NOTE 16 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In the ordinary course of its business operations, the Company has ongoing relationships with several related entities. The following table details the receivables and payables with these related parties (in thousands):

	June 30,		September 30,
	2012		2011
Receivables from managed entities and related parties, net:
Commercial finance investment entities (1)	$	19,853	$	29,725
Real estate investment entities (2)		18,398		19,796
Financial fund management investment entities		3,550		2,652
RSO		4,907		2,539
Other		209		103
Receivables from managed entities and related parties	$	46,917	$	54,815

Payables due to managed entities and related parties, net:
Real estate investment entities	$	1,396	$	1,010
RSO		30		222
Payables to managed entities and related parties	$	1,426	$	1,232

(1)	Reflects $18.8 million of reserves for credit losses related to management fees owed from three commercial finance investment entities that, based on a change in estimated cash distributions, are not expected to be collectible.

(2)	Reflects $2.4 million of reserves for credit losses related to management fees owed from two real estate investment entities that, based on projected cash flows, are not expected to be collectible.

The Company receives fees, dividends and reimbursed expenses from several related/managed entities. In addition, the Company reimburses another related entity for certain operating expenses. The following table details those activities (in thousands):

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Fees from unconsolidated investment entities (1) :
Real estate(2)	$	4,405		$	3,753		$	12,862		$	9,909
Financial fund management		765			1,038			2,468			3,523
RSO:
Management, incentive and servicing fees		4,181			2,582			11,521			8,880
Dividends received		510			612			1,646			1,835
Reimbursement of expenses		1,134			687			2,731			1,708
RRE Opportunity REIT: Reimbursement of costs and expensesand expenses		150			473			785			1,441
Dividends received		14			−			14			−
Atlas Energy, L.P.- reimbursement of net costs and expenses		160			220			478			830
LEAF:
Reimbursement of net costs and expenses		84			−			226			−
Payment for rent and related expenses		(193	)		−			(497	)		−
Payment for sub-servicing the commercial finance investment partnerships		(585	)		−			(1,696	)		−
1845 Walnut Associates Ltd- payment of rent and operating expenses		(155	)		(152	)		(469	)		(522	)
Graphic Images, LLC- payment for printing services		(34	)		(61	)		(136	)		(96	)
9 Henmar LLC- payment of broker/consulting fees		(20	)		(20	)		(42	)		(46	)
Ledgewood P.C. - payment for legal services		(239	)		(357	)		(508	)		(491	)
TBBK - reimbursement of net costs and expenses		32			8			106			8

(1)	During the three and nine months ended June 30, 2012, the Company waived $1.1 million and $3.8 million, respectively, and $1.9 million and $6.4 million during the three and nine months ended June 30, 2011, respectively, of its fund management fees from its commercial finance investment entities.

(2)

Reflects discounts recorded by the Company of $57,000 and $185,000 recorded in the three and nine months ended June 30, 2012, respectively, and $512,000 and $702,000 for the three and nine months ended June 30, 2011, respectively, in connection with management fees from its real estate investment entities that it expects to receive in future periods.

Relationship with RSO. In March, 2012, the Company entered into an amendment to its management agreement with RSO in order to provide RSO with a sufficient number of accounting professionals dedicated to RSO's operations. The number of accounting professionals and amounts charged for them by the Company is reviewed and approved by RSO's Board of Directors. In conjunction with the June 2012 preferred stock offering by RSO, the management agreement was further amended on June 14, 2012 to include the RSO preferred shares in addition to its common shares for purposes of calculating the Company's management fees.

Relationship with CVC Credit Partners. In conjunction with the sale of Apidos to CVC, the Company received, in part, a 33% limited partner interest in the CVC Credit Partners, a joint venture between the Company and CVC, and a 33% interest in the General Partner of CVC Credit Partners (see Note 1 for a more detailed description of the transaction). Mr. Jonathan Z. Cohen, the Company's Chief Executive Officer and President, will serve as the chairman of the board of CVC Credit Partners for an initial term until December 31, 2013 so long as the Company holds at least 10% of the partnership interests. In addition, so long as the Company holds at least 25% of the partnership interests, the Company's consent will be required for all non-routine partnership actions, including dispositions and acquisitions in excess of specified thresholds, declarations of distributions, appointment and termination of senior employees, establishment of new investment funds and financings in excess of specified thresholds.

The Company is entitled to a reimbursement of transitional and shared service costs of $1.4 million through the transaction closing date, which was included in Receivables from Managed Entities at June 30, 2012. The Company received the payment for these costs in July 2012. In accordance with the shared services agreement it has with CVC Credit Partners, the Company will receive $85,000 per month for reimbursement of various operating costs and expenses it incurs on behalf of the partnership.

Relationship with LEAF. The Company maintains a shared service agreement with LEAF for the reimbursement of various costs and expenses it incurs on behalf of LEAF. In addition, the Company subleases office space in Philadelphia, Pennsylvania from LEAF under a lease that expires in August 2013.

Sub-servicing agreement with LEAF for the commercial finance investment funds. The Company entered into a sub-servicing agreement with LEAF to provide management services for the commercial finance funds. The fee is equal to LEAF's costs to provide these services up to a maximum of 1% of the net present value of all lease and loan contracts comprising each commercial finance fund's borrowing base under its credit facilities or securitizations. In addition, LEAF is entitled to an evaluation fee equal to one half of any acquisition or similar fee collected by the Company in connection with the acquisition of any new lease or loan contracts for which LEAF provides evaluation services.

During the three and nine months ended June 30, 2012, LEAF sold $1.2 million of leases and loans to the commercial finance funds. During the three and nine months ended June 30, 2011, such sales to the funds totaled $0 and $821,000, respectively.

Loan to affiliated real estate partnership. The Company advances funds to an affiliated real estate investment partnership under a revolving note to a maximum of $3.0 million, bearing interest at the prime rate. Amounts drawn, which are due upon demand, were $2.4 million and $2.2 million as of June 30, 2012 and September 30, 2011, respectively, which is included in Receivables from Managed Entities and Related Parties, net of allowance for credit losses. The Company recorded $17,000 and $49,000 of interest income on this loan, and then fully reserved these amounts, during the three and nine months ended June 30, 2012.