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Full title: Adversary case 21-03030. 31 (Approval of sale of property of estate and of a co-owner - 363(h)), 91 (Declaratory judgment) Complaint by PROFESSIONAL FINANCIAL INVESTORS, INC., Professional Investors 47, LLC against Dennis W Green, Susan Marie Green, Jonathan C Marmelzat. Fee Amount $350. (Attachments: # 1 AP Cover Sheet) (Marum, J.) (Entered: 07/16/2021)

Document posted on Jul 15, 2021 in the bankruptcy, 16 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

Professional Financial Investors, Inc. (“PFI”) and Professional Investors 47, LLC (“LLC 2 47,” and together with PFI, the “Plaintiffs,” and collectively with PFI and the other debtors in the 3 above-captioned jointly administered bankruptcy cases, the “Debtors”) in this Complaint for Sale 4 of Co-Owners’ Interests in Property Pursuant to 11 U.S.C. § 363(h) (the “Complaint”) against 5 Dennis W. Green and Susan Marie Green, Trustees, of the Dennis W. Green and Susan Marie 6 Green Revocable Trust (the “Green Trust”) and Jonathan C. Marmelzat , Trustee of The Jonathan7 C. Marmelzat Revocable Trust U/T/D July 24, 2008 (“Marmelzat Trust,” and together with the 8 Green Trust, the “Defendants”) hereby allege and state as follows: 9 I. 10 JURISDICTION AND VENUE 11 1. This is an adversary proceeding for (1) the approval of the sale of co-owners’ 12 interests in property held as tenants in common with PFI and LLC 47 pursuant to 11 U.S.C. § 13 363(h), and (2) a determination and declaration pursuant to Rule 7001(9) of the Federal Rules of 14 Bankruptcy Procedure (the “Bankruptcy Rules”) of the co-owners’ respective ownership interests15 in such property and entitlement to a distribution from the net proceeds from a sale of said 16 property based on such ownership interests according to 11 U.S.C. § 363(j).Pursuant to 11 U.S.C. § 363(h), a trustee or debtor in possession may sell both the 13 estate’s interest and the interest of any co-owner in property in which the debtor had, at the time o14 the commencement of the case, an undivided interest as a tenant in common, joint tenant, or tenan15 by the entirety, if: (i) partition in kind of such property among the estate and such co-owners is 16 impracticable; (ii) sale of the estate’s undivided interest in such property would realize 17 significantly less for the estate than sale of such property free of the interests of such co-owners; 18 (iii) the benefit to the estate of a sale of such property free of the interests of co-owners outweighs19 the detriment, if any, to such co-owners; and (iv) such property is not used in the production, 20 transmission, or distribution, for sale, of electric energy or of natural or synthetic gas for heat, 21 light, or power.(Declaratory Relief Pursuant to Bankruptcy Rule 7001(9) and 11 U.S.C. § 363(j) 21 Determining Co-Owners’ Ownership Interests in Property and Directing Debtors to Distribute Net Proceeds from Sale of Property Pursuant to Such Ownership Interests) 22 (All Plaintiffs Against All Defendants) Pursuant to 11 U.S.C. § 363(j), after a sale of property to which 11 U.S.C. § 363(h26 applies, a trustee or debtor in possession shall distribute to the co-owners of such property and to 27 the estate, the proceeds of such sale, less the costs and expenses, not including any compensation 1 to the trustee or debtor in possession, of such sale, according to the interests of such co-owners 2 and of the estate.

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1 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP A Limited Liability Partnership 2 Including Professional Corporations ORI KATZ, Cal. Bar No. 209561 3 J. BARRETT MARUM, Cal. Bar No. 228628 JEANNIE KIM, Cal. Bar No. 270713 4 MATT KLINGER, Cal. Bar No. 307362 GIANNA SEGRETTI, Cal. Bar No. 323645 5 Four Embarcadero Center, 17th Floor San Francisco, California 94111-4109 6 Telephone: 415.434.9100 Facsimile: 415.434.3947 7 E mail okatz@sheppardmullin.com bmarum@sheppardmullin.com 8 jekim@sheppardmullin.com mklinger@sheppardmullin.com 9 gsegretti@sheppardmullin.com 10 Counsel for the Debtors 11 UNITED STATES BANKRUPTCY COURT 12 NORTHERN DISTRICT OF CALIFORNIA, SAN FRANCISCO DIVISION 13 In re Case No. 20-30604 (Jointly Administered) 14 PROFESSIONAL FINANCIAL INVESTORS, INC., et al.,1 Chapter 11 15 Debtors. Adv No. 16 COMPLAINT FOR SALE OF CO- PROFESSIONAL FINANCIAL INVESTORS, 17 OWNERS’ INTERESTS IN PROPERTY INC. and PROFESSIONAL INVESTORS 47, PURSUANT TO 11 U.S.C. § 363(h) LLC, 18 Plaintiffs, 19 The Hon. Hannah L. Blumenstiel v. 20 DENNIS W. GREEN AND SUSAN MARIE 21 GREEN, TRUSTEES, OF THE DENNIS W. GREEN AND SUSAN MARIE GREEN 22 REVOCABLE TRUST, AND JONATHAN C. MARMELZAT, TRUSTEE, OF THE 23 JONATHAN C. MARMELZAT REVOCABLE TRUST U/T/D JULY 24, 2008 24 Defendants. 25 26 1 A complete list of the Debtors and their respective chapter 11 case numbers may be found at 27 www.donlinrecano.com/Clients/pfi/index. The federal tax identification numbers of each of the Debtors is also available in the bankruptcy petitions of each Debtor, also available at the Donlin

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1 Professional Financial Investors, Inc. (“PFI”) and Professional Investors 47, LLC (“LLC 2 47,” and together with PFI, the “Plaintiffs,” and collectively with PFI and the other debtors in the 3 above-captioned jointly administered bankruptcy cases, the “Debtors”) in this Complaint for Sale 4 of Co-Owners’ Interests in Property Pursuant to 11 U.S.C. § 363(h) (the “Complaint”) against 5 Dennis W. Green and Susan Marie Green, Trustees, of the Dennis W. Green and Susan Marie 6 Green Revocable Trust (the “Green Trust”) and Jonathan C. Marmelzat , Trustee of The Jonathan7 C. Marmelzat Revocable Trust U/T/D July 24, 2008 (“Marmelzat Trust,” and together with the 8 Green Trust, the “Defendants”) hereby allege and state as follows: 9 I. 10 JURISDICTION AND VENUE 11 1. This is an adversary proceeding for (1) the approval of the sale of co-owners’ 12 interests in property held as tenants in common with PFI and LLC 47 pursuant to 11 U.S.C. § 13 363(h), and (2) a determination and declaration pursuant to Rule 7001(9) of the Federal Rules of 14 Bankruptcy Procedure (the “Bankruptcy Rules”) of the co-owners’ respective ownership interests15 in such property and entitlement to a distribution from the net proceeds from a sale of said 16 property based on such ownership interests according to 11 U.S.C. § 363(j). This Court has 17 jurisdiction over this adversary proceeding and its subject matter pursuant to 28 U.S.C. §§ 157 an18 1334, 11 U.S.C. §§ 363(f), (h) and (j), and Bankruptcy Rules 7001(3) and (9). 19 2. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). 20 3. Venue in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409. 21 4. PFI and LLC 47 consent, to the extent such consent is necessary, to the entry of 22 final orders and judgments by this Court in this proceeding. 23 II. 24 FACTUAL ALLEGATIONS 25 5. Kenneth Casey founded PFI and related entity, Professional Investors Security 26 Fund, Inc. (“PISF”), as real estate investment and management firms specializing in multi-unit 27 residential and commercial properties in Northern California, and ran them, along with several

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1 other PFI affiliated entities (together with PFI and PISF, the “PFI Enterprise”), up until his death 2 on May 6, 2020. 3 6. In total, the Debtors own, either directly or indirectly, approximately 70 real 4 properties in Northern California (Marin and Sonoma Counties), consisting mostly of apartment 5 buildings and office buildings. 6 7. Following Mr. Casey’s death, it was uncovered that the PFI Enterprise was in 7 actuality a Ponzi scheme, and on July 16, 2020, certain asserted creditors of PISF, commenced an8 involuntary chapter 11 bankruptcy action against PISF, Case No. 20-30579 (the “PISF Case”). O9 July 26, 2020, PISF filed a consent to the entry of an order for relief in the PISF Case, which the 10 Court entered on July 27, 2020. 11 8. On July 26, 2020 (the “Petition Date”), PFI commenced its bankruptcy case by 12 filing a voluntary chapter 11 petition. Subsequently PFI commenced involuntary petitions against13 all but two of its affiliated limited liability companies (the “LLCs”) and limited partnerships (the 14 “LPs”), as follows: 15 a. On November 20, 2020, under authority granted by the Bankruptcy Court, 16 PFI commenced involuntary petitions against twenty-nine LLCs and LPs (collectively, the17 “LLC/LP Debtors”), and on December 11, 2020, PFI consented to such involuntary 18 petitions and the Court entered orders for relief. 19 b. On February 3, 2021, and February 4, 2021, PFI commenced involuntary 20 petitions against ten additional LLC affiliates of PFI (including LLC 47 and collectively, 21 the “New Debtors”). On February 17, 2021, PFI consented to the ten additional 22 involuntary petitions, and on February 18, 2021, the Court entered orders for relief. 23 9. The Debtors’ chapter 11 cases are jointly administered under Case No. 20-30604. 24 10. The Debtors, including PFI and LLC 47, continue to operate as debtors in 25 possession pursuant to sections 1101(a), 1107(a) and 1108 of the Bankruptcy Code. 26 11. On August 19, 2020, the Office of the United States Trustee appointed the Official27 Committee of Unsecured Creditors (the “OCUC”). Meanwhile, certain parties with membership

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1 (the “Ad Hoc Committee of LLC Members”), and certain lenders to the Debtors who are secured 2 by deeds of trust on property owned by the Debtors formed into an ad hoc committee of DOT 3 holders (the “Ad Hoc Committee of DOT Holders,” and collectively with the OCUC and the Ad 4 Hoc Committee of LLC Members, the “Committees”). 5 12. On the Petition Date, PFI, LLC 47, and the Defendants were co-owners as tenants 6 in common of certain real estate located in Marin County, California commonly known as the 7 Hunt Plaza Office Complex, which is located at 240 Tamal Vista Boulevard, Corte Madera, 8 California 94925 (the “Property”). 9 13. The legal description of the Property is as follows: 10 Escrow No.: 0500636 11 Lot 12, as shown upon that certain Map entitled “Map of Fifer Industrial Park”, filed for record February 25, 1960 in Volume 10 of 12 Maps, at Page 52, Marin County Records 13 APN: 024-011-66 14 14. Pursuant to that certain Hunt Plaza Office Complex Tenancy in Common 15 Agreement dated September 1, 2019 (the “TIC Agreement”), PFI owns an undivided 30% interest16 in the Property, LLC 47 owns an undivided 53.45% interest in the Property, the Green Trust owns17 an undivided 12.73% interest in the Property (the “Green Trust’s Interest”), and Marmelzat Trust 18 owns an undivided 3.82% interest in the Property (“Marmelzat Trust’s Interest,” and together wit19 the Green Trust’s interest, the “Defendants’ Interests”). A true and correct copy of the TIC 20 Agreement signed by the trustees of the Green Trust and the Marmelzat Trust, respectively, is 21 attached hereto as Exhibit A. 22 15. An outstanding debt is secured by the Property as a whole. 23 16. On July 9, 2021, the Court entered an order approving and confirming the Second 24 Amended Joint Chapter 11 Plan of Professional Financial Investors, Inc. and Its Affiliated 25 Debtors Proposed by the Debtors and Official Committee of Unsecured Creditors and Supported 26 by the Ad Hoc LLC Members and the Ad Hoc DOT Noteholders Committee (Dated May 20, 202127 (the “Plan”). The Plan has yet to go effective.

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1 17. In the meantime, the Debtors’ have engaged in the marketing of their portfolio of 2 assets and real property to potential interested purchasers, which has resulted in an offer by 3 Hamilton Zanze & Company (the “Stalking Horse Bidder”) for the purchase of approximately 60 4 real properties owned in whole or in part by the Debtors (collectively, the “Portfolio”), including 5 the Property held as tenants in common by PFI and LLC 47 with the Defendants. 6 18. To effectuate the proposed sale of the Property, PFI and LLC 47 therefore now 7 seek authority to sell it free and clear of the Defendants’ Interests. 8 FIRST CLAIM FOR RELIEF (Authority to Sell Co-Owners’ Interest in Property Pursuant to 11 U.S.C. § 363(h)) 9 (All Plaintiffs Against All Defendants) 10 19. PFI and LLC 47 hereby restate, reallege, and incorporate by reference paragraphs 11 through 18 of the Complaint in their entirety. 12 20. Pursuant to 11 U.S.C. § 363(h), a trustee or debtor in possession may sell both the 13 estate’s interest and the interest of any co-owner in property in which the debtor had, at the time o14 the commencement of the case, an undivided interest as a tenant in common, joint tenant, or tenan15 by the entirety, if: (i) partition in kind of such property among the estate and such co-owners is 16 impracticable; (ii) sale of the estate’s undivided interest in such property would realize 17 significantly less for the estate than sale of such property free of the interests of such co-owners; 18 (iii) the benefit to the estate of a sale of such property free of the interests of co-owners outweighs19 the detriment, if any, to such co-owners; and (iv) such property is not used in the production, 20 transmission, or distribution, for sale, of electric energy or of natural or synthetic gas for heat, 21 light, or power. 22 21. Partition in kind of the Property between the Plaintiffs and the Defendants is 23 impracticable because the Property is considered one continuous unit and because PFI, LLC 47, 24 and the Defendants are each liable on a debt secured by the entire Property. As such, it would be 25 particularly impracticable to partition the Property between the Plaintiffs and the Defendants. 26 22. The sale of only the Plaintiffs’ undivided interests in the Property would realize 27 significantly less for the Debtors’ bankruptcy estates (collectively, the “Bankruptcy Estate”) than

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1 has offered to purchase the Portfolio at a purchase price that reflects that multiple properties are t2 be included in the proposed sale in their entirety. However, pursuant to the Stalking Horse Asset 3 Purchase Agreement entered into between the Stalking Horse Bidder and the Debtors, there will 4 be a reduction in the proposed purchase price for the Portfolio sale should PFI and LLC 47 be 5 authorized to sell only their tenants in common interests in the Property rather than the Property a6 a whole, free and clear of the Defendants’ Interests. Moreover, the Stalking Horse Bidder could 7 elect to forego purchasing Plaintiffs’ tenants in common interests in the Property, which, in turn, 8 would further reduce the proposed purchase price for the Portfolio to the detriment of the 9 Bankruptcy Estate. 10 23. The benefit to the Bankruptcy Estate of a sale of the Property free of the 11 Defendants’ Interests outweighs the detriment, if any, to the Defendants. Indeed, the Defendants 12 merely hold their interests in the Property as an investment and will receive their proportionate 13 share from the net proceeds of its sale. Thus, because the Property is held by PFI, LLC 47, and 14 the Defendants as an investment property, the proposed sale of the Property, should it close, 15 should be a net benefit to the Defendants rather than a detriment. 16 24. The Property is not used in the production, transmission, or distribution, for sale, o17 electric energy or of natural or synthetic gas for heat, light, or power. 18 25. Accordingly, Plaintiffs seek authority pursuant to 11 U.S.C. § 363(h) to sell the 19 entirety of the Property free and clear of the Defendants’ Interests. 20 SECOND CLAIM FOR RELIEF (Declaratory Relief Pursuant to Bankruptcy Rule 7001(9) and 11 U.S.C. § 363(j) 21 Determining Co-Owners’ Ownership Interests in Property and Directing Debtors to Distribute Net Proceeds from Sale of Property Pursuant to Such Ownership Interests) 22 (All Plaintiffs Against All Defendants) 23 26. PFI and LLC 47 hereby restate, reallege, and incorporate by reference paragraphs 24 through 25 of the Complaint in their entirety. 25 27. Pursuant to 11 U.S.C. § 363(j), after a sale of property to which 11 U.S.C. § 363(h26 applies, a trustee or debtor in possession shall distribute to the co-owners of such property and to 27 the estate, the proceeds of such sale, less the costs and expenses, not including any compensation

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1 to the trustee or debtor in possession, of such sale, according to the interests of such co-owners 2 and of the estate. 3 28. According to that certain TIC Agreement as executed by the trustees to the Green 4 Trust on October 22, 2019, and the trustees to the Marmelzat Trust on October 10, 2019, and 5 attached hereto as Exhibit A, the Green Trust agreed to and holds an undivided 12.73% ownershi6 interest in the Property, and the Marmelzat Trust agreed to and holds an undivided 3.82% 7 ownership interest in the Property. 8 29. A judicial determination of the Defendants’ respective ownership interests in the 9 Property is necessary and appropriate to determine their respective entitlements to the net proceed10 from any sale of the Property under 11 U.S.C. § 363(j). 11 30. Accordingly, the Plaintiffs seek a declaration from the Court pursuant to 12 Bankruptcy Rule 7001(9) determining the Defendants’ respective ownership interests in the 13 Property and directing the Plaintiffs to distribute the net proceeds from any such sale of the 14 Property, less the costs and expenses, according to those respective ownership interests pursuant t15 11 U.S.C. § 363(j). 16 PRAYER FOR RELIEF 17 WHEREFORE, PFI and LLC 47 respectfully request that the Court enter judgment agains18 the Defendants pursuant to 11 U.S.C. §§ 363(h) and (j) and Bankruptcy Rule 7001: 19 1. Authorizing PFI and LLC 47 to take sole possession of the Property; 20 2. Authorizing PFI and LLC 47 to sell the entirety of the Property free of the 21 Defendants’ Interests; 22 3. Determining and declaring, pursuant to Bankruptcy Rule 7001(9), that the 23 Defendants’ respective ownership interests in the Property are as follows: 24 (a) The Green Trust’s interest in the Property is 12.73%, and 25 (b) Marmelzat Trust’s interest in the Property is 3.82%; 26 4. Authorizing and directing PFI and LLC 47 to, pursuant to 11 U.S.C. § 363(j), 27 distribute a proportionate share of the net proceeds from the sale of the Property to the Defendant

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1 5. Providing for all other just and proper relief. 2 Dated: July 16, 2021 3 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP 4 5 By /s/ J. Barrett Marum ORI KATZ 6 J. BARRETT MARUM 7 JEANNIE KIM MATT KLINGER 8 GIANNA SEGRETTI 9 Counsel for the Debtors 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

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EXHIBIT A EXHIBIT A

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