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Receivership in SEC v. John V. Bivona, et al., Case No. 3:16-cv-01386-EMC

 

General Information

This is the website of successor Receiver, Kathy Bazoian Phelps. On February 28, 2019, Ms. Phelps was appointed as the Successor Receiver in the case of Securities and Exchange Commission v. John V. Bivona, Saddle River Advisors, LLC, SRA Management Associates, LLC, and Frank Mazzola, Case No. 3:16-cv-1386, in the United States District Court for the Northern District of California. The case was originally filed on March 22, 2016, and on October 11, 2016, Sherwood Partners, Inc. was appointed and served as Receiver until the appointment of Ms. Phelps as successor receiver.

The Receivership is imposed over the following entities: SRA Management Associates, LLC, and relief defendants SRA I LLC, SRA II LLC, SRA III LLC, Clear Sailing Group IV LLC, Clear Sailing Group V LLC, as well as the stipulating affiliated entities, Felix Multi-Opportunity Fund I LLC, Felix Multi-Opportunity Fund II LLC, Felix Management Associates LLC, NYPA Fund I LLC, NYPA Fund II LLC and NYPA Management Associates LLC.

The purpose of this website is to provide convenient access to information about the receivership, including status reports from the Receiver, copies of pleadings filed in the case, and Frequently Asked Questions (FAQs). The website will be updated periodically, and all creditors, investors and parties in interest are encouraged to check the website for updates. If you require further information not contained in this website, you may Contact Us.

 

Recent Updates 

 

May 13, 2020

Hearings were held by Zoom webinar on the following matters, which were resolved as follows:

  • Receiver’s Motion for (1) Final Approval of Receiver’s Plan of Distribution; and (2) For Order Approving Form and Manner of Notice, and Notice of Opportunity to Serve on Investment Advisory Committee (Doc. No. 570). The Motion was granted with two modifications that postpone decisions relating to the treatment of Failed Investment Claims and the treatment of the claim of Joshua Cilano.
  • Plaintiff Securities and Exchange Commission’s Objection to Receivership Claims by Michelle Mazzola and Joshua Cilano for Management Fees (Doc. No. 572). The Court granted the objection to the claim of Michelle Mazzola and postponed a decision of the allowance of the claim of Joshua Cilano.
  • Receiver’s Motion to Disallow Purported Guarantee Claims (Doc. No. 575). The Court granted the motion.
  • Receiver’s Motion for Instructions Regarding Investors Advisory Committee (Doc. No. 583). The Court approved the participation of Joshua Cilano on the Investment Advisory Committee.

 


 

May 11, 2020

The Court posted instructions for dialing into the Zoom hearing for the May 13, 2020 hearings. The instructions can be found here.


 

April 21, 2020

The Court issued the following notice regarding the May 13, 2020 hearing on the distribution plan and related matters, which are scheduled to go forward by Zoom Webinar on the scheduled date:

CLERKS NOTICE: Regarding the upcoming hearing for motions related to final approval set on 5/13/2020 (Docket Nos. 570, 572, 575, and 583), the Court will conduct same by Zoom Webinar. The general public will receive an invitation, posted on the docket, to appear in these proceedings. The participants in the "well" of the court will be deemed panelists with the ability to see and hear all other panelists. The listening and watching audience, including investors which wish to attend, will be deemed "Attendees." Attendees will have the opportunity to raise their virtual hand to speak, with permission from the Court, provided that person has given advance notice to the Court that they want to speak at the hearing. The Court directs the Receiver to notify all interested parties (including known investors) of the timing and nature of the 5/13/2020 hearing and to inform them that anyone wishing to speak at the hearing must notify Judge Chen's CRD via email: [email protected]  by 5/11/2020


 

March 20, 2020

Due to the corona virus, the Court has rescheduled the hearings on the following motions to May 13, 2020 at 10:00 a.m.:

  1. [570] Receiver’s Motion for (1) Final Approval of the Receiver’s Plan of  Distribution; and (2) for Order Approving Form and Manner of Notice; and Notice of Opportunity to Serve on Investment Advisory Committee
  2. [572]  SEC’s Objections to Receivership Claims by Michele Mazzola and Joshua Cilano for Management Fees
  3. [575] Receiver’s Motion for Disallowance of Guaranty Claims
  4. [583] Motion for Instructions Regarding Investment Advisory Committee

 


 

February 28, 2020

This Update is posted to provide a high level summary of the structure of the Plan. All investors and creditors are encouraged to read the terms of the Distribution Plan, and the following summary of the structure of the Plan is not intended to, and shall not, substitute the actual terms of the Plan. The Plan provides for the distribution of shares to investors and cash to creditors as set forth in detail in the Plan.

Under the Plan, investors will receive some of their claimed shares back if and only if an IPO event has occurred for a particular company in which shares are claimed, and creditors will receive some cash back. The number of shares to be returned to investors is not yet fixed as some of the shares held in the estate will need to be liquidated to create the Plan Fund as described in the Plan, which will be used to pay cash to administrative and unsecured creditors. Additionally, some of the shares will need to be liquidated to pay the tax liability associated with the sale and distribution of the shares.  It is therefore possible that some investors will not receive any shares following an IPO because the assessment under the Plan exceeds the remaining value of the particular company’s publicly traded share held by the estate, but this is unknown at this time and is dependent on the market value of the shares at the time of liquidation and distribution. Shares that remain pre-IPO at this time will not yet be distributed as the Plan requires that the shares first have an IPO or liquidity event prior to distribution. If the investor has purchased interests in shares that no longer have value because the investment company has failed and  will not have a liquidity event such as an IPO, the investor will receive nothing for those shares.

A final distribution schedule for each investment company will be filed with the Court and approved before any distributions are made, which will not occur until a Distribution Plan has been approved and shares are ripe for distribution under the terms of the Plan. Investors are encouraged to review the terms of the Plan and to consult the schedules of Allowed Claims attached to the Plan to evaluate the treatment of their particular claim.


 

February 27, 2020 

The Receiver filed a Motion for Final Approval of the Distribution Plan, which is set for hearing on April 7, 2020. Any opposition or response to the Motion must be filed no later than March 16, 2020. One of the provisions of the Plan provides for the formation of an Investor Advisory Committee (“IAC”) to consult with the Receiver regarding the liquidation of securities in connection with the Plan implementation. If you are interested in serving on the IAC, please submit an application to the Receiver by March 9, 2020 by email to [email protected] or regular mail to Kathy Bazoian Phelps, Diamond McCarthy, 1999 Avenue of the Stars, Ste 1100, Los Angeles, CA 90067. The IAC application must include: (1) the investor name; (2) mailing address; (3) email address; (4) phone number; and (5) brief statement of qualifications to serve on the IAC. Submission of an application to serve on the IAC is not a guarantee of a position to serve on the IAC.


 

February 7, 2020

A hearing was held on January 30, 2020 regarding the Receiver’s Motion for Instructions on the tax and plan issues. The Court authorized the Receiver to amend prior tax returns and to file qualified settlement fund tax returns. The Court also preliminarily approved the Receiver’s form of distribution plan that was attached to her Supplement as Exhibit “1.” The Receiver shall meet and confer with counsel for the SRA Fund Investor Group, the SEC and Progresso Ventures on certain revisions to the Plan discussed at the hearing and shall then file a motion for final approval of the distribution plan. The Receiver shall serve notice of the motion for final approval on all claimants.


January 27, 2020

The Receiver has filed her Interim Status Report for Fourth Quarter 2019.


December 26, 2019

The hearing on the Receiver’s Motion for Instructions has been continued to January 30, 2020 at 1:30 p.m. The Administrative Motion filed by the SRA Funds Investor Group was denied by the Court.


December 19, 2019

The Court continued the Receiver’s Motion for Instructions from December 19, 2019 to January 16, 2020 at 1:30 p.m. The Receiver has filed a Supplement setting for the legal analysis of tax and securities issues relating to the distribution issues in the case, which will be heard and considered by the Court on January 16, 2020. The Investor Group filed an Administrative Motion seeking turnover of reports relating to the tax and securities issues, and the Receiver has filed an opposition to that motion.


October 9, 2019

The Court granted the Receiver’s Motion to employ tax and securities professionals and continued the hearing on the Motion for Instructions regarding the tax opinion to December 19, 2019 at 1:30 p.m. The Court’s Minute Order from the October 8, 2019 hearing is located here.


October 8, 2019

The hearing on the Receiver’s Motion to (1) Employ Miller Kaplan as Tax Advisor; (2) Employ Schinner & Shain as LLP as Securities Counsel; and (3) for Instructions has been rescheduled for October 8, 2019 at 1:30 p.m.

The Court has also rescheduled the case management conference for October 8, 2019 at 1:30 p.m.

The Receiver has filed her Interim Status Report for Third Quarter 2019.  


August 29, 2019

A hearing was held on June 27, 2019 in connection with the proposed Distribution Plan. At the hearing, modifications were suggested to the plan, and the parties were asked to meet and confer regarding the proposed modifications. The Receiver was instructed to obtain an opinion regarding the tax consequences of the proposed plan. The Receiver has filed a motion to employ a tax advisor and securities counsel and for instructions regarding the tax opinion, which motion is set for hearing on October 10, 2019.

Following the sharing of that opinion with the SRA Investor Group, Progresso and other interested parties, the Receiver shall file a revised Plan of Distribution with the Court. 

A further case management conference is set for October 10, 2019 at 10:30 a.m.


July 1, 2019

A hearing was held on June 27, 2019 in connection with the proposed distribution plan. At the hearing, modifications were suggested to the plan, and the parties were asked to meet and confer regarding the proposed modifications. The Receiver was instructed to obtain an opinion regarding the tax consequences of the proposed plan by August 9, 2019, if possible. Following the sharing of that opinion with the SRA Investor Group, Progresso and other interested parties, the Receiver shall file a revised Plan of Distribution with the Court. The Court’s order is reflected in the Court’s Civil Minutes

On June 27, 2019, the Court also approved the Receiver’s Motion to Disallow Claims and the Stipulation with Progresso Ventures LLC regarding its claim.

A further case management conference is set for October 17, 2019 at 10:30 a.m.

 

Court Filings

Please click on the following links to view copies of:

            The Receiver’s Reports

            Court-Filed Documents

Receiver’s Proposed Plan of Distribution

 

 

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