1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ECRO: APPEARANCES: IN RE:

UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE ) ) ) ) ) ) ) ) ) ) Case No. 07-10416 (KJC) Chapter 11 Courtroom No. 5 824 Market Street Wilmington, DE 19801 June 20, 2013 1:30 P.M.

NEW CENTURY TRS HOLDINGS, INC., et al., Debtors.

TRANSCRIPT OF HEARING BEFORE HONORABLE KEVIN J. CAREY UNITED STATES BANKRUPTCY JUDGE

For the Liquidating Trustee:

Hahn & Hessen LLP By: MARK INDELICATO, ESQUIRE EDWARD SCHNITZER, ESQUIRE 488 Madison Avenue, 15th Floor New York, New York 10022 United States Dept. of Justice By: MARK KENNEY, ESQUIRE 844 King Street, Suite 2207 Wilmington, DE 19801 AL LUGANO Reliable 1007 N. Orange Street Wilmington, Delaware 19801 Telephone: (302) 654-8080 E-Mail: gmatthews@reliable-co.com

For the U.S. Trustee:

Transcription Service:

Proceedings recorded by electronic sound recording: transcript produced by transcription service.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Telephonic Appearance: Creditor, Helen Galope: By: HELEN GALOPE (818)355-7061

3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INDEX Page NOTICE OF AGENDA MATTERS: For Liquidating Trustee, by Mr. Indelicato 4,8,11,13,43,61,67,76,84 Creditor, Helen Galope, by Ms. Galope 6,10,37,54,65,68,82 For Liquidating Trustee, by Mr. Schnitzer 15 For the U.S. Trustee, by Mr. Kenney 67,80 EXHIBITS: Documents from Helen Galope Liquidating Trustees Three Exhibit Binder

13 43

WITNESS FOR THE LIQUIDATING TRUSTEE: Alan Jacobs

Further Direct Cross Redirect Recross Redirect 16

4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE CLERK: THE COURT: All rise. Please be seated.

Good afternoon, everyone. Good afternoon, Your Honor, Mark

MR. INDELICATO:

Indelicato from Hahn & Hessen on behalf of Alan M. Jacobs Liquidating Trustee of New Century. non-omnibus hearing. Your Honor, this is a

It was a special hearing scheduled by

Your Honor to deal with a number of matters that had been pending. The first matter thats before Your Honor is the motion by Ms. Galope to impeach and remove the Trustee. Honor, if you will recall you entered a scheduling order which required among other things in paragraph 4, of that order if Ms. Galope intended, well she could appear by phone to present legal arguments on the removal and the second motion for reconsideration. But if she wished to testify, Your

examine any witness or present any other evidence that must be done in person. I dont believe Ms. Galope is here. It is her

motion and I would normally turn it over to her to present her case in chief, but if she is not here to present her evidence I would request that we have the ability to present the testimony of Mr. Jacobs to refute some of the allegations contained in her motion, and then we then move to arguments and then I would let Mr. Galope go first and we would respond. Since shes not here I think we should be allowed

5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Galope. THE COURT: No, you may not. All right, Ms. Lampley to permit our evidence first. THE COURT: couple things. connection? MS. GALOPE: THE COURT: just a moment. MS. GALOPE: THE COURT: Okay. I note that #4 and #5 on today s agenda Is Ms. Lampley either on Yes, Your Honor, I m here. All right, good afternoon. Stand by for All right, thank you. Let me ask a

First, Mr. Galope, are you on the telephone

are motions by El Veasta Lampley. the phone or in the Courtroom? MS. GALOPE:

Your Honor, may I speak.

This is Helen

is not on the phone sign-up sheet. the phone connection.

Shes apparently not on

Mr. Indelicato, what can you tell me

about what notice Ms. Lampley may have gotten about today s scheduled hearing on her motions? MR. INDELICATO: I believe, Your Honor, she received

a copy of the agenda and she received our responses to her motion. THE COURT: And did notice of the hearing go out?

Did the clerks office do that here, do you know? MR. INDELICATO: I do not, Your Honor. I have been

informed that KCC our claims and noticing agent served her by

6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. THE COURT: Okay, now let me just turn for a minute. overnight mail. THE COURT: When? When the agenda was filed two days

MR. INDELICATO: ago, Your Honor. THE COURT:

So she would of only had a couple days

notice of this hearing? MR. INDELICATO: about the hearing. No, Your Honor. I believe she knew

Your Honor, and I believe the way we got

to todays hearing was when Ms. Lampley filed her motion the clerk scheduled it for the hearing for today. THE COURT: And thats what I figured. I just

wanted to confirm that. MR. INDELICATO: Thats our understanding, Your

Ms. Galope, did you have some light to shed on the Lampley matters? MS. GALOPE: Yes, Your Honor, she called me

yesterday to say that she won t be able to come because for your information, Your Honor, Ms. Lampley is now homeless. And she has no means of paying for the Court fees. And I

asked her if she could fax something to the Court to let them know of her situation. THE COURT: So far as I know she has not contacted

the Court to tell us that she couldn t be here or any reason

7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 why she might not be here. MS. GALOPE: Yes, Your Honor, the situation of Ms.

Lampley is really in dire fates. THE COURT: All right, well unfortunately that And it doesn t

doesnt really give the Court very much help.

give me a way to make it any easier for Ms. Lampley to assert her positions. All right, well thank you, Ms. Galope.

Let me just say this with respect to the Lampley motions; as the Trustee correctly points out in his response there are several forms of relief that are requested in the motions, all of which are designed to advance her position that this Court should have no involvement in her matters, to put it plainly. But specifically one of the requests is to

move her adversarys to the District Court. Typically the form of that request should be made in the form of a motion to withdraw the reference which would be filed here and then sent over to the District Court. I felt

I was unable to do that at least as the pleadings came to the Court and I was hoping to resolve that issue today at the scheduled hearing, but am now unable to do so. What I will do is direct counsel for the Trustee to prepare forms of order which dismiss the motions for Ms. Lampleys failure to appear and prosecute them. Now,

normally such a dismissal for that reason would be with prejudice; however, specifically the form of order should be

8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that its without prejudice. Ill take just for the moment

Ms. Galopes word about Ms. Lampleys situation. MR. INDELICATO: Your Honor, might it be easier, and

Im just trying to, we do have another hearing scheduled, an omnibus hearing scheduled for next week. Would it be easier

for the Court if we at least adjourn those two matters until next week to see, and we can send her a notice to make her appear? My fear is if we enter an order even without

prejudice it will create more litigation related to the order then is necessary. THE COURT: All right, well aim obviously is not to

create more time or expense for anybody. MR. INDELICATO: Yeah, Im sorry, Your Honor, as Next week is a pre-trial,

usual I was mistaken about dates.

not an omnibus, but we do have a short period of time I believe scheduled for the 26 th. THE COURT: Im sorry. That hearing has been marked as moved.

Bear with me for a minute. And I believe its the Lampley

MR. INDELICATO: motion for the pre-trial. THE COURT:

Well, I will tell you the hearing has

been marked as moved, but moved at the request of counsel to June 20th. So I dont recall what happened here. But there

is now not presently a hearing scheduled for the 26 th of June I will tell you.

9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. INDELICATO: Then I guess, Your Honor, we will

settle the orders as directed without prejudice. THE COURT: The next hearing is July 24 th, but again And there wouldn t be

thats just a pre-trial day basically.

really time for very much of a substantive hearing. MR. INDELICATO: Your Honor, to move it along if you

want us to submit the orders dismissing without prejudice we will do that and then deal with it going forward. THE COURT: Heres what Id like you to do, submit

them in hard copy, but either electronically or with a disc so that I can add further provisions a kin to the comments I made today on the record, maybe that would be helpful to Ms. Lampley. But send her copies of what you send me when you

send them to me. MR. INDELICATO: THE COURT: We will do that, Your Honor.

All right, thank you, Mr. Indelicato. Youre welcome. Now how would you

MR. INDELICATO:

like to proceed with the Galope motions? THE COURT: MS. GALOPE: THE COURT: All right, Ms. Galope? Yes, Your Honor. What Mr. Indelicato has suggested is

that since you will be presenting no evidence today that he be permitted to present his evidence and then would be argument following that both by you as the Movant and by him on behalf of the Trustee. Is this manner of proceeding

10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 acceptable to you? MS. GALOPE: For the record, Your Honor, I would

like the Court to know that I have filed some exhibits, filed it today, this morning. And I would also like to let the

Court know that I have let counsel that I will be using the exhibits for the hearing. And I am unable to come to the And if the Court

hearing, you know, for personal reasons.

would allow my exhibits to be used for today I would really appreciate it, Your Honor. THE COURT: Well, Ms. Galope, those documents to The order that

which you refer came to the Court only today.

I signed on April 29th provides that any exhibits that were to be used should be exchanged no later than Thursday, June 13 th. So first let me ask MS. GALOPE: THE COURT: with my order? MS. GALOPE: The reason for that, Your Honor, is Your Honor, okay, go ahead. First let me ask why you did not comply

because it was voluminous and I understand the CD came from the Trustee and I let them know that this one I m going to be using that CD. them. Its even difficult for me to send it to They know that

Its a 25 megabyte file, a huge file.

they have this information.

They gave this to me and it s They already

just a matter of them looking at their copies. have those copies, Your Honor.

It s like referring them for

11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 whats been docketed. I got it up right the same way here.

In order to, you know, make formal or the make-up for that transgression I did send those copies today, this morning. THE COURT: Well as I understand it, well let me What I ve received is something

tell you what I received.

that was clocked in, in the clerk s office just after noon today and the first page says Exhibit A, is that what youre talking about? MS. GALOPE: Thats the one, Your Honor. It was

more than 200 pages is supposed to have come with it. THE COURT: MS. GALOPE: 20 pages, Your Honor. THE COURT: Yeah, that seems about right. I didn t I dont have that many pages. Yeah, its only about 20 or less than

count them, but that seems about right.

Okay, let me ask,

Mr. Indelicato, do you have that submission? MR. INDELICATO: Were trying to figure out, Your We did not get this morning

Honor, we have what she sent us. what she sent to the Court. THE COURT:

Okay, well let me hand you what I have

and maybe that will help you determine whether you have that already and whether you have any objection to its use. may not, but I leave that for you to tell me. Ms. Galope, so that you know whats happening Mr. Indelicato and his colleagues are trying to see whether what You

12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you submitted to the Court today consists of things that they already have from you. So there will be a couple minutes of

silence till theyre able to make that determination, okay? MS. GALOPE: I understand, Your Honor. Thank you.

MR. INDELICATO: pages here.

Your Honor, we do have at least the Your Honor, we do I

She did provide it to us.

have a binder, although, I only have one of what she sent. dont know the best way to proceed. I would not have an

objection to move this along to allowing her or allowing the Court to utilize these documents. Again would could make

arguments of relevance, but for example, I mean she wants to, part of it relates to the American Home Mortgage Bankruptcy proceeding pending forward. THE COURT: Let me ask you to pause for a moment.

Ms. Galope, is what you want to have admitted into evidence all of the things that you sent to Trustees counsel or just those pages that you sent to the Court today? MS. GALOPE: Your Honor, in addition to what I sent

to the Court today I have sent them some documents meeting the deadline of June 13th. THE COURT: MS. GALOPE: THE COURT: And I would like for that -

Ms. Galope? Yes, Your Honor. Are you saying that you want whatever

you sent to the Trustees counsel to be admitted into evidence in its entirety?

13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. GALOPE: THE COURT: objection to that? MR. INDELICATO: Your Honor, again we don t have Yes, Your Honor. Okay, Mr. Indelicato, do you have any

objections to move this along to the documents being admitted into evidence, but we would object strenuously to any testimony of Ms. Galope over the phone. The order provided

that if she was going to testify she needed to be here in person. We are willing to allow the documents into evidence

to move this along, but we are not willing to waive any of the other provisions of the scheduled order. THE COURT: the documents? MR. INDELICATO: She could absolutely make arguments But she first could make argument about

about the documents, Your Honor. THE COURT: Okay, I dont have a set. Maybe before

the end of the hearing if the Trustee has a set you could leave one with the Court or if I need to look at something as we argue you could provide a copy, but at least for the record, Ms. Galope, I will admit into evidence those documents that you sent to the Trustee which he says he has with them and has no objection to their admission, okay? MS. GALOPE: Yes, Your Honor. And for the record

also, Your Honor, the Trustee has provided me some documents by e-mail and I am assuming that those are the same documents

14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 them. that they are going to present to the Court today. THE COURT: I dont know what the Trustee intends to Okay, now,

present today, but well find out as we go along.

Mr. Indelicato although youre not the Movant, let me ask there are three motions before the Court that Ms. Galope has filed do you have any suggestion about how we might proceed in connection with one at a time or all three together? MR. INDELICATO: Your Honor, I think because of the

nature of the motions I would normally have suggested that we do them globally, but I think because of the nature of the motions and the seriousness of some of the allegations in the particular motions I think we need to deal with them one at a time. I will be in my presentations referring back to Im going to try not to duplicate in each instance a

lot of the arguments and facts that I deal with in each of the motions, but I do think we need to deal with each of the motions individually. THE COURT: All right, I understand and thats fine. Ms. Galope, let me ask for the

Well proceed on that basis.

record the exhibits that we ve admitted into evidence, do you intend that they are relevant to all of the motions that you filed or some to one and not to the other. MS. GALOPE: THE COURT: They are relevant to my motions. To all of the motions, okay. Well then

15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 since that as I take it concludes your evidentiary presentation Ill turn to the Trustee and ask for his. MR. INDELICATO: Yes, Your Honor, before we do that

may I return to the Court the documents that were filed with the clerks office? THE COURT: You may. Thank you.

MR. INDELICATO: THE COURT:

Thank you. Your Honor, for the testimony of

MR. INDELICATO:

Mr. Jacobs Ill turn it over to my partner Ed Schnitzer. THE COURT: All right, thank you. Your Honor, I have exhibit binders.

MR. SCHNITZER: May I approach? THE COURT:

You may.

All right, everything youre

handing the Court, Mr. Schnitzer, I take it you have previously forwarded to Ms. Galope? MR. SCHNITZER: THE COURT: Yes, Your Honor.

Understanding that she s on the phone I

would just ask that you take care to identify the documents in such a way that she can refer to them as the testimony goes on. MR. SCHNITZER: Understood, Your Honor, and Ill

make clear now for the record the binder we ve just handed out has three tabs and it has three exhibits. The first is

the modified plan of New Century, the second is the

16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCHNITZER: Q. A. Q. Good morning, Mr. Jacobs. Good afternoon. Could you describe how you became involved in the New confirmation order of the modified plan and the third is the New Century Liquidating Trust agreement. Yes, all three of

these as well as this list, were provided to Ms. Galope in accordance with your scheduling order. THE COURT: Okay, thank you. So we ll proceed first

on the motion to impeach remove the Trustee which Ms. Galope has filed. MR. SCHNITZER: Thank you, Your Honor. The Trust

would like to call Mr. Alan Jacobs. THE COURT: As Mr. Jacobs is walking to the stand

let me just note I do hear sounds coming from the telephone connection and I ask that until its time for them to be heard that the telephone participants keep their phones on mute. Thank you. ALAN JACOBS, WITNESS, SWORN THE CLERK: MR. JACOBS: State your full name for the record. Alan M. Jacobs. DIRECT EXAMINATION

Century Bankruptcy? A. Sometime prior to the confirmation hearing for the I was approached and, frankly,

Debtors plan of liquidation.

17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I dont recall as I sit here today whether I was approached by one of the professionals involved with the case, or one of the Creditors involved with the case, but I was approached to consider whether I might want to pursue the Trustee role through a proposal to the Creditors Committee which was considering various people to potentially serve as the Trustee. I made my proposal to that group. that group. I was selected by

And then up to the planned confirmation date I

did preparatory work with the Debtors and its advisors as well as with the Creditor Committee advisors preparing myself so that we go affective with the plan. And upon the

confirmation of the plan and shortly thereafter with the effective date I executed the Trust agreement and became the Trustee. Q. Thank you. And is it correct that you were appointed the

Trustee under the first plan that was in the New Century cases? A. Q. A. Q. Thats correct. And the first confirmation order as well. That is correct. And then with the modified plan and the modified

confirmation order you remained the Trustee? A. Yes, I actually prosecuted that modified plan and was

similarly appointed.

18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. If I can direct your attention to Tab 2 in the binder.

Do you know what Tab 2 is? A. Its the order confirming the modified second amended

joint Chapter 11 plan. Q. 24. A. Q. Yes. And does that paragraph contain a reference to And if you could flip to paragraph 22, which is on page

appointment as the Trustee in this Bankruptcy case? A. Yes, that particular paragraph refers to the appointment

of the Trustee and identifies me as being appointed the Liquidating Trustee in the original affective date and goes on with respect to modified plan. Q. A. Q. A. Q. A. Q. A. Q. Can I direct your attention to Tab 1? Yes. Can you let me know what Tab 1 is? Its the modified second amended joint Chapter 11 plan. And can I direct your attention to page 68. Yes. And do you see paragraph 3 up top? Yes, I do. And is this the section that refers to your appointment

as Liquidating Trustee pursuant to the plan? A. Yes, again the paragraph is captioned appointment of the

Liquidating Trustee and I am identified within that

19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 paragraph. Q. 3. A. Q. A. Yes. Can you tell me what this exhibit is? This is the notice of filing of the Liquidating Trust Let me direct your attention to the last exhibit, Exhibit

agreement and attached to it is as Exhibit 1 is New Century Liquidating Trust agreement. Q. A. Q. A. And if you can turn to page 3, Section 1.4. Yes. And what is that section? Section 1.4 is the appointment of the Liquidating Trustee

and it indicates that I am appointed as the Liquidating Trustee, and I believe as well, although, this does not have signatures on it, but if you go to page 24 I can testify that I actually signed this agreement and became the Liquidating Trustee. Q. Thank you. Is your appointment as Liquidating Trustee

subject to removal or replacement? A. The Liquidating Trust agreement does have provisions for

the removal of the Trustee I believe. Q. Lets start with the Liquidating Trust agreement, if you

could flip to Section 6.1 which is on page 16. A. Q. Yes. And is that the section that your referencing that does

20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 make your appointment subject to change? A. Q. 70. A. Q. Yes. Do you see the top paragraph B, does that also reference That is correct. And if you can flip to Exhibit 1 which was the plan, page

that you are subject to removal or replacement? A. Q. That is correct. Just to complete this circle if you can turn to Exhibit 2 Does that

the confirmation order, page 26, paragraph 28.

section also reference the ability to have the Trustee removed or replaced? A. Q. That is correct. Next, are there provisions in the claim that set forth

your obligations with respect to the Plan Advisory Committee? A. Q. Yes, it does. And if you could turn to page 70 of the plan, again the

plan was Tab 1. A. Q. A. Yes. Is that reference in paragraph 5? Yes, liquidation of Liquidating Trust assets,

responsibilities of Liquidating Trustee. Q. And generally speaking does the Liquidating Trust

agreement also provide or explain your obligations with respect to recording or getting consent from the Plan

21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Advisory Committee? A. It explains my responsibilities, as well as my duties as

well as how I interface with the Plan Advisory Committee. Q. A. Q. And have you complied with all of those obligations? Absolutely. And as well as any obligations set forth in the plan with

respect to the Plan Advisory Committee? A. Q. That is correct. Are you aware does the Plan Advisory Committee have

fiduciary obligations to the estate? A. Q. Yes, it does. And as far as you know have they complied with those

obligations? A. Q. As far as I know, absolutely. Are you aware were the members of the Plan Advisory

Committee disclosed in the confirmation order? A. Q. Yes, they were. If I can direct your attention to Tab 2 which is the You can flip to paragraph 36 which is on

confirmation order. page 29. A. Q. Yes.

And is that the paragraph in which the members are

disclosed? A. Q. Yes, they enumerated within that paragraph. Were they also enumerated in Section 4.1 of the

22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Liquidating Trust agreement which is Tab 3, page 11? A. I believe so, but let me double check. Yes, they are

listed. Q. Staying with the Liquidating Trust agreement do you see

Section 4.2? A. Q. Yes, I do. And do you see does it state that the Plan Advisory

Committee has an obligation to act in good faith? A. Q. Yes, I do. Do you believe theyve acted in good faith throughout

this case? A. Q. Yes, I do. To date have you performed all duties required of you

under the Trust agreement, the plan and the confirmation order? A. Q. A. Q. Yes, I have. To date have you failed to perform any required duties? No. Have you unreasonably delayed the performance of your

duties as of today? A. Not in a personal capacity. Obviously, I d like to close

the Trust up quicker then were being able to do so, but personally Im moving it along as quickly as reasonably possibly. Q. And as you just mentioned have there been delays in your

23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ability to close the case? A. Q. Yes, there have been. And as general or specific as you d like to be could you

explain why there have been delays? A. Well, basically there are three things that have been

overhanging the closing up of the Trust for the last period of time. I dont recall how far back it goes. One is the IRS settlement which is concluded. I got

a significant refund and we re trying to just clean up the claims as they appear in the claims register. consider that a delay anymore. Secondly, is the Carrington asset which has proven to be a little bit difficult to liquidate? And we continue So I don t

to look at that asset and assess the best means of converting it to cash or otherwise dealing with it. And the third, and most costly and time consuming is the resolution of the handful of remaining claims that are unresolved which I can attribute primarily to borrow claims, mostly pro say, maybe all pro say at this point. know if theyre represented or not represented. I don t And trying

to address those claims some of which I actually settled, but litigation continues both in this Court and in other Court s. And thats the most costly and time consuming element affecting my ability to close up this Trust and make final distributions.

24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Have you made every possible effort to litigate all

delays? A. Well, initially I intended on trying to settle these

claims, but met with only frustration when after a settlement, the settlement gets, you know, reconsidered by the parties and we then continue litigation. I obviously

have views with respect to each of the individual claims as to the bonifides, the issue with respect to notice, as respect to actual damages if any, etc. But at this point we And

are basically simed in terms of trying to resolve those.

we are waiting for the Court s ruling with respect to the due process issue. Q. In addition to the other matters you mentioned is the

Trust also dealing with subpoenas from actions in which New Century is a third party? A. Yes, you know, we did come before this Court to tee up

our first of potentially many records destructions, notices because we know at the end of the day besides the claims resolution and distributions we re going to have to deal with the final administrative matters affecting the Trust, and both records destruction and compliance with subpoenas which continue to burden the estate, you know, is obviously something that we address on a daily basis. We are fully

complying both in terms of retaining records, which were not authorized to dispose of, as well as complying with

25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 subpoenas, and coordinating with the parties and getting them the information that they seeks. Q. Thank you. Do you have a fiduciary to the New Century

estates? A. Q. A. Q. Yes, I do. At any time have you violated that duty? No, I have not. And as the Liquidating Trustee have you ever acted in bad

faith? A. Q. No, I have not. Have you reviewed the pleadings that Ms. Galope has filed

with respect to seeking your removal? A. Q. Yes, I have. And did you see as one of the matters that she referenced

was with respect to litigations that you brought or not brought? A. Q. I believe I did. As Trustee did you investigate all potential causes of

action belonging to the New Century estate? A. Q. Yes, I did. As Trustee did you bring all actions you determined were

appropriate to be brought? A. Q. Yes, I did. And in fact did you pursue over 200 actions on behalf of

the estate?

26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes, I did. Do you know approximately how much money the estate

received from those litigations and/or settlements? A. Q. I believe somewhere between 75 and $85 million dollars. And one of the actions specifically Ms. Galope mentions I

is actions against what she s characterized as big banks. will phrase it this way; did you consider actions against

certain Creditors that had received New Century loans in the 90 days before New Century filed for Bankruptcy? A. Q. A. Q. A. Yes, I did. And did you elect not to bring such actions? That is correct. And do you know why? Well, those bodies obviously have their own defenses to

such claims, and the provisions and in discussions with my various professionals it was the results of such litigation would not be successful. Q. And is it fair to say it would not be beneficial to the

estate to bring litigation if the estate could not prevail? A. Q. That is correct. One of the other issues mentioned by Ms. Galope is Are you familiar with

whether you are disinterested or not. the Bankruptcy Code term disinterested? A. Q. Yes, I am.

Prior to your appointment of Trustee, were you

27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 disinterested with respect to New Century? A. Q. A. Q. A. Q. Yes. Are you currently a Creditor of New Century? No, I am not. Have you ever been a Creditor of New Century? No. Prior to your appointment as Trustee, were you an equity

security holder of New Century? A. Q. No. Prior to your appointment as Trustee were you an insider

of New Century? A. Q. No. And prior to your appointment as Trustee were you ever an

employee of New Century? A. Q. No. After your appointment as Trustee did you ever determine

that you may hold an interest that was adverse to the interest of the New Century estates? A. In one particular instance there was a cause of action

which I was considering along with the oversight committee, the Plan Advisory Committee against an entity to whom I am a pensioner. And accordingly at my recommendation the Plan

Advisory Committee retained a conflicts Trustee to pursue that matter so that I would not be participating in any determination with respect to that matter.

28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. So is it fair to say that because you believe there could

be at least an appearance of a conflict you removed yourself from all determinations on that matter? A. Absolutely. Im not sure that there was an actual

conflict, but certainly wanted to avoid any appearance. Q. Other than that one instance have there been any other

matters that have come to your attention in which would indicate either a conflict or at least an appearance of a conflict? A. Q. None. Do you currently hold any interest materially adverse to

the interest of New Century? A. Q. None. If I can direct your attention to Section 3.2 of the

Liquidating Trust agreement, which is Tab 3, page 4. A. Q. A. Yes. And what is that section called? 3.1 is the purpose of the Liquidating Trust, followed by

3.2 the authority of the Liquidating Trustee. Q. And is it fair to say in Section 3.2 going from subpart A

all the way through subpart EE those are certain things that you have authority to do? A. Q. Yes. And is it fair to say that some of them require you to

report and seek approval from the Plan Advisory Committee?

29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Yes, either directly within this section it references

that as well as under the duties of the Plan Advisory Committee it references what kind of oversight they have in respect to me as Trustee. Q. And is it fair to say there are some actions you can do

without seeking approval from the Plan Advisory Committee and there are some which you need their approval? A. Q. A. Q. That is correct. And have you complied in both respects? Absolutely. And as you probably saw Ms. Galope has stated, I believe

more than once, that you are beholden to the Plan Advisory Committee, is that true? A. This is a typical governance structure of a place It is not

reorganization Liquidating Trust arrangement.

dissimilar from any case where I serve as Trustee, nor from other cases where Im not the Trustee, but I have to be familiar with it. Q. Have there been any situations in which you and the Plan

Advisory Committee with respect to a particular act you wanted to perform in which you disagreed with the Plan Advisory Committee? A. I would not use the word disagreement. We obviously

have, you know, I have an opinion. Advisory Committee.

I bring it to the Plan

We consider alternatives and we reach a

30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 conclusion. So whether there was a disagreement along the

way or just different viewpoints which ultimately got amalgamated into a conclusion as to how we would proceed, thats how I would describe it. Q. Understood. One of the other issues Ms. Galope has

mentioned is fees and professionals that work for the Trust so I want to switch over to that kind of area. As Trustee do

you have the authority to hire counsel for the Trust? A. Q. Yes, subject to the Plan Advisory Committee approval. If you could turn to Tab 2 the confirmation order, page

32, paragraph 41. A. Q. Yes. Is it correct that this section gives you the authority

to hire such professionals? A. Just one moment, Im sorry. Let me make sure I m in the I m sorry.

right document. Q. A. Q.

Okay, 32 you said?

Yes, 32, Section 41. Yes, go right ahead. Does this section give you the authority to hire

professionals on behalf of the Trust? A. Q. Yes. And have you used that authority to hire professionals on

behalf of the Trust? A. Q. Yes, I have. As Trustee do you also have the authority to pay counsel

31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 for work done on behalf of the Trust? A. Yes, I do, again subject to procedures which the Plan

Advisory Committee and I have agreed where I received invoices from professionals. I reviewed them personally

obviously and discuss any issues with the professionals directly. I notice them for the Plan Advisory Committee on a I receive, or if I receive any comments from

monthly basis.

members of the Plan Advisory Committee I pursue resolution of those comments. And I ultimately pay those matters which

remain undisputed to the various professionals. Q. And is it correct that the professionals fees need to be

reasonable? A. Q. Absolutely. And is that one of the determinations that you make when

reviewing the invoices? A. Yes, actually we have a budgetary process and we monitor And we, you know, again discuss areas

actual versus budget.

where there might be issues of efficiency and what have you, and address them with the professionals as to how we re going to deal with them. Q. And is that also a role that the Plan Advisory Committee

has with respect to reviewing invoices to determine if theyre reasonable? A. Well again the Plan Advisory Committee has that feedback

to me on the monthly notice and I pursue resolution of

32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 matters that they bring to my attention. Q. And pursuant to either the confirmation order, the plan

or the Trust agreement is Court approval necessary before you pay the Trust and its professionals? A. Q. No, it is not. Have all fees that youve paid as Trustee been

reasonable? A. Q. Yes. Are you also kept apprise on an ongoing basis as to what

actions the Trust professionals are taking on your behalf? A. Q. A. Yes, I am. Could you explain how that works? Well, Im a bit of a control freak so, at the beginning

of the case we start with a long list of what has to be done to get to the end of the case. And as we resolve and then And at the moment we

take them off the list gets shorter.

generally have status calls either weekly or bimonthly with various professionals to see what needs to be done to get the case closed. So Im very much involved in both what they are

doing, as well as the actual documents, and filings and what have you that need to be made. Q. Thank you. Lets switch onto another topic. Ms. Galope

mentions distributions that have been made to Unsecured Creditors. As the Trustee have you made any distributions to

Unsecured Creditors?

33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Yes, I have. How many distributions have been made? Three. Do you know approximately the total of those three

distributions? A. I believe somewhere in the neighborhood of $225 million

dollars in the aggregate. Q. Were all three distributions made in accordance with the

terms of the confirmation order? A. Q. Yes, they were. Have you kept appropriate reserves in the event a current

disputed claim becomes an allowed claim? A. Q. Yes, I have. Ms. Galope also mentions disgorgement. Are you aware of

any legitimate basis to seek disgorgement from any of the Creditors that have received a distribution so far? A. Q. No, I am not. Lets change to another topic. One of the other topics

mentioned in the motion and/or reply is the treatment of borrowers. As Trustee have you or your staff received

requests from borrowers for copies of the loan files? A. Q. Yes, we have. And what have you generally done in response to those

requests? A. We have provided them copies of whatever we had in the

34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 New Century records. Q. And as part of those responses have you provided

information on the transfer of their loans? A. Q. Thats success of the servicer, etc, yes. As you sit here today are you aware of any other

documents that you have relating to a borrower that you have not been provided, yet been asked for? A. Q. That I have not been provided? Sitting here today are you aware of any documents that

New Century possesses that it hasn t provided to a borrower that a borrower has specifically requested? A. Q. No, I am not. As the Trustee do you have an obligation to object to a

claim that you believe should be either disallowed, reduced or reclassified? A. Q. A. Q. Yes. Have you complied with that obligation? Yes, I have. And is that obligation regardless of what type of claim

it is? A. Its regardless of what type of claim it is and the only

other consideration is a business judgment as to the cost benefit of objecting to claims. Q. Is it fair to say that the Trust has objected to claims

not only of borrowers, but claims also of corporate entities?

35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. As demonstrated by I believe in excess of 40 claim

objection motions, yes. Q. And as Trustee do you also have an obligation to object

to adversary proceedings that you believe are unwarranted? A. Q. Absolutely. Did you see the response that Ms. Galope filed this

morning with respect to this motion? A. Q. Yes, I did. And Ms. Galope made some serious allegations in it. I

wanted to just go through a couple. concerned fabrication. documents? A. Q. Absolutely not.

One of the allegations

Have you fabricated any New Century

Have any of your professionals fabricated any New Century

documents? A. Q. Absolutely not. Theres also an allegation of falsification. Have you

falsified any New Century documents? A. Q. Absolutely not. Have your professionals falsified any New Century

documents? A. Q. Absolutely not. There are also allegations concerning what happened to

Ms. Galopes loan after it was originated by New Century. Did you have any role in either the origination or transfer

36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of Ms. Galopes loan? A. Q. No, I did not. Did you have any role in the servicing of Ms. Galope s

loan? A. Q. No, I did not. There are also allegations concerning documents with

respect to Ms. Galope in terms of what she s been provided. Has the Trust given Ms. Galope copies of any documents that New Century possesses which relate to her loan? A. Q. Yes, we have. As you sit here today are there any other documents that

you are aware of which New Century possesses which relate to her loan, but have not been given to her? A. Q. No. Ms. Galope also references false representations. As

Trustee have you made any false representations? A. Q. No. Ms. Galope also mentions obtaining borrower, personal Have you ever obtained

information for personal gain.

borrower personal information for personal gain? A. Absolutely not. MR. SCHNITZER: Thank you. THE COURT: Thank you. Ill note that in my order No further questions, Your Honor.

of April 29th of this year I indicated that examinations could

37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be made only in person so I will not afford Ms. Galope the opportunity to cross examine Mr. Jacobs, but I see that the U.S. Trustee is present. Mr. Kenney, I ll ask do you have

any cross examination of Mr. Jacobs? MR. KENNEY: THE COURT: may step down. MR. JACOBS: Thank you, Your Honor. Does the No, I do not. All right, thank you. Mr. Jacobs, you

Trustee have any further evidence in opposition to the removal motion? MR. INDELICATO: THE COURT: No, we do not, Your Honor.

Okay, so the evidentiary record is now Ms. Galope, as the Movant I will

concluded on that motion.

give you the opportunity to make whatever argument you d like in support of that motion. MS. GALOPE: Yes, Your Honor. First of all I would

like to put on record that a hearing like this had been done before where you allowed cross examination from the phone. THE COURT: Ms. Galope, I will tell you I don t

remember that happening and if I did it, it was only under very rare and unique circumstances, but the order said I would not permit it and I will not permit it. argument you may make it now. MS. GALOPE: All right, I want to remind the Court If you have

that this impeachment motion came about because the

38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Liquidating Trustee made hearsay testimony during the evidentiary hearing on December 13 th, 2011 where he asserted that the Galope loan had been transferred to Barclays PLC with nothing to offer during that evidentiary hearing. Now,

after more than 18 months and after they were successful at obtaining an order from this Court; abandon and destroy more page files and documents. I received a CD containing supposedly all documents in their possession related to Galope loan. compliance with the destruction motion order. And this is in I found the There

contents of this CD lacking in any sound authenticity. were no signatures. loans.

There was nothing that related to my

In essence it is a document that doesn t support what

Alan Jacobs had said during that evidentiary hearing. They fail to meet the burden of proving the true sale of that transfer. True sale is defined very clearly in

counsel Indelicatos 2002 article as being necessary if not perfected the SBE or the associated banks may be subject to that by the originators Bankruptcy Trustee. Now, I dont

see, Mr. Jacobs admitted that he withheld avoidance actions because he thought that the Trust will not prevail. he know that? Now, in the article 2002 authored by counsel Indelicato its entitled Securitization Provides Means to Protect Assets. Its a recipe I was obtaining to conspire How did

39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 among the Debtor and the SBE, and associated creditor insider banks to conceal assets in Bankruptcy. It portrays the

counsel as out of character, and those persons with fiduciary duty as counsel for the Trustee in the liquidation of the assets. Counsels interest is for the clashing of all borrowed Creditor claims in favor of the unsecured creditor banks in this Bankruptcy case. As we are in the dark as to

how loans are transferred, you know, after 18 months I still dont know how my loan was transferred. And unquestionably

being the only main party in interest in our own individual loan transactions we hold secured senior priority claims against the Debtors, superior over those of the unsecured creditor banks. And collectively we are the largest

Creditors in this Bankruptcy, but the Trustee and counsel refuse to acknowledge that fact. In fact the first borrower creditor filed a claim; [indiscernible] was immediately expunged and never allowed representation in the formation of the plan. They were even

successful at obtaining this Court s ordered abandon and destroy the mortgage files, in clear violation of the New Century Liquidating Trust Agreement document 6414 that counsel used here for evidence. There is a Section 3.3 on

page 8 where it says on and after affective dates the Liquidating Trustee shall not destroy or otherwise abandon

40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 any documents, and shall maintain the electronic data in the archives subject before the order by the Bankruptcy Court. Now, Mr. Jacobs said that he had some disagreements or some sort of difference on some issues with the Plan Advisory Committee. I wonder what happened when this order

was being formulated or the motion was being conceptualized. This is a very important matter that needs to be resolved. With the money thats gone to interest by counsel and the Trust, on final representation with the Unsecured Creditors from this article in 2002 and the Trust being subservient, having a subservient position against the Plan Advisory Committee. Take note that when the Trust said that the plan, they take much from all the plans that it had been in, this plan then is flawed because in the Century case it is clearly stated that the Liquidating Trustee can make decisions without approval, without consulting with the plan oversight committee, that is what they call them there and make decisions on his own. The Liquidating Trustee in this New

Century case does not have that discretion. So because of that we borrowers are at risk of losing our right to our rightful position in the distribution of assets. Right now we continue to be considered below our In this removal motion I am asserting that

proper stature.

Hahn & Hessens counsel are equally liable with the Trustee

41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in this impeachment and removal motion of all actions of the Trust arises from their meeting of mine in their discretion and fiduciary duties. In my responses to their objections I have listed here the actual facts of those to support my allegation. I still have to hear them. I still have to hear counsel And

Indelicato address; counsel Indelicato continues to plead no ground duty, but yet he has never addressed nor refuted all of my repeated accusations at him. So how can he, he hasn t

provided any proof to erase our doubts. THE COURT: on this motion? MS. GALOPE: Yes, Your Honor, I just want to say Is there anything further, Ms. Galope,

that it is to our detriment that the counsel from Trustees are of this character. We have no way of winning or getting

the relief that we ask for in here because they re interest encounters to our interest, them serving those big banks. And in the Trust agreement it says that they are; let me show you that motion. It is clear; it says here something like, hold on. Okay, on page 2 of the New Century Liquidating Trust Agreement, Exhibit 1 I believe, it says here the Liquidating Trust is created on behalf of and for the sole benefit of holders of holding company Debtors, Unsecured Creditors and holders of operating Debtors Unsecured Creditors.

42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now, we should be part of those. We should be, like

I said, as the largest Secured Creditors we should have that status as well. But because only the banks are holding those

positions then it is very clear, Your Honor, where their interest would lie. It would then be for the borrowers. And

thats how I close this. THE COURT: MS. GALOPE: THE COURT: MS. GALOPE: All right, anything further, Ms. Galope? That is all, Your Honor. Thank you. Im sorry, and I would like to point For the record the CD was

out to my exhibits from the CD.

delivered to me, it was received by me because of the order on the destruction motion where we were supposed to get all of the documents that the Trust has in their possession as to my loan, as to all of our individual loans. Now, if this is the only document that they have to support Mr. Jacobss assertion that my claim had been properly transferred then it does not support that. still carry the burden to prove that assertion. applies to many borrowers I would say. Honor. THE COURT: Thank you. Mr. Indelicato. They

And that

Thank you, Your

MR. INDELICATO: THE COURT:

Thank you, Your Honor.

First let me ask you do you move the

admission of the three exhibits in the binder?

43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. INDELICATO: THE COURT: Yes, Your Honor.

Is there any objection, Ms. Galope, to

the admission of the Trustees three exhibits? MS. GALOPE: THE COURT: objection. I have no objections, Your Honor. All right, they re admitted without

Thank you. Thank you, Your Honor, Mark Your Honor,

MR. INDELICATO:

Indelicato on behalf of the Liquidating Trustee.

Im going to try and be brief, but given the magnitude of some of the allegations made by Ms. Galope in her pleadings both against the Trustee, my firm and me personally I think it really requires some response. Your Honor, at the outset I think we should outline for the Court the requirements to remove the Liquidating Trustee, there are two. One, pursuant to contract between

the terms of the Liquidating Trust Agreement and the other pursuant to an order of this Court on a motion for course shown. I think as is indicated by the testimony of Mr. Jacobs he does not lack disinterest to this. failed to perform his duties. He has not

His is not engaged in

unreasonable delays or he has not violated his fiduciary duties to this estate. As indicated by Mr. Jacobs he has

recovered in excess of $225 million dollars to distribute to Creditors. In fact, the $225 million dollar number, Your

44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor, is a little misleading because thats what was distributed to Unsecured Creditors after paying all of the administrative and priority claims that were due to Creditors. Your Honor, Ms. Galope makes a number of allegations regarding the actions of the Trustee. She starts, Your

Honor, in this pleading and others regarding what she classifies to be the hearsay testimony of Mr. Jacobs at her evidentiary hearing. Really what it is, is, Your Honor, its

testimony that she didnt like that she has classified as hearsay and she has time and time again brought up again in this proceeding regarding the bad acts of both counsel and the Trustee. Your Honor, we have made clear in numerous hearings before this court that the documents that we have as Liquidating Trustee are what was left in the Debtors books and records. We have indicated from the inception of the

Liquidating Trustee that we no longer owned any of the assets of the Debtors estates, the mortgages. They were either

sold prior to or during the course of the Chapter 11 proceeding. So at the time Mr. Jacobs assumed control of the

Liquidating Trust we no longer held any mortgages except I believe there is one mortgage that still is in the name of New Century. So, therefore, the documents that we have produced

45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to the various parties over the course of these proceedings are the copies. We may have a few originals, but the vast In fact in the

majority of the documents are copies.

documents that Ms. Galope presented to the Court which we will provide the Court with a binder after the hearing, one of the documents that the Court does have is marked Galope 376. And that is a letter dated January 18 th, 2007 addressed

to Kevin Cloyd from Barclays Bank. In the course of that document, Your Honor, there is evidence, I dont know how far the Courts documents go, but I believe on page 478, I believe, it has, it begins sort of the settlement notification which indicates the amount of money that New Century received for the sale of a group of loans which according to the schedule is attached to that including Ms. Galopes loan. That does not satisfy her as

evidence of a true transfer of her loan. I apologize. I am sorry. I don t know what else to If as

say to her, but those are the documents that we have.

a result of the documents that are in the Trusts possession that gives her rights against third parties as to whether or not they are the true lawful owner of the asset that they purchased, thats for a different Court in a different matter. That does not indicate that anything Mr. Jacobs said

was either hearsay, untruthful, fictitious or in any other way anything but the truth.

46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Your Honor, she raises another objection. She

raises in her argument that the Trustee did not pursue causes of actions against the big banks. Well, Your Honor, I

believe as then counsel for the Creditors Committee, and this Court knows that in various points in this case we were at the inception counsel to the Creditors Committee. We as counsel for the Creditors Committee looked at the concept of whether or not we would be able to look back 90 days for all of the transactions that occurred including all of the parties that seized loans. Unfortunately, because

of the safe harbor provisions of the Bankruptcy Code as this Court is well aware; those causes of actions do not maintain liability. Again, Your Honor, there is nothing we can do.

If they want a change in the law, this place and this Court is not the form in which to seek it. Your Honor, she fails to note as pointed out by Mr. Jacobs, he did bring in excess of 200 causes of action asserting preferences, recovering almost $9 million dollars for this estate. He also brought various other causes of

action against third parties, brining another in excess of $70 million dollars into this estate. So any allegation that

the Trustee has done anything other than exercise its fiduciary duty to liquidate the assets of this estate and bring the coverage to Creditors cannot be tolerated. Your Honor, she claims in her pleadings again,

47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 somewhat pejoratively, that the Trustee is nothing more than a puppet. And I think as Mr. Jacobs testified to, the

provisions in the Liquidating Trust Agreement are standard in Liquidating Trust Agreements. And she brings in the American And I ll get to

Home Mortgage Bankruptcy proceeding as well. that in a moment, Your Honor.

But this is a large estate in Some of the Creditors were Many of them were

which there are large Creditors.

owed in excess of $100 million dollars. owed tens of millions of dollars.

Mr. Jacobs was put into to liquidate the estate.

As

part of the negotiation process it was not unreasonable for the Creditors to have some oversight as to the party whos liquidating the very assets which are going to provide their distribution. And thats what this provides. It does not

make Mr. Jacobs a puppet. Mr. Jacobs exercised his own decisions regarding potential causes of action, advised by his own counsel, and informed the Plan Advisory Committee and has kept them up to date. So I can assure Your Honor that Mr. Jacobs is anything He is a task master. He s done the best he

but a puppet.

can to bring these cases to a swift and quick conclusion. There have been a number of very contentious, very complicated issues. As Mr. Jacob indicated and Im sure Your

Honor is relieved, we brought in tens of millions of dollars in tax refunds without ever having to involve the Court. We

48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 did it through pain staking negotiations, and processes and development by the Trustee. That is not somebody who is

shirking his responsibility to this estate. Your Honor, I think we need to look at some of the individual allegations that Ms. Galope is making. I ve gone

over her issues about the preferences, her issues about the hearsay. She makes an allegation that somehow we

miraculously made a Credit Suisse and Deutsche Bank, the top two Unsecured Creditors and as a result they got preferential treatment to anybody else. Credit Suisse and Deutsche Bank are the largest of the Creditors because they had the most invested in New Century. They received the largest distribution because they There are plenty of distributions

are the largest Creditors.

that weve made in this case of less than $1,000 to people who supplied goods and services to New Century, who have allowed unsecured claims and have been paid in accordance with the terms of the plan. Your Honor, Ms. Galope also makes a statement to lead this Court to believe that New Century just gave away loans. In her reply that was filed this morning she

indicates that in some way that her loan with a face amount of $522,000 was sold for only $25,000. I think if Your Honor

looks at the exhibits attached to the Kevin Cloyd letter, I believe theyre part of that, but it begins at Galope 486 I

49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to. believe. It would indicate that this pool of loans that sold

actually sold above par, which mean that New Century received a slight premium on the sale of its loan to Ms. Galope. So again its not clear to me what she is referring So, all I can tell Your Honor is that no, those loans New Century in fact received a small

were not given away. premium.

Im sure the purchasers are sorry they paid the

premium, but in the fact as the transaction closed there was a premium. Your Honor, I now must turn and I don t like the fact that Im compelled to defend myself, but she has made allegations against me personally and my firm. First of all,

had I known the article I wrote in 2002 would have changed the industry or been looked at as a primer of things to come I might have promoted it a little differently. Your Honor, that article was written at a different time, in different facts and if the Court has trouble sleeping and would like to review the article, what the article does is establish ways to review and analyze the special purpose vehicles that were then being developed by various parties. It is nothing more than that.

There are also allegations, Your Honor, about the compensation that Hahn & Hessen received, that at some point we received what she classifies as a Christmas bonus. I m

trying not even to dignify those with a response, but suffice

50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to say, Your Honor, every hour that Hahn & Hessen billed has been accounted for in our time records both prior to the appointment of the Trustee, and our retention as Trust counsel when we were counsel for the Creditors Committee and as counsel to the Liquidating Trust. It goes to the review And if there were

process as was testified to Mr. Jacobs.

any questions wed certainly hear about it. Your Honor, lets talk a little bit about the destruction motion because that s going to come up in several of the motions that you hear today. If the Court will recall

in fact, I hate to admit it, but I actually lost that motion. In fact the borrowers as a result of their objections were successful in defeating the relief sought by the Trustee. Ms. Galope correctly pointed out that the Trustee cannot get rid of any documents in its possession without further order of this Court. So what did we do, Your Honor? case was coming to a close. We knew that this

We decided to look at what we

call the low hanging fruit, the documents in which we thought we could get rid of. We tried to get rid of documents in

which were either Bankruptcy pleadings or duplicative, but they were a significant objection. And as a result of this

Courts ruling none of those documents have been destroyed, nor will they be destroyed absent further order of this Court. We have maintained all of the documents in the form

51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that we have them. In addition, Your Honor, as a result of that hearing we have provided everybody who objected and who has asked since with copies not only of their own loan file, but every document that we have related to their loan. So for example,

if their loan was related to any particular transfer documents and we could easily identify it, we provided them with a transfer document as well. It may not be what they re

looking for, but its in fact what we have in our books and records. So the Trustee not only did not create any scheme to destroy documents as a result of the [indiscernible] decision. In fact it was the start of a process which we

knew would be an ongoing process in order to get rid of documents which were costing this estate money to retain and needed to be done if this case was ultimately going to be concluded. Your Honor, and only because they are in the documents that Ms. Galope submitted to the Court, to which we have no objection, I think we need to address the American Home case. And as this Court knows I was counsel to the

Creditors Committee there and I am presently co-counsel with Young Conaway as counsel to the Liquidating Trustee. Your Honor, the allegations contained in Ms. Galopes response could not be further from the truth. There

52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 are some truths, but they are taken out of context. did have a Borrowers Committee in the American Home Bankruptcy proceeding. It was a motion that was made, dually Yes, we

noticed and supported the U.S. Trustee at the time we were negotiating a plan. A Borrowers Committee was appointed over the objection of the Unsecured Creditors Committee; I lost that one to, but over the objection, and was appointed for a very finite limited purpose to negotiate provisions in the plan to deal with borrower issues. And mainly the borrowers in that

case were concerned with finding out when their loan was sold, who owned their loan, who is the present servicer. Your Honor, as a result of what we learned in that case we took it back to Mr. Jacobs and we suggested as soon as Mr. Jacobs became the Liquidating Trustee we said let s do what were doing in American Home. If people call and ask,

lets tell them we filed Bankruptcy, let s tell them, you know, what we have about their loan, let s tell them when it was sold and lets tell them who it was sold to because really thats all the information that we had. In American Home we put in place an Ombudsman who does that. In American Home learning from the other cases we

put that into place and weve done that ever since Mr. Jacobs was in. So, Your Honor, we re doing in fact in this case

more than they did in American Home voluntarily.

53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Your Honor, the other thing that I will just mention with respect to the American Home, since I drafted both plans there is a provision in Article 8G4 of the American Home Plan that sets forth the rights and duties of the Plan Advisory Committee and among other things it includes the removal of the Trustee, approval of releases, commencing litigation. in a different way we had to go to the American Home Plan Advisory Committee for the same way that Mr. Jacobs goes to the Plan Advisory Committee in this case. In addition pursuant to the terms of 2.2 of the American Home Plan Advisory Agreement it provides again the authority for the Liquidating Trustee. And those So

specifically in that case we did it a little differently. The Trustee has authority up to a certain dollar amount and then after that he must go to the Plan Advisory Committee for approval. So, Your Honor, for all of the reasons weve set forth in our pleadings, for all of the reasons set forth in Mr. Jacobss testimony we do not believe the Trustee s removal is warranted. We believe that Mr. Jacobs has done an

incredible job and was returning an incredible return to these Creditors. And to the extent there are allowed claims,

unsecured claims as a result of Mr. Jacobss services they will receive a much larger distribution then they might have otherwise, but Mr. Jacobs is bound by the rule of law under

54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the Bankruptcy Code, under the Liquidating Trust Agreement. And to the extent that he believes that there are not valid claims he has an obligation to prosecute them to the fullest extent he can if they cannot be settled. And

this Court knows we have attempted very early on to settle these matters to no avail. So, Your Honor, we believe the

motion should be denied on all counts. THE COURT: All right, thank you. I will take this

matter under advisement and issue a decision in due course. Lets turn to the next motion. MR. INDELICATO: Thank you, Your Honor. The next

motion, Your Honor, is Ms. Galope s second motion for reconsideration. over to her. THE COURT: MS. GALOPE: All right, Ms. Galope. Yes, Your Honor, I thought I was going And since it is her motion I will turn it

to have a second chance to speak, Your Honor. THE COURT: Ms. Galope, normally I give a Movant the

chance for rebuttal, but Ive heard so much here and so much has been submitted, I dont think anything further would be helpful to the Court. for reconsideration. MS. GALOPE: Id like to say this, you know, he kept You know, talk is So lets move onto your second motion

referring to the Kevin Cloyd letter. cheap, Your Honor.

55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Ms. Galope, Ms. Galope, if you do not

follow my instructions I will not allow you to participate by phone. Please turn to your second motion for If you have anything you d like to

reconsideration.

highlight about the submissions that you ve made in writing you may do so now. MS. GALOPE: All right, the second motion for

reconsideration, Your Honor, is I d like to remind the Court that my motion for reconsideration is on my claim to be allowed. Previously this Court has denied my claim because

it was late filed. After all this, Your Honor, this Court has allowed many other borrowers claims that were also late filed. I

believe my claim should not be considered any differently only to the ruling on Owens vs. Corning, for which I will explain in detail in a few minutes. Since I have nominated myself to be member of the Proposed Borrowers Committee, a prerequisite for which would be to have my claim accepted that I hope you would grant me the favor after presenting my responses to the objections and my explanation. The grounds for the second motion for reconsideration is based on the application of the new case law, the Third Circuit decision on Wright vs. Owens Corning which was upheld by the Supreme Court on February 19 th, 2013.

56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Corning. yesterday. The Trust objections are erroneous, irrelevant and perceived as either a lack of comprehension of the relevance and applicability of the Wright vs. Owens Corning, Galope and similar others were situated for a deliberate effort, a modest rounding by the Trust to confuse the uninformed on the new case law. Owing is highly improbably for lawyers, [indiscernible] that they are. misunderstood the new case law. The counsels have Either way the objections And Galope s second Its

are without basis and without merit.

motion should be allowed including claim number 4131.

ridiculous, Your Honor, the way the objections were raised there for the caliber that these counsels have. I was trying to understand this Wright vs. Owens It came to me very clearly when I read it The Owens Corning that details parallels, so many In Owens

parallels to the New Century borrowers claims.

Corning, Patricia Wright bought, had been exposed to the brother of the Debtor by buying their shingles in 1999. By

2009 those shingles leaked and by, I think 2009, she filed a class action against Owens Corning. Now, at that time in 2002 Owens Corning filed a Bankruptcy petition. At that time the rule controlled the

claim of Patricia Wright and another Litigant Mr. West. The difference between them is Ms. Wright bought his shingles in

57 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1999 while Mr. West bought his shingles in 2005. Now, the Bankruptcy occurred in 2002. confirmation of the plan occurred before 2009. A Now, at that

time the rule controlled the status of the claim of both Ms. Wright and Mr. West. And so they did not have, the rule held

that they did not have claims. But at the same time there were efforts to overturn that rule and they did so successfully in 2010. By that they

have decided, the Third Circuit decided to retroactively apply the Grossmans Rule that made Wright and West claims to have claims and the right to payment in the Bankruptcy. Now, what happened was, and this is very significant to the adequacy of the notices, all right, had Ms. Wright and Mr. West seen those notices when they were issued they would not have any interest to file claim because they did not have claims at that time because the rule controlled the status of their claims, meaning they would be discharged just as they have by the District Court. But because of the retroactive application of Grossman doesnt mean they have this claim, their right to a payment. And the Court ruled that because the claims were

filed way after the notices, the bar dates and the confirmation of the plan, the same way for most of borrowers here, they held that the Plaintiffs did not have due process. So, in short it was irrelevant that the notices were

58 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 judged as adequate because it no longer was, it didn t serve the purpose. published. The Debtors did not held claims when it was As applied in the New Century case

[indiscernible] was retroactively overturned in 2007, thus Galope and similar others in this Bankruptcy case held claims. But at the time of the New Century Bankruptcy

filing, the Frenville throughout this controlled the status of Galope claim. While Galope refinanced, while I refinanced my loan with New Century it took me years to realize my exposure to the harm of New Century. And I named New Century as a

defender in my adversary proceeding, but there was nothing in there that I spoke about the harm from New Century as I still did not realize the harm by New Century at that time in 2010. It was sometime in late 2010 when I learned about the real reasons of the financial crisis of 2008. And that s

when I caught on. I realized that New Century was in litigation in Delaware. So I went there and filed my claim.

When the bar dates notices were published sometime in July 2007 in this sense of the case Frenville was the law in this Circuit. Galope and similarly situated others their notices We did not get the actual bar

were sent out and published. notices from the mail.

We did not see, nor read the

publication of the bar date. Applying the rule on Wright, even if I had seen the

59 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 notice at the time of the publication I could not understand that my rights would not be affected in any way by the referenced proceedings. And that correctly would not have

taken actions and my interest was represented then. Now, the Wright vs. Owens claim retroactively applied the Grossman Test to the Wright and concluded that she held the claim. And due process of which we do in this

special situation to be sure all claimers have equal rights. It says later that they hold that persons who have claims under the Bankruptcy Code based solely on the retroactive aspect of the rule announced in Grossmans. Those claims are

not discharged and the notice given to those persons once with the understanding that they did not hold claim. So, there is a first group, there are two groups of Claimants now. The first group comprises of those who hold

claims Grossman, rejection of the Frenville test that expresses, exposes or Debtors conduct on product for petition. As to these persons due process calls for the

outcome of the Frenville test applied for Bankruptcy cases in which reorganizational plans are proposed and confirmed prior to June 2nd, 2010 when Grossman was decided. Now, I belong to

that first group who hold claim against based on Grossmans objection of the Frenville test. Debtors conduct of prior petition. So because at the time of the confirmation date That is exposed to the

60 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 December 1st, 2009 Frenville controlled the status of our claims, I and similar others were not afforded due process. Accordingly, I and similar others were not discharged. Our

claims were not discharged with the plan and confirmation order and bringing the cross of action against New Century. And I think to have such a reason why you allow the others after me, the claims of others after me, Your Honor. So the Trust in their argument were those a valid basis for reconsideration. The second motion for reconsideration

should be denied because the Court s conclusion that the Galope claim is a prepetition claim that meets the same in applying the change in law, announcing all its claims. Now, the objection thats full comprehension of the new case law and like I said its perceived as a deliberate attempt by counsel to confuse the uninformed. under Frenville test the Plaintiffs. timing is important here. It is noted

Now, the reference the

New Century Bankruptcy petition

was filed in April 2nd, 2007 and notices confirmed affective dates and modified affective dates were before December 1 st, 2009. The Plaintiffs did not hold claims under the Bankruptcy Code. On reading the notices the Plaintiff s

could not have understood that their rights would not be affected in any way by the referenced proceedings. And that

is correct; we would not have taken any action to ensure that

61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 their interests were represented. But because the notices

were done at the time Frenville had control of the status of their claims. Plaintiffs were not afforded due process.

Applying the Third Circuit Court decision to Galope; we were not afforded due process. And our claims were not

discharged by the plan and confirmation order, and [indiscernible] the causes of action against New Century. And thus the argument that the Trustee and the counsel raised is without merit, airs on its face and overruled by the decision on Wright vs. Owens Corning. Honor. THE COURT: Thank you. Ill hear from the Trustee. Thats all, Your

MR. INDELICATO:

Thank you, Your Honor, and for the Your Honor,

record Mark Indelicato on behalf of the Trustee.

let me try and be brief with respect to this because I think for the most part Ms. Galope got it right. I think she is

right that under Federal Rule of Civil Procedure 59(e) that there is an intervening change in controlling law and that s Owens Corning. sites. And, Your Honor, I m not going to provide the I think there is a

Its set forth in our pleadings.

change in controlling law that would justify the motion for reconsideration. I think where the one main difference we have, Your Honor, is Ms. Galope believes under Frenville she would not have a claim and as a result she would fall within the

62 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 dictates of the Grossman and Owens Corning decision. And the

Trustee takes the position under the Frenville analysis she has a claim that can be dealt with in the Bankruptcy. I think thats in a nutshell where we are. just walk through it a little bit. Let me

So, what Owens Corning

told us and I think what it told the Court is that we re finally get rid of a Frenville. And I think as Judge Ambrose And I

said at the end Frenville fades, but fades slowly.

think the reason is, is because they wanted to deal with this due process argument. And the way they did it is, is first they set out in Grossman they sort of reaffirmed, Owens Corning reaffirmed Grossman. They said a claim exists when an individual

exposed to prepetition to a product or conduct giving rise to an injury which underlines the right to payment under the Bankruptcy Code. So they got rid of sort of that amorphous concept is when you can sue on it. And they tied together two of the So they

then existing definitions of claim [indiscernible].

tied in the prepetition, but you have to have the conduct. What they didnt do and I think thats unfortunately what the borrowers are indirectly, directly; however, what they want is they want to add a discovery component. They

want this Court to say, you know what, if I didn t know about it, it doesnt matter if it happened prepetition. It doesn t

63 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 matter if the contact was prepetition. If I didn t know

about it Owens Corning says its not a claim, the Bankruptcy Court cant discharge it. I am not subject to the bar order.

And, Your Honor, that would be the exception that would swallow almost every rule in Bankruptcy. Basically

what they would say is if we don t know about it we dont have to pay attention to the Bankruptcy, and unfortunately, in my view thats worse than Frenville. What the Courts have done here is created an exception. They created a time frame from the time period

before they entered into Grossman, we have to go back and we have to live with Frenville a little longer. And what does Frenville ask us? Frenville asks us

when we want to determine whether it s a claim, the existence of that claim in Frenville depends on whether the Claimant possess the right to payment and when that right arose as determined by an applicable non-Bankruptcy Law. And I think

from everything Ms. Galope has said in this argument, in this hearing and in prior it was a prepetition loan. There is no question it was a prepetition loan. There is no question that it closed prepetition. There is no

question that all of the actions that she claims New Century did were prepetition because as we have demonstrated, not necessarily to her satisfaction, but I certainly think to our satisfaction the sale occurred prepetition. So there cant

64 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be any dispute that any of the actions occurred prepetition. And clearly had Ms. Galope discovered prepetition, these what she calls bad acts, she could have sued us prepetition. Clearly her right to payment arose at the time Some of it may have been at the

those actions took place. time of origination.

Some of it may have been between Some of it may have happened in

origination and closing. closing.

If you give credence to any of it, although, we

dont believe that any actual claim exists, if there is one it clearly is a prepetition claim. So even though you take the change in law of Grossman and Frenville, sorry Grossman and Owens Corning and you look at the dictates of Owen Corning s. What it tells us

is that, and I think this Court was right in its initial Galope decision, she has a prepetition claim. She is an

unknown Creditor, but what you didn t do because you didnt yet know, and the Third Circuit hadn t sort of told us, was you needed to do, and what I think we need to do now, but it gets us to the same result, is look at that one more component. And look at the Galope claim and say is that a claim that would have been dealt with in Bankruptcy under Frenville. And if it is then the due process was satisfied If it

as an unknown Creditor by the publication notice.

wasnt, and if it only became a claim because of the change

65 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in the law as a result of Grossman you have a different analysis, but thats not the case here, Your Honor. I believe Galopes claim is a claim under Frenville. Its a claim under Grossman. And as a result I think due

process clearly was satisfied as this Court held in the original Galope decision, as a result of the publication notice that was provided. So unless the Court has any

questions well rest on that on our papers. THE COURT: All right, thank you. Ms. Galope, I ll

hear you briefly now if you d like a short time for rebuttal. Ms. Galope. MS. GALOPE: mute was one. THE COURT: MS. GALOPE: All right. As I pointed out earlier, Your Honor, I Im sorry, Your Honor, I thought the

am not accepting that my claim would be labeled prepetition because as I have pointed out in the earlier motion we held secured senior priority claim over, superior over those of the Unsecured Creditors. And we would like to raise that

with the formation of the Borrowers Committee. THE COURT: All right, thank you. I will take this

matter under advisement and issue a decision in due course. Lets turn to the final matter on Court today and that is the motion for order appointing the Borrowers Committee. MR. INDELICATO: And, Your Honor, that is Ms.

66 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Galopes motion so I will turn to her. THE COURT: MS. GALOPE: THE COURT: All right, Ms. Galope. Yes, Your Honor. Let me begin by asking, Ms. Galope, the

exhibits that we admitted in connection with the motion to remove Mr. Jacobs, do you also want them to be considered in connection with the Committee motion? MS. GALOPE: THE COURT: Indelicato? MR. INDELICATO: THE COURT: MS. GALOPE: No objection. You may proceed. Yes, Your Honor, they should. All right, any objection to that, Mr.

Okay, thank you.

Yes, Your Honor, I would like to

explain also to the Court for the record that the reason my filings were late was because I was trying to get in some lawyers to be in this hearing and start to represent us, myself initially, but the discussions fell, you know, fell through. So thats why it took me a long time to prepare

those filings. Now, if I understand it correctly my lawyer, [indiscernible] had made arrangements to be here today. I m

not sure if hes on the phone, but because we are trying to get them, us represented, Your Honor, I would like to seek a continuance on this motion. And the reason being that, you

know, the U.S. Trustee has added this motion into a gender

67 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 quietly. And the second being we are in the process of

trying to get the counsels to represent us for this motion. THE COURT: Well, let me ask if the Trustee or the

U.S. Trustee have any response to that request. MR. INDELICATO: Your Honor, I normally wouldn t

object to an adjournment, but, Your Honor, these pleadings, this is an incredible drain on the estate. And to have to

come back to Delaware, and bring the Trustee back down and involve the U.S. Trustees office, I believe we should go forward today. As the U.S. Trustee pointed out there is no I mean this is clearly a

basis in law for this, Your Honor. motion that has no basis.

And to carry it and prolong it I

think makes no sense and wastes the estates assets. THE COURT: MR. KENNEY: Thank you. Mr. Kenney.

Good afternoon, Your Honor, for the Your And I

record Mark Kenney for the United States Trustee. Honor, I came prepared to argue the motion today. understand the Liquidating Trust position.

I can say that

essentially the burden on me is not significant if Your Honor continues it and, therefore, whatever Your Honor prefers. THE COURT: All right, thank you. Well, from the

Courts standpoint Ms. Galope has had plenty of time to obtain counsel for hers and other matters including this one. She has been involved in these Bankruptcy proceedings, I dont know, but its been for how long, but its been an

68 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 extended period of time. And this is an issue that Ms.

Galope has raised repeatedly from time to time and then she filed the motion. Frankly, Ms. Galope, if it was your intention to obtain counsel the better strategy might have been to obtain counsel before filing the motion. But secondly, I tend to

agree with the Liquidating Trustee that a further expenditure of resources is simply unwarranted. So, if you wish to

proceed with your motion today you may do so and you have that opportunity now. MS. GALOPE: what I did. before. For the record, Your Honor, that is I sought to discuss this

I sought counsel.

Thats why Ive been filing in late because I was

hoping they would get in earlier and they would do the filings for me. they did THE COURT: Ms. Galope, if you d like to proceed But given the time and the limited time when

with your motion please begin your presentation. MS. GALOPE: All right, Your Honor, hold on. Just

one moment, Your Honor. THE COURT: MS. GALOPE: All right. Okay, this motion we have asked for so I have argued earlier we did not

many times from the Court.

have representation here, Your Honor, and there is much disappointment with our claims here. Our position is that

69 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we, the Trust and the Unsecured Creditors Committee are one against the borrowers. The interests are diverged. It must

counter, how can we win when both Trusts put the signs on the distribution of the assets. As stated in the Trust Agreement is created, the Liquidating Trust is created on behalf of and for the sole benefit of holders, of holding company Debtors, Unsecured Creditors and holders of operating Debtors, Unsecured Creditors, when this reason for the Court to hear our pleadings, why we need to be at level, I mean put to the status of a Secured Claimant here. So this Borrowers Committee motion was filed when Your Honor answered the repeated complaints on the lopsidedness and the non-representation of borrowers on at least three different occasions. You mentioned nobody asked And even

and you mentioned I have yet to see a motion filed.

while I have consulted with the counsel and the U.S. Trustee the first time that you said nobody asked I did not get support to form the Committee solely because they said it was too late. Why would it be too late when there are provisions

in the rule that says if Creditors are not properly represented then something had to be done? addressed. Now, counsel has made argument that the position of a Borrowers Committee would only hold, would only perform That needed to be

70 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 fiduciary duties. And I would tend to agree with them

provided that they tried to adhere to the requirements that this, first of all, we needed to have disclosures. And that

is the purpose of a Borrowers Committee, a meeting on the disclosures. There is so much to be resolved, and what And that is pivotal on the claims

happened to our loans. that we have here. in this. Court.

It will prove how much harm has been done

And that has not been properly investigated by this

So by this Courts asking three times that he has not signed the motion, and because at the last hearing, Your Honor, you told me to do a good job. would in turn do well in your job to. And you said that you So, with that I took

it and filed this Borrowers Committee motion. In the same fashion the U.S. Trustee writes statements. If the Court were to determine that it is

appropriate to grant the motion and direct appointment of such a Committee then the U.S. Trustee would have a responsibility under Section 11028 to select and appoint the members of such a committee, in affect expressing his readiness to abide by your decision. So because of the

decision of the Wright vs. Owens Corning it gives me and all borrowers Claimants the legal standing to pursue our claims. And the U.S. Trustee made an objection and is overruled by the virtue of this Supreme Courts ruling on

71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Owens Corning. We have rightful claim and are standing to And the Trust filed a litany of

pursue the motions.

objections here to which I would answer some of them. The Trust states that the Galope motion is for appointment of committees and impermissible basis to appoint an additional committee. I responded Section 11028 of the

Bankruptcy Code shows us the proper basis. In another objection they said that the Borrowers Committee represents the collective Unsecured Creditors. With that they say that we will all be represented, but as I said before they are in no position to represent us here. They are as provided in the New Century Liquidating Trust Agreement, they are, the Liquidating Trust is created on behalf and for the sole benefit of the holders of Unsecured Creditors, Creditors holding Unsecured Creditors claims. theyre interest in which is different from the borrowers. And we will not be adequately represented given this Court. I further argue that the appointment of a Borrowers Committee is unnecessary because Galope and others have been and will continue to be heard in these proceedings. of these proceedings have been decided on, really the continuance of hearings to the proper borrower representation that only stirs the interest of the Trust and counsel. We have seen how difficult it is to get the Court to provide the relief that we have sought in the many motions As most So

72 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 before. And we were hoping that a counsel, a proper

representation, you know, to match the savviness of the counsels would help us. We further argue the cost associated with appoint of the Borrowers Committee is unjustifiable. Well, Your Honor,

there is still $25 million that can accommodate relief sought by Borrower Creditors including the cost of hiring professionals. In the [indiscernible] case they had provided 250,000 as a cap for the fees to the professionals of the Borrowers Committee. That is not, you know, I would argue

with what the counsel says that this is going to drain the Trust. You know, 250,000 is his monthly fee. I mean that s

how you compare this, you know. I have repeatedly complained that the Liquidating Trust cannot judiciously act on its fiduciary role. Due to

its compromised position it is their interest to crush all our claims in order to uncomplicated whats already in the bank for the Unsecured Creditors. Now, let me point out, Your Honor, that there is a requirement that the committee, the plan should have been complied with. That requirement has not been met. Each

requirements of Section 1129(a) were not complied with, while these borrowers, we were the burden of producing evidence to support our objections. And that is totally unfair, totally

73 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 lopsided. In this language fee, Your Honor, Credit Suisse and Deutsche Bank were identified as the two largest Creditors. When they had no entry in the two disclosure statements that, you know, prove their harm or exposure. Yet, the unsecured

claims are converted to [indiscernible] and Deutsche Bank took the lions share in the distribution. Deutsche Bank for the most part prefers to be the Trustee in many securitized mortgage back securities. such it never funded the loans. harm. As

It was never exposed to any

This should require no less than a forensic

investigation and make them comply; comply with the disclosure rules to prove their harm. that disclosure, Your Honor. largest Creditors? Counsel Indelicato said earlier that they were the largest investors. that. Where is that disclosure? We should see We have yet to see

How did they become the two

And the counsels on the hand who charge fees you don t

need the Court to approve, when in the [indiscernible] case they are required to apply for the fees every month. And

they dont go to the levels that they are receiving here. And in the [indiscernible] case it litigated from the UBS motion for failing to prove its harm. rejected as Claimants. And we don t see that. They were I mean if the

Court would only look at how the securitization occurred, how

74 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the banks did not really put out any money for the fee of this loan. And I would like to point out on exhibits that I

have shown here where this was supposed to be a seller agreement where the seller is New Century and the buyer is Barkleys. On page Galopes 504 here is a transfer that shows the banks Morgan Stanley, UBS, Barkley s, Bank of America, [indiscernible] Capital, [indiscernible] and even New Century. They were being wired to receive millions of

dollars when its supposed to be a seller agreement, a seller transaction, a sale transaction where they were supposed to be paying instead of receiving funds. thinking person take this? And also going back to the letter by Kevin Cloyd, councilman Indelicato had used as evidence the transfer of my loan. I would like to see and councilman Indelicato to be in If he were given this letter to say that the So would a reasonable

my decision.

loan had been transferred and this has all the details there, and then you see on the last page, the signees name Paul Manfredi, director, no signature on the letter. letter didnt even have a letterhead. this letter to be? And this

What would he think

If he were in my position would he take And the next page

this as evidence of how his loan was sold?

is, Galope 472 Exhibit A, the mortgage loan it s a blank page, Exhibit B the assignment and conveyance agreement its

75 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 also blank page. And then you have spreadsheets here where it shows my name there and some numbers to show some wire transfers, but there is nothing to explain what this is. I would like

to have counsel Indelicato to be in my position, how would he accept this document? Would you just, you know, this is how This is not. Nobody would accept

they transferred my loan. this as admissible.

It goes to prove, Your Honor, that there is so much to be discovered. In turn give reason to our claim that we

have a right to have secured senior position in the distribution of these assets. And hence because we all have

similar complaints and arguments, it all boils down to how our loans were transferred. And we thought that a proper

representation would be proper and through a Borrowers Committee so we could get the disclosures on our loans. still have not done that. We heard counsel Indelicato say that they have provided me with all of the documents that they have. they have responded to all, when my motion to compel discovery went for the fifth time and the only thing that I got was a CD which also boils down to the point that they dont have anything. And the fact that counsel Indelicato That We

and Trustee Mr. Alan Jacobs came to this Bankruptcy quite late after New Century was the sole, who was taking care of

76 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the accounting? Who was taking care of the records?

I have pointed out in my arguments here there was a lot of land grabbing, property grabbing without the proper documentation, without the proper fees. Bankruptcy. That s not allow din

Any assets that are taken when you file a

Bankruptcy petition should be replaced with an equivalent amount no less than its value. loans? Like I said, my loan had a face value of $522,000, was sold for $25,000. How is that fair to us. Your Honor, So what happened to those

there needs to be a Borrowers Committee and give us the proper representation here. THE COURT: Thats all, Your Honor. Mr. Indelicato.

Thank you.

MR. INDELICATO:

Your Honor, I believe, I don t know She filed a joinder. Do

if Ms. Carr is still on the phone.

you want to hear from her and the Trustee? THE COURT: I do not. No.

MR. INDELICATO: THE COURT: close on this. MR. INDELICATO: made a point of it.

Your Honor, Ill address that before we

Your Honor, just because Ms. Galope

In the binder that we will provide to And what Ms. Galope

the Court theres an Exhibit Galope 504.

is confused about its a letter from New Century Capital Corp. Its addressed to Paul Manfredi at Barclays. And what

77 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it is actually is a payment letter. It tells him that of the

$89 million, four hundred and eighteen thousand, six hundred and fifty-six thousand, thirteen cents that they are to pay for these loans which includes a 2.56 percent premium on the loan, who it should go to. approximately $25 million. got $5 million. And Morgan Stanley got UBS got $10 million. Barclays

Bank of America got $6 million.

So what it is, Your Honor, and I can understand her level of confusion. What it is, is it s a payment direction And what those were, were to pay

letter from New Century.

the various warehouse lines that had security interest in the loans that were being sold. So that s what that document is.

If that helps thats all I can tell Ms. Galope regarding that. Your Honor, I think this one is very simple. Under

1102(a)(2) a Creditors Committee can be appointed, but this motion should denied, Your Honor. At this late stage of the

Chapter 11 process a Borrowers Committee not only is unprecedented, but is unwarranted. Its not appropriate. It

wont provide any benefit to the estate. And as Ms. Galope has indicated to Your Honor the sole purpose of this committee is so the various borrowers who have disputes with us can either get disclosure that they think theyre entitled to, additional discovery they think theyre entitled to or to appear as a group and be heard with

78 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 respect to the balance of these proceeding. As pointed out by the U.S. Trustee, and I ll let them argue it themselves, but the provisions for appointing a committee talk about the duties and responsibilities of a committee up through confirmation. responsibilities post confirmation. Your Honor, this case as the Court knows was confirmed in July of 2008. It went affective initially in It does deal with

August of 2008 when Mr. Jacobs became Liquidating Trustee. The confirmation order was reversed in June of 2009. In July

or late June, or early July an order was put in place to keep Mr. Jacobs in. We called it the status quo order. And Mr.

Jacobs as he pointed out in his testimony re-prosecuted the plan which was reconfirmed and went affective by this Court in November of 2009. The Trustee has already resolved all, but a very handful of claims, most of them being prepetition borrower claims. We have liquidated substantially all of the assets.

Hes made three distributions exceeding $223 million dollars to Unsecured Creditors and plus all payments to administrative priority claims. There is no basis, Your Honor, in order to appoint a Borrowers Committee. The plan and disclosure statement have Ms. Galope raises

long since been approved by the Court.

issues of disclosure what was or was not included in the

79 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 disclosure. That order, Your Honor, is final and not

appealable, the confirmation order for the modified plan, final and not appealable. The purpose of a Borrowers Committee to renegotiate provisions, Im not even sure, I know its not appropriate, but its not even legally cognizable, Your Honor. There s no And

way in which can at this date amend and change the plan. its not justified.

The Plan Advisory Committee and the Trustee has been liquidating this estate for the benefit of all constituencies, including Trust Beneficiaries which are valid, borrower claims. the type of the claim. The Trustee does not discriminate on If its an allowed unsecured claim The mere fact, Your Honor,

they receive the distribution.

that there may be tensions between parties on the Plan Advisory Committee and other Creditors doesn t in and of itself justify the appointment of additional committees. Your Honor, as is clear Galope and the other borrowers are going to continue to have a voice in these Bankruptcy proceedings. And again as I hate to admit it, yet

it is most recently evidenced by their objections to the document destruction motion. heard and they got relief. So, Your Honor, for all the reasons set forth in our pleadings and for the reasons set forth on the record today They had issues, they were

80 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 dam. and the various motions we believe the appointment of a Borrowers Committee is unprecedented. basis for it. be denied. Its unwarranted. There is no legal

Its unnecessary and should

Thank you, Your Honor. Thank you. Mr. Kenney.

THE COURT: MR. KENNEY:

Good afternoon, Your Honor, for the Your

record Mark Kenney for the United States Trustee.

Honor, I would have very little to add to what Mr. Indelicato already pointed out to the Court. This case is basically five years water over the That water cant be retrieved. Most of the functions

that a committee would perform are looking forward to confirmation, investigation and negotiation. Those are That

things that that clock cannot be reversed, Your Honor. is over.

I noticed this in her response and Ms. Galope said this on the phone that somehow the U.S. Trustee is supporting her request because we said off the Court their exit, we ll do it. But, Your Honor, I think that simply youre saying

that if the Court does order the formation of a committee, you know, the formation of the committee is the responsibility of the United States Trustee, not of the Court. I dont think that should be construed as in any way Its simply stating that it will be

supporting the request. our job.

81 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 And of course if were directed to do that it wouldnt necessarily be the list of borrower candidates Ms. Galope suggested. We would have to do some due diligence and

determine whether there really is an appropriate constituency out there, people who are capable of fulfilling the fiduciary duties of committee members. Your Honor, one of the big issues that we have with the request, the request is addressed in terms of Ms. Galope is going up against attorney s of the highest caliber. I

hope they dont use that as a basis to increase their hourly rates. Your Honor, it doesn t look like this committee would

be there in for the purpose of representing the collective interest of borrowers. It would essentially be to represent

the interest of individual borrowers in pursuing their claims against the estate. committee. A committee is a fiduciary for collective rights, not for individual rights. And it seems to me that what And that is not the purpose of a

remains at issue in this case with respect to the borrower claims, to the extent that they actually have cognizable claims are a series of individual rights. And at this point

its one off loans, one off borrower claims that each one has to be adjudicated on. Im not sure there is anything to be

handled collectively at this point, Your Honor. THE COURT: Thank you. I will note for the record

82 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 angle. that as Mr. Indelicato indicated on June 18 th Anita Carr filed a joinder to the Galope motion to appoint a Borrowers Committee. I received today, a little bit after 1:00, a

joinder by Leslie Marks to the Galope motion for a Borrowers Committee. I dont know if the Trustee has received that. We did not, Your Honor.

MR. INDELICATO: THE COURT:

But in either event I will not hear them

because Ive determined previously in written opinions issued and reconsidered, and reconsidered again, and one of which at least went up on appeal and in which I was affirmed that neither has a claim in this Bankruptcy, therefore, they have no standing to be heard. And even absent the objection of But I will

the other parties involved I will not hear them.

go back to the Movant, Ms. Galope, if you d like to rebut briefly. MS. GALOPE: Yes, Your Honor. We hear counsel The legal basis

Indelicato saying there is no legal basis. here is we have not been represented.

When the first

borrower claim met the bar date this Court has expunged her claim right away. She should have been our first

representation in the formation of the plan, but no. Like I said nobody is looking at this from our We are the only main party on that loan transaction

and yet our loans have been, you know, sold, resold, separated, and servicing rights. The servicing rights to

83 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 relief when the Bankruptcy happened, why would someone give us the revenues from a servicing. I point to the fact that in the absence of anyone making an oversight those loans, the transfers of our loans were improperly done, improperly done. poses this to look at it from our end. Now El Veasta, Ms. Lampley, she had had two by Deutsche Bank and New Century. She lost those two homes and And then you hear And I dare anyone who

now she is homeless, and many others here. of banks continuing to gain profits.

And you hear of news I would like to

saying that they didnt fund these loans.

dare the Court to present us the harm of Deutsche Bank and Credit Suisse that they are the largest Creditors here. Now, Im harmless to the Court. Now, some of us are

unable to even file pleadings here because we have already lost homes. And I myself I don t really have time. I only

have my evenings to spend to write my pleadings, when those banks have their super caliber lawyers to represent them. They dont even have to think about what s going on here. They do not [indiscernible] Your Honor. your attention to this lopsidedness. I repeatedly called

And I was hoping

because you have mentioned that you have yet to see a Borrowers Committee motion. THE COURT: Now its there, now its there.

Ms. Galope that was not intended to be

an invitation and I might have mentioned that to you on more

84 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 than one occasion, but I was simply stating a fact. MS. GALOPE: Please listen to our pleas, Your Honor. That s all, thank you. I will take this matter Mr.

We are not represented here. THE COURT:

Thank you.

under advisement and issue a decision in due course.

Indelicato, Id like to return for a moment on a housekeeping matter to the Lampley matters. The Trustees submission

indicated that briefing on the Trustees motion to dismiss had been completed, but I don t think weve received completion of briefing binders. MR. INDELICATO: I will check, Your Honor. It will

be filed shortly, Your Honor, probably tomorrow. THE COURT: All right, its not that I was waiting

by the door, you know, pending their arrival, but I wanted to make sure that even given the disposition, especially given the disposition of todays motions to keep the process moving. MR. INDELICATO: Your Honor, just to make it clear

weve discussed at the beginning of the hearing there is no hearing next week. That hearing to the extent it is, is at

the end of July, July 24th I think. THE COURT: July 24th at 1:30 and its just listed

its kind of a pretrial day I think. MR. INDELICATO: Correct, Your Honor. Okay, we ll

make sure that she receives notice of that.

85 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATE I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the aboveentitled matter. /s/Mary Zajaczkowski Mary Zajaczkowski, CET**D-531 June 25, 2013 Date today? MR. INDELICATO: THE COURT: this hearing. That is it, Your Honor. That concludes THE COURT: All right, is there anything further for

Thank you all very much.

Court will stand adjourned. Thank you, Your Honor.

MR. INDELICATO: (Court Adjourned)