UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION

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1 Dean M. Gloster (State Bar No. ) Gary M. Kaplan (State Bar No. 0) Telephone: () -00 Facsimile: () -0 gkaplan@fbm.com [Proposed] Attorneys for Debtors WALTER J. NG AND MARIBEL NG UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION 1 In re WALTER J. NG and MARIBEL NG, Case No. - RLE Chapter Case Tax I.D. No. xxx-xx- Debtors. [NO HEARING SET] Judge: Hon. Roger Efremsky 0 1 () -00 DECLARATION OF DEAN M. GLOSTER IN SUPPORT OF DEBTORS APPLICATION TO EMPLOY FARELLA BRAUN + MARTEL LLP AS COUNSEL I, Dean Gloster, declare as follows: 1. I am an attorney licensed to practice law in the State of California and before this Court. I am a partner in the law firm of ( FBM ), and am authorized to make this declaration in that capacity. Except as otherwise indicated, all statements in this Declaration are based on my personal knowledge, and, if called upon to do so, I could and would testify competently thereto.. I make this Declaration in support of the application (the Application ) by Walter J. Ng and Maribel Ng, the debtors in possession in the above-captioned case ( Applicant or the Debtors ) for authority pursuant to Section (a) of Title of the United States Code (the Bankruptcy Code ) and Federal Rule of Bankruptcy Procedure ( Bankruptcy Rule ) 0(a) to employ FBM as their bankruptcy counsel in the above-captioned Chapter case. GLOSTER DECL. ISO DEBTORS APPL. EMPL. Case: - Doc# Filed: 0// Entered: 0// ::0 Page 1 of

2 Applicant filed a voluntary petition for relief under Chapter of the Bankruptcy Code on May 1, 0 (the Petition Date ). A trustee has not been appointed for the Debtors, and they continue to function as debtors-in-possession pursuant to Sections 0 and 0 of the Bankruptcy Code.. FBM is experienced in representing debtors and trustees (and other parties)in cases and proceedings under the Bankruptcy Code and is well qualified to represent Applicant as debtors-in-possession in the above-captioned Chapter case.. FBM has acted as counsel for Debtor Walter Ng and his son Kelly Ng since June 0 regarding advice concerning creditor issues, potential liability issues, business interests and restructuring and related matters. FBM has been advising and assisting the Debtor since early 0 regarding pre-bankruptcy planning and advice and preparation for filing this case. As described in greater detail below, FBM has been paid current for services rendered pre-petition and is not a general unsecured creditor of Applicant.. As a condition to accepting representation of new clients or new matters for existing clients, FBM runs a conflicts check through its computer system. Given the voluminous number of creditors of this estate (e.g., there are approximately,000 creditors listed on the Creditor Matrix filed herein by the Debtors), FBM limited its conflicts inquiry to: (i) the Debtors; (ii) the Debtors secured creditor, Provident Credit Union; (iii) each of the entities listed on the List of Creditors Holding 0 Largest Unsecured Claims filed herein by the Debtors; (iv) each of the 0 largest unsecured creditors of the following entities in which Debtor Walter Ng holds interests: RE Loans, LLC; RE Reno, LLC; and Mortgage Fund 0, LLC; and (vi) each of the parties identified as plaintiffs in any lawsuits against the Debtors of which FBM is aware. That check disclosed the following potential conflicts: (a) As discussed above, FBM continues to represent Kelly Ng, the son of the Debtors, including in connection with lawsuits brought against Kelly and Debtor Walter (among others) No claims have been brought or asserted by Kelly Ng against Debtor Walter Ng or by Debtor Walter Ng against Kelly Ng. In connection with its representation of Walter Ng and Kelly () -00 Ng prior to the filing of the petition, at the direction of Kelly Ng, FBM represented the interests GLOSTER DECL. ISO DEBTORS APPL. EMPL. - - Case: - Doc# Filed: 0// Entered: 0// ::0 Page of

3 1 0 1 of Bar-K, Inc., a corporation which is 0% owned by Kelly Ng, and which at a prior time was (but no longer is, and was not at the time of the representation) 0% owned by Walter Ng and Maribel Ng, with respect to funds owed to Bar-K, Inc. (b) FBM represents J. Robert Orton III and Amy Silver Orton, each of whom are investors in Mortgage Fund 0 and in RE Loans, LLC; as noted above, Debtor Walter Ng is a principal in each of Mortgage Fund 0 and RE Loans, LLC. The matters for which FBM represents the Ortons are unrelated to Mortgage Fund 0, RE Loans or the Debtors. (c) FBM represents certain entities (Historic Central Building, LLC, Sansome and Pacific Investments, LLC, and Fort-Baker Retreat Group, LLC) in which the Jordan/Delaney family holds significant interests. The Jordan/Delaney Family Trust (for which Wayne Jordan and Quinn Delaney are trustees), are investors in Mortgage Fund 0 LLC, in which Debtor Walter Ng is a principal. The matters for which FBM represents the Jordan/Delaney-related entities are unrelated to Mortgage Fund 0 or Debtor Walter Ng, and FBM does not represent the Jordan/Delaney Family Trust (the investor in Mortgage Fund 0) in any matters.. While I do not believe that any of the foregoing matters constitutes an actual conflict, it is here described in the interests of full disclosure.. Because of the diversity and size of FBM s practice, it is possible that FBM may have rendered legal services to certain creditors or other interested parties or may have been involved in matters in which attorneys for creditors or other interested parties were also involved, in matters unrelated to this bankruptcy case. Similarly, various attorneys of FBM may have had business associations with certain affiliated parties, creditors or other interested parties that have no connection with FBM s representation of Applicant. In light of the depth and scope of FBM s practice, there may be other relationships or connections between this firm or its attorneys and various creditors and parties in interest and their professionals. In addition, some of the attorneys at FBM may also hold equity securities of publicly traded entities which are creditors of the Debtors, or which are parties in interest in this case. FBM does not believe that any such relationships conflict with its proposed representation of Applicant in this case or affect its () -00 qualification as disinterested under the Bankruptcy Code. However, in the event that FBM GLOSTER DECL. ISO DEBTORS APPL. EMPL. - - Case: - Doc# Filed: 0// Entered: 0// ::0 Page of

4 1 0 1 discovers any material associations beyond those noted above, it will promptly inform this Court during the period of its employment. In all events and circumstances, FBM will not represent any creditors or other parties in interest in connection with any matter related to this Chapter case.. To the best of my knowledge, information and belief, none of FBM s attorneys is either (a) a relative of the bankruptcy judge presiding over this bankruptcy case, or (b) a relative of the United States Trustee ( UST ) for the region where this case is pending.. Except as disclosed above, to the best of my knowledge, information and belief: (a) FBM has no material connections with the Debtors, their creditors or any other party in interest or their respective attorneys and accountants; (b) FBM neither holds nor represents any interest adverse to the Debtors estate; and (c) FBM is a disinterested party in the Debtors bankruptcy case within the meaning of Section 1() of the Bankruptcy Code.. Applicant has agreed to the employment of FBM according to FBM s standard terms, which include monthly billing for professional services rendered and reimbursement of expenses incurred on behalf of Applicant, subject to Court approval. FBM s fees are computed and billed on a time-expended basis in accordance with the standard hourly rates assigned to the particular attorneys and legal assistants performing the work. 1. The primary attorneys and legal assistants presently responsible for this representation and their current hourly rates are set forth immediately below: Attorney Hourly Rate Dean Gloster $0 Gary Kaplan $0 Legal Assistant Hourly Rate Kristen Schwartz $0 Some work may be done by other attorneys or legal assistants whose hourly rates may be different from those persons listed above. The standard hourly billing rates for FBM s attorneys range from $ per hour to $0 per hour, and the standard hourly billing rates for FBM s legal assistants range from $00 per hour to $00 per hour. These rates are subject to periodic adjustment, and the applicable rates are those in effect at the time the services are rendered. In () -00 addition, the terms and conditions of FBM s employment include reimbursement of a number of GLOSTER DECL. ISO DEBTORS APPL. EMPL. - - Case: - Doc# Filed: 0// Entered: 0// ::0 Page of

5 1 0 1 expenses incurred in the course of the representation, such as photocopying, telecommunications charges, computer research, delivery services and travel.. The terms of FBM s employment by Applicant include an agreement (a) that FBM is entitled to satisfy the amounts due under current invoices from any funds held in a retainer account, (b) that FBM has a security interest on all funds held by the firm from time to time as retainers and (c) that FBM may request that Applicant replenish the retainer from time to time.. Prior to commencement of this Chapter case, FBM received from time to time retainers in the aggregate amount of $, ($, on //; $,000 on //; and $0,000 on // 1 ) in connection with the representation of Applicant (and, with respect to matters unrelated to this bankruptcy case, Debtors son Kelly Ng, as discussed above), $,. of which remains available as of the Petition Date. The total pre-petition payments to FBM equals $1,. (the difference in the foregoing amounts is due to aggregate accrued interest on the retainer balance of $.).. More specifically, FBM applied previously received retainers during the ninety days prior to the Petition Date, and applied those payments to its invoices, as follows: (a) On //, FBM applied $,0. from the retainer balance received in 0 on account of: (i) an invoice in the amount of $,1.0, dated 01/1/, covering services rendered for the period ending 1/1/; (ii) an invoice in the amount of $,0.00, dated //, covering services rendered for the period ending 1/1/; and (iii) an invoice in the amount of $,.00, dated //, covering services rendered for the period ending //. (b) On //, FBM applied $,0.00 from the retainer balance received in 0 on account of an invoice in the amount of $,0.00, dated 0//, covering services rendered for the period ending /1/. (c) On /1/ (prior to the filing of the petition commencing this case), FBM applied $,0. from the retainer balance on account of an invoice in the amount of $,0., dated 0/1/, covering services rendered for the period ending //. () The $0,000 amount was paid by cashiers checks to replace $,000 of non-cashiers checks that Applicant gave FBM on //. GLOSTER DECL. ISO DEBTORS APPL. EMPL. - - Case: - Doc# Filed: 0// Entered: 0// ::0 Page of

6 FBM believes that none of the payments identified in paragraph of this Declaration constitutes an avoidable preferential transfers under Section of the Bankruptcy Code, because at the time of each payment, FBM was a fully secured creditor (i.e., was holding a retainer balance in excess of the debt owed to FBM by Applicant, as evidenced by FBM s invoices). FBM further believes that to the extent that any of the payments identified in paragraph of this Declaration might arguably constitute preferential transfers, they were made within the ordinary course of business between Applicant and FBM, so that such payments would not be recoverable as preferential transfers by the estate pursuant to Bankruptcy Code Section (c)().. In an effort expeditiously and fairly to dispose of any objection to FBM s proposed employment by the estate on account of the firm s receipt of potentially preferential payments from Applicant prior to the commencement of this case, as set forth in paragraphs of this Declaration, FBM proposes that if any party in interest wishes to raise such objection to FBM s employment, it must file a written objection within ten () days of the filing of the Application for Employment. If any such timely objection is filed, or if the Bankruptcy Court indicates that it believes that the matter of FBM s disinterestedness should be determined prior to its employment by the estate, then FBM proposes that it set a Status Conference before the Bankruptcy Court pursuant to Section of the Bankruptcy Code, on not less than five () days notice to: (i) Provident Credit Union, the Debtors secured creditor; (ii) the creditors listed on the List of Creditors Holding 0 Largest Unsecured Claims filed herein by the Debtors; (iii) the Office of the United States Trustee and (iv) any party that timely files an objection regarding FBM s disinterestedness, at which time the parties may be heard on the most appropriate manner of resolving this issue, and the Bankruptcy Court shall determine how best to proceed. () -00 FBM notes that the $,0. of its retainer balance applied on // to the three months of prior invoices is consistent with FBM s application of $,. from its retainer balance on 1// on account of three months of prior invoices (invoice in the amount of $,., dated //, covering services rendered for the period ending /0/; invoice in the amount of $1,., dated //, covering services rendered for the period ending /1/; and invoice in the amount of $,.0, dated 1//, covering services rendered for the period ending /0/), and notes that the retainer was received in 0 prior to the services for which it was applied to pay. GLOSTER DECL. ISO DEBTORS APPL. EMPL. - - Case: - Doc# Filed: 0// Entered: 0// ::0 Page of

7 1. FBM understands that the compensation paid or promised to FBM for services to be rendered in connection with this case is limited to such amounts as may be allowed by the Court. If the Application is approved by the Court, FBM intends to apply to this Court, from time to time, for compensation (based on the normal hourly rates of the professionals employed by FBM) and reimbursement of expenses in accordance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules the rules and orders of this Court, the Court s Guidelines for Compensation and Expense Reimbursement of Professionals and Trustees and applicable UST Guidelines. FBM understands that the allowed fees and reimbursable expenses of FBM will constitute administrative expenses of the Debtors estate pursuant to the Bankruptcy Code. No agreement or understanding exists between FBM and any other person or entity for a division of the compensation in connection with this bankruptcy case.. I submit this declaration in accordance with Sections (a) and (a) of the Bankruptcy Code and Bankruptcy Rules 0(a), 0(b) and 00(a). I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed this day of May, 0, in San Francisco, California. /s/ Dean Gloster Dean Gloster 0 \. 1 () -00 GLOSTER DECL. ISO DEBTORS APPL. EMPL. - - Case: - Doc# Filed: 0// Entered: 0// ::0 Page of