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Mills v. Billings

United States District Court, S.D. Mississippi, Northern Division

November 16, 2018

ALYSSON MILLS, IN HER CAPACITY AS RECEIVER FOR ARTHUR LAMAR ADAMS AND MADISON TIMBER PROPERTIES, LLC, Plaintiff,
v.
MICHAEL D. BILLINGS and MDB GROUP, LLC; TERRY WAYNE KELLY, JR. and KELLY MANAGEMENT, LLC; and WILLIAM B. MCHENRY, JR. and FIRST SOUTH INVESTMENTS, LLC, Defendants. Securities and Exchange Commission
v.
Arthur Lamar Adams and Madison Timber Properties, LLC

          AGREED ORDER ON PRELIMINARY INJUNCTION

          CARLTON W. REEVES UNITED STATES DISTRICT JUDGE.

         Plaintiff Alysson Mills, in her capacity as the court-appointed receiver for Arthur Lamar Adams and Madison Timber Properties, LLC (the “Receiver”), has filed a Motion for Preliminary Injunction against Defendants William B. McHenry and First South Investments, LLC (sometimes collectively, “McHenry”) that seeks to restrain McHenry from dissipating assets in his possession that are directly traceable to the Madison Timber Ponzi scheme, pending the litigation of the Receiver's claims.

         The law governing federal equity receiverships authorizes the relief the Receiver requests. Janvey v. Alguire, 647 F.3d 585, 594 (5th Cir. 2011). The assets, and assets traceable to assets, that McHenry received from Adams and Madison Timber belong to the receivership estate.

         Accordingly, it is hereby ORDERED:

         1. William B. McHenry and First South Investments, LLC, individually and collectively, and all persons acting in concert with either of them or having knowledge of this Order, shall not, directly or indirectly

a. transfer, sell, convey, disburse, dispose of, mortgage, encumber, or otherwise transfer any property of any type or description consisting of assets, and assets traceable to assets, that McHenry received from Adams and Madison Timber and in which McHenry has any legal, equitable, or other interest, including, but not limited to, any stocks, bonds, negotiable instruments, certificates of deposit, notes, cash, personal property, furniture, fixtures or equipment, real estate, other tangible or intangible property of any type, or any inchoate or choate interests; provided, however, that McHenry may make cash disbursements up to the maximum amount and in the aggregate of $10, 000 per 30-day period, with the first 30-day period commencing on the date of this Order;
b. incur any indebtedness, confess to judgment, or otherwise acknowledge any obligation, debt, or other liability or obligation; or mortgage, permit a lien upon, or encumber any property of any type or description; provided, however, that McHenry may, together, incur indebtedness in the ordinary course of business up to the maximum amount of $2, 500; or
c. cause or permit any person acting in concert with McHenry to commit any act or omission prohibited above.

         2. Any balance of the $10, 000 that remains unspent at the end of a 30-day period shall roll over to the next 30-day period.

         3. At the end of every 30-day period, McHenry must provide to the Receiver written confirmation of the amount of cash disbursements expended in the previous 30 days.

         4. If McHenry encounters an emergency or other exigent situation necessitating the expenditure of cash disbursements in excess of $10, 000 in a 30-day period, he will advise the Receiver of such situation and provide her with documents supporting his request for excess expenditure. The Receiver shall have two business days from receipt of the supporting documents to respond to McHenry's request. In the event McHenry finds the Receiver's response unsatisfactory, he can apply to the Court for relief.

         5. Notwithstanding the foregoing paragraph 1, McHenry and First South Investments may expend up to an additional $ 2, 659.63 (the “Additional Funds”) during the first two thirty-day periods which occur following entry of this order, subject to the following conditions:

a. The Additional Funds shall be used solely to pay installments on promissory notes or other debt instruments ...

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