Status of Standard Property Development Lawsuit

(Oct. 5): The date for filing answers to the Standard Property Development Direct Lender complaint has been extended to October 31, 2006, and the hearing on the preliminary injunction has been continued to October 19, 2006 because of ongoing settlement discussions

(Aug. 23): The matter of the Standard Property Development Lawsuit the Motion for Relief From Stay has been continued until September 28, 2006. In the interim, the automatic stay from the filing of USACM's bankruptcy petition remains in effect. The Borrower (Standard Property Development) has agreed to extend the deadline for answering the Complaint in the Florida Lawsuit to Tuesday, October 10, 2006. If USACM does not reach an acceptable settlement with the Borrower prior to that deadline, then USACM will file a Complaint and Motion with the Bankruptcy Court requesting an injunction to stay the Florida Lawsuit from going forward.

(Aug. 15): Joinder to Standard Property Development’s Motion for Relief from Automatic Stay. (PDF)

(Aug. 10): USACM, in its capacity as the servicer of the loan made by direct lenders to Standard Property Development, LLC ("Standard Property"), contacted the attorneys for Standard Property and requested an extension of time for the direct lenders to file their answers or other responses to the Complaint recently filed against them by Standard Property in a Florida state court (Case No. 2006-CA-5756). Even though the papers that are being served on direct lenders state that answers are due to be filed within 20 days after service, Standard Property has agreed that none of the direct lenders will be required to file their answers (or other responses) any earlier than September 15, 2006.

USA Commercial Mortgage Company ("USACM") and USA Capital First Trust Deed Fund ("FTD Fund") (collectively, the "Debtors") are aware that one of the borrowers, Standard Property Development, LLC, has recently commenced a lawsuit in Florida state court (Case No. 2006-CA-5756, Circuit Court of the 9th Judicial District in and for Orange County, Florida) against direct lenders on the Standard Property loan. The borrower has also filed a Motion for Relief from Stay (the "RFS Motion") in the USACM's bankruptcy case seeking permission from Judge Riegle of the Bankruptcy Court to include the Debtors as defendants in the Florida lawsuit.

The Debtors believe that the Florida lawsuit has no merit, and filed on August 4, 2006 an opposition (PDF) to the borrower's RFS Motion. The RFS Motion is set for hearing in the Bankruptcy Court on August 16, 2006. USACM also is exploring possible remedies it may seek from the Bankruptcy Court that might result in a stay prohibiting the borrower from proceeding with the lawsuit in Florida against the direct lenders. Although the interests of the Debtors and the direct lenders in this matter are similar, direct lenders who have been named as defendants in the Florida lawsuit certainly are entitled, and may desire, to obtain their own legal counsel to advise them in this matter.

USACM Opposition to Standard Property Development's Motion for Relief from Automatic Stay (PDF)