http://photos.imageevent.com/banos/tplbk/Opposition%20Brief-Memorandum%201-9-14.pdf
TPL accuses Patriot of not exercising its right under Article 4 of the Operating Agreement which allows Patriot to use an Arbitrator to cause the appointment of the third member.
Perhaps our BoD would be kind enough in its FAQ to let shareholders know exactly why they have not exercised their right to have an arbitrator select the third member of PDS.
b. Claims Regarding Leckrone Role On PDS Board (begin p. 17)
36. The OCC references Mr. Leckrone’s disagreement with the other PDS board members on appointment of a third member of the board, though it does not explain exactly how alleged conflicts as board member of that non-debtor entity that has resulted in an inability to make decisions (Motion, 8:28-9:3) automatically translate to a conflict in this bankruptcy case.There is merely an unspecified allegation that Mr. Leckrone “places Alliacense’s interests ahead of PDS’s or TPL’s interests in communications with PDS.” The facts are worth reviewing as they show that any discontinuity of decision-making results not from inaction by Mr. Leckrone but the PDS Board’s inexplicable refusal to implement the contractual remedy available to it to fill the third board seat
37. The vacancy arose under the following circumstances: during the course of rancorous litigation initiated by PTSC Directors Felcyn and Johnson against TPL in April of 2010, the five-year term of the Independent Member of the PDS Management Committee Robert Neilson expired, and PTSC’s Directors (not TPL) refused to reengage his services on the financial basis he was proposing. The Independent Member position has remained vacant ever since with no effort by PTSC Directors to exercise their right under Article 4 of the PDS Operating Agreement to cause the appointment of an Independent Member by employing an Arbitrator to make the selection.
38. PTSC’s apparent motivation in seeking appointment of a third board member was disclosed in its 2013 10Q Statement, which TPL discussed in its Response to Objection:
Third, the reason that TPL proposed in the Plan that the seat would revert to Mr. Leckrone in the event of a capital call is compelling: PTSC has an unwaivable conflict of interest with respect to PDS, and should the OCC be incapable of or unwilling to protect the MMP Proceeds directed to the Creditor Trust by voting against capital calls for the benefit of all creditors in the estate, including those not in Class 6A, Mr. Leckrone is duty-bound to step in to ensure this key asset of the estate is maintained and protected. Were a capital call made that TPL could not meet, which might well be the case since its free cash is devoted under the Plan to pay creditors, TPL would lose its controlling interest in the MMP Portfolio. PDS has stated this to be the case in its October 15, 2013 10Q Statement filed with the Securities and Exchange Commission:
On March 20, 2013, TPL filed a petition under Chapter 11 of the United States Bankruptcy Code. We have been appointed to the creditors’ committee and will be closely monitoring the progress in this matter as it relates to our interest in PDS. If we provide funding to PDS that is not reciprocated by TPL, our ownership percentage in PDS will increase and we will have a controlling financial interest in PDS, in which case, we will consolidate PDS in our consolidated financial statements. If we determine that it is appropriate to consolidate PDS, we would measure the assets, liabilities and noncontrolling interests of PDS at their fair values at the date that we have the controlling financial interest (emphasis added).p.18
