"SUMMARY OF ACTIONS TAKEN BY THE TRUSTEE AND COUNSEL VIOLATING PROVISIONS OF SEVERAL OREGON LIMITED LIABILITY COMPANIES RESPECTIVE OPERATING AGREEMENTS
A) History of Corney Investors, LLC (“Corney”), and Padrick, Obsidian, and Tonkon Torp’s attempt to take governance rights away from existing Managers and Members
- June 10, 2005 Corney Investors LLC is formed.
- Corney Investor LLC is managed by VSN Properties LLC (“VSN”).
- March 31, 2009 VSN resigns and all members agree to Larry Sirhall becoming the manager.
Since the Interested Parties are not a debtor in this case, their money should not be used to pay for the claims against the debtor. More importantly, the Trustee as an assignee of VSN’s interest in Corney had no rights under the operating agreement to take any such actions.
- B. History of Klondike Point LLC (“Klondike”), and Padrick, Obsidian, and Tonkon Torp’s attempt to take governance rights away from existing Managers
- January 1, 2005 Klondike is formed to own and operate a commercial building in downtown Bend.
- Initial managers are Studebaker and Larkin.
- On January 1, 2009 Larkin resigns as a manager, all members agree to Barb Tyler (“Tyler”) becoming a manager.
- On February 10, 2009 a required capital call is made to all members.
- By March 11, 2009 Studebaker and Tyler make their capital call requirements. Stevens, Larkin, Neuman did not make their capital call requirement.
- In accordance with the provisions of Sections 9.3, 9.4 and 9.5 of the Operating Agreement, on April 15, 2009, Windermere, acting on behalf of Ms. Studebaker, sent to Stevens, Larkin, and Neuman an offer to purchase their respective interests in Klondike. NO RESPONSE.
- On April 20, 2009, Klondike’s business attorney sent to the Simson, by overnight mail, a copy of the purchase offer. NO RESPONSE.
- On May 26, 2009, Opera sent an offer (Exhibit F3) to Simson from Studebaker to purchase the building owed by Klondike. Opera communicated to Peterson that the Trustee received the purchase offer about six weeks ago. He has not bothered to respond to the purchase offer. In accordance with the provisions of the Operating Agreement, request is hereby made that the Trustee, as the assignee of the defendants’ economic interests as members of Klondike, respond[s] to the Purchase Offer as promptly as possible, but in no event later than June 11, 2009.” Opera tells Counsel that “it has come to our attention that the Trustee has either ignored or rejected out of hand any and all offers that have been extended to him to purchase limited liability company membership interests of the four principals of the debtor. This appears to us to be a blatant disregard of the Trustee’s obligations to the debtor’s creditors…The Trustee’s duty to maximize the value of the debtor’s estate for the benefit of the debtor’s creditors, the Trustee should act promptly to consummate a transaction in accordance with the provisions of the Purchase Offer. Otherwise, given the precarious state of Klondike’s financial affairs, the Trustee will run the very significant risk of losing all value on account of the debtor Members’ interests in Klondike.”
- On June 4, Padrick filed Articles of Amendment/Dissolution with the Oregon State Corporation Division (Exhibit) changing the company from being member managed to the LLC being manager-managed an action requiring consent of 60% of the members of the LLC pursuant to Section 4.2 of the operating agreement.. By reason of the defendants’ failure to make required capital contributions, as of April 30, 2009, the defendants’ had only 58.07% of the ownership interests in Klondike, and Studebaker and Tyler had 41.93% of the ownership interests in Klondike. Padrick signed the document as Manager of the LLC. As an assignee of Larkin, Stevens, and Neuman interests’ in the LLC, Padrick is not entitled to exercise any management rights under the operating agreement unless or until the remaining members vote to admit him as a member (Exhibit F5). The Oregon State Corporation Division told Studebaker that falsely filing documents with their administration is a CIVIL MISDEMEANOR.
- On June 23, 2009 Aman emailed a response to Opera enclosing “copies of memoranda of action of the members of both Klondike and Century, removing the current managers of those companies and appointing the Trustee as the manager of each company.” (Exhibit F6)
- In this same email, the “Trustee, acting as manager of both Klondike and Century” notified Opera that he was “terminated as legal counsel for either company, effective immediately”.
- Section 8.1 of the Operating Agreement provides that any transfer of a member’s interest in Klondike is “prohibited,” and that no member may transfer his interest in Klondike. Section 8.3.1 of the Operating Agreement provides that the transferee of a member’s interest will not be admitted as a substitute member without the unanimous written consent of the non‑transferring members. Such consent has not been obtained by the Trustee, and will not be given either by Studebaker or by Tyler.
- Oregon law is clear that the debtor Members’ transfer of their interests to the Trustee allows the Trustee to have recourse only to the members’ economic interests in Klondike, and that the Trustee does not become, as a result of such transfer, a member in Klondike or obtain any right to participate in the governance of Klondike. See, O.R.S. 63.259. The Trustee has no greater rights with respect to Klondike than he has under the Operating Agreement and under applicable Oregon law. See, Butner v. United States, 440 U.S. 48 (1979).
- Pursuant to the Operating Agreement, the Trustee is not entitled to vote as a member of Klondike, and is not entitled to exercise any management rights under the Operating Agreement. Governing Oregon law is consistent with this result.
- C. History of CFalls Investors, LLC (“CFalls”), and Padrick, Obsidian, and Tonkon Torp’s attempt to take governance rights away from existing Managers
- October 27, 2005 C Falls Investors, LLC, was formed.
- CFalls was member managed with VSN Properties LLC acting as the Operating Member.
- On April 20, 2009 there was a transfer vote to make Gross the new Operating Member of the LLC.
- On May 26, Padrick filed a memorandum of action to take over as Operating Member.
- On June 1, 2009 Opera received email from Rose requesting monies the LLC member uses to retain Opera for legal representation
- Per the provisions of the LLC’s operating agreement, VSN Properties LLC is in default because of not contributing the capital necessary to maintain and complete the project agreed in Section 3.2 of the operating agreement and the majority of remaining members can vote at any time to elect a new Operating Member pursuant to Section 4.1. Also under Section 8.1 the Trustee has no rights as a member, being merely an assignee of another member interests’ and having not been admitted as a member by the remaining members.
- D. History of Century & Padrick, Obsidian, and Tonkon Torp’s attempt to take governance rights away from existing Managers
- The company was formed October 4, 2005.
- Initial managers are/were Studebaker and Neuman.
- On 2/12/09 Studebaker spoke with Padrick about the cash deficiencies and negative equity to the estate resulting in ABSOLUTELY NO ASSISTANCE AND NO COMPASSION FOR JIM HULL’S LOSS.
- On 2/18/09 Studebaker sent all the information she had to Ryan Norwood of Obsidian, WITHOUT ANY RESPONSE. (Exhibit F8)
- On or about July 31, 2008, Hull entered into a Tenancy in Common Agreement (“TIC”) with the company and became a co-owner of the property owned by the company.
- Century needed cash and a capital call was made December 28, 2008 in the aggregate amount of $86,414.03, but only an aggregate of $8,473.90 was received by the LLC. The Trustee has made no attempt to pay the debtor’s shares of the capital contributions.
- On January 1, 2009 Neuman resigns as manager and all members agree to Hull becoming manager.
- On or about February 4, 2009, the property was listed for sale thru Fratzke Commercial Real Estate. Fratzke received offers between $1,000,000 and $2,650,000. The property was taken off the market because the highest offer was approximately $573,000 SHORT of paying off the debt obligations of the LLC.
- On April 20, 2009 Opera sent an offer requesting the Trustee to, essentially, sign off or sign on to making the Shareholders’ capital call contributions.
- Section 8.1 of the Operating Agreement provides that any transfer of a member’s interest in Century is “prohibited,” and that no member may transfer his interest in Century. Section 8.3.1 of the Operating Agreement provides that the transferee of a member’s interest will not be admitted as a substitute member without the unanimous written consent of the non‑transferring members. Such consent has not been obtained by the Trustee, and will not be given either by Studebaker or by Hull.
- Oregon law is clear that the defendants’ transfer of their interests to the Trustee allows the Trustee to have recourse only to the members’ economic interests in Century, and that the Trustee does not become, as a result of such transfer, a member in Century or obtain any right to participate in the governance of Century. See, O.R.S. 63.259. The Trustee has no greater rights with respect to Century, or any other LLC interest he receives than he has under the Operating Agreement and under applicable Oregon law. See,Butner v. United States, 440 U.S. 48 (1979).
- Pursuant to the Century Drive Mobile Home Park, LLC’s operating agreement the Trustee is not entitled to vote as a member of Century, and is not entitled to exercise any management rights under the Operating Agreement. Governing Oregon law is consistent with this result.
Originally Posted on ObsidianFinanceSucks.com at
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