Case AJC Doc 156 Filed 09/09/11 Page 1 of 7 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION.

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1 Case AJC Doc 156 Filed 09/09/11 Page 1 of 7 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION In re: MERENDON MINING (Nevada), INC. a/k/a Milowe Brost, Debtor. / MARCIA DUNN, Chapter 7 Trustee Case No AJC Chapter 7 Adv. Proc. No AJC v. Plaintiff, MILOWE BROST, et al., Defendants. / AGREED EX-PARTE MOTION TO CONTINUE FOR AT LEAST THIRTY (30) DAYS THE PRE-TRIAL CONFERENCES CURRENTLY SET FOR SEPTEMBER 19, 2011 IN (I) ADV. PROC. NO [D.E. #153 IN THAT ADV. PROC.] AND (II) ADV. PROC. NO [D.E. #91 IN THAT ADV. PROC.], AND TO CONTINUE ALL CORRESPONDING PRE-TRIAL DEADLINES Marcia Dunn, as Chapter 7 Trustee for the Estate of Merendon Mining (Nevada), Inc., by and through undersigned counsel, and pursuant to Local Rule and 9013(C)(8) respectfully requests that this Court continue for at least thirty (30) days the pre-trial conferences currently set for September 19, 2011 in (I) Adv. Proc. No (the SubCon Case )[D.E. #153 in that adversary proceeding] and (II) Adv. Proc. No (the 363 Case )[D.E. #91 in that adversary proceeding]; and all corresponding pre-trial deadlines in relation to the new date; and in support states as follows: 1. On February 4, 2009, Petitioning Creditors Eileen McCabe, Jane L. Otto, and Diane Kaplan-Berk filed a Chapter 7 Involuntary Petition in the Southern District of Florida against the Debtor, Merendon Mining (Nevada), Inc., a Nevada corporation, whose principal

2 Case AJC Doc 156 Filed 09/09/11 Page 2 of 7 place of business was in Miami-Dade County. 2. On June 9, 2009, this court entered an Order for Relief [D.E. #29 in the Main case]. 3. On June 10, 2009, Marcia Dunn was appointed as the Trustee [D.E. #30 in the Main case]. 4. On December 15, 2009, the Trustee commenced this Adversary Proceeding No (the SubCon Case ) in which a motion for summary judgment was subsequently granted on January 27, 2010 substantively consolidating a great number of the Debtor s related entities, and five American mining properties, into the main case, and Debtor s estate [D.E. #84]. 5. On September 29, 2010, the Trustee commenced Adversary Proceeding No (the 363 Case ) in order to facilitate the sale, by 363 motion, of the three Colorado mining properties for a total of $2.25 million to a third party buyer (the 1 st Buyer ) that had been located, subject to higher and better offers at a bankruptcy court supervised auction (the Sale Motion )[See D.E. #167 in the Main Case, dated September 3, 2010]. 6. That sale and Sale Motion subsequently did not consummate because of the interference of Mr. Paul Garfinkle with the proposed 1 st Buyer which led to the 1 st Buyer walking away from the transaction. Before and during this bankruptcy, Mr. Garfinkle has long expressed his desire to acquire the Glory Hole mining property for his own benefit. Rather then making any written offer and providing earnest money to buy the Glory Hole or any other mining property, Mr. Garfinkle has chosen to not respect the bankruptcy process, and rather has tried to sabotage any sale that does not result in his acquisition of the Glory Hole mine. 7. Fortunately, a subsequent third party buyer was found for the Glory Hole, and on June 9, 2011, the Sale Motion was revised to just sell the Glory Hole, not the other Colorado properties to this new third party buyer (the 2d Buyer ), for $495,000, also subject to higher and 2

3 Case AJC Doc 156 Filed 09/09/11 Page 3 of 7 better offers at a bankruptcy court supervised auction (the Amended Sale Motion )[D.E. #245 in the Main Case]. 8. However, while several superior offers subsequently came in for the Glory Hole that led the Trustee and her professionals to believe that substantial competitive bidding would occur, because the Glory Hole was subject to two competing ownership claims by the Estate of Harold Caldwell ( Caldwell ) and Clearwater Mining Company ( Clearwater )(as differentiated from lien claims), all emanating from Mr. Garfinkle s relationship with the late Harold Caldwell, and because the Court would also not consider bids for the Glory Hole that contained non monetary elements, such as settlement of these competing ownership claims, this Court refused to allow the sale of the Glory Hole until such time as those ownership issues were resolved by litigation or settlement [D.E. #252 in the Main Case, Order denying the Amended Sale Motion, dated July 26, 2011]. 9. The pre-trial conference in the SubCon Case [D.E. #153 in that adversary case, Order dated July 26, 2011], and the 363 Case [D.E. #91 in that adversary case, Order dated July 26, 2011], are both currently set for September 19, 2011, which date was originally set to facilitate the potential sale of the Glory Hole, which motion has subsequently been denied without prejudice by this Court. 10. Notwithstanding the denial without prejudice of the sale of the Glory Hole, fortunately, the Trustee was able to persuade the 2d Buyer to agree to purchase the other two non Glory Hole Colorado mining properties for the same purchase price and to apply its pending earnest money deposit toward that purchase, which again is also subject to higher and better offers at a bankruptcy court supervised auction (the Non Glory Hole Sale or the 2d Amended Sale Motion )[D.E. #256 in the Main Case, dated August 3, 2011]. The hearing to consider approval of the Sale Procedures for the sale of the Non Glory Hole Colorado Properties pursuant 3

4 Case AJC Doc 156 Filed 09/09/11 Page 4 of 7 to the 2d Amended Sale Motion is set to be heard on September 27, 2011 [D.E. #260 in the Main Case, Order dated August 8, 2011]. 11. At the same time, the Trustee was also able to successfully settle the ownership dispute with the Caldwell Estate through the payment of $600,000 to the bankruptcy estate in exchange for releasing any interest the bankruptcy estate has in the Glory Hole. The Bankruptcy Rule 9019 motion to approve this settlement [D.E. #262 & 263, dated August 19, 2011), is also set to be heard on September 27, 2011 [D.E. #264 in the Main Case, notice dated August 22, 2011]. 12. The result of this settlement with Caldwell over the Glory Hole will lead to a substantial benefit to the estate, as compared with a sale of the Glory Hole, in that the proceeds of the settlement would go directly to the estate for the benefit of injured victim investors, rather then potentially being lost through litigation, during which the Trustee would have to rely upon the testimony of Mr. Garfinkle to support its case, the costs of litigation may overwhelm the recovery that may be received through sale, and the proceeds of any such sale would have to be delayed until after ownership issues were resolved through litigation or settlement that may result in sharing those proceeds with competing claimants, or even worse the bankruptcy estate could potentially lose the issue of ownership outright and have to turn all of the sale proceeds over to a competing claimant. While the Trustee believes that ultimately she would have prevailed on both the law and the facts of this unique case, the fact that these issues had been tied up in state court litigation for over 10 years in Texas and Colorado before even this case was filed, coupled with the risks described above, led the Trustee to exercise her business judgment and determine that settlement with Caldwell was in the best interests of the estate and its creditors. 13. Not surprisingly, the only objector to the Rule 9019 motion is Mr. Garfinkle, who 4

5 Case AJC Doc 156 Filed 09/09/11 Page 5 of 7 despite this Court making itself clear that it would not approve a sale of the Glory Hole absent resolution of the ownership issues, wants to force the Trustee to sell the Glory Hole to him, or persons or entities affiliated with him, notwithstanding his not having made a single written offer or provided any deposit money to the estate over the course of this bankruptcy. 14. The Trustee requests the continuance of the pre-trial conferences and all associated deadlines in these adversary cases, till after the hearings on approval of the sale procedures of the Non Glory Hole Colorado mining properties, and the 9019 Settlement Motion, since the completion of the sale and approval of the settlement will simplify the issues in these cases, and most likely result in the droppings of parties, counts and properties from these cases, and will ease the administration of this case, and that said pre-trial conferences not be rest for a minimum of at least thirty (30) days. The Trustee believes that the adversary proceedings should continue to be set on the same track so we ask for this additional continuance with respect to both pre-trial conferences. 15. This Court has previously granted continuances in both pre-trial conferences. 16. Counsel for each of the defendants who have made an appearance in both adversary proceedings or have contacted the undersigned counsel were contacted regarding this extension and we ve asked to send an objection by 2:00 p.m. EDT on September 9, 2011 if they did not consent to this relief. 17. Not surprisingly, only Paul Garfinkle, who is not a party to either of those proceedings nor a creditor in his own standing in this case, has raised an objection, notwithstanding his lack of standing to do so. As indicated before, Mr. Garfinkle is the only person to object to a proposed settlement that is pending before the Court and set to be heard on September 27, 2011 with respect to a property known as the Glory Hole mine. The Trustee will address Mr. Garfinkle s by separate response prior to that hearing. 5

6 Case AJC Doc 156 Filed 09/09/11 Page 6 of However, of the parties with standing, E. Alan Hampson, counsel for William B. Kemper and Marjorie Daggett, requests the pre-trial conferences are not to be set from October because he will be unavailable, and the Trustee is agreeable to such a request and asks that these pre-trial conferences not be set until after October 27, The Trustee believes that no one in addition opposes the requested relief. 19. The undersigned counsel certifies that the Trustee consents to the relief set out in this Motion. WHEREFORE, the Trustee respectfully requests that the Court enter the attached Order continuing the pre-trial conferences in Adv. Proc. No and Adv. Proc. No for at least thirty (30) days, and for no earlier then October 27, 2011, and continuing all related pre-trial deadlines in both adversary cases in relation to that new date set for the pre-trial conferences, and granting such other and further relief as the Court deems just and proper. Dated: September 9, 2011 Respectfully submitted, GRAYROBINSON, P.A. Attorneys for Plaintiff, Marcia Dunn, Chapter 7 Trustee 401 E. Las Olas Boulevard, Suite 1850 Fort Lauderdale, FL Phone /Fax By: /s/ Ivan J. Reich Ivan J. Reich, Esq. Florida Bar No ivan.reich@gray-robinson.com Michael D. Lessne, Esq. Florida Bar No michael.lessne@gray-robinson.com 6

7 Case AJC Doc 156 Filed 09/09/11 Page 7 of 7 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true copy of this Motion was served on the 9 th day of September, 2011 to all parties registered to receive service via the Court s CM/ECF system and in accordance with the Court s Order of December 30, 2009 [D.E. #74 in the main case], shall be posted to set up for the purposes of providing information on this case. /s/ Ivan J. Reich Ivan J. Reich \351016\4 - # v1 7

8 Case AJC Doc Filed 09/09/11 Page 1 of 2 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION In re: MERENDON MINING (Nevada), INC. a/k/a Milowe Brost, Debtor. / MARCIA DUNN, Chapter 7 Trustee Case No AJC Chapter 7 Adv. Proc. No AJC v. Plaintiff, MILOWE BROST, et al., Defendants. / ORDER CONTINUING THE PRE-TRIAL CONFERENCES AND CONTINUING ALL CORRESPONDING PRE-TRIAL DEADLINES On September 9, 2011, Trustee Marcia Dunn filed an Agreed Ex Parte Motion to continue the Pre-Trial Conference and all corresponding pre-trial deadlines currently set for September 19, 2011 [D.E. #153] (the Continuance Motion ). The Court considered the Continuance Motion and the relevant record in this case, and is otherwise duly advised. For good cause shown,

9 Case AJC Doc Filed 09/09/11 Page 2 of 2 It is ORDERED and ADJUDGED: 1. The Continuance Motion is GRANTED. 2. The Pre-Trial Conference shall be continued to, 2011, at.m. at the Claude Pepper Federal Building, 51 SW First Avenue, Room 1410, Miami, Florida. The pre-trial deadlines and obligations of the parties pursuant to the Order Setting Filing and Disclosure Requirements for Pretrial and Trial [D.E. #5] are continued and extended to conform to that date. Submitted by: Ivan J. Reich, Esq. GrayRobinson, PA Counsel for the Trustee 401 E. Las Olas Blvd., Suite 1850 Ft. Lauderdale, FL Telephone: Facsimile: ivan.reich@gray-robinson.com # # # (Mr. Reich shall upon receipt serve a copy of this Order upon all creditors and interested parties and file a certificate of service). \351016\4 - # v1 2