 23 San Francisco, CA 94102 Judge: Hon. Hannah L. Blumenstiel 24 POTENTIALLY AFFECTED Homestreet Bank, a Washington State Chartered 25 LIENHOLDERS: Commercial Bank; Marin County Tax Collector 26 27 1 A complete list of the Debtors and their respective chapter 11 case numbers may be found at www.donlinerecano.com/pfi. The federal tax identification numbers of each of the Debtors is also

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1 I. 2 INTRODUCTION 3 Professional Investors 49, LLC (“LLC 49”) hereby moves (the “Motion”) the Cour4 for an order under sections 105(a) and 363 of title 11 of the United States Code (the 5 “Bankruptcy Code”) (i) authorizing LLC 49 to consummate the private sale (the “Propose6 Sale”) of the commercial real property LLC 49 owns at 1732 Lincoln Avenue, San Rafael,7 California 94901 (the “Property”) to Over the Fence, LLC (the “Buyer”), pursuant to a 8 purchase and sale agreement between LLC 49 and the Buyer (the “Purchase Agreement”) 9 attached to this Motion as Exhibit A, (ii) authorizing LLC 49 to enter into the escrow 10 instructions substantially in the form attached to this Motion as Exhibit B (the “Escrow 11 Instructions”) in connection with the Proposed Sale after making any modifications that 12 are necessary in light of LLC 49’s bankruptcy case, (iii) granting the protections afforded 13 by Section 363(m) to the Buyer, (iv) authorizing the sale of the Property free and clear of 14 liens, and (v) granting related relief. 15 As further set forth below, the Proposed Sale follows extensive marketing of the 16 Property, which yielded seven purchase offers, and an arm’s-length negotiation process 17 between LLC 49 and the Buyer involving highly-qualified real estate agents on both sides. 18 Moreover, if consummated, the Proposed Sale will represent the termination of a 19 significant liability for LLC 49 and its estate and will provide substantial tangible and 20 direct benefits and value to LLC 49, its estate, and creditors. Specifically, the Property is 21 presently operating at a significant loss and is in dire need of extensive repair work. 22 Moreover, the Property is currently subject to a $4.15 million Deed of Trust. By selling 23 the Property, LLC 49 will no longer be responsible for covering the costs to maintain or 24 repair the Property, nor will it continue to incur monthly mortgage obligations for the 25 Property. Additionally, LLC 49’s estate will receive the benefit of the net proceeds of the 26 Proposed Sale, which are estimated to be at least $700,000. LLC 49 has determined in its 27 business judgment that the Proposed Sale is the most viable, fair, and best option currently

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1 This Motion is based on the discussion below, the Declaration of Andrew 2 Hinkelman, Declaration of Scott Gerber, and the Declaration of Tom Neville, each filed 3 concurrently with this Motion, the other papers of record in this case and upon such furthe4 oral and documentary evidence as may be presented prior to or at the time of the hearing 5 on the Motion. 6 II. 7 BACKGROUND 8 A. The Debtors’ Bankruptcy2 9 On July 16, 2020, Jacques Achsen, Samuel Goldberger, Elizabeth Goldblatt, Arthu10 Indenbaum, Andrew Michaels, Mary Michaels, and Joel Rubenzahl, each of whom assert 11 they are creditors of Professional Investors Security Fund, Inc. (“PISF”), commenced an 12 involuntary chapter 11 bankruptcy action against PISF, Case No. 20-30579 (the “PISF 13 Case”). On July 26, 2020, PISF filed a consent to the entry of an order for relief in the 14 PISF Case, entered by the Court on July 27, 2020. 15 On July 26, 2020, Professional Financial Investors Inc. (“PFI,” and together with 16 PISF, the “Original Debtors”) commenced its bankruptcy case, by filing a voluntary 17 chapter 11 petition. Subsequently, PFI commenced involuntary petitions against all but 18 two of its affiliated limited liability companies and limited partnerships (the “LLC/LP 19 Debtors”). On November 20, 2020, under authority granted by the Bankruptcy Court, PFI20 commenced involuntary petitions against twenty-nine of the LLC/LP Debtors and on 21 December 11, 2020, PFI consented to such involuntary petitions and the Court entered 22 orders for relief. On February 3, 2021 and February 4, 2021, PFI commenced involuntary23 petitions against ten additional LLC Debtors, including LLC 49.3 On February 17, 2021, 24 PFI consented to the ten additional involuntary petitions and on February 18, 2021, the 25 26 2 The Declaration of Michael Hogan in Support of the Bankruptcy Filing and Early Case Administration Motions filed on July 26, 2020 as Dkt. No. 5 (the “First Day Hogan Declaration”) contains a detailed 27 discussion of the background and capital structure of PFI and PISF, and the events leading to these chapter11 cases.

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1 Court entered orders for relief. The Debtors’ Chapter 11 Cases are jointly administered 2 under Case No. 20-30604. 3 On August 19, 2020, the Office of the United States Trustee appointed the Official 4 Committee of Unsecured Creditors (“OCUC”). Meanwhile, certain parties with a 5 membership interest in limited liability companies formed and controlled by PFI have 6 formed an ad hoc committee of LLC members (the “Ad Hoc Committee of LLC 7 Members”) and certain lenders to the Debtors who are secured by a deed of trust on 8 property owned by one of the Debtors have also formed into an ad hoc committee of DOT9 holders (the “Ad Hoc Committee of DOT Holders,” and collectively with the OCUC and 10 the Ad Hoc Committee of LLC Members, the “Committees”). 11 B. The Debtors’ Prior Management and Fraud 12 PISF was founded in 1983 and PFI was founded in 1990. Both companies were 13 founded as real estate investment and management firms specializing in multi-unit 14 residential and commercial properties in Northern California. In 1990, PFI hired Lewis 15 Wallach (“Mr. Wallach”) as a bookkeeper. The Debtors’ now-deceased founder, Kenneth16 Casey, served as the sole director, officer, and shareholder of PFI until 1998, when Mr. 17 Wallach took over as president of PFI. Mr. Wallach continued to serve as president of PF18 until June 2020, when he was asked to resign. 19 It appears that from at least 2007, PFI and the rest of the Debtors were operated by 20 Mr. Casey and Mr. Wallach as a Ponzi scheme, with both men separately misappropriatin21 and embezzling company and investor funds. From at least September 2015 through May22 2020, Mr. Wallach misappropriated more than $26 million from investors in the Debtors a23 part of the fraudulent scheme. Mr. Wallach used these misappropriated funds to enrich 24 himself and has admitted to his role in operating the fraudulent scheme involving the 25 Debtors and their affiliates, including his misappropriation of investor funds. 26 As a result of Mr. Wallach’s fraud involving the Debtors, he is currently the 27 defendant in (i) an action brought by the Securities and Exchange Commission before the

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1 Case No. 20-cv-06756 and (ii) criminal proceedings initiated by the Department of Justice2 and pending in the United States District Court, Northern District of California, San 3 Francisco Division, as Case No. CR20- 365MMC. 4 C. Background Regarding the Property 5 LLC 49 obtained title to the Property along with Carolyn Lee Walker Davis, 6 Trustee of the Walker Davis Family Trust Agreement Dated November 4, 2017 (the 7 “Walker Davis Trust”) as tenants in common by a Grant Deed recorded in the official 8 records of Marin County, California on January 30, 2020 (the “Grant Deed”).4 9 LLC 49 obtained a preliminary title report for the Property (the “Prelim”), which 10 report shows that the Property is subject to (i) delinquent property taxes in the amount of 11 $63,778.78 plus an associated penalty in the amount of $3,188.93 (as of March 25, 2021), 12 (ii) a supplemental assessment for the tax year 2019-2020 in the amount of $10,133.67 13 plus an associated penalty in the amount of $1,013.36 (as of March 25, 2021), (iii) a 14 supplemental assessment for the tax year 2020-2021 in the amount of $23,742.78 plus an 15 associated penalty in the amount of $2,374.27 (as of March 25, 2021), and (iv) a Deed of 16 Trust dated January 23, 2020 (the “Deed of Trust”) in favor of Homestreet Bank, a 17 Washington State Chartered Commercial Bank (“Homestreet”), which Deed of Trust state18 that it secures a promissory note made by LLC 49 and the Walker Davis Trust in the 19 amount of $4,150,000.00 (the “Note”) and the performance of the covenants and 20 agreements under the Deed of Trust and the Note. 21 Presently the Property is in disrepair and in need of extensive deferred repairs to 22 return the property to normal operations. Given the present condition of the Property, 23 thirteen of its nineteen units are vacant due to life safety issues and cannot be occupied 24 until the needed repairs are completed. Because only six of the nineteen units are occupie25 by tenants and generating income, LLC 49 is operating the Property at a monthly deficit 26 and cannot afford to complete the critical repairs needed. 27

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1 D. Marketing of the Property and Sale Process 2 Pursuant to an order of this Court entered on April 8, 2021 as Dkt. No. 551, LLC 43 engaged Scott Gerber (“Mr. Gerber”) of Meridian Commercial as its commercial real 4 estate agent to market the Property. Mr. Gerber is the Managing Director of Meridian 5 Commercial, has been working in the commercial real estate market since 1989, is the 6 former President of the North Coast Rental Housing Association, and is presently the top 7 apartment broker in Marin and Sonoma Counties. During his career, Mr. Gerber estimate8 that he has handled the sale of more than 8,000 units with a total value of well over $1 9 billion. 10 Subsequent to his engagement by LLC 49, Mr. Gerber prepared marketing material11 for the Property with an original list price of $5,100,000. Mr. Gerber specifically markete12 the Property to over two-hundred ninety qualified and vetted principals and agents with 13 knowledge of the North Bay market. The marketing campaign involved direct contact 14 made to these potential buyers and agents via phone and email. Although the Listing 15 Agreement between LLC 49 and Meridian Commercial attached as Exhibit A to the 16 Declaration of Scott Gerber in Support of Application to Employ Scott Gerber as Real 17 Estate Agent filed on March 30, 2021, as Docket No. 512-1 includes language that the 18 Property would be listed on a multiple listing service, Mr. Gerber and LLC 49 chose not t19 market the Property on any multiple listing service or other commercial real estate 20 websites like LoopNet and Costar as the full extent of the repairs the Property needed 21 became clear due to (i) the high-profile nature of the proposed sale of the Property since 22 many parties without actual interest in purchasing the Property have been seeking 23 information on the real estate portfolio held by PFI and its affiliated entities; (ii) the need 24 to quickly close a sale of the Property given its dire physical condition and the financial 25 implications of LLC 49 having to continue operating the Property; (iii) the fact that deals 26 not listed for the public typically result in much stronger responses from well-qualified an27 serious buyers; and (iv) the substantial repairs the Property needs limited the potential poo

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1 of buyers, such that marketing the Property on publicly available listing services did not 2 make sense. 3 As a result, although the Property was not publicly marketed, Mr. Gerber’s targeted4 approach of marketing directly to the qualified and vetted buyers created a competitive an5 calculated scenario that resulted in seven offers. Four of the initial offers were well below6 the original proposed list price of $5,100,000 and thus were rejected. LLC 49 responded t7 the three highest offers with a counteroffer for best and final terms. Ultimately, one of 8 these three highest initial offerors dropped out and two of the initial highest offerors were 9 willing to purchase the Property for at least $5.15 million, with the proposed Buyer makin10 the higher of the two offers at $5.175 million. Buyer’s offer is also free of contingencies. 11 The Buyer’s offer is at or above LLC 49’s expectations for the sale price of the 12 Property and, thus, LLC 49, in its sound business judgment, determined to move forward 13 to sell the Property to Buyer, subject to the approval of this Court, to consummate the Sale14 E. The Purchase Agreement 15 Following extensive arm’s-length negotiations, LLC 49 and the Buyer reached the16 agreements set forth in the Purchase Agreement, which contemplates the sale of the 17 Property on the following material terms: 18 Asset to be Sold: The 19-unit apartment complex located at 1732 Lincoln Avenue, 19 San Rafael, California 94901. 20 Identification of the Buyer: Over the Fence, LLC. 21 Purchase Price: $5,175,000.00. 22 Deposit: $500,000.00. 23 Closing: Three business days after entry of the final Sale Order. 24 Broker Fees: $207,000.00. 25 Intended Use of Proceeds of the Sale: Upon the closing of the Proposed Sale, the 26 Purchase Price shall be paid as set forth in the Purchase Agreement, property taxes will be27 paid directly from escrow, the debt secured by Homestreet’s Deed of Trust shall be paid i

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1 full directly from escrow, and the net sale proceeds shall be remitted to LLC 49’s 2 bankruptcy estate without prejudice to the rights of the Walker Davis Trust. 3 III. 4 RELIEF REQUESTED 5 By way of this Motion, LLC 49 seeks an order from this Court (the “Sale Order”) 6 (i) authorizing LLC 49 to consummate the Proposed Sale of the Property to the Buyer, 7 pursuant to the Purchase Agreement; (ii) authorizing LLC 49 to enter into the Escrow 8 Instructions after making any modifications that are necessary in light of LLC 49’s 9 bankruptcy case; (iii) granting the protections afforded by Section 363(m) to the Buyer; 10 (iv) authorizing the sale of the Property free and clear of liens, claims, encumbrances and 11 other interests of any persons or entities listed as creditors on LLC 49’s schedules or who 12 have filed a proof of claim or request for notice in LLC 49’s case or any other persons or 13 entities with unknown liens, claims, encumbrances, or other interests against or in the 14 Property, excepting those liens and claims of (a) Homestreet pursuant to the Deed of Trust15 recorded against the Property in the amount of $4.15 million and (b) the Marin County Ta16 Collector for delinquent taxes, supplemental assessments, and associated penalties totaling17 $104,231.79 in the aggregate as of March 25, 2021, which liens and claims shall be 18 satisfied with proceeds from the escrow; and (v) granting related relief. 19 LLC 49 further requests that the Sale Order provide that the Buyer is afforded the 20 protections of Section 363(m) of the Bankruptcy Code. 21 Finally, LLC 49 requests that the Sale Order provide that the provisions of the 22 Federal Rule of Bankruptcy Procedure 6004(h), which would otherwise stay any order 23 approving the sale of the Property to the Buyer, be waived. 24 25 26 27

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1 IV. 2 AUTHORITY FOR REQUESTED RELIEF 3 A. The Sale Is Within the Sound Business Judgment of LLC 49 and Should Be 4 Approved 5 Section 363(b)(1) of the Bankruptcy Code provides, in relevant part, that a debtor i6 possession, “after notice and a hearing, may use, sell, or lease, other than in the ordinary 7 course of business, property of the estate.” 11 U.S.C. § 363(b)(1). Section 363 does not 8 set forth a standard for determining when it is appropriate for a court to authorize the sale 9 or disposition of a debtor’s assets prior to confirmation of a plan. 10 However, courts in the Ninth Circuit and others have required that the decision to 11 sell assets outside the ordinary cause of business be based upon the sound business 12 judgment of the debtors. See In re 240 North Brand Partners, Ltd., 200 B.R. 653, 659 (9t13 Cir. BAP 1996) (“debtors who wish to utilize § 363(b) to dispose of property of the estate 14 must demonstrate that such disposition has a valid business justification”) (citing In re 15 Lionel Corp., 722 F. 2d 1063, 1070 (2nd Cir. 1983)); In re Humboldt Creamery, LLC, No. 16 09-11078, 2009 Bankr. LEXIS 2470, at *3 (Bankr. N.D. Cal. Aug. 14, 2009). 17 Bankruptcy Code Section 363 does not require that the Court substitute its own 18 business judgment for that of the debtor. See, e.g., In re Ionosphere Clubs, Inc., 100 B.R. 19 670, 678 (Bankr. S.D.N.Y. 1989); In re Highway Equip. Co., 61 B.R. 58, 60 (Bankr. S.D. 20 Ohio 1986). Rather, the Court should ascertain whether the debtor has articulated a valid 21 business justification for the proposed transaction. See, e.g., Lewis v. Anderson, 615 F.2d 22 778, 781 (9th Cir. 1979). This is consistent with the congressional intent to limit judicial 23 involvement in business decisions and to leave day-to-day operational matters within the 24 debtor’s broad authority. In re Airlift Int’l, Inc., 18 B.R. 787, 789 (Bankr. S.D. Fla. 1982) 25 (recognizing “broad authority to operate the business of a debtor . . . [which] indicates 26 congressional intent to limit court involvement in business decisions by a trustee . . . [so 27 that] a court may not interfere with a reasonable business decision made in good faith by a

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1 Several courts have held that the “sound business judgment” test requires a debtor 2 to establish four elements in order to justify the sale or lease of property outside the 3 ordinary course of business, namely, “(1) a sound business purpose exists for the sale; (2) 4 the sale is in the best interest of the estate, i.e., the sale price is fair and reasonable; (3) 5 notice to creditors was proper; and (4) the sale is made in good faith.” In re Slates, No. 126 1168, 2012 Bankr. LEXIS 5159, at *31 (B.A.P. 9th Cir. Oct. 31, 2012). 7 Whether or not there are sufficient business reasons to justify a transaction depends8 upon the facts and circumstances of each case. See In re Humboldt Creamery, LLC, 2009 9 Bankr. LEXIS 2470, at *3 (Bankr. N.D. Cal. Aug. 14, 2009) (citing In re Lionel Corp., 7210 F.2d 1063, 1071 (2nd Cir. 1983)). 11 1. There is a Sound Business Purpose for the Proposed Sale 12 A debtor’s showing of a sound business purpose need not be unduly exhaustive but13 rather, a debtor is “simply required to justify the proposed disposition with sound business14 reasons.” In re Baldwin United Corp., 43 B.R. 888, 906 (Bankr. S.D. Ohio 1984). 15 In this case, LLC 49 submits that a sound business purpose exists to proceed with 16 the Sale of the Property to the Buyer pursuant to the Purchase Agreement. Indeed, more 17 than ample business justification exists to approve the Proposed Sale. Thus, the sale of th18 Property would benefit LLC 49 and its creditors by eliminating the significant ongoing 19 costs, hassle, and liability of retaining the Property and by generating cash for LLC 49’s 20 estate. Accordingly, there is a sound business purpose for the sale of the Property. 21 2. The Purchase Price is Fair and Reasonable 22 The Proposed Sale follows the targeted marketing of the Property by a highly-23 experienced agent in a manner that is customary for commercial apartment complexes. 24 Mr. Gerber is incredibly suited to market the Property, having closed an extraordinary 25 number of sale transactions in his career. His efforts yielded seven initial offers and, 26 ultimately, the Buyer willing to purchase the Property for an amount $75,000.00 in excess27 of LLC 49’s listing price on the property, an extraordinary feat considering the extensive

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1 For these reasons, the purchase price of the Property is fair and reasonable. 2 3. All Interested Parties are Being Provided with Notice of the Proposed Sale 3 LLC 49 believes that reasonable and adequate notice of the Proposed Sale is being 4 provided to interested persons. Notice of the hearing on the Proposed Sale is being served5 on (i) the United States Trustee, (ii) counsel for the Committees, (iii) LLC 49’s top 20 6 unsecured creditors, (iv) all parties that have specially requested notice any of the above-7 captioned jointly-administered bankruptcy cases, (v) Homestreet, (vi) the Walker Davis 8 Trust, and (vii) Marin County Tax Collector holding such liens or claims against the 9 Property for delinquent property taxes, supplemental assessments, and associated penaltie10 for the tax years 2019-2020 and 2020-2021 as of March 25, 2021. Accordingly, the notic11 prong of the “sound business judgment” test is satisfied. Moreover, the Committees have 12 already been informed of the Proposed Sale, and each of the Committees either (i) has 13 informed LLC 49 that it supports the Proposed Sale or (ii) is expected by LLC 49 to 14 support the Proposed Sale. Additionally, the Walker Davis Trust has been informed of th15 Proposed Sale, has agreed to the Proposed Sale, and will execute an addendum to the 16 Purchase Agreement authorizing the sale of its interest in the Property. 17 4. The Proposed Sale is in good faith 18 The fourth prong of the “sound business judgment” test examines whether the 19 Proposed Sale is in good faith. Section 363(m) of the Bankruptcy Code provides, in 20 pertinent part: 21 The reversal or modification on appeal of an authorization under subsection (b) or (c) of this section of a sale or lease of property does not affect the 22 validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the 23 pendency of the appeal, unless such authorization and such sale or lease were 24 stayed pending appeal. 25 11 U.S.C. § 363(m). Section 363(m) of the Bankruptcy Code thus protects the purchaser 26 of assets sold pursuant to Section 363 of the Bankruptcy Code from the risk that it will los27 its interest in the purchased assets if the order allowing the sale is reversed on appeal.

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1 Although the Bankruptcy Code does not define “good faith purchaser,” the Ninth 2 Circuit, construing Section 363(m) of the Bankruptcy Code, has stated that “[a] good faith3 buyer ‘is one who buys ‘in good faith’ and ‘for value.’” Ewell v. Diebert (In re Ewell), 4 958 F. 2d 276, 281 (9th Cir. 1992); see also Paulman v. Gateway Venture Partners Iii, Ltd5 P'ship (In re Filtercorp, Inc.), 163 F.3d 570, 577 (9th Cir. 1998); In re Hunt, No. 12-6 08439, 2014 U.S. Dist. LEXIS 189464, at *59 (C.D. Cal. July 25, 2014) (“Good faith’ 7 encompasses fair value, and further speaks to the integrity of the transaction.”). 8 Generally, lack of good faith can be shown by “fraud, collusion between the 9 purchaser and other bidders or the trustee or an attempt to take grossly unfair advantage of10 other bidders.” Kwai v. Wirum (In re Glob. Reach Inv. Corp.), 570 F. App’x 723, 723 (9t11 Cir. 2014) (citing In re Ewell, 958 F.2d at 281); In re Filtercorp, Inc., 163 F.3d at 577; In 12 re Hunt, 2014 U.S. Dist. LEXIS 189464, at *59 (“Typical ‘bad faith’ or misconduct, woul13 include collusion between the seller and buyer, or any attempt to take unfair advantage of 14 other potential purchasers.”). 15 Here, the Proposed Sale is in good faith. The Buyer has no prior connection with 16 LLC 49 or the other Debtors. LLC 49 and the Buyer have each engaged their own neutral17 third-party agent to negotiate the sale of the Property on their behalf. Moreover, the 18 Proposed Sale is documented in a Purchase Agreement drafted and reviewed by counsel 19 for both LLC 49 and the Buyer. Finally, the Purchase Price is objectively the highest offe20 LLC 49 received for the Property. As such, there is no evidence of fraud or collusion 21 between LLC 49 and the Buyer in the terms of the Purchase Agreement, or elsewhere. 22 5. The Buyer Should be Afforded Protections Under Section 363(m) of the 23 Bankruptcy Code 24 Under the circumstances, the Buyer should be afforded protections that Section 25 363(m) of the Bankruptcy Code provides to a good faith purchaser. There is no evidence 26 that the Buyer has engaged in collusion or any bad faith in connection with the Proposed 27 Sale. The Buyer was represented in this transaction by a highly-qualified agent from a

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1 Estate, Inc.), as was LLC 49. Additionally, Buyer was represented by its attorney, 2 Mitchell B. Greenberg of Abbey, Weitzenberg, Warren & Emery. The Proposed Sale is 3 documented by the Purchase Agreement which contains customary terms and conditions 4 for such a commercial real estate transaction and no term of the Proposed Sale is out of th5 ordinary. Both parties to the sale and their counsel participated in the drafting and review 6 of the Purchase Agreement. All key constituencies in LLC 49’s bankruptcy case will 7 receive notice of the hearing on the Motion and will be provided with an opportunity to be8 heard. LLC 49 submits that such notice is adequate for entry of the order approving the 9 sale of the Property pursuant to the Purchase Agreement and satisfies the requisite notice 10 provisions required under Section 363(b) of the Bankruptcy Code. Accordingly, the Buye11 should be afforded protections under Section 363(m) of the Bankruptcy Code. 12 B. The Sale Satisfies the Requirements of Section 363(f) of the Bankruptcy Code 13 Under Section 363(f) of the Bankruptcy Code, a debtor-in-possession may sell all o14 any part of its property free and clear of any and all liens, claims or interests in such 15 property if: (1) such a sale is permitted under applicable non-bankruptcy law; (2) the party16 asserting such a lien, claim or interest consents to such sale; (3) the interest is a lien and 17 the purchase price for the property is greater than the aggregate amount of all liens on the 18 property; (4) the interest is the subject of a bona fide dispute; or (5) the party asserting the 19 lien, claim or interest could be compelled, in a legal or equitable proceeding, to accept a 20 money satisfaction for such interest. 11 U.S.C. § 363(f). 21 “Because Section 363(f) is written in the disjunctive, satisfaction of any one 22 condition is sufficient to sell the property ‘free and clear of any interest.’” SEC v. Capital23 Cove Bancorp LLC, No. 15-00980, 2015 U.S. Dist. LEXIS 186531, at *4-5 (C.D. Cal. 24 Nov. 19, 2015); Citicorp Homeowners Serv., Inc. v. Elliot (In re Elliot), 94 B.R. 343, 345 25 (E.D. Pa. 1988) (same). 26 Furthermore, courts have held that they have the equitable power to authorize sales27 free and clear of interests that are not specifically covered by Section 363(f). See, e.g., In

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1 Volvo White Truck Corp. v. Chambersburg Beverage, Inc. (In re White Motor Credit 2 Corp.), 75 B.R. 944, 948 (Bankr. N.D. Ohio 1987). 3 Finally, to the extent a party receives notice of, but does not file a written objection4 to, this Motion, such party should be deemed to have consented to the sale free and clear o5 their liens. See In re Channel One Comm., Inc., 117 B.R. 493, 496 (Bankr. E.D. Mo 6 1990). 7 Here, out of an abundance of caution, LLC 49 seeks to sell the Property free and 8 clear of unknown liens, claims, or disputed interests in the Property or any liens, claims, o9 disputed interests asserted by any persons or entities listed as creditors on LLC 49’s 10 schedules or who have filed a proof of claim or request for notice in LLC 49’s case that 11 asserts a lien, claim, or disputed interest that is purported to attach to the Property or 12 proceeds from the sale of the Property, with the exception of the liens and claims held by 13 Homestreet and the Marin County Tax Collector, as described below. With regard to 14 Homestreet’s lien against the Property pursuant to the Deed of Trust recorded in its favor 15 and the Marin County Tax Collector’s claims for delinquent taxes, assessments, and 16 associated penalties of $104,231.79 in the aggregate as of March 25, 2021 for tax years 17 2019-2020 and 2020-2021, LLC 49 will satisfy and pay these liens and claims with 18 proceeds from the escrow. Thus, LLC 49 is not seeking to sell the property free and clear 19 of these liens and instead will extinguish them using proceeds from the sale since the 20 Purchase Price of $5.175 million exceeds Homestreet’s lien in the amount of $4.15 millio21 as well as the broker’s fee of $207,000.00 and delinquent taxes, assessments, and 22 associated penalties of $104,231.79 in the aggregate as of March 25, 2021. 23 Having reviewed the Prelim, LLC 49 is not aware of any other liens against the 24 Property. Hinkelman Decl., ¶ 16. Moreover, the Debtors will cause notice of the hearing 25 on the Motion to be provided to all persons and entities who were scheduled by LLC 49 or26 who have filed a Proof of Claim, among others, and the notice will specify the relief 27 requested in this Motion. To the extent, however, any person or entity asserts that it has a

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1 and the County of Marin, such lien, claim, or interest is in bona fide dispute, and LLC 49 2 seeks to sell the property free and clear of any such lien, claim, or interest. 3 Accordingly, the sale free of clear of such interests is authorized pursuant to Sectio4 363(f) of the Bankruptcy Code. 5 C. Relief From The Waiting Periods Under Bankruptcy Rule 6004(h) Is 6 Appropriate 7 Bankruptcy Rule 6004(h) provides that an “order authorizing the use, sale, or lease 8 of property . . . is stayed until the expiration of 14 days after entry of the order, unless the 9 court orders otherwise.” LLC 49 requests that the Sale Order be effective immediately by10 providing that the fourteen-day stay under Bankruptcy Rule 6004(h) is waived. Such relie11 should be granted for several reasons. 12 First, the purpose of Bankruptcy Rule 6004(h) is to provide sufficient time for an 13 objecting party to request a stay pending appeal before an order is implemented. See 14 Advisory Committee Notes to Fed. R. Bankr. P. 6004(h). Although Bankruptcy 15 Rule 6004(h) and the Advisory Committee Notes are silent as to when a court should 16 “order otherwise” and eliminate or reduce the fourteen-day stay period, Collier on 17 Bankruptcy suggests that the fourteen-day stay period should be eliminated to allow a sale18 or other transaction to close immediately “where there has been no objection to the 19 procedure.” 10 Collier on Bankruptcy, ¶ 6004.11 (16th ed. rev. 2019). Therefore, to the 20 extent there are no objections to this Motion, the fourteen-day stay should be waived give21 that its purpose is to allow an objecting party to prepare an appeal. 22 Even if an objection is filed and overruled, this court should still waive the 23 fourteen-day stay. When an objection is overruled to a sale motion, a court may waive the24 stay “upon a showing that there is a sufficient business need to close the transaction withi25 the 14-day period and the interests of the objecting party, taking into account the 26 likelihood of success on appeal, are sufficiently protected.” 10 Collier on Bankruptcy 27 ¶ 6004.11 (16th ed. rev. 2019).

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1 Concurrently with filing this Motion, LLC 49 is also filing an application to shorte2 time for the hearing on this Motion (the “OST Application”), so that such hearing would 3 occur on May 20, 2021. If the OST Application is granted, there is a strong justification t4 waive the fourteen-day stay under Bankruptcy Rule 6004(h) because the Buyer has 5 conditioned the purchase of the Property on escrow closing within three business days of 6 Court approval of the sale. Moreover, a closing within three business days of Court 7 approval of the sale will facilitate a quicker elimination of LLC 49’s continuing liabilities 8 and costs associated with operating the Property. Thus, even if an objection is made and 9 overruled, the fourteen-day stay of Rule 6004(h) should be waived. 10 V. 11 CONCLUSION 12 Based on the foregoing reasons, LLC 49 respectfully requests that the Court enter 13 an order granting this Motion and such other and further relief as the Court deems just and14 proper. 15 Dated: May 6, 2021 16 PROFESSIONAL INVESTORS 49, LLC 17 18 By /s/ Andrew Hinkelman 19 ANDREW HINKELMAN 20 Chief Restructuring Officer 21 SUBMITTED BY: 22 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP 23 24 By /s/ J. Barrett Marum ORI KATZ 25 J. BARRETT MARUM MATT KLINGER 26 GIANNA SEGRETTI 27 Counsel for the Debtors

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