UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

Transcription

1 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 1 of LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP DAVID R. ZARO (BAR NO ) JOSHUA A. DEL CASTILLO (BAR NO ) PETER A. GRIFFIN (BAR NO ) ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP 865 South Figueroa Street, Suite 2800 Los Angeles, California Phone: (213) Fax: (213) dzaro@allenmatkins.com jdelcastillo@allenmatkins.com pgriffin@allenmatkins.com Attorneys for Receiver DAVID P. STAPLETON SECURITIES AND EXCHANGE COMMISSION, v /LA Plaintiff, BIC REAL ESTATE DEVELOPMENT, CORP., et al., Defendants. UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA Case No. 1:16-cv LJO-JLT NOTICE OF RECEIVER'S INTENT TO SELL OIL RIG PURSUANT TO COURT'S JUNE 14, 2016 ORDER Judge: Hon. Lawrence J. O'Neill TO ALL INTERESTED PARTIES, COUNSEL OF RECORD, AND THIS HONORABLE COURT: PLEASE TAKE NOTICE THAT, in accordance with this Court's June 14, 2016 Order on First Interim Report and Petition for Instructions of Receiver, David P. Stapleton (the "Interim Order") (Dkt. No. 76), David P. Stapleton (the "Receiver"), the Court-appointed permanent receiver for Defendant BIC Real Estate Development Corporation ("BIC") and its subsidiaries and affiliates, including but not limited to WM Petroleum; Target Oil & Gas Drilling, Inc.; Tier 1 Solar Power Company; Tier 1 Solar Power Company, LLC; and Home Sweet Holdings

2 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 2 of LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP (collectively, the "Receivership Entities" or "Entities") hereby intends to sell an outof-commission water well drilling rig (the "Oil Rig") from the inventory of miscellaneous oil machinery and equipment (collectively, the "Oil Inventory") belonging to the Receivership Entities WM Petroleum and Target Oil & Gas Drilling, Inc. (collectively, the "Oil Company"). The relevant terms of the Receiver's anticipated sale of the Oil Rig are as follows: The Buyer shall be DownHole Knowledge, Inc. ("DownHole Knowledge"), a California corporation with no relationship to the Receivership Entities; The Oil Rig shall be sold to DownHole Knowledge on an "as-is / where-is" basis and without any representations and warranties by the Receiver or the Receivership Entities; The purchase price paid for the Oil Rig shall be $22,500. As detailed in the Receiver's June 6, 2016 First Interim Report and Petition for Instructions (Dkt. No. 69), the Oil Inventory includes outdated machinery, such as the Oil Rig, which the Receiver has determined is neither necessary for Oil Company operations nor relevant to the value of the Oil Company; The Receiver has determined that purchase price for the Oil Rig to be consistent with its market value, and has obtained an independent appraisal of value (the "Appraisal"), the relevant portions of which are attached hereto as. Pursuant to the Appraisal, the Oil Rig's value ranges from $5,200 to $42,500, with the high market value likely to be realized after "a sale lead time that may extend over several years." Further, and pursuant to the Appraisal, "lower retail numbers should be expected if the seller would look to sell the [Oil Rig] in a faster time frame." The Receiver believes, in his reasonable business judgment, that marketing the Oil Rig for a period of several years /LA -2-

3 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 3 of LAW OFFICES Allen Matkins Leck Gamble Mallory & Natsis LLP would impose unwarranted additional cost upon the estate of the Receivership Entities, and would be generally inconsistent with the goals of the receivership; The purchase price for the Oil Rig will be paid after fifteen (15) days of the date of Notice, assuming no objections are raised, as provided for in the Court's Interim Order; and DownHole Knowledge will execute and shall have executed a document releasing the Receiver and the Receivership Entities from any and all actual or contingent liability arising from, or in connection with, the Oil Rig, including a waiver of California Civil Code 1542, no later than fifteen (15) days after the filing of this Notice. The Receiver has determined, in his reasonable business judgment, that the above-identified material terms are fair, reasonable, and will yield a net benefit to the Receivership Entities and their estate. In accordance with the terms of the Court's Interim Order (Dkt. No. 76), and absent any objections from the Court or any parties, the sale of the Oil Rig will close as early as fifteen (15) days after this Notice is filed, or January 18, Dated: January 30, /LA -3- ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP DAVID R. ZARO JOSHUA A. DEL CASTILLO PETER A. GRIFFIN By: /s/ Joshua A. del Castillo JOSHUA A. DEL CASTILLO Attorneys for Receiver DAVID P. STAPLETON

4 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 4 of 14 EXHIBIT A Page 4

5 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 5 of 14 Appraisal Report KD Capital Equipment LLC Inventory # QTY YEAR MAKE and MODEL Corsair Workover Rig Model W5284 SERIAL NUMBER DESCRIPTION FLV FMV Work Over Rig, VIN 1CYEEJ589CTO30949, Trans Type 12E1, 108 Foot Mast 5,200 42,500 Fair Market Value of Equipment $42,500 Forced Liquidation Value of Equipment $5,200 Page 5

6 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 6 of 14 Does hereby Certify That on this date given in the certificate, the property of: Target Oil and Gas Drilling Inc 4902 Hartnett Ct Bakersfield, CA Was well and reasonably worth: $42,500 On the basis of its Fair Market Value appraisal. Appraisal Report Page 11 The "Fair Market Value," as used in this report is being defined as A professional opinion of the estimated, most probable price, expressed in terms of currency to be realized for property in an exchange between a willing buyer, and a willing seller, with equity to both, neither being under any compulsion to buy or sell, and both parties fully aware of all relevant facts as of the effective date of the appraisal report. The Signature Appraiser has not appraised these assets within the last three (3) years. Effective Date: 1/17/2017 By: Mr. James A Mills Page 6

7 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 7 of 14 Does hereby Certify That on this date given in the certificate, the property of: Target Oil and Gas Drilling Inc 4902 Hartnett Ct Bakersfield, CA Was well and reasonably worth: $5,200 On the basis of its Forced Liquidation Value appraisal. Appraisal Report Page 11 The "Forced Liquidation Value," as used in this report is being defined as a professional opinion of the estimated, most probable price, expressed in terms of currency which could typically be realized at a properly advertised, and conducted public auction sale, held under forced sale conditions, and under present day economic trends, as of the effective date of the appraisal report. Conclusions taken into consideration are physical location, difficulty of removal, physical condition, adaptability, specialization, marketability, overall appearance, and psychological appeal. Further, the ability of the asset group to draw sufficient prospective buyers to insure competitive offers is considered. All assets are to be sold on a piecemeal basis 'as is' with purchasers responsible for removal of assets at their own risk, and expense. Any deletions or additions to the total assets appraised could change the psychological, and or monetary appeal necessary to gain the price indicated. The Signature Appraiser has not appraised these assets within the last three (3) years. Effective Date: 1/17/2017 By: Mr. James A Mills Page 7

8 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 8 of 14 Notes and Comments: At the time of the inspection the equipment appeared to be very poor condition. The appraiser was relayed information from the agent for the receiver in regards to the Corsair not being started in several months and to the current restrictions of driving this piece due to the Carb Certification in the state of California. One main problem that was noted was the arm itself being stuck into the upright position and that maintenance would need to be performed prior to this piece being moved from its current location. The value appraised on the Corsair is based on a sale lead time that may extend over several years, as newer versions and rebuilt rigs of the same type or style are taking long periods for their sales to come to fruition. That being said, lower retail numbers should be expected if the seller would look to sell the asset in a faster time frame. The FLV stated in the report takes into all considerations that would impact the sale of the rig. If the rig would be scraped out and not sold the approximate value would drop to $3,200 as a scrap price based on trending scrap values in and around Bakersfield, CA. This scrap value does take into consideration the cost of the removal and local charges for handling and dismantling. The fluctuation in the oil market will change the value of this asset depending highs and lows of where oil is traded as with most oil field based assets in kind. During conversations with Mike Cox, Manager of Drilling Rigs for Crane Carrier, this model is no longer supported. Corsair was merged with another company approximately 1.5 years ago. After this merger, serial number records and build sheets for this item were destroyed and are no longer available. Several used dealers in Oil Rigs were consulted for their opinions on value, marketability, and current trending conditions in the oil industry which directly impacts the pricing on this and similar pieces of equipment. All of these conversations were taken into account whilst the appraiser was determining value for this piece of equipment. If the Corsair was put back into working order the current top retail market for similar items is trending in Africa. The Market, Cost and Income approaches were considered for this report. The Market and Cost approaches were used and the Income approach was deemed inappropriate for the values conclusions found in this report. The scope of this report is limited to Equipment in this report, and does not include any land, buildings or lease hold improvements. Page 8

9 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 9 of 14 Definition of Values Market Value (Fair Market Value) A professional opinion of the estimated, most probable price, expressed in terms of currency to be realized for property in an exchange between a willing buyer, and a willing seller, with equity to both, neither being under any compulsion to buy or sell, and both parties fully aware of all relevant facts as of the effective date of the appraisal report. Market Value In Place A professional opinion of the estimated, most probable price, expressed in terms of currency to be realized for property in an exchange between a willing buyer, and a willing seller, with equity to both, neither being under any compulsion to buy or sell, and both parties fully aware of all relevant facts as installed for intended utilization, as of the effective date of the appraisal report. Forced Liquidation Value (Auction) A professional opinion of the estimated, most probable price, expressed in terms of currency which could typically be realized at a properly advertised, and conducted public auction sale, held under forced sale conditions, and under present day economic trends, as of the effective date of the appraisal report. Conclusions taken into consideration are physical location, difficulty of removal, physical condition, adaptability, specialization, marketability, overall appearance, and psychological appeal. Further, the ability of the asset group to draw sufficient prospective buyers to insure competitive offers is considered. All assets are to be sold on a piecemeal basis 'as is' with purchasers responsible for removal of assets at their own risk, and expense. Any deletions or additions to the total assets appraised could change the psychological, and or monetary appeal necessary to gain the price indicated. Orderly Liquidation Value A professional opinion of the estimated, most probable price, expressed in terms of currency which the subject equipment could typically realize at a privately negotiated sale, properly advertised, and professionally managed, by a seller obligated to sell over an extended period of time, usually within six to twelve months, as of the effective date of the appraisal. Further, the ability of the asset group to draw sufficient prospective buyers to insure competitive offers is considered. All assets are to be sold on a piecemeal basis 'as is' with purchasers responsible for removal of assets at their own risk and expense. Any deletions or additions to the total assets appraised could change the psychological and/or monetary appeal necessary to gain the price indicated. Page 9

10 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 10 of 14 New Replacement Cost Value A professional opinion of the cost expressed in terms of currency, F.O.B. the manufacturer's plant, to purchase a new item of like quality and specifications. If such an item is unavailable, the appraiser has used his or her best judgment in estimating a value as of the effective date of the appraisal. Desktop Opinion A professional opinion of the appropriately defined value, expressed in terms of currency to be realized by the sale of assets, in which the opinion is generated from lists, and/or other informational materials supplied to the appraiser, and evaluated without the benefit of an actual on-site inspection. This opinion is not recommended for use in credit decisions. A desktop opinion should be used to determine the need for an appraisal or the scope of an appraisal. Page 10

11 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 11 of 14 Approaches to Value Market Approach One of the three recognized approaches used in appraisal analysis, this approach involves the collection of market data pertaining to the subject assets being appraised. This approach is also known as the "Comparison Sales Approach". The primary intent of the market approach is to determine the desirability of the assets, and recent sales or offerings of similar assets currently on the market in order to arrive at an indication of the most probable selling price for the assets being appraised. If the comparable sales are not exactly similar to the asset being appraised, adjustments must be made to bring them as closely in line as possible with the subject property. Cost Approach One of the three recognized approaches used in appraisal analysis, this approach is based on the proposition that the informed purchaser would pay no more for a property than the cost of producing a substitute property, with the same utility as the subject property. It considers that the maximum value of a property to a knowledgeable buyer would be the amount currently required to construct, or purchase a new asset, of equal utility. When subject asset is not new, the current cost must be adjusted for all forms of depreciation, as of the effective date of appraisal. Income Approach One of the three recognized approaches used in appraisal analysis, this approach considers value in relation to the present worth of future benefits derived from ownership, and is usually measured through the capitalization of a specific level of income. This approach is the least common approach used in the valuation of machinery, and equipment since it is difficult to isolate the income attributable to such assets. DEPRECIATION: Defined as the actual loss in value or worth of property from all causes, including those resulting from physical deterioration, function al obsolescence, and economic obsolescence. PHYSICAL DETERIORATION: A form of depreciation where the loss in value, or usefulness of an asset is attributable solely to physical causes, such as wear and tear, and exposure to the elements. FUNCTIONAL DETERIORATION: A form of depreciation where the loss in value is due to factors inherent in the property itself, and due to change in design, or process resulting in inadequacy, over capacity, excess construction, lack of functional utility, or excess operating costs. Page 11

12 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 12 of 14 Appraiser Qualifications Experience 5 Years of buying and selling of machine tools with K.D. Capital Equipment. 5 Years of Auction/Liquidation experience through K.D. Capital Equipment. Senior Sales and Senior Buyer for K.D. Capital Equipment. Extensive liquidation and auction experience with over 2 Billion in assets sold. Education Passed certification exam for AMEA (2014). CEA Status received (2016) USPAP National Course (2016) Membership Machinery Dealers National Association (MDNA). Association of Machinery and Equipment Appraisers (AMEA) USPAP Current Status Page 12

13 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 13 of PROOF OF SERVICE Securities and Exchange Commission v. BIC Real Estate Development Corporation and Daniel R. Nase, et al. USDC, Eastern District of California Case No. 1:16-cv (LJO) JLT I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action. My business address is 865 S. Figueroa Street, Suite 2800, Los Angeles, California A true and correct copy of the foregoing document(s) described as: NOTICE OF RECEIVER'S INTENT TO SELL OIL RIG PURSUANT TO COURT'S JUNE 14, 2016 ORDER will be served in the manner indicated below: 1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING ("NEF") the above-described document will be served by the Court via NEF. On January 30, 2017, I reviewed the CM/ECF Mailing Info For A Case for this case and determined that the following person(s) are on the Electronic Mail Notice List to receive NEF transmission at the address(es) indicated below: John Brian Bulgozdy bulgozdyj@sec.gov,larofiling@sec.gov,berryj@sec.gov James M. Duncan jduncan@kleinlaw.com,kratekin@kleinlaw.com Barry L Goldner BGOLDNER@KLEINLAW.COM,mbrown@kleinlaw.com,shayes@kleinlaw.c om Peter Allen Griffin pgriffin@allenmatkins.com James Robert Harvey jharvey@kleinlaw.com Matthew C. McCartney matt@eastmanmccartney.com Noel Thomas McCartney tom@mccartneylaw.net,lacy@mccartneylaw.net,matt@mccartneylaw.net Matthew Thomas Montgomery montgomerym@sec.gov,larofiling@sec.gov,irwinma@sec.gov David P. Stapleton david@stapletoninc.com Manuel Vazquez vazquezm@sec.gov Scott Vick scott@vicklawgroup.com,april@vicklawgroup.com David Robert Zaro dzaro@allenmatkins.com,mdiaz@allenmatkins.com Joshua A. del Castillo jdelcastillo@allenmatkins.com /LA - 1 -

14 Case 1:16-cv LJO-JLT Document 162 Filed 01/30/17 Page 14 of SERVED BY U.S. MAIL OR OVERNIGHT MAIL (indicate method for each person or entity served): On, I served the following person(s) and/or entity(ies) in this case by placing a true and correct copy thereof in a sealed envelope, U.S. Mail first class, and/or with an overnight mail service addressed as stated below. I am readily familiar with this firm's practice of collection and processing correspondence for mailing. It is deposited with the U.S. postal service on that same day in the ordinary course of business. I declare that I am employed in the office of a member of the Bar of this Court at whose direction the service was made. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on January 30, 2017 at Los Angeles, California. /s/ Martha Diaz Martha Diaz /LA - 2 -