june 20 2013 transcript new century trs holdings 07-10416 kjc 6-20-13

7/28/2019 June 20 2013 Transcript New Century TRS Holdings 07-10416 KJC 6-20-13

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UNITED STATES BANKRUPTCY COURTDISTRICT OF DELAWARE

IN RE: ) Case No. 07-10416 (KJC)) Chapter 11

NEW CENTURY TRS HOLDINGS, INC., )et al., ) Courtroom No. 5

Debtors. ) 824 Market Street) Wilmington, DE 19801))) June 20, 2013) 1:30 P.M.

TRANSCRIPT OF HEARINGBEFORE HONORABLE KEVIN J. CAREYUNITED STATES BANKRUPTCY JUDGE

APPEARANCES:

For the LiquidatingTrustee: Hahn & Hessen LLP

By: MARK INDELICATO, ESQUIREEDWARD SCHNITZER, ESQUIRE

488 Madison Avenue, 15th FloorNew York, New York 10022

For the U.S. Trustee: United States Dept. of JusticeBy: MARK KENNEY, ESQUIRE

844 King Street, Suite 2207Wilmington, DE 19801

ECRO: AL LUGANO

Transcription Service: Reliable1007 N. Orange StreetWilmington, Delaware 19801Telephone: (302) 654-8080E-Mail: [email protected]

Proceedings recorded by electronic sound recording:

transcript produced by transcription service.
http://netmail.verizon.com/netmail/%22http:/mailto:[email protected]%22http://netmail.verizon.com/netmail/%22http:/mailto:[email protected]%22


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Telephonic Appearance:

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


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THE CLERK: All rise. Please be seated.

THE COURT: Good afternoon, everyone.

MR. INDELICATO: Good afternoon, Your Honor, Mark

Indelicato from Hahn & Hessen on behalf of Alan M. Jacobs

Liquidating Trustee of New Century. Your Honor, this is a

non-omnibus hearing. 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. Your

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,

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


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to permit our evidence first.

THE COURT: All right, thank you. Let me ask a

couple things. First, Mr. Galope, are you on the telephone

connection?

MS. GALOPE: Yes, Your Honor, Im here.

THE COURT: All right, good afternoon. Stand by for

just a moment.

MS. GALOPE: Okay.

THE COURT: I note that #4 and #5 on todays agenda

are motions by El Veasta Lampley. Is Ms. Lampley either on

the phone or in the Courtroom?

MS. GALOPE: Your Honor, may I speak. This is Helen

Galope.

THE COURT: No, you may not. All right, Ms. Lampley

is not on the phone sign-up sheet. Shes apparently not on

the phone connection. Mr. Indelicato, what can you tell me

about what notice Ms. Lampley may have gotten about todays

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


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overnight mail.

THE COURT: When?

MR. INDELICATO: When the agenda was filed two days

ago, Your Honor.

THE COURT: So she would of only had a couple days

notice of this hearing?

MR. INDELICATO: No, Your Honor. I believe she knew

about the hearing. 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

Honor.

THE COURT: Okay, now let me just turn for a minute.

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 wont 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 couldnt be here or any reason


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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

doesnt really give the Court very much help. And it doesnt

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


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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

usual I was mistaken about dates. Next week is a pre-trial,

not an omnibus, but we do have a short period of time I

believe scheduled for the 26th

.

THE COURT: That hearing has been marked as moved.

Im sorry. Bear with me for a minute.

MR. INDELICATO: And I believe its the Lampley

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.


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MR. INDELICATO: Then I guess, Your Honor, we will

settle the orders as directed without prejudice.

THE COURT: The next hearing is July 24th, but again

thats just a pre-trial day basically. And there wouldnt be

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: We will do that, Your Honor.

THE COURT: All right, thank you, Mr. Indelicato.

MR. INDELICATO: Youre welcome. Now how would you

like to proceed with the Galope motions?

THE COURT: All right, Ms. Galope?

MS. GALOPE: Yes, Your Honor.

THE COURT: 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


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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

hearing, you know, for personal reasons. And if the Court

would allow my exhibits to be used for today I would really

appreciate it, Your Honor.

THE COURT: Well, Ms. Galope, those documents to

which you refer came to the Court only today. The order that

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: Your Honor, okay, go ahead.

THE COURT: First let me ask why you did not comply

with my order?

MS. GALOPE: The reason for that, Your Honor, is

because it was voluminous and I understand the CD came from

the Trustee and I let them know that this one Im going to be

using that CD. Its even difficult for me to send it to

them. Its a 25 megabyte file, a huge file. They know that

they have this information. They gave this to me and its

just a matter of them looking at their copies. They already

have those copies, Your Honor. Its like referring them for


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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

tell you what I received. What Ive received is something

that was clocked in, in the clerks 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: I dont have that many pages.

MS. GALOPE: Yeah, its only about 20 or less than

20 pages, Your Honor.

THE COURT: Yeah, that seems about right. I didnt

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

Honor, we have what she sent us. We did not get this morning

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. You

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


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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: Your Honor, we do have at least the

pages here. She did provide it to us. Your Honor, we do

have a binder, although, I only have one of what she sent. I

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. And I would like for that -

THE COURT: Ms. Galope?


THE COURT: Are you saying that you want whatever

you sent to the Trustees counsel to be admitted into

evidence in its entirety?


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THE COURT: Okay, Mr. Indelicato, do you have any

objection to that?

MR. INDELICATO: Your Honor, again we dont have

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: But she first could make argument about

the documents?

MR. INDELICATO: She could absolutely make arguments

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


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that they are going to present to the Court today.

THE COURT: I dont know what the Trustee intends to

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

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

them. 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.

Well proceed on that basis. Ms. Galope, let me ask for the

record the exhibits that weve 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: They are relevant to my motions.

THE COURT: To all of the motions, okay. Well then


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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.

MR. INDELICATO: Thank you.

THE COURT: Thank you.

MR. INDELICATO: Your Honor, for the testimony of

Mr. Jacobs Ill turn it over to my partner Ed Schnitzer.

THE COURT: All right, thank you.

MR. SCHNITZER: Your Honor, I have exhibit binders.

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: Yes, Your Honor.

THE COURT: Understanding that shes 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 weve just handed

out has three tabs and it has three exhibits. The first is

the modified plan of New Century, the second is the


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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 well 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: State your full name for the record.

MR. JACOBS: Alan M. Jacobs.

DIRECT EXAMINATION

BY MR. SCHNITZER:

Q. Good morning, Mr. Jacobs.

A. Good afternoon.

Q. Could you describe how you became involved in the New

Century Bankruptcy?

A. Sometime prior to the confirmation hearing for the

Debtors plan of liquidation. I was approached and, frankly,


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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. I was selected by

that group. 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. Thats correct.

Q. And the first confirmation order as well.

A. That is correct.

Q. 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.


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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. And if you could flip to paragraph 22, which is on page

24.

A. Yes.

Q. And does that paragraph contain a reference to

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. Can I direct your attention to Tab 1?

A. Yes.

Q. Can you let me know what Tab 1 is?

A. Its the modified second amended joint Chapter 11 plan.

Q. And can I direct your attention to page 68.

A. Yes.

Q. And do you see paragraph 3 up top?

A. Yes, I do.

Q. 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


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paragraph.

Q. Let me direct your attention to the last exhibit, Exhibit

3.

A. Yes.

Q. Can you tell me what this exhibit is?

A. This is the notice of filing of the Liquidating Trust

agreement and attached to it is as Exhibit 1 is New Century

Liquidating Trust agreement.

Q. And if you can turn to page 3, Section 1.4.

A. Yes.

Q. And what is that section?

A. 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. Yes.

Q. And is that the section that your referencing that does


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make your appointment subject to change?

A. That is correct.

Q. And if you can flip to Exhibit 1 which was the plan, page

70.

A. Yes.

Q. Do you see the top paragraph B, does that also reference

that you are subject to removal or replacement?

A. That is correct.

Q. Just to complete this circle if you can turn to Exhibit 2

the confirmation order, page 26, paragraph 28. Does that

section also reference the ability to have the Trustee

removed or replaced?

A. That is correct.

Q. Next, are there provisions in the claim that set forth

your obligations with respect to the Plan Advisory Committee?

A. Yes, it does.

Q. And if you could turn to page 70 of the plan, again the

plan was Tab 1.

A. Yes.

Q. Is that reference in paragraph 5?

A. 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


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Advisory Committee?

A. It explains my responsibilities, as well as my duties as

well as how I interface with the Plan Advisory Committee.

Q. And have you complied with all of those obligations?

A. Absolutely.

Q. And as well as any obligations set forth in the plan with

respect to the Plan Advisory Committee?

A. That is correct.

Q. Are you aware does the Plan Advisory Committee have

fiduciary obligations to the estate?

A. Yes, it does.

Q. And as far as you know have they complied with those

obligations?

A. As far as I know, absolutely.

Q. Are you aware were the members of the Plan Advisory

Committee disclosed in the confirmation order?

A. Yes, they were.

Q. If I can direct your attention to Tab 2 which is the

confirmation order. You can flip to paragraph 36 which is on

page 29.

A. Yes.

Q. And is that the paragraph in which the members are

disclosed?

A. Yes, they enumerated within that paragraph.

Q. Were they also enumerated in Section 4.1 of the


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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. Yes, I do.

Q. And do you see does it state that the Plan Advisory

Committee has an obligation to act in good faith?

A. Yes, I do.

Q. Do you believe theyve acted in good faith throughout

this case?

A. Yes, I do.

Q. To date have you performed all duties required of you

under the Trust agreement, the plan and the confirmation

order?

A. Yes, I have.

Q. To date have you failed to perform any required duties?

A. No.

Q. Have you unreasonably delayed the performance of your

duties as of today?

A. Not in a personal capacity. Obviously, Id 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


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ability to close the case?

A. Yes, there have been.

Q. And as general or specific as youd 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 were trying to just clean up the

claims as they appear in the claims register. So I dont

consider that a delay anymore.

Secondly, is the Carrington asset which has proven

to be a little bit difficult to liquidate? And we continue

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. I dont

know if theyre represented or not represented. And trying

to address those claims some of which I actually settled, but

litigation continues both in this Court and in other Courts.

And thats the most costly and time consuming element

affecting my ability to close up this Trust and make final

distributions.


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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

are basically simed in terms of trying to resolve those. And

we are waiting for the Courts 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 were 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


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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. Yes, I do.

Q. At any time have you violated that duty?

A. No, I have not.

Q. And as the Liquidating Trustee have you ever acted in bad

faith?

A. No, I have not.

Q. Have you reviewed the pleadings that Ms. Galope has filed

with respect to seeking your removal?

A. Yes, I have.

Q. And did you see as one of the matters that she referenced

was with respect to litigations that you brought or not

brought?

A. I believe I did.

Q. As Trustee did you investigate all potential causes of

action belonging to the New Century estate?

A. Yes, I did.

Q. As Trustee did you bring all actions you determined were

appropriate to be brought?

A. Yes, I did.

Q. And in fact did you pursue over 200 actions on behalf of

the estate?


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A. Yes, I did.

Q. Do you know approximately how much money the estate

received from those litigations and/or settlements?

A. I believe somewhere between 75 and $85 million dollars.

Q. And one of the actions specifically Ms. Galope mentions

is actions against what shes characterized as big banks. I

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. Yes, I did.

Q. And did you elect not to bring such actions?

A. That is correct.

Q. And do you know why?

A. 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. That is correct.

Q. One of the other issues mentioned by Ms. Galope is

whether you are disinterested or not. Are you familiar with

the Bankruptcy Code term disinterested?

A. Yes, I am.

Q. Prior to your appointment of Trustee, were you


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disinterested with respect to New Century?

A. Yes.

Q. Are you currently a Creditor of New Century?

A. No, I am not.

Q. Have you ever been a Creditor of New Century?

A. No.

Q. Prior to your appointment as Trustee, were you an equity

security holder of New Century?

A. No.

Q. Prior to your appointment as Trustee were you an insider

of New Century?

A. No.

Q. And prior to your appointment as Trustee were you ever an

employee of New Century?

A. No.

Q. 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.


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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. None.

Q. Do you currently hold any interest materially adverse to

the interest of New Century?

A. None.

Q. If I can direct your attention to Section 3.2 of the

Liquidating Trust agreement, which is Tab 3, page 4.

A. Yes.

Q. And what is that section called?

A. 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. Yes.

Q. And is it fair to say that some of them require you to

report and seek approval from the Plan Advisory Committee?


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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. That is correct.

Q. And have you complied in both respects?

A. Absolutely.

Q. 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

reorganization Liquidating Trust arrangement. It is not

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. I bring it to the Plan

Advisory Committee. We consider alternatives and we reach a


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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. Yes, subject to the Plan Advisory Committee approval.

Q. If you could turn to Tab 2 the confirmation order, page

32, paragraph 41.

A. Yes.

Q. Is it correct that this section gives you the authority

to hire such professionals?

A. Just one moment, Im sorry. Let me make sure Im in the

right document. Okay, 32 you said? Im sorry.

Q. Yes, 32, Section 41.

A. Yes, go right ahead.

Q. Does this section give you the authority to hire

professionals on behalf of the Trust?

A. Yes.

Q. And have you used that authority to hire professionals on

behalf of the Trust?

A. Yes, I have.

Q. As Trustee do you also have the authority to pay counsel


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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

monthly basis. I receive, or if I receive any comments from

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. Absolutely.

Q. 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

actual versus budget. And we, you know, again discuss areas

where there might be issues of efficiency and what have you,

and address them with the professionals as to how were 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


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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. No, it is not.

Q. Have all fees that youve paid as Trustee been

reasonable?

A. Yes.

Q. Are you also kept apprise on an ongoing basis as to what

actions the Trust professionals are taking on your behalf?

A. Yes, I am.

Q. Could you explain how that works?

A. 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

take them off the list gets shorter. And at the moment we

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?


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A. Yes, I have.

Q. How many distributions have been made?

A. Three.

Q. 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. Yes, they were.

Q. Have you kept appropriate reserves in the event a current

disputed claim becomes an allowed claim?

A. Yes, I have.

Q. 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. No, I am not.

Q. 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. Yes, we have.

Q. And what have you generally done in response to those

requests?

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


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New Century records.

Q. And as part of those responses have you provided

information on the transfer of their loans?

A. Thats success of the servicer, etc, yes.

Q. 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. That I have not been provided?

Q. Sitting here today are you aware of any documents that

New Century possesses that it hasnt provided to a borrower

that a borrower has specifically requested?

A. No, I am not.

Q. As the Trustee do you have an obligation to object to a

claim that you believe should be either disallowed, reduced

or reclassified?

A. Yes.

Q. Have you complied with that obligation?

A. Yes, I have.

Q. 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?


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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. Absolutely.

Q. Did you see the response that Ms. Galope filed this

morning with respect to this motion?

A. Yes, I did.

Q. And Ms. Galope made some serious allegations in it. I

wanted to just go through a couple. One of the allegations

concerned fabrication. Have you fabricated any New Century

documents?

A. Absolutely not.

Q. Have any of your professionals fabricated any New Century

documents?

A. Absolutely not.

Q. Theres also an allegation of falsification. Have you

falsified any New Century documents?

A. Absolutely not.

Q. Have your professionals falsified any New Century

documents?

A. Absolutely not.

Q. 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


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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, Ill ask do you have

any cross examination of Mr. Jacobs?

MR. KENNEY: No, I do not.

THE COURT: All right, thank you. Mr. Jacobs, you

may step down.

MR. JACOBS: Thank you, Your Honor. Does the

Trustee have any further evidence in opposition to the

removal motion?

MR. INDELICATO: No, we do not, Your Honor.

THE COURT: Okay, so the evidentiary record is now

concluded on that motion. Ms. Galope, as the Movant I will

give you the opportunity to make whatever argument youd 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 dont

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. If you have

argument you may make it now.

MS. GALOPE: All right, I want to remind the Court

that this impeachment motion came about because the


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Liquidating Trustee made hearsay testimony during the

evidentiary hearing on December 13th, 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. And this is in

compliance with the destruction motion order. I found the

contents of this CD lacking in any sound authenticity. There

were no signatures. There was nothing that related to my

loans. In essence it is a document that doesnt 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. How did

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


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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 Courts 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


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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

proper stature. In this removal motion I am asserting that

Hahn & Hessens counsel are equally liable with the Trustee


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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: All right, anything further, Ms. Galope?

MS. GALOPE: That is all, Your Honor.

THE COURT: Thank you.

MS. GALOPE: Im sorry, and I would like to point

out to my exhibits from the CD. For the record the CD was

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. They

still carry the burden to prove that assertion. And that

applies to many borrowers I would say. Thank you, Your

Honor.

THE COURT: Thank you. Mr. Indelicato.

MR. INDELICATO: Thank you, Your Honor.

THE COURT: First let me ask you do you move the

admission of the three exhibits in the binder?


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MR. INDELICATO: Yes, Your Honor.

THE COURT: Is there any objection, Ms. Galope, to

the admission of the Trustees three exhibits?

MS. GALOPE: I have no objections, Your Honor.

THE COURT: All right, theyre admitted without

objection. Thank you.

MR. INDELICATO: Thank you, Your Honor, Mark

Indelicato on behalf of the Liquidating Trustee. Your Honor,

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. He has not

failed to perform his duties. 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


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to the various parties over the course of these proceedings

are the copies. We may have a few originals, but the vast

majority of the documents are copies. In fact in the

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 18th, 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 dont know what else to

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

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.


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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,


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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

Home Mortgage Bankruptcy proceeding as well. And Ill get to

that in a moment, Your Honor. But this is a large estate in

which there are large Creditors. Some of the Creditors were

owed in excess of $100 million dollars. Many of them were

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

but a puppet. He is a task master. Hes done the best he

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


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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. Ive 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

are the largest Creditors. There are plenty of distributions

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


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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

to. So, all I can tell Your Honor is that no, those loans

were not given away. New Century in fact received a small

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 dont 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. Im

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


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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

process as was testified to Mr. Jacobs. And if there were

any questions wed certainly hear about it.

Your Honor, lets talk a little bit about the

destruction motion because thats 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? We knew that this

case was coming to a close. 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


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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 theyre

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


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are some truths, but they are taken out of context. Yes, we

did have a Borrowers Committee in the American Home

Bankruptcy proceeding. It was a motion that was made, dually

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 lets do

what were doing in American Home. If people call and ask,

lets tell them we filed Bankruptcy, lets tell them, you

know, what we have about their loan, lets 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, were doing in fact in this case

more than they did in American Home voluntarily.


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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. So

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

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 Trustees

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


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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. Galopes second motion for

reconsideration. And since it is her motion I will turn it

over to her.

THE COURT: All right, Ms. Galope.

MS. GALOPE: Yes, Your Honor, I thought I was going

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. So lets move onto your second motion

for reconsideration.

MS. GALOPE: Id like to say this, you know, he kept

referring to the Kevin Cloyd letter. You know, talk is

cheap, Your Honor.


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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

reconsideration. If you have anything youd like to

highlight about the submissions that youve made in writing

you may do so now.

MS. GALOPE: All right, the second motion for

reconsideration, Your Honor, is Id 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.


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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. The counsels have

misunderstood the new case law. Either way the objections

are without basis and without merit. And Galopes second

motion should be allowed including claim number 4131. Its

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

Corning. It came to me very clearly when I read it

yesterday. The Owens Corning that details parallels, so many

parallels to the New Century borrowers claims. In Owens

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


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1999 while Mr. West bought his shingles in 2005.

Now, the Bankruptcy occurred in 2002. A

confirmation of the plan occurred before 2009. 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


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judged as adequate because it no longer was, it didnt serve

the purpose. The Debtors did not held claims when it was

published. 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 thats

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

were sent out and published. We did not get the actual bar

notices from the mail. We di

june 20 2013 transcript new century trs holdings 07-10416 kjc 6-20-13

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