LEO FOX, ESQ. (LF-1947)630 THIRD AVENUE, ISTIl FLOORNEW YORK, NEW YORK 10017(212) 867·9595

Presentment Date: August 25, 2009

UNITED STATES BANKRUPTCY COURTEASTERN DISTRlCT OF NEW YORK--------------------------------------------------------------)(IN RE:

ISACK ROSENBERG,

Chapter 11 09-46326 (CEC)

Debtor.

--------------------------------------------------------------)(

SillS:

NOTICE OF PRESENTMENT

PLEASE TAKE NOTICE, that on August 25, 2009, at 10:00 am, the undersigned shall

prescnt for signature and entry the within Order extending time to file the balance of the Initial

filings Schedules and Statements to and until September 30, 2009 to the Honorable Carla E.

Craig, Chief United States Bankruptcy Judge in her Chambers, United States Bankruptcy Court,

271 Cadman Plaza East, Brooklyn, NY 1120 I.

PLEASE TAKE FURTHER NOTICE, that objections, if any, to the rcliefsought shall

be in writing, served upon Leo Fox, Esq., 630 Third Avenue, 18th Floor, New York, New York

10017, together with proof of service thereof, in accordance with the Local Rules, and prior 10

such date filed with the United Slates Bankruptcy Coun electronically (with a hard copy

delivered directly to Chambers).

.. -~'- .

alQ,..-_~~Ut .4:i6..t!.Ai J.b.%.!piliib!. I WI!. §j.N. It. .A.M. t .,.,~;,.,

LEO FOX, ESQ. (LF-1947)630 THIRD AVENUE, 18TH FLOORNEW YORK, NEW YORK 10017(212) 867-9595

UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF NEW YORK

--------------------------------------------------------------)(INRE:

ISACK ROSENBERG,

Debtor.

--------------------------------------------------------------)(

SIRS:

Presentment Date: August 25, 2009

Chapter 11 09-46326 (CEC)

NOTICE OF PRESENTMENT

PLEASE TAKE NOTICE, that on August 25, 2009, at 10:00 am, the undersigned shall

present for signature and entry the within Order extending time to file the balance of the Initial

filings Schedules and Statements to and until September 30,2009 to the Honorable Carla E.

Craig, Chief United States Bankruptcy Judge in her Chambers, United States Bankruptcy Court,

271 Cadman Plaza East, Brooklyn, NY 11201.

PLEASE TAKE FURTHER NOTICE, that objections, if any, to the relief sought shall

be in writing, served upon Leo Fox, Esq., 630 Third Avenue, 18th Floor, New York, New York

10017, together with proof of service thereof, in accordance with the Local Rules, and prior to

such date filed with the United States Bankruptcy Court electronically (with a hard copy

delivered directly to Chambers).

.. ~ .. - ..~ .

PLEASE TAKE FURTHER NOTICE, that ifobjections are timely filed, the Court

may schedule a hearing on the objections.

.. ';,~ - ......Dated: New York, New York

August 12,2009Yours etc.,

lsi Leo FoxLeo Fox, Esq. (LF-1947)Prospective Attorney for Debtor630 Third AvenueNew York, New York 10017(212) 867-9595

Office of the United States TrusteeEastern District ofNew York271 Cadman Plaza East,Suite 4529Brooklyn, NY 11201

Daniel J. FlanaganPolsinelli Shughart, PC700 W. 47th Street, Suite 1000Kansas City, MO 64112

Joseph C. SavinoLazer, Aptheker, Rosella & Yedid, p.e.Melville Law Center225 Old Country RoadMelville, NY 11747

H:lRcccPli~n~UJ.rd~I\lSACK\Noticc of Prelcntmcnt 8.1 1.09.wpd~ ~V' ... --

2

LEO FOX, ESQ. (LF-1947)630 THIRD AVENUE, 18TH FLOORNEW YORK, NEW YORK 10017(212) 867-9595

UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF NEW YORK

--------------------------------------------------------------)(INRE:

ISACK ROSENBERG,

Debtor.

--------------------------------------------------------------)(

Chapter 11 ReorganizationCase No. 09-46326 (CEC)

ORDER EXTENDING TIMETO FILE SCHEDULES

Upon the annexed Application of the Debtor, by its attorney Leo Fox, Esq., pursuant to

Section 521 of the Bankruptcy Code, and for good cause shown, it is hereby

ORDERED, that the time for the Debtor to file the balance of the initial filings, the

Schedules and Statements is hereby extended to and until September 30,2009.

Dated: New York, New YorkAugust _, 2009

Hon. Carla E. CraigChief, United States Bankruptcy Judge

H:\R.cccptioR.mydocsIlSACK\Order re ext 8.II.09.wpd

LEO FOX, ESQ. (LF-1947)630 THIRD AVENUE, 18TH FLOORNEW YORK, NEW YORK 10017(212) 867-9595

UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF NEW YORK

--------------------------------------------------------------XIN RE:

ISACK ROSENBERG,

Debtor.

---------------------------------------------------------------X

TO THE HONORABLE CARLA E. CRAIG,CHIEF UNITED STATES BANKRUPTCY mDGE

Chapter 11 ReorganizationCase No. 09-46326(CEC)

APPLICATION SEEKINGEXTENSION OF TIME TOFILE INITIAL FILINGS,SCHEDULES ANDSTATEMENTS

The above Debtor by Leo Fox, its prospective attorney, r~spectfully represent, as follows:

I. On July 28, 2009 the above Debtor filed a Petition under Chapter II of the

Bankruptcy Code.

2. By this Application, the Debtor seeks an extension to September 30,2009 to file

the balance of the initial filing papers and the Schedules and Statements. The time for filing

these papers is presently August 12,2009, fifteen days after the Chapter II filings.

3. The reasons for the extension request are as follows: The filing was made on an

emergency basis to stay the UCC sale of the Debtor's principal assets consisting ofhis equity

interest in several corporations or limited liability companies, which was scheduled for July 28,

2009. Thus, the filings consisted of the petition pages and a matrix list of creditors. The Debtor....... -61, .;. ..-.

must still file "the balance of the initial filings, the Schedules and Statements.

4. The Debtor and his brother, Abraham Rosenberg, a Debtor in a related to case,

which is also pending before this Court, own the equity interests of Certified Lumber

Corporation, (Certified) Boro Park Home Center Corporation (Boro Park) and Waterfront Realty

II (Waterfront) LLC, large corporate business entities conducting business in Brooklyn, New

York. The Debtor is most familiar with the financial affairs of the Debtor and his brother,

Abraham. The Debtor invested in two real estate developments owned by Maspeth Properties

LLC and McCaren Park Mews LLC, two condominium developments. Lenders entitled RCGLV

Maspeth LLC, RCG Longview, II L.P. and Galster Funding, LLC advanced a portion of the funds

to the Debtor for the condominium developments. These lenders had obtained a security interest

in the Debtor's and Abrahams' equity interests of Certified, Boro Park and Waterfront and other

collateral to secure the loans. The lenders have alleged that the toans are in default and that there

is due in excess of $20,000,000. The VCC sale of these equity interests had been scheduled by

these Lenders for July 28, 2009 which was stayed by the Chapter 11 filing.

5. On Saturday night, August 1,2009 the Debtor was rushed from upstate New York

to Lenox Hill Hospital in Manhattan and underwent major surgery on August 3,2009. The

Debtor remained in the hospital for over a week and is presently recuperating at home. As

advised by his Debtor in his letter dated (Exhibit A), the Debtor must remain at his home

recuperating until at least September 30,2009.

6. The Debtor has full knowledge of all of the assets and liabilities of the Debtor and

his brother, Abraham, in a way no other person, including Abraham, has. It is essential that the

DebtoI be co.Qs}:llted re~~d}ng the filings, petitions and schedules. There is accordingly, need to

extend the time to make these filings until September 30,2009. It is believed that the matrix list

-2-

is generally accurate so that all creditors are aware of this Chapter 11 filing.

7. The undersigned will also be requesting that the United States Trustees Office

reschedule the Debtor's interview and the 341 Meeting to permit creditors and parties to be able

to review the schedules and statements before the Section 341 Meeting.

8. This request for an extension is the first request for the extension of time to file

the filings, Schedules and Statement of Financial Affairs.

9. For good cause shown, Section 521 permits the granting of an extension and the

Debtor requests that the Court grant the request and enter the Order submitted herewith.

10. No prior application has been made to this or any other Court for the relief

requested herein.

WHEREFORE, the Debtor respectfully requests that this, Court grant the relief requested

.herein and such other and further relief as this Court may deem proper.

Dated: New York, New YorkAugust 12 , 2009

LEO FOXProspective Attorney for Debtors

By: sILeo FoxLeo Fox (LF-1947)

630 Third Avenue, 18th FloorNew York, NY 10017(212) 867-9595

H:\ReceptioR_mydocs\ISACK'v\pplicatioR seeking ext 8. I I.09.wpd

-3-

122 EAST 761lo STREET. SUITE IB A. DOUGLAS HEYMANN, M.D., r.A.C.S.NEW YORK. NEW YORK 10021 JOSEPH C.IRACI, M.D., F.A.C.S.

MARK P. ZOLAND, M.D., F.A.C.S.SERGEI V. DOLGOPOLOV, M.D.,F.A.C.s.

VALERY DRONSKY, M.D.

August 10, 2009

Re: Rosenberg, Isack

To Whom It May Concern:

PHONE (212) 628-8771FAX (212) 794.Q136

This is to verify that Mr. Isack Rosenberg had surgery and is under my surgical care as of08/01/2009. He will be seen in my office on 08/14/2009 and may not return to work untilfurther notice.

Additional comments: Mr. Rosenberg had extensive surgery at Lenox Hill Hospital on08/03/2009. He was discharged from the hospital on 08/1012009. Mr. Rosenberg is still under mycare and will be cleared, by me after future evaluations, to continue work not before 09/30/2009.

If any further information is required, please contact the office at (212) 628-8771.

Sincerely,

Surgical Associates of New York

SURGICAL ASSOCIATES OF NEW YORK, LLP

A

UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF NEW YORK

--------------------------------------------------------------)(INRE:

ISACK ROSENBERG,

Debtor.

--------------------------------------------------------------)(

Chapter 11 ReorganizationCase No. 09-46326 (CEC)

AFFIRMATION OF SERVICE

LEO FOX, affinns under penalty of perjury as follows:

On August 12,2009, I served the within Order Extending Time to File Schedules, Notice ofPresentment and Application Seeking Extension of Time to File Initial Filings, Schedules andStatements by Fax and served by First Class United States Mail, postage prepaid, to each of thepersons identified below:

Office of the United States TrusteeEastern District ofNew York271 Cadman Plaza East,Suite 4529Brooklyn, NY 11201

Daniel J. FlanaganPolsinelli Shughart, PC700 W. 47th Street, Suite 1000Kansas City, MO 64112

Joseph C. SavinoLazer, Aptheker, Rosella & Yedid, P.C.Melville Law Center225 Old Country RoadMelville, NY 11747

Affinned: New York, New YorkAugust 12, 2009

sILeo FoxLeo Fox

H:\Reeeption_mydocs\lSACK\AOSNotiee of Resentment. Order. etc 8.12.98.wpd

POLSINELLI SHUGHART PCAlIome)'s for ReG Longview lJ, L. P..RCGLV Mw,pelh LiC, andGalster Funding. LL.C.7 Penn Plaza. Suite 600Nc\\ York. New York 10001(212) 684-0199Fax: (212)684-0197Daniel J. Flanigan

I-Icltring Dale: SClltcmbcr 23, 2009HCllring Time: 2:30 p.m.Return Date: September 18,2009

UNITED STATES BANKRUPTCY COURTEASTERN IllSTRICT OF NEW YORK

- - - - - - . - - - - - - - - --------------- -.\

In rc:Chapter J I

ISACK ROSENI1ERG,

Debtor.

- - - - - - - - - ~ - - - - ~ - - - - - - - - - - - - - - --x

Case No.: 09-46326 (CEC)

NOTICE OF MOTION

PLEASE TAKE NOTICE that upon the annexed motion. creditors RCGLV Maspeth

LLC, ReG Longview II, L.P" and Galster Funding. L.L.c. (collectively referred to herein as

·'Lenders"). b) and through their undersigned counsel. \\ ill move this Coun before the

Honorable Carla E. Craig, Chief United States Bankruptcy Judge, in the United States

Bankruptcy Court. Eastern District of New York. 271 Cadman Plaza East. Brooklyn. Ne\\ York,

on September 23. 2009 at 2:30 p.m., or as soon thcreatler as counsel can be heard. for entry of an

order appointing an examiner or, in the alternative. for conversion or dismissal of the case

("Motion") and for such other and further relief as this Coun may decm just and proper.

PLEASE TAKE FURTHER NOTICE that any rcsponsivc papers should be filed with the

Court. with a copy to chambers. and served on undersigned counsel for Lenders so as to be

received at least three (3) business days prior to the hearing date. Such papers shall conform to

1784]171

thc Fcderal Rules of Bankruptcy Procedure and identify the party on whosc behalf the papers are

submitted. the nature of the response, and the basis for such response.

Dated: August 27. 2009

171\4317 I

POLSINELLI SHUGHART PC

By: sf Daniel J. FlaniganDANIEL J. FLANIGAN7 Penn Plaza. Suite 600New York. New York 10001(212) 684-0199Fax No. (212) 684-0197

Attorneys for RCG Longvie\\ II, L.P.. RCGLVMaspeth LLC, and Galstcr Funding. L.L.C.

2

POLSINELLI SHUGHART PCAtlorneysfor ReG Longview II, L.P..RCGLV Ma<;pelh LLC, andGalster Funding. L.L.c.7 Penn Plaat. Suile 600New York. Nc\\ York 1000 I(212) 684-0199Fax: (212)684-0197Daniel J. Flanigan

I-Ic~lrillg Datc: September 23, 2009Hearing Time: 2:30 p.m.Relurn Date: September 18,2009

UNITED STATES IlANKRUPTCY COURTEASTERN DISTRICT OF NEW YORK

- - - - - - - -- - - - - - - - - - - - - - - - - - - - - --xIn rc:

Chapter ItISACK ROSENIlERG,

Debtor.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - --x

C:ISC No.: 09-46326 (CEC)

MOTION OF CREDITORS FOR APPOINTMENT OF EXAMINER, OR, IN THEALTERNATIYE, FOR CONVERSION OR DISMISSAL OF THE CASE

Creditors RCGLV Maspeth LLC (--RCGLV··). RCG Longvic" [I. L.P. ("RCG

Lr'). and Galster Funding. L.L.c. ("Calster") (ReG II. ReGLV. and Galster being

sometimes collectively referred to herein as "Lenders') by and through their

undersigned counsel. submit the following in support of their Motion ofCrcdilors For

Appointment or Examiner. or. in the Alternative. For Conversion or Dismissal orthe

Case ("Motion"):

I. On July 28. 2009 (""Petition Date"), the Debtor commenced a voluntary

case under chapter II ortitle II. United States Code (the "Bankruptcy Code"). Debtor

continues in possession or its properties and is continuing to operate and manage its

business as a debtor in possession pursuant to 11 USc. §§ 1107 and 1108.

1784218 I

2. The Court hasjurisdictiol1 over this matter pursuant 10 28 U.s.c. §§ 157

and 1334. This is a core proceeding pursuant to 28 U.S.C. § I57(b)(2)(A) and (0).

3. The statutory predicatc for this Motion is II U.S.c. § 1104(c) and §

1112(b).

Background

Isack Rosel/berg. Abraham Rosel/berg and )'icchock Schwan: Cases

4. lsack Rosenbcrg ("JR") is the brother and business partner of Abraham

Rosenberg ("'AR·'). the debtor in Casc No. 09-46327 (CEC), filed the same day as IR's

case. IR and AR are also business associates of Yitzchock Sch\\artz ('"Schwart.t'")

against \\ hom a perhaps collusive or othcf\\ ise improper imolumar) case was tiled by a

singlc creditor on the same day, July 28, 2009. as Ihe IR and AR voluntary cases \\ere

filed. AJllhree cases were filed in order 10 invoke the automatic stay to prevent a vee

sale of Lenders' collatcral scheduled to occur at 10:30 a.m, on the date of filing. A

limeline of the events described in the following paragraphs is attached as Exhibit A,

Maspefh Preferred Equity Investment, McCaren Loan

5. Thc vce Sale and the bankruptcy Iilings were the culmination ora long

and painful series ofevents. IR o\\es the Lenders in excess of 22,000,000 arising out

of:

17Jl.l22f11

•

•

RCGLV's preferred equity investment in a condominium project inWilliamsburg known as Olive Park Condominium owned byMaspeth Properties LLC, a New York limited liability company("!\1:lslleth LLC') located at 84 and 100 Maspcth Avenue.Brooklyn. Ne" York ('"Maspcth ProjecC): and

a loan 10 IR b) ReG 11 and Galster on a condominium project inWilliamsburg known as McCaren Park Mews Condominiumowned by McCnren Park Mews LLC, a New York limited liability

2

company ("McC:lrcn LLC") located at 214 North 1Ith Street,Brooklyn. New York ("McCllrcn Project").

Thc amount owcd on the Maspeth-related obligations ("Maspeth Obligations") exceeds

57,000.000 and on the McCaren-relatcd obligations ("McCarcn Obligations") exceeds

$15,000,000,

Maspelh Collateral

6. As collateral for the preferred equit) obligations of Maspeth LLC and IR

to RCGLV, IR and AR granted to RCGLV a securit) interest in the follo\\ing collateral:

• IR's Class B Member Interests in Maspeth LLC:

• 100% of the ownership interests in Boro Park Home CenterCorporation. a Ne\\ York corporation that owns and operates a "homecenter" business at 4601 IC\\ trecht A\cnue. Brookl)n, Ne\\ York("80ro");

• 100% of the ownership interests in Certified Lumber Corporation, aNew York corporation that owns and operates a lumber yard on the\\aterfrolll at 484 Kent Avenue alk/a 1-9 Division Street. Brooklyn.New York ("·Cerlil"icd"):

• I00% of the 0\\ nership interests in Waterfront Realty II LLC thatowns and operates a \\arehouse property adjacent to Certified'sproperty at 462 Kent Avenue, Brooklyn, New York ("'Waterfront")!

McCaren Collateral

7. As collateral fort he M(.,'Carcn Obligations. IR. AR. and SchwartL granted

to RCG II and Galster a securit) interest in the follO\\ ing collateral:

• 100% of the ownership interests in McCaren LLC;• 100% of the ownership interests in Certified:• \00% of the ownership imerests in Waterfront.

I Waterfront is actually nOilocated 011 thc waterfront while Certified is so located, a source ofalle,lstoccasional confusion of the two entities.

1784128 I 3

Maspeth De/al/JI, Forbearance

8. RCGLV is the Class A Member of Maspcth lLC. and IR \\as. until (he

filing of his bankruplcy petition. the Class B Member of Maspeth LLC, although now. as

provided in sections 6.3.2 and 6.1.2 of the Maspeth LLC Operating Agreement. IR is no

longer a member bUI holds a mere "Economic Imerest"" in Maspeth LLC as his

b<lnkruplC) filing conslituted an Event oflnvolunlary Withdrawal under the Maspelh

LLC Operating Agreement. The Operming Agreement of Maspeth LLC required th::lt the

Class A member's imestment be redeemed on October I. 2007. nearl) 1\\0 ) ears ago.

and further required IR "10 contribule such funds to [Maspeth I as are necessar) to allow

for the timely redemption of the Class A Member's Membership Interest." Section 6.9.

as amended b) the Fourth Amendment to the Maspeth LLC Operating Agreement

Maspelh LLC failed to redeem RCGLV's preferred equil) inveSlment and IR failed 10

contribute the necessary funds.

9. NOh\ ithstanding Maspeth LLCs and IR's defaults, RCGLV entered into a

Forbearance Agreement in Jul) 2008 \\ ilh IRand AR \\ hereb) RCGLV gran led an

additional period oftil11e, until September 30. 2008, for Maspeth LLC and IR (0 pay their

obligation but IR and Maspeth LLC failed to do so.

AlcCaren De/ault. Forbearance

10. RCG 11 and Galster loaned IR $ t3,000.000 for the purpose of assisting

him in completing construction of the McCaren I)roject (though the Project is still

incomplete and being Foreclosed on b) its mortgage lender as discussed more fully

below}. The McCaren LLC is owned by IR and Yitzchock Schwartz. The McCarcn loan

was due and payable on March I. 2008 but IR failed to pa) as agreed.

1784218 1 4

II. Notwithst<ll1ding lR"s default. RCG II and Galster entcrcd into a

Forbearance Agreement in July 2008 \\ hereb) RCG II and Galster granted an additional

period of time. until August 28. 2008. for IR to pa) his obligation but IR failed to do so.

UnallfhQri:ed Mortgages

32nd Street Mor/gage

12. On or about November 17.2007. prior to the time the Forbearance

Agreements \\erc signed. Debtor, Maspeth LLC. Boro. Waterfront and another cntit) that

is. on infonnation and belief, owned and controlled by IR and AR, Franklin Realty

COrp.,l executed and delivered to 32nd Street Investors III LLC r'J2lld Street'") a

Mortgage. Assignment Of Leases And Rents And Securit) Agreement to secure a debt of

$6.000.000 ("J2nd Street Mortgage"). The 32nd Street Mortgage purported to gmnt

32nd Street a security interest in. among other things, the rcal property owned by

Maspeth LLC. Boro. and Waterfront. the ownership interests in which were all pledged at

that time to Lenders. The Lenders believe the 32nd Street Mortgage violated \arious

provisions of the Maspeth LLC Operating Agreement and the Pledge Agreements that

secured the Maspcth LLC and McCarcn LLC Obligations. But. whether the Lenders are

correct in that beliefor not. in any case IR and AR did not disclose the existence of the

32nd Street Mortgage \\ hen negotiating and entering into the Forbearance Agreements.

Tellingly, the 32nd Street Mortgage was 110t recorded until September 8, 2008. aOcr the

Forbcarance Agreements were signed, thus making it impossible lor thc Lenders to

discover its existence until after that time. The Lenders believe that the evidence

ovemhelmingly dcmonstmtes that IR. AR. 32nd Street. Maspeth. Boro. and Waterfront

J Lenders believe that Franklin Realty is also owned by AR and IR and that it may operatc a specializcdcatcring business or other businesses.

t7SJllS I 5

conspired to delay the recording and to otherwise hide the existence of the 32nd Street

Mortgage from Lenders in order to induce Lenders not 10 declare default and exercise

Iheir remedies al thai time and 10 induce Lenders to enter into the Forbcar.mce

Agreements.

UnalllllOri=ed MorlKoges

Nee MorlKoge

13. In addition. the Lenders ha, e disco'vered thaI. on or about Februar) 12.

2008 (1'0110\\ ing the fa-ilun: to pa) the redemption amount on OClober I. 2007 but prior to

the Forbearance Agreement in July 2008). Aron DClltsch (the designated Manager or

Maspeth LLC pursuant to Section 5.1.1 or Operating Agreement) and Maspeth LLC. "ith

the definite kno" ledge and participation of! R and perhaps of AR as "ell. executed and

delivered to NCC Capital. LLC ("NCe') a CollalCral Mortgage to secure an

indebtedness 01'$1.800.000.00 (Ihe "NCe Morlgagc"). Thc NCC Mortgage purported

to gr.tnt NCe a security intcrest in. among other things. 35 condominium units and other

real property o"ned b) Maspeth LLC.

14. As with the 32nd Street Mortgage. IR and AR did not disclose the

exislence orthe NCe Mortgage to the Lenders at the time orthe Forbearance

Agreements. Just like the 32nd Street Mortgage. the NCe Mortgage "as nOI recorded

until November 20.2008. much later than it was signed and delivered. in order. the

Lenders believe, to keep it hidden from the Lenders until after the Forbe,lnmce

Agreements ',"cre signed. Further support for this fraudulent moti,ation is the faCllhat a

related February 12.2008 Mortgage bet\\een NCC and Franklin Reali) Corp. "as

recorded almost immediately upon execution.

17842281 6

State Court Litigation and vce Sale

15. In earl) 2009 thc Lenders filed a la\\ suit in the Supreme Court ofNc\\

York. King·s Count). Judge Carol)n E. Demarest. Index No. 2324/09 against IR. AR.

Maspeth LLC. WaterfronL13oro. Certified. Aron Dcutsch. 32nd Street. and NCe seeking

various forms of relief due to the events and transactions described above ('·State Court

Lilig:ltion .").

16. The Lenders also scheduled a UCC Sale of the collateral ("uee Sale··)

for March 25. 2009: howc\er, a temporary restraining ordcr \\as entered in the State

Court Litigation enjoining the sale. At the preliminary injunction hearing on April 28.

2009. the sale was rescheduled to July 28. 2009 pursuant to a stipulated order entered into

in the State Court Litigation. giving JR and AR an additional 90 dais. It \\as perfectl)

clear that there \\ould be no further postponements of the UCC Sale and Ihat on July 28

the debtors would either have to either pay in full or file bankruptcy. Although IR and

AR made a last-minute futile attempt to persuade Judge Demarest. and Sch\\artz made

such an attempt in the Appellate Division of the Supreme Court of Ne\\ York. Second

Judicial Department, to seek a further postponement of or slay of the UCC Sale, their

efforts predictabl) and utterly failed.

Filing.\· Were Not The Result OjAn "Emergency"

17. Thus, JR, AR, and Sch\\artz had several months in which to prepare for

thcir bankruptcy filings. There was nothing '"cmergency" about their filings except the

··emergency·· caused b) their own pcrsistem refusal to honor ill1Y agreement or obligation

on their pan including a stipulation solemn!) entered into before Judge Demarest. There

l184nSI 7

\\as thus no excuse \\ hatsoc"er for the deficient (indeed. virtuall) non·cxistcnt)

information fried with their bankruptcy petitions.

CI/rre1l/ Sitl/lltion ojLenders' CollalerallProperly O/The Bankruptcy E'stOles

18. The busincss interests of IR and AR. the ownership intcrcsts that are

collateral for the more than $22.000.000 o\\ed to Lenders, arc rapidly dctcriorating ifnot

collapsing. evidenced by the following:

Waler/ron!

19. Capital One [lank. N.A. has filed a mortgage foreclosure action against the

Waterfront Property to enforce an outstanding obligation in the principal amount of

S3.579.627.11 plus interest from and after Januaf) I. 2009. Capital One's counsel has

informed Lenders' eounsclthat it intcnds to file a Motion for Summary Judgment

momentarily.

20. Moreover. the 32nd Street Mortgagc \\-as "spread" to Waterfront's

propert) by an instrument dated September 8. 2008. further Undenllining Lenders'

collateral position as the pledgee of the ownership interests in Waterfront since, if the

NCC Mortgage is \ alid as against WaterfronCs propc:rt) and Lenders. Lenders are

structural!) subordinated to it. Lenders belie\e that the Nee Mortgage is in default and

could be subject to a foreclosure <lction at any time ifone has not already been tiled.

21. Mortgage foreclosure actions pursuant to these mortgages rna) not be

subject to thc automatic sta) of the AR and IR bankruptcies as the) seck foreclosure

against Waterfront's propert), which is not in bankruptcy.

22. Thus. the o\\nership interests of AR and IR ill Waterfront. which are

collateral for the Maspeth and McCaren Obligations. are. at the very best, rapid I)

178·mSl 8

deteriorating in value (with interest on the mortgage obligations probably accruing at

default rates and substantial unome) s' fees and other costs being incurrcd). and at \\orst.

likely to soon be elTectively c1iminated and rendered entirely \\orthless.

Certified

23. The NCe Mortgage was spread to the Certified's property b) an

instrument dated November 14, 2008. further undermining Lenders' collateral position as

the pledgee of the 0\\ nership interests in Certified since. if the 32nd Street Mortgage is

valid as against the Certified's property and Lenders. Lenders are structurall)

subordinated to it. Lenders believe thm the 32nd Street Mortgage is in default and could

be subject to a foreclosure action at an) time ifone has not alread) been filed.

24. Also. Lenders believe that there is another mortgage. senior to the NCC

Mortgage. in favor of l3ank ofSmithto\\ n securing an obligation in the original principal

amount of S1.000,000. Lenders have no kno\\ ledge of the status of this mortgagc_ but.

given everything else that has happened and continues to happen, there is no reason to

believe that thc mortgage is not nO\\. or will not soon be. in default.

25. Mortgage foreclosure actions pursuant to thesc mortgages may not be

subject to the automatic stay of the IR and AR bankruptcies as they seck foreclosure

against Certified's proper!) _\\ hich is not in bankruptc).

26. Thus, thc o\\nership interests of IR and AR in Certified, which are

collateral lor the Maspeth and McCaren Obligations. arc. at the ver) best, rapid I)

deteriorating in value (\\ ith interest on the mortgage obligations probably accruing at

default rates tlnd substantial attorneys' fees and other costs being incurred), and at worst.

likely to soon be efTecli\el) eliminated and rendered entirely \\ orth less.

17S422111 9

j\fcCaren Project

27. The McCnren Project is subjcct to a mortgage securing obligations in

excess of $42.000.000 held by Capital One Bank. N.A. Capital Onc's counsel has

infonned Lenders' counsel that it intends to file a Motion for Summary Judgment

momentarily.

28. The mortgage foreclosure action may not be subject to the alltommic stay

ofthe IR. AR. and SchwartJ" bankruptcies as it seeks foreclosure against the property of

MeCaren LLC \\hich is nOI in bankruptcy.

29. Thus. the ownership interests of IR and Schwartz in the McCarcn LLC.

\\ hich are collmcral for the MeCaren Obligations. arc. mlhe VCl") best. rapidly

deteriorating in value (with interest on the mortgage obligations probably accruing m

default rates and substantial attorneys' fees and other costs being incurred). and at worst.

likely to soon be effccti\ely eliminated and rendered entirely worthless.

80ro

30. The 32nd Street Mortgage also encumbers the 13oro's property. Lcnder$

believe that the 32nd Street Mortgage is in dcfault and could be subject to a foreclosure

action at any time ifone has not alread) been filed.

31. AIso, Lenders believe that there is another mortgage, senior to the 32nd

Street Mortgage, in favor of Brooklyn Federal Savings Bank securing an obligation in the

original principal amount of$1.900.000. Lenders have no kno\\ledge of the status of this

mortgage. but. given everything else that has happened and continues to happen, there is

no reason to believe that the mortgage is not now, or will not soon be. in default.

I78·U28 1 10

32. Mortgage foreclosure actions pursuant to these Mortgages may not be

subject to the automatic stay orthe IR and AR bankruptcies as the) seek foreclosure

against Boro's property. which is not in bankruptcy.

33. Thus. the ownership interests of IR and AR in Boro. which arc collateral

for the Maspeth Obligations. are. at the \ cry best. rapid I) deteriorating in value (" ith

interest on the mortgage obligations probably accruing at default rates and substantial

attome) s' fees and othcr costs being incurred}. and at "orst. likel) to soon be effccti\ely

eliminated and rendered entirel) worthless.

Ma~pelh Project

3..L In the State Coun Litigation. Judge Demarest appointed Frank Rcill). one

of Lenders' employees. as co-manager. "itll Aron Deutsch, of the Maspeth Project, but

the appoimmcm \\a5 to no avail as Deutsch and IR. through his son Michael Rosenberg.

ha\e simpl) stone\\alled and stiff-armed Reill) at every tum.) For example. after Reilly

was informed by the property manager at the Maspeth Project that some of the rental

tenants had givcn their month I) rental checks to the propert) manager. he instructed the

propen) manager that he should keep possession orthe rent payments and that the) be

used to pay the Maspeth Project's future common area obligations. Reilly informed

Deutsch and Michael Rosenberg orthase instructions. Michael Rosenberg instead.

\\ithout any authorit). demanded that the rent payments be sent to him on behalrof

Maspeth LtC and threatened the property manager" ith criminal prosecution if they

"ere not immediatel) tumed 0\ cr. Despite Reilly's instructions to the contral) and 0\ cr

3Actually, RCGLV has had the right under the Operating Agrt.o.ement to act as the sole ~\'Ianager of the~\"aspeth LLC follo\\ing the failure to p3) the redemption amount: and Judge Demarest. in an effort.Lendcrs belicve.to "cut thc bab) in half' on this issue. chose the oo-manager approach instead. "..hich haspro\ed unerly ineffecti\ e.

178422~ I II

his protest. thc propert) manager turned the rC_nl pa) ments 0\ er to Michael Rosenberg.

Reilly e-mailed Mr. Rosenberg and told him Ihat those proceeds were nOlto he llsed for

any purpose without his approval. Reilly has not received an) information about what

happened 10 those monies.

35. Meanwhile, Deutsch has infonned Reilly Ihat he is no longer Ihe Manager

of Maspcth LLC. He told Reilly that he has tumed overall orthe Maspeth LLC records

and control to lsack Rosenberg's son. Michael Roscnberg. Neither Judge Demarest"s

Order nor thc Operating Agreement authoril.cs or contemplates that Michael Rosenberg.

a stranger to Maspcth LLC in every respect. act as Maspeth LLCs Manager, the grossest

possible usurpation.

36. The Maspelh Project is experiencing significant waler damage because of

apparent construction defects. The water damagc has already caused two afthe top naar

balconies to partially collapse to the street below. fortunatel> not causing injul') to an)

third·parties. RCGLV is infonncd b) its engineering consultant that additional repairs

arc necessary ta stap the damage from continuing and ta ensure that additional collapses

\\ ill not occur.

37. RCGL V has discovered other significant \\ater issues at the Maspeth

Project. Tenants or unit owners on the top naor are complaining that water continues to

leak into their units. If this situation is nOl corrected. the property will deteriorate and

Maspeth LLC may be exposed to claims from the tenants or unit owners. In addition. the

air conditioning units in the hallways were incorrectly installed and cannot be Llsed

\\ithout causing further. significant leaks. As a result. they have been disabled and the

haIh\a)'s have no air conditioning. causing numerous tenant and condominium unit

17&41281 12

0\\ ncr complaints. All of these issues need to be immediately investigated and remedied

to protect the Maspeth Project.

38. Until recentl) a fe\\ sales \\ere occurring. to the benefit ofall involved.

Ilowevcr, s(lles of condominium units at the Maspeth Project are now at a standstill since

a $300.00 mechanic's lien claim has been filed that makes sales of additional units

impossible until it is cleared. At least t\\-O sales have already been lost as a result of the

lien.

39. To the extent the NeC and 32nd Street Mortgages are valid against the

Property and RCGLV. Lenders believe they are in default and now due and payable and

perhaps accruing default intercst and altornc) s' fees and other costs.

40. Thus, the ownership interests of IR in Maspeth LLC, which are collateral

for the Maspeth Obligations. and RCGLV's Class A 0\\ nership interests as \\e1l. are. at

the very best. rapidly deteriorating in value. and, at \\orst, likely to soon be effectively

eliminated and rendered entirel) \\ orthlcss.

General Sil1Wlion

41. The above ,Ire just the real estate isslles. BUI Horo and Certified arc also

operating businesses \\ ith all the complements of operating businesses such as trade

creditors and employees. Lenders have almost no information on the financial or other

condition of these businesses including ho\\ much monies that IR and AR. and their

relati\ es and other affiliates and insiders. may be extracting from those businesses.

Appointmcnt Of An Exnminer Is In Thc Interest OfCredilors

And Olher Interests Of The EShlte

42. As is evident from the abovc rccitmion. the Lenders' collalcral and the

propert) oflhis estate consists prirnaril) ofcquity interests in various entities that operate

171\4228 I 13

various businesses including a home center business. a lumber )ard busincss. a

\\arehouse rental operation (Waterfront). an unfinished condominium (the McCarcn

I)roject). a completed condominium \\ ith remaining unsold units that are being rented and

also offered for salc (thc Maspeth Projecl). and other busincsses operated by Franklin

Realty or through other entities. Most ifnot all of the Debtors' busincsses arc in a state

of crisis. The Lcnders and the other credilors in Ihc case need as much infonnation as

fast as they can obtain it in order to have any chance of prevcnting further deterioration.

and perhaps complete devaluation. of their interests in the property of the estalc.

43. The Court may appoint an Examiner under Bankruptcy Code § II04(c)(I)

if such appointment is in the interests of creditors. an) equily securil) holders and other

interests of the estatc. There arc no cquity security holders and the appointment is clearly

in the intcrest of the c.reditors and all othcr legitimate interests of the estate.

Failure To File IIiforll/a/iol/all/ems Required By 71Je Bankruptcy Code And Rille."

44, Since the filing ofthc bankruptc) cases on Jul) 28.2009. it is fair to sa)

that IR and AR have provided essentially no information, and there has becn essentially

no compliance \\ ith the filing requirements of the Bankruptcy Code and Rules, As thc

Lenders have made clear in olher pleadings, they do not believe Ihat II{'s allcged

incapacit) should prc\ent the required infonnation from being timel) filed. and IR's

incapacily provides no legitimate excusc whatsoever for AR's noncompliance, This is

just a continuation of their successful campaign of avoidance. dela) , obfuscation. and

\vorse that IR and AR have engaged in for scveral years now, and it will continue until

the Court puts a stop to it. Inherent in debtor's fiduciary obligations under Ihe

Bankruptcy Code is the dut) to file acctlrJlc and complcle reports, financial and

1784228 1 14

othem ise. as required b) the Bankruptc) Code. In re Ford, 36 B.R. 50 I. 504 (Bkrtc) .K).

1983). The failure to filc accurate reports as required is cause to appoint an examiner or

trustee. Id.

45. Among other things the Examiner should do is to quickly investigate IR's

condition and determine whether the ph)sician's letter submitted b) IR is just somc kind

of "rubber stamp" of \\ hat IR requested of him, \\hether IR's condition has improved

since the letter. and whether thc level of incapacity is rcally so great that he cannot

produce an) of the information required b) the Bankruptc) Code and Rules. elc.

IR II/capacity Is ItselfGroll/lds For Appointment Of£wminer

46. If IR rcall) is incapacitated at this critical time as he claims to be. and AR

is incapable of providing basic financial information as IR and AR both claim that he is.

that is itself cause for deep concern and offers. in and of itself. justification for

appointment of an Examiner. IR and AR have been in financial crisis for several years

nO\\. Their residential condominium ventures ha\ e come to grief. The creditors of this

estatc are complctely in the dark about many things but especially in the dark about the

Debtors' primaf) cash Oo\\ing busincsses·-the lumbef)'ard and home center. the

Waterfront warehouse rental operation. and any other businesses the Debtors are engaged

in under Franklin Realty or othem ise. The creditors of this estate are entitled to a full

accouJ1ling of what has happencd and is currcntly happening with regard to those

businesses. the sources of funds that the Debtors are using to live on. the decisions that

arc being made (or. possibly even \\orse. the decisions not being made) that could further

jeopardize the possibilit) of recO\erics for creditors of these estates.

\784228 I 15

47. The situation actuall)' justifies appointment ofa Trustee. but the Lenders are

suggesting the less intrusive remcd) ofappointmenl of an Examiner whose mission and

PO" ers can be custom tailored to deal" ilh this situation. See. lor example. In rc

Gliatcch. Inc.. 305 B.R. 832 (Bkrtcy.N.D.Ohio 2004): In re Gilman Services. Inc.. 46

B.R. 322, 327 (Bkrtc) .D.Mass. 1985) and In re Landscaping Services. Inc.. 39 B.R. 588

(Bknc).N.C.1984).

If All Examiner Is Not Appointed. The Cllse Should Be I':ither ConvertedTo Chapter 7 Or Dismisse,d

48. Iffor any reason the Court docs not appoint an examiner. the COllrt

should. under 13ankruptc)' Code §1112(b). convert the case to a chapter 7 case or dismiss

tbis case. "Cause·' for conversion rind dismissal includes mismanagement of the estate.

failure to campi) "ith a Court order. and the unexcused failure to satisfy timel) an) filing

or reporting requirements. Bankruptcy Code § [112(b)(4). IR is. intentionally or nol.

mismanaging his estate due to his incapacity whether real or feigned. has failed to

compl) in any respect" hatsocver \\ ith the Deficient Filing Notice issued in his case. and

has failed to provide virtually all of the required filings in this casco Thus. cause exists to

convert or dismiss this casco

49. To date, IR has failed to comply with almost all of the requirements oflhe

Bankruptc) Code since filing his petition on Jul) 28.2009. in an effort 10 stop the UCC

Sale. IR. by his own admission. states that he is unable to provide such information due

10 his health. IflR cannot provide the requisile filings required by law, it seems highly

unlikel) that he is capable of running his businesses. Gi\-en lR claims that he has

"singular knowledgc" concerning not only his alTairs but AR' s as well. it follows that

IR's incapacity extends to the estate of AR. The affairs orlhe two brolhers are the

11842111 1 16

businesses. the \alue of\\hicn constitutes most like!) the bulk of both debtors' estates.

IR's inability to manage Ihe businesses and affair.;; of IRand AR while incapaciHltcd and

his failure to provide for ahernative management constitutes mismanagement ofthe

businesses and the estates of IR and AR. This mismanagement constitutes cause for

conversion or dismissal.

50. As pre\ iOllsly mentioned. IR has failed 10 compl) with the Deficient

Filing Notice issued in this case and has failed to provide almost all oflhe information

required to be disclosed b) a debtor under the Bankruptc) Code. Rules and Local Rules

within 15 days or filing. That date was August 12.2009. Clearly cause exists to convert

or. alternativel). to dismiss IR's casco

51. The Lenders are unsure atlhis time \\nich ortllese alternatives \\ould be

better for creditors and solicit comments from the U.S. Trustee and other creditors on this

issues.

WHEREFORE. ReG 11. RCGLV and Galster request the Coun enter an Order

Appointing an Examiner pursuant to Ban~ruptc) Code § II O-l(c)( I), or in the alternative

an Order Converting or Dismissing Isack Rosenberg's Case. and for such other relief as

is just and equilable.

Dated: August 27. 2009 POLSINELLI SHUGHART I'C

By: sl Daniel J. FlaniganDANIEL J. FLANIGAN7 Penn Plaza. Suite 600New York. Ne\\ York 10001(212)684-0199Fax No. (212) 684-0197

17&.122& I

Attorne) s for RCGRCGLV MaspethFunding. L.L.c.

17

Longvic\\LLC. and

II. L.P ..Galster

CERTIFICATE OF SERVICE

I. Daniel J. Flanigan. hcrcb) certif) Ihal on the 27th da) of August 2009. a true

and correct COP) of the MOlion ofCredilOrs for Appoimmellf ofEraminer or. in Ihe

AJrematil'e.jiJr COl/versiol/ or /)i.\"I1II~~.\'{/1 of/he Case was served eleclronically to

Debtor" s counsel. the U.S. Trustee. and all interested parties registered to receive ECF

notification from the COUft.

s/ Daniel J. Flanigan

17SJ:U8 I 18

EXHIIIIT A

TIMELINE

November 4. 2004· RCGLV invests $7.000.000 in Maspeth LLC. purchasing 100% ofthe Class A Membership Interest therein.IR and AR pledge to RCGLV their inlerests in Maspclh. Certifiedand Waterfront pursuant to the Pledge And SeCUril) Agreement.RCGLV and IR cnler into the Maspeth LLC Operating Agreementrequiring Maspeth LtC (Q redeem RCGLV's Class A MembershipIntcreSIS no latcr Ihan December I. 2006. and further requiring fR.as the 0\\ ncr of 100% ohhe Class B Membership Interests. tocontribute to Maspeth LLC funds necessary to redeem ReGLV' sClass A Membership Interests.

February 28. 2006· ReG II and Galster loan IR $12.000.000 in connection wilh theMcCarcn Project.IR pledges to ReG II and Galster all of his interests in McCarcn(lR's McCaren interests constituting 50% of the interests therein)pursuant to the Pledge and Security Agreement.IR and AR pledge to RCG II and Galster all ofthcir interests inWaterfront and Certified (constituting 100% of the interests inWaterfront and Certified) pursuant to the Pledge and SecurityAgreemcnt.

June 30, 2006 - RCGLV increases its investment in Maspeth LtC to $7.650,000.IR and AR pledge to RCGLV their interests in Maspcth. Certifiedand Waterfront as \\ell as Boro (constituting 100% of the interestsin Boro) pursuant to the Amended and Restated Pledge AndSecurity Agreement.

Januar) 2007 - RCGLV increases its im estment in Maspeth LtC 10 $8.300.000.IR and AR again pledge their interests in Maspeth. Certificd.Waterfront and Bora to RCGLV pursuant to the Amended andRestated Pledge And Security Agreement.

January 18.2007 - Maspeth LLC Operating Agreement is amended. extendingRedemption Date to June I. 2007

May 25, 2007 • RCGL V increases its investment in Maspeth LLC to $11.300,000.IRand AR again pledge to RCGL V their interests in Maspeth.Certified. Waterfront and Boro pursuant to the Amended andRestated Pledge And Security Agreement.Maspeth LLC Operating Agreement is amended. extendingRedemption Date 10 October 1.2007.

t733687 I

June 25, 2007-

October 1, 2007 -

RCG II and Galster make an additionul1oan to IR in the amount of$1.000.000. which amount was consolidated with the original loanto form a single loan in the amount of S13.000.000.IR again pledges his membership interests in McCaren pursuant tothe Amended Pledge and Secur;t} Agreement.IR and AR again pledge their interests in Waterfront and Certifiedto RCG II and Galster pursuant to the Amended 1>ledge andSecurity Agreement.

Maspeth Redemption Date - Maspeth LLC failed to redeemRCGLV's Class A Membership Interests as required by theMaspeth LLC Operating Agreement.IR. as the 100% Class B Member. failed 10 contribute to MaspethLLC the funds nccessaf) to redeem RCGLV's Class AMembership Intcrests as rcquired by thc Maspeth LLC OperatingAgreement.

Novcmber 17.1007 - Debtor, Maspeth LLC, Boro, Waterfront and another entit) that is.on information and belief. 0\\ ned and controlled b} IR and AR.Franklin Realt:" Corp.. executed and deli\ered the 32nd Mortgageto 32nd Street.

February 12. 2008 - Aron DeUlseh (Manager of Maspeth LLC) and Maspeth LLC. withthe defini!c knowledge and participation oflR and perhaps of ARas \\ ell. executed and delivered to NCe the NCC Mortgage.

March 1.2008 • Maturit} date of McCaren loan by RCG II and Galster to IR: IRfailcd to pa}.

July 2008 - McCaren Forbcarance Agrecmcnt entered into between RCG 11.Galster, IR and ARMaspeth Forbearance Agrccment entcrcd into bctween RCGLV,IR and AR

August 5. 2008 • Pledge and Sccurit} Agrecment dated August 5. 2008. made b)Sch\\anz in favor of RCG and Galster pledging thc remaining 50%Membership Intcrests in McCaren.

August 28, 2008· McCaren Forbcarance Expiration Datc. lR failcd to pay.

Septcmber 8. 2008 - Recording of 32nd Street Mortgage

September 30. 2008 - Maspeth Forbearance Expiration Datc. lR failed to pa).

November 20. 2008 - NCC Mortgage recorded.

1783687 I ii

Januar) 29.2009 - Lenders filed a lawsuit against IR. AR. Maspeth LLC, Waterfront.Boro. Certified. Aron Deutsch. 32nd Street. and NCe.

March 25. 2009 - Lenders· first scheduled UCC Sale of the lit AR and Schwartzinterests in Maspcth LLC. McCaren. Ccrtified. Waterfront andBoro: ho\\cvcr. a temporary restraining order \\as entered in theState Court Litigation enjoining the sale.

April 28.2009 - Preliminary injunction hearing at which the UCC Sale wasrescheduled to July 28. 2009 pursuant to a stipulated order.

July 28.1009 - Lenders' second scheduled UCC Sale.lsack Rosenberg's voluntal') chapter II filing.Abraham Rosenberg·s voluntary chapter II filing.Yitzchock Schwartz·s involuntary chapter II filing.

1183687 I iii

I'OLSINELLI SHUGI1ART PCAllorney.\'jiJr ReG Longview II. LP.,RCGLV Maspeth LLC, and Galster Funding, L.L.c.7 Pcnn Plaza. Suite 600j c\\ York. fe" York 1000 I(212) 684-0199Fa" (212) 684-0197Daniel J. Flanigan

UNITED STATES IlANKRUI'TCY COURTEASTERN DISTRICT OF NEW YOllK

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - --.:I.

In re:Chapter II

ISACK 11OSENIlERG,

OclHor.

--- - - --- - - - - - - - - - - - - - - - - - - - - - - -\.

Case No.: 09-46326 (CEC)

OIlJECTION OF RCG LONGVIEW II, LoP., RCGLV MASPETH LLC, ANI) GALSTERFUNDINC, L.L.C., TO DEIlTOR'S APPLICATION SEEKING EXTENSION OF TIME

TO FILE INITIAL FILINGS, SCHEDULES ANI) STATEMENTS

TO TilE HONRAIlLE CARLA E. CRAIG.CIIIEF NITED STATES IlANKRUI'TCY JUDGE:

Debtor lsack Rosenberg has tiled his Application Seeking Extension orTimc to File

Initial Filings, Schedules and Statements (the "Applicliliooo') and in cOllnection therewith has

announced his intention 10 presenllo thc Court an Order approving the Application on

September 4,2009. RCGLV Maspeth LLC ("RCGLV"), RCG Long, ie" II. LoP. ("RCG U"),

and Galster Funding. L.L.C ("'Galster") (RCG II. RCGLV. and Galster being sometimes

collectively referred to herein as ,oLenders"), by and through their undersigned coullsel, object to

the Application and submit the follo\\lng in support of their Objection:

Blu'kground

!sack Rosenberg, Abraham Rosenberg and Y;I=chock Schwan= Cases

I. lsack Rosenberg ("'IK') is the brother and business partner of Abraham

Rosenberg ('·AK·). the debtor in Case No. 09-46327 (CEq, filed the same day as IR's case. IR

and AR are also business associates of Yitzchock Schwartl. ("Scbwartz") against \\ hom a

perhaps collusive or otherwise improper involuntary ease was riled by a single creditor on the

same da). Jul) 28.2009. as the IR and AR voluntary cases \\ere riled. All three cases \\ere filed

in order to invoke the automatic stay to prevent a vec sale of Lenders' collateral scheduled to

occur at 10:30 a.m. on the date of filing. A timeline of the events described below is set forth on

Exhibit A.

Maspeth Preferred Eqllily II/veslmeflf, McCaren Loan

2. The vce Sale and the bankruptc) filings were thc culmination ofa long and

painful series of events. IR owes the Lenders in excess of $22.000.000 arising out of RCGLV's

preferred equity investment in a condominium projcct in Williamsburg known as Olive Park

Condominium 0\\ ned b) Maspeth Properties LLC. a Ne\\ York limitcd liabilit) cOIn pan)

("Maspeth LLC") located at 84 and 100 Maspeth Avenuc. Brooklyn, Ncw York ("'Maspeth

Project"') and a loan to IR on a condominium project in Williamsburg known as McCaren Park

Mews Condominium owned by McCarcn Park Mcws LLC. a New York limited liability

company ("McCaren LLC') located at 214 North II th Street. Brookl) n. New York ("McCarcn

Projcct"'). The amount o\\ed on lhe Maspeth-related obligations ("Maspcth Obligations")

exceeds $7.000,000 and on the McCarelHelatcd obligations ("McCarclI Obligations") c.xcecds

$15,000,000.

1783943.1 2

Maspeth Colla/eral

3. As collateral forthe preferred equity obligations ofMaspcth LLC and IR Lo

RCGLV. IRand AR granted to RCGL V a security interest in the follO\\ ing collateral:

• IR's Class B Member Interests in Maspeth LLC:

• 100% of the 0\\ nership interests in Bora I>ark Homc Center Corporation. a

Nc\\ York corporation that owns and operates a "'home center" business at

4601 New Utrecht Avenuc. Brooklyn. Ne\\ York ("Boro");

• 100% of the 0\\ nership interests in Certified Lumber Corporation. a 'Je\\

York corporatiollthat owns and operates a lumber yard on the watcrfront at

484 Kent Avenue alk/a 149 Division Street. Broo"'l~n. Nc\\ York

(""Certified"):

• 100% of tile 0\\ nership interests in Watcrfront Realt) II LLC that 0\\ ns and

operates a warehouse propert) adjacent to Certified's propert) at 462 Kent

Avenue. Brooklyn. New York ("'\VatcrfronC).1

McCaren Collo/eral

4. As collateral for the McCaren Obligations, fR. AR, and Schwartz granted to RCG

I[ and Galster a seeurit) interest in the 1'0110\\ ing collateral:

• 100% of the ownership intercsts in McCarcl1 LLC;

• 100% of the 0\\ nership interests in Certified:

• 100% of the o\\nership interests in Waterfront.

I Waterfront is actually not localcd on Ihe waterfront \\ hilc Cenificd is so located. a source ofat leasl occasionalconfusion oflhe two enlilies.

17&39·0 t J

Maspeth Default. Forbearance

5. RCGLV is the Class A Member of Maspeth LLC. and lit was. until the filing of

his bankruptcy petition. the Class B Member of Maspeth LLC, although no\\. as provided in

sections 6.3.2 and 6.1.2 of the Maspeth LLC Operating Agreement. IR is no longer a member but

holds a mere Economic Interest in Maspeth LLC as his bankruptc) filing constituted an E...ent of

Involuntary Withdrawal under Ihe Maspeth LLC Operaling Agreement. The Operating

Agreement of Maspeth LLC rcquired that thc Class A mcmber's inveslment be redeemed on

October I. 2007. nearly two years ago. and further required JR "'to contribute sueh funds to

IMaspeth] as are necessal) to allow for the timcl) redemption of the Class A Member's

Membership Interest:' Section 6.9. as amended by the Fourth Amendment to the Maspeth LLC

Operating Agrecment. Maspeth LLC failed to redeem RCGLV's preferred equity investment,

and IR failed to contribute the necessary funds.

6. Nom ithstanding Maspeth LLC's and IR's defaults. RCGL V entered into a

Forbearance Ag.reement \\ith lR and AR "hereb) RCGLV granted an additional period of time.

until September 30.2008. for Maspeth LLC and IR to p<.ly their obligation but IR and Maspeth

LLC failed to do so.

McCarell Default. Forbearance

7. ReG II and Galster loaned IR $13.000.000 forthe purpose of assisting him in

completing construction orthe McCaren Project (though the Project is still incomplete and being

foreclosed on by its mortgage lender as discllssed more fully below). The McCaren LLC is

owned by JRand Yitzehoek Schwartz. The McCaren loan was due and payable on March I,

2008 but IR failed to pay as agreed.

1783943 1 4

8. Notwithstanding IR' s default. ReG II and Galster entered into a rorbearance

Agreement "hereby RCG 11 and Galster granted an additional period of lime. until August 28.

2008. for IR to pay his obligation butlR failcd to do so.

UlIlIlIlhori=ed MorIKage.\·

9. On or about November 17.2007, prior to the timc the Forbearance Agrecments

\\ere signed. Debtor. Maspeth LLC. Boro. Waterfront and another entit) that is. on information

and belief. 0\\ ned and controlled by IR and AR. Franklin Really Corp ..2 executed and delivered

to 32nd Street Investors III LLC ("'32Ild Strccf") a Mortgage, Assignment Of Leases And Rents

And Security Agreement to secure a debt of 56.000.000 ("'J2Ild Street Mortgage'"). The 32nd

Street Mortgage purported 10 gmnt 32nd Street a security imerest in. among other things. the real

property 0\\ ned by Maspeth LLC.l3oro. and WmerfrOnl.lhe o\\nership interests in which \\ere

all pledged at that time to Lenders. The Lenders believe the 32nd Street Mortgage violated

various provisions of the Maspeth LLC Operating Agreement and the Pledge Agreements that

secured the Maspeth LLC and McCaren LLC Obligations. BUI, whether the Lenders are correct

in that belief or not, in an) case IR and AR did not disclose the existence of the 32nd Street

Mortgage when negotiating and entering into the Forbearance Agreements. Tellingly. the 32nd

Street Mortgage "as not recorded until Seplcmber 8. 2008. aftcr thc Forbearance Agreements

\\cre signed. thus making it impossible for the Lenders to discover its existence until alter that

time. The Lenders believe thai the evidence o\cl"\\hehllingl) dcmonstralcS that IR. AR. 32nd

Street, Maspeth. Boro. and Waterfront conspired to delay the recording and to otherwise hide the

existence of the 32nd Street Mortgage from Lenders in order to induce Lenders not to declare

~ Lenders believe that Franklin Realty is also owned by AR and IR and that it may operate a specialized cateringbusiness or other businesses.

I7KJ9.U 1 5

default and exercise their remedies althat time and to induce Lenders to enter into the

Forbearance Agreemcnts.

10. In addition, the Lenders have discovered that. on or about February 12.2008

(follo\\ ing the failure to pay the redemption amount on October 1.2007. but prior to the

Forbearance Agreemcnt in July 2008). Aron Deutsch (the designated Managcr of Maspeth LLC

pursuant to Section 5.1.1 ofOpcrating Agreement) and Maspeth LLC. \\ ith the definite

knowledge and participation of IR and perhaps of AR as well. executed and delivered to NCC

Capital, LLC ("NCC") a Collateral Mortgage to secure an indebtedness of$I.800.000.00 (the

"NCC Morlgage··). The NCC Mortgage purported to grant NCC a sccurit) interest in. among

other things. 35 condominium units and other real property owned by Maspeth LLC

II. As with the 32nd Street Mortgage. IRand AR did not disclose the existence of the

NCC Mortgage to the Lenders at the time of the Forbearance Agreements. Just like the 32nd

Street Mortgage. the NCC Mortgage \\ as not recorded until No\ember 20. 2008. mueh later than

it was signed and delivered, in order, the Lenders believe. to keep it hidden from the Lenders

until after the Forbearance Agreements \\cre signed. Further support for Ihis fraudulent

motivation is thc fact that a related February 12,2008 Mortgage bc[ween NCC and Franklin

Realt) Corp. was recorded almost immediately upon execution.

Stale Court LitiKation and vee Sale

12. In earl) 2009 the Lenders filed a la\\ Suil in the Supreme Court ofNe\\ York.

King's Counly. Judge Carolyn E. Demarest. Index No. 2324/09 againsllR. AR. Maspeth LLC.

Waterfront. Boro. Certified. Aron Deutsch, 32nd Street. and NCC seeking various fonus of relief

due to the events and transactions described above ("Slate Court Litiglilion").

17839-tJ I 6

13. The Lenders also scheduled <I UCC Sale of the collateral ("vee Sale'") for

March 25. 2009: ho\\cver. a temporary restraining order was entered in the State Court Litigation

enjoining the sale. At the preliminary injunction hC<lring on April 28, 2009, the sale was

rescheduled to July 28. 2009 pursuant to a stipulated order entered into in the State Court

Litigation. giving IR and AR an additional 90 days. It was perfectly clear that there would be no

further postponements ofthe vce Sale and that on Jul) 28 the debtors would either have to

either pay in full or tile bankruptcy. Although IR and AR made a last-minute futile attempt to

persuade Judge Demarest. and Seh\\artz made such an attempt in the Appellate Division of the

King's County Supreme Court. to seek a further postponement of or stay of the vce Sale. their

efTorts predictably and unerl) failed.

Filings Were Not The Result 0IAIl "Emergency"

14. Thus. IR, AR. and Schwartz had several months in which 10 prepare for their

bankruptc) filings. There \\as nothing "emergenc)" about their filings except the "emergency"

caused by their own persistent refusal to honor ill!Y agreement or obligation on their pan

including a stipulation solemnl) entered into before Judge Demarest. There \\as thus no excuse

whatsoever for the deficient (indeed. virtually non-existent) information filed with their

bankruptc) petitions.

Cllrrelll Sirl/ll/ion ofLenders' CollaremllProperry GfThe lJankruplcy ESlales

15. The business interests of IRand AR. the 0\\ nership interests that are collateral for

the more than $22.000.000 owed to Lenders. are rapidly deteriorating ifnot collapsing,

evidenced b) the follo\\ ing:

173J~3 I 7

IVater/rom

16. Capital One Bank. l.A. has filed a mortgage foreclosure action against the

Waterfrom Property to enforce an outstanding obligation in Ihe principal amount of

$3.579.627.11 plus interest from and alter January I. 2009. Capital Onc·s counsel has inforrned

lenders' counsel that it intends to file a Motion for Summar) Judgment momentaril).

17. Moreover. the 32nd Street Mortgage \\ as "spread·' to Waterfront's proper!) by an

instrument dated September 8. 2008. further undermining Lenders' collateral position as the

pledgee of the 0\\ nership interests in Waterfront since. if the NCC Mortgage is \ alid as against

Walerfront"s property and Lenders, Lenders are struelurall) subordinated to it. Lenders believe

that the NeC Mortgage is in default and could be subject to a foreclosure action at any timc if

one has not alread) been filed.

18. Mortgage foreclosure actions pursuant to these mortgages may not be subject to

the automatic stay of the AR and IR bankruptcies as they seck foreclosure against Watcrfront's

property. \\hicn is not in bankruptcy.

19. TIlliS. thc ownership interests of AR and IR in Waterfront, \\ hich arc collateral for

the Maspeth nnd McCaren Obligations. arc. at the very best. rapidly deteriorating in value (with

interest on the mortgage obligations probabl) accruing at default rates and substantial attorneys'

fees and other costs being incurred). and at \\orst. likel) to soon be cflectivcl) eliminated and

rendered entirely worthless.

Cerlijied

20. The I CC Mongage \\as spread to the Cenified"s propcrt) by an instrument dated

Novcmber 14.2008, furtner undennining Lenders' collateral position as the pledgee of the

ownership interests in Certified since. if tile 32nd Street Mortgage is valid as against the

11839431 8

Certified's property and Lenders. Lenders are structural!) subordinated to it. Lenders belic\c

that the 32nd Strcet Mortgagc is in default and could be subject to a foreclosure action at allY

time ifone has not already been filed.

21. Also. Lenders believe that there is another mortgage. senior to the Nee

Mortgage. in favor of Bank of Smithtown securing an oblig<ltion in the original principal amount

ofS 1.000.000. Lenders have no k.no\\ ledge of the status of this mortgage. but. given evcT)1hing

else that has happened and continues to happen. there is no reason to belie\e that the mortgage is

not now. or will not soon be. in default.

22. Mortgage foreclosure actions pursuant to these mortgages rna) not be subject to

the automatic stay of the IRand AR bankruptcics as thcy seck foreclosure against Certified's

property, \\ hich is not in bankruptc).

?'-,. Thus. the ownership interests of IR and AR in Certified. \\ hich are collateral for

the Maspeth and McCarcn Obligations. arc. at the vcry best. rapidly deteriorating in value (with

interest on the mortgage obligations probabl) accruing at default rates and substantial attornc)s'

fees and other cosls being incurred). and at worst. likel) to soon be efTectivcl) eliminated and

rendered entirely worthless.

McCaren Project

24. The McCaren I)roject is subject to a mortgage securing obligations in excess of

$42.000.000 held by Capital One Bank. N.A. Capital One has filed a mortgage foreclosure suit

and has just filed a motion for summary judgmcnt in the case.

25. The mortgage foreclosure action may not be subject to the automatic stay of the

IR. AR, and Schwartz bankruptcies as it seeks foreclosure against the property of McCaren LLC

which is not in bankruptcy.

17839431 9

26. Thus. the ownership interests of IR and Sch\\urtz in the McCaren LLC. which are

collateral for the McCaren Obligations. are. at the very best. rapid I) deteriorating in value (\\ itll

interest on the mortgage obligations probably accruing at default rates and substantial attorncys'

fees and other costs being incurred). and at \\orst. likely to soon be effectivel) eliminated and

rendered entirel) \\orthless.

/Jom

27. The 32nd Street Mortgage also encumbers the Boro's propert). Lenders bclie\e

that Ihe 32nd Street Mortgage is in default and could be subject to a foreclosure action at any

time irone has not alread) been filed.

28. Also. Lenders believe that Iherc is another mortgage. senior 10 the 32nd Strcet

Mortgage. in favor of Drooklyn Federal Savings Dank securing un obligution in the original

principal amoullt of$1.900.0oo. Lenders ha\ e no kno\\ ledge of the stalus of this mortgage. but.

given everything else that has happened and continues 10 happen. there is no rcason to believe

that the mortgage is not now. or will not soon be. in ddaull.

29. Mortgage foreclosure actions pursuant to these Mortgages rna) not be subject to

the aUlommic stay of the IR and AR bnl1kruptcics as they seck foreclosure against 130ro's

property. which is not in bankruptcy.

30. Thus. the ownership interests oflR and AR in Boro. \\hich are collateral for thc

Maspeth Obligations. arc. at the vcry best. rapidly deteriorating in value (with interest on the

mortgage obligations probabl) accruing at default rates and substantial attome)s' fees and other

costs being incurred). and at \\orst. likely to soon be effectively eliminated and rendered entirely

\\orthlcss.

17839-13 I 10

Maspeth Projeci

31. In the Statc Court Litigation, Judge Demarest appointed Frank Reill). one of

Lenders' employees, as co-m'lnager. with Aron Deutsch. of the Maspeth Projeel. but the

appointl11cnt was to no avail as Deutsch and IR, through his son Michael Rosenberg. have simply

stonewalled and stiff-anned Reilly at cvery turn.J For example. aftcr Reilly was informed by the

propert) manager at the Maspeth Project that some of the rental tenants had given their month I)

rental checks to the propert) manager. he instructed the propert) manager that he should keep

posscssion of the rent payments and that they be used to pa) the Maspeth Project"s future

common area Obligations. Reilly informed Deutsch and Michael Rosenberg of those

instructions. Michael Rosenberg instead. without any authority, demanded that the rent

pa)ments be sent to him on behalfofMaspclh LLC and threatened Ihe property manager with

criminal proseculion if they \\ere not immediatcly turned over. Despite Reilly's instructions to

the contral) and 0' er his protest. the propert) manager turned the rent payments o\-er to Michael

Rosenberg. Reilly e-mailed Mr. Rosenberg and told him Ihal Ihose procceds wcre not to be used

for any purpose without his approval. Reilly has not rcceived any infommtion about what

happened to those monies.

32. Meanwhile. Deutsch has infonned Reilly that be is no longer the Manager of

Maspeth LLC. He told Reill) Ihat he has turned o,er all of the Maspeth LLC records and control

to lsack Rosenberg"s son. Michael Rosenberg. either Judge Demarest's Order nor the

Operating Agreement authorizes or contemplates that Michael Rosenberg. a stranger to Maspeth

LLC in every respect. act as Maspeth LLCs Manager. the grossest possible usurpation.

3 Actually. ReGLV has had Ihe right under the Opemting Agreemem 10 act lIS the sole Manager of the l-,'laspeth LLC

following the failure to pay the redemption amount: and Judge Demarest. in an effort, Lenders believe, to "cut thebaby in half' on this issue, chose the co--manager approach instead, which has proved unerl) ineffcctive.

1783~J I II

33. The Maspeth Projt.X:t is c:\.periencing significant \\ ater damage because of

apparent construction defects. The water damage has already caused t,\O of the top floor

balconies to partiall) collapse to the street belo\\. fortumncl) not causing injul) to an) third­

parties. RCGLV is infonlled by its engineering consultant that additional repairs arc nccessaf)

to stop the damage from continuing and to ensure thai additional collapses \\ ill not occur.

34. RCGLV has discovered OIher significant water issues aI the Maspeth Project.

Tenants or unit owners 011 the top floor arc complaining that water continues to leak into their

units. If this situation is not corrected. the property will deteriorate and Maspeth LLC may be

exposed to claims from the tenants or unit o\\ners. In addition. the air conditioning units in the

hall\\a)s \\cre incorrect I) installcd and cannot be uscd \\ithout causing furthcr. significantlcaks.

As a result thc) ha,e been disabled and the hall\\a)s ha\-e no air conditioning. causing

numerous tenant and condominium unit 0\\ ncr cornplaillls. All of these issues need to be

immediatel) im cstigated and rcmcdied to protect the Maspeth Project.

35. Until recently a fe\\ salcs \\cre occurring. to the benefit of all involved. HO\\-cvcr.

salcs of condominium units at thc Maspeth Project are now at a standstill since a $300.00

mechanic's lien claim has been filed that makes sales of additional units impossible until it is

cleared. At least two snlcs have already been lost as n result ofthe lien.

36. To the extent the NCC and 32nd Street Mortgagcs are valid against the Properl)

and RCGLV. Lenders bclie'e they arc in default and no\\ due and pa)ablc and perhaps accruing

default intcrest and atlorne) s' fees and other costs.

37. Thus. the o\\ncrship interests of IR in Maspeth LLC. \\hich are collateral for the

Maspeth Obligations. and RCGL V's Class A 0'\ nership intercsts as "ell. arc. at the ver) best.

17~3943 1 12

rapid I) dctcriorating in value. and. at worst. like!) to soon be efTecti\el) eliminated and rendered

entirel) wonhtess.

General Situation

38. The above are just the real estate issues. But Boro and Certified arc also

operating businesses with all the complements of operating businesses such as trade creditors

and employees. Lenders have almost no informntion on the finnncini or other condition of these

businesses including bow much monies that IR and AR, and their relatives and othcr affiliates

and insiders. may be extracting from those businesses.

Debtor's Motion Should Be Denied Unless Ilcbtor Provides Further S:uisfaetorl'

Exulanation And .11Istilic:.llion

39. As should be obvious from the abO' e recitation. the Lenders' collateral and the

property of this estate consists primarily ofequity interests in various entities that operale various

businesses including a home center business and 3 lumber )3rd business. an unfinished

condominium (the McCarcn Project) and 3 complcted condominium \\ith rem<lining unsold units

that are being rented (the Maspeth Project). Most ifnot all of the Debtors' businesses are in a

state of crisis. The Lenders and the other creditors in the case need as mueh information as last

as they can obtain it in order to hnve any chance of preventing further deterioration, and perhaps

complete devaluation, of their interests in the property of the eSlate.

40. As support for Debtor's extension request. Debtor statcs that his case \\as filed on

"an emergency basis to S13) the UCC sale of the Debtor's principal assets consisting of his equity

interest in several corporations or limited liability companies. \\hich was scheduled for Jul) 28.

2009." As shown abO'c. there was no emergenc) \\ hatsoever. IR and AR had al least 90 da) s (0

prepare for a filing. There is no excuse \\ hatsoever for the slopp) wa) in \\ hich their cases \\crc

1783943 1 13

filed. The way their cases were filed is just an extension of the approach these Debtors take 10

everything--delay. delay. delay. obfuscate, confuse. delay some morc. They are vcry willing to

take money from a lender but not so willing to pay it back. The) are vcry willing to take

advantage of the prolcctions offered by the Bankruptc) Code but not so \\ illing to honor even

thcir most basic and minimal responsibililies under the Code.

41. rinally. and at the risk of being charged wilh insensilivil) to IR' s health situation.

it is hard to belicvc that recovcry from a gall bladder operalion takes anywhere ncar two months.

Just because IR cannol. according to his surgeon. report 10 \\ork docs nOI mean that he can do

nothing at all and Ihat cSIX"'Ciall) he eannot pro\ ide information or guide his counsel and AR and

emplo)ees of his businesses 10 the location ofany information Ihat AR is sameho\\ incapable of

discovering for himself. Given the past history of obfuscation and delay, counsel for Lenders

Illay perhaps claim some justification for belicving thatlhc Debtor Inny be taking advantage of

his health siluation. exaggeraling the unfortunate situation to achieve some benefits from it.

"gilding the Iii)" if)ou \\ill.

42. In addition 10 IR's counscl and AR. there arc numerous clllplo)ees of the

businesses. including. surely. accounting employees that could presumably assist the owner of

the businesses in compiling any business information required for the filings.

43. And there is the othcmisc ubiquitous Michael Rosenberg. san of Dcbtor. who is

acting as the unappointed and unauthorized manager of the Maspeth LLC and is othcm ise

involved in the businesses who can surel) assist both his father and uncle in this endeavor

including espccinlly information relatcd 10 Maspeth and McCaren.

44. The Order submittcd by the Debtor is cagcy. vague. and unclear in the c:\trcme.

stating that the Debtor \\ill be granted an c:\tcnsion oftimc ..to file the balance ofthc initial

178J~J I 14

filings. the Schedules and Statements:' which \\ocfully insuflkiently identifies the items with

respcctlo \\ hich Debtor may be granted an extension. The follo\\ ing arc the items that the Code.

the Rules. and Local Rules require IR to lile--eithcr alrcad) in the case or in the near future--and

the Debtor should be required to justify \\ ith respect to each particular item \\ h) he cannot

provide Ihe full information (and ifnot the full infomlation, as much of the information as

possible no\\ \\ ith the full information to follo\\ later):

Items OOl.'lIt Time of Filing pu'" 28. 2009)

a List of20 Largest Unsecured Creditors pursuant to FRSP I007(d) and DeficientFiling J otice ("·DFN").

Items Duc withill 15 da\'s of Filing (August 12.2009)

a Disclosure of Compensation pursuant to FRBP 20 16(b) and DFN. IThis item isthe responsibility ojDebtor's cOlil/sel alld it says c\'c1),thillg lIboUl the Debtor'sMotion that e\'enthis is included within it.)

o Summa!) of Schedules (Official Form 136) per DFN

Q Statistical Summary of Certain Liabilities (Official Fonn 136) and DFN

CJ Schedules A through J pursuant to FRIlP I007(b)(I) and DFN

1:1 Declaration Concerning Debtor Schedules (OfficiHI Form 6) DFN

1:1 Statement of Financial AfTairs (Official Form 7). FRill' I007(b)(1 )(0) and DFN

u Copies of Pay Statements received within 60 days of filing from any employer ora statement indicating this requirement is not applicable. FRllpI007(b)(1)(E)and DFN.

o Slatcrnent ofOebtofs monthly income. FRBP 1007(b)(S) and (e) and DFN.

Q Statement of interest in any account or program orlhe t)pe specified in § 521(c)(education individual retirement account or qualified state tuition program).FRBP I007(b)(I)(F).

Ilchtor's Affid:lvit due 011 August 12.2009 (Local Rule 1007-4) must include the followinginfommtion:

a \\ hether debtor is a small business debtor

178J9.iJ I 15

a nalUre of dcbtor's business and statcment of circumstanccs Icading to chaptcr 11filing

names. addresses and members of. and professionals emplo)cd b). an) committeeorganized prior to order for relicf and description ofcircumstances surroundingformation

names. address. zip code, telephone number. names of persons familiar withdebtor's accounl. amount of claim. \\ hether claim is contingent. unliquidated.disputed. or partially secured with respect to 20 largest unsccured claimsexcluding insiders

names. address, zip code. claim description, collateral value of 5 largest securedclaims

a summary ofassets and liabilities

:I list of all debtor's propert) in possession of an) custodian. mortgagee. pledge.assignce or secured creditor \\ ith name. address. and phone number. title of anyproceeding related thereto and court in \\ hich pending

a list of premises 0\\ ned. leased or held from which debtor operates

o location ofdebtor's significant assets. bool..s and records. nature. value andlocation of assets outside United States

nature and status ofan) action pending or threatencd against debtor or its propert)where a judgment against the debtor or seizure of its property may be imminent

[J amount paid and proposed to be paid for services lor 30 day period followingpetition to the individual debtor tlnd if a financial consultant has been hired. to tileconsultant

o schedule. for 30 day period following petition, ofestimated cash receipts anddisbursements. net cash gain or loss. obligations and receivables expected toaccrue but remaining unpaid. and any relevant information

o such additional infom1ation as ma) be necessary to full) inform the court ofdebtor's rehab prospects.

Angusl 17. 2009: Tax Rctu rn - At leasl 7 da) s prior to date first set for 341 MeetingDeblor must prQ\ ide tax return to US Trustee. The date first set for the meeting of creditors \\asAugust 24. 2009. The mecting has been rescheduled to October 1.2009.

August 19.2009: Report of financial information on entities in \\hich eh. II Debtorholds interest (no later than 5 days before first date set for meeting ofcreditors). The date first

17839Hl 16

Evidence of current incomeStatements of each depository and investment accountsDocumentation of monthly expenses

set for the meeting ofcreJitors was August 24, 2009. The meeting has been rescheduled toOctober 1_ 2009. The report Sh~lll include the ".tlue, operations .1IId profihlhilitv of eaehentity, FRBP 20 15.3. (Note that copies of the report shall be served on the US Trustee, anycommittee formed, and any other parties in interest that have filed a request therefor.) rThis ilemis of fhe /IIOSf crilical possible imporlance 10 Lenders and the other creditors oflhis eslale.]

August 20, 2009: First Monlhh·' 0llerating Report (Monthly Operating Reports are due onthe 20th of each month. Local Bankruptcy Rule 2015·1)

October .,2009: Debtor must bring to meeting or provide to trustee the following to the341 meeting:

ooo

Debtor" s should, through his counsel. be required to justi fy item bv item why his health situation

should prevent the information from being promptly assembled. organized, filed, and delivered s

required by the Cae and Rules.

WHEREFORE, RCG II, RCGLV and Galster request the Court enter an Order denying

the Application and requiring, on pain of dismissal of the case, the Debtor to timely furnish all

required information, and for such other reliefas isjust and equitable.

Dated: August 26. 2009

1783943 1

POLSINELLI SIIUGIIART PC

By: sf Daniel.!. FlanigallDANIEL J. FLANIGAN7 Penn Plaza, Suite 600New York, New York 1000 I(212)684-0199Fax No. (212) 684-0197

Attorneys tor RCG Longview II, L.P., RCGLVMaspeth LLC, and Galsler Funding, L.L.C.

17

CERTIFICATE OF SERVICE

I. Daniel J. Flanigan. hereby ccrtif) that on the 26th day of August. 2009. a true and

correct copy of the Ohjecliofl ofReG Long,'iew II. L. P, RCGLV Maspe1l1 LLe. and Galster

Fill/ding. L.L c., 10 DeblOr ',,- Applicalioll Seeking E\"IensiulI o/Time to File II/itial Filings,

Schedllle~' (md Statements was sened elcclronicall) to Deblor's counsel. the U.S. Trustee. and all

interested parties registered to receive Eer nOlilicalion from the Court.

.... Daniel J. Flanigan

[XHIIIIT A

TLMILINE

NO' ember 4. 2()().t - RCGL V invests 57.000.000 in Maspeth LLC. purchasing 100010 ofthe Class A Membership Interest [herein.IR and AR pledge to RCGLV their interests in Maspeth. Certifiedand Waterfront pursuant to the Pledge And SCCUril) Agreement.RCGLV and IR e11lcr into the Maspeth LLC Operating Agreementrequiring Maspeth LLC to redeem RCGLV's Class A MembershipInterests no later than December I. 2006. and further requiring IR.as the owner of IOook ofthc Class B Membership Inlcrests. tocontribute to Maspeth LLC funds necessal) to redeem RCGLV'sClass A Membership Interests.

February 28, 2006 - ReG II and Galster loan IR $12.000.000 in connection with theMcCaren Project.IR pledges 10 ReG II and Galsler all of his interests in McCarell(I R's McCaren interests constituting 50% ohhe interests therein)pursuant to the Pledge and Security Agreement.IR and AR pledge to ReG II and Galster all of their interests inWaterfront and Certified (constituting 100% of the interests inWaterfront and Certified) pursuant to the Pledge and SecurityAgrcement.

June 30. 2006 - RCGLV increases its il1\Cstlllcnt in Maspeth LLC to S7.650,000.IR and AR pledge to RCGLV their interests in Maspeth. Certifiedand Waterfront as well as Bora (constituting 100% of the interestsin Bora) pursuant to the Amended and Restated Pledge AndSecurity Agrecment.

January 2007 - RCGLV increases its investment in Maspeth LLC 10 $8.300.000.lR and AR again pledge their interests in Maspcth. Certified,Waterfront and Bora to RCGLV pursuant to the Amended andRestated Pledge And Security Agreement.

January 18. 2007 - Maspeth LLC Operating Agreement is amended. extendingRcdcmption Date to June 1.2007

May 25. 2007 - ReGL V incrcases its investment in Maspeth LLC to $11.300.000.IRand AR again pledge to RCGL V their interests in Maspeth.Certified, Waterfront and Boro pursuant to the Amended andRestated Pledge And Security Agreement.Maspeth LLC Operating Agrcemcnl is amended. extendingRedemption Date to October 1. 2007.

11&36871

Junc 25. 2007-

October I. 2007 -

RCG II and Galstcr make an additional loan 10 IR in thc amount of$1.000.000. which amount was consolidated with the original loanto fonn a single loan in the amount of$I3.000,000.IR again pledges his membership interests in McCaren pursuant tothe Amended Pledge and Security Agreement.IR and AR again pledge their interests in Waterfront and Certifiedto RCG II and Galster pursuant to the Amended 1>ledge andSecurity Agreement.

Maspeth Redemplion Date - Maspeth LLC failed to redeemRCGLV·s Class A Membership Intercsts as required b) theMaspeth LLC Operating Agreement.IR. as the 100% Class B Member. failed to contribute to MaspethLLC the funds necessal) to redeem RCGLV's Class AMembership Interests as required by the Maspeth LLC GpcmlingAgreement.

November 17.2007 - Debtor. Maspcth LLC, Bora. Watcrfrom and another entity that is.on infonnation and belief, owned and controlled by IR and AR.Franklin Realt) Corp.. cxecuted and deli'ered the 32nd Mortgagcto 32nd Street.

February 12. 2008· Aron Deutsch (Manager of Maspeth LLC) and Maspeth LLC, withthe definite knowledge and participation of IR and perhaps of ARas well. executed and delivered to NCC the NCC Mortgage.

March I. 2008 - Maturity date of McCaren loan by RCG II and Galster to IR: IRfailed to pa).

July 2008 - McCaren Forbearance Agrcement entered into bet\\een RCG 11.Galster, IR and ARMaspeth Forbearance Agreement entered into between RCGLV.IR and AR

August 5. 2008 - Pledge and Securit) Agrecment dated August 5. 2008. made bySch\\artz in fa\or of RCG and Galster pledging the remaining 50%Membership Interests in McCaren.

August 28. 2008· McCarcn Forbearance Expiration Date. IR failed to pay.

September 8. 2008 - Recording of 32nd Street Mortgagc

September 30. 2008 - Maspeth Forbearance Expiration Datc. IR failed to pa).

November 20, 2008 • NCe Mortgage recorded.

1113687 I ii

January 29. 2009-

March 25, 2009 -

April 28, 2009-

July 28, 2009-

1783687 I

Lenders filed a lawsuit against IR, AR, Maspeth LLC Waterfront,Bora, Certified, Aron Deutsch, 32nd Street, and NCe.

Lenders' first scheduled UCC Sale orthe IR. AR and Schwartzinterests in Maspeth LLC, McCaren. Certified. Waterfront andBora; however. a temporary restraining order was entered in theState COllrt Litigation enjoining the sale.

Preliminary injunction hearing at which the UCC Sale wasrescheduled to July 28, 2009 pursuant to a stipulated order.

Lenders' second scheduled UCC Sale.Isack Rosenberg's voluntary chaptcr 11 filing.Abraham Rosenberg's voluntary chapter 11 filing.Yitzchock Schwartz's involuntary chaptcr 11 filing.

'"

(.

Edward E. NeigerNEIGERLLPIII John Street, Suite 800New York, New York 10038Tel: 212-267-7342Facsimile: 212-406-3677Email: eneigerCZV.neigerllp.com

Attorneys for NCC Capital, LLC

UNITED STATES BANKRUPTCY COURTEASTERN DISTRICT OF NEW YORK-----------------------------------------------------------xIn re:

Isaac Rosenberg,

Debtor.-----------------------------------------------------------x

Chapter 11

Case No. 09-46326

NOTICE OF APPEARANCE AND DEMAND FOR SERVICE OF PAPERSAND REQUEST TO BE ADDED TO MASTER SERVICE LIST

PLEASE TAKE NOTICE that the undersigned appears in the above-captioned case on

behalf ofNCC Capital, LLC ("NCC Capital"), a creditor in the above-captioned proceeding,

and pursuant to Rules 2002 and 9010(b) of the Federal Rules ofBankruptcy Procedure and

section 11 09(b) of the Bankruptcy Code, demands that all notices given or required to be given

and all papers served in this case be delivered to and served upon the party identified below at

the following address and further requests to be added to the Master Service List:

Edward E. NeigerNeiger LLP111 John Street, Suite 800New York, New York 10038Tel: 212-267-7342Fax: 212-406-3677E-mail: eneiger@neigerllpcom

PLEASE TAKE FURTHER NOTICE that pursuant to section 1109(b) of the

Bankruptcy Code, the foregoing demand includes not only the notices and papers referred to in

· .

the above-mentioned Bankruptcy Rules, but also includes, without limitation, all orders,

applications, motions, petitions, pleadings, requests, complaints or demands, whether formal or

informal, written or oral, transmitted or conveyed by mail delivery, telephone, facsimile or

otherwise, in this case.

This Notice of Appearance and any subsequent appearance, pleading, claim, or suit is not

intended nor shall be deemed to waive NCC Capital's: (i) right to have final orders in noncore

matters entered only after de novo review by a district court judge; (ii) right to trial by jury in any

proceedings so triable herein or in any case, controversy or proceeding related hereto; (iii) right

to have the reference withdrawn by the United States District Court in any matter subject to

mandatory or discretionary withdrawal; or (iv) other rights, claims, actions, defenses, setoffs or

recoupments to which NCC Capital is or may be entitled under agreements, at law, or in equity,

all of which rights, claims, actions, defenses, setoffs, and recoupments expressly are hereby

reserved.

Dated: New York, New YorkAugust 28, 2009

By.(;:#/(/1/l /1war . NeigeBftt-v r

NEIGER LLPIII John Street, Suite 800New York, New York 10038Tel: (212) 267-7342Fax: (212) 406-3677Email: eneiger@neigerllp.com

1782823.1

POLSINELLI SHUGHART PC Attorneys for RCG Longview II, L.P., RCGLV Maspeth LLC, and Galster Funding, L.L.C. 7 Penn Plaza, Suite 600 New York, New York 10001 (212) 684-0199 Fax: (212) 684-0197 Daniel J. Flanigan UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X In re: ABRAHAM J. ROSENBERG, Debtor.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X

Chapter 11

Case No.: 09-46237 (CEC)

OBJECTION OF RCG LONGVIEW II, L.P., RCGLV MASPETH LLC, AND GALSTER FUNDING, L.L.C., TO DEBTOR’S APPLICATION SEEKING EXTENSION OF TIME

TO FILE INITIAL FILINGS, SCHEDULES AND STATEMENTS TO THE HONRABLE CARLA E. CRAIG, CHIEF UNITED STATES BANKRUPTCY JUDGE:

Debtor Abraham J. Rosenberg has filed his Application Seeking Extension of Time to

File Initial Filings, Schedules and Statements (the “Application”) and in connection therewith

has announced his intention to present to the Court an Order approving the Application on

August 26, 2009. RCGLV Maspeth LLC (“RCGLV”), RCG Longview II, L.P. (“RCG II”), and

Galster Funding, L.L.C. (“Galster”) (RCG II, RCGLV, and Galster being sometimes

collectively referred to herein as “Lenders”), by and through their undersigned counsel, object to

the Application and submit the following in support of their Objection:

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Background

Abraham Rosenberg, Isack Rosenberg, and Yitzchock Schwartz Cases

1. Abraham Rosenberg (“AR”) is the brother and business partner of Isack

Rosenberg (“IR”), the debtor in Case No. 09-46326 (CEC), filed the same day as AR’s case. AR

and IR are also business associates of Yitzchock Schwartz (“Schwartz”) against whom a

perhaps collusive or otherwise improper involuntary case was filed by a single creditor on the

same day, July 28, 2009, as the AR and IR voluntary cases were filed. All three cases were filed

in order to invoke the automatic stay to prevent a UCC sale of Lenders’ collateral scheduled to

occur at 10:30 a.m. on the date of filing.

Maspeth Preferred Equity Investment, McCaren Loan

2. The UCC Sale and the bankruptcy filings were the culmination of a long and

painful series of events. IR owes the Lenders in excess of $22,000,000 arising out of RCGLV’s

preferred equity investment in a condominium project in Williamsburg known as Olive Park

Condominium owned by Maspeth Properties LLC, a New York limited liability company

(“Maspeth LLC”) located at 84 and 100 Maspeth Avenue, Brooklyn, New York (“Maspeth

Project”) and a loan to IR on a condominium project in Williamsburg known as McCaren Park

Mews Condominium owned by McCaren Park Mews LLC, a New York limited liability

company (“McCaren LLC”) located at 214 North 11th Street, Brooklyn, New York (“McCaren

Project”). The amount owed on the Maspeth-related obligations (“Maspeth Obligations”)

exceeds $7,000,000 and on the McCaren-related obligations (“McCaren Obligations”) exceeds

$15,000,000.

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Maspeth Collateral

3. As collateral for the preferred equity obligations of Maspeth LLC and IR to

RCGLV, IR and AR granted to RCGLV a security interest in the following collateral:

• IR’s Class B Member Interests in Maspeth LLC;

• 100% of the ownership interests in Boro Park Home Center Corporation, a

New York corporation that owns and operates a “home center” business at

4601 New Utrecht Avenue, Brooklyn, New York (“Boro”);

• 100% of the ownership interests in Certified Lumber Corporation, a New

York corporation that owns and operates a lumber yard on the waterfront at

484 Kent Avenue a/k/a 1-9 Division Street, Brooklyn, New York

(“Certified”);

• 100% of the ownership interests in Waterfront Realty II LLC that owns and

operates a warehouse property adjacent to Certified’s property at 462 Kent

Avenue, Brooklyn, New York (“Waterfront”).1

McCaren Collateral

4. As collateral for the McCaren Obligations, IR, AR, and Schwartz granted to RCG

II and Galster a security interest in the following collateral:

• 100% of the ownership interests in McCaren LLC;

• 100% of the ownership interests in Certified;

• 100% of the ownership interests in Waterfront.

1 Waterfront is actually not located on the waterfront while Certified is so located, a source of at least occasional confusion of the two entities.

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Maspeth Default, Forbearance

5. RCGLV is the Class A Member of Maspeth LLC, and IR was, until the filing of

his bankruptcy petition, the Class B Member of Maspeth LLC, although now, as provided in

sections 6.3.2 and 6.1.2 of the Maspeth LLC Operating Agreement, IR is no longer a member but

holds a mere Economic Interest in Maspeth LLC as his bankruptcy filing constituted an Event of

Involuntary Withdrawal under the Maspeth LLC Operating Agreement. The Operating

Agreement of Maspeth LLC required that the Class A member’s investment be redeemed on

October 1, 2007, nearly two years ago, and further required IR “to contribute such funds to

[Maspeth] as are necessary to allow for the timely redemption of the Class A Member’s

Membership Interest.” Section 6.9, as amended by the Fourth Amendment to the Maspeth LLC

Operating Agreement. Maspeth LLC failed to redeem RCGLV’s preferred equity investment,

and IR failed to contribute the necessary funds.

6. Notwithstanding Maspeth LLC’s and IR’s defaults, RCGLV entered into a

Forbearance Agreement with IR and AR whereby RCGLV granted an additional period of time,

until September 30, 2008, for Maspeth LLC and IR to pay their obligation but IR and Maspeth

LLC failed to do so.

McCaren Default, Forbearance

7. RCG II and Galster loaned IR $13,000,000 for the purpose of assisting him in

completing construction of the McCaren Project (though the Project is still incomplete and being

foreclosed on by its mortgage lender as discussed more fully below). The McCaren LLC is

owned by IR and Yitzchock Schwartz. The McCaren loan was due and payable on March 1,

2008 but IR failed to pay as agreed.

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8. Notwithstanding IR’s default, RCG II and Galster entered into a Forbearance

Agreement whereby RCG II and Galster granted an additional period of time, until August 28,

2008, for IR to pay his obligation but IR failed to do so.

Unauthorized Mortgages

9. On or about November 17, 2007, prior to the time the Forbearance Agreements

were signed, Debtor, Maspeth LLC, Boro, Waterfront and another entity that is, on information

and belief, owned and controlled by IR and AR, Franklin Realty Corp.,2 executed and delivered

to 32nd Street Investors III LLC (“32nd Street”) a Mortgage, Assignment Of Leases And Rents

And Security Agreement to secure a debt of $6,000,000 (“32nd Street Mortgage”). The 32nd

Street Mortgage purported to grant 32nd Street a security interest in, among other things, the real

property owned by Maspeth LLC, Boro, and Waterfront, the ownership interests in which were

all pledged at that time to Lenders. The Lenders believe the 32nd Street Mortgage violated

various provisions of the Maspeth LLC Operating Agreement and the Pledge Agreements that

secured the Maspeth LLC and McCaren LLC Obligations. But, whether the Lenders are correct

in that belief or not, in any case IR and AR did not disclose the existence of the 32nd Street

Mortgage when negotiating and entering into the Forbearance Agreements. Tellingly, the 32nd

Street Mortgage was not recorded until September 8, 2008, after the Forbearance Agreements

were signed, thus making it impossible for the Lenders to discover its existence until after that

time. The Lenders believe that the evidence overwhelmingly demonstrates that IR, AR, 32nd

Street, Maspeth, Boro, and Waterfront conspired to delay the recording and to otherwise hide the

existence of the 32nd Street Mortgage from Lenders in order to induce Lenders not to declare

2 Lenders believe that Franklin Realty is also owned by AR and IR and that it may operate a specialized catering business or other businesses.

1782823.1 6

default and exercise their remedies at that time and to induce Lenders to enter into the

Forbearance Agreements.

10. In addition, the Lenders have discovered that, on or about February 12, 2008

(following the failure to pay the redemption amount on October 1, 2007, but prior to the

Forbearance Agreement in July 2008), Aron Deutsch (the designated Manager of Maspeth LLC

pursuant to Section 5.1.1 of Operating Agreement) and Maspeth LLC, with the definite

knowledge and participation of IR and perhaps of AR as well, executed and delivered to NCC

Capital, LLC (“NCC”) a Collateral Mortgage to secure an indebtedness of $1,800,000.00 (the

“NCC Mortgage”). The NCC Mortgage purported to grant NCC a security interest in, among

other things, 35 condominium units and other real property owned by Maspeth LLC.

11. As with the 32nd Street Mortgage, IR and AR did not disclose the existence of the

NCC Mortgage to the Lenders at the time of the Forbearance Agreements. Just like the 32nd

Street Mortgage, the NCC Mortgage was not recorded until November 20, 2008, much later than

it was signed and delivered, in order, the Lenders believe, to keep it hidden from the Lenders

until after the Forbearance Agreements were signed. Further support for this fraudulent

motivation is the fact that a related February 12, 2008 Mortgage between NCC and Franklin

Realty Corp. was recorded almost immediately upon execution.

State Court Litigation and UCC Sale

12. In early 2009 the Lenders filed a lawsuit in the Supreme Court of New York,

King’s County, Judge Carolyn E. Demarest, Index No. 2324/09 against IR, AR, Maspeth LLC,

Waterfront, Boro, Certified, Aron Deutsch, 32nd Street, and NCC seeking various forms of relief

due to the events and transactions described above (“State Court Litigation”).

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13. The Lenders also scheduled a UCC Sale of the collateral (“UCC Sale”) for

March 25, 2009; however, a temporary restraining order was entered in the State Court Litigation

enjoining the sale. At the preliminary injunction hearing on April 28, 2009, the sale was

rescheduled to July 28, 2009 pursuant to a stipulated order entered into in the State Court

Litigation, giving AR and IR an additional 90 days. It was perfectly clear that there would be no

further postponements of the UCC Sale and that on July 28 the debtors would either have to

either pay in full or file bankruptcy. Although AR and IR made a last-minute futile attempt to

persuade Judge Demarest, and Schwartz made such an attempt in the Appellate Division of the

King’s County Supreme Court, to seek a further postponement of or stay of the UCC Sale, their

efforts predictably and utterly failed.

Filings Were Not The Result Of An “Emergency”

14. Thus, AR, IR, and Schwartz had several months in which to prepare for their

bankruptcy filings. There was nothing “emergency” about their filings except the “emergency”

caused by their own persistent refusal to honor any agreement or obligation on their part

including a stipulation solemnly entered into before Judge Demarest. There was thus no excuse

whatsoever for the deficient (indeed, virtually non-existent) information filed with their

bankruptcy petitions.

Current Situation of Lenders’ Collateral/Property Of The Bankruptcy Estates

15. The business interests of AR and IR, the ownership interests that are collateral for

the more than $22,000,000 owed to Lenders, are rapidly deteriorating if not collapsing,

evidenced by the following:

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Waterfront

16. Capital One Bank, N.A. has filed a mortgage foreclosure action against the

Waterfront Property to enforce an outstanding obligation in the principal amount of

$3,579,627.11 plus interest from and after January 1, 2009. Capital One’s counsel has informed

Lenders’ counsel that it intends to file a Motion for Summary Judgment momentarily.

17. Moreover, the 32nd Street Mortgage was “spread” to Waterfront’s property by an

instrument dated September 8, 2008, further undermining Lenders’ collateral position as the

pledgee of the ownership interests in Waterfront since, if the NCC Mortgage is valid as against

Waterfront’s property and Lenders, Lenders are structurally subordinated to it. Lenders believe

that the NCC Mortgage is in default and could be subject to a foreclosure action at any time if

one has not already been filed.

18. Mortgage foreclosure actions pursuant to these mortgages may not be subject to

the automatic stay of the IR and AR bankruptcies as they seek foreclosure against Waterfront’s

property, which is not in bankruptcy.

19. Thus, the ownership interests of IR and AR in Waterfront, which are collateral for

the Maspeth and McCaren Obligations, are, at the very best, rapidly deteriorating in value (with

interest on the mortgage obligations probably accruing at default rates and substantial attorneys’

fees and other costs being incurred), and at worst, likely to soon be effectively eliminated and

rendered entirely worthless.

Certified

20. The NCC Mortgage was spread to the Certified’s property by an instrument dated

November 14, 2008, further undermining Lenders’ collateral position as the pledgee of the

ownership interests in Certified since, if the 32nd Street Mortgage is valid as against the

1782823.1 9

Certified’s property and Lenders, Lenders are structurally subordinated to it. Lenders believe

that the 32nd Street Mortgage is in default and could be subject to a foreclosure action at any

time if one has not already been filed.

21. Also, Lenders believe that there is another mortgage, senior to the NCC

Mortgage, in favor of Bank of Smithtown securing an obligation in the original principal amount

of $1,000,000. Lenders have no knowledge of the status of this mortgage, but, given everything

else that has happened and continues to happen, there is no reason to believe that the mortgage is

not now, or will not soon be, in default.

22. Mortgage foreclosure actions pursuant to these mortgages may not be subject to

the automatic stay of the IR and AR bankruptcies as they seek foreclosure against Certified’s

property, which is not in bankruptcy.

23. Thus, the ownership interests of IR and AR in Certified, which are collateral for

the Maspeth and McCaren Obligations, are, at the very best, rapidly deteriorating in value (with

interest on the mortgage obligations probably accruing at default rates and substantial attorneys’

fees and other costs being incurred), and at worst, likely to soon be effectively eliminated and

rendered entirely worthless.

McCaren Project

24. The McCaren Project is subject to a mortgage securing obligations in excess of

$42,000,000 held by Capital One Bank, N.A. Capital One has filed a mortgage foreclosure suit

and has just filed a motion for summary judgment in the case.

25. The mortgage foreclosure action may not be subject to the automatic stay of the

IR, AR, and Schwartz bankruptcies as it seeks foreclosure against the property of McCaren LLC

which is not in bankruptcy.

1782823.1 10

26. Thus, the ownership interests of IR and Schwartz in the McCaren LLC, which are

collateral for the McCaren Obligations, are, at the very best, rapidly deteriorating in value (with

interest on the mortgage obligations probably accruing at default rates and substantial attorneys’

fees and other costs being incurred), and at worst, likely to soon be effectively eliminated and

rendered entirely worthless.

Boro

27. The 32nd Street Mortgage also encumbers the Boro’s property. Lenders believe

that the 32nd Street Mortgage is in default and could be subject to a foreclosure action at any

time if one has not already been filed.

28. Also, Lenders believe that there is another mortgage, senior to the 32nd Street

Mortgage, in favor of Brooklyn Federal Savings Bank securing an obligation in the original

principal amount of $1,900,000. Lenders have no knowledge of the status of this mortgage, but,

given everything else that has happened and continues to happen, there is no reason to believe

that the mortgage is not now, or will not soon be, in default.

29. Mortgage foreclosure actions pursuant to these Mortgages may not be subject to

the automatic stay of the IR and AR bankruptcies as they seek foreclosure against Boro’s

property, which is not in bankruptcy.

30. Thus, the ownership interests of IR and AR in Boro, which are collateral for the

Maspeth Obligations, are, at the very best, rapidly deteriorating in value (with interest on the

mortgage obligations probably accruing at default rates and substantial attorneys’ fees and other

costs being incurred), and at worst, likely to soon be effectively eliminated and rendered entirely

worthless.

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Maspeth Project

31. In the State Court Litigation, Judge Demarest appointed Frank Reilly, one of

Lenders’ employees, as co-manager, with Aron Deutsch, of the Maspeth Project, but the

appointment was to no avail as Deutsch and IR through his son Michael Rosenberg have simply

stonewalled and stiff-armed Reilly at every turn.3 For example, after Reilly was informed by the

property manager at the Maspeth Project that some of the rental tenants had given their monthly

rental checks to the property manager, he instructed the property manager that he should keep

possession of the rent payments and that they be used to pay the Maspeth Project’s future

common area obligations. Reilly informed Deutsch and Michael Rosenberg of those

instructions. Michael Rosenberg instead, without any authority, demanded that the rent

payments be sent to him on behalf of Maspeth LLC and threatened the property manager with

criminal prosecution if they were not immediately turned over. Despite Reilly’s instructions to

the contrary and over his protest, the property manager turned the rent payments over to Michael

Rosenberg. Reilly e-mailed Mr. Rosenberg and told him that those proceeds were not to be used

for any purpose without his approval. Reilly has not received any information about what

happened to those monies.

32. Meanwhile, Deutsch has informed Reilly that he is no longer the Manager of

Maspeth LLC. He told Reilly that he has turned over all of the Maspeth LLC records and control

to Isack Rosenberg’s son, Michael Rosenberg. Neither Judge Demarest’s Order nor the

Operating Agreement authorizes or contemplates that Michael Rosenberg, a stranger to Maspeth

LLC in every respect, act as Maspeth LLC’s Manager, the grossest possible usurpation.

3 Actually, RCGLV has had the right under the Operating Agreement to act as the sole Manager of the Maspeth LLC following the failure to pay the redemption amount; and Judge Demarest, in an effort, Lenders believe, to “cut the baby in half” on this issue, chose the co-manager approach instead, which has proved utterly ineffective.

1782823.1 12

33. The Maspeth Project is experiencing significant water damage because of

apparent construction defects. The water damage has already caused two of the top floor

balconies to partially collapse to the street below, fortunately not causing injury to any third-

parties. RCGLV is informed by its engineering consultant that additional repairs are necessary

to stop the damage from continuing and to ensure that additional collapses will not occur.

34. RCGLV has discovered other significant water issues at the Maspeth Project.

Tenants or unit owners on the top floor are complaining that water continues to leak into their

units. If this situation is not corrected, the property will deteriorate and Maspeth LLC may be

exposed to claims from the tenants or unit owners. In addition, the air conditioning units in the

hallways were incorrectly installed and cannot be used without causing further, significant leaks.

As a result, they have been disabled and the hallways have no air conditioning, causing

numerous tenant and condominium unit owner complaints. All of these issues need to be

immediately investigated and remedied to protect the Maspeth Project.

35. Until recently a few sales were occurring, to the benefit of all involved. However,

sales of condominium units at the Maspeth Project are now at a standstill since a $300,00

mechanic’s lien claim has been filed that makes sales of additional units impossible until it is

cleared. At least two sales have already been lost as a result of the lien.

36. To the extent the NCC and 32nd Street Mortgages are valid against the Property

and RCGLV, Lenders believe they are in default and now due and payable and perhaps accruing

default interest and attorneys’ fees and other costs.

37. Thus, the ownership interests of IR in Maspeth LLC, which are collateral for the

Maspeth Obligations, and RCGLV’s Class A ownership interests as well, are, at the very best,

1782823.1 13

rapidly deteriorating in value, and, at worst, likely to soon be effectively eliminated and rendered

entirely worthless.

General Situation

38. The above are just the real estate issues. But Boro and Certified are also

operating businesses with all the complements of operating businesses such as trade creditors

and employees. Lenders have almost no information on the financial or other condition of these

businesses including how much monies that AR and IR, and their relatives and other affiliates

and insiders, may be extracting from those businesses.

Debtor’s Motion Should Be Denied

` 39. As should be obvious from the above recitation, the Lenders’ collateral and the

property of this estate consists primarily of equity interests in various entities that operate various

businesses including a home center business and a lumber yard business, an unfinished

condominium (the McCaren Project) and a completed condominium (the Maspeth Project) with

remaining unsold units that are being rented. Most if not all of the Debtors’ businesses are in a

state of crisis. The Lenders and the other creditors in the case need as much information as fast

as they can obtain it in order to have any chance of preventing further deterioration, and perhaps

complete devaluation, of their interests in the property of the estate.

40. As support for Debtor’s extension request, Debtor states that his case was filed on

an emergency basis. As shown above, there was no emergency whatsoever. IR and AR had at

least 90 days to prepare for a filing. There is no excuse whatsoever for the sloppy way in which

their cases were filed. The way their cases were filed is just an extension of the approach these

Debtors take to everything--delay, delay, delay, obfuscate, confuse, delay some more. They are

very willing to take money from a lender but not so willing to pay it back. They are very willing

1782823.1 14

to take advantage of the protections offered by the Bankruptcy Code but not so willing to honor

even their most basic and minimal responsibilities under the Code.

41. Typical of the attitude of AR and IR is Debtor’s proffered excuse that “Debtor

had to be out of the country after the filing of this case which prevented the Debtor and his

counsel from working together to complete his filings.” Debtor offers no explanation as why he

“had to be out of the country” soon after he undertook the responsibility of becoming a debtor

under the Bankruptcy Code or why his trip outside of the United States rendered him unable,

with all of the cell phone, internet, electronic mail and related services generally available

worldwide, to complete his schedules, statement of financial affairs, or any of the required filings

at issue. The world may also wonder how he justified using estate funds to take a trip out of the

country.

42. Debtor also tries to justify his request for an almost two-month delay in providing

information required by the Bankruptcy Code, Rules, and Local Rules by claiming that his

brother, Debtor Isack Rosenberg, has “singular knowledge of their finances…” and that, due to

major surgery, “[Isack] is presently unavailable to provide the Debtor with information which is

essential for completing his schedules, statements, and other filings.” Debtor, by these

assertions, is essentially claiming that he cannot, without his brother’s assistance, provide any

information, including his own tax returns, information concerning his own assets and liabilities,

his bank accounts, his income, etc., without the assistance of his brother. Yet the Debtor states

that he has continued in possession of his property and operation of his business and that he is in

the business of managing a lumber and a hardware store. Surely someone with the intelligence

and knowledge necessary to co-manage a home center and lumber yard and perhaps other

businesses can provide the great majority of the information required by the filings in question

1782823.1 15

with limited, if any, assistance from his brother. While the Debtor’s claims may have some

validity with respect to the McCaren and Maspeth Projects, they have no credibility with respect

to Boro, Waterfront, Certified, Franklin Realty, and the other businesses in which he has an

ownership interest.

45. Finally, and at the risk of being charged with insensitivity to IR’s health situation,

it is hard to believe that recovery from a gall bladder operation takes anywhere near two months.

Just because IR cannot, according to his surgeon, report to work does not mean that he can do

nothing at all and that especially he cannot provide information or guide AR to the location of

any information that AR is somehow incapable of discovering for himself. Given the past

history of obfuscation and delay, counsel for Lenders may perhaps claim some justification for

believing that IR and AR may be taking advantage of IR’s health situation, exaggerating the

unfortunate situation to achieve some benefits from it, “gilding the lily” if you will.

46. In addition, there are numerous employees of the businesses, including surely,

accounting employees that could presumably assist the owner of the businesses in compiling any

business information required for the filings.

47. And there is the otherwise ubiquitous Michael Rosenberg, nephew of Abraham

and son of Isack, who is acting as the unappointed and unauthorized manager of the Maspeth

LLC and is otherwise involved in the businesses who can surely assist both his father and uncle

in this endeavor including especially information related to Maspeth and McCaren.

48. The Order submitted by the Debtor is cagey, vague, and unclear in the extreme,

stating that the Debtor will be granted an extension of time “to file his schedules, statements of

financial affairs and other missing documents herein,” which woefully insufficiently identifies

the items with respect to which Debtor may be granted an extension. (Note also that, while

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Debtor’s Motion requests an extension until September 30, 2009, the Order submitted by Debtor

purports to grant an extension “to and including December 30, 2009,” perhaps evidence of

Debtor’s real intention and goal). The following are the items that the Code, the Rules, and

Local Rules require AR to file--either already in the case or in the near future--and the Debtor

should be required to justify with respect to each particular item why he cannot provide the full

information (and if not the full information, as much of the information as possible now with the

full information to follow later):

Items Due at Time of Filing (July 28, 2009)

List of 20 Largest Unsecured Creditors pursuant to FRBP 1007(d) and Deficient

Filing Notice (“DFN”) [It is not credible that AR cannot complete this without the

assistance of his brother. In any event, with respect to this and other required

information, he should at a minimum be required to do the best he can and amend

later.]

Items Due within 15 days of Filing (August 12, 2009)

Disclosure of Compensation pursuant to FRBP 2016(b) and DFN. [This item is

the responsibility of Debtor’s counsel and it says everything about the Debtor’s

Motion that even this is included within it.]

Summary of Schedules (Official Form B6) per DFN

Statistical Summary of Certain Liabilities (Official Form B6) and DFN

Schedules A through J pursuant to FRBP 1007(b)(1) and DFN

Declaration Concerning Debtor Schedules (Official Form 6) DFN

Statement of Financial Affairs (Official Form 7). FRBP 1007(b)(1)(D) and DFN

1782823.1 17

Copies of Pay Statements received within 60 days of filing from any employer or

a statement indicating this requirement is not applicable. FRBP 1007(b)(1)(E)

and DFN.

Statement of Debtor’s monthly income. FRBP 1007(b)(5) and (c).

Statement of interest in any account or program of the type specified in § 521(c)

(education individual retirement account or qualified state tuition program).

FRBP 1007(b)(1)(F).

Debtor’s Affidavit due on August 12, 2009 (Local Rule 1007-4) must include the following

information:

whether debtor is a small business debtor

nature of debtor’s business and statement of circumstances leading to chapter 11

filing

names, addresses and members of, and professionals employed by, any committee

organized prior to order for relief and description of circumstances surrounding

formation

names, address, zip code, telephone number, names of persons familiar with

debtor’s account, amount of claim, whether claim is contingent, unliquidated,

disputed, or partially secured with respect to 20 largest unsecured claims

excluding insiders

names, address, zip code, claim description, collateral value of 5 largest secured

claims

summary of assets and liabilities

1782823.1 18

list of all debtor’s property in possession of any custodian, mortgagee, pledge,

assignee or secured creditor with name, address, and phone number, title of any

proceeding related thereto and court in which pending

list of premises owned, leased or held from which debtor operates

location of debtor’s significant assets, books and records, nature, value and

location of assets outside United States

nature and status of any action pending or threatened against debtor or its property

where a judgment against the debtor or seizure of its property may be imminent

amount paid and proposed to be paid for services for 30 day period following

petition to the individual debtor and if a financial consultant has been hired, to the

consultant

schedule, for 30 day period following petition, of estimated cash receipts and

disbursements, net cash gain or loss, obligations and receivables expected to

accrue but remaining unpaid, and any relevant information

such additional information as may be necessary to fully inform the court of

debtor’s rehab prospects.

August 20: First Monthly Operating Report (Monthly Operating Reports are due on the

20th of each month. Local Bankruptcy Rule 2015-1)

August 24: Tax Return – At least 7 days prior to date first set for 341 Meeting (scheduled

for August 31)

August 26: Report of financial information on entities in which Ch. 11 Debtor holds

interest (no later than 5 days before first date set for meeting of creditors). The report shall

include the value, operations and profitability of each entity. FRBP 2015.3. (Note that

1782823.1 19

copies of the report shall be served on the US Trustee, any committee formed, and any other

parties in interest that have filed a request therefor.) [This item is of the most critical possible

importance to Lenders and the other creditors of this estate.]

August 31, 2009: Debtor must bring to meeting or provide to trustee the following to the

341 meeting:

Evidence of current income

Statements of each depository and investment accounts

Documentation of monthly expenses

WHEREFORE, RCG II, RCGLV and Galster request the Court enter an Order denying

the Application and requiring, on pain of dismissal of the case, the Debtor to timely furnish all

required information, and for such other relief as may be just and equitable.

Dated: August 21, 2009 POLSINELLI SHUGHART PC

By: s/ Daniel J. Flanigan DANIEL J. FLANIGAN 7 Penn Plaza, Suite 600 New York, New York 10001 (212) 684-0199 Fax No. (212) 684-0197

Attorneys for RCG Longview II, L.P., RCGLV Maspeth LLC, and Galster Funding, L.L.C.

1782823.1

CERTIFICATE OF SERVICE

I, Daniel J. Flanigan, hereby certify that on the 21st day of August, 2009, a true and

correct copy of the Objection of RCG Longview II, L.P, RCGLV Maspeth LLC, and Galster

Funding, L.L.C., to Debtor’s Application Seeking Extension of Time to File Initial Filings,

Schedules and Statements was served electronically to Debtor’s counsel, the U.S. Trustee, and all

interested parties registered to receive ECF notification from the Court.

s/ Daniel J. Flanigan