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UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA JACKSONVILLE DIVISION

In re: OCALA FUNDING, LLC, Debtor. ______________________________/

Chapter 11 Case No. 3:12-bk-_____-JAF

DECLARATION OF NEIL F. LURIA, CHIEF RESTRUCTURING OFFICER FOR THE DEBTOR, IN SUPPORT OF FIRST DAY PLEADINGS I, Neil F. Luria, hereby declare as follows: 1. I am the Chief Restructuring Officer for the above-captioned debtor and

debtor in possession (Ocala or the Debtor). I am also the Chief Restructuring Officer of TBW (defined below) and the trustee of the TBW Plan Trust (defined below). In these capacities, I am generally familiar with the Debtors assets, business and financial affairs, and books and records, and have knowledge sufficient to support the facts stated herein, either through direct knowledge or information and belief. 2. To enable the Debtor to commence the tasks relating to the administration

of this chapter 11 case (the Chapter 11 Case) and to maximize recoveries from the Debtors causes of action, as described herein, for the benefit of its estate and creditors, the Debtor has requested various types of relief in first day pleadings and applications (each, a First Day Pleading) described below.1 I am familiar with the contents of each First Day Pleading (including the exhibits and schedules thereto) and I believe that the
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the relevant First Day Pleading.
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relief sought in each First Day Pleading: (a) is necessary to enable the Debtor to accomplish the goals of this Chapter 11 Case in an expedient fashion; and (b) best serves the Debtors estate and the interests of its creditors. 3. Except as otherwise indicated, all facts set forth herein are based upon:

(a) my personal knowledge; (b) information learned from my review of relevant documents; or (c) information supplied to me by other members of the Debtors management, the Debtors advisors, and advisors to Taylor, Bean & Whitaker Mortgage Corp. (TBW) and its affiliates, including the Taylor, Bean & Whitaker Plan Trust (the TBW Plan Trust). I am authorized to submit this Declaration on behalf of the Debtor, and, if called upon to testify, I could and would testify competently to the facts set forth herein. I. The Debtor and the Chapter 11 Case 4. On the date hereof (the Petition Date), the Debtor filed a voluntary

petition for relief under chapter 11 of title 11 of the United States Code (11 U.S.C. 1011532, as amended, the Bankruptcy Code), commencing the Chapter 11 Case. The Debtor continues to possess and manage its assets as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No request for the appointment of a trustee or examiner has been made in the Chapter 11 Case and, as of the date hereof, no official committee has been appointed or designated. 5. The Debtor is a limited liability company organized under the laws of the

State of Delaware. TBW is the manager and sole economic member of the Debtor. Additionally, the Debtor has an independent special member (the Special Member)

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whose approval is required for the Debtor to take certain actions under the terms of its organizational documents, including, without limitation, its Second Amended and Restated LLC Agreement of Ocala Funding, LLC (the LLC Agreement). 6. On January 18, 2012, in preparation for the filing of this Chapter 11 Case

and in accordance with applicable provisions of the LLC Agreement, the Debtor appointed Charles Sweet as the Special Member. As Special Member, Mr. Sweet is, and is required by the terms of the LLC Agreement to be, independent. Mr. Sweet is not and has never been a director, officer, trustee, supplier, contractor, manager, or employee of TBW or the TBW Plan Trust. II. History and Structure of the Debtor and Its Relationship to TBW 7. Prior to August 2009, TBW was the countrys largest independent

originator and servicer of residential mortgage loans. TBW established the Debtor in January 2005 as a wholly-owned bankruptcy-remote subsidiary (with an independent Special Member). The Debtor was created for the purposes of: (a) purchasing mortgage loans originated by TBW; and (b) selling such mortgage loans to third parties, principally the Federal Home Loan Mortgage Corporation (Freddie Mac). In furtherance of this structure, the Debtor raised money from Deutsche Bank AG (DB) and BNP Paribas Mortgage Corporation (BNPP, and collectively with DB, the Noteholders), and various other financial institutions, as secured lenders through sales of asset-backed commercial paper (the Funding Facility) under the Prepetition Indenture (as defined below). The Debtor used proceeds of mortgage sales to Freddie Mac and others to satisfy its financing obligations to its lenders. By 2007, the Debtors role in providing liquidity

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to TBW had grown to the point where the outstanding balance of notes issued under the Funding Facility was over $4.4 billion. The Funding Facility was restructured in June 2008 such that the maximum outstanding balance was reduced to $1.75 billion. 8. From 2002, prior to the Debtors formation, through August 2009, TBWs

former Chief Executive Officer Lee Farkas and certain other employees of TBW (collectively, the Farkas Parties) engaged in a scheme to defraud, among others, Colonial Bank, the Debtor, and the Debtors secured lenders and other creditors. The purpose of the scheme was to enrich the Farkas Parties and cover up their fraud. 2 9. From May 2008 until TBWs collapse in August 2009, the Farkas Parties

diverted approximately $1 billion in cash from the Debtor to certain of TBWs creditors. Chief among the beneficiaries of these payments was Freddie Mac, which received approximately $805 million from Ocala from September 2008 through August 2009. By causing Ocala to transfer funds to certain of TBWs creditors, the Farkas Parties were able to maintain the appearance that TBW was continuing to honor its servicing obligations to Freddie Mac and others, thereby extending their fraudulent scheme. As a result of the improper use of the Debtors funds, the Debtor was left with substantial shortfalls in collateral to secure or service the Funding Facility.
For a comprehensive description of the history of the Farkas Parties fraudulent misconduct, see generally the Second Amended Disclosure Statement of the Debtors, Pursuant to Section 1125 of the Bankruptcy Code, With Respect to the Second Amended Joint Plan of Liquidation of the Debtors and the Official Committee of Unsecured Creditors filed on November 12, 2010 in the case of In re Taylor, Bean & Whitaker Mortgage Corp. et al., Case No. 03:09-bk-07047 (Bankr. M.D. Fla.), Docket No. 2144, pp. 1743. Additionally, certain of the facts set forth in this Section II of this Declaration have been derived from plea agreements and related documents entered in the criminal cases against certain of the Farkas Parties. See Statement of Facts, Doc. No. 7, United States v. Jean William Ragland, Case No. 1:11cr162 (March 29, 2011); Statement of Facts, Doc. No. 7, United States v. Catherine Kissick, Case No. 1:11cr88 (E.D. Va. March 2, 2011); Statement of Facts, Doc. No. 5, United States v. Desiree Brown, Case No. 1:11cr84 (E.D. Va. February 24, 2011).
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10.

On Monday, August 3, 2009, federal law enforcement agents

simultaneously executed search warrants at TBWs Ocala headquarters and at the Orlando offices of Colonial Bank, N.A. On August 4, 2009, the following day, the United States Department of Housing and Urban Development (HUD) delivered to TBW a written notice suspending TBWs HUD/FHA origination and underwriting approval. That same day, the Government National Mortgage Association (Ginnie Mae) delivered to TBW a written notice of termination of TBW as a Ginnie Mae issuer and servicer of its $26 billion mortgage portfolio. Finally, also on August 4, 2009, Freddie Mac delivered to TBW a written notice of the termination of TBWs eligibility to sell loans to Freddie Mac and to service its $51.2 billion portfolio. In combination, these terminations and suspensions rendered TBW unable to conduct its business. 11. TBW filed a voluntary petition for relief on August 24, 2009 (the TBW

Case). Immediately prior to the commencement of the TBW Case, the board of TBW authorized my appointment as chief restructuring officer (CRO) for TBW. After the commencement of the TBW Case, the Bankruptcy Court authorized my appointment as TBWs CRO and the provision by Navigant Capital Advisors, LLC (Navigant) of certain personnel of Navigant as additional restructuring support staff. The Debtor did not file for bankruptcy relief concurrently with TBW. 12. TBW and its joint debtor-affiliates confirmed their Second Amended Joint

Plan of Liquidation (the TBW Plan) on July 21, 2011, and the TBW Plan became effective on August 10, 2011. The TBW Plan established the TBW Plan Trust to marshal and distribute all remaining assets of TBW. TBWs membership and manager interests in

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the Debtor, however, were not transferred to the TBW Plan Trust and revested in TBW upon the effective date of the TBW Plan. I remain the CRO of TBW and am also the Plan Trustee of the TBW Plan Trust. 13. During the TBW Case, TBW, the Debtor, Freddie Mac and the FDIC

reached several court-approved agreements reconciling the ownership of loans purportedly sold through the Debtor. The Debtor was allocated several hundred mortgage loans and cash proceeds related thereto. The Debtor holds 252 mortgage loans with an unpaid balance of approximately $42.3 million (as of May 31, 2012). The Debtor also holds five real estate owned (REO) properties resulting from foreclosures. The Debtor also holds approximately $22.4 million in proceeds of mortgage loans previously owned by it that are on deposit in an account in the Debtors name at Regions Bank. Finally, the Debtor has an interest in approximately $75 million in cash, consisting of proceeds of mortgage loans previously owned by the Debtor, that are in an account maintained by Bank of America, N.A. as Prepetition Indenture Trustee for the benefit of the Noteholders (the Prepetition Indenture Trustee). The Debtor also holds a claim in the current amount of approximately $1.6 billion against the estate of TBW (the TBW Claim). 14. The outstanding balance of the Funding Facility is approximately $1.75

billion. Additionally, the FDIC, as receiver for Colonial Bank, has asserted a claim against the Debtor of approximately $900 million on account of loans on Colonial Banks books that were sold by the Debtor for which it did not pay.

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15.

The Debtor has liabilities that exceed its assets by more than $2 billion.

Nearly half of this shortfall is the result of transfers of the Debtors assets to Freddie Mac under the direction and control of the Farkas Parties. III. The Debtors Claims and Causes of Action Against Freddie Mac 16. Upon information and belief, the fraudulent conduct of the Farkas Parties

included actually and/or constructively fraudulent transfers of the Debtors assets to or for the benefit of Freddie Mac (among others) that attempted to cover up their overall fraudulent scheme. Specifically, the Debtor believes that the Farkas Parties directed the transfer of approximately $805 million of Ocalas funds to Freddie Mac in order to satisfy TBWs obligations to Freddie Mac. These transfers of Ocalas assets provided no benefit to Ocala and, upon the Debtors information and belief, were executed with the actual intent of hindering, delaying and defrauding Ocala and its creditors, but in any event done at a time when the Debtor was insolvent or was rendered insolvent as a result of such transfers. The Debtor believes that these transfers may be avoided and recovered for the benefit of the Debtors estate under applicable provisions of the Bankruptcy Code and state law. Moreover, the Debtor believes, after diligent review of its books and records and the relevant records of TBW, that its claims and causes of action against Freddie Mac are of substantial value to its estate. 17. The Debtors belief as to the nature of the transactions that constitute the

basis for its claims and causes of action against Freddie Mac are supported by, among other things: (a) testimony of former TBW employees and principals in the criminal action against Farkas; and (b) plea agreements of certain of the Farkas Parties in their

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own criminal proceedings. For example, Desiree Brown, Treasurer of TBW, agreed in her Statement of Facts in support of her plea agreement that: co-conspirators at TBW caused the diversion of hundreds of millions of dollars from Ocala Funding bank accounts, located at LaSalle Bank, to pay TBW operating expenses, such as mortgage loan servicing payments owed to investors in Freddie Mac and Ginnie Mae securities 18. Freddie Mac is a public company and has disclosed claims of the Debtor

as a potential liability in recent quarterly and annual filings with the Securities and Exchange Commission. IV. Events Leading to Commencement of the Chapter 11 Case and Purpose for Filing 19. After the confirmation of the TBW Plan, the TBW Plan Trust Advisory

Committee and I turned to the task of preserving and recovering the remaining assets of the Debtor. In October 2011, the Debtor retained Proskauer Rose LLP (Proskauer) to assist it in evaluating its claims and causes of action against Freddie Mac and other third parties, and how best to use the chapter 11 process to recover on account of these claims. 20. The Debtor determined that the best interests of its estate and its creditors

will be served by the Debtor filing for chapter 11 relief and exercising its right to seek discovery under Rule 2004 of the Federal Rules of Bankruptcy Procedure to conduct a thorough review of facts in support of its causes of action against Freddie Mac and others, as well as any defenses that these parties may assert.

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21.

Prior to the commencement of the Chapter 11 Case, the Debtor entered

into extensive negotiations with the Prepetition Indenture Trustee, DB, BNPP, the FDIC and the TBW Plan Trust with respect to a consensual plan of liquidation for the Debtor, the funding of the Debtors Chapter 11 Case, and certain related matters relating to the administration of the Chapter 11 Case and the settlement of certain disputes, the result of which was the parties execution of that certain Restructuring and Plan Support Agreement (the RSA). The material provisions of the RSA3 are as follows: a. Immediately after the execution of the RSA, and prior to the Petition Date, $26.3 million of the Debtors funds that were on deposit with Platinum Bank (at the time of Platinum Banks own shutdown and takeover by the FDIC) were distributed by the FDIC (as receiver for Platinum) as follows: (a) 19.96% to the FDIC (as receiver for Colonial); (b) 59.89% to DB and BNPP; and (c) 20.15% (i.e. $5.3 million) to OF Finance, LLC, a newly-formed limited liability company owned 25% by FDIC and 75% by DB and BNPP (the DIP Lender), which funds are to be advanced by the DIP Lender to the Debtor under the proposed debtor-inpossession financing facility as described below, to fund the costs of this Chapter 11 Case. The parties agreed that the Debtor will file a motion, described in greater detail below, in this Chapter 11 Case pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure seeking approval of the Debtors transfer to DB and BNPP of claims it holds against Bank of America, N.A. (BOA) for conversion of its assets, in exchange for BOAs assignment to the Debtor of certain claims it may have against Deloitte & Touche (Deloitte), as former auditor of TBW. The parties agreed that the Debtor will file a Bankruptcy Rule 9019 motion, described in greater detail below, in both this Chapter 11 Case and TBWs chapter 11 case seeking approval of an arrangement in which (i) the net proceeds of all claims and causes of action of Ocala (including claims assigned by BOA) and

b.

c.

The RSA will be filed along with the DIP Motion within ten days after the Petition Date, in accordance with the requirements of the RSA.

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the TBW Plan Trust against Deloitte will be allocated 75% to Ocala and 25% to TBW, and (ii) the costs of litigating such claims and causes of action will be paid by the TBW Plan Trust (subject to certain reimbursement obligations and termination of such funding under the conditions set forth in the RSA). d. Within 90 days after commencement of the Chapter 11 Case, the Debtor will file a chapter 11 plan of liquidation (the Ocala Plan) that will provide, among other things, for (i) the transfer of all remaining mortgage loans and cash collateral proceeds thereof to DB and BNPP, (ii) the increase of the TBW Claim to $1,750,000,000 (recoveries of which shall be allocated 90% to DB and BNPP, and 10% to the FDIC), (iii) payment of up to 25% of the general unsecured claims (excluding unsecured deficiency claims of DB and BNPP and the claims of the FDIC), not to exceed $250,000 in the aggregate, (iv) the allocation of the proceeds of any fraudulent conveyance and other unencumbered actions of the Debtors estate 25% to the FDIC (as receiver for Colonial) and 75% to DB and BNPP, and (v) the transfer of all claims and causes of action of the Debtor, including with respect to Deloitte and fraudulent conveyances or other avoidance actions, to a post-confirmation litigation trust (the Ocala Litigation Trust) for prosecution. The Ocala Plan must be confirmed and become effective within 160 days after the Petition Date. The Ocala Litigation Trust shall be governed by an oversight committee consisting of designees from DB, BNPP and the FDIC. Approval of material decisions of the Ocala Litigation Trustee (including retention of counsel and commencement and settlement of any claim of the Debtors estate) shall require the approval of the designee of DB and one or both of the designees of BNPP and the FDIC. I will be the initial trustee of the Ocala Litigation Trust.

e.

22.

Pursuant to the RSA, the Ocala Plan will be unanimously accepted by

holders of claims in two of the four impaired classes of claims as described in the RSA, which accepting classes constitute over 97% of all claims against the Debtor. I believe that the Ocala Plan as outlined in the RSA and described above is confirmable, feasible and in the best interests of the Debtors creditors. The Debtor therefore intends to comply with its obligations under the RSA.

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V.

The Debtors Motion to Authorize Debtor-in-Possession Financing 23. The Debtor intends to file a motion (the DIP Motion) within ten days

after the Petition Date, pursuant to its obligations under the RSA, to authorize it to obtain $5,200,000 of postpetition financing (the DIP Facility) for the purpose of paying administrative expenses necessary to conduct this Chapter 11 Case, principally the investigation and prosecution of avoidance actions. 24. Under the Funding Facility, the Debtor is party to a Second Amended and

Restated Base Indenture dated as of June 30, 2008 (the Prepetition Indenture) with the Prepetition Indenture Trustee, as well as related Security Agreement, Depository Agreement, and Custodial Agreement. Prior to the Petition Date, under the Prepetition Indenture, the Debtor issued to the Noteholders multiple series of Notes with an aggregate face value of approximately $1.75 billion. 25. Under the Prepetition Indenture and related Security Agreement, the

Debtor granted to the Prepetition Indenture Trustee security interests in collateral (the Prepetition Collateral) to secure the Debtors obligations under the Prepetition Indenture and Notes issued under and in connection therewith. The Prepetition Collateral includes a Collateral Account maintained by the Prepetition Indenture Trustee (as Collateral Agent) and certain Assigned Collateral, which included the mortgages securing the Notes and proceeds from the sale of such mortgages. 26. Facility. The Debtor is presently in default of its obligations under the Funding

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27.

As of the Petition Date, the Debtor held or otherwise controlled

approximately $97.4 million in cash (as such balance increases or decreases, the Ocala Cash). Of the Ocala Cash, approximately $22.4 million is in an account at Regions Bank (the Regions Account). The Debtor believes that the Ocala Cash constitutes Prepetition Collateral or traceable proceeds of Prepetition Collateral under sections 9102(12) and (64) of the Uniform Commercial Code. To the extent that the Ocala Cash does constitute such traceable proceeds, it is cash collateral subject to the liens and security interests of the Prepetition Indenture Trustee under the Prepetition Indenture and the Security Agreement. The Prepetition Indenture Trustee and the Noteholders have not consented to the use of such cash collateral. 28. Prior to the Petition Date, the FDIC, in its capacity as receiver for

Platinum Bank, was holding approximately $26,300,000 of proceeds of the Prepetition Collateral (the Platinum Funds). Pursuant to the RSA, the FDIC, DB, BNPP and the Prepetition Indenture Trustee agreed to the allocation of these funds among themselves in partial payment of their claims against the Debtor. Additionally, $5,300,000 of the Platinum Funds was transferred to the DIP Lender for the purpose of providing the DIP Facility to the Debtor ($5,200,000 of which will be used to fund the DIP Facility and $100,000 of which will be used by the DIP Lender for accounting purposes). 29. The Debtor will seek authority to use advances on the DIP Facility to

administer the Chapter 11 Case for the benefit of its creditors and other parties in interest, including the investigation and prosecution of the Fraudulent Transfer Actions, Ocala Deloitte Claim and other Ocala Causes of Action (each as described more fully in the

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DIP Motion and the RSA). Advances will be governed by an initial six week budget and subsequent six week budgets as approved under the following process. On the 25th day (or the next occurring business day) of each calendar month during the term of the DIP Facility, the Debtor shall send to the DIP Lender an updated budget setting forth projected fees and expenses for the six week period commencing on the first day of the following month, for approval by the DIP Lender. The DIP Lender shall have until the first business day of the following month to either approve the updated budget or send to the Debtor a proposed revised budget. In the event that the Debtor and the DIP Lender are unable to reach agreement on the form of updated budget on or before the 5th business day prior to the expiration of the then current budget period, the Debtor and/or the DIP Lender may schedule a hearing before the Court on an expedited basis to seek appropriate relief. In the event that an updated budget is not either agreed upon by the Debtor and the DIP Lender or ordered by the Court on or before the expiration of the then current budget period, the DIP Lender shall automatically be deemed to have terminated the DIP Facility as of the date the then current budget period expires. 30. The DIP Facility will not bear interest; moreover, the DIP Lender will

receive no distribution under the Ocala Plan and, upon the consummation of the Ocala Plan, all obligations of the Debtor relating to the DIP Facility will be discharged and released. 31. In return for the use of the DIP Facility, and for any potential diminution

in value of the Prepetition Collateral during the course of the proceedings, the DIP

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Lender and its members (i.e. the FDIC and the Noteholders) shall receive the following rights as adequate protection: a. prior to hiring special litigation counsel to represent the Debtor in any fraudulent transfer action, the Debtor shall obtain approval of (1) the designee of DB; and (2) either the designee of BNPP or the designee of the FDICR; any potential settlement or resolution of any fraudulent transfer actions, the Debtors claims against Deloitte, or other causes of action of the Debtor shall require approval of (i) the designee of DB; and (ii) either the designee of BNPP or the designee of the FDICR; and any proceeds of any fraudulent transfer actions, the Debtors claims against Deloitte, or other causes of action of the Debtor received during the pendency of the Chapter 11 Case (whether such proceeds are received pursuant to a final judgment, settlement or otherwise) shall: (i) first be used to satisfy and pay unpaid administrative claims and expenses of the Chapter 11 Case only to the extent (A) payment of such claims and expenses is either permitted under the budget or on account of any deferred restructuring fee payable to Navigant Capital Advisors in accordance with its engagement letter with Ocala Funding or (B) the Bankruptcy Court enters an order finding that the incurrence of such claims was necessary to satisfy or discharge the fiduciary and/or ethical obligations of Ocala Funding or its professionals; (ii) second, subject to the approval of DB, BNPP and/or the FDICR as provided in the Plan Term Sheet attached as Exhibit 1 to the RSA (the Plan Term Sheet), be used as the source and amount of committed funding of the Ocala Litigation Trust in the manner and for the uses contemplated in the Plan Term Sheet; and (iii) third, be reserved for transfer to the Ocala Litigation Trust in accordance with and for distribution pursuant to the Ocala Plan.

b.

c.

32.

The DIP Facility is superior to the Debtors other alternatives. The

adequate protection described above and other benefits and privileges relating to the DIP Facility are consistent with and authorized by the Bankruptcy Code and are necessary in order to obtain the DIP Facility and the consent or non-objection of the Noteholders and

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the FDIC, and to adequately protect the Noteholders interests in the Prepetition Collateral. The Debtor does not have sufficient available sources of working capital and financing to maintain the estate in the ordinary course of business and administer the estate without the DIP Facility. Absent the ability to use the DIP Facility, the Debtor will not be able to pay its professionals and other costs that will be incurred in the Chapter 11 Case, including cash necessary to pursue recovery of hundreds of millions of dollars of avoidance actions that it seeks to recover for the benefit of its estate. 33. Given its financial condition, financing arrangements, and capital

structure, the Debtor is unable to obtain financing from sources other than the DIP Lender on terms more favorable than the DIP Facility. I believe the Debtor would be unable to obtain sufficient unsecured credit allowable under Bankruptcy Code section 503(b)(1) as an administrative expense. The Debtor has also been unable to obtain credit: (a) having priority over administrative expenses of the kind specified in sections 503(b), 507(a) and 507(b) of the Bankruptcy Code; or (b) secured by a lien on property of the Debtor and the estate that is not otherwise subject to a lien. Financing on a postpetition basis is not otherwise available without granting to the Noteholders at least the adequate protection rights described above. Moreover, the terms of the DIP Facility are very favorable to the Debtor, as the DIP Facility does not accrue interest and will be discharged without repayment upon the consummation of the Ocala Plan. 34. The terms and conditions of the DIP Facility and the DIP Documents are

fair, reasonable, and the best available to the Debtor under the circumstances, reflect the Debtors exercise of prudent business judgment consistent with its fiduciary duties, and

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are supported by reasonably equivalent value and consideration. The DIP Facility was negotiated in good faith and at arms length among the Debtor and the DIP Lender. 35. As of the Petition Date, the Debtor has not brought, is not aware of, and

has no claims, objections, challenges, causes of action, including without limitation, avoidance claims under chapter 5 of the Bankruptcy Code against the Noteholders, the Prepetition Indenture Trustee, the DIP Lender, or its members, arising out of or related to the Funding Facility. VI. The Debtors Rule 2004 Discovery Motion 36. Concurrently with the Petition, the Debtor has filed its Motion for Entry of

an Order Authorizing and Directing the Examination of Freddie Mac Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure (the 2004 Motion). The Debtor seeks to commence an investigation of its rights, claims, and causes of action against, and possible defenses available to, Freddie Mac and its conservator, the FHFA, regarding the claims and causes of action described above. The Debtor is seeking authority to issue subpoenas in furtherance of such examination, and an order directing each of FHFA and Freddie Mac to: (a) appear for examination through designated representatives; and (b) produce documents responsive to the Debtors requests, which the Debtor anticipates being substantially in the form attached to the 2004 Motion as Exhibit A (as may be amended prior to service on Freddie Mac, the Request for Production). 37. While the Debtor believes that it possesses viable, legitimate and valuable

causes of action against Freddie Mac based on the transactions described above, the Debtor is not certain that such transactions constitute the totality of avoidable transactions

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between the Debtor and Freddie Mac. Accordingly, the Debtor seeks to investigate the potential of other claims and causes of action against Freddie Mac, as well as to examine and to obtain documents from the FHFA and Freddie Mac regarding facts relevant to the transactions and transfers described above and related avoidance or other actions that the Debtor holds or may hold as a result of such transactions and transfers. The Debtor seeks an examination of topics within the scope of Bankruptcy Rule 2004(b), including, but not limited to, information and documents establishing and supporting the basis for avoidance actions against Freddie Mac and the validity of any defenses it might assert. The Debtor also seeks to examine representatives of the FHFA and Freddie Mac who are identified through document production and other discovery as possessing information relevant to such claims and potential defenses. 38. The Debtor believes, after diligent review of its books and records and the

relevant records of TBW, that its claims and causes of action against Freddie Mac and others will yield substantial value to the Debtors estate. Authorization for the Debtor to conduct 2004 examinations related to the potential fraudulent transfer claims against Freddie Mac is essential to the administration of the Debtors estate and maximizing recoveries to its creditors. VII. The Debtors Motion for Approval of Settlement Agreement Regarding Exchange of Claims With Bank of America, N.A. 39. As required under the RSA, and described briefly above, the Debtor has

filed the Debtors Motion for Approval, Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code and Rule 9019(a) of the Federal Rules of Bankruptcy Procedure, of Settlement Agreement Regarding Exchange of Claims With Bank of America, N.A. (the

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Deloitte Claim Assignment Motion). By the Deloitte Claim Assignment Motion, the Debtor seeks this Courts approval of a settlement agreement (the Deloitte Claim Assignment Agreement) with BOA whereby: (a) BOA will assign to the Debtor all of the claims that BOA holds against Deloitte related to Deloittes work for TBW (as described therein, the BOA Assigned Deloitte Claims); and (b) the Debtor will assign to BOA certain of its claims against BOA (as described therein, the Conversion Claims). A copy of the Deloitte Claim Assignment Agreement is attached to the Deloitte Claim Assignment Motion as Exhibit A.4 40. The Conversion Claims arise from the alleged conversion and sale by

BOA of certain mortgage loans that were allegedly owned by the Debtor and would have served as collateral securing the debt obligations held by the Noteholders. The allegations surrounding the Conversion Claims are set forth in detail in the complaints commencing the cases captioned BNP Paribas Mortgage Corporation v. Bank of America, N.A., Case No. 1:10-cv-23116 (United States District Court, Southern District of Florida, Miami Division) and Deutsche Bank AG v. Bank of America, N.A., Case No. 1:10-cv-08299 (United States District Court, Southern District New York) (collectively, the Conversion Litigation), copies of which are attached to the Deloitte Claim Assignment Agreement as Exhibit 2. 41. In essence, the Settlement Agreement provides that the Debtors estate

will gain the benefit of the BOA Assigned Deloitte Claims, free and clear of any lien or
The summary of the Deloitte Claim Assignment Agreement provided herein is qualified in its entirety by the terms of the Deloitte Claim Assignment Agreement. In the event of any inconsistency between this summary and the terms of the Deloitte Claim Assignment Agreement, the Deloitte Claim Assignment Agreement shall control.
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interest of BOA, in exchange for assigning its interest in the Conversion Claims to BOA. However, because the Debtor believes that the proceeds of the Conversion Claims are part of the Noteholders collateral and are fully encumbered by liens held by BOA in its capacity as Collateral Agent for the Noteholders, the Debtor submits that the assignment of the Conversion Claims does not prejudice the rights of any of its creditors or other parties in interest, and does not diminish its estate. Moreover, the assumption by the Debtor of the BOA Assigned Deloitte Claims will allow the Debtor to prosecute these claims jointly with its other claims against Deloitte, as described below. VIII. The Debtors Motion for Approval of Settlement Regarding Deloitte Claim Funding and Allocation 42. As required under the RSA, and described briefly above, the Debtor has

filed the Debtors Motion for Approval, Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code and Rule 9019(a) of the Federal Rules of Bankruptcy Procedure, of Settlement Regarding Deloitte Claim Funding and Allocation (the Deloitte Sharing Settlement Motion. The Deloitte Sharing Settlement Motion seeks entry of an order approving a settlement agreement (the Deloitte Sharing Settlement Agreement)5 among the Debtor, the TBW Plan Trust, and BOA with respect to the allocation of costs and recoveries related to their respective claims against Deloitte. A copy of the Deloitte Sharing Settlement Agreement is attached to the motion as Exhibit A.

The summary of the Deloitte Sharing Settlement Agreement provided herein is qualified in its entirety by the terms of the Deloitte Sharing Settlement Agreement. In the event of any inconsistency between this summary and the terms of the Deloitte Sharing Settlement Agreement, the Deloitte Sharing Settlement Agreement shall control.

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43.

At all times during which the Farkas Parties engaged in their fraudulent

conduct with respect to the Debtor and certain of its stakeholders (as described in paragraphs 8 and 9 above), Deloitte served as TBWs auditor. In that capacity, Deloitte certified TBWs financial statements from 2002 to 2008. Each of TBW, BOA and Ocala hold claims against Deloitte related to Deloittes work for TBW (collectively, with any such claims of TBW and/or the TBW Plan Trust, the Deloitte Claims). 44. On September 26, 2011, each of Ocala and TBW sued Deloitte, as TBWs

former auditing firm, under the facts and circumstances set forth in the complaints commencing the cases captioned Neil F. Luria, Plan Trustee of the Taylor, Bean & Whitaker Plan Trust vs. Deloitte & Touche, LLP, Case No. 11-30967CA31 (11th Judicial Circuit Court for Miami-Dade County, Florida) and Ocala Funding, LLC vs. Deloitte & Touche, LLP, Case No. 11-30967CA30 (11th Judicial Circuit Court for Miami-Dade County, Florida), which cases are now pending (collectively, with any related arbitration proceedings, the Deloitte Litigation). As described above, on the date hereof the Debtor filed the Deloitte Claim Assignment Motion, pursuant to which the Debtor is seeking this Courts approval of a settlement with BOA whereby BOA will assign to Ocala the BOA Assigned Deloitte Claims in exchange for the Debtors assignment to BOA of the Conversion Claims. If the Deloitte Claim Assignment Motion is granted, the BOA Assigned Deloitte Claims shall become property of the Debtors estate pursuant to section 541(a)(7) of the Bankruptcy Code and the Debtor shall have the sole authority and standing to prosecute the BOA Assigned Deloitte Claims, which shall be pursued along with the Deloitte Claims of the Debtor and the TBW Plan Trust as part of the

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Deloitte Litigation. The Deloitte Sharing Settlement Agreement is a negotiated compromise whereby the parties with interests in the Deloitte Litigation agree to share the costs and any award of the Deloitte Litigation. 45. Under the Deloitte Sharing Settlement Agreement: (a) the TBW Plan Trust

(as it has to date) shall continue to fund 100% of all direct and indirect expenses related to litigating the Deloitte Claims on behalf of the Debtor and TBW (as defined in the Deloitte Sharing Settlement Motion, the Deloitte Claim Expenses); and (b) the Net Proceeds (as defined in the Deloitte Sharing Settlement Motion) of any judicially determined recovery on the Deloitte Claims or of any settlement thereof agreed to by the TBW Plan Trust and either the Ocala Litigation Trust or by Ocala and approved in accordance with the RSA (as applicable), regardless of the amount so funded by the TBW Plan Trust, shall first be used to reimburse the TBW Plan Trust for 100% of the Deloitte Claim Expenses it funds related to the prosecution of the Deloitte Claims. Remaining Net Proceeds shall be shared as follows: (i) 75% to the Debtor or the Ocala Litigation Trust, as applicable, and (ii) 25% to the TBW Plan Trust; provided, however, that if the Net Proceeds are insufficient to reimburse the TBW Plan Trust for 100% of the Deloitte Claim Expenses funded by it, then the Debtor or the Ocala Litigation Trust, as applicable, shall promptly pay to the TBW Plan Trust, in addition to the Net Proceeds, an amount equal to 25% (subject to a total cap of $1,250,000) of the remaining reimbursement shortfall, which payment obligations shall constitute an allowed administrative expense claim in the Ocala Funding Bankruptcy Case.

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46.

As further described in the Deloitte Sharing Settlement Agreement, under

certain circumstances the TBW Plan Trust shall have the right to terminate its funding of the prosecution of the Deloitte Claims. If the TBW Plan Trust so elects, then, based on the amount expended prior to its termination of funding and the amount recovered on account of the Deloitte Claims, the portion of the award allocated to the TBW Plan Trust will be reduced or eliminated. IX. The Debtors Motion for Order Authorizing Maintenance of Existing Bank Account 47. The Debtor has filed its Motion of Ocala Funding, LLC for Order

Authorizing Maintenance of Existing Bank Account (the Regions Account Motion). As of the Petition Date, the balance of the Debtors cash in the Regions Account was approximately $22.4 million. Given that the Debtor is no longer operating, the Debtor writes relatively few checks on the Regions Account. Additionally, the Debtor has a good relationship with Regions Bank, and is comfortable with the amount of funds on deposit at Regions Bank. 48. The Debtor will make sure that any postpetition checks written on the

Regions Account bear the designation Debtor in Possession. Additionally, the Regions Account Motion does not seek a waiver of the collateral requirements contained in section 345 of the Bankruptcy Code, and Regions Bank is an authorized depository under the operating guidelines of the United States Trustee. Moreover, there were no checks outstanding on the Regions Account as of the Petition Date. 49. Accordingly, the Debtor believes that ample grounds exist for the Court to

(a) waive the requirement that the Debtor close the Regions Account and open a new

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bank account and (b) authorize the Debtor to maintain the Regions Account as a debtor in possession account. X. The Debtors Application to Retain Proskauer Rose LLP 50. The Debtor has filed its Application to Retain Proskauer Rose LLP Nunc

Pro Tunc to the Petition Date Pursuant to Section 327(a) of the Bankruptcy Code (the Proskauer Application). In assisting the Debtor with the prepetition investigation of the fraudulent conveyance claims and causes of action against Freddie Mac and others and with the preparation and filing of the Chapter 11 Case, and as a result of Proskauers prepetition representation of the Debtor, Proskauers attorneys have become familiar with the complex factual and legal issues that will have to be addressed in the Chapter 11 Case in general and the prosecution of fraudulent conveyance actions in particular. The retention of Proskauer, with its knowledge of and experience with the Debtor and the industry in which it operated, will assist in the efficient administration of the estate, thereby minimizing the expense to the estate. 51. The Debtor believes that, except as set forth in the Marwil Declaration,

Proskauers partners and associates do not hold or represent any interest adverse to the Debtor and that Proskauer and each of its partners and associates is a disinterested person within the meaning of section 101(14) of the Bankruptcy Code. 52. Based upon the Marwil Declaration, the Debtor believes that Proskauers

partners and associates have no connection with the Debtor, the Debtors managers or members (including TBW) the Debtors other professionals, the Debtors primary secured creditors, the Debtors largest unsecured creditors, the FDIC, the Judges of the

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United States Bankruptcy Court for the Middle District of Florida, or the United States Trustee and the Assistant Trustee and Trial Attorneys for the office of the United States Trustee (Region 21), except as set forth in the Marwil Declaration. 53. The Debtor believes that the employment of Proskauer is in the best

interests of the Debtor and its estate and desires to employ Proskauer, effective as of the Petition Date. Were the Debtor required to engage counsel other than Proskauer in connection with the Chapter 11 Case, the Debtor, its estate and all parties in interest would be unduly prejudiced by the time and expense necessarily attendant to such counsels familiarization with the intricacies of the Debtors prior activities and financial affairs. XI. The Debtors Application to Retain Navigant as Restructuring Personnel of the Debtor and Designating Neil F. Luria as Chief Restructuring Officer of the Debtor 54. The Debtor seeks to employ certain personnel of Navigant pursuant to

section 363 of the Bankruptcy Code, effective as of the Petition Date, as CRO and support personnel of the Debtor pursuant to the terms and conditions of the of the engagement letter between Navigant and the Debtor (the Navigant Engagement Letter). The Debtor selected Navigant based on its extensive knowledge and experience in the restructuring of mortgage originators and servicers in general and its role as TBWs CRO and related restructuring personnel in the TBW Case. The Debtor also seeks the approval of my appointment as CRO of the Debtor. 55. The Debtor does not believe that Navigant is a professional whose

retention is subject to approval under section 327 of the Bankruptcy Code. Nonetheless,

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to the best of the Debtors knowledge, information and belief, and as disclosed in the Luria Retention Declaration attached to the Navigant Application and exhibits thereto, neither Navigant nor any professional employee or independent contractor of Navigant has any connection with or any interest adverse to the Debtor, its creditors, or any other party in interest, or their respective attorneys and accountants, except as set forth in the Luria Retention Declaration. 56. The terms and conditions of the Navigant Engagement Letter were

negotiated by the Debtor (represented in such negotiations by an independent special member with sole authority over the retention of Navigant and the Navigant Engagement Letter) and Navigant at arms-length and in good faith. Moreover, the terms outlined in the Navigant Engagement Letter and in the Navigant Application are structurally similar to the terms of the employment of Navigant personnel as authorized by this Court in the TBW Case. 57. The Debtor submits that the employment of Navigant is a sound exercise

of its business judgment and satisfies section 363 of the Bankruptcy Code as Navigants services are necessary and essential to the prosecution and recovery of causes of action that constitute the Debtors principal assets. Navigant is intimately familiar with the enormously complex facts surrounding the operations and demise of TBW and Ocala, including the intricacies of the fraud by the Farkas Parties and the essential role in that fraud played by transfers from Ocala to TBWs creditors. Navigant carried out its fiduciary duties as independent restructuring personnel in the TBW Case in an exemplary

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and cost-effective manner and is well-suited to do so again in this related Chapter 11 Case with many of the same operative facts and players. XII. The Debtors Application to Retain Thomas, Alexander & Forrester LLP as Special Litigation Counsel 58. The Debtor has filed its Application to Retain Thomas, Alexander &

Forrester LLP (TAF) as Special Litigation Counsel (the TAF Application). 59. As set forth above, on September 26, 2011, Ocala and TBW commenced

the Deloitte Litigation. Also prior to the Petition Date, the Debtor and TBW Trust each retained TAF to prosecute the Deloitte Litigation. Due to the nature of the Debtors relationship with TBW and the services that Deloitte performed for the purported benefit of TBW and its affiliates (the Debtor included), the claims of TBW and Ocala against Deloitte will require substantially similar efforts to prosecute. Retaining a single firm to prosecute these claims will decrease duplication of effort and total litigation costs. 60. The Debtor and TAF are parties to that certain Engagement Letter dated

September 23, 2011 (the TAF Engagement Letter, a copy of which is attached to the TAF Application as Exhibit B), pursuant to which the Debtor engaged TAF to provide the Debtor with advice and assistance as counsel in investigating, evaluating, analyzing and prosecuting the Deloitte Litigation. Under the terms of the TAF Engagement Letter, TAF shall be compensated for its services to the Debtor in summary as follows: a. The Debtor assigned to TAF 35% of the gross proceeds of all recoveries, including but not limited to compensatory and punitive damages, restitution and/or insurance recoveries, in any way arising from or related to the Deloitte Litigation, whether by settlement, litigation, arbitration or otherwise (the Contingent Fee).

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b.

The Debtor is obligated to pay all costs, disbursements and expenses incurred in connection with the Litigation, including those incurred by TAF and by experts or consultants retained by TAF with the approval of the Debtor. Such costs, disbursements and expenses shall be billed on a monthly or quarterly basis and payable upon receipt, and are not to be deducted from the Contingent Fee.

61.

The TBW Trust also engaged TAF to represent it to investigate, evaluate

and prosecute the Deloitte Litigation on its behalf. 62. The Debtor originally selected TAF because its attorneys have extensive

experience and knowledge regarding the type of litigation claims that the Debtors estate holds against Deloitte. The Debtor believes that TAF is well qualified to represent it with respect to the Deloitte Litigation. Moreover, TAF has performed substantial work on the Deloitte Litigation (for both TBW and the Debtor) and is highly knowledgeable regarding the claims the Debtors estate holds against Deloitte, the Deloitte Litigation, and related strategy. It would be unnecessarily wasteful if the Debtor were to terminate its engagement of TAF and retain a new firm to pursue the Deloitte Litigation. 63. Depending on the outcome of the Deloitte Sharing Settlement Motion,

TAF may apply to the Court for reimbursement of expenses actually incurred that are reimbursable under the TAF Engagement Letter, in accordance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the local rules of the United States Bankruptcy Court for the Middle District of Florida, general orders of this Court, guidelines established by the United States Trustee, and such other procedures as may be fixed by order of the Court. Upon entry of an award to the Debtor against Deloitte, TAF intends to apply to this Court for entry of an order awarding it the Contingent Fee.

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64.

The Debtor believes that, except as set forth in the Thomas Declaration,

TAF does not represent or hold any interest adverse to the Debtor or the Debtors estate with respect to the Litigation. 65. The Debtor believes that the employment of TAF would be in the best

interests of its estate. XIII. The Debtors Application to Retain Berger Singerman LLP as Special Litigation Counsel 66. The Debtor has filed its Application to Retain Berger Singerman LLP

(Berger Singerman) as local co-counsel with TAF (the BS Application) in connection with the Deloitte Litigation, which is presently pending in Miami-Dade County, Florida. 67. Prior to the Petition Date, the Debtor and TBW each retained Berger

Singerman to assist TAF as local counsel in prosecuting the Deloitte Litigation. The terms of Berger Singermans engagement provide for hourly billing at Berger Singermans standard rates and reimbursement of expenses actually and necessarily incurred. However, all expenses of Berger Singerman in connection with the Deloitte Litigation will be satisfied by the TBW Plan Trust. 68. Berger Singerman has performed substantial work on the Deloitte

Litigation (for both TBW and the Debtor) and is highly knowledgeable regarding the claims the Debtors estate holds against Deloitte, the Deloitte Litigation, and related strategy. It would be unnecessarily wasteful if the Debtor were to terminate its engagement of TAF and retain a new firm to act as local co-counsel in connection with the Deloitte Litigation.

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69.

The Debtor believes that the employment of Berger Singerman would be

in the best interests of its estate. XIV. The Debtors Application to Retain Stichter, Riedel, Blain & Prosser, P.A. as Local Counsel 70. The Debtor has filed its Application to retain Stichter, Riedel, Blain &

Prosser, P.A. (SRBP) as Bankruptcy Counsel Nunc Pro Tunc to the Petition Date (the SRBP Application). SRBP served as bankruptcy counsel to TBW and has become very familiar with the background facts and circumstances regarding the Farkas Parties fraudulent misconduct and the purposes for this Chapter 11 Case. The retention of SRBP as local Florida counsel, with its knowledge of and experience with the Debtor and the TBW Case, will assist in the efficient administration of the estate, thereby minimizing the expense to the estate. 71. The Debtor believes that, except as set forth in the Affidavit of Edward J.

Peterson, III (the Peterson Affidavit) attached to the SRBP Application, SRBPs partners and associates do not hold or represent any interest adverse to the Debtor and that SRBP and each of its partners and associates is a disinterested person within the meaning of section 101(14) of the Bankruptcy Code. 72. Based upon, and except as provided in, the Peterson Affidavit, the Debtor

believes that SRBPs partners and associates have no connection with the Debtor, the Debtors managers or members (including TBW), the Debtors other professionals, the Debtors primary secured creditors, the Debtors largest unsecured creditors, the FDIC, the Judges of the United States Bankruptcy Court for the Middle District of Florida, or

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the United States Trustee and the Assistant Trustee and Trial Attorneys for the office of the United States Trustee (Region 21). 73. During the TBW Case, pursuant to authorization granted by this Court,

SRBP served as general bankruptcy counsel to TBW, which holds the sole economic membership interest in the Debtor and is the manager of the Debtor. Additionally, since the confirmation of the TBW Plan, SRBP has served as special counsel to me in my capacity as the TBW Plan Trustee. SRBPs retention by the Debtor has been authorized and approved by both TBW, as the Debtors sole economic member, and Mr. Sweet as independent Special Member. 74. The Debtor believes that the employment of SRBP as Florida co-counsel

is in the best interests of the Debtor and its estate and desires to employ SRBP, effective as of the Petition Date. XV. The Debtors Applications to Retain Gonzalo R. Dorta, P.A. and Gamba & Lambana, P.A. as Special Litigation Local Counsel 75. The Debtor will file applications to Gonzalo R. Dorta, P.A. and Gamba &

Lambana, P.A. (together, Special Litigation Local Counsel) as special litigation local counsel in connection with the Deloitte Litigation, which is presently pending in MiamiDade County, Florida. 76. Prior to the Petition Date, the Debtor and TBW each retained Special

Litigation Local Counsel to assist TAF as local counsel in prosecuting the Deloitte Litigation. The terms of Special Litigation Local Counsels engagements provide for hourly billing at standard rates and reimbursement of expenses actually and necessarily

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incurred. However, all expenses of Special Litigation Local Counsel in connection with the Deloitte Litigation will be satisfied by the TBW Plan Trust. 77. Each Special Litigation Local Counsel has performed substantial work on

the Deloitte Litigation (for both TBW and the Debtor) and is highly knowledgeable regarding the claims the Debtors estate holds against Deloitte, the Deloitte Litigation, and related strategy. It would be unnecessarily wasteful if the Debtor were to terminate its engagement of either or both Special Litigation Local Counsel and retain new firms to act as special litigation local counsel in connection with the Deloitte Litigation. 78. The Debtor believes that the employment of Special Litigation Local

Counsel would be in the best interests of its estate. XVI. Motion to Establish Procedures for Interim Compensation of Professionals 79. The Debtor seeks entry of an order, among other things: (a) establishing

an orderly process for the allowance and payment of compensation for professional services rendered and reimbursement of expenses incurred by professionals whose retentions are approved by this Court pursuant to section 327 and (if applicable) 1102 of the Bankruptcy Code and who will be required to file applications for allowance of compensation and reimbursement of expenses pursuant to sections 330 and 331 of the Bankruptcy Code; (b) establishing a procedure for reimbursement of reasonable out-ofpocket expenses incurred by members of any statutory committees appointed in the Chapter 11 Case; and (c) limiting service of interim fee applications and final fee applications to identified Notice Parties.

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80.

The proposed compensation procedures (the Interim Compensation

Procedures) will enable the Debtor to closely monitor costs of administration, maintain appropriate cash flow, and implement efficient cash management procedures. Moreover, the Compensation Procedures will allow the Court and key parties in interest to ensure the reasonableness and necessity of the compensation and reimbursement sought pursuant to such procedures. 81. The efficient administration of the Chapter 11 Case will be significantly

aided by establishing the requested interim compensation and expense reimbursement procedures. The relief requested is in the best interests of the Debtor, its estate, and creditors. The proposed Interim Compensation Procedures will promote the efficient administration of the Chapter 11 Case, while at the same time allowing for appropriate monitoring of professionals fees.

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