Preferred Merchants Solutions, LLC filed a “Motion to Dissolve” the TRO recently ordered by the Court, and indicate the reason for this filing:
Before filing this motion, pursuant to Local Civil Rule 7.1(b), counsel for Preferred
contacted the Receiver’s counsel in a good faith attempt to resolve areas of disagreement. On October 31, 2014, the Receiver’s counsel responded with an email saying the Receiver would “not agree to dissolve the TRO.”
Along with this filing, they included Memorandum of Law in Support that laid out their arguments:
First, the timing of the relevant events shows a temporary restraining order is not warranted. Preferred initiated the transfers at issue before the Court entered its freeze order. Thus, contrary to the Receiver’s assertions, Preferred had no legal obligation to freeze any assets prior to the entry of that order. Second, the purpose of a temporary restraining order is to maintain the status quo pending a preliminary injunction. Here, the TRO effectively obliterates the status quo and drastically alters the relative positions of the parties. Third, the Receiver has not demonstrated a likelihood of success on the merits or a threat of irreparable harm, both necessary elements in order to obtain a temporary restraining order. Accordingly, the Court should grant Preferred’s Motion and dissolve the TRO. Additionally, the Court should grant Preferred’s pending motion to lift the stay and proceed with its declaratory judgment action against the Receiver.
Apparent;y, the Court agreed with them and Ordered the TRO to be Stayed and issued the following Order:
In light of the contentions raised in Preferred’s Motion, the Court STAYS its previous Temporary Restraining Order (Doc. No. 274) pending resolution of Preferred’s Motion to Dissolve. The Receiver is directed to file a response to the Motion to Dissolve as soon as practicable. The hearing set for November 12 will remain in place unless otherwise ordered.
Of course, we will continue to follow this development as the outcome will be most interesting, especially how Preferred plans to disprove the SEC’s phone records.