Doug:as -J, Austin -hadcleus E Morg!'lll'\ Jared A qoborts f'l.eli(e,;l FraserTrebilcocK Mlchasl E. C$\lllMl>Qh 810!\ ?, Morley David J, Housfoll Dona!d A Hines LAWYERS Darrell A. Li1d'T!an Janritter Utter Hesloo Me1lsa M, W, Mysliwiec John J. Loose Ga:y G. Rogers Marlaine C, reahan Sh.lino A, Read Michael H, Perry Viark E, Ke~ogg Archie C. Fras0t Thomas J, Waters Ryan K Kluffman l1902-1991!i 124 West Allegan Street, Suite 1000 Michael S, Ashton P!l.lfa J. Maocierf,eld OfCOWSFL Everett A. TfSlJilcook {t9l~002} Lansirig, Michigan 48933 H. Krny Albright Paui V. McCord Daw:! E. S. Marvin James A. Oavis T {517) 482-5800 F {517) 482-0887 Graham K Crebltea Brian T. Gal>agt1er _.__ Ste¢teo L Bvrllngamc iHJ-18-2005} www.fraserlaw1irm,com Mlclui.81 P. Drnvuily Jonathan T. Walton. Jr. Rona.d R. Penteoost EdwardJ.CastellarJ l_lU,!($ & fausslfl Brandon W, ZUX (1932-2006) ~ E. Raven Norbert T. Maolson, Jr. David S. Fry Metk A. R;x H96J,,2011l Peter D, Houk Aaron L. Davis Thomas L Spar'..:s Biza'oath H latchana Pal.If C. Mil!!on, Jr. Max A, Hotf,nan Pete!' L Dunlap, P,C, [email protected] (517) 377-0816 December 30, 2019 VIA HAND DELIVERY Clerk of the Court Ingham County Circuit Court 315 S, Jefferson, 3rd Floor Mason, MI 48854 Re: Fox v Pavonia Life Insurance Company ofl\fichigan Case No. 19-504-CR Dear Clerk: Enclosed for filing please find an original and Judge's copy of Supplement to Objection of Interested Party Independent Insurance Group, LLC, together with the Affidavit of Edward W. Buttner, IV and Exhibits. Thank you for your assistance. Should you have any questions or concerns, please do not hesitate to contact me. Very truly yours, l<'raser Trebilcock Da'l-is & Dunlap, P.C. JER:enp Enclosures cc wl enc.: Honorable Wanda M. Stokes Michigan Department of Attorney General Attn: Christopher Kerr, Esq.!James Long, Esq. (via hand delivery+ U.S. Mail) FRASER l A E 8 IL COCK DAV IS & DUNLAP I PC LANSING DETROIT GRAND RAPlDS STATE OF MICHIGAN CIRCUIT COURT FOR THE 30TII WDICIAL CIRCUIT INGHAM COUNTY ANITA G. FOX, DIRECTOR FOR THE MICHIGAN DEPARTMENT OF INSURANCE AND FINANCIAL SERVICES Petitioner, Case No. 19-504 - CR v. Hon. Wanda M. Stokes PAVO NIA LIFE INSURANCE COMPANY OF MICHIGAN, Respondent. ---------------~/ SUPPLEMENT TO OBJECTION OF INTERESTED PARTY INDEPENDENT INSURANCE GROUP, LLC NOW COMES Interested Party Independent Insurance Group, LLC ("Independent"), through its attorneys Fraser Trebilcock, and Adams and Reese, and hereby submits this Supplement to the Objection of Interested Party Independent Insurance Group, LLC timely filed in this case ("Supplement"). Subsequent to Independent's Objection to the Plan of Rehabilitation filed with the Court on October 4, 2019 ("Independent's Objection"), Anita G. Fox, Director of the Michigan Department oflnsurance and Financial Services (the "DIFS"), in her capacity as the statutory and Court-appointed Rehabilitator (the "MI Rehabilitator") of Pavonia Life Insurance Company of Michigan ("Pavonia"), filed with the Court the Rehabilitator's Response in Opposition to Independent's Objection on November I, 2019 (the "Rehabilitator's Response"). In addition, Aspida Holdco, LLC ("Aspida" or "Buyer") and GBIG Holdings, Inc. ("GBIG Holdings" or "Seller") filed their respective responses to Independent's Objection with the Court, both also llPage dated November 1, 2019 (collectively with the Rehabilitator's Response, the "Responses"). Independent believes the information contained in this Supplement, most of which has been discovered after the filing date of Independent's Objection, bears upon and is relevant to the Court's consideration of the Plan of Rehabilitation of Pavonia (the "Plan"), and that it is in the best interests of Pavonia's policyholders, creditors and the public for the Court to consider this Supplement in these proceedings. I. RATIONALE FOR THIS SUPPLEMENT Independent is filing this Supplement with the Court because new information relevant to these proceedings became publicly available after the date of Independent's Objection ("New lnformation"), and Independent believes it is in the best interests of Pavonia's policyholders, creditors and the public for the Court to be informed of and consider this New Information in these proceedings. This New Information is as follows: 1. Information, previously unknown to both Independent and, based upon the record as Independent understands it to be, the Court, contained in a Wall Street Journal article published on October 5, 2019, the day after the filing date of Independent's Objection. This article led to further research by Independent of publicly available financial statements and other documents (e.g., the indictment of Greg Lindberg), a summary of which was provided to the Michigan Attorney General ("MI AG") in a letter from Jonathan Raven, Esq., shareholder at Fraser Trebilcock and counsel to Independent, on October 31, 2019 (the "10/31 Follow-up Letter"); 2. Information, previously unknown to both Independent and, based upon the record as lndependent understands it to be, the Court, contained in the Responses; and 3. Information, previously unknown to both Independent and, based upon the record as Independent understands it to be, the Court, contained in the Rehabilitator's 21Page Quarterly Report on each of Southland National Insurance Corporation ("SNIC"), Southland National Reinsurance Corporation, Bankers Life Insurance Company ("BLIC"), Colorado Bankers Life Insurance Company ("CBLIC"), all affiliates of Pavonia (the "NC Insurance Affiliates"), issued by the North Carolina Commissioner of Insurance (the "NC Rehabilitator") on November 20, 2019 (the "New NC Reports") attached hereto as Exhibit "A". 4. Other information that became publicly available after the filing date of the Plan, as cited above, throughout this Supplement and reiterated and summarized in Section V below. II. INTRODUCTION Independent respectfully requests that the Court review this Supplement and supporting documentation, which, among other things, describes the relevance of this New Information to these proceedings in the context of the Responses. In addition to the New Information, the Responses contain numerous assertions regarding Independent' s Objection and, through the information presented in this Supplement, Independent respectfully seeks to correct the record which Independent believes was misstated in a number of respects, both factual and legal, in the Responses. The Responses assert the following: 1. That Independent lacks the requisite standing to object to the Plan. Independent disagrees, for the reasons set forth in Section III, a below; 2. That the applicable standard of review for purposes of the Court's review of the Plan is "abuse of discretion". Independent disagrees, for the reasons set forth in Section III, b below; 3. That Independent's concerns are "scurrilous", "unfounded" and/or "unsupported by evidence". Independent disagrees, for the reasons set forth in Section III, c below; 3IPage 4. That the Plan is based on the separation of Pavonia from the NC Insurance Affiliates and their owner. Independent disagrees, and asserts that, while the Plan should accomplish this goal, the Plan as proposed does not do so, for the reasons set forth in Section III, d below. 5. That the MI Rehabilitator has broad discretion to rehabilitate Pavonia in a manner that protects Pavonia's insureds and creditors, including by conducting a private sale of Pavonia. Independent agrees, but differs on what this means in connection with these proceedings, for the reasons set forth in Section III, e below; 6. That Independent did not participate in the Pavonia sale process, conducted by the proposed Aspida management team (i.e., the GBIG management team) prior to the filing of the Plan, and therefore is barred from objecting to it. Independent agrees that it did not participate in the sale, but differs on what this means in connection with these proceedings, for the reasons set forth in Section III, f below; 7. That the Stock Purchase Agreement among GBIG Holdings and Aspida (the "Aspida SPA") does not obligate the MI Rehabilitator or the Seller to solicit or entertain other offers for the acquisition of Pavonia. Independent agrees, but differs on what this means in connection with these proceedings, for the reasons set forth in Section III, g below; 8. That Independent has only made a "proposal to propose" and has not made an actual offer. Independent agrees, but differs as to what this means in connection with these proceedings, for the reasons set forth in Section III, h below; 9. That an offer from Independent would only benefit the Seller. Independent disagrees, for the reasons set forth in Section III, i below; 10. That allowing Independent to conduct due diligence and submit a proposal will cause delay, and delay harms Pavonia's policyholders. Independent disagrees, for the reasons set forth in Section III, j below; and 11. That Independent is not a credible buyer. Independent disagrees, for the reasons set forth in Section III, k below. 41Page Independent believes that these assertions either do not follow the relevant law or regulations or misapply or misstate the relevant law, regulations and facts. Also, Independent believes many of these assertions fail to fully and comprehensively represent the totality of the facts and circumstances involving various concurrent, potentially inter-connected processes, aspects of which are or may be relevant to these proceedings, as follows: (i) the process, and the facts and circumstances thereof, of preparing for and the filing of the Plan, (ii) the sale process for Pavonia by GBIG Holdings, (iii) the process, and the facts and circumstances thereof, of the Form A filed by Aspida on July 24, 2019 (the "Aspida Form A"), (iv) the process, and the facts and circumstance thereof, of the rehabilitation of the NC Insurance Affiliates, (v) the process, and the facts and circumstances thereof, of these Court proceedings, and (vi) the process, and the facts and circumstances thereof, of the investigation, indictment and upcoming trial of Greg Lindberg for alleged bribery and related crimes (these processes are collectively referred to as the "Inter-related Proceedings").