1
00:00:00,000 --> 00:00:13,680
Good afternoon, all. This is Judge Goldblatt. We are on the record in In Re, Yellow Corporation,

2
00:00:13,680 --> 00:00:24,640
which is case number 23-11069, as well as the various affiliated cases. We are proceeding

3
00:00:24,640 --> 00:00:37,520
this afternoon by way of Zoom. My preference in terms of Zoom hearings for what it's worth

4
00:00:37,520 --> 00:00:44,480
is that I ask that counsel leave your microphones muted unless you're addressing the court,

5
00:00:44,480 --> 00:00:51,440
that counsel introduce yourself for the record each time you address the court. And finally,

6
00:00:51,440 --> 00:00:57,280
my own preference is if folks would leave their cameras off unless you're either addressing the

7
00:00:57,280 --> 00:01:03,600
court or wish to be recognized. Not that I'm not happy to see everyone, but I do find it helpful

8
00:01:03,600 --> 00:01:10,560
as a way of managing a Zoom proceeding that if folks turn their cameras on when they would like

9
00:01:10,560 --> 00:01:15,200
to be recognized, I can then recognize you. But if you would otherwise leave your cameras off,

10
00:01:15,200 --> 00:01:21,920
that would be helpful. So with that, I'm happy to pass the baton to counsel to the debtor to take

11
00:01:21,920 --> 00:01:27,360
us through the agenda for our hearing this afternoon. Thank you, Your Honor. Ms. Jones.

12
00:01:27,360 --> 00:01:32,240
I'm Laura Davis Jones, Cholesky and Keelan Jones on behalf of Yellow Corporation, the related

13
00:01:32,240 --> 00:01:36,880
debtors. Your Honor, first of all, let me thank you for giving us time. What we know has been an

14
00:01:36,880 --> 00:01:43,280
extremely busy week already for the court, and we truly appreciate that. Your Honor, you should

15
00:01:43,280 --> 00:01:50,400
have before you an amended notice agenda that we filed. It gives, Your Honor, the current status

16
00:01:50,400 --> 00:01:57,760
of matters. Your Honor, also we have submitted to chambers prior to this hearing some black lines

17
00:01:57,760 --> 00:02:04,080
of some of our proposed orders. One of those black lines disclosed and reflect changes that we have

18
00:02:04,080 --> 00:02:09,040
made after numerous conversations with the U.S. trustee. And if I may, Your Honor, I would thank

19
00:02:09,040 --> 00:02:14,400
Ms. Lamy and Mr. Sheppard-Carter, who have spent quite a bit of time with us trying to get through

20
00:02:14,400 --> 00:02:20,000
those orders. And I think if not all done, we were very close to being all done on all those

21
00:02:20,000 --> 00:02:24,320
proposed orders with respect to the U.S. trustee comments. And we thank you for them for that.

22
00:02:25,680 --> 00:02:31,200
Your Honor, personally, I have the pleasure of in co-counsel with Kirkland and Ellis

23
00:02:31,200 --> 00:02:37,600
on this case. And Your Honor, if I may, Mr. Nash has got his video on and I would like to yield to him.

24
00:02:37,600 --> 00:02:41,760
Perfect. Thank you, Ms. Jones. And I have seen those red lines and I appreciate those being

25
00:02:41,760 --> 00:02:48,880
submitted. Mr. Nash, let me pass the baton to you. Good afternoon, Judge. Pat Nash from Kirkland

26
00:02:48,880 --> 00:02:54,400
and Ellis proposed counsel to Yellow Corporation and its affiliate debtors. We're, of course,

27
00:02:54,400 --> 00:03:00,560
here for our first day hearing. I want to echo Ms. Jones' thanks to the court, to chambers,

28
00:03:00,560 --> 00:03:04,400
and to the U.S. trustee's office for all the accommodation leading up to today.

29
00:03:04,400 --> 00:03:10,080
Your Honor, before diving into the agenda, if you'd permit me to, we've had an active few days

30
00:03:10,080 --> 00:03:15,440
since we filed the cases on Sunday night. I want to make Your Honor aware of where things stand with

31
00:03:15,440 --> 00:03:21,840
respect to our debtor in possession financing and also lay out for Your Honor, you know, why we

32
00:03:21,840 --> 00:03:29,440
filed these cases and where we intend to go here. Your Honor, of course, it's common in most

33
00:03:29,440 --> 00:03:36,400
situations for debtors counsel to open up a first day hearing describing in-depth and at length the

34
00:03:36,400 --> 00:03:45,760
circumstances that led to or caused the company to be in Chapter 11. I am not intending to do that

35
00:03:45,760 --> 00:03:52,960
here today, Judge. One of my favorite phrases is people stand where they sit, and it's particularly

36
00:03:52,960 --> 00:03:57,840
true in restructurings. I've found over the years different stakeholders have different

37
00:03:57,840 --> 00:04:06,240
perspectives on a restructuring or a troubled situation. And with respect to the path forward

38
00:04:06,240 --> 00:04:12,160
and what the current state of play and what we hope to accomplish in these cases, with your

39
00:04:12,160 --> 00:04:17,840
permission, Judge, I think I'll focus on that. The current state of play, Your Honor, is that

40
00:04:17,840 --> 00:04:25,520
yellow has ceased all operations. There is no prospect of a going concern reorganization, and

41
00:04:25,520 --> 00:04:34,800
there is no prospect of a going concern sale. And as painful as that is, and painful for the

42
00:04:34,800 --> 00:04:40,960
employees, former employees of yellow first and foremost, they're the ones most impacted by this.

43
00:04:40,960 --> 00:04:48,400
That is the current situation. The fact of the matter is that the week of July 17th, yellow's

44
00:04:48,400 --> 00:04:57,280
shipments fell off a cliff. It was not uncommon, Judge, in the weeks leading up to July 17th

45
00:04:57,280 --> 00:05:02,400
for yellow to have as many as plus or minus 50,000 shipments on any given day.

46
00:05:03,680 --> 00:05:10,560
That shipment count declined precipitously the week of July 17th. And on Friday, July 21st,

47
00:05:10,560 --> 00:05:18,960
Judge, yellow picked up zero or near zero new shipments. So then the week of July 24th, yellow

48
00:05:18,960 --> 00:05:26,800
affirmatively stopped picking up any new shipments and spent that week focusing on flushing the

49
00:05:26,800 --> 00:05:34,080
shipments that it had in the system through the system. And as of July 30th, approximately

50
00:05:34,080 --> 00:05:43,440
28,400 of yellow's, approximately 30,000 employees were let go. And when we think about the

51
00:05:43,440 --> 00:05:50,720
stakeholders in these cases and who is most impacted by the demise of this 100-year business,

52
00:05:50,720 --> 00:05:58,560
it's certainly the employees. And as you'll hear later in my remarks, we have every expectation and

53
00:05:58,560 --> 00:06:05,280
intention of honoring all employee obligations during these cases. We believe we're going to have

54
00:06:05,280 --> 00:06:10,880
proceeds to do that. And we're certainly confident that any of those claims that constitute priority

55
00:06:10,880 --> 00:06:16,880
claims or to the extent they constitute administrative claims, we do not see any issue

56
00:06:16,880 --> 00:06:22,560
with those being paid. And that's been a focus of the company. So where are we going to go from

57
00:06:22,560 --> 00:06:29,840
here, Judge? We are, we filed these cases for the purpose of selling substantially all of yellow's

58
00:06:29,840 --> 00:06:38,240
assets pursuant to section 363, converting yellow's assets to cash and distributing yellow's,

59
00:06:38,240 --> 00:06:44,240
and distributing that cash, pardon me, your honor, to yellow's stakeholders. And when we talk about

60
00:06:44,240 --> 00:06:50,960
yellow's assets, what are we talking about? We've given out approximately 308 service facilities,

61
00:06:50,960 --> 00:06:59,680
169 of those are old, 142 of those are leased. Those are terminals, Judge. We've got approximately

62
00:06:59,680 --> 00:07:10,320
42,000 trailers, approximately 38,400 of those are owned, approximately 7,200 of those are leased.

63
00:07:10,960 --> 00:07:18,800
And we've got approximately 12,700 tractors. That's the truck, you know, Judge, that moves

64
00:07:18,800 --> 00:07:26,640
the trailers. Approximately 11,700 of those are owned and approximately 1,000 of those are leased.

65
00:07:27,520 --> 00:07:32,880
Your honor, with respect to this collateral, earlier this year, the terminals in the rolling

66
00:07:32,880 --> 00:07:40,240
stock were appraised at an approximately $2.1 billion valuation, approximately a billion one

67
00:07:40,240 --> 00:07:48,560
for the real estate, and approximately $900 million for the trailers. Then, as I said,

68
00:07:48,560 --> 00:07:55,600
that is a recent appraisal. Ducera, the company's proposed investment banker,

69
00:07:56,160 --> 00:08:04,080
is already, Judge, in the market, marketing these assets. And I am pleased to be able to report

70
00:08:04,800 --> 00:08:09,200
that as of today's hearing, as of this morning anyway, we could have a few more

71
00:08:09,200 --> 00:08:14,880
now that we're sitting here, you know, just after 3 p.m. in the Eastern time zone. But we've got

72
00:08:14,880 --> 00:08:25,760
93 parties under NDA, including 21 strategics. We have gone out, your honor, of 292 parties,

73
00:08:26,560 --> 00:08:35,040
and only 15 have declined at this point to participate. Approximately 184 are continuing

74
00:08:35,040 --> 00:08:43,440
to evaluate whether to participate. And from our perspective, we are very optimistic that

75
00:08:43,440 --> 00:08:49,040
the sale proceeds are going to exceed the entirety of the better secured capital structure,

76
00:08:49,600 --> 00:08:55,200
including any post-petition financing. You know, Judge, there's been a ton of media coverage around

77
00:08:55,200 --> 00:09:01,200
the yellow situation, and I've read numerous articles where industry experts are describing

78
00:09:01,200 --> 00:09:08,560
this as a once-in-a-lifetime opportunity for interested parties to secure assets such as these

79
00:09:08,560 --> 00:09:15,520
and the volume of these assets. Yellow's terminals are located all over the country. Many of them

80
00:09:15,520 --> 00:09:22,160
are in what are already built up urban areas. So if you are interested in a terminal in a specific

81
00:09:22,160 --> 00:09:28,560
built up urban area, you know, they're not building any more of them. So we do have a lot of optimism

82
00:09:28,560 --> 00:09:34,800
around the sale process. We do not think that there's any prospect of administrative insolvency,

83
00:09:34,800 --> 00:09:40,960
and we're cautiously optimistic that there's going to be material proceeds available for

84
00:09:40,960 --> 00:09:46,720
unsecured creditors, probably premature for me to speculate, you know, how many millions,

85
00:09:46,720 --> 00:09:52,720
how many hundreds of millions, but suffice to say we have a high degree of optimism around

86
00:09:53,520 --> 00:09:57,920
the sale process. And that has been borne out by the work that's been done to date.

87
00:09:57,920 --> 00:10:06,480
Judge, in terms of Yellow's existing capital structure, we've got an ABL facility. We've got

88
00:10:06,480 --> 00:10:13,440
what we call a B2 term loan, and we've got two tranches of funded term loan debt from the United

89
00:10:13,440 --> 00:10:20,640
States Treasury Department. The ABL facility, Your Honor, has a priority lien on cash, accounts

90
00:10:20,640 --> 00:10:26,080
receivable, and deposit accounts. As of the petition date, there was a large amount of

91
00:10:26,080 --> 00:10:33,920
cash. As of the petition date, there was approximately $900,000 drawn on the ABL and

92
00:10:33,920 --> 00:10:42,480
approximately $359 million in undrawn letters of credit. With respect to the B2 term loan, Your

93
00:10:42,480 --> 00:10:51,360
Honor, there was approximately, as of the petition date, $501.5 million owed to the B2 term lenders.

94
00:10:51,360 --> 00:10:57,680
That facility, Your Honor, is secured by a first lien on all of the company's real estate,

95
00:10:58,240 --> 00:11:04,400
as well as a first lien on certain of the company's rolling stock. The U.S. Treasury loan,

96
00:11:04,400 --> 00:11:11,280
Your Honor, it's got two tranches, as I mentioned, what we call the tranche A, and owed under there

97
00:11:11,280 --> 00:11:19,840
is $337 million approximately. And we've also got, Your Honor, the tranche B, U.S. Treasury loan,

98
00:11:19,840 --> 00:11:27,440
and the amount outstanding there is approximately $400 million. And that U.S. Trustee tranche B

99
00:11:27,440 --> 00:11:34,800
loan judge has a priority lien on certain of the company's rolling stock. Also, importantly,

100
00:11:35,440 --> 00:11:43,120
all of these funded debt issuances, all of these secured debt instruments have shared,

101
00:11:43,120 --> 00:11:48,880
all this collateral is shared. So certain of these facilities have a priority senior lien,

102
00:11:48,880 --> 00:11:55,040
but all of them have, you know, crossing junior liens on all of the collateral. Of course,

103
00:11:55,040 --> 00:12:02,720
we do expect that there is going to be a lot of unsecured claims generated here and expect that

104
00:12:02,720 --> 00:12:07,920
there will probably be a lot of work to be done on that denominator. But the unsecured predators

105
00:12:07,920 --> 00:12:13,040
are obviously an important constituent, as they always are, but particularly here, because we do

106
00:12:13,040 --> 00:12:18,560
not think the secured debt is the fulcrum. And then with respect to the equity, Your Honor,

107
00:12:18,560 --> 00:12:23,440
approximately 30 percent of this company's equity is owned by the United States Treasury Department,

108
00:12:24,000 --> 00:12:31,440
and approximately 42 or 43 percent of the equity is owned by MFN Partners LP,

109
00:12:32,160 --> 00:12:37,920
a private investment fund based in Boston, Massachusetts. And you'll hear more about MFN

110
00:12:37,920 --> 00:12:44,800
here in a bit, Your Honor. So we filed these cases, judges, you're aware, because we filed

111
00:12:44,800 --> 00:12:50,880
a motion and whatnot, and filed these cases with dip financing from certain of our B2 lenders.

112
00:12:51,920 --> 00:13:01,840
And the B2 dip facility would provide $142.5 million of new money to the company.

113
00:13:02,560 --> 00:13:08,720
And let me say, Judge, that was a hard-fought negotiation, and we certainly didn't get

114
00:13:08,720 --> 00:13:15,280
everything that we want, but it was a good-faith negotiation. We are very appreciative of the B2

115
00:13:15,280 --> 00:13:21,440
lenders who stepped up and demonstrated a willingness to finance these cases post-petition.

116
00:13:22,080 --> 00:13:28,240
We're clearly better off having committed dip financing. The cases are, they benefit from

117
00:13:28,240 --> 00:13:35,760
having committed dip financing. So we are very appreciative of it. Notwithstanding everything I

118
00:13:35,760 --> 00:13:41,840
just said, Your Honor, there are aspects of that financing that we wish were different and that we

119
00:13:41,840 --> 00:13:47,120
didn't love. First, I'll take through a couple of these, because I think it's relevant to the

120
00:13:47,120 --> 00:13:52,160
overall picture of where we're going and what we're dealing with. The financing that we have in hand

121
00:13:52,160 --> 00:13:58,080
is expensive, but so is probably every dip financing proposal I've ever presented to a court.

122
00:13:58,080 --> 00:14:08,640
The financing is predicated on a day-one roll-up. $142.5 million of new money predicated on $501.5

123
00:14:08,640 --> 00:14:14,400
million getting rolled up at the interim hearing. We resisted that mightily, as Your Honor might

124
00:14:14,400 --> 00:14:21,440
expect. We have questions ourselves as to whether Your Honor would have allowed us to do that.

125
00:14:21,440 --> 00:14:27,680
But in any event, the financing that we filed these cases with requires a day-one roll-up.

126
00:14:28,480 --> 00:14:32,640
The financing that we filed these cases with has a milestone that would

127
00:14:33,520 --> 00:14:39,760
purport to require the bid procedures order to be entered within 10 days of the petition date.

128
00:14:40,560 --> 00:14:46,720
So within 10 days of Sunday, we anticipated that Your Honor might have a problem with that.

129
00:14:46,720 --> 00:14:53,360
And then also, importantly, Judge, the financing that we have in hand is for effectively a 90-day

130
00:14:53,360 --> 00:15:01,600
case. The dip facility matures within 90 days. That's extendable to 105 days with lender consent.

131
00:15:02,640 --> 00:15:11,840
And is 90 days a sufficient amount of time to dispose of all of these assets for more than

132
00:15:11,840 --> 00:15:19,200
the secured debt? We think that it is. But if it was up to the debtors and we had our druthers,

133
00:15:19,920 --> 00:15:26,080
do we think that we would benefit by having a little more time than 90 days? And the answer

134
00:15:26,080 --> 00:15:32,160
to that question is we do. In a perfect world, the interest in these assets is so robust

135
00:15:32,160 --> 00:15:41,520
that maximizing value will in a positive way take longer than 90 days. Also, Your Honor, another

136
00:15:41,520 --> 00:15:49,520
issue that we have with the financing, as much as we appreciate it, it is premised upon and it is

137
00:15:50,240 --> 00:15:56,960
a requirement that the bid procedures be acceptable to the dip lenders. And those bid procedures,

138
00:15:56,960 --> 00:16:03,280
Your Honor, that are acceptable to the lenders, limit the debtors' flexibility in certain ways

139
00:16:03,280 --> 00:16:08,480
that the debtors would prefer to not have their flexibility limited. Most importantly and

140
00:16:08,480 --> 00:16:16,800
specifically, those bid procedures preclude the debtors from selling assets piecemeal. Now,

141
00:16:16,800 --> 00:16:23,280
that's not to say that we have some specific intention of selling assets piecemeal. But if

142
00:16:23,280 --> 00:16:27,840
it were up to the debtors, Your Honor, we would have the freedom and flexibility in our business

143
00:16:27,840 --> 00:16:34,720
judgment to bring assets to market and to sell assets in the way that is most value maximizing,

144
00:16:35,520 --> 00:16:43,920
even if that is piecemeal. And so where does that leave us? Yesterday, Judge, we received a

145
00:16:43,920 --> 00:16:51,920
financing proposal from MFN Park. Oh, before I talk about the MFN Park, I want to talk about

146
00:16:51,920 --> 00:16:57,120
MFN financing, Judge. Let me describe a couple other aspects of the dip financing that we have

147
00:16:57,120 --> 00:17:04,720
in hand. The dip financing that we have in hand, Your Honor, is predicated on the day one roll-up

148
00:17:04,720 --> 00:17:13,440
in the new monies. So that's $644.5 million of dip financing under that proposal. That financing

149
00:17:13,440 --> 00:17:22,000
would be senior and priming on what is the B2 priority collateral, the real estate and those

150
00:17:22,000 --> 00:17:28,240
and that portion of the rolling stock for which they are already priority senior lenders. That

151
00:17:28,240 --> 00:17:36,560
financing would not prime the ABL lenders with respect to the ABL collateral. And that financing

152
00:17:36,560 --> 00:17:44,720
would not prime U.S. Treasury with respect to the U.S. Treasury priority collateral. And that

153
00:17:44,720 --> 00:17:50,640
financing package that we started these cases with, Judge, with respect to the use of cash collateral

154
00:17:51,200 --> 00:18:00,480
by agreement, we have an arrangement with our ABL lenders where 80 percent, 80 cents of each day's

155
00:18:00,480 --> 00:18:07,440
AR receipts would be turned over to the ABL lenders to secure their unground letters of credit.

156
00:18:07,440 --> 00:18:15,200
And 20 cents of every dollar would be available to the debtors to fund these cases. So that's the

157
00:18:15,200 --> 00:18:22,000
financing that we have in hand. Yesterday, Your Honor, we received the financing proposal from

158
00:18:22,000 --> 00:18:32,720
MFN Partners. And what MFN Partners has proposed to the debtors is to effectively step into this same

159
00:18:32,720 --> 00:18:40,880
financing arrangement, provide the company the same $142.5 million of new money. They would be

160
00:18:40,880 --> 00:18:50,480
doing it a little bit cheaper. The interest rates are the same. The fees that would be payable there

161
00:18:50,480 --> 00:18:58,400
under are less than what would be under the dip financing that we have in hand. With one, you know,

162
00:18:58,400 --> 00:19:06,880
important issue or consideration, Your Honor, their $142.5 million of new money, they are proposing

163
00:19:06,880 --> 00:19:16,480
and insisting that it is parried to the existing B2 debt. So their $142.5 million would be parried

164
00:19:16,480 --> 00:19:25,120
to the existing $501.5 million that is owed to the B2 lenders. The B2 lenders, as Your Honor might

165
00:19:25,120 --> 00:19:31,040
expect, you know, are not willing or, you know, not willing to be, I don't know if it's primed,

166
00:19:31,040 --> 00:19:37,200
it's effectively priming. It's priming with respect to approximately 20% of every dollar generated

167
00:19:37,200 --> 00:19:44,880
from their collateral. And they have, no surprise, expressed an unwillingness to be primed in that

168
00:19:44,880 --> 00:19:52,000
fashion. The other aspect of the MFN financing proposal, another important aspect, Judge,

169
00:19:52,720 --> 00:20:01,680
is that they would be proposing a 180-day process. So they would be giving us more time to the extent

170
00:20:01,680 --> 00:20:11,200
that we need it to maximize the sale value of these assets. And also, given that they are the

171
00:20:11,200 --> 00:20:18,640
largest equity owner, Your Honor, we have every expectation that when it comes to, you know, the

172
00:20:19,520 --> 00:20:25,360
process and the strategy and tactics around how to, you know, bring these assets to market and

173
00:20:25,360 --> 00:20:32,240
sell them, we anticipate that the debtors would have certainly more flexibility, you know, if not

174
00:20:32,240 --> 00:20:38,400
total business judgment flexibility with respect to how we market those assets. Because they're

175
00:20:38,400 --> 00:20:44,800
not an existing lender, there's no roll-up component to the MFN financing. And so there's a lot

176
00:20:45,840 --> 00:20:52,800
that is, you know, very positive about the MFN financing. And there's also the challenge, Your

177
00:20:52,800 --> 00:20:59,920
Honor, that they're insisting that they prime the existing B2 lenders at least with respect to

178
00:20:59,920 --> 00:21:08,880
approximately 20 cents of every dollar generated. Your Honor, then this morning we received and

179
00:21:08,880 --> 00:21:13,600
we're at the, we have, there's other, you know, of my colleagues who are, you know, down the hall

180
00:21:13,600 --> 00:21:25,040
negotiating with Estes Express Lines, a strategic participant in the trucking industry. Estes has

181
00:21:25,040 --> 00:21:33,520
indicated, Your Honor, a willingness to effectively provide the same financing that the B-Circuit,

182
00:21:33,520 --> 00:21:41,120
the B2 lenders have already provided and that MFN has indicated that it would be willing to provide.

183
00:21:41,840 --> 00:21:48,240
They have indicated a willingness to step into that same financing structure. I may not have

184
00:21:48,240 --> 00:21:55,360
mentioned, Judge, but I should. The MFN financing, I think I did, you know, they would not be, MFN,

185
00:21:55,360 --> 00:22:01,680
like the existing B2 lenders, would not be priming the ABL lenders with respect to ABL collateral,

186
00:22:01,680 --> 00:22:06,560
would not be priming the U.S. trustee with respect to U.S. trustee priority collateral.

187
00:22:07,280 --> 00:22:16,720
And similarly, Estes is proposing to not prime the ABL lenders or treasury. But importantly,

188
00:22:16,720 --> 00:22:22,800
Your Honor, Estes has indicated a willingness to give the company the money that it needs on a

189
00:22:22,800 --> 00:22:30,720
junior basis also to the existing B2 loan. So they would be, their new money would be next in line

190
00:22:30,720 --> 00:22:38,080
as to the B2 collateral, but would be junior to the other secured parties with respect to their

191
00:22:38,080 --> 00:22:47,360
priority collateral. And we are, you know, feverishly going back and forth with Estes to document that

192
00:22:47,360 --> 00:22:53,280
proposal, reduce it to a term sheet. We do believe that it is real and that it is viable.

193
00:22:54,320 --> 00:23:00,800
One important, another very important detail, the Estes financing, Judge, is, would be, Estes is

194
00:23:00,800 --> 00:23:11,280
prepared to advance the company up to $230 million. The existing proposal that we have and the

195
00:23:11,280 --> 00:23:20,160
MFN proposal is for $142.5 million. Estes is prepared to upsize that facility and one of the

196
00:23:20,960 --> 00:23:27,680
primary, if not the primary motivation for upsizing that facility would be to give the

197
00:23:27,680 --> 00:23:35,760
debtors sufficient proceeds to pay priority and administrative employee obligations,

198
00:23:36,400 --> 00:23:44,160
PTO and otherwise. Without question, Judge, the other secured parties in the case,

199
00:23:44,960 --> 00:23:49,360
notwithstanding that I am preemptively reserving their rights and sure they're going to get up and

200
00:23:49,360 --> 00:23:56,320
also reserve their rights, from the debtors perspective, the fact that we have a DIP lender

201
00:23:56,320 --> 00:24:03,920
who is prepared to loan us money to make sure that the 28,400 already let go employees and the

202
00:24:03,920 --> 00:24:11,200
1,600 employees who are currently working themselves out of a job, to the extent that we've got a party

203
00:24:11,200 --> 00:24:16,400
who is prepared to loan us the money so that we can pay any of those obligations that are admin

204
00:24:16,400 --> 00:24:21,120
and priority claims in a case that we do not see a prospect for administrative insolvency.

205
00:24:21,120 --> 00:24:26,720
We are very pleased to receive that proposal. Obviously, there's no financing in front of your

206
00:24:26,720 --> 00:24:30,400
honor today. There's nothing that anybody needs to reserve their rights.

207
00:24:30,400 --> 00:24:35,040
All right. So Mr. Nash, apologies. You may have told me this already, but in looking at my notes,

208
00:24:35,040 --> 00:24:39,840
I don't have it. So my apologies if I'm asking you to repeat yourself, but the pricing of this

209
00:24:39,840 --> 00:24:44,640
Estes proposal, is that comparable to the other terms in terms of fees and interest?

210
00:24:44,640 --> 00:24:52,640
It's 2%…interest rate is 2% less judged than the other proposals.

211
00:24:53,920 --> 00:25:01,600
And the fees are 4% of the new money. And the fees associated with the MFN financing is 5%

212
00:25:01,600 --> 00:25:07,760
of the new money. And the fee associated with the financing that we have in hand is at least 5% of

213
00:25:07,760 --> 00:25:11,680
the new money, maybe more than 5%. Got it. Okay. And I saw the first

214
00:25:11,680 --> 00:25:17,040
day declaration that described the ability to refinance out the original term. I take it that's

215
00:25:17,040 --> 00:25:21,600
perhaps overtaken by events, but I think I follow that much. Okay. Apologies for the

216
00:25:21,600 --> 00:25:26,080
interruption. Let me let you continue. No, I appreciate it, Judge. Any other

217
00:25:26,080 --> 00:25:34,480
questions? Please stop. So where we find ourselves today, Your Honor, is not comfortable

218
00:25:34,480 --> 00:25:40,880
moving forward seeking approval of a day one roll-up and the financing that we have in hand

219
00:25:40,880 --> 00:25:47,600
as much as we appreciate having it in. We do think that these other two proposals that we've

220
00:25:47,600 --> 00:25:55,040
received are compelling. The Estes proposal, Your Honor, also contemplates up to a 180-day case.

221
00:25:55,920 --> 00:26:02,880
And no one has seen that proposal. And so, obviously, everybody's rights are reserved

222
00:26:02,880 --> 00:26:08,320
as to that proposal. The other parties in the case have at least seen a term sheet with respect to

223
00:26:08,320 --> 00:26:15,680
the MFM proposal. Optimistically, Judge, to the extent that Your Honor would have time for us

224
00:26:15,680 --> 00:26:20,000
later in the week, I know it's already Wednesday afternoon, so there's not that much time left,

225
00:26:20,000 --> 00:26:25,920
and I understand you're very busy this week. But in a perfect world, Judge, if we had a hearing

226
00:26:25,920 --> 00:26:33,280
date from Your Honor sometime on Friday, we would be in a position to get amended debtor in

227
00:26:33,280 --> 00:26:41,040
possession, financing papers on file. And if the Estes financing ends up truly materializing,

228
00:26:41,600 --> 00:26:49,120
as described and as we're discussing with them, which is stepping into the existing structure that

229
00:26:49,120 --> 00:26:55,840
all these pre-petitions secured parties have signed off on, and in fact doing it junior to the

230
00:26:55,840 --> 00:27:03,120
existing be-too-dead, I'm cautiously optimistic that we would have an agreed order for Your

231
00:27:03,120 --> 00:27:08,320
Honor on Friday, or maybe we would be fighting about whether a semicolon should be a comma

232
00:27:08,320 --> 00:27:15,920
or something like that. But we should, optimistically perhaps, but hopefully be in a better position to

233
00:27:15,920 --> 00:27:22,800
have a more fulsome record and a higher level of consensus, folks having had an opportunity

234
00:27:23,440 --> 00:27:30,240
to review this financing and whatnot. I also want to point out for my colleagues who represent

235
00:27:30,240 --> 00:27:36,320
the other pre-petitions secured parties, with respect to the Estes financing, what we're

236
00:27:36,320 --> 00:27:44,080
discussing with them, Judge, is the same $60 million first day draw as contemplated by the

237
00:27:44,080 --> 00:27:49,760
financing that we have on hand. So to the extent that any of the other parties have questions,

238
00:27:49,760 --> 00:27:58,240
concerns, or agita about the upsize amount as 230 is compared to 142.5, none of that is going to be

239
00:27:58,240 --> 00:28:04,240
up if we aren't positioned to have a hearing in front of Your Honor later this week. The balance

240
00:28:04,240 --> 00:28:09,840
of that financing is going to be kicked over to a final hearing, it's going to be kicked over to

241
00:28:10,960 --> 00:28:16,400
after a committee is formed. You know, these other two financings, Judge, whether it's MFM or Estes,

242
00:28:17,280 --> 00:28:23,040
they contemplate us getting bid procedures on file only after a committee is formed, and only

243
00:28:23,040 --> 00:28:27,680
after a committee has an opportunity to weigh in. And you know, Judge, a case like this where we've

244
00:28:27,680 --> 00:28:33,840
got like a billion, multi-billion dollars of assets, and the entire case revolves around selling

245
00:28:33,840 --> 00:28:39,440
those assets, we frankly think it's pretty important that the official committee, when it gets formed,

246
00:28:39,440 --> 00:28:48,720
have an opportunity to weigh in on those procedures. And so apologies for, you know, we're not all that

247
00:28:48,720 --> 00:28:55,360
settled right now, but the fact of the matter is, is that the developments from our perspective,

248
00:28:55,360 --> 00:29:01,200
since we filed the cases, have been positive. Okay, so Mr. Nash, so thank you for that. That's

249
00:29:01,200 --> 00:29:06,000
very helpful. Let me say the following. I mean, first of all, it's always cheering to see

250
00:29:06,560 --> 00:29:19,840
competition over, over DIP financing. I understand that we are available at 10 o'clock on Friday,

251
00:29:19,840 --> 00:29:25,040
to the extent you want to come back with a DIP loan then. What I'm going to say that is going

252
00:29:25,040 --> 00:29:34,240
to be less helpful to all of you is the following. If what we have on Friday is essentially in agreed

253
00:29:34,240 --> 00:29:41,520
order or a conversation about wording, I'm happy to do it by Zoom. If we've got a priming fight

254
00:29:41,520 --> 00:29:46,800
where I've got to hear evidence about value in order to make appropriate findings, but adequate

255
00:29:46,800 --> 00:29:52,720
protection or the like, I do want to do that in person. So I don't know, and I appreciate that you

256
00:29:52,720 --> 00:29:56,800
may not know the answer to that and that it's complex. You've got to make decisions about travel

257
00:29:56,800 --> 00:30:03,040
and I appreciate that that's not perfect, but I think it's frankly better than the risk that I

258
00:30:03,040 --> 00:30:08,400
have to conduct a hearing where I've got to make findings on a contested factual question of

259
00:30:08,400 --> 00:30:16,720
valuation or adequate protection based on a Zoom record. So again, if you're able to get to a

260
00:30:16,720 --> 00:30:23,600
non-evidentiary hearing, I'm happy to do that by Zoom under the circumstances. But if we're going

261
00:30:23,600 --> 00:30:27,360
to have a contested hearing on Friday, I'd like to do that in person. Is that clear enough?

262
00:30:27,360 --> 00:30:33,360
– Clear and totally understandable, and frankly, I anticipate it as much. Thank you, Judge.

263
00:30:33,360 --> 00:30:33,520
– Great.

264
00:30:33,520 --> 00:30:37,760
– And thank you for me. And thank you. What we appreciate first and foremost is

265
00:30:37,760 --> 00:30:40,400
the time at 10 a.m. on Friday. So thank you. – Terrific.

266
00:30:40,400 --> 00:30:47,120
– Your Honor, in terms of before, one thing I neglected to mention that with us in the virtual

267
00:30:47,120 --> 00:30:53,360
courtroom is the debtor's first day declarant, Matt Doheny, the chief restructuring officer of

268
00:30:53,360 --> 00:30:59,600
Yellow Corporation. And at some point here, you know, we'll move his declaration into evidence

269
00:30:59,600 --> 00:31:05,280
to provide the evidentiary basis for the first day relief that we are going forward with here today.

270
00:31:05,280 --> 00:31:11,120
Also, Judge, we do anticipate after we get through the agenda at the end of the hearing,

271
00:31:11,920 --> 00:31:19,680
very helpfully, and again, appreciate, my colleagues and the counsel to the ADL lenders

272
00:31:19,680 --> 00:31:26,960
are working on a consensual cash collateral order to bridge us, I believe, through Monday of next

273
00:31:26,960 --> 00:31:33,920
week, you know, Friday, hopefully in a position to get debt financing approved. We do have a payroll

274
00:31:33,920 --> 00:31:38,960
that would come due tomorrow. We have another payroll that would come due on Friday. And,

275
00:31:38,960 --> 00:31:45,200
you know, a few other limited and discreet items that, again, with thanks and appreciation,

276
00:31:45,760 --> 00:31:50,240
we do believe that we're going to have consensus around using cash collateral coming out of today's

277
00:31:50,240 --> 00:31:54,880
hearing and didn't want to neglect to mention that. We'll deal with that, Your Honor, because

278
00:31:54,880 --> 00:32:00,160
that order is being worked on. We'll deal with that. It's okay with you, Judge, at the end of the hearing.

279
00:32:00,160 --> 00:32:04,480
MR KIRBY And that makes good sense, Mr. Nash.

280
00:32:04,480 --> 00:32:12,160
MR NACHT Okay. And with that, Your Honor, I will move Mr. Doheny's declaration into evidence – or

281
00:32:12,160 --> 00:32:15,120
should I wait until other – I see other folks may want to be heard.

282
00:32:15,120 --> 00:32:21,040
MR KIRBY Let me see if others want a chance to be heard. So I think the order is

283
00:32:21,040 --> 00:32:32,800
Mr. Dunn, then Mr. Hsu, and then Mr. Winston. So Mr. Dunn. And then Mr. Nelson.

284
00:32:32,800 --> 00:32:38,320
MR NELSON Thank you. For the record, Dennis Dunn,

285
00:32:38,320 --> 00:32:42,880
the Null Bank, LLP on behalf of certain investment funds and accounts managed by

286
00:32:43,680 --> 00:32:49,040
affiliates of Apollo Capital Management. With the court's indulgence, I just wanted to spend a few

287
00:32:49,040 --> 00:32:55,840
minutes kind of sharing the perspective of our client company, its recent history, and the matters

288
00:32:55,840 --> 00:33:01,920
before the court today. It'll – it will allow me to provide perspective on the dip, which isn't

289
00:33:01,920 --> 00:33:07,040
going forward today, and also will allow me not to interject repeatedly as we consider the individual

290
00:33:07,040 --> 00:33:12,560
motions. And I don't think I'll take more than five minutes or so. So with the court's permission,

291
00:33:12,560 --> 00:33:14,000
I would report to do that.

292
00:33:14,000 --> 00:33:15,200
MR KIRBY Okay. You can proceed.

293
00:33:15,200 --> 00:33:21,440
MR NELSON Thank you. Apollo owns a majority of the V2 term

294
00:33:21,440 --> 00:33:29,040
loan, which Mr. Nash described accurately earlier. Approximately $500 million is due as of the

295
00:33:29,040 --> 00:33:33,920
petition date, and the loan is secured by a first lien on the terminals and other assets,

296
00:33:33,920 --> 00:33:41,360
and a second lien on the cash and certain ADL collateral. This case, Your Honor, has really

297
00:33:41,360 --> 00:33:46,560
been an extraordinary one and surprising in many respects. You know, at the highest level,

298
00:33:46,560 --> 00:33:53,200
that – you know, such a kind of story franchise in the critical industry is filing Chapter 11 to

299
00:33:53,200 --> 00:34:01,200
immediately liquidate is extraordinary in and of itself. In my career, it has been extremely rare

300
00:34:01,840 --> 00:34:06,480
to be involved with a business that starts its Bank 50 case having ceased operations,

301
00:34:06,480 --> 00:34:11,520
and so we don't liquidate and monetize its assets and run it the absolute priority waterfall.

302
00:34:12,480 --> 00:34:17,120
I think we've all been involved in cases that ultimately decided to liquidate after using

303
00:34:17,120 --> 00:34:22,480
Chapter 11 for some period of time to attempt to reorganize or sell itself through the dollar

304
00:34:22,480 --> 00:34:28,080
concern. And this company just at the end of last year, the company was doing $5 billion in

305
00:34:28,080 --> 00:34:33,200
revenue, I believe, and over $3 billion in EBITDA, and they went from there to shutting down and

306
00:34:33,200 --> 00:34:39,600
liquidating. How we arrived here and the decisions made by the company over those quarters in reaction

307
00:34:39,600 --> 00:34:45,920
to the conduct of the unions and otherwise will no doubt be hotly debated and contested, but that's

308
00:34:45,920 --> 00:34:51,760
not – for me, we're not going to wade into that thicket today. But what is relevant today and on

309
00:34:51,760 --> 00:34:58,240
Friday, Your Honor, is that once the company made this decision to liquidate pre-petition and wind

310
00:34:58,240 --> 00:35:04,320
damage operations, Apollo and the other lenders immediately sprung into actually about to work

311
00:35:04,320 --> 00:35:10,400
with them. We engaged with the debtors to better understand their preferred path forward, relevant

312
00:35:10,400 --> 00:35:17,760
cost and timing, and potential impact on our collateral. And these interactions demonstrated

313
00:35:17,760 --> 00:35:25,520
that this, again, is an unusual case because the contemplated process in order to maximize the

314
00:35:25,520 --> 00:35:31,920
value would require more liquidity than the company could access through the use of cash collateral

315
00:35:31,920 --> 00:35:37,840
alone. So it became pretty clear early on that there was an additional funding need. And we worked

316
00:35:37,840 --> 00:35:44,080
tirelessly with the company to kind of size that dip financing amount that would offer the debtors

317
00:35:44,080 --> 00:35:51,840
the necessary liquidity, but that was predicated on a heavily negotiated, carefully calibrated budget

318
00:35:51,840 --> 00:35:56,800
to ensure that both the assets were sold thoughtfully and on a reasonable and appropriate

319
00:35:56,800 --> 00:36:02,240
timeline. But here we are today actually not moving forward with that dip facility because

320
00:36:02,240 --> 00:36:09,040
the debtors have received at least one, maybe two, uncommitted dip proposals, and they want to hit

321
00:36:09,040 --> 00:36:16,160
the pause button to explore them, one of which is on a carried-to-sue basis with our means.

322
00:36:16,880 --> 00:36:20,800
Again, I'd say this is unusual, at least in my career. There have certainly been cases where the

323
00:36:20,800 --> 00:36:26,480
debtors have paused to receiving kind of committed facility and commitment letters that were

324
00:36:26,480 --> 00:36:32,720
materially better or that took out the incumbent lenders. The MFN one is on a junior basis,

325
00:36:32,720 --> 00:36:39,600
and the other one I haven't seen any terms of yet. But it's a decision that, while it's a prize to

326
00:36:39,600 --> 00:36:47,040
us, it basically just has us concerned and a bit fatigued. And you only have to look at that recent

327
00:36:47,040 --> 00:36:53,440
history to understand why. A few long ago, we were loaning to a company that had $5 billion in

328
00:36:53,440 --> 00:36:57,920
revenue and hundreds of millions in EBITDA. But then the company, for whatever reason,

329
00:36:57,920 --> 00:37:02,560
began to fail to execute on the plan of integration of their various business lines, and the business,

330
00:37:02,560 --> 00:37:08,000
as Mr. Nash said a few minutes ago, kind of fell off a cliff. And the debtors found themselves with

331
00:37:08,000 --> 00:37:13,520
no choice but to cease operations and to liquidate, and tens of thousands of jobs, Your Honor, have

332
00:37:13,520 --> 00:37:20,000
been lost. And Apollo, together with the other pre-petition B2 lenders, were prepared to provide

333
00:37:20,000 --> 00:37:26,720
dip financing to fund a controlled and we thought thoughtful sale process in Chapter 11, based on

334
00:37:26,720 --> 00:37:31,280
the debtors' belief that a controlled wind down over that top line would yield the best results.

335
00:37:32,000 --> 00:37:38,480
The debtors are now pivoting away from that in the hope that something better comes along.

336
00:37:38,480 --> 00:37:45,040
But it's those decisions, Your Honor, or indecisions that make us continue to be concerned

337
00:37:45,040 --> 00:37:50,720
about the trajectory of the cases and the value of our collateral. We hope that this doesn't need

338
00:37:50,720 --> 00:37:56,800
to additional delay and degradation. We're really just looking to protect our collateral and receive

339
00:37:56,800 --> 00:38:03,840
payment on the claim. Your Honor, a couple of points about the dip, and this is all kind of

340
00:38:03,840 --> 00:38:09,520
real time that I wanted to raise, because this will be important as your others speak. One knock-on

341
00:38:09,520 --> 00:38:16,080
consequence to the debtors' decision yesterday to not move forward with our dip today is it deprived

342
00:38:16,080 --> 00:38:23,520
us of the usual time, the usual interactions to refine and finalize our dip terms. What do I mean

343
00:38:23,520 --> 00:38:27,920
by that? And I know Your Honor knows this, both from your time on the bench and during private

344
00:38:27,920 --> 00:38:33,920
practice, but in that period between filing and the first day hearing, the dip ledgers field

345
00:38:33,920 --> 00:38:39,520
numerous emails from the U.S. trustee and other parties with respect to prospective objections to

346
00:38:39,520 --> 00:38:46,480
the dip and proposals to resolve those objections. That's exactly where we were 24, 36 hours ago.

347
00:38:47,360 --> 00:38:52,400
And as a result of those interactions, economic or other changes are often made before the hearing.

348
00:38:52,400 --> 00:38:58,240
Indeed, I frequently rise at the beginning of these hearings to say, good news, Your Honor,

349
00:38:58,240 --> 00:39:03,040
we've revised the dip in the following ways to address or resolve most, if not all, the concerns

350
00:39:03,040 --> 00:39:10,880
of the U.S. trustee or others. The point I want to emphasize here is that that annealing process

351
00:39:10,880 --> 00:39:16,640
on our dip didn't happen. And so any summaries you hear of the dip, you should take with that

352
00:39:16,640 --> 00:39:24,080
caveat in mind. Plus, we haven't had the benefit of Your Honor's thinking on it either. Your Honor,

353
00:39:24,080 --> 00:39:29,440
with respect to the collateral, just two points, one of the dip lenders, the one that precipitated

354
00:39:29,440 --> 00:39:38,560
the German MFN, their dip is coming in parric. That always concerns us because that means not

355
00:39:38,560 --> 00:39:44,480
withstanding Mr. Natchez's contention that they believe we are extremely over-secured, the dip

356
00:39:44,480 --> 00:39:52,160
lenders unwilling to underwrite that proposition, they don't want the junior to us. And if we ever

357
00:39:52,160 --> 00:39:55,360
get to a contested hearing, you'll see the appraisals that were done in very different

358
00:39:55,360 --> 00:40:01,600
circumstances and under very different assumptions with respect to misuse and going concern assumptions.

359
00:40:02,720 --> 00:40:08,160
One other note, this more disclosure point about one of the perspective dip lenders, MFN, which I

360
00:40:08,160 --> 00:40:15,920
think Mr. Natch mentioned is either a large or the largest stockholder of the debtors. I saw today

361
00:40:15,920 --> 00:40:20,960
that it's been publicly reported they're also the largest stockholders of XPO, a strategic competitor,

362
00:40:20,960 --> 00:40:27,520
and I think somebody who is under NDA now and potentially a prospective bidder. So the alternative

363
00:40:27,520 --> 00:40:33,600
dip lender has a significant economic interest in one of those bidders. The court just needs to be

364
00:40:33,600 --> 00:40:40,400
aware from the outset of any potential economic influences there. A couple other points and then

365
00:40:40,400 --> 00:40:47,040
I'll yield, Your Honor. The time factor, the debtors tout the fact that the sale milestone might be

366
00:40:47,040 --> 00:40:55,120
as far out as 180 days under the alternative dip proposals. I want to make two points there, one of

367
00:40:55,120 --> 00:41:01,360
which is more time is not always better, Your Honor. For one thing, lawyers, and I mean this with all

368
00:41:01,360 --> 00:41:07,200
due respect, they're like inert gases, Your Honor, they expand to fill up the allotted space. An extra

369
00:41:07,200 --> 00:41:12,960
three months guarantees additional fee bird and administrative expense bird, but with no concomitant

370
00:41:12,960 --> 00:41:19,120
guarantee of higher sale prices. We spent a lot of time with the debtors reviewing their pre-petition

371
00:41:19,120 --> 00:41:24,800
efforts to attract interest in their assets, the current number of parties under NDA, how much time

372
00:41:24,800 --> 00:41:30,400
those parties would likely need to transact, among other inputs. The debtors and we concluded that 90

373
00:41:30,400 --> 00:41:36,880
days was an appropriate milestone for that sale. It was longer frankly than we thought was necessary

374
00:41:36,880 --> 00:41:44,240
and we deployed under other liquidations, but we exceeded to the debtors request there. One telling

375
00:41:44,240 --> 00:41:50,080
point though, Your Honor, is the debtors never pushed us for a 180-day sale milestone. The

376
00:41:50,080 --> 00:41:56,000
debtors first request before this refinement process I just mentioned concluded sort of 105

377
00:41:56,000 --> 00:42:02,480
day milestone, 105 not 180. So the much talented milestone provides substantially more time and

378
00:42:02,480 --> 00:42:08,240
corresponding risk of drift than the debtors sought with us in terms of milestones. The roll-up,

379
00:42:08,240 --> 00:42:11,920
you know, if we're back in front of Your Honor, we'll talk about it slightly more than three to one,

380
00:42:11,920 --> 00:42:17,520
we don't believe it's off market, but here if the debtors are right, we're over secured and it hurts

381
00:42:17,520 --> 00:42:24,000
no one. On the junior facility, we haven't seen anything in writing about it. Obviously a junior

382
00:42:24,000 --> 00:42:30,240
facility is better. We'll review it if and when it materializes, but right now it's an expression

383
00:42:30,240 --> 00:42:36,320
of interest. If it is materially better and truly junior and doesn't hurt us from a credit bidding

384
00:42:36,320 --> 00:42:41,280
remedial or other standpoint, we'll work with the debtors on terms and adequate protection and

385
00:42:41,280 --> 00:42:46,320
timeline, but we'll see how that plays out between now and Friday. My last point, Your Honor, and I

386
00:42:46,320 --> 00:42:53,040
apologize because it's unfortunately a technical one, is adequate protection. We, as is common,

387
00:42:53,040 --> 00:42:57,920
requested adequate protection prior to the filing in connection with our negotiation of the dip

388
00:42:57,920 --> 00:43:04,400
and a corresponding adequate protection package acceptable to us and the debtors. Had we moved

389
00:43:04,400 --> 00:43:09,760
forward with the dip today, we'd be seeking the Court's approval of that adequate protection

390
00:43:10,720 --> 00:43:15,680
package and its terms. The debtors, as you've heard, have decided to adjourn today's dip hearing.

391
00:43:15,680 --> 00:43:21,520
There are two potential paths forward. One path, when we're next in front of the Court, maybe we're

392
00:43:21,520 --> 00:43:27,440
moving forward with our dip and adequate protection in any event, in which case Your Honor will judge

393
00:43:27,440 --> 00:43:33,520
the propriety of that package and it will rise or fall on its own. The other path is the reason I

394
00:43:33,520 --> 00:43:39,840
raised this now. It's possible, although I hope unlikely, that the debtors don't move for approval

395
00:43:39,840 --> 00:43:44,240
of a consensual adequate protection dip with us and we have to fight for it. In that case, we need

396
00:43:44,240 --> 00:43:50,080
to be clear on one item and it is why I'm putting it on the record now. We requested adequate

397
00:43:50,080 --> 00:43:54,400
protection for the petition. We requested it already and to the extent we have to formally seek

398
00:43:54,400 --> 00:43:59,280
it in the future because the debtors decide not to prosecute the stipulation we have with them,

399
00:44:00,000 --> 00:44:04,560
we seek adequate protection from the petition date forward. It's from the petition date that

400
00:44:04,560 --> 00:44:08,880
we made our request and at all times have made our request for adequate protection from the petition

401
00:44:08,880 --> 00:44:15,040
date. I don't think I can say it more clearly than that. Your Honor will have a lot more to say about

402
00:44:15,040 --> 00:44:20,080
the alternative dip facilities on Friday, but let's leave it for then and unless Your Honor has any

403
00:44:20,080 --> 00:44:24,800
questions to me, I'll yield the virtual podium and I appreciate the time. Okay, thank you. Thank you,

404
00:44:24,800 --> 00:44:30,800
Mr. Dunn. Look, I think everyone appreciates the circumstances of this case are sort of

405
00:44:32,880 --> 00:44:39,120
challenging and unfortunate though. I guess we're all used to taking the case as we find it, so that

406
00:44:39,120 --> 00:44:46,880
sort of is what it is and as unfortunate as it is, of course. But I take it, Mr. Dunn, you're not

407
00:44:46,880 --> 00:44:53,520
taking issue with the debtor to the extent the debtor can finance its way to a subsequent hearing

408
00:44:53,520 --> 00:44:58,640
using cash collateral that isn't your collateral. You aren't taking issue with their decision to

409
00:44:59,280 --> 00:45:02,400
allow a competitive process to play itself out and we'll see where we are.

410
00:45:02,400 --> 00:45:09,040
Your Honor, short answer is yes. The longer one is that we have a second on the cash, but the

411
00:45:09,040 --> 00:45:15,680
ABO controls the consent to use the cash collateral. Got it. Okay. Okay. So thank you, Mr. Dunn. So,

412
00:45:15,680 --> 00:45:19,520
Mr. Su, I think you are next, so let me give you a chance to be heard.

413
00:45:21,200 --> 00:45:27,040
Good afternoon, Your Honor. This is Yiheng Xu from the DOJ on behalf of the United States Treasury.

414
00:45:27,040 --> 00:45:32,400
We thank you for your time and we appreciate the difficult circumstances in front of you today.

415
00:45:33,840 --> 00:45:41,280
The Treasury extended a $700 million loan to the company during the pandemic, and we are focused

416
00:45:41,920 --> 00:45:46,720
on protecting the taxpayers' interests on behalf of the Treasury in this bankruptcy.

417
00:45:48,160 --> 00:45:53,920
Along with Treasury's outside counsel, Arnold Porter, and other advisors, we have worked closely

418
00:45:53,920 --> 00:46:00,320
with the company and other stakeholders leading up to the bankruptcy and negotiated certain

419
00:46:00,320 --> 00:46:07,280
protections for Treasury. There are many moving pieces now, but we understand and we expect Mr.

420
00:46:07,280 --> 00:46:13,280
Nash to confirm later on the record that the advocate protection we have negotiated for

421
00:46:13,280 --> 00:46:19,840
Treasury will still be implemented, regardless of which dip financing is ultimately selected.

422
00:46:19,840 --> 00:46:27,760
And Treasury and everyone on our side, we will continue to work throughout this bankruptcy

423
00:46:28,640 --> 00:46:32,000
to protect the taxpayers' interests. Thank you, Your Honor.

424
00:46:32,960 --> 00:46:40,480
Thank you. Okay, I confess I may have lost track, but Mr. Winston, I think perhaps you're next.

425
00:46:41,760 --> 00:46:45,040
Yes, Your Honor. Thank you so much. Eric Winston of Quinn Emmanuel,

426
00:46:45,040 --> 00:46:53,680
for Cardin Sullivan, on behalf of MFN Partners LP. As Mr. Nash described, MFN holds approximately

427
00:46:53,680 --> 00:46:59,040
42.5% of the common stock of yellow, and we believe it is the biggest stockholder.

428
00:46:59,600 --> 00:47:05,440
We were prepared to object to the dip motion, and we did provide a superior alternative proposal.

429
00:47:06,480 --> 00:47:10,960
One aspect of it that Mr. Nash, I can't remember if he talked about it or not,

430
00:47:10,960 --> 00:47:17,120
but by eliminating the roll-up, that actually ends up saving the estates at least 32 million,

431
00:47:17,120 --> 00:47:22,560
maybe as high as $41 million in fees that would otherwise have incurred on that roll-up amount.

432
00:47:23,120 --> 00:47:28,560
So to the extent that Mr. Dunn is worried about fee burn, that's a massive savings

433
00:47:29,200 --> 00:47:35,120
instantaneously. And we've been pleased and appreciative that the debtors and the professionals

434
00:47:35,120 --> 00:47:41,440
in the last 24 hours have taken our proposal under very serious consideration. And it appears,

435
00:47:41,440 --> 00:47:48,400
whether it be MFN or SDS or really anybody else, there is going to be a better financing. And from

436
00:47:48,400 --> 00:47:53,200
MFN's perspective, whatever is the best one for the estates is the best one that should be picked.

437
00:47:53,200 --> 00:48:01,360
It does not have to be MFN. MFN just wants the estates to have the best economic terms and the

438
00:48:01,360 --> 00:48:07,760
ability to maximize value for all stakeholders and not to be handcuffed, especially with respect to

439
00:48:07,760 --> 00:48:14,080
timing and the flexibility to market assets in the most intelligent way. That seems to be where the

440
00:48:14,080 --> 00:48:20,720
alternative financing is headed, better economic terms and importantly, longer time to conduct a

441
00:48:20,720 --> 00:48:28,000
robust marketing process that benefits all. MFN, with its advisors, has the largest shareholder

442
00:48:28,000 --> 00:48:33,520
and perhaps the dip lender, does expect to be heavily involved in developing and monitoring the

443
00:48:33,520 --> 00:48:38,880
bidding process. I look forward to working with the debtors, U.S. Treasury, which itself is the

444
00:48:38,880 --> 00:48:46,320
second largest shareholder in the company, lenders, and a committee is formed, a committee to achieve

445
00:48:46,320 --> 00:48:52,560
this goal. I do want to just make one comment because I heard something that Mr. Dunn said about

446
00:48:52,560 --> 00:49:01,840
MFN. It is an investor in, I guess, competitor, a completely passive investor, and that company does

447
00:49:01,840 --> 00:49:08,000
what it does with no input from MFN. I wouldn't be surprised if a lot of the folks that are

448
00:49:08,000 --> 00:49:14,640
representing lenders and other constituents would be surprised they are also involved in competitors

449
00:49:14,640 --> 00:49:20,560
or anybody else that may have interest in this, and I'm sure some of you are interested in this.

450
00:49:20,560 --> 00:49:28,480
And I'm sure that we can get through this, whether MFN is the dip lender or not, it is

451
00:49:28,480 --> 00:49:32,480
not going to be an issue. But I just wanted to respond to that point. Your Honor, with that,

452
00:49:32,480 --> 00:49:38,080
I'm – thanks for the time, and we look forward to going forward on Friday, whether it's MFN,

453
00:49:38,080 --> 00:49:39,280
SDS, or somebody else.

454
00:49:39,280 --> 00:49:42,480
Okay. Very well. Thank you, Mr. Winston. Appreciate it. Mr. Nelson?

455
00:49:42,480 --> 00:49:47,440
Your Honor, good afternoon. Philip Nelson on behalf of Altered Dumbness Products Corporation,

456
00:49:47,440 --> 00:49:55,600
which is the administrative and collateral agent for the B2 loans, the B2 agent. I wanted to just

457
00:49:55,600 --> 00:50:04,000
raise or address a technical point that Mr. Dunn brought up at the end of his remarks, which is,

458
00:50:04,000 --> 00:50:14,720
obviously, he and his firm represent Apollo as the majority of the largest lender for our loans,

459
00:50:14,720 --> 00:50:21,840
but to the extent that it needed to be clarified, I wanted to make clear that the collateral agent

460
00:50:21,840 --> 00:50:27,120
joins in that adequate protection request with respect to the entire facility and all of these

461
00:50:27,120 --> 00:50:30,080
secured parties under the B2 facility.

462
00:50:30,080 --> 00:50:38,560
Okay. Thank you, Mr. Nelson. Thank you, Your Honor. Thank you. Mr. Silverman, I think you might

463
00:50:38,560 --> 00:50:42,880
be next, though. If I'm wrong, I apologize to whomever I've allowed you to skip.

464
00:50:44,960 --> 00:50:46,800
Well, thank you, Your Honor. Can you hear me well?

465
00:50:46,800 --> 00:50:47,200
I can.

466
00:50:48,400 --> 00:50:55,760
Thank you. Your Honor, Ronald Silverman, Hogan Loves Plus LLP. We represent the Bank of New York

467
00:50:55,760 --> 00:51:01,280
Mellon as the administrative agent and the collateral agent with respect to both the Tronch

468
00:51:01,280 --> 00:51:10,880
A USD credit facility and the Tronch B USD credit facility. So the United States Treasury is the

469
00:51:10,880 --> 00:51:17,200
lender under each of those, but similar to Mr. Nelson, his role as collateral agent, administrative

470
00:51:17,200 --> 00:51:22,800
agent, we likewise have a similar role. And we wanted to say again, importantly for the first day,

471
00:51:22,800 --> 00:51:29,920
that we reserve our rights generally with respect to the DIPP financing. Secondly, that we understand

472
00:51:30,800 --> 00:51:39,280
and understand that the debtors will be stating on the record that the adequate protection

473
00:51:39,760 --> 00:51:47,120
arrangements that have been negotiated with respect to the US Treasury facilities will be

474
00:51:47,120 --> 00:51:53,760
will be implemented regardless of which DIPP facility is put in place. That does

475
00:51:53,760 --> 00:51:58,240
seem like the case based on the statements that the other DIPP lenders are willing to step

476
00:51:58,240 --> 00:52:05,280
generally into those terms. And lastly, as Mr. Nelson said, as client, we do request and have

477
00:52:05,280 --> 00:52:10,320
requested and seek adequate protection from the petition date. So thank you very much, Your Honor.

478
00:52:10,320 --> 00:52:12,320
Thank you, Mr. Silverman. Mr. Griezmann.

479
00:52:15,200 --> 00:52:16,720
Thank you, Your Honor. Can you hear me?

480
00:52:16,720 --> 00:52:18,720
I can.

481
00:52:18,720 --> 00:52:26,080
Great. Scott Griezmann, White and Case for Beal Bank. Beal Bank is a 45 percent holder of the B2 loan

482
00:52:26,640 --> 00:52:33,680
and echoes all of Mr. Dunn's statements and is in agreement with Apollo that the situation

483
00:52:34,240 --> 00:52:40,480
leading up to the filing and presently is actually quite problematic. I won't repeat all of Mr.

484
00:52:40,480 --> 00:52:47,440
Dunn's statements, but I will emphasize a couple of points. One, there are presently no buyers for

485
00:52:47,440 --> 00:52:56,240
these assets. Two, the appraisals Mr. Nash mentioned are months old and it is unclear if

486
00:52:56,240 --> 00:53:03,200
they were predicated on a going concern or go dark basis. But non-operating terminals and

487
00:53:03,200 --> 00:53:11,040
non-operating rolling stock are obviously much less valuable potentially. And going into an

488
00:53:11,040 --> 00:53:18,720
extended sale process beyond 90 days takes us into seasonal issues that require a much greater

489
00:53:18,720 --> 00:53:24,240
expenditure of the state resources to preserve that collateral. And so in addition, I understand

490
00:53:24,240 --> 00:53:32,400
Mr. Winston's point that the roll-up costs a bunch in respect of additional interest. The additional

491
00:53:32,400 --> 00:53:38,080
90 days also costs a bunch in respect of additional interest and also does take into account the

492
00:53:38,080 --> 00:53:43,200
substantial state expenditures that are likely to be required to preserve this collateral.

493
00:53:44,240 --> 00:53:51,440
Beal Bank won't agree to a priming or parry-pessu dip facility. I think everyone understands that

494
00:53:51,440 --> 00:53:58,080
and Apollo agrees with that as well. And if there is a junior facility proposed, obviously the devil

495
00:53:58,080 --> 00:54:05,040
is going to be in the details. It's not just a junior lien in priority that would be concerning

496
00:54:05,760 --> 00:54:11,200
but also the rights of enforcement and other inter-creditor discussions that can actually

497
00:54:11,200 --> 00:54:15,600
get very complicated in these scenarios. It's hard to understand how all this is going to get

498
00:54:15,600 --> 00:54:24,720
pulled together by Friday. But I won't, I guess, begrudge Kirkland the opportunity to try. But the

499
00:54:24,720 --> 00:54:30,960
situation is a lot less rosy and a lot more problematic than their explaining at the moment.

500
00:54:30,960 --> 00:54:37,280
And we are very concerned about the collateral coverage here and we will be watching this very

501
00:54:37,280 --> 00:54:44,080
carefully. Thank you. Okay. Thank you, Mr. Griezmann. So I see someone who else has your

502
00:54:44,080 --> 00:54:50,880
camera on who's identified as conference room 35C. Apologies for describing you that way,

503
00:54:50,880 --> 00:54:55,920
but if you'd like to be heard, let me give you the opportunity. Thank you, Ron. My apologies for not

504
00:54:55,920 --> 00:55:00,480
having the technological skills to change my name. This is Kevin Samar and Chodolpil Stewart.

505
00:55:01,280 --> 00:55:08,240
We are counsel to the Citizen Bank as the ADL agent. As Mr. Nash stated, all parties' rights

506
00:55:08,240 --> 00:55:12,880
are reserved. We appreciate that they're in the other party working real time with us,

507
00:55:12,880 --> 00:55:17,920
keeping us up to speed. But until we see final terms, we'll need to reserve our rights.

508
00:55:17,920 --> 00:55:26,160
One thing I'd like to point out is that while the proposed SEAS dip is not priming the B2s,

509
00:55:26,880 --> 00:55:34,240
it is priming us on our ABL priority collateral. As Mr. Nash stated, the ABL lenders have a second

510
00:55:34,240 --> 00:55:42,080
on the B2 priority collateral and a third on the U.N. trustee US Treasury priority collateral.

511
00:55:42,080 --> 00:55:48,400
So in fact, that dip would be priming us on those assets. So we have our rights with respect to

512
00:55:48,400 --> 00:55:53,600
ethical protection, our rights with respect to consent. We have concerns with additional dollars

513
00:55:53,600 --> 00:56:00,560
in addition to the $142.5 million being funded. We also have concerns with respect to the extended

514
00:56:00,560 --> 00:56:05,200
milestones. While a little bit more time may benefit the debtor, doubling the milestones

515
00:56:05,200 --> 00:56:11,440
we've asked for, but we've not seen the justification and the cost-benefit analysis

516
00:56:11,440 --> 00:56:18,240
on those points. As Mr. Nash stated, we have worked with the debtor today to come to a

517
00:56:18,240 --> 00:56:23,680
– moving things to a conceptual use of cash – the ABL priority cash collateral so we can bridge

518
00:56:23,680 --> 00:56:29,360
the debtor to pay payroll and a couple other necessary items through Wednesday of next week,

519
00:56:29,360 --> 00:56:32,640
if necessary. Thank you, Your Honor.

520
00:56:32,640 --> 00:56:39,360
MR. RADDATZ Thank you very much. So, Mr. Nash, I think back to you to continue through the agenda

521
00:56:39,360 --> 00:56:44,720
unless there are – I take it no one else would like to be heard more broadly. Seeing no one,

522
00:56:44,720 --> 00:56:48,080
Mr. Nash, let me pass the baton back to you.

523
00:56:48,080 --> 00:56:55,280
MR. NASH Thank you, Judge. Let me make the statement on the record that Treasury is looking for.

524
00:56:55,280 --> 00:57:05,200
We absolutely intend that we are going to respect the existing cash collateral arrangement and

525
00:57:05,200 --> 00:57:13,680
stipulation with Treasury. The financing that we came to court with, Your Honor, was very carefully

526
00:57:13,680 --> 00:57:21,280
and painstakingly crafted. And in terms of our discussions with the potential alternative

527
00:57:21,280 --> 00:57:26,640
debt financing providers, we have made it very clear that from our perspective, they need to

528
00:57:26,640 --> 00:57:32,640
step into – or in the case of SDs, in fact, be better than, because it would be junior to – but

529
00:57:32,640 --> 00:57:40,480
step into the same exact financing and collateral arrangements that the B-2 lenders had reached with

530
00:57:40,480 --> 00:57:46,800
the other pre-petition secured parties. And we have every expectation that, to the extent that

531
00:57:46,800 --> 00:57:51,120
we're presenting alternative debt financing to Your Honor, we are going to be respecting

532
00:57:52,000 --> 00:57:55,440
those inter-creditor arrangements that are already in place.

533
00:57:55,440 --> 00:58:06,080
I also would like to just make clear, Judge, we unsolicited received two proposals that offered

534
00:58:06,080 --> 00:58:14,560
180 days. We may not need 180 days. We didn't ask for 180 days. We do think that having more

535
00:58:14,560 --> 00:58:20,320
than 90 days could be helpful. And just so Your Honor doesn't think that, you know, I fell off

536
00:58:20,320 --> 00:58:29,680
the turnip truck yesterday, $142.5 million is contemplated by the MFN financing, and $230 million

537
00:58:29,680 --> 00:58:35,040
is contemplated by the SDIS financing. If you want to think about, you know, 80 or 90 of that

538
00:58:35,040 --> 00:58:45,360
being sort of earmarked for employees, $142.5 million is not enough to get us to 180 days

539
00:58:45,360 --> 00:58:52,400
if you're not making any assumptions around asset sales. As we've been discussing with both of these

540
00:58:52,400 --> 00:59:00,000
providers, to the extent that we don't sell an asset between now and the 90th day, $142 million

541
00:59:00,000 --> 00:59:05,920
isn't going to be enough money. But to the extent that we're selling assets and generating cash,

542
00:59:06,480 --> 00:59:13,040
$142 million may be enough money. And it may be enough money for a case that ultimately takes

543
00:59:13,040 --> 00:59:22,240
112 days or 118 days or 121 days. We were offered 180 days, and we're discussing the financing,

544
00:59:22,240 --> 00:59:26,960
and we're going to be discussing it with the other pre-petitioned secured parties.

545
00:59:26,960 --> 00:59:33,120
And with respect to Mr. Dunn's comments on medical protection, I'd be shocked, Your Honor,

546
00:59:33,120 --> 00:59:38,480
to the extent that we've got alternative financing of the type and nature that we've been describing,

547
00:59:38,480 --> 00:59:44,240
particularly as it relates to Astes. I'd be shocked if we don't have a consensual adequate

548
00:59:44,240 --> 00:59:50,800
protection package. I want to reiterate, because of course, you could perhaps draw a different

549
00:59:50,800 --> 00:59:55,280
conclusion, but the debtor's to mean it when we say how much we appreciate the financing that we

550
00:59:55,280 --> 01:00:01,040
have in hand, how much better it is to have that financing in hand. We do think it's positive

551
01:00:01,040 --> 01:00:06,960
development, that there's competition. And so with that, Judge, I think we can probably move

552
01:00:06,960 --> 01:00:13,680
into the agenda. And before doing so, with Your Honor's permission, I would move Mr. Doheny's

553
01:00:13,680 --> 01:00:19,200
declaration into evidence for purposes of the relief that we seek here today.

554
01:00:19,200 --> 01:00:25,120
MR PALLADINO Okay. Is there any party in interest that objects to the introduction of Mr. Doheny's

555
01:00:25,680 --> 01:00:33,920
declaration, which I believe is DI 14, admitted, as Mr. Nash says, for the purposes of the relief

556
01:00:33,920 --> 01:00:34,560
sought today?

557
01:00:34,560 --> 01:00:42,640
Okay. Seeing no one, it will be admitted. Is there any party that wishes to cross-examine

558
01:00:42,640 --> 01:00:49,920
Mr. Doheny with respect to the matters before the Court today? Okay. Seeing no one, Mr. Nash,

559
01:00:49,920 --> 01:00:50,560
you can continue.

560
01:00:50,560 --> 01:00:55,520
MR Your Honor, with your permission, I'm going to yield the podium to my colleague,

561
01:00:55,520 --> 01:00:56,080
Connor McNamara.

562
01:00:56,080 --> 01:00:57,920
MR PALLADINO Okay. Very well. Thank you.

563
01:00:57,920 --> 01:01:00,000
MR Thanks a lot, Judge.

564
01:01:00,000 --> 01:01:12,480
MR

565
01:01:12,480 --> 01:01:32,000
McNAVARRA Good afternoon, Your Honor. Connor McNamara, Kirk Lennon-Alice, proposed counsel

566
01:01:32,000 --> 01:01:43,360
3, motion request that the court jointly administer the Chapter 11 cases for procedural purposes only,

567
01:01:43,360 --> 01:01:47,360
and for administrative efficiency. No party has objected to the motion, and unless Your

568
01:01:47,360 --> 01:01:51,680
Honor has any questions, we would respectfully request entry of the order.

569
01:01:51,680 --> 01:01:55,440
MR PALLADINO Okay. Is there any party in interest that would like the opportunity to be heard

570
01:01:55,440 --> 01:02:01,920
with respect to the debtor's motion for joint administration? Okay. Seeing none, I've reviewed

571
01:02:01,920 --> 01:02:06,720
the motion in order. I'm satisfied the relief sought is appropriate, and we will enter that

572
01:02:06,720 --> 01:02:07,040
order.

573
01:02:07,040 --> 01:02:37,040
MR

574
01:02:37,040 --> 01:03:06,400
PALLADINO Okay. Thank you.

575
01:03:07,760 --> 01:03:18,240
MR PALLADINO Is there any party in interest that would like the chance to be heard with

576
01:03:18,240 --> 01:03:24,560
respect to the NOL motion? Okay. Seeing none, I've – I'm sorry, Mr. Mintz.

577
01:03:24,560 --> 01:03:31,760
MR MINTZ Good afternoon, Your Honor. On behalf of Treasury, we did provide comments to that order

578
01:03:31,760 --> 01:03:38,560
that was incorporated. We have not seen the comments and the changes that were made with respect to the

579
01:03:38,560 --> 01:03:43,760
comments received from the U.S. trustee. We would just ask for the opportunity to see those. I don't

580
01:03:43,760 --> 01:03:48,000
anticipate an issue, but it's just something we would not provide.

581
01:03:48,000 --> 01:03:51,120
MR PALLADINO Okay. So, Mr. McNer, under the circumstances,

582
01:03:53,040 --> 01:03:59,920
does it make sense to give you the chance to be sure that you've run those by Mr. Mintz before

583
01:03:59,920 --> 01:04:05,040
they are – I don't know if they've been uploaded, but if you could run those by Mr. Mintz and let

584
01:04:06,720 --> 01:04:12,880
chambers know that those – that there aren't issues that require further consideration? Ms. Jones?

585
01:04:12,880 --> 01:04:17,440
MS JONES Thank you, Your Honor. Your Honor, I would note to the record that none of the orders

586
01:04:17,440 --> 01:04:22,400
have been uploaded. We anticipated that Your Honor may have some comments, so we thought we'd wait

587
01:04:22,400 --> 01:04:27,680
to the balance – until the hearing is over. So in that regard, Your Honor, yes, we can provide a copy

588
01:04:27,680 --> 01:04:30,880
to Mr. Mintz in the interim while Mr. McNer is talking.

589
01:04:30,880 --> 01:04:36,560
MR PALLADINO Okay. Terrific. So I'll take – if they're uploaded, I'll take that as a representation

590
01:04:36,560 --> 01:04:41,520
that those – that there aren't further issues. Is there any other party in interest that would

591
01:04:41,520 --> 01:04:50,080
like the opportunity to be heard with respect to the NOL motion? Okay. Seeing no one, I've

592
01:04:50,800 --> 01:04:57,440
reviewed the motion and the proposed order. I did have the chance to review the red lines that have

593
01:04:57,440 --> 01:05:01,440
been submitted, reflecting, as I understand it, the discussions with the U.S. Trustee.

594
01:05:02,320 --> 01:05:09,760
I'm satisfied that the relief sought is appropriate under the circumstances, and we will,

595
01:05:09,760 --> 01:05:14,080
when it's uploaded, enter that order, which is, of course, on an interim basis.

596
01:05:14,080 --> 01:05:22,800
MR PALLADINO That's right. Thank you, Your Honor. The next motion is the wages motion filed at

597
01:05:22,800 --> 01:05:29,120
Dock at number 20. Under the wages motion, the debtor seeks to pay pre-petition wages, salaries,

598
01:05:29,120 --> 01:05:34,320
and other compensation and continue certain employee benefits programs. In the ordinary

599
01:05:34,320 --> 01:05:40,960
course, for employees employed by the debtors on a go-forward basis and also payable for former

600
01:05:40,960 --> 01:05:46,960
employees who were terminated before the petition date. Currently, the debtors employ approximately

601
01:05:46,960 --> 01:05:53,840
1,600 employees on a go-forward basis. It will be critical to implementing the sale process

602
01:05:54,400 --> 01:05:59,120
in these Chapter 11 cases, as they have historical knowledge of the debtor's assets and operations.

603
01:06:00,560 --> 01:06:05,280
By the interim order, the debtors are only seeking authority to pay approximately $17 million

604
01:06:06,000 --> 01:06:11,360
in wages and employee benefits. The debtors are not seeking to pay anyone over the statutory caps,

605
01:06:11,360 --> 01:06:17,520
nor are the debtors seeking to pay any severance during the interim period. As with the other

606
01:06:17,520 --> 01:06:22,000
orders, we've provided the U.S. trustee and also the secured lenders an opportunity to comment on

607
01:06:22,000 --> 01:06:26,880
the form of order. Those comments are largely incorporated. I don't believe any party has

608
01:06:26,880 --> 01:06:31,120
objected, and unless, Your Honor, there's any questions, we would request entry of the revised

609
01:06:31,120 --> 01:06:32,720
order submitted to chambers.

610
01:06:32,720 --> 01:06:35,920
MR PALLADINO Okay. Is there any party in interest that would like the opportunity to be heard with

611
01:06:35,920 --> 01:06:38,560
respect to the debtor's wages motion? Mr. Mintz.

612
01:06:38,560 --> 01:06:45,520
MR MINTZ Same request, Your Honor, and I would ask for the opportunity to – I won't keep rising,

613
01:06:45,520 --> 01:06:49,840
but with respect to the orders – I know things were moving very quickly, so I understand the

614
01:06:49,840 --> 01:06:53,760
dynamic, but we would appreciate the opportunity to see the revisions that are being made.

615
01:06:53,760 --> 01:06:59,440
MR PALLADINO All right. We'll treat that as a standing understanding that nothing will be

616
01:06:59,440 --> 01:07:03,280
uploaded unless and until you've had the chance to look at it.

617
01:07:03,280 --> 01:07:04,640
MR MINTZ Thank you.

618
01:07:04,640 --> 01:07:10,400
MR PALLADINO Any other party in interest would like the opportunity to be heard with respect to

619
01:07:10,400 --> 01:07:17,600
the wages motion? Okay. I've reviewed that motion and order. I'm satisfied that the relief

620
01:07:17,600 --> 01:07:23,440
sought is appropriate, and we will enter that order again on interim basis when it's uploaded.

621
01:07:23,440 --> 01:07:31,280
MR PALLADINO Great. Thank you, Your Honor. The next motion I will take is the creditor

622
01:07:31,280 --> 01:07:37,520
matrix motion filed at docket number seven. By this motion, the debtor received relief to file

623
01:07:37,520 --> 01:07:43,200
a consolidated creditor matrix, consolidate the top 30 creditors list, and to redact certain

624
01:07:43,200 --> 01:07:47,920
personally identifiable information of the debtor's creditors that are natural persons.

625
01:07:48,880 --> 01:07:54,480
In addition, the debtor's request authority to serve creditors by email that have a valid email

626
01:07:54,480 --> 01:08:03,440
address on file but no physical address information on file. We provided the U.S. Trustee with an

627
01:08:03,440 --> 01:08:09,200
opportunity to comment on the form of order. Those comments are largely incorporated. I do believe

628
01:08:09,200 --> 01:08:15,200
we missed one, and so as with the others, we will submit a revised order after the hearing

629
01:08:15,840 --> 01:08:20,640
for Your Honor's consideration. MR MINTZ Okay. Is there any party in

630
01:08:20,640 --> 01:08:27,040
interest that would like the opportunity to be heard with respect to the creditor matrix motion

631
01:08:27,040 --> 01:08:35,520
and related relief? Okay. Seeing no one, I've reviewed that motion in order. I'm satisfied

632
01:08:35,520 --> 01:08:40,800
that that relief is appropriate, and we'll enter that interim order after it is uploaded.

633
01:08:40,800 --> 01:08:47,040
MR PALLADINO Great. Thank you, Your Honor. The last item I will take you through today is the

634
01:08:47,040 --> 01:08:54,320
insurance insurity motion filed at docket number six. Debtors seek relief to continue their

635
01:08:54,320 --> 01:09:00,560
insurance policies and insurity bonds. In the ordinary course, there are approximately 82

636
01:09:00,560 --> 01:09:09,600
insurance policies and over $150 million in insurity bonds collateralized by over $80 million in

637
01:09:09,600 --> 01:09:15,840
letters of credit. On an interim basis, however, the debtors are only seeking to pay approximately

638
01:09:15,840 --> 01:09:21,200
$3 million, and that is largely related to the premium financing agreements until we are back

639
01:09:21,200 --> 01:09:29,440
in front of Your Honor on Friday or early next week. The proposed order incorporates comments

640
01:09:29,440 --> 01:09:36,480
from Old Republic Insurance Company, comments from Chubb Insurance, comments from the U.S.

641
01:09:36,480 --> 01:09:41,440
Trustee, as well as comments from other parties in interest. I don't believe there are any

642
01:09:41,440 --> 01:09:46,960
objections, so unless Your Honor has any questions, we request entry of the revised order submitted

643
01:09:46,960 --> 01:09:50,880
to the chambers as well. MR PALLADINO Okay. Is there any party in interest that would like

644
01:09:50,880 --> 01:09:57,360
the opportunity to be heard with respect to the debtors' insurance and insurity motion at DI6?

645
01:10:00,160 --> 01:10:04,400
Okay. Seeing none, I have had a chance to look at that motion in order. I'm satisfied the relief

646
01:10:04,400 --> 01:10:07,680
sought is appropriate, and we will enter that order on an interim basis.

647
01:10:07,680 --> 01:10:14,560
MR MCNARRO Thank you, Your Honor. With that, I will turn over the podium to my colleague,

648
01:10:14,560 --> 01:10:18,160
Mr. Jacobson, to tell you through the balance of motion for today's hearing.

649
01:10:18,160 --> 01:10:20,720
MR MCNARRO Perfect. Thank you, Mr. McNarro. Mr. Jacobson.

650
01:10:20,720 --> 01:10:34,080
MR Jacobson Good afternoon, Your Honor. Rob Jacobson of

651
01:10:34,080 --> 01:10:38,800
Perkland & Ellis on behalf of the debtors. I'm going to walk through the balance of today's

652
01:10:38,800 --> 01:10:44,720
agenda as my colleague, Connor McNamara, just alluded to. The next item on today's agenda

653
01:10:44,720 --> 01:10:51,680
at docket number 11 is the debtors' 156C application to retain Epic as our claims and

654
01:10:51,680 --> 01:10:57,520
noticing agent. As a preliminary matter, attached to this exhibit B to the application is the

655
01:10:57,520 --> 01:11:04,240
declaration of Kate Mayhew, Senior Director at Epic, in support of the application. Ms. Mayhew

656
01:11:04,240 --> 01:11:09,760
is on the Zoom line today, and I'd ask to move her declaration into evidence for purposes of

657
01:11:09,760 --> 01:11:14,240
this application subject to parties' rights to ask her questions if they would like to.

658
01:11:14,240 --> 01:11:19,280
MR MCNARRO Okay. Is there any party in interest that would like to be heard with respect to

659
01:11:20,080 --> 01:11:24,000
Mr. Jacobson's motion to move into evidence the declaration of Ms. Mayhew?

660
01:11:24,000 --> 01:11:31,280
Okay. Seeing none, that will be admitted. Is there any party in interest who wishes to cross-examine

661
01:11:31,280 --> 01:11:35,920
Ms. Mayhew? Okay. Seeing none, Mr. Jacobson, you can proceed.

662
01:11:35,920 --> 01:11:40,320
MR Jacobson Thank you, Your Honor. By appointing Epic as

663
01:11:40,320 --> 01:11:45,120
the claims and noticing agent in these Chapter 11 cases, distribution of notices and processing

664
01:11:45,120 --> 01:11:49,280
of claims will be expedited, and the clerk's office will be relieved of the administrative

665
01:11:49,280 --> 01:11:54,160
burden of processing the proofs of claim. Consistent with the claims agent protocol,

666
01:11:54,160 --> 01:11:59,040
we solicited multiple claims agent bids, and we found that Epic's proposal was competitive

667
01:11:59,040 --> 01:12:04,800
and the best fit for the debtors. We've reviewed this motion with the lenders in the U.S. Trustee's

668
01:12:04,800 --> 01:12:10,080
office. No party is objected to this application, and so unless Your Honor has any questions,

669
01:12:10,080 --> 01:12:12,320
we respectfully request entering the proposed order.

670
01:12:12,320 --> 01:12:16,080
MR MCNARRO Thank you. I have reviewed that motion and order.

671
01:12:16,080 --> 01:12:20,560
I'm satisfied that that relief sought is appropriate, and we will enter that order.

672
01:12:20,560 --> 01:12:22,560
MR Jacobson Thank you, Your Honor.

673
01:12:23,280 --> 01:12:27,920
The next item on today's agenda at Docket Number 9 is the debtor's motion to authorize

674
01:12:27,920 --> 01:12:33,520
Yellow Corporation to act as foreign representative on behalf of the debtor's estates in legal

675
01:12:33,520 --> 01:12:40,000
proceedings in Ontario's Superior Court of Justice in Toronto, Ontario, Canada, pursuant to the

676
01:12:40,000 --> 01:12:46,240
Company's Creditors' Arrangement Act. Your Honor, Yellow Corporation is the ultimate parent entity

677
01:12:46,240 --> 01:12:53,600
of the debtors. Yellow Corporation is commencing ancillary proceedings in Canada to request that

678
01:12:53,600 --> 01:12:59,360
the Canadian court recognize the Chapter 11 case of Yellow Corporation as a foreign main proceeding

679
01:12:59,360 --> 01:13:05,520
under the applicable provisions of the CCAA. To that end, the debtors require authority for Yellow

680
01:13:05,520 --> 01:13:11,360
Corporation to act as foreign representative on behalf of the debtor's estates. Recognition of

681
01:13:11,360 --> 01:13:16,880
its Chapter 11 case is necessary to protect Yellow's assets in Canada and to obtain a Canadian

682
01:13:16,880 --> 01:13:23,920
order staying self-help remedies by stakeholders. The lenders in the United States Trustee's Office

683
01:13:23,920 --> 01:13:28,560
have had the opportunity to review the form of order, and no party is objected to this motion.

684
01:13:29,440 --> 01:13:33,520
Unless Your Honor has any questions, we respectfully request entering the proposed order.

685
01:13:33,520 --> 01:13:39,200
Is there any party in interest that would like the opportunity to be heard with respect to the

686
01:13:39,200 --> 01:13:44,000
debtor's motion for an order that would authorize the debtor to act as foreign representative under

687
01:13:44,000 --> 01:13:53,360
Section 1505? Okay, seeing none, I've reviewed that motion and order. I'm satisfied that that

688
01:13:53,360 --> 01:13:59,520
relief is appropriate under the circumstances, and we will enter that order. Thank you, Your Honor.

689
01:13:59,520 --> 01:14:05,600
The next item on today's agenda at Docket Number 10 is the debtor's cash management motion. By this

690
01:14:05,600 --> 01:14:10,240
motion, the debtors are seeking authority to continue to operate their cash management system

691
01:14:10,240 --> 01:14:15,520
and maintain their existing bank accounts, honor certain pre-petition and post-petition obligations

692
01:14:15,520 --> 01:14:21,840
related thereto, maintain existing business forms, and continue to perform inter-company transactions.

693
01:14:23,200 --> 01:14:28,080
Your Honor, Yellow's cash management system is complex and comprehensive. The cash management

694
01:14:28,080 --> 01:14:35,040
system is made up of two silos. There's the USA cash management system, which consists of 30 bank

695
01:14:35,040 --> 01:14:41,840
accounts, and the Canada cash management system, which consists of 14 bank accounts. Because access

696
01:14:41,840 --> 01:14:48,240
to the cash management system is imperative to meet the immediate term obligations, any disruption

697
01:14:48,240 --> 01:14:52,240
to the cash management system could have an immediate and significant value-destructive

698
01:14:52,240 --> 01:14:56,240
effect on the debtor's estates, which would be to the detriment of all stakeholders.

699
01:14:56,240 --> 01:15:00,400
Accordingly, the debtors submit that the relief sought in the motion is necessary and appropriate

700
01:15:00,400 --> 01:15:05,600
under the circumstances. Prior to filing the motion, we received and incorporated comments

701
01:15:05,600 --> 01:15:10,880
from the lenders and the U.S. Trustee's office, and after we filed the motion, but prior to submitting

702
01:15:10,880 --> 01:15:17,760
the revised order earlier today, we received and incorporated informal comments from JPMorgan Chase

703
01:15:17,760 --> 01:15:22,800
relating to the merchant services relationship between Chase and the debtors.

704
01:15:22,800 --> 01:15:27,120
No party is objected to this motion, and so unless Your Honor has any questions,

705
01:15:27,120 --> 01:15:29,360
we respectfully request entry of the proposal.

706
01:15:29,360 --> 01:15:31,200
Okay. Thank you. Ms. Leeming.

707
01:15:32,080 --> 01:15:36,560
Good afternoon, Your Honor. Jay Leeming for the U.S. Trustee. We're resolved on the form of order.

708
01:15:37,440 --> 01:15:42,160
The U.S. Trustee would like to be heard on a motion and in particular Section 345 compliance.

709
01:15:43,120 --> 01:15:48,560
Section 345 of the Bankruptcy Code obligates the debtors in possession to inquire from an entity

710
01:15:48,560 --> 01:15:54,640
with which the estate monies are invested, one, a bond having features defined in Code Section 345B

711
01:15:55,680 --> 01:16:01,680
or alternatively, two, that a deposit of securities consistent with 31 USC Section 93-03,

712
01:16:01,680 --> 01:16:06,320
unless the court orders otherwise. In connection with the cash management motion,

713
01:16:06,320 --> 01:16:12,720
we would make four observations. First, Section 345 places an obligation on a debtor in possession

714
01:16:12,720 --> 01:16:15,600
to require protection for its money from the state.

715
01:16:15,600 --> 01:16:21,040
Second, while Section 345 does not mention the U.S. Trustee's office, the U.S. Trustee's office

716
01:16:21,040 --> 01:16:26,880
in its supervisory role assists with protection of debtor in possession funds by entry into uniform

717
01:16:26,880 --> 01:16:34,240
depository agreements or UDAs. UDAs obligate depositories to maintain collateral for bankruptcy

718
01:16:34,240 --> 01:16:38,240
funds on deposit in an amount no less than $150,000.

719
01:16:38,240 --> 01:16:46,320
UDAs obligate depositories to maintain collateral for bankruptcy funds on deposit in an amount no less than 115%

720
01:16:46,320 --> 01:16:50,960
of debtor in possession in trustee deposits, which exceed FDIC limits.

721
01:16:51,520 --> 01:16:55,840
The U.S. Trustee maintains information on the banks who have executed UDAs,

722
01:16:56,560 --> 01:17:00,880
and there is a current list posted on our website of those banks.

723
01:17:01,760 --> 01:17:07,680
Third, in order for a debtor in possession to comply with Section 345 where a UDA bank is involved,

724
01:17:07,680 --> 01:17:12,640
the debtor in possession must first identify and disclose all accounts where monies are held,

725
01:17:12,640 --> 01:17:17,520
and second, contact those banks to ensure the relevant accounts are designated as debtor in

726
01:17:17,520 --> 01:17:23,200
possession accounts. Fourth, recent bank failures highlight the importance of the debtor in

727
01:17:23,200 --> 01:17:27,440
possession's compliance with Section 345 for the benefit of all of its stakeholders.

728
01:17:28,160 --> 01:17:33,360
The U.S. Trustee seeks specific language in any interim cash management order that identifies

729
01:17:33,360 --> 01:17:38,080
concrete steps and a definite timeframe to achieve compliance with Section 345.

730
01:17:38,640 --> 01:17:43,360
The U.S. Trustee encourages the debtors here to act promptly to ensure full compliance with Section

731
01:17:43,360 --> 01:17:48,480
345, and we reserve the right to be heard on the cash management motion at the final hearing.

732
01:17:48,480 --> 01:17:49,200
Thank you, Your Honor.

733
01:17:50,240 --> 01:17:54,400
Thank you, Ms. Leeming. Is there any other

734
01:17:54,400 --> 01:17:59,280
parting interest that would like to be heard with respect to the debtor's cash management motion?

735
01:17:59,280 --> 01:18:04,000
Okay. Seeing none, I've reviewed the motion and order. I'm satisfied that the relief sought

736
01:18:04,720 --> 01:18:10,000
is warranted under the circumstances, and we will enter that order on interim basis.

737
01:18:11,200 --> 01:18:16,240
Thank you, Your Honor. The next item on the agenda at Docket Number 12 is the debtor's

738
01:18:16,240 --> 01:18:20,960
critical vendors motion. By this motion, the debtors are seeking authority to pay certain

739
01:18:20,960 --> 01:18:25,520
pre-petition claims of certain vendors who will be essential to the debtor's post-petition

740
01:18:25,520 --> 01:18:30,480
wind-out efforts on a go-forward basis. As described in greater detail in the motion,

741
01:18:30,480 --> 01:18:36,080
the critical vendors include, among others, suppliers of certain essential services,

742
01:18:36,080 --> 01:18:40,960
including terminal security to protect the debtor's valuable rolling stock assets.

743
01:18:41,680 --> 01:18:45,680
The debtors have tailored the critical vendor relief to only that relief which is necessary

744
01:18:45,680 --> 01:18:50,080
to avoid irreparable harm to the debtor's wind-down efforts and their objective to

745
01:18:50,080 --> 01:18:54,160
maximize the value of their estates. To give the debtor the ability to make

746
01:18:54,160 --> 01:18:57,920
the most of the money that he or she has earned from the past, the debtor is only seeking

747
01:18:57,920 --> 01:19:01,760
relief from the state's debtor's estates. To give Your Honor a sense of just how

748
01:19:01,760 --> 01:19:07,520
nearly we tailored this relief, the critical vendors represent less than 1% of the debtor's

749
01:19:07,520 --> 01:19:13,840
total vendor population. For today's purposes, we are only seeking relief to pay pre-petition

750
01:19:13,840 --> 01:19:19,920
critical vendor claims up to $1 million on an interim basis. Your Honor, the lenders in the

751
01:19:19,920 --> 01:19:24,400
motion are rejected to this motion. Unless Your Honor has any questions, we respectfully

752
01:19:24,400 --> 01:19:30,320
request that you enter the proposal. Thank you. Is there any parting interest

753
01:19:30,320 --> 01:19:33,520
that would like to be heard with respect to the critical vendor motion?

754
01:19:36,160 --> 01:19:40,880
Okay. Seeing none, I've also had a chance to review that motion in order. I'm satisfied

755
01:19:40,880 --> 01:19:45,680
that the relief sought is warranted here, and we will enter that order on an interim basis.

756
01:19:45,680 --> 01:19:54,240
Thank you, Your Honor. The next item on the agenda at docket number 12 and supplemented

757
01:19:54,240 --> 01:20:00,480
by docket number 148 is the debtor's customers collection motion. Earlier today, we filed a

758
01:20:00,480 --> 01:20:05,040
supplement to the debtor's customer collections motion following discussions with the United

759
01:20:05,040 --> 01:20:10,240
States Trustee's Office. Attached as exhibit aid to the supplement is a declaration of Mr. Michael

760
01:20:10,240 --> 01:20:16,800
Leto in support of the motion. As a preliminary matter, Mr. Leto is on the Zoom line today,

761
01:20:16,800 --> 01:20:20,560
and I'd ask to move his declaration into evidence for the purposes of this motion,

762
01:20:20,560 --> 01:20:23,520
subject to the party's rights to ask him questions if they would like to.

763
01:20:23,520 --> 01:20:28,400
Got it. So first, Mr. Dickinson, I apologize. I think you said this was at DI-12, if I'm

764
01:20:28,400 --> 01:20:33,120
understanding. I think this is at DI-19, and the critical vendor's was DI-12. Do I have that?

765
01:20:33,120 --> 01:20:39,920
I apologize, Your Honor. I misspoke. Okay, no worries. Okay, so DI-19,

766
01:20:39,920 --> 01:20:46,000
and so you're now moving into evidence. Mr. Leto's declaration, which I believe is at DI-148.

767
01:20:47,440 --> 01:20:52,560
Is there any party in interest that would like the opportunity to be heard with respect to the

768
01:20:52,560 --> 01:20:58,800
motion to admit Mr. Leto's declaration to evidence? Okay, seeing none, that will be

769
01:20:58,800 --> 01:21:02,960
admitted. Is there any party in interest that would like the opportunity to cross-examine Mr. Leto?

770
01:21:04,800 --> 01:21:06,720
All right, seeing none, Mr. Regal, you can proceed.

771
01:21:08,480 --> 01:21:13,040
Thank you, Your Honor. By this motion, and as clarified in the supplement, the debtors are

772
01:21:13,040 --> 01:21:19,120
seeking authority to consent to a modification of the automatic stay solely to permit the set off

773
01:21:19,120 --> 01:21:24,080
of certain customer claims against the debtors. Further, the debtors are seeking authority,

774
01:21:24,080 --> 01:21:30,640
but not direction, to continue to administer certain customer programs and honor undisputed

775
01:21:30,640 --> 01:21:36,080
pre-petition obligations related thereto. As described in greater detail in our pleadings,

776
01:21:36,080 --> 01:21:41,840
the debtors have approximately 465 million in an accounts receivable from their customers.

777
01:21:42,560 --> 01:21:47,440
These receivables are clearly a very valuable asset of the estates. On the other hand,

778
01:21:47,440 --> 01:21:52,640
in connection with the customer programs, the debtors owe their customers approximately 60 million

779
01:21:52,640 --> 01:21:58,800
on account of such pre-petition programs. Your Honor, our customers' refusal to remit to the

780
01:21:58,800 --> 01:22:02,960
debtors the amounts owed on account of the accounts receivable would irreparably harm the

781
01:22:02,960 --> 01:22:08,320
debtors' estates because the debtors may be unable to collect a significant portion of their

782
01:22:08,320 --> 01:22:13,760
accounts receivable, which is critical to these Chapter 11 cases. And to that end, we are seeking

783
01:22:13,760 --> 01:22:19,440
entry of an order to facilitate set off negotiations with our customers on a customer member by

784
01:22:19,440 --> 01:22:24,480
customer basis, which would be conditioned upon such customers promptly remitting accounts

785
01:22:24,480 --> 01:22:29,520
receivable to the estates. We believe that permitting the debtors to negotiate set offs on a

786
01:22:29,520 --> 01:22:34,960
customer by customer basis and to continue programs in the ordinary course will be essential to

787
01:22:34,960 --> 01:22:39,840
maximize in the debtors' collection efforts. I want to be clear, Your Honor, the debtors do not

788
01:22:39,840 --> 01:22:45,840
intend on consenting to a set off for any customer who does not agree to promptly remit outstanding

789
01:22:45,840 --> 01:22:51,840
accounts receivable to the debtors. As I previously mentioned, we worked with the Office of the United

790
01:22:51,840 --> 01:22:57,360
States Trustee prior to the hearing to answer their questions and resolve all concerns. No party is

791
01:22:57,360 --> 01:23:01,840
objected to this motion, and unless your partner has any questions, we respectfully request that

792
01:23:01,840 --> 01:23:03,360
you enter the order.

793
01:23:03,360 --> 01:23:08,240
Thank you. Is there any party in interest that would like to be heard with respect to the customer

794
01:23:08,240 --> 01:23:14,880
set off motion? Okay. Seeing none, I've had the chance to review the motion.

795
01:23:14,880 --> 01:23:19,440
I've had the chance to review the motion and the proposed order as well as the supplement to the

796
01:23:19,440 --> 01:23:24,720
motion, and I'm satisfied that the relief sought is appropriate and in the best interest of the

797
01:23:24,720 --> 01:23:30,240
estate, and we will enter that order on interim basis.

798
01:23:30,240 --> 01:23:35,920
Thank you, Your Honor. That brings me to the end of the motions that I was covering today. So I

799
01:23:35,920 --> 01:23:39,760
would like to at this time pass the podium off to Mr. Nash.

800
01:23:39,760 --> 01:23:43,760
Okay, very well. Thank you, Mr. Jacobson. Mr. Nash.

801
01:23:43,760 --> 01:23:47,760
Thank you, Your Honor.

802
01:23:47,760 --> 01:23:53,760
Thanks, Judge. I'm back to talk about the potential use of cash collateral.

803
01:23:53,760 --> 01:24:02,400
Pleased to report that we do have the specific consent of the ABL lender, which is Mr. Dunn,

804
01:24:02,400 --> 01:24:08,960
helpfully reminded all of us they control, but we do think that we're doing this with the consent of

805
01:24:08,960 --> 01:24:14,640
all of the pre-petition secured parties. We have consent, Your Honor, for the limited use of cash

806
01:24:14,640 --> 01:24:19,600
collateral through, I believe, next Wednesday, either until next Wednesday or through next

807
01:24:19,600 --> 01:24:29,360
Wednesday. And specifically, Your Honor, at docket number 156, we filed a cash collateral budget that

808
01:24:29,360 --> 01:24:34,960
will be operated for the next five days. And what we have agreement with respect to,

809
01:24:34,960 --> 01:24:43,040
Your Honor, is approximately $16 million in wages, which are due tomorrow or payable tomorrow,

810
01:24:43,040 --> 01:24:50,640
Friday. We also have agreement with respect to the payment of approximately $2.6 million in

811
01:24:50,640 --> 01:24:57,600
insurance premiums, insurance which ensures the collateral, Your Honor. And we also have

812
01:24:57,600 --> 01:25:06,560
an agreement to pay approximately $1 million in critical vendors. About 500 of that is post-petition

813
01:25:06,560 --> 01:25:13,760
and about 500 of that relates to pre-petition consistent with the motion that was presented a

814
01:25:13,760 --> 01:25:20,640
few minutes ago. And, Your Honor, the reason we seek that now is specifically that $1 million

815
01:25:21,680 --> 01:25:26,240
targeted towards security providers who are safeguarding the collateral around the country.

816
01:25:26,240 --> 01:25:32,400
And also collection agencies who are overseeing in real time the collection of yellows accounts

817
01:25:32,400 --> 01:25:39,840
receivable. We don't have, Your Honor, filed, we have an agreed, you know, cash collateral order

818
01:25:39,840 --> 01:25:46,240
with this, an interim cash collateral order that would be operative for the next five days. And

819
01:25:46,240 --> 01:25:51,440
that is out, you know, being reviewed by parties. We don't have it, it's not in front of, Your

820
01:25:51,440 --> 01:25:57,440
Honor, so we can't page flip it. I do think it's relatively guarded variety and it's only going to

821
01:25:57,440 --> 01:26:03,840
be in effect for the next couple of days. We did win their grant replacement liens and claims

822
01:26:04,800 --> 01:26:09,360
to be pre-petitioned secure parties to the extent of any diminution in their collateral over the

823
01:26:09,360 --> 01:26:16,560
next five days. And otherwise, Your Honor, I think that when this order is uploaded, you'll find it

824
01:26:16,560 --> 01:26:29,520
unproblematic. Okay. Let me ask this. It's being distributed and is the suggestion that it's being

825
01:26:29,520 --> 01:26:35,120
uploaded will essentially amount to a representation that all of the affected parties have signed off

826
01:26:35,120 --> 01:26:41,680
on its terms? Yes, sir. Okay. Is there anyone who objects to proceeding on that basis or would

827
01:26:41,680 --> 01:26:48,400
require a certification? Okay. I don't see anyone objecting. So I'm happy to proceed on that basis.

828
01:26:48,400 --> 01:26:54,480
Obviously, if I have questions on looking at it, I'll reach out. But otherwise, in the absence of

829
01:26:54,480 --> 01:27:00,880
questions or concerns on my own, I'd be happy to end. And I do appreciate the time sensitivity to

830
01:27:00,880 --> 01:27:09,120
upcoming payroll and the need to have access to cash collateral. Mr. Su? Your Honor, Your Honor,

831
01:27:09,120 --> 01:27:21,760
I just wanted to set out on the record the conditions under which a treasury is consenting

832
01:27:21,760 --> 01:27:30,000
to the short-term use of the cash collateral. One of the issues is that the cash collateral budget

833
01:27:30,000 --> 01:27:37,520
remains subject to treasuries review and consent. And we ask that we receive the budget sufficiently

834
01:27:37,520 --> 01:27:45,520
in advance of hearings so that we can actually review the budget before the hearings. As Mr.

835
01:27:45,520 --> 01:27:51,920
Nash mentioned earlier, we understand that the cash collateral order that we had negotiated

836
01:27:52,880 --> 01:28:00,080
will be implemented in connection with any good financing. And that includes the company's

837
01:28:00,080 --> 01:28:08,800
commitment, among other things, to pay treasuries agreed upon adequate protection payments

838
01:28:08,800 --> 01:28:14,400
consisting of cash pay interest at the default rate and the payment of professional fees and

839
01:28:14,400 --> 01:28:22,880
expenses. And we also, and also a commitment to not prime treasuries' links in respect to the

840
01:28:22,880 --> 01:28:31,920
Trunch B priority collateral or the Trunch B joint collateral. And that one of the conditions is also

841
01:28:31,920 --> 01:28:40,000
that the commitment that treasuries collateral will be so consistent with a milestone set forth

842
01:28:40,000 --> 01:28:45,760
in the cash collateral order subject to modifications which may be agreed to by the treasury.

843
01:28:45,760 --> 01:28:54,400
And the bidding procedure shall be reasonably acceptable to treasury. And that the dip budgets,

844
01:28:55,040 --> 01:29:01,200
the sizing, the maturity, and all the dip terms affecting treasuries' rights and interests

845
01:29:01,200 --> 01:29:09,520
with the sale process will be reasonably acceptable to treasury. And as adequate protection for the

846
01:29:09,520 --> 01:29:16,560
interim use of cash collateral, we agree that we will continue to receive the adequate protection

847
01:29:16,560 --> 01:29:24,960
links and super priority claims, accrual of adequate protection payments, and no expenditure

848
01:29:24,960 --> 01:29:30,880
outside the cash collateral budget. That's what we agree to. So I just wanted to confirm on the

849
01:29:30,880 --> 01:29:37,200
record now. All right, except that you confused me a little bit. So as I understand the current,

850
01:29:37,200 --> 01:29:44,720
the debtor's current ask, they're asking for authority to enter into an order that would

851
01:29:44,720 --> 01:29:49,840
provide for the use of cash collateral for five days pursuant to a budget that has already been

852
01:29:49,840 --> 01:29:54,720
docketed. So with respect to all of your rights, with respect to some future dip order, I don't

853
01:29:54,720 --> 01:29:59,200
think they're affected, but your reservation of rights with respect to all those things

854
01:29:59,920 --> 01:30:03,760
gave me a moment of pause to ask me whether I misunderstood what's actually in front of me.

855
01:30:03,760 --> 01:30:11,680
Mr. Nash, am I right that all you're asking for is this five-day use of cash collateral

856
01:30:11,680 --> 01:30:16,080
pursuant to an order that the parties will have signed off on and that everyone's rights with

857
01:30:16,080 --> 01:30:23,200
respect to what happens with respect to a future dip motion is everyone's rights are fully reserved

858
01:30:23,200 --> 01:30:26,400
with respect there too? Do I have that close to right?

859
01:30:27,840 --> 01:30:29,040
Perfectly correct, Your Honor.

860
01:30:29,040 --> 01:30:31,760
Got it. Okay. Mr. Mintz.

861
01:30:31,760 --> 01:30:41,040
I want to make sure we have an understanding here because we had a back and forth with Mr. Nash

862
01:30:41,600 --> 01:30:49,040
before this hearing that Mr. Soot was putting on the record, which was a commitment from the debtor

863
01:30:49,040 --> 01:30:54,400
that the terms of the cash collateral order that was specifically negotiated for US Treasury

864
01:30:55,040 --> 01:31:01,440
would be part and parcel of any dip financing that is ultimately presented to the court.

865
01:31:01,440 --> 01:31:06,320
So that is a commitment that goes beyond the five-day period that we're talking about now.

866
01:31:06,880 --> 01:31:12,320
And we had an understanding with the debtor that that was a commitment that they would put on the

867
01:31:12,320 --> 01:31:19,520
record and that is a condition to our willingness to consent today. I believe I did that, Judge,

868
01:31:19,520 --> 01:31:24,240
more than once. Okay. And maybe it may have been only that I introduced the confusion. So to the

869
01:31:24,240 --> 01:31:30,160
extent that the thing I did, I apologize, but it sounds like Mr. Mintz, are you satisfied with Mr.

870
01:31:30,160 --> 01:31:33,600
Nash's representation? Not by any one.

871
01:31:33,600 --> 01:31:40,240
Okay. And apologies to all to the extent that I made it more complicated. So the person who's next

872
01:31:40,240 --> 01:31:44,800
introduced himself last time and I confess that your name fell out of my head. My apologies for

873
01:31:44,800 --> 01:31:50,160
that, but let me give you that opportunity to proceed. Thank you, Your Honor. It's Kevin

874
01:31:50,160 --> 01:31:55,440
Samardich at Alamastore for Citizens Bank as the AVL agent. As Mr. Nash stated, this is a very

875
01:31:55,440 --> 01:32:01,200
short-term use of cash collateral motion. It is a very limited budget. No parties, these expenses

876
01:32:01,200 --> 01:32:05,200
are being paid, including the AVL agent. That will all be addressed in the final,

877
01:32:07,120 --> 01:32:11,680
you know, wherever we land on the dip order or cash collateral order. The idea here is to

878
01:32:12,480 --> 01:32:19,920
bridge this better for the next week to allow them to solidify the dip proposal. As Mr. Dunn stated,

879
01:32:19,920 --> 01:32:26,960
under our inter-credit agreement with the U.S. Treasury and the term lenders, as the order is

880
01:32:26,960 --> 01:32:35,040
limited solely to the AVL proceeds of the AVL priority collateral, Citizens Bank can consent

881
01:32:35,040 --> 01:32:39,280
in the other parties that deem to have consented. That's not our goal here. We hope everybody reviews

882
01:32:39,280 --> 01:32:43,440
the order and is satisfied with it. We provide it at a protectionally and some priority administrative

883
01:32:43,440 --> 01:32:51,600
claims to the Treasury and to the term lenders. However, you know, deep being that's the road

884
01:32:51,600 --> 01:32:57,600
will go so this data can move forward, pay its employees, and get to get the next stage of this

885
01:32:57,600 --> 01:33:03,600
case. Thank you. Thank you. Ms. Leamy, I think you're next then. Mr. Silverman. Thank you, Your Honor.

886
01:33:03,600 --> 01:33:07,760
Just to follow up on a point Your Honor made earlier, I think since this is a new order that

887
01:33:07,760 --> 01:33:12,240
hasn't been – a form of which hasn't been filed yet, I think it might be better to ask the

888
01:33:12,240 --> 01:33:17,520
parties to file the neuro-certification at council just to make sure that any party that thinks it

889
01:33:18,240 --> 01:33:21,680
should have reviewed it already has done so before it's presented to Your Honor.

890
01:33:22,400 --> 01:33:27,200
Okay. Mr. Nash or Ms. Jones, any objection to proceeding as Ms. Leamy suggests?

891
01:33:29,040 --> 01:33:35,360
Go ahead, Rocky. Go ahead. I'm sorry, Mr. Nash. No, just mechanically, Your Honor, yes, we can

892
01:33:35,360 --> 01:33:38,720
do the neuro-certification at council so that it's submitted to the court.

893
01:33:38,720 --> 01:33:45,920
Okay. Very well. Thank you. Mr. Silverman. Thank you, Your Honor. Very briefly, just for the record,

894
01:33:45,920 --> 01:33:53,040
on behalf of Bank of New York Mellon, we read it to reiterate and adopt the statements on that Bank

895
01:33:53,040 --> 01:33:57,040
of New York Mellon that Mr. Hsu and Mr. Mince made with respect to treasure.

896
01:33:57,920 --> 01:34:05,200
Okay. Very well. Okay. So Mr. Nash, I guess back to you. Where to from here?

897
01:34:05,200 --> 01:34:11,280
So that concludes everything we have in front of Your Honor today, and we will be in touch with

898
01:34:11,280 --> 01:34:17,200
your chambers real time with respect to the time that you graciously allotted us on Friday morning,

899
01:34:17,200 --> 01:34:21,280
whether that will be in person or Zoom. Thank you, Judge.

900
01:34:21,280 --> 01:34:25,200
Okay. Thank you, Mr. Griezmann. I see you've also raised your hand. Let me give you a chance to be

901
01:34:25,200 --> 01:34:30,080
heard. Sure. Thank you, Your Honor. We just reviewed, it was just sent over the so-called

902
01:34:30,080 --> 01:34:35,680
junior facility proposal, which I think, at least based on the one paragraph that was contained in

903
01:34:35,680 --> 01:34:40,240
the letter, it was junior name only. We don't have to get into details on this call, on this

904
01:34:41,120 --> 01:34:47,760
hearing at the moment, but I'd like Mr. Nash to commit to getting on the phone with us and with

905
01:34:48,480 --> 01:34:54,800
the Mill Bank team to discuss the pro parameters of Friday's hearing, whether they truly intend to

906
01:34:54,800 --> 01:35:02,000
have evaluation trial on Friday, or whether we're going to try to work through what is, I think,

907
01:35:04,000 --> 01:35:10,000
a questionable proposal for junior financing and how we plan to handle the next 36 hours.

908
01:35:10,000 --> 01:35:16,960
There's been weeks of negotiations over this facility. They have toggled now, really on almost

909
01:35:16,960 --> 01:35:23,120
a moment's notice, to a contested hearing on Friday, and we'd like to figure out how that's

910
01:35:23,120 --> 01:35:27,440
all going to work. So we don't have to get into it on the call on this hearing, but I'd like to get

911
01:35:27,440 --> 01:35:32,080
on the call with Mr. Nash and his team and Mill Bank team immediately or as soon as possible at this

912
01:35:32,080 --> 01:35:37,280
hearing. Okay. I take it Mr. Nash, you don't have an objection to continue discussions with affected

913
01:35:37,280 --> 01:35:42,960
parties with respect to the relief you're seeking. As you might expect, Your Honor, I do not. Okay,

914
01:35:42,960 --> 01:35:55,920
very well. Okay. Let me start by, well, finish by thanking all of the parties for the, oh,

915
01:35:55,920 --> 01:36:01,600
I guess while we're here, what we haven't done, and I'm not sure we need to do this now or we

916
01:36:01,600 --> 01:36:06,640
could do it on Friday, is for the relief that's being entered on an interim basis, I guess if

917
01:36:06,640 --> 01:36:13,680
you're going to serve out those orders, we should probably include a date for a second day hearing.

918
01:36:13,680 --> 01:36:17,600
Does it make sense to address that now or would you prefer to come back to that on Friday? Ms.

919
01:36:17,600 --> 01:36:21,600
Jones, do you have a preference in that regard? No, Your Honor, that's totally to the corner.

920
01:36:22,320 --> 01:36:32,160
Your chambers had reached out seeking a date, and I'd advise that it's probably 21 to 25 days out for

921
01:36:32,160 --> 01:36:38,160
things like the finals of pretensions or other utilities, things like that, that are interim

922
01:36:38,160 --> 01:36:44,160
type orders. So we stand at Your Honor's pleasure on that. Obviously, Your Honor, the only reservation

923
01:36:44,160 --> 01:36:50,720
I would make is depending on how JIP is moving through with respect to Mr. Nash and his team,

924
01:36:50,720 --> 01:36:57,120
obviously, Your Honor, I'd want to stay flexible on that. Okay. Mr. Nash, any other thoughts?

925
01:36:57,120 --> 01:37:06,000
Should we identify a date or do we just come back to that on Friday? Whatever works for Your Honor.

926
01:37:09,040 --> 01:37:15,200
Wood penciling in September 18th at 2 o'clock, does that work for the parties?

927
01:37:18,800 --> 01:37:25,520
Works for me, Judge. Mr. Honor, we can do that for a second day for all the other

928
01:37:25,520 --> 01:37:32,320
type motions. Terrific. And we'll see where Mr. Nash ends with respect to whether we need to use

929
01:37:32,320 --> 01:37:38,560
that in any respect for JIP financing. Okay, very well. So let's plan on the ordinary second day

930
01:37:38,560 --> 01:37:45,360
materials, you know, motions to be considered for final approval on that date. And obviously,

931
01:37:45,360 --> 01:37:49,920
with respect to the JIP, to the extent there are moving parts, we'll address that as it arises.

932
01:37:49,920 --> 01:37:57,040
Okay. Look, I appreciate that this case arises in unusual circumstances and presents a number of

933
01:37:57,040 --> 01:38:04,240
challenges. I do appreciate the debtor's efforts to obtain the most favorable

934
01:38:04,240 --> 01:38:11,360
DIP terms that it can, consistent with its fiduciary obligations. So everyone's efforts here,

935
01:38:11,360 --> 01:38:18,720
appreciating that everyone's substantive rights are fully reserved, are appreciated.

936
01:38:18,720 --> 01:38:28,560
So let me thank all of you for the good and hard work you've done. And with that, I guess we will

937
01:38:29,440 --> 01:38:34,560
see you on Friday in some form or fashion. If there's an emergency that arises between now and

938
01:38:34,560 --> 01:38:40,800
then, of course, you know how to find us to the extent orders are uploaded. We will enter those,

939
01:38:41,600 --> 01:38:48,640
subject to the filing of a certification for the cash collateral order. And then,

940
01:38:48,640 --> 01:38:50,960
and with that, and my thanks, we're adjourned.