Pelorus Fund LOC, LLC vs. Mogul Investments LLC

However, Baker also indicates that, on the same day of the appointment and upon inspecting the Property, ten to fifteen people were actively stripping the Property of equipment and other assets. The cultivation facility had been stripped of all equipment, including lighting, HVAC systems, irrigation infrastructure, and processing equipment and there were no employees, no plants, no inventory, and no ongoing operations.

Baker further indicates that the Receivership Estate holds three active state cannabis licenses issued by the California Department of Cannabis Control: (i) CCL19-0002610 (Cultivation - Medium Indoor), expiring February 6, 2027; (ii) C9-0000568-LIC (Retailer - Non-Storefront), expiring May 11, 2027; and (iii) C11-0000873-LIC (Distributor), expiring July 21, 2026.

In addition, the Estate holds four local cannabis licenses issued by the City of Woodlake: (i) 18-0001 (Cultivation); (ii) 18-002 (Manufacturing); (iii) 18-003 (Distribution); and (iv) 21-006 (Non Storefront Retail.)

Further, that Baker successfully renewed the cultivation license in February 2026 and the non storefront retail license in May 2026, and continues to work with the DCC to obtain access to the retail and distribution licenses, which remain associated with legacy Bureau of Cannabis Control accounts.

Baker indicates these licenses are significant assets of the Estate, but require continued preservation, including $309,000 in unpaid cultivation taxes, $35,044.61 in unpaid regulatory fees, $400 in LiveScan fees, $4,471.82 in unpaid trash fees, and additional unknown retail, distribution, and manufacturing taxes.

Further, delinquent property taxes on the Property total approximately $71,654.92, plus additional accrued penalties and default interest. The Property is also subject to multiple deeds of trust and other encumbrances, including by Plaintiff Pelorus Fund LOC, LLC who holds the senior deed of trust.

Further, junior liens include deeds of trust in favor of Collect Access LLC ($250,000, Instrument No. 2022 0050714) and Jaskum Singh Briana ($200,000 and $100,000, Instrument Nos. 2023-0051379 and 2023-0051380, respectively). A UCC Financing Statement was filed by AGRI-BEST FINANCIAL in 2008, however no continuation statement appears of record.

The Estate generates no operating revenue. In April 2026, cash receipts totaled $18,952.85 and consisted solely of funding from Plaintiff, while disbursements totaled $11,624.83 for fire monitoring, insurance, utilities, and bank fees. Baker has sought additional funding from Plaintiff to cover current and prior operating costs, engage engineering to comply with the City's CUP requirements, and pay utilities, insurance, and professional fees.

Baker utilized Green Life Business Group ("GLBG"), a firm that specializes in selling cannabis licenses and real estate, to market and solicit buyers for the licenses and Property. Initially, Plaintiff initially made a credit bid of $4,000,000 and a third party made a bid of $5,000,000. Thereafter, Plaintiff increased its credit bid to $5,100,000 and Plaintiff was the prevailing buyer. No cash changes hands at closing as the purchase price reduces Plaintiff's outstanding claims by $5,100,000.

The transaction is structured as a sale of substantially all assets of the Receivership Estate. Baker indicates Plaintiff's credit bid is in the best interest of the estate because: (a) the business is defunct with no prospect of generating revenue; (b) the Property is incurring ongoing costs that deplete the Estate; (c) the cannabis licenses and CUP require continued funding and regulatory attention to avoid loss of value; (d) the credit bid eliminates financing risk and ensures certainty of closing; (e) the Property was broadly marketed through GLBG, and the only third-party bid received was $5,000,000, which Plaintiff exceeded; and (f) the alternative, continued deterioration of the assets, license jeopardy, and further depletion of the Estate's limited cash, would result in even greater loss to the Estate and its creditors.

Baker seeks approval of the sale that includes lien stripping pursuant to this Court's equitable authority and Code of Civil Procedure section 568.5. Further, Baker requests authority to borrow funds and issue super property receiver certificates in an aggregate principal amount not to exceed $500,000, only if and to the extent necessary to fund costs and expenses of the Receivership Estate. Baker indicates this is a reasonable estimate of the maximum funding that may be required through closing and the post-closing period and that Baker would not draw on this amount unless and until receivership costs require it pursuant to the authority in paragraph 9(k) of the Receivership Order.

No opposition to this motion appears filed. Matters related to receiverships rest in the Court's sound discretion and are "afforded considerable deference on review." (City of Santa Monica v. Gonzalez (2008) 43 Cal.4th 905, 931.)

In exercising such discretion, the Court considers all material facts and evidence and "...applies legal principles essential to an informed, intelligent, and just decision. ... Where there is no evidence of fraud, unfairness, or oppression, the court has wide discretion in approving the receiver's proposed actions." (County of Sonoma v. Quail (2020) 55 Cal.App.5th 696, 671.)

Code of Civil Procedure section 568 states "The receiver has, under the control of the court, power to bring and defend actions in his own name, as receiver; to take and keep possession of the property, to receive rents, collect debts, to compound for and compromise the same, to make transfers, and generally to do such acts respecting the property as the court may authorize."

Further, section 568.5 states "A receiver may, pursuant to an order of the court, sell real or personal property in the receiver's possession upon the notice and in the manner prescribed by Article 6 (commencing with Section 701.510) of Chapter 3 of Division 2 of Title 9. The sale is not final until confirmed by the court."

Prior to authorizing an involuntary sale, "The receiver here had to establish actual, not imaginary, necessity for the sale... and also needed to demonstrate the sale had to be consummated at that time." (Cal-American Income Property Fund VII v. Brown Development Corp. (1982) 138 Cal.App.3d 268, 276, FN7.)

Further, "The receiver has the affirmative duty to endeavor to realize the largest amount from the sale of the receivership property." (Id., FN8.)

"'Generally speaking if no good reason appears for refusing to confirm a receiver's sale, such as chilling of bids or other misconduct or gross inadequacy of price, the sale should be confirmed. . . . The order of confirmation gives the judicial sanction of the court, and when made, it relates back to the time of sale and cures all defects and irregularities except those founded in want of jurisdiction of the persons or the subject matter, or in fraud. The court has power to confirm the sale although the terms of the decree of sale may not have been strictly followed. The matter of confirmation rests upon the sound discretion of the appointing court to be judicially exercised in view of all the surrounding facts and circumstances and in the interest of fairness, justice and rights of the respective parties.'" (People v. Riverside University (1973) 35 Cal.App.3d 572, 582.)

Here, Baker has sufficiently set forth the bid process, the estimated value of the Receivership Estate and the necessity to confirm this sale to preclude further loss to the property, including loss of the cannabis licenses and related land-use approvals.

Further, the Court has the power to order the sale of property free and clear of liens and encumbrances. (City of Riverside v. Horspool (2014) 223 Cal.App.4th 670, 684.) Here, the proposed sale will result in the extinguishment of Plaintiff's lien, as well as three junior liens. As Plaintiff is the bidder on the sale, there appears no objection to lien stripping the first priority lien. The Receiver further indicates that the junior liens were acquired after Plaintiff's first priority lien and without the authorization or consent of Plaintiff. In any event, the sale price, a credit bid, is insufficient to cover these junior liens.

As to the accrued property taxes on APN 059-090-002 and APN 059-090-049 totaling approximately $71,654.92 at the time of the Receiver's appointment, plus additional accrued penalties and default interest, the Court notes no objections from the taxing authorities. As to any taxes accruing after appointment of the Receiver, the Court approves the payment of such taxes from the funds to be borrowed by the receiver for which issue super property receiver certificates in an aggregate principal amount not to exceed $500,000 are issued.

The Court will authorize the receiver's certificates as requested under Code of Civil Procedure section 568. The Court will order the Receiver to execute the necessary documents and discharge following completion of post-closing obligations or nine (9) months after closing, whichever occurs first.

Therefore, the Court grants the motion and will sign the proposed order lodged with this Court on July 17, 2026.

If no one requests oral argument, under Code of Civil Procedure section 1019.5(a) and California Rules of Court, rule 3.1312(a), no further written order is necessary. The minute order adopting this tentative ruling will become the order of the court and service by the clerk will constitute notice of the order.

Court reporters are usually not available for law and motion matters in the civil division. The parties and counsel must provide their own reporter if they want a transcript of the proceedings.

Visalia Division Honorable Bret D. Hillman Presiding- Department 2 Examiner notes for probate matters calendared August 17, 2026, that allow for posting: Status: Recommended for Approval (RFA), Appearance Required or Recommended, Approval Conditional Upon, etc. Case Number | Case Name |