Case JAD Doc 681 Filed 04/17/18 Entered 04/17/18 09:39:38 Desc Main Document Page 1 of 4

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1 Case JAD Doc 681 Filed 04/17/18 Entered 04/17/18 09:39:38 Desc Main Document Page 1 of 4 UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA IN RE: PITTSBURGH ATHETIC ASSOCIATION, et al., JOINTLY ADMINISTERED AT BANKRUPTCY NO JAD Bankruptcy Nos: JAD JAD Debtors CHAPTER 11 Document Number: COMMONWEALTH OF PENNSYLVANIA, Hearing Date: May 8, 2018 DEPARTMENT OF REVENUE Hearing Time: 10:00 am PITTSBURGH ATHLETIC ASSOCIATION, et al., Movant, Related to Document #673, #674-1 Respondent. OBJECTION BY THE COMMONWEALTH OF PENNSYLVANIA, PENNSYLVANIA DEPARTMENT OF REVENUE TO THE CONFIRMATION OF THE SECOND REVISED AMENDED DEBTOR S PLAN DATED MARCH 3, 2018 (as revised April 15, 2018, AND TO THE APPROVAL OF THE IMPAIRED CLASS JOINT AMENDED DISCLOSURE STATEMENT TO ACCOMPANY THE JOINT PLAN OF REORGANIZATION DATED MARCH 13, 2018 (as revised April 15, 2018) AND AND NOW, comes the Commonwealth of Pennsylvania, Pennsylvania Department of Revenue (hereinafter PA DOR) by its Counsel, Senior Deputy Attorney General, T. Lawrence Palmer, Office of Attorney General, and makes the following statement in support of its Objection to the Confirmation of Debtors Joint Plan of March 13, 2018, as revised March 16, 2018 and April 15, 2018 (Current Plan) and to the Approval of Debtors Impaired Class Joint Amended Disclosure Statement to Accompany the Joint Plan of Reorganization Dated March 13, 2018 (as revised April 15, 2018) (Current Disclosure).

2 Case JAD Doc 681 Filed 04/17/18 Entered 04/17/18 09:39:38 Desc Main Document Page 2 of 4 1. The PA DOR is a party in interest having filed a Proof of Claim asserting a Secured Claim, a Priority Claim, and an Unsecured Claim. PA DOR is also a prospective Administrative Creditor, since the Plan provides for a taxable sale of real property of either the Joint Debtors, or of one of the Debtors, Pittsburgh Athletic Association Land (PAA LC), is now a profit corporation, and any gain from such sale will therefore be subject to Pennsylvania Corporate Net Income, Capital Stock and Franchise Taxes. 2. The Current Plan claims the Debtors to be exempt from Pennsylvania Corporate Net Income, Capital Stock and Franchise Taxes because the Debtors are completely exempt from Federal Tax based on the characterization of the Debtor Pittsburgh Athletic Association as a nonprofit corporation. However PAA LC, the Debtor that owns the real estate asset being sold, is presently a taxable entity, and is not a qualified Non-Profit entity. 3. The Internal Revenue Service has heretofore filed an objection to Debtors assertion that the land sale transaction is exempt from Federal Taxation, (Document #529) and has objected to Confirmation of that earlier Plan, and has further objected an attempt to have this court s make a determination that the Paragraph 7.2 tax exempt statement is controlling law to the effect that the IRS, and indirectly PA DOR, are not entitled to any Administrative Claims for any taxes properly due under the applicable PA and Federal Tax laws generated by the sale of the real estate assets. PA DOR hereby concurs and adopts in full Objection of the IRS (Document#529) as part of this Objection. 4. PA DOR objects to any confirmation order applicable to the Current Plan to the effect that PA DOR is not and will not become a holders of an Allowed Administrative Expense Claims arising out of the sale of the Sale Assets since that order: (1) would be contrary to the relevant facts and law applicable to such taxation; (2) there is no present case or controversy to currently adjudicate since the closing has not and may not occur, and the post-petition tax period has not ended; and (3) the requested confirmation order cannot make an advance determination for a post-confirmation period. 5. Both the Current Plan and the Current Disclosure Statement continue to assert the non-taxable nature of the transaction without proof of any of the predicate facts necessary to establish that legal finding. 6. Both the Current Plan and the Current Disclosure Statement assert that the requested retroactive reinstatement of PAA LC s alleged prior Section 501(c)(2) tax status is forthcoming,

3 Case JAD Doc 681 Filed 04/17/18 Entered 04/17/18 09:39:38 Desc Main Document Page 3 of 4 which is certainly not a guaranteed future event at any time, or at a time prior to the proposed immediate conveyance of the real estate as proposed by the Current Plan. To the contrary it is most likely that at the time of the proposed sale and the payment of the consideration pursuant to the Revised Agreement of Sale and the creation of the tax escrow PAA LC will still be a taxable entity and required to file an normal corporate tax return under its existing tax ID Number and report its gain accordingly in that filing, which will be used by the IRS and PA REV to assess tax. Debtors only have a hope that such a non-profit ruling by the Commissioner of Internal Revenue will be favorable, timely and retroactive. 7. Both the Current Plan and the Current Disclosure Statement propose a tax escrow account of $3,500,000 funded by the buyer in order to secure payment to IRS and PA REV of future taxes due if the sale is finally determined to be a taxable sale. That final adjudication of the taxability of the transaction will be based upon tax returns as filed, audit and assessment thereof, and delinquency arising from the required tax returns as filed, all based on the facts extant at the time of the conveyance. However, despite numerous requests from Counsel to the IRS and PA DOR, proposed findings of fact and conclusions of law accurately setting forth protections for the legal positions of IRS and the PA DOR have not provided nor been incorporated into the Current Plan or Current Disclosure, including but not limited to the precise terms of the escrow agreement and the certainty of prompt distribution from the escrow to pay any tax resulting upon the final determination of the tax issues resulting from the proposed sale, the procedure the Debtors intend to follow to seek a determination of the tax liability, and finally a guarantee of payment by the surviving reorganized Debtor of any deficiency remaining after the exhaustion of the escrow account. 8. The Current Plan as described in the Current Disclosure is not feasible because it does not assure that the surviving debtors are not likely to suffer a subsequent bankruptcy. If the Administrative Claims of the IRS and PA DOR are not paid in full, the surviving Debtor will have no ability to pay any deficiency, and the Current Plan will fail.

4 Case JAD Doc 681 Filed 04/17/18 Entered 04/17/18 09:39:38 Desc Main Document Page 4 of 4 WHEREFORE, the Commonwealth of Pennsylvania, Pennsylvania Department of Revenue respectfully requests that the Current Plan not be confirmed, and further that no Plan be confirmed that includes any finding of fact or conclusion of law that supports the Debtors contention that the prospective sale of assets as set forth in such plan does not create a taxable event under either the Internal Revenue Code or the tax laws of the Commonwealth of Pennsylvania, and which does not include clear provisions for payment of the appropriate Taxes on the real estate transaction in full, either by the escrow or the surviving Debtor. April 17, 2018 Respectfully submitted, JOSH SHAPIRO ATTORNEY GENERAL By: /s/ T. Lawrence Palmer T. Lawrence Palmer Senior Deputy Attorney General Office of Attorney General Manor Complex 564 Forbes Avenue Pittsburgh, PA (412) PA Attorney I.D. #

5 Certificate of Service Page 1 of 9 UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA IN RE: PITTSBURGH ATHETIC ASSOCIATION, et al., JOINTLY ADMINISTERED AT BANKRUPTCY NO JAD Bankruptcy Nos: JAD JAD Debtors CHAPTER 11 Document Number: COMMONWEALTH OF PENNSYLVANIA, Hearing Date: May 8, 2018 DEPARTMENT OF REVENUE Hearing Time: 10;00 am PITTSBURGH ATHLETIC ASSOCIATION, et al., Movant, Related to Document #673, #674-1 Respondent. CERTIFICATE OF SERVICE I, the undersigned, hereby certify that a true and correct copy of the Commonwealth of Pennsylvania, Department of Revenue s Objection to the Confirmation of Debtors Joint Plan of March 13, 2018, as revised March 16, 2018 and April 15, 2018 (Current Plan) and to the Approval of Debtors Impaired Class Joint Amended Disclosure Statement to Accompany the Joint Plan of Reorganization Dated March 13, 2018 (as revised April 15, 2018) (Current Disclosure) was served upon the following this 17th day of April, 2018 via electronic mail: JAD Notice will be electronically mailed to: Justin T. Barron on behalf of Defendant Oakland Fifth Avenue Hotel Associates, LP jbarron@metzlewis.com, ccameron@metzlewis.com Jordan S. Blask on behalf of Debtor Pittsburgh Athletic Association jblask@tuckerlaw.com, agilbert@tuckerlaw.com

6 Certificate of Service Page 2 of 9 Jordan S. Blask on behalf of Debtor Pittsburgh Athletic Association Land jblask@tuckerlaw.com, agilbert@tuckerlaw.com Jordan S. Blask on behalf of Plaintiff Pittsburgh Athletic Association jblask@tuckerlaw.com, agilbert@tuckerlaw.com Jordan S. Blask on behalf of Plaintiff Pittsburgh Athletic Association Land jblask@tuckerlaw.com, agilbert@tuckerlaw.com Kirk B. Burkley on behalf of Creditor McKnight Realty Partners kburkley@bernsteinlaw.com, pghecf@bernsteinlaw.com;cwirick@bernsteinlaw.com;kburkley@ecf.courtdrive.com; cwirick@ecf.courtdrive.com Matthew James Burne on behalf of Debtor Pittsburgh Athletic Association mburne@tuckerlaw.com Matthew James Burne on behalf of Debtor Pittsburgh Athletic Association Land mburne@tuckerlaw.com Matthew James Burne on behalf of Plaintiff Pittsburgh Athletic Association mburne@tuckerlaw.com Matthew James Burne on behalf of Plaintiff Pittsburgh Athletic Association Land mburne@tuckerlaw.com CSU - OUCTS, PA Labor & Industry ra-li-ucts-bankpitts@state.pa.us Erica Koehl Dausch on behalf of Spec. Counsel Babst, Calland, Clement & Zomnir, P.C. edausch@babstcalland.com, ekoehl@babstcalland.com Claudia Davidson on behalf of Creditor National Retirement Fund

7 Certificate of Service Page 3 of 9 claudia.davidson@pghlaborlawyers.com, dsapp@amalgamatedlife.com Claudia Davidson on behalf of Creditor Committee Official Committee Of Unsecured Creditors claudia.davidson@pghlaborlawyers.com, dsapp@amalgamatedlife.com Keri P. Ebeck on behalf of Creditor McKnight Realty Partners kebeck@bernsteinlaw.com, DMcKay@bernsteinlaw.com Matthew A. Gold on behalf of Creditor Argo Partners courts@argopartners.net John R. Gotaskie, Jr. on behalf of Creditor Richard J Velan jgotaskie@foxrothschild.com, mpayne@foxrothschild.com;hsemmer@foxrothschild.com;mhojdila@foxrothschild.c om;vazzarella@foxrothschild.com Jeffrey R. Hunt on behalf of Creditor Allegheny County Central Tax Collection District jhunt@grblaw.com, cnoroski@grblaw.com Jeffrey R. Hunt on behalf of Creditor City & School District of Pittsburgh jhunt@grblaw.com, cnoroski@grblaw.com Jeffrey R. Hunt on behalf of Creditor County of Allegheny jhunt@grblaw.com, cnoroski@grblaw.com Jeffrey R. Hunt on behalf of Creditor Pittsburgh Water & Sewer Authority jhunt@grblaw.com, cnoroski@grblaw.com Jennifer M. Irvin on behalf of Creditor CSU - OUCTS, PA Labor & Industry jeirvin@pa.gov, jeirvin@pa.gov Michael J. Joyce on behalf of Interested Party JDI Loans L.L.C./Rollover Fund LLC mjoyce@saul.com

8 Certificate of Service Page 4 of 9 Michael J. Joyce on behalf of Interested Party PITT AA LLC mjoyce@saul.com Ari D. Kunofsky on behalf of Creditor United States Of America ari.d.kunofsky@usdoj.gov, eastern.taxcivil@usdoj.gov David W. Lampl on behalf of Creditor Committee Official Committee Of Unsecured Creditors bankruptcy@leechtishman.com, dlampl@leechtishman.com;cthorntonillar@leechtishman.com;mproden@leechtishman.com Robert O Lampl on behalf of Debtor Pittsburgh Athletic Association rol@lampllaw.com, jschemm@lampllaw.com;jlacher@lampllaw.com;dfuchs@lampllaw.com;eslagle@la mpllaw.com;neish51@gmail.com;jcooney@lampllaw.com;rcooney@lampllaw.com;sl ampl@lampllaw.com;rosslampl@lampllaw.com Robert O Lampl on behalf of Interested Party Pittsburgh Athletic Association Preservation Association (PAAPA) rol@lampllaw.com, jschemm@lampllaw.com;jlacher@lampllaw.com;dfuchs@lampllaw.com;eslagle@la mpllaw.com;neish51@gmail.com;jcooney@lampllaw.com;rcooney@lampllaw.com;sl ampl@lampllaw.com;rosslampl@lampllaw.com Robert O Lampl on behalf of Interested Party Frank W. Gustine rol@lampllaw.com, jschemm@lampllaw.com;jlacher@lampllaw.com;dfuchs@lampllaw.com;eslagle@la mpllaw.com;neish51@gmail.com;jcooney@lampllaw.com;rcooney@lampllaw.com;sl ampl@lampllaw.com;rosslampl@lampllaw.com Robert O Lampl on behalf of Interested Party Irwin Kotovsky rol@lampllaw.com, jschemm@lampllaw.com;jlacher@lampllaw.com;dfuchs@lampllaw.com;eslagle@la mpllaw.com;neish51@gmail.com;jcooney@lampllaw.com;rcooney@lampllaw.com;sl ampl@lampllaw.com;rosslampl@lampllaw.com

9 Certificate of Service Page 5 of 9 Robert O Lampl on behalf of Interested Party Yvonne L. Rose rol@lampllaw.com, jschemm@lampllaw.com;jlacher@lampllaw.com;dfuchs@lampllaw.com;eslagle@la mpllaw.com;neish51@gmail.com;jcooney@lampllaw.com;rcooney@lampllaw.com;sl ampl@lampllaw.com;rosslampl@lampllaw.com Jessica Heveran Lathrop on behalf of Interested Party Pennsylvania Liquor Control Board jelathrop@pa.gov Andrew Joseph Leger, Jr on behalf of Creditor Mary A Barone aleger@leger-law.com Thomas J. Michael on behalf of Creditor Kay Merge tmichael@tjmandassociates.com Thomas J. Michael on behalf of Interested Party Yvonne L. Rose tmichael@tjmandassociates.com Sloane B. O'Donnell on behalf of Debtor Pittsburgh Athletic Association sodonnell@tuckerlaw.com Sloane B. O'Donnell on behalf of Debtor Pittsburgh Athletic Association Land sodonnell@tuckerlaw.com Sloane B. O'Donnell on behalf of Plaintiff Pittsburgh Athletic Association Land sodonnell@tuckerlaw.com John R. O'Keefe, Jr. on behalf of Creditor Oakland Fifth Avenue Hotel Associates, LP jokeefe@metzlewis.com John R. O'Keefe, Jr. on behalf of Defendant Oakland Fifth Avenue Hotel Associates, LP jokeefe@metzlewis.com

10 Certificate of Service Page 6 of 9 Office of the United States Trustee ustpregion03.pi.ecf@usdoj.gov T. Lawrence Palmer on behalf of Creditor T. Lawrence Palmer Office of Attorney General, Pennsylvania Department of Revenue lpalmer@attorneygeneral.gov, MarkSPalmerPC@aol.com William C. Price on behalf of Creditor Oakland Fifth Avenue Hotel Associates LP wprice@clarkhill.com, aporter@clarkhill.com William C. Price on behalf of Creditor Oakland Fifth Avenue Hotel Associates, LP wprice@clarkhill.com, aporter@clarkhill.com William C. Price on behalf of Creditor Pittsburgh Water and Sewer Authority wprice@clarkhill.com, aporter@clarkhill.com Eric D. Rosenberg on behalf of Creditor Oakland Fifth Avenue Hotel Associates, LP erosenberg@metzlewis.com David W. Ross on behalf of Debtor Pittsburgh Athletic Association dross@bccz.com David K. Rudov on behalf of Attorney Walnut PAA david@rudovlaw.com, drudov@rudovstein.com;rstein@rudovstein.com;drudov@gmail.com;cheryl@rudovla w.com;ashley@rudovlaw.com David K. Rudov on behalf of Interested Party Walnut Capital Aquisitions, Inc david@rudovlaw.com, drudov@rudovstein.com;rstein@rudovstein.com;drudov@gmail.com;cheryl@rudovla w.com;ashley@rudovlaw.com David K. Rudov on behalf of Interested Party David K. Rudov david@rudovlaw.com, drudov@rudovstein.com;rstein@rudovstein.com;drudov@gmail.com;cheryl@rudovla

11 Certificate of Service Page 7 of 9 w.com;ashley@rudovlaw.com Gary M. Sanderson on behalf of Creditor Pittsburgh Building Owners Welfare Fund Trustees gms@muslaw.com Michael A. Shiner on behalf of Debtor Pittsburgh Athletic Association mshiner@tuckerlaw.com Michael A. Shiner on behalf of Debtor Pittsburgh Athletic Association Land mshiner@tuckerlaw.com Michael A. Shiner on behalf of Plaintiff Pittsburgh Athletic Association mshiner@tuckerlaw.com Michael A. Shiner on behalf of Plaintiff Pittsburgh Athletic Association Land mshiner@tuckerlaw.com Christopher P. Smith, Jr. on behalf of Creditor Pittsburgh Building Owners Welfare Fund Trustees cps@muslaw.com, muslawpitt@yahoo.com;kmd@muslaw.com Jillian Nolan Snider on behalf of Debtor Pittsburgh Athletic Association jsnider@tuckerlaw.com Jillian Nolan Snider on behalf of Debtor Pittsburgh Athletic Association Land jsnider@tuckerlaw.com Brett A. Solomon on behalf of Debtor Pittsburgh Athletic Association bsolomon@tuckerlaw.com, agilbert@tuckerlaw.com;cabbott@tuckerlaw.com;dparanay@tuckerlaw.com Brett A. Solomon on behalf of Debtor Pittsburgh Athletic Association Land

12 Certificate of Service Page 8 of 9 bsolomon@tuckerlaw.com, agilbert@tuckerlaw.com;cabbott@tuckerlaw.com;dparanay@tuckerlaw.com John M. Steiner on behalf of Creditor Committee Official Committee Of Unsecured Creditors jsteiner@leechtishman.com, mproden@leechtishman.com;bankruptcy@leechtishman.com;cthorntonillar@leechtishman.com John A. Straka, III on behalf of Creditor Allegheny Valley Bank of Pittsburgh john@strakalaw.com Crystal H. Thornton-Illar on behalf of Creditor Committee Official Committee Of Unsecured Creditors cthornton-illar@leechtishman.com, bankruptcy@leechtishman.com;mproden@leechtishman.com Jeremiah Vandermark on behalf of Debtor Pittsburgh Athletic Association jvandermark@tuckerlaw.com, sanantonio.bankruptcy@publicans.com;sanantonio.bankruptcy@publicans.com;dallas.bankruptcy@publicans.com Jeremiah Vandermark on behalf of Plaintiff Pittsburgh Athletic Association jvandermark@tuckerlaw.com, sanantonio.bankruptcy@publicans.com;sanantonio.bankruptcy@publicans.com;dallas.bankruptcy@publicans.com Jeremiah Vandermark on behalf of Plaintiff Pittsburgh Athletic Association Land jvandermark@tuckerlaw.com, sanantonio.bankruptcy@publicans.com;sanantonio.bankruptcy@publicans.com;dallas.bankruptcy@publicans.com S. James Wallace on behalf of Creditor Peoples Natural Gas LLC sjw@sjwpgh.com, srk@sjwpgh.com;pngbankruptcy@peoples-gas.com

13 Certificate of Service Page 9 of 9 Norma Hildenbrand, on Behalf of the United States Trustee by on behalf of U.S. Trustee Office of the United States Trustee Norma.L.Hildenbrand@usdoj.gov Respectfully submitted, JOSH SHAPIRO ATTORNEY GENERAL By: /s/ T. Lawrence Palmer T. Lawrence Palmer Senior Deputy Attorney General Office of Attorney General Manor Complex 564 Forbes Avenue Pittsburgh, PA (412) PA Attorney I.D. #

14 Case JAD Doc Filed 04/17/18 Entered 04/17/18 09:39:38 Desc Proposed Order Page 1 of 1 UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA IN RE: PITTSBURGH ATHETIC ASSOCIATION, et al., JOINTLY ADMINISTERED AT BANKRUPTCY NO JAD Bankruptcy Nos: JAD JAD Debtors CHAPTER 11 Document Number: COMMONWEALTH OF PENNSYLVANIA, Hearing Date: May 8, 2018 DEPARTMENT OF REVENUE Hearing Time: 10:00 am PITTSBURGH ATHLETIC ASSOCIATION, et al., Movant, Related to Document #673, #674-1 Respondent. O R D E R AND NOW, this day of, 2018 it is hereby ordered that confirmation of the Second Amended Joint Plan of Reorganization, dated March 13, 2018 and Revised April 15, 2018, is denied and the Current Disclosure Statement is not approved. United States Bankruptcy Judge