Filed: Mar. 08, 2017
Latest Update: Mar. 08, 2017
Summary: ORDER GRANTING RECEIVER'S MOTION REGARDING UPDATED BUDGET, PROPOSAL FOR FINANCING, AND CONSULTANT AGREEMENT FOR FARMER'S MARKET AND MOTION PRELIMINARILY APPROVING DISPOSITION OF RECEIVERSHIP ASSETS JAMES L. ROBART , District Judge . Before the court are two motions: (1) Receiver Michael A. Grassmueck's motion for approval of (a) an updated budget for the development of the 40,000 square feet of commercial space ("the Marketplace Project") at the mixed use development currently known as Pota
Summary: ORDER GRANTING RECEIVER'S MOTION REGARDING UPDATED BUDGET, PROPOSAL FOR FINANCING, AND CONSULTANT AGREEMENT FOR FARMER'S MARKET AND MOTION PRELIMINARILY APPROVING DISPOSITION OF RECEIVERSHIP ASSETS JAMES L. ROBART , District Judge . Before the court are two motions: (1) Receiver Michael A. Grassmueck's motion for approval of (a) an updated budget for the development of the 40,000 square feet of commercial space ("the Marketplace Project") at the mixed use development currently known as Potal..
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ORDER GRANTING RECEIVER'S MOTION REGARDING UPDATED BUDGET, PROPOSAL FOR FINANCING, AND CONSULTANT AGREEMENT FOR FARMER'S MARKET AND MOTION PRELIMINARILY APPROVING DISPOSITION OF RECEIVERSHIP ASSETS
JAMES L. ROBART, District Judge.
Before the court are two motions: (1) Receiver Michael A. Grassmueck's motion for approval of (a) an updated budget for the development of the 40,000 square feet of commercial space ("the Marketplace Project") at the mixed use development currently known as Potala Marketplace, located at 2900 Grand Avenue, Everett, Washington ("Potala Marketplace"), (b) proposals for the financing for the Marketplace Project, and (c) the agreement with The Carlin Company ("Carlin") to act as the development manager for the Marketplace Project (1st Mot. (Dkt. #454)); and (2) Mr. Grassmueck's motion for preliminary approval of the proposed transaction by which Path America, LLC ("Path America") will transfer its ownership interest in Path America SnoCo, LLC ("SnoCo") and the distribution rights among partners in Path America Farmer's Market, LP ("PAFM") will be restructured, among other things (2d Mot. (Dkt. #487)).
Defendant Lobsang Dargey initially opposed Mr. Grassmueck's first motion and cross-moved for preliminary approval of a restructuring plan for the Marketplace Project described in a signed Letter of Intent ("LOI") with EB5 Group, LLC.1 (Dargey Resp. to 1st Mot. (Dkt. #458).) However, after the Receiver filed his second motion, which requested preliminary approval of a proposal to restructure the Marketplace Project, which was described in a new LOI from EB5 Group, LLC (see 2d Mot.), Mr. Dargey withdrew his cross-motion and opposition to Mr. Grassmueck's first motion.2 A group of EB-5 investors in the Marketplace Project also filed a response to the Receiver's first motion. (See EB-5 Resp. (Dkt. #473); see also Not. of EB-5 Joinder (Dkt. #478).) Although the EB-5 investors expressed concerns about the Receiver's management of the Marketplace Project, they ultimately supported granting the Receiver's first motion. (See EB5 Resp. at 12, 14.) Plaintiff Securities and Exchange Commission ("the SEC") did not file a response to Mr. Grassmueck's first motion. (See generally Dkt.)
Mr. Dargey filed a response to the Receiver's second motion seeking approval of a restructuring plan for the Marketplace Project. (Dargey Resp. to 2d Mot. (Dkt. #499).) In his response, Mr. Dargey raises a number of concerns about the restructuring plan, but he does not expressly oppose the Receiver's motion. (See generally id.) Rather, he asks the court to require the Receiver "to provide further clarity" regarding the restructuring plan, but does not provide a viable alternative transaction for disposition of the Marketplace Project. (Id. at 12.) The SEC filed a "statement of non-opposition" to the Receiver's second motion. (SEC Resp. (Dkt. #501).) The SEC stated: "The proposal advanced by the Receiver appears to meet the objectives of permitting for completion of the Project; transfer of management of the Project out of the receivership estate, with responsibility assumed by the new manager to pursue immigration appeals; and improvement of the financial terms of the Project for the benefit of EB-5 Program investors." (Id. at 2.) No EB-5 investors filed any response to the Receiver's second motion before the filing deadline. (Receiver's Reply (Dkt. #504) at 2 n.2; see also Dkt.)
A district court's power to administer an equity receivership is extremely broad. SEC v. Hardy, 803 F.2d 1034, 1037 (9th Cir. 1986). Indeed, the "primary purpose of equity receiverships is to promote orderly and efficient administration of the estate by the district court for the benefit of creditors." Id. at 1038. With these principles in mind, the court has considered both of the Receiver's motions, all of the submissions of the parties and the EB5 investors related to the motions, and the relevant portions of the record. Being fully advised and finding good cause, the court GRANTS both of the Receiver's motions (Dkt. ##454, 487).
In addition, the court ORDERS as follows:
1. The Receiver's Revised Budget for the Marketplace Project including the development of the Marketplace "farms and market" café and retail establishment for the Marketplace Project ("the Farms and Market Business"), a copy of which is attached hereto as Exhibit A, is hereby APPROVED;
2. The Receiver's proposed plan to finance the development of the Marketplace Project through the use of funds from the Potala Marketplace, recoveries by PAFM, and an inter-receivership loan from Path America is hereby APPROVED on the terms specified in the loan documents, which are attached hereto as Exhibit B;
3. The Receiver's request for authority to engage Carlin as his consultant for the development of the Marketplace Project is APPROVED, the Receiver is AUTHORIZED to pledge the collateral as described in the agreement, and the consulting agreement entered into between the Receiver and Carlin dated November 2016, a copy of which is attached hereto as Exhibit C, is hereby APPROVED;
4. The Receiver's recommendation to select the restructuring proposal submitted by EB5 Group, LLC ("the EB5 Group Proposal"), is hereby APPROVED; and
5. The court sets the following deadlines with respect to the final approval and closing of the transaction contemplated by the EB5 Group Proposal ("the Restructuring Transaction"):
a. By no later than March 31, 2017, the Receiver and EB5 Group, LLC shall execute the final documents memorializing the Restructuring Transaction;
b. By no later than April 13, 2017, the Receiver shall submit a motion for approval of the final terms of the Restructuring Transaction ("Motion for Final Approval"), including the fully executed documents memorializing the Restructuring Transaction and the agreement between the parties; and
c. If the Motion for Final Approval is granted, the Restructuring Transaction shall be closed within five (5) business days of entry of the order granting the Motion for Final Approval.
