UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 17, 2010

	Performance Capital Management, LLC
	(Exact name of registrant as specified in its charter)

California		0 – 50235		03-0375751
(State or other Jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

	7001 Village Drive, Suite 255
	Buena Park, California		90621
	(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (714) 736-3790

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 4 1.01. ~~Changes~~Entry inInto ~~Registrant’s~~a Material ~~Certifying~~Definitive ~~Accountant~~Agreement.

~~Performance~~Termination ~~Capital Management, LLC (the “Company”) was notified that, effective January 1, 2010, certain partners~~ of ~~Moore~~Credit Stephens Wurth Frazer and Torbet, LLP (“MSWFT”) and Frost, PLLC (“Frost”) formed Frazer Frost, LLP (“Frazer Frost”), a new partnership. Pursuant to the terms of a combination agreement by and among MSWFT, Frazer Frost and Frost (the “Combination Agreement”), each of MSWFT and Frost contributed all of their assets and certain of their liabilities to Frazer Frost, resulting in Frazer Frost assuming MSWFT’s engagement letter with the Company and becoming the Company’s new independent accounting firm. As of the date of this Current Report, Frazer Frost is not registered with the Public Company Accounting and Oversight Board (PCAOB), however such registration is in process.Facility

~~The~~On ~~audit~~July ~~reports~~13, of2004, ~~MSWFT~~effective onJune ~~the~~10, ~~financial~~2004, ~~statements~~Performance ofCapital ~~the~~Management, LLC (the “Company”) asentered ofinto ~~and~~a ~~for~~definitive ~~the~~Master Loan Agreement (“MLA”) with Varde ~~years~~Investment ~~ended~~Partners, ~~December~~L.P. 31(“Varde”), ~~2008~~a ~~and~~well-known ~~December~~participant 31in the debt collection industry, ~~2007~~to ~~did~~augment its ~~not~~portfolio ~~contain~~purchasing ancapacity ~~adverse~~using ~~opinion~~capital orprovided by Varde. To implement the MLA, the Company created a wholly-owned ~~disclaimer~~subsidiary, ofMatterhorn ~~opinion~~Financial Services, ~~and~~LLC ~~were~~(“Matterhorn”), which ~~not~~is ~~qualified~~also ora ~~modified~~party asto the MLA. The facility provided for up to $25 million of ~~uncertainty~~capital (counting each dollar loaned on a cumulative basis) with a term ending in June 2009. In June 2009, ~~audit~~Varde ~~scope~~agreed orto ~~accounting~~extend ~~principles~~the termination date of the MLA to June 2010.

~~During~~Matterhorn ~~the~~served ~~Company’s~~as ~~most two recent fiscal years ended December 31, 2008 and 2007 and through January 1, 2010,~~ the ~~Company~~entity ~~did~~that ~~not~~purchased ~~consult~~portfolios ~~with~~under ~~Frazer Frost on (i)~~ the ~~application~~MLA. ofVarde ~~accounting~~had ~~principles to~~ a ~~specified transaction, either~~first ~~completed~~priority orsecurity ~~proposed,~~interest orin all the ~~type~~assets of ~~audit~~Matterhorn ~~opinion~~securing ~~that~~repayment ~~may be rendered on the~~of ~~Company’s~~its ~~financial~~loans ~~statements,~~ and ~~Frazer~~payment ~~Frost~~of ~~did~~its ~~not~~interest ~~provide~~in ~~either~~residual ~~a written~~collections. ~~report~~The ~~or oral advice to the~~ Company ~~that was an important factor~~also ~~considered~~entered byinto ~~the~~a ~~Company~~Servicing inAgreement ~~reaching~~with aMatterhorn ~~decision~~ as topart ~~any~~of ~~accounting,~~the ~~auditing~~MLA, whereby orthe ~~financial~~Company ~~reporting~~serviced ~~issue; or (ii)~~ the ~~subject~~portfolios ofowned ~~any~~by ~~disagreement,~~Matterhorn ~~as defined~~for ~~in Item 304 (~~a~~)(1)(iv)~~ offee, ~~Regulation S-K~~ and ~~the~~Varde ~~related instructions,~~had or a ~~reportable~~security ~~event~~interest ~~within~~in ~~the~~Matterhorn's ~~meaning~~rights ~~set~~to ~~forth~~proceeds inunder ~~Item~~the ~~304(a)(1)(v) of~~Servicing ~~Regulation S-K~~Agreement.

~~In connection~~Varde ~~with~~ had the ~~audits~~option of ~~the~~exercising ~~Company’s~~its ~~financial~~rights ~~statements~~under ~~for~~its ~~the~~various ~~fiscal year~~security ~~ended~~interests ~~December 31, 2008~~ and ~~2007 and through~~ the ~~date of this Current~~ ~~Report,~~guaranty ~~there~~if ~~were:~~an ~~(i)~~event noof ~~disagreements~~default ~~between~~occurred. ~~the~~These ~~Company~~rights ~~and~~included ~~MSWFT~~demanding ~~on any~~the ~~matters~~immediate payment of ~~accounting~~all ~~principles~~amounts ordue ~~practices,~~to ~~financial statement disclosure~~Varde, or ~~auditing~~as ~~scope~~well oras ~~procedures,~~liquidating ~~which disagreements, if not resolved to~~ the ~~satisfaction~~portfolios ofowned ~~MSWFT,~~by ~~would~~Matterhorn. ~~have~~A ~~caused~~failure ~~MSWFT~~ to make ~~reference~~payments towhen ~~the~~due, ~~subject matter~~if ~~of the disagreement in their reports on the Company’s financial~~not ~~statements~~cured ~~for~~within ~~such~~five ~~years~~days, ~~and~~was ~~(ii)~~an noevent ~~reportable~~of ~~events~~default. ~~within~~Other ~~the~~events ~~meaning set forth in Item 304(a)(1)(v)~~ of ~~Regulation S-K.~~default included:

~~The Company~~— ~~has~~Material ~~provided~~breaches ~~MSWFT a copy~~ of ~~the~~representations ~~disclosures in this Form 8-K~~ and has requested that MSWFT furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not MSWFT agrees with the Company’s statements in this Item 4.01(a). A copy of the letter dated January 7, 2010, furnished by MSWFT in response to that request is filed as Exhibit 16.1 to this Form 8-K.warranties;

—	Uncured breaches of agreements having a material adverse effect;

—	Bankruptcy or insolvency of Performance Capital Management, LLC or Matterhorn;

—	Fraudulent conveyances;

—	Defaults in other debt or debt-related agreements;

—	Failure to pay judgments when due;

—	Material loss or damage to, or unauthorized transfer of, the collateral;

—	Change in control of Performance Capital Management;

—	Termination of Performance Capital Management as the Servicer under the Servicing Agreement; and

—	Breach of Varde's right of first refusal to finance portfolio acquisitions.

Matterhorn had not kept up with its scheduled principal and interest payments to Varde over the past couple of years, which had entitled Varde to declare Matterhorn in default and commence with seizing the portfolios and selling them to pay amounts owed by Matterhorn to Varde. In an effort to prevent such an outcome, Matterhorn sought and received extensions for amounts owing to Varde. In lieu of commencing with a default, Varde had taken amounts that would have otherwise been paid to the Company to pay for amounts owing to it by Matterhorn.

In light of these circumstances, and the Board’s decision to dissolve and liquidate the Company, the Board determined that was in the best interests of the Company and its Members to structure a settlement among the Company, Varde and Matterhorn that included the sale of the portfolios owned by Matterhorn and the use of the sale proceeds to settle amounts owing by Matterhorn to Varde and the Company.

As a result, on January 7, 2010, the Company entered into an Agreement Regarding Loan (“Settlement Agreement”) with Varde and Matterhorn, the Company’s Board having approved the same on January 6, 2010. The Settlement Agreement provided for the payment of $1,075,425.36 to Varde in full settlement of all amounts owing to it by Matterhorn, including principal, interest and Varde's residual equity value in the portfolios. Varde also released all security interests it had in the portfolios owned by Matterhorn. The Settlement Agreement also provided that Matterhorn would retain $500,000 as a net settlement payment to the Company for its equity interest in the portfolios. The closing of the Settlement Agreement was January 11, 2010 and the effective date of the termination of the MLA was January 7, 2010. A copy of the Settlement Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference, and the foregoing disclosure is qualified by reference to the Termination Agreement.

Sale of Loan Portfolios

In connection with the Settlement Agreement, and conditioned upon its execution, Matterhorn entered into a Purchase and Sale Agreement (“PSA”) with North Star Capital Acquisition LLC, a Florida limited liability company (“North Star”) on January 8, 2010, the Company’s Board having approved the same on January 6, 2010. The closing of the PSA was January 11, 2010. Matterhorn sold all of its loan portfolios to North Star for $1,575,425.36. Under the PSA, North Star purchased the debt accounts “as is”, thereby relieving Matterhorn of any obligation to repurchase the accounts if North Star should determine that an account is deficient. A copy of the PSA is attached hereto as Exhibit 10.2 and incorporated herein by reference, and the foregoing disclosure is qualified in its entirety by reference to the PSA.

Termination of Servicing Agreement with Matterhorn

With the termination of the MLA and sale of all of the Matterhorn portfolios, the Servicing Agreement between the Company and Matterhorn also terminated on January 7, 2010.

Outsourcing of Collections of the Company’s Portfolios

The Company’s cost to collect exceeded 100% of its collection revenues in December 2009. In an effort to reduce its operating expenses and preserve cash, the Company terminated all but four of its full-time employees and three of its part-time employees effective January 1, 2010, which was disclosed in a Report on Form 8-K dated January 1, 2010 and filed with the SEC on January 7, 2010.

As previously disclosed in a Report on Form 8-K dated December 15, 2009 and filed with the SEC on December 21, 2009, Mr. Darren Bard will be resigning as Chief Technology Officer effective January 15, 2010. The Board has agreed to retain him on a part-time, consulting basis to assist from time-to-time with transitional matters.

As a result of dismantling its collections infrastructure, the Company entered into an Agency Service Agreement (“Agency Agreement”) with Oliphant Financial Group, LLC, a Florida limited liability company (“Oliphant”) on January 11, 2010. The Agency Agreement provides for Oliphant to service all of the Company’s portfolios in exchange for a servicing fee of between 45% and 52% of gross receipts. Either party may terminate the Agency Agreement upon 30 days advance written notice to the non-terminating party. A copy of the Agency Agreement is attached hereto as Exhibit 10.3 and incorporated herein by reference, and the foregoing disclosure is qualified in its entirety by reference to the Agency Agreement.

Item 1.02. Termination of a Material Definitive Agreement.

The Master Loan Agreement, as amended, by and among Varde Investment Partners, L.P., Performance Capital Management, LLC and Matterhorn Financial Services, LLC was terminated effective January 7, 2010. For additional disclosure regarding the termination of the Master Loan Agreement, see the section entitled Termination of Credit Facility under Item 1.01 in this Report on Form 8-K above, which disclosure is incorporated herein by reference.

Item 2.01. Completion of Acquisition or Disposition of Assets

On January 8, 2010, Matterhorn Financial Services, LLC, a wholly-owned subsidiary of Performance Capital Management, LLC, entered into a Purchase and Sale Agreement with North Star Capital Acquisition LLC, a Florida limited liability company, to sell all of its portfolios for $1,575,425.36 in connection with the termination of the credit facility with Varde Investment Partners, L.P. The Purchase and Sale Agreement closed on January 11, 2010. For additional disclosure regarding the sale of the Matterhorn Financial Services, LLC portfolios, see the section entitled Sale of Loan Portfolios under Item 1.01 in this Report on Form 8-K above, which disclosure is incorporated herein by reference.

Item 8.01. Other Events.

~~Reduction~~Legal ~~in Force~~Proceedings

In an ~~effort~~addition to ~~cut ongoing operating expenses,~~ the ~~Company terminated all but four of its full-time employees and three of its part-time employees effective January 1, 2010. Its~~ two ~~officers,~~class ~~David~~action ~~Caldwell~~lawsuits ~~and~~disclosed ~~Darren~~in ~~Bard,~~Performance ~~were not terminated.~~Capital ~~However,~~Management’s ~~Mr.~~(the ~~Bard~~“Company”) ~~will be resigning effective January 15, 2010, as previously reported in a~~ report on Form 810-KQ ~~dated~~for ~~December 15, 2009 and filed with~~ the ~~SEC on~~period ~~December~~ended 21September 30, 2009., ~~The~~two ~~Company~~other ~~plans~~lawsuits tohave ~~outsource~~been ~~its~~filed ~~collections~~against ~~operations until~~the ~~such time as its portfolios are sold. The~~ Company ~~did not incur any material charges~~ as ~~a result of the reduction in force~~ follows.

~~Item~~In 9November 2009, a lawsuit was filed against the Company in Orange County Superior Court in the United States District Court for the Eastern District of New York by Mark Palmer (“Plaintiff”).01 An amended complaint was filed with the Court on November 30, 2009. ~~Financial~~ ~~Statements~~Plaintiff makes broad, general assertions that the Company violated the Fair Debt Collection Practices Act, 15 U.S.C. Section 1692 et seq. with respect to its debt collection practices. Plaintiff seeks statutory and punitive ~~Exhibits~~damages as well as attorney’s fees and court costs. This lawsuit has been referred to legal counsel. The merits of the case have not yet been determined. The Company expects to prevail in this lawsuit; however, as litigation is inherently unpredictable, there can be no assurance in this regard. If the plaintiff does prevail, the results could have a material effect on the Company’s financial position.

~~Exhibit~~On November No10, 2009, a purported class action lawsuit was filed against the Company in the United States District Court for the District of Massachusetts, Boston Division, on behalf of Ronald A. ~~Description~~Luippold and a broad proposed class of debtors (“Plaintiffs”). Plaintiffs make broad, general assertions that the Company violated the Fair Debt Collection Practices Act, 15 U.S.C. Section 1692 et seq. with respect to its debt collection practices. Plaintiffs seek statutory and punitive damages as well as attorney’s fees and court costs. This lawsuit has been referred to legal counsel. The merits of the case have not yet been determined and no class has been certified. The Company expects to prevail in this lawsuit; however, as litigation is inherently unpredictable, there can be no assurance in this regard. If the Plaintiffs do prevail, the results could have a material effect on the Company’s financial position.

~~16.1~~Should the ~~Letter~~Company ~~From~~proceed ~~Predecessor~~with ~~Independent~~dissolving ~~Registered~~and ~~Public~~liquidating ~~Accounting~~after ~~Firm~~a vote by its members (“Members”), all pending lawsuits will need to be resolved before the Company can distribute its remaining assets to its Members and dissolve.

1Solicitation of Member Votes

As previously announced, and as described in the definitive proxy statement filed with the SEC on January 12, 2010, the Company is soliciting votes from its members to take action by written consent in lieu of a special meeting of the members to seek approval of a voluntary dissolution and liquidation of the Company. If such approval is received, the Company intends to proceed with an orderly wind down and dissolution of the Company, and cease its reporting obligations under the Securities Exchange Act of 1934, as amended.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

The disclosure in this Report on Form 8-K is incorporated by reference in the definitive proxy statement filed by the Company with the SEC on January 12, 2010. Members are urged to read the proxy statement and other relevant materials filed by the Company with the SEC carefully, including this Report on Form 8-K, because they contain important information about the Company, the proposal and related matters. Members may to obtain free copies of the solicitation documents filed with the SEC on the Company’s web site at: http://www.cfpproxy.com/9101SM. Members may also request a copy of any document posted on the Company’s web site by writing to Performance Capital Management, LLC, 7001 Village Drive, Suite 255, Buena Park, California 90621, Attn: David J. Caldwell or by calling 1-714-736-3790 or toll-free 1-800-757-7700 extension 0.

FORWARD-LOOKING STATEMENTS

Except for the historical information presented in this document, the matters discussed in this Form 8-K or otherwise incorporated by reference into this document contain “forward-looking statements” (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements can be identified by the use of forward-looking terminology such as “believes,” “plans,” “expects,” “may,” “will,” “intends,” “should,” “plan,” “assume” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, apply to forward-looking statements made by Performance Capital Management, LLC. You should not place undue reliance on forward-looking statements. Forward-looking statements involve risks and uncertainties. The actual results that we achieve may differ materially from any forward-looking statements due to such risks and uncertainties. These forward-looking statements are based on current expectations, and we assume no obligation to update this information. Readers are urged to carefully review and consider the various disclosures made by us in this report on Form 8-K and in our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business.

Item 9.01. Financial Statements and Exhibits.

Exhibit No.		Description
10.1		Agreement Regarding Loan by and among Matterhorn Financial Services, LLC, Performance Capital Management, LLC and Varde Investment Partners, L.P. dated January 7, 2010

10.2		Purchase and Sale Agreement by and between Matterhorn Financial Services, LLC and North Star Capital Acquisition LLC dated January 8, 2010

10.3		Agency Service Agreement by and between Performance Capital Management, LLC and Oliphant Financial Group, LLC dated January 11, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PERFORMANCE CAPITAL MANAGEMENT, LLC
January 7, 2010		By:	/s/ David J. Caldwell
January 13, 2010		By:	/s/ David J. Caldwell
(Date)		David J. Caldwell	~~David J. Caldwell~~
		Its: Chief Operations Officer	~~Its: Chief Operations Officer~~

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