Case TPA Doc 7 Filed 02/13/17 Entered 02/13/17 15:31:00 Desc Main Document Page 1 of 4

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1 Case TPA Doc 7 Filed 02/13/17 Entered 02/13/17 15:31:00 Desc Main Document Page 1 of 4 UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA IN RE: UNIQUE VENTURES GROUP, LLC, Bankruptcy Case No Chapter 11 DEBTOR. FIRST DAY DECLARATION Now Comes Eric E. Bononi, the State Court Receiver, Chief Operating Officer and Chief Restructuring Officer of the Debtor pursuant to an Order of the Court of Common Pleas of Allegheny County, Pennsylvania, and declares as follows: History of Business Entity The Debtor, Unique Ventures Group, LLC ( Unique ) is a Pennsylvania Limited Liability Company with original members consisting of Joseph Rusnock, Michael Sabatini, Jack Kuhn, Carl Baker and Jack Nalipinsky. Unique currently owns 28 Perkins restaurants and may have an interest in ten (10) Burger King Restaurants. See, Exhibit A and Exhibit B. Unique originally purchased the Perkins restaurant operations for a total purchase price of approximately $38,000,000. Spirit Funding financed the purchase transaction by acquiring fee simple title to these restaurants and then back to the Debtor 1. Unique pays Spirit $265, per month to lease back these locations. After paying Spirit Funding and other monthly operating expenses, Unique paid itself monthly accounting and management fees and pays salaries to officers and directors. Historically, the operation of the restaurant businesses grossed approximately $38,000,000 per year. However, after paying Spirit and certain operating expenses, Unique reportedly was netting only approximately $500,000 per year. In an effort to expand its profits, Unique purchased the Damon s trademark out of this bankruptcy court. Franchisees of Damon s are required to pay fees of approximately $75,000 per year, which should be revenue to Unique. 1 More detail on this transaction is outlined in the Cash Collateral Motion and Order that will be filed in this case.

2 Case TPA Doc 7 Filed 02/13/17 Entered 02/13/17 15:31:00 Desc Main Document Page 2 of 4 Certain Insiders of the Debtor formed a new business entity known as Elite Restaurant Group, LP (referred to herein as Elite ) on March 3, Elite is a Pennsylvania limited partnership which was originally formed to be the transferee of all of the assets of Unique. The Controller for both Unique and Elite is Dewayne Chandler. There is significant infighting among the insiders of both Unique and Elite regarding ownership interests. Further, and as more fully set forth below, there were major issues with inaccurate bookkeeping for these businesses, as there were two entities paying the debts of Unique. Furthermore, significant delinquent sales and payroll tax obligations posed a dire situation for these businesses. Receivership On or about February 16, 2016, an action was commenced in the Court of Common Pleas of Allegheny County, Pennsylvania, at case number GD , seeking, among other relief, the appointment of a Receiver for Unique. See, Exhibit C. By Order dated October 13, 2016, the Honorable Christine Ward appointed, Eric E. Bononi, as the Receiver for Unique. A copy of that Order is attached as Exhibit D. Pursuant to the terms of the Receivership Order, Judge Ward substituted the Receiver for and displaced the executive committee of Unique and the Receiver was granted full authority to exercise all powers and authority given to the Executive committee by the amended Operating Agreement of Unique Ventures Group, LLC dated July 31, The Receiver is the defacto corporate governance of the Debtor. Currently, the Receiver is in possession of all the Debtor s assets ( Property ) and is responsible for the operation, management, maintenance and preservation of the Property under the terms of the Receivership Order, including taking such steps as the Receiver believes are necessary in order to manage, operate, protect, and preserve the Property. Upon his appointment, the Receiver began to investigate various allegations made by the rival factions of insiders and to perform a forensic accounting of the business. Upon his appointment, the Receiver hired Chuck Dahlman, a former IRS criminal investigator of MDO Investigations in Pittsburgh, to investigate the various allegations, to perform forensic accounting, and to assist the Receiver in this matter. The corporate accounting books were approximately eight months behind.

3 Case TPA Doc 7 Filed 02/13/17 Entered 02/13/17 15:31:00 Desc Main Document Page 3 of 4 As a result of the investigation, the Receiver has determined that the so-called Elite Restaurant Group, LP, does not conduct any business operations and has no revenue of its own. Instead, all of the funds flowing through Elite were the revenue, assets and property of Unique. Further, at the time of his appointment, the Receiver learned that Unique owed approximately $500,000 in delinquent sales tax payments to the Pennsylvania Department of Revenue. This considerable tax delinquency was confirmed by one of the principals of Unique during an evidentiary hearing on October 19, What was not known to the Receiver at the time, nor disclosed to the Court by any of the owners of Unique, was that Unique additionally owed significant delinquent tax payments to other taxing authorities, including six-figure sales tax obligations to the State of Ohio and six-figure employment tax obligations to the United States Treasury, for a total of approximately $1.8 million. Based upon the Receiver s subsequent investigation, it appears that Unique remains delinquent in the following tax payments (excluding delinquent real estate tax obligations): Taxing Authority Type Delinquency United States Treasury, Internal Revenue Service Employee Withholding/Payroll Taxes $518,910 Ohio Department of Revenue Sales Taxes $794,442 Pennsylvania Department of Revenue Sales Taxes $510,941 These unpaid tax obligations constitute a considerable financial challenge to Unique, and substantially threatens its ability to continue operations. (By way of example, at the time of the Receiver s appointment, a principal of Unique had already negotiated with the Pennsylvania Department of Revenue to make payments of $5, per day against the past-due balance. Payments in that amount are unsustainable, particularly during Unique s slower winter season. The Receiver has since negotiated a reduced payment of $13, per week, but even this amount is difficult for Unique to meet while also paying other operating expenses.) This Chapter 11 filing will assist in providing an amount of breathing room necessary to help the reorganization of these restaurant operations most likely by a 363 Sale Transaction or a recapitalization and Plan of Reorganization. In addition to these priority tax obligations, Unique currently owes general accounts payable of approximately $2,250,000.

4 Case TPA Doc 7 Filed 02/13/17 Entered 02/13/17 15:31:00 Desc Main Document Page 4 of 4 Additionally, the ownership and structure of Unique and its related entities, such as CBK Future s, Inc. which may own an interest in ten Burger King locations in Ohio, and Damon s of North America, LLC, which owns the trademark and associated Damon s property (but which assets were paid for by Unique), are unclear and confused. This confusion in corporate structure further impairs the operations of Unique and the potential sale of assets. For example, CBK Future s, Inc. has and continues to operate at a significant financial loss. Historically, Unique has funded those losing operations, and CBK Ventures continues to request that it do so. However, as the entities are constituted, it does not appear that Unique has any financial obligations to or on behalf of CBK Ventures, and should not be funding its losses. Finally, the Receiver has transferred the payroll the substantial employee payroll operations to ADP for outside handling, as the payroll is approximately $15 Million yearly. This will ensure the timely payment of all payroll taxes. The Debtor in Possession planned this filing for Monday, February 13, 2017 so that the employees were all paid current and there are no prepetition unsecured wage creditors. Date: February 13, 2017 /s/ David K. Rudov David K. Rudov, Esq. Pa I.D The Frick Building 437 Grant Street, Suite 1806 Pittsburgh, PA david@rudovlaw.com Respectfully submitted, Bononi & Company, P.C. /s/ Eric E. Bononi Eric E. Bononi, Esq., CPA Court Appointed Receiver and Chief Operating Officer 20 N. Pennsylvania Avenue, Suite 201 Greensburg, PA eric@bononilaw.com /s/ Scott M. Hare Scott M. Hare, Esq. Pa I.D The Frick Building 437 Grant Street, Suite 1806 Pittsburgh, PA scott@scottlawpgh.com Proposed Counsel to the Debtor

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