Member Info for Madpunter

Posted by Symore_Bottoms on ii :-

As we approach Thursday’s hearing, worth remembering there are two major issues for the Judge to opine on: 1) Discovery Order and 2) Preliminary Injunction.

For the injunction order, remember FRR had suggested to Hope’s legal team that in order to save court time and money, they should not challenge the injunction because according to them (and their court submission) OMF proceedings are unaffected by Cali proceedings (but they still objected).

On the Discovery Order, FRR team agreed to OMF’s request that in case they needed an extension of time to respond they would not object to their request but this was in exchange for OMF not contesting the Discovery Order, they didn’t agree.

Either way, we will have a better idea of where we stand after Thursday. But next weekend could again be a bit of nail biter as we may have an update by Friday evening. But if the two items go in our favour (i.e. granting of the injunction and discovery order), it may force Hope to rethink his approach perhaps consider entering OoCS with FRR.

But overall, I feel, after FRR’s latest court submission where the focus was firmly brought back on the issue of Fiduciary and Directors duties (equivalent to the ‘Magna Carta’ for the Directors), we stand a good chance on Thursday but I still have everything crossed.

Posted by Devex on ii :-

Have to say that despite earlier views - mine and others - that the fiduciary case was weak - the latest reveals have been pretty powerful. No doubt in my mind that this was the core legal advice from the beginning but of course the journey has gone all over place since October. A couple of observations…

don’t ever underestimate the influence of Levan here and I see Bugsy has spotted his appearance at an AmCham event a few days ago. A few more grey hairs but that Levan is still there is testament to in part the strength of the argument, in part his loyalty and in part I suspect a very significant shareholding.

that Hope has not once tried - as a director - to act as a director is surely now beyond dispute. So the issue here will be how either a jury sees that - or more importantly how the lawyers think a jury will see it. Once in court there is no turning back for Hope.

the blanket of silence is now I think understood by all. But to be clear the simple fact is that some shareholders are clearly in the enemy camp so the decision to cease all communications became unavoidable

where this ends up I do not know. But in my view this has now to be the binary bet of all time. The downside is so obvious but for key players - including the likes of Levan - to be still at the table demonstrates for me that winning here is about far more than just survival

The end game is clearly not that far away

Posted by dunkweev on ii :-

This has clearly been the intention of FRR from the outset. Hope’s appurtenant duties were to Frontera and not, as he now wants to claim, other 3rd parties, in particular those he is associated with, whether now or in the past, as in OR.

I am struggling to understand here how he can be so ignorant of his fiducial duties and the fact that his legal team have revealed everything they have at this stage without any recourse or challenge to the more serious allegation of failure in his fiduciary role and requisites staggers me. They must be aware of the consequences and were I instructed by him would be advising him in the strongest terms to prove, first to the legal team and subsequently the ability to prove to any court, that he has acted within his duties to the company. Any hint of non-compliance would be disastrous and his situation become not only untenable but potentially serious with the SEC focussing their lens in his direction too.

The big question is, whether he is willing to risk all that over a personal argument with ZM & SN. Clearly, pride has overtaken logic here and I feel, the latter 2 have allowed the non-payment to engineer this situation in the knowledge of Hope’s ulterior motives being true, w which is what appears to be evidencing now.

Hope’s lawyers are making a lot of noise, and that is really all they are doing. Not much of it is anything that suggests any serious wrong-doing by Frontera, the fact they had circa $75k in the account is nothing, many companies operate on thin margins and all these lawyers achieve is creating a poor smokescreen to detract from the serious issues at hand.

It would not surprise me if this never reaches court given the high stakes at play, but when it becomes personal [Hope] all bets are off and sensible course s of action become quickly ignored. Were it me, and knowing my real intentions when I took hold of the loan notes coupled with the potential of the SEC examining my performances I would be quick to withdraw and avoid that particular lens. Nobody wants to go to prison, least of all someone with an ego like Hope. Best to withdraw and find another sucker to draw in…

Here are some of excerpts from FRR submission on the fiduciary duty of a Director:

"… Supreme Court adopted the stringent test and high ideals articulated in Pepper v. Litton, 308 U.S. 295 (1939): “A director is a fiduciary . . . . So is a dominant or controlling stockholder or group of stockholders . . . . Their powers are powers of trust . . . .” “He who is in such a fiduciary position cannot serve himself first and his cestuis second. He cannot manipulate the affairs of his corporation to their detriment and in disregard of the standards of common decency and honesty. . . . He cannot use his power for his personal advantage and to the detriment of the stockholders. . . . For that power is at all times subject to the equitable limitation that it may not be exercised for the aggrandizement, preference, or advantage of the fiduciary to the exclusion or detriment of the cestuis. Where there is a violation of these principles, equity will undo the wrong or intervene to prevent its consummation.” Id. The ultimate question, under California law, “is whether or not under all the circumstances the transaction carries the earmarks of an arm’s length bargain.” (Id., 306-307). Plaintiffs make no pretense that Mr. Hope had any intention to engage in any arm’s length transaction, and readily admit that his seat on the board of directors was intended by him to protect his interests as a creditor. California law is clear that directors have a fiduciary duty to act in the best interest of the corporation, not a creditor in which the director holds an interest. This was made plain in the factually-analogous case Heckmann v. Ahmanson, 168 Cal. App. 3d 119, 126-127, 214 Cal. Rptr. 177, 182 (1985), where the California Court of Appeals referred to the above language in Pepper and Jones as “the shareholders’ Magna Carta.”

“… Not a shred of evidence has been presented that Mr. Hope took any action to support any other creditors, or to ensure that FRC and its subsidiaries had a dime left over after Defendants were paid out. Moreover, Mr. Hope never placed the company’s interests ahead of his desire to carve up the company and extract funds for himself and his companies. Because there is no dispute here that Hope was an “interested director” with regard to the transactions described in the moving and opposition papers, and because Hope did not recuse himself from any deliberations, and because Hope readily admits that his goal was to protect the interests of the Outrider entities, and there can be no doubt the burden is on Hope to establish that the transactions at issue were “in good faith,” and the “inherent fairness from the viewpoint of the corporation and those interested therein.” Defendants do not present any evidence or argument to meet their burden. Moreover, Hope is not freed from his fiduciary duties as a director despite his resignation from the Board because “[o]ne who assumes such a fiduciary role cannot abandon it for personal aggrandizement.” (He

The following post was by Symore_Bottoms on ii :-

Posted by bugsy-b yesterday @ 22:03 :-

"AmCham Business Roundtable / panel discussion on "Countering Russian Aggression and Propaganda" at Radisson Blu Iveria Hotel
Wednesday, May 29, 2019"..

Levan in attendance..

http://www.amcham.ge/album.php?item=354

the Mortgaged Property or any part ; h) deliver, assign and/or transfer the Mortgaged Property; i) exercise and do (or permit the Mortgagor or any nominee of the Mortgagor to exercise and do) all such rights and things as the Collateral Agent would be capable of exercising or doing if it were the absolute beneficial owner of the Mortgaged Property; and/or j) do anything else to change the status quo regarding the Mortgaged Property as of the date of this Order; and/or k) take any steps to appoint and/or direct appointment of a Receiver pursuant to Section 9 of the Equitable Mortgage. Thank you, Eric Fisher

Eric, Thank you for your email. First, the Defendants absolutely “believe what they submied to the Court.” Further, the Defendants do not agree with Frontera’s premise that that the proper approach is to consent to an injuncon simply because Frontera seeks “irrelevant” relief. The proper course of acon would have been—and remains—Frontera’s withdrawing its request for injuncve relief. Outrider Master Fund, L.P. intends to take all appropriate acons to protect its interests, as is permied under the operave loan documents and under prevailing law. To the best of our ability, we have described in significant detail to the Court (and to Frontera) the JVL process that is underway in the Cayman Islands. However, neither OMF nor any affiliate-Defendant intends to consent to injuncve relief that is legally without merit. Certainly, the Defendants prefer to avoid the expense of an unnecessary injuncon hearing; however, the Defendants cannot consent to the proposed order that you outline below. Ross.

would be of no effect because the Defendants (even at the bounds of their indirect influence over OMF) have no present control over the liquidation of FRCC. Preserving the current “status quo,” therefore, will not prevent any “irreparable harm” (to the extent that any actually exists) which Plaintiffs seek to avoid. (Opposition at 12). If, in fact, Defendants believe what they submitted to the Court, including that they “have no present control over the liquidation of FRCC,” why not simply stipulate that Defendants will not take the actions that Plaintiffs fear? In other words, if the parties are fighting over something that is irrelevant, Defendants should save the Court’s and the parties’ time and resources and stipulate to a corresponding Consent Order. Below are the material terms that appear to be consistent with Defendants’ submission. Please let us know Defendants’ position on this by the close of business on Tuesday. (To be clear, this email is not a confidential settlement communication). Proposed Material Terms of a Consent Order: During the pendency of this action, or pending further order of the Court, Defendants Stephen Hope, Outrider Management, LLC, and Outrider Onshore, LP (collectively, “Defendants”) are temporarily enjoined, and restrained from making any payment and/or providing any funds to MaplesFS Limited, FTI Consulting, and/or any other joint voluntary liquidator, and/or instructing any of these parties, directly or indirectly, in any manner whatsoever, including but not limited instructing them to: a) exercise voting and other consensual rights attaching to the Mortgaged Property (all capitalized terms shall have the meanings ascribed to them in the Motion for Preliminary Injunction) or any part thereof; b) exercise any other rights and/or powers and/or discretions of the Mortgagor in, to and under the Mortgaged Property; and/or c) receive and/or retain any dividends, interest, distributions or other moneys or assets accruing on or in respect of the Mortgaged Property or any part thereof ; d) demand any dividends, interest, distributions or other moneys or assets received by the Mortgagor be held in trust by the Mortgagor for the Collateral Agent and/or paid or transferred to the Collateral Agent; e) f) g) 2 of 5 present to the Company or any other applicable person any undated documents provided to it pursuant to any provision of the Equitable Mortgage; take any steps to register the Mortgaged Shares in the name of the Collateral Agent or its nominee or nominees to assume control as registered owner of the Mortgaged Shares; take possession of, assign, exch

The following posts were posted by Taffy52 :-

My name is Eric S. Fisher. I am over the age of eighteen (18) and competent to give this Declaration. I am one of Plaintiffs’ counsel of record in this action and have personal knowledge of all matters set forth herein. This Declaration is given for use in connection with Plaintiffs’ Motion for Preliminary Injunction, the Reply in support thereof, and for all other purposes permitted by law. 2. I sent an email to Defendants’ counsel on May 27, 2019 in which I suggested that the parties simply agree to a Consent Order to save the time and resources of this Court and the parties. The following day, Defendants’ counsel rejected this proposal. Attached hereto as Exhibit “A” is a true and correct copy of this email exchange. I declare under penalty of perjury that the foregoing is true and correct. Dated: May 30, 2019. /s/ Eric S. Fisher Eric S. Fisher Counsel, In Defendants’ Opposition to the Motion for Preliminary Injunction, Defendants state the following in support of their position that the requested equitable relief is unnecessary: As disclosed to this Court and Plaintiffs, non-party OMF has exercised its indisputably valid powers as a secured creditor holding a defaulted Note and directed the Collateral Agent to take steps to protect and realize all value in its Collateral. (Second Hope Decl., ¶ 9.) These actions placed FRCC in the sole control of the JVLs. Accordingly, even if Plaintiffs obtained the preliminary injunction they seek, it 1 of 5 5/30/2019, 5:45 PM

Defendants make no arguments regarding the balance of harms and public interest factors of the injunction analysis. There are none for Defendants to make since both factors favor entering the requested injunctive relief. C. Defendants’ Arguments About OMF Are Irrelevant Defendants devote several pages of Defendants’ Opposition to explaining why the Court should not enjoin OMF. However, there is not a single mention of OMF in Plaintiffs’ [Proposed] Order Granting Motion for Preliminary Injunction (Dkt. 36-2). Plaintiffs request only that the Court enjoin Defendants. If Defendants actions are so inextricably tied to OMF’s actions that enjoining Defendants means a de facto injunction of OMF, Defendants should outright admit that. They refuse to do so, however, because they know that such an admission will allow this Court to exercise personal jurisdiction over OMF. Regardless, even if OMF acts at the direction of Defendants and/or OMF’s actions are in concert with Defendants, this Court may still issue the requested injunctive relief. See Fed. R. Civ. P. 65(d)(2) (a preliminary injunction may bind parties, their officers, agents, servants, employees, and attorneys, and persons in active concert). CONCLUSION For the foregoing reasons and those in Plaintiffs’ moving papers, Plaintiffs respectfully request that the Court grant their Motion for Preliminary Injunction. DATED: May 30, 2019 Respectfully submitted, TAYLOR ENGLISH DUMA LLP /s/ William DeClercq William DeClercq SBN 240538

detailed is not in dispute, only whether enjoining Defendants will assist in stopping that irreparable harm. Plaintiffs do not believe that Defendants have extricated themselves from the process they initiated with the JVLs. If the requested injunction will have no impact on Defendants and the JVLs, why are Defendants fighting so hard to prevent the injunction? Plaintiffs’ counsel suggested that the parties simply agree to a Consent Order to save the time and resources of this Court and the parties. (See Declaration of Eric S. Fisher, Ex. “A,” attached hereto as Exhibit “B”). Conspicuously, Defendants’ counsel rejected Plaintiffs’ proposal, and, despite their representations of mootness in Defendants’ Opposition, Defendants refused to agree to even consider a Consent Order. (Id.). Without Mr. Hope’s approval, along with the buy-in of the other Defendants, the fees of the JVLs will likely not be paid. Without Mr. Hope’s directions, the JVLs will likely focus solely on FRCC, and not seek to impact any other aspects of FRC’s business. Defendants need to be enjoined from, at minimum, taking part in such activities. If Mr. Hope has truly washed his hands of his interaction with the JVLs, there will be no harm to Defendants if the requested relief is granted. The JVLs, presumably on Mr. Hope’s instructions, have already interfered with FRGC’s ongoing arbitration with the Georgian government over valuable assets. (See Third Nicandros Decl., ¶ 8). This interference has already harmed FRGC, and may permanently weaken its position in the arbitration if the JVLs continue to interfere. (Id.). They have no reason to do so unless prompted by Mr. Hope or some other outside party with an ulterior motive. The requested injunction will prevent Defendants from orchestrating such interference. Similarly, enjoining Defendants from causing future interference will likely support Plaintiffs’ ability to constructively work in financial markets and with host governments to the benefit of all the Plaintiffs’ stakeholders, and will help preserve Plaintiffs’ reputation and Goodwill in these areanas

2019, two days following the commencement of the voluntary liquidation. (See Third Nicandros Decl., ¶ 6, Ex. “C”). Why? The resignation notice does not provide a reason. Perhaps Mr. Hope’s resignation is an acknowledgement that acting in the interest of a creditor is inconsistent with the fiduciary duties of a board member of FRC, who must act in the company’s best interests. Notably, Mr. Hope has never advised this Court that he resigned as a board member of FRC, or why he resigned. 3. FRC Was Never Insolvent. Under California law, a corporation’s directors and officers owe no fiduciary duty to creditors until the corporation becomes insolvent. See In re Jacks, 243 B.R. 385, 390 (Bankr. Ct. C.D. Cal. 1999), aff’d in part, rev’d in part, 266 B.R. 728 (9th Cir. B.A.P. 2001). Defendants conclude for the Court that “[t]here is no question that, at the time Hope expressed disapproval of certain financing options, FRC could not pay its debts as they accrued and was insolvent.” (Def. Opp., 11). However, the time of insolvency as determined under California law is the point at which the corporation is unlikely to be able “to meet its liabilities…as they mature.” In re Jacks, 266 B.R. at 738 (quoting Cal. Corp. Code § 501). No such determination was ever made about FRC – except possibly Mr. Hope’s self-serving individual determination. In addition, under California law, an entity is insolvent “if, at fair valuations, the sum of the debtor’s debts is greater than all of the debtor’s assets.” Cal. Civ. Code § 3439.02(a). At all times in 2018, the value of FRC’s assets exceeded the amount of its debts. (See Third Nicandros Decl., ¶ 7). Therefore, FRC was never insolvent. B. Defendants’ Admissions Support Granting Injunctive Relief Defendants’ sole argument in response to the numerous examples of irreparable harm Plaintiffs detailed in their Motion is: “Because Plaintiffs seek to obtain injunctive relief against parties who no longer have the ability to cause harm, the request is moot.” (Def. Opp., 15). In other words, the irreparable harm

uncontested loan agreement.” (Def. Opp., 11). However, in addition to assuring FRC’s directors and owners that he would be independent, Mr. Hope agreed to allow FRC to incur “Permitted Indebtedness” of up to $200 million, with the caveat that all directors of FRC had to unanimously vote to approve such indebtedness. See Replacement Note Agreement § 7.2(b) and Schedule 1, attached as Exhibit “C” to the Second Nicandros Declaration. Thus, there is no evidence that the above-described financing arrangements would have violated the provisions of the loan agreement. And, certainly, Mr. Hope could have agreed to compromise, or recuse himself, if his interests were not aligned with the best interests of FRC. Instead, Mr. Hope used section 7.2 of the Replacement Note Agreement (unanimous consent) as a “poison pill” to block all meaningful financing, whether $5.4 million, or $50 million. 2. Mr. Hope and OML Initiated and Control the Liquidation of FRCC. On May 6, 2019, the directors of FRCC received a notice from MaplesFS Limited (the “Maples Notice”), the collateral agent under the Equitable Mortgage through which the shares of FRCC were pledged to secure the Replacement Notes issued by FIC to OMF, that a voluntary liquidation of FRCC had commenced on May 1. (See Third Nicandros Decl., ¶ 5). The Maples Notice states that OMF retained FTI to liquidate FRCC on April 29, 2019 (while Mr. Hope was still a Director of FRC), pursuant to the terms of an undisclosed engagement letter. (Id.). FTI indicated to Mr. Nicandros that OMF will pay FTI’s fees in the event the assets of FRCC are not sufficient to pay those fees. (Id.). It is remarkable that OML, OMF, and Mr. Hope claim that Mr. Griffin and Mr. Morrison are acting independently, with no input from the parties responsible for retention and payment. In addition, it is obvious that Mr. Hope, through OMF, negotiated the retention of FTI while still a member of the board of FRC, with the fiduciary duty to act in the best interests of FRC. Mr. Hope resigned as a member of the Board of Directors of FRC on May 3,

Nicandros Decl.”), ¶ 2, a true and correct copy of which is attached hereto as Exhibit “A”). However, according to the Defendants’ Opposition, Mr. Hope never intended to be independent: His [Mr. Hope’s] board appointment was designed to gain access to fundamental data relating to operations (which was not previously available, despite loan covenants requiring the provision of this information), providing needed financial expertise and market connections to FRC to all parties’ mutual benefit, and protecting OMF’s Collateral by virtue of the “unanimous consent” requirements relative to the operating assets…. (Def. Opp., 4). FRC and outside third parties (i.e. the public) were effectively conned. Mr. Hope’s conduct in April of 2018, when he blocked a proposed $5.4 million financing that he originally approved because he believed it to be contrary to the interests of OML, is consistent with this intent, as set forth above, to use his board position as a way to represent OML’s interests. (See Second Nicandros Decl., Ex. “A”). Similarly, in November 2018, Mr. Hope blocked a potential $60 million financing arrangement with Durham Capital because he believed the arrangement might be detrimental to OML. (See Third Nicandros Decl., ¶ 3, Ex. “A” (Transcript of November 27, 2018 FRC Board Meeting)). In each of these instances, Mr. Hope never considered the best interests of FRC, as his fiduciary duties required, but only what he perceived to be the best interests of OML.2 Defendants argue that “it is unfathomable to conclude that any director, including Hope, violates his fiduciary duties (under any circumstances) by voting against a financing or other transaction that violates the priority provisions of an 2 Indeed, Mr. Hope’s tenure on the FRC board was a continuation of his prior activities to undermine FRC. For example, see Exhibit “B” to the Third Nicandros Decl., which is a February 27, 2014 email inadvertently sent to FRC’s financial advisor briefly describing the efforts of MND to takeover, rather than invest in, FRC. Mr. Hope was copied on this otherwise internal MND email. See also Mr. Hope’s pre-board appointment conduct as described in the Second Nicandros Decl.

regard to the transactions described in the moving and opposition papers, and because Hope did not recuse himself from any deliberations, and because Hope readily admits that his goal was to protect the interests of the Outrider entities, and there can be no doubt the burden is on Hope to establish that the transactions at issue were “in good faith,” and the “inherent fairness from the viewpoint of the corporation and those interested therein.” Defendants do not present any evidence or argument to meet their burden. Moreover, Hope is not freed from his fiduciary duties as a director despite his resignation from the Board because “[o]ne who assumes such a fiduciary role cannot abandon it for personal aggrandizement.” (Heckmann, 168 Cal. App. 3d at 184 (citing cases).) Thus Hope and the Outrider defendants acting at his direction to aid and abet breaches of fiduciary duty may rightfully be enjoined from any actions that could further harm Plaintiffs. 1. Mr. Hope Never Acted as an Independent Director. In the Mediation Settlement Agreement that resolved the adversary complaint filed by FRC against OML and OMF, among others, in the Frontera Resources Holdings chapter 7 bankruptcy case (see Exhibit B to the Second Declaration of Steve C. Nicandros), FRC agreed that: … [S]o long as any amount remains unpaid with respect to the Replacement Notes, Outrider has the right to nominate an independent director for appointment to the board of directors of [FRC], who will be identified to the public as an independent director. Outrider agrees that [FRC] shall have the right to approve Outrider’s nominee, which shall not be unreasonably withheld or denied…. (Second Nicandros Decl., Exhibit B, p. 3, ¶ d. (emphasis added)). Mr. Hope, as the principal of OML, chose to nominate himself to the FRC board and take on the fiduciary duties of a board member. Mr. Hope assured FRC’s directors and owners that he would be independent. (Third Declaration of Steve C. Nicandros (“Third

derivative action to stop an acquisition. (Id., at 181) Analogizing to in the touchstone case, Jones, "defendants chose a course of action in which they used their control [] to obtain an advantage not made available to all stockholders.” (Id., quoting Jones, 1 Cal.3d at 114.) The court held the directors could be liable for a breach of fiduciary duty since “the naked desire to retain their positions of power and control over the corporation” was not a valid reason for the decision. (Id. at 182.) The directors could be liable for breaches of fiduciary duty, and the defendant corporation could be jointly for aiding and abetting the directors’ breaches of fiduciary duty. (Id.) Importantly, the California Court of Appeal emphasized that the defendants had failed to meet their burden on the motion for preliminary injunction at issue in Heckmann because “once it is shown a director received a personal benefit from the transaction, which appears to be the case here, the burden shifts to the director to demonstrate not only the transaction was entered in good faith, but also to show its inherent fairness from the viewpoint of the corporation and those interested therein.” (Id., at 183 (citations omitted).) Defendants failed to meet their burden with a simple conclusory statement that they thought that damage might occur. Similarly, here, Defendants fail to meet their burden and instead pose a rhetorical question to the Court: “Hope’s incentive at all times is to maximize the value of Frontera. Why would he be motivated otherwise?” (Def. Opp., 11). The evidence presented in Plaintiffs’ moving papers and below show that Mr. Hope’s sole motivation was for him to collect on the balance he believes is owed to him and his businesses. Not a shred of evidence has been presented that Mr. Hope took any action to support any other creditors, or to ensure that FRC and its subsidiaries had a dime left over after Defendants were paid out. Moreover, Mr. Hope never placed the company’s interests ahead of his desire to carve up the company and extract funds for himself and his companies. Because there is no dispute here that Hope was an “interested director” with

Supreme Court adopted the stringent test and high ideals articulated in Pepper v. Litton, 308 U.S. 295 (1939): “A director is a fiduciary . . . . So is a dominant or controlling stockholder or group of stockholders . . . . Their powers are powers of trust . . . .” “He who is in such a fiduciary position cannot serve himself first and his cestuis second. He cannot manipulate the affairs of his corporation to their detriment and in disregard of the standards of common decency and honesty. . . . He cannot use his power for his personal advantage and to the detriment of the stockholders. . . . For that power is at all times subject to the equitable limitation that it may not be exercised for the aggrandizement, preference, or advantage of the fiduciary to the exclusion or detriment of the cestuis. Where there is a violation of these principles, equity will undo the wrong or intervene to prevent its consummation.” Id. The ultimate question, under California law, “is whether or not under all the circumstances the transaction carries the earmarks of an arm's length bargain.” (Id., 306-307). Plaintiffs make no pretense that Mr. Hope had any intention to engage in any arm’s length transaction, and readily admit that his seat on the board of directors was intended by him to protect his interests as a creditor. California law is clear that directors have a fiduciary duty to act in the best interest of the corporation, not a creditor in which the director holds an interest. This was made plain in the factually-analogous case Heckmann v. Ahmanson, 168 Cal. App. 3d 119, 126-127, 214 Cal. Rptr. 177, 182 (1985), where the California Court of Appeals referred to the above language in Pepper and Jones as “the shareholders’ Magna Carta.” In Heckmann, found that the directors of the Walt Disney Company had breached their fiduciary duties by failing to discharge the paramount task of maximizing shareholder value for all shareholders. Specifically, the corporate directors took on debt to defeat a hostile takeover bid, generating a $60 million profit to the defendant corporation that have become a “fox in the henhouse” by acquiring 12 percent of the outstanding stock and initiating a “greenmail”

Morrison, independent professional fiduciaries with FTI Consulting (“FTI”)….” (Id., 2). Plaintiffs reject Defendants’ unsubstantiated premise that Mr. Hope is no longer pulling FTI’s strings or otherwise guiding FTI and paying its invoices. Nonetheless, as detailed below, entering the requested injunction will, by Defendants’ own concession, impose no harm on Defendants. At the same time, it will protect Plaintiffs from additional irreparable harm. Finally, Defendants repeat their go-to argument that Plaintiffs are actually attempting to enjoin non-party OMF. Defendants cannot point to anything in the Proposed Order or any other filing in which Plaintiffs actually seek such relief. The only way OMF will be impacted by the Order Plaintiffs seek is if OMF acts at the direction of, or in concert with, Defendants. It is well within this Court’s power to enjoin any of Defendants’ actions, even if such actions happen to relate to or indirectly impact a non-party to this action such as OMF. For these reasons, further detailed below, and for the additional reasons in Plaintiffs’ prior filings, Plaintiffs’ Motion for Preliminary Injunction should be granted. A. Plaintiffs Have a Substantial Likelihood of Success on the Merits Under both California and Cayman Islands law, Plaintiffs met their burden of demonstrating a likelihood of success in order to obtain a preliminary injunction in the Motion for Preliminary Injunction. Defendants’ Opposition does nothing to combat the damning evidence presented about Mr. Hope, and instead attempts to hide behind mudslinging – out of one side of their mouths they claim that Plaintiffs did not present enough background information to the Court, and out of the other, they claim that too much information was presented. What Defendants fail to appreciate is that under California law – which they do not dispute applies here – the burden was on Mr. Hope to establish that any transaction in which he participated was entirely fair to the corporation. See Jones v. H. F. Ahmanson & Co., 1 Cal.3d 93, 108-109 (1969). In Jones, the California

Pursuant to the Court’s Order Denying TRO and Setting Briefing Schedule (Dkt. 32), as well as Fed. R. Civ. P. 65 and Civil L.R. 7-2 and 65-2, Plaintiffs1 hereby file this Reply brief addressing the material points raised in Defendants’ Memorandum of Points and Authorities in Opposition to Plaintiffs’ Motion for Preliminary Injunction (Dkt. 37; “Defendants’ Opposition” or “Def. Opp.”) as follows: INTRODUCTION Defendants again attempt to focus this Court’s attention on dicta and interim rulings in the Cayman Islands Action. No discovery was ever conducted in the Cayman Islands Action, and few documents beyond affidavits were submitted to the court in that action. In Plaintiffs’ Motion for Preliminary Injunction (Dkt. 36), and below, Plaintiffs present to this Court documents and information that: (i) establishes a likelihood of success on the merits of Plaintiffs’ claims for breach of fiduciary duty and duty of loyalty and intentional interference with prospective economic relations against Defendant Hope, and (ii) affirms that Mr. Hope is not merely a lender seeking to collect on a debt. After this action was initiated, Mr. Hope set the wheels in motion for the destruction of Plaintiffs’ businesses, with the intention of deriving a benefit solely for himself and the entities he controls. Mr. Hope is now claiming that he should be free from any blame because he has washed his hands of these actions. In fact, the primary argument in Defendants’ Opposition is that the relief requested by Plaintiffs will no longer have an impact on Defendants because, while Defendants “did direct the Collateral Agent to begin the [liquidation] process, [they have] since maintained zero control of liquidation process.” (Def. Opp., 8-9). Defendants similarly hide behind the purported defense that “Frontera Resources Caucus Corporation (“FRCC”) … is now controlled by David Griffin and Andrew 1 All undefined capitalized terms shall have the meanings ascribed to them in Plaintiffs’ Motion for Preliminary Injunction.

The following 10 posts are FRR's response to Hope's objection to the injunction posted by Taffy52.