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you

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you

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you

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you

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you

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okay good morning everyone we will start the BlockFi I guess BlockFi calendar

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this morning those are the only matters I have on we are hearing the matter

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remotely so the usual rules apply if you wish to be heard please raise your hand

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and I will do my best to spot you and hear from you my understanding is the

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pending motion to intervene has been resolved the JPL's motion to intervene I

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believe an order a proposed order was sent so mr. Bernard I see your hand

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raised yes your honor Richard Bernard a favorite drinker on behalf of the joint

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provisional liquidators yes yesterday afternoon towards the end of the day we

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came to agreement on the form of order with the US government it's been

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circulated I don't think the committee has any issue with it and I know the

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debtor signed off on a prior version of that form of order and we've submitted

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it informally to your honor through your chambers email but we understand that

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there's a more formal process to submit an agreed order all right miss

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Dorskin did you want to be heard yes your honor

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Sharon Dorskin from Brown government for the committee we have no objection to

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the JPL intervention and no comments to the order that was circulated to us and

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it will be submitted that's fine so I'm happy to look at the order and if there

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are any concerns I assume parties will reach out for for for the court that

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leaves us with I believe two matters that are contested the motion by the

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lead plaintiff or proposed lead plaintiff Cameron Wyatt to revise the

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prior orders of the court with respect to the proposed class action matter and

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the contested motion to stay the adversary proceeding with the United

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States pending a determination of the motion to withdraw the reference miss

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Chavez let me hear from you thank you good morning your honor Jordan Chavez

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along with Amy Furness of Haynes and Boone on behalf of the block side debtors

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good morning I good morning I agree with you your honor those are the only two

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remaining matters that on the agenda if it's okay with your honor before we take

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up those matters I would like to just take a moment to briefly address the

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data privacy issue that arose over the last few days I think that'd be

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appropriate thank you thanks your honor we were notified by

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crawl that through a stem swapping attack on an employee's mobile phone they

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fell victim to a data breach resulting in a leak of personal information of the

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block by creditors including the name address and emails and phone numbers the

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type of information that block I would have provided to crawl for the creditor

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matrix and for servicing purposes call is still conducting a more thorough

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investigation but block by took immediate action along with coordinating

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with the committee and crawl to provide the relevant communication to the

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affected parties along with discussions with the US trustee and the relevant

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regulatory and government authorities I did just want to confirm on the record

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that blocked by was not the subject of the attack and that its system is still

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secure all right that's good to hear it's frightening that this information

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is so readily available through such what would seem

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facile ways of getting of accessing through a telephone it's it's alarming

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in so many respects but I'm glad that the debtor and all the debtors that are

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involved these cases are taking the proper steps does anybody else wish to

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comment on it all right let me turn to debtors counsel is there a preference

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for which matter to be heard first yes your honor I think we would propose

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taking up the green adversary first which will be handled from our end by

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mr. Nag alright thank you then let me turn to let me have appearances on the

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green on this matter your honor Michael Etkin Lowenstein Sandler on behalf of

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the proposed lead plaintiff mr. Wyatt and go with me as my colleague Michael

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Papandrea as well as Brian Kalandra who is proposed lead counsel in connection

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with the class to action representing mr. Wyatt all right it is your motion why

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don't you proceed then thank you your honor just a couple of observations at

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the outset first of all we are requesting extremely narrow relief from

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the existing injunction that was entered back in April we simply want the

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district court or courts to be able to rule with respect to the pending lead

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plaintiff motions and issue an order with respect to those motions there have

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been no objections by the council on behalf of the plaintiffs that executed

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the stipulation we know that mr. Green has about mr. Green's council has advised

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us that they support the motion that's that's before your honor today in

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addition we have not seen any objection by the creditors committee with respect

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to the individual defendants who are the beneficiaries of the injunction and have

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been referenced by counsel for the debtors there's been no objection filed

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by them and in fact it's worthy of note that there actually was no declaration

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filed by any of these non-debtor defendants the individuals regarding

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the so-called impact on them and whether they even intend to try to take a

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position with respect to the lead plaintiff motions they have not weighed

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in at all you would think your honor that if there's an allegation that that

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they would drop everything with respect to their responsibilities to the debtor

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and focus their entire attention on lead plaintiff motions where they actually

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have no standing to weigh in at all it's it's a bit beyond the pale another

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observation that's important your honor is the claims that are asserted in the

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class action those claims are claims in connection with the purchase or sale of

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a security in this case the BIA's are alleged to be securities covered by the

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federal securities laws and as I'm sure the court is aware under section 510 B

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of the code those types of claims are statutorily subordinated so those

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claims would not be entitled to a distribution under the plan the proposed

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plan and I don't know that whether anyone has even filed a claim against

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the debtor in the bankruptcy proceeding the debtors are obviously not parties to

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the class actions those class actions were filed after the petition date so

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there's no impact on the debtors with respect to the class actions altogether

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of course that doesn't that assume that we're dealing with securities I mean

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that's just not such a given given the cases that have come down recently no

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no question your honor that's that's an issue that the district court will have

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to wrestle with down the road but in terms of what's before you today if

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they're not securities then there are no federal securities claims and and the

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class actions fail on the merits so excuse me so you know that's not that's

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not a today issue and if if there is a resolution of that issue that the BIAs

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are not securities then there are no federal securities claims so that's

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that's that's really the bottom line and your observation is is correct your

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honor as I indicated there's a very limited purpose to our motion but the

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debtors have put in front of you a parade of horribles that I'd like to

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address briefly I know they're addressed in the briefing but I think it's

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important to point some of them out first of all even dating back to the

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debtors opposition to the motion to shorten time the debtors who again are

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not parties to the class action and there are no claims certainly asserted

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by our client we don't know whether there are any other claims asserted

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based upon the violations of the securities laws but the debtors take the

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position that somehow the district courts deciding the lead plaintiffs

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motions would force the debtors to participate in the class action lawsuits

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and forfeit their due process rights now those are lofty words your honor but

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there's no explanation as to the basis for that kind of her pervoli there simply

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is no impact on the debtor and the debtors due process rights are not put

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into play by virtue of this court granting the very limited release that

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we're seeking second they take the position back then and in their

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opposition that we're looking to solve a problem that doesn't exist with respect

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to representation of putative class members they claim that the creditors

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committee is already representing these class members with respect to the claims

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asserted in the class action well the problem with that your honor it ignores

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the distinction between the status of those individuals as holders of the IAs

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and with respect to that status yes they are general unsecured creditors

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and part of the creditors committee's constituency but with respect to the

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subordinated claims that are asserted in the class action which may or may not

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have even been asserted in the chapter 11 cases and even if they were they

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would not be entitled to any distribution by virtue of that

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subordination the creditors committee doesn't represent their interests with

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respect to those claims that would be an interest that would be represented by a

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court appointed lead plaintiff and we're just looking to get to that point where

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there is a court appointed lead plaintiff who has certain responsibilities

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and fiduciary obligations to individual class members regardless of whether a

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class has been certified or not and is empowered to take certain positions with

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respect to the class again even even in advance of certification but and your

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honor what what's looming now and why the motion was made is a confirmation

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objection deadline of September 11th at a confirmation hearing on September 26th

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and to the extent the class is and their claims in the class action are in need

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protection and to the extent that a position needs to be taken we believe

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it's critical that a lead plaintiff be appointed now the debtors also harp on

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the fact that there's no guarantees as district courts will rule on time well

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we get that that's a risk we don't know what the district courts are going to do

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and what the orders are going to say and whether mr. Wyatt will in fact be

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appointed by the district court but one thing is for certain if the district

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court is precluded from even considering the motions and the relief that we're

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requesting is not granted then there will be no a court appointed lead

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plaintiffs who's in a position to take a position with respect to the plan and

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confirmation whatever that might be simply put your honor mr. Wyatt or any

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lead plaintiff that's appointed would be handcuffed by virtue of not having the

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imprimatur of an article 3 court in terms of an order appointing him or some

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other individual to assume the role of a lead plaintiffs order the appointment

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of lead plaintiffs chosen counsel and put them in a position to act in the

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bankruptcy proceeding but let me ask you mr. Ecken if I were to grant the relief

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to allow the process to go forward is the logical next motion on shortened

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time going to be judge the district court hasn't decided the motion for lead

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plaintiffs yet we need to adjourn the confirmation hearing and this process to

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allow the lead plaintiff to to be appointed and to be be the position to

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participate at the confirmation hearing is going to follow well I don't know

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your honor said you know thanks for pointing out an option to me with

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respect to this but I doubt I needed to point that out but you know I to be

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frank with the court I don't know that that that that that's something that we

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would entertain I think the first thing that we would do if the court were to

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sign an order and hopefully sign it quickly allowing us to go forward is to

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advise the district courts that they can now decide the lead plaintiff motions

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and that and point out the schedule with respect to confirmation and try to get

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them to to issue an order quickly your honor as as you know you know I'm

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somewhat familiar with the fast-moving train of a confirmation process and

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the danger of trying to step in front of that train so you know I don't know that

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we would take that step I think that our preference would be to advise the

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district court quickly advise the district court that that timing is an

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issue and important and and hopefully get his decision out of them in advance

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of the objection deadline which is obviously why we moved on short notice

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in the first place and certainly advance of in advance of the confirmation

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hearing and you know to the extent that doesn't happen but we would have to weigh

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our options fair enough

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your honor this is not an attempt to push the class actions forward to anyone's

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detriment there there there would be no merits determinations here the

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individual defendants obviously don't care by virtue of the fact that they did

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not weigh in at all on the motion and that they did not even execute a

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declaration with respect to the factual allegations in the debtors in the

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debtors opposition so the issue of whether the individual defendants hair

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will be put on fire by virtue of a district court deciding a lead plaintiff

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motion I just don't think that there's any substance to that kind of argument

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now the debtors also argue that likely previewed in their objection to the

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motions a shortened time that's the same considerations that would support

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excuse me the same considerations that would support the injunction in the

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first place are at play with respect to the limited relief that we're that we're

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requesting well you know leaving aside the merits of those arguments from mr.

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why its perspective as well as the extent to which those arguments support a

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preliminary injunction regarding all other activity in the class actions

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which is not the subject of our motion they certainly have nothing to do with

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what we're asking the court to do and let me just get into that you know

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briefly mr. Wyatt inherited the stipulated injunction order it's not a

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complaint your honor it's just a fact and it it does contemplate that the

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district court I'm talking about the stipulated order it contemplates that

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the district court can enter certain unidentified orders and it does not

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expressly prohibit the district court from entering orders with respect to the

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lead plaintiff motion but here we are we're not taking that position on the

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merits were in front of your honor asking for relief let's talk about each

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of the three issues that the debtors raise the collateral estoppel

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evidentiary prejudice I'm lost with respect to that one your honor I don't

195
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know what the relief that we're requesting would have to do with respect

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to any residue to Conor collateral estoppel evidentiary prejudice on a

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debtor that's not a defendant in the class action where there are no claims

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against the debtor and even if there were those claims would be subordinated

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and not entitled to a distribution under the current version of the plan so I'm

200
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at a loss to know where where that's coming from with respect to the impact

201
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on the individual defendants we're still at the company and who are performing

202
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services for the company again I've raised this issue the papers deal with

203
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the issue the idea that they're going to drop everything and focus their

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attention on the district court deciding these lead plaintiff motions just makes

205
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no sense and there's no evidentiary support for it so again I don't know how

206
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that figures in as a as a reason for the court to deny the limited relief that

207
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we're requesting and lastly your honor they focus on their indemnification

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obligations a couple of things to say about that and we do raise that in our

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reply number one the indemnification or with respect to a claim against these

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individuals that's based upon the purchase or sale of a security is

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likewise subordinated under 510 B so those indemnification claims when you

212
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look at the code clearly would not be entitled to a distribution the debtors

213
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may point out although there didn't in their papers that that the debtors

214
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assumed certain indemnification obligations under the terms of the plan

215
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well there's a carve-out with respect to those indemnification obligations your

216
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honor as it relates to gross negligence fraud willful misconduct those are the

217
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claims that are asserted in the class action so to the extent that that that

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the that the class would be successful with respect to the claims those claims

219
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on their face would not be carved out of any indemnification obligations and

220
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lastly your honor with respect to the somewhat newly minted settlement with

221
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the committee several of those key defendants have waived their

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indemnification claims against the debtor in any event under the terms of

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that settlement agreement so in terms of indemnification you run oh and of course

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there is insurance with respect to those claims as well so in terms of those

225
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arguments your honor there's really there's really no substance to them

226
00:27:34,840 --> 00:27:40,720
certainly as they relate to the relief that we're requesting in connection with

227
00:27:40,720 --> 00:27:50,880
the motion the debtors also reason their opposition that the selection of lead

228
00:27:50,880 --> 00:27:58,480
plaintiffs is complex and time-consuming well I I've had the opportunity over

229
00:27:58,480 --> 00:28:03,080
the years to be involved in that process where there's an intervening bankruptcy

230
00:28:03,080 --> 00:28:12,600
and I haven't seen that it's competitive process it may be complex as between

231
00:28:12,600 --> 00:28:19,080
those vying for the role with respect to lead plaintiff motions but there's

232
00:28:19,080 --> 00:28:29,080
nothing before the court that supports the conclusory allegation that that the

233
00:28:29,080 --> 00:28:34,400
process is complex and time-consuming and frankly your honor if if the district

234
00:28:34,400 --> 00:28:40,680
court believes that they'll act accordingly but they need to be given

235
00:28:40,680 --> 00:28:46,800
the opportunity to make a decision on that in the first instance and and

236
00:28:46,800 --> 00:28:58,680
that's why we're here finally your honor the debtors take the position that well

237
00:28:58,680 --> 00:29:06,640
by virtue of the terms of the stipulated injunction once the plan goes effective

238
00:29:06,640 --> 00:29:14,040
you can do whatever you want so no bit no big deal you know the problem is that

239
00:29:14,040 --> 00:29:21,160
there are issues that the plan creates these of the third party releases an

240
00:29:21,160 --> 00:29:26,080
issue that this court many courts have been wrestling with for quite some time

241
00:29:26,080 --> 00:29:35,200
and at the end of the day if if the plan is confirmed without the participation

242
00:29:35,200 --> 00:29:42,760
of a court appointed fiduciary on behalf of class of class members 30 days after

243
00:29:42,760 --> 00:29:48,600
the effective date will come and those claims that are the subject of the class

244
00:29:48,600 --> 00:29:55,800
action could be wiped out or severely eviscerated under the terms of a plan

245
00:29:55,800 --> 00:30:02,880
so you know why we appreciate the injunction is automatically terminated

246
00:30:02,880 --> 00:30:11,240
at that point in time that's that's going to be much too late with respect to

247
00:30:11,240 --> 00:30:18,400
that issue as well as other issues that may exist under the plan that may

248
00:30:18,400 --> 00:30:30,160
require some involvement by a court appointed lead plaintiff so your honor

249
00:30:30,160 --> 00:30:37,520
the idea that there's no harm in waiting until then really you know doesn't

250
00:30:37,520 --> 00:30:45,480
provide what's required and avoid the prejudice that would happen without an

251
00:30:45,480 --> 00:30:50,720
appointment by the district court so with that your honor we would urge the

252
00:30:50,720 --> 00:30:58,560
court to grant the motion and allow us the opportunity to advise the district

253
00:30:58,560 --> 00:31:04,640
court that they are free to make a decision and hopefully they will make it

254
00:31:04,640 --> 00:31:13,320
quickly and and whoever the court appointed lead plaintiff and their and

255
00:31:13,320 --> 00:31:19,160
their counsel are would have the opportunity to weigh in with respect to

256
00:31:19,160 --> 00:31:26,240
the confirmation process all right thank you mr. Etkin let me turn to miss

257
00:31:26,240 --> 00:31:38,520
Furness thank you your honor mr. Etkin the loss is over one significant issue

258
00:31:38,520 --> 00:31:46,120
here there are two cases we have the Green matter and the Ellis matter one is

259
00:31:46,120 --> 00:31:52,320
in New Jersey one is in Massachusetts mr. Etkin didn't address it today they

260
00:31:52,320 --> 00:32:00,000
didn't address it on their reply but consolidation and whether there are two

261
00:32:00,000 --> 00:32:03,760
cases that go forward at the exact same time in two different courts based on

262
00:32:03,760 --> 00:32:11,560
more or less the same actions has to be decided first the PSLRA says that quote

263
00:32:11,560 --> 00:32:17,280
if any party has thought to consolidate those actions for pretrial persons or

264
00:32:17,280 --> 00:32:23,920
for trial that has to be heard before the lead plaintiff process first

265
00:32:23,920 --> 00:32:30,320
sometimes mr. Etkin used district court sometimes he used district court and we

266
00:32:30,320 --> 00:32:37,200
believe that this entire issue was ignored simply because it goes back to

267
00:32:37,200 --> 00:32:42,640
the original issues that we brought before this court in April of this year

268
00:32:42,640 --> 00:32:50,120
the defendant in the class action purported class actions have every right

269
00:32:50,120 --> 00:32:56,520
to participate and weigh in on that consolidation the PSLRA says any party

270
00:32:56,520 --> 00:33:02,440
that a rule of civil procedure allows any party to address consolidation that

271
00:33:02,440 --> 00:33:08,120
must be heard first to the extent it hasn't been filed it's because this

272
00:33:08,120 --> 00:33:13,040
court stipulation allowed the lead plaintiff motions to be filed and said

273
00:33:13,040 --> 00:33:20,800
nothing else that's where we are that's where it stopped so the idea that

274
00:33:20,800 --> 00:33:26,240
there's absolutely no harm here and a harm that we identified in April have

275
00:33:26,240 --> 00:33:32,440
gone away now is absurd and without basis the same concerns that we presented

276
00:33:32,440 --> 00:33:38,560
previously one for indemnification and two for divided times of our offices and

277
00:33:38,560 --> 00:33:45,620
directors still exist today as far as evidentiary and substance on that we

278
00:33:45,620 --> 00:33:49,360
presented that with the original TRO application your honor you've got it in

279
00:33:49,360 --> 00:33:54,160
the file and if they have to turn their attention to matters such as these again

280
00:33:54,160 --> 00:34:00,160
in which descendants have the absolute right to participate they won't be

281
00:34:00,160 --> 00:34:04,400
focused on the debtors during this incredibly crucial time we have less

282
00:34:04,400 --> 00:34:12,160
than a month prior to the confirmation of the plan mr. I can talk a lot about

283
00:34:12,160 --> 00:34:16,640
the indemnification provision and why that doesn't matter as it relates and

284
00:34:16,640 --> 00:34:23,760
to the debtors concern with this moving forward but your honor I'm you know this

285
00:34:23,760 --> 00:34:27,840
mr. White's council seems to have ignored it the plan hasn't been confirmed

286
00:34:27,840 --> 00:34:34,320
right so to the extent anyone in the officers and directors have waived their

287
00:34:34,320 --> 00:34:39,400
right to indemnification in the plan that's not confirmed yet and until that

288
00:34:39,400 --> 00:34:44,960
is it is a concern for the debtors and we are entitled to have the full focus of

289
00:34:44,960 --> 00:34:51,720
our officers and directors as far as what the debtors can do on the lead

290
00:34:51,720 --> 00:34:55,280
plaintiff or excuse me as far as what the descendants can do on the lead

291
00:34:55,280 --> 00:35:00,600
plaintiffs process in each of the two district courts again that we're talking

292
00:35:00,600 --> 00:35:05,360
about it's not necessary that this court make a decision related to that instead

293
00:35:05,360 --> 00:35:11,240
we presented the court with cases that clearly say defendants can and do

294
00:35:11,240 --> 00:35:16,000
participate in both the lead plaintiff process whether the plaintiff is

295
00:35:16,000 --> 00:35:21,560
adequate and the lead counsel process whether these district courts again two

296
00:35:21,560 --> 00:35:27,160
of them in both New Jersey and Massachusetts actually take the

297
00:35:27,160 --> 00:35:32,120
arguments of those defendants or not if not before this court they can

298
00:35:32,120 --> 00:35:36,240
participate whether the participation leads the court to review those things

299
00:35:36,240 --> 00:35:41,960
or not again it is that participation that deprives the debtors of their

300
00:35:41,960 --> 00:35:46,520
officers and directors time during a very very crucial moment in these

301
00:35:46,520 --> 00:35:54,600
bankruptcy cases mr. Wyatt and the proposed class have demonstrated

302
00:35:54,600 --> 00:35:59,400
absolutely no irreparable harm here it is their duty to come here with good

303
00:35:59,400 --> 00:36:04,400
cause there's no evidentiary basis you heard mr. I can argue that repeatedly as

304
00:36:04,400 --> 00:36:07,800
far as the debtors but again we presented the evidentiary basis which is

305
00:36:07,800 --> 00:36:12,520
before this court and we came to argue for the TRO and we got the stipulation

306
00:36:12,520 --> 00:36:17,880
agreed to by mr. Green's counsel mr. Ellis's counsel there's been absolutely

307
00:36:17,880 --> 00:36:22,600
nothing presented no doubt no declaration or anything on behalf of

308
00:36:22,600 --> 00:36:28,080
mr. Wyatt or this purported lead plaintiff there's nothing to show

309
00:36:28,080 --> 00:36:33,400
irreparable harm and again going back and I'm confident you've read our

310
00:36:33,400 --> 00:36:38,880
briefing but there is no standing in this bankruptcy for purported class

311
00:36:38,880 --> 00:36:46,760
counsel purported plaintiff in a class action against non debtors we presented

312
00:36:46,760 --> 00:36:50,320
you your honor with a diner G case there's another case out of the Eastern

313
00:36:50,320 --> 00:36:57,040
District of Virginia that goes to the exact same analysis somebody as a lead

314
00:36:57,040 --> 00:37:01,960
plaintiff in a securities litigation did not provide any authorization for them

315
00:37:01,960 --> 00:37:06,680
to come in to the bankruptcy cases it doesn't provide them any status to come

316
00:37:06,680 --> 00:37:11,440
into the bankruptcy case of being a lead plaintiff in one type of litigation is

317
00:37:11,440 --> 00:37:16,640
not close tantamount to a blanket consent to any litigation the class

318
00:37:16,640 --> 00:37:22,100
council may wish to pursue and so there's they've admitted they have no

319
00:37:22,100 --> 00:37:26,800
claims here there's no place here for someone who has been designated as lead

320
00:37:26,800 --> 00:37:33,400
plaintiff solely in a one of two district courts related to a PSLRA action

321
00:37:33,400 --> 00:37:39,520
to come to this court without further authorization further moving asking for

322
00:37:39,520 --> 00:37:44,480
this court to clarify or classify a class certified class and there's just

323
00:37:44,480 --> 00:37:48,840
absolutely no basis so again because there's no basis there's no irreparable

324
00:37:48,840 --> 00:37:53,720
harm that they've shown or can show in this case especially considering again

325
00:37:53,720 --> 00:37:59,000
when the last month before confirmation and stipulation by some terms expires 30

326
00:37:59,000 --> 00:38:06,120
days after confirmation of the plan as far as mr. Etkins argument that certain

327
00:38:06,120 --> 00:38:13,520
and as these purported class members have you know a basis to object to

328
00:38:13,520 --> 00:38:17,900
confirmation they can't they're more than welcome to mr. Wyatt clearly have

329
00:38:17,900 --> 00:38:23,040
counsel and each one of them can come to this court and object to the

330
00:38:23,040 --> 00:38:28,520
confirmation in whatever way they feel it's just not appropriate here for a

331
00:38:28,520 --> 00:38:35,880
class action in addition mr. Etkins said that these folks have claims that quote

332
00:38:35,880 --> 00:38:42,400
could be wiped out or eviscerated that's simply not true your honor the plan

333
00:38:42,400 --> 00:38:48,240
includes an opt-out these folks received the disclosure statement that discusses

334
00:38:48,240 --> 00:38:54,560
and explains the opt-out provision of those releases and so if the individuals

335
00:38:54,560 --> 00:39:01,680
want to opt out they can it's possible mr. Wyatt have counsel he can do it I

336
00:39:01,680 --> 00:39:12,240
also point the court again to the delay mr. Wyatt has shown in April the

337
00:39:12,240 --> 00:39:16,560
stipulation was entered into by Green Councils Green Council and Alice's

338
00:39:16,560 --> 00:39:23,040
Council the lead plaintiff motions were filed in May and defrauded three months

339
00:39:23,040 --> 00:39:29,640
to come to this court to ask for something else to go forward they asked

340
00:39:29,640 --> 00:39:35,000
for it on an emergent basis simply one month before confirmation again your

341
00:39:35,000 --> 00:39:41,200
honor this is their burden they presented no evidence to you there is no

342
00:39:41,200 --> 00:39:46,520
irreparable harm here these individuals have the same rights that they have with

343
00:39:46,520 --> 00:39:51,480
or without mr. Wyatt being appointed a class counsel and at the end of the day

344
00:39:51,480 --> 00:39:57,720
this harms the debtors because our officers and directors attention will be

345
00:39:57,720 --> 00:40:02,320
focused on other matters at a time when we really need to have their attention

346
00:40:02,320 --> 00:40:08,960
focused here as we move towards confirmation in less than a month thank

347
00:40:08,960 --> 00:40:14,960
you thank you thank you mr. Burness mr. Calandra I see your hand raised first

348
00:40:14,960 --> 00:40:21,720
thank you your honor I just wanted to as the purported lead count or proposed

349
00:40:21,720 --> 00:40:26,400
lead counsel in the class actions I just wanted to speak to the issues about

350
00:40:26,400 --> 00:40:32,880
consolidation that were just raised which really are meritless it's the same

351
00:40:32,880 --> 00:40:36,720
movements in both New Jersey and Massachusetts with the same

352
00:40:36,720 --> 00:40:42,040
certifications so the same lead plaintiff is going to be selected in each

353
00:40:42,040 --> 00:40:48,240
the one with the greatest losses which we submit is mr. Wyatt and there will be

354
00:40:48,240 --> 00:40:52,920
nothing having to do with consolidation that goes forward under the terms of

355
00:40:52,920 --> 00:40:58,960
the relief that we're looking for and it was a nice bit of three card Monte that

356
00:40:58,960 --> 00:41:03,360
council was trying to play with the nature of how consolidation must be

357
00:41:03,360 --> 00:41:07,520
must be addressed under the PSL array but there is nothing in the PSL array

358
00:41:07,520 --> 00:41:12,760
that says consolidation must happen before a lead plaintiff is selected it's

359
00:41:12,760 --> 00:41:17,600
just that if a party wants consolidation they need to move forward and I can

360
00:41:17,600 --> 00:41:24,560
represent that none of the filers again are all the same in both both actions

361
00:41:24,560 --> 00:41:29,240
are going to be seeking consolidation under the very limited relief that we

362
00:41:29,240 --> 00:41:37,120
are seeking counsel for the debtors also brought up the cases purporting to allow

363
00:41:37,120 --> 00:41:46,120
people like people like defendants in the current cases to weigh in on the

364
00:41:46,120 --> 00:41:50,080
lead plaintiff motion as you saw in our papers your honor those cases are simply

365
00:41:50,080 --> 00:41:54,640
not there number one a minority of cases number two are not relevant here there

366
00:41:54,640 --> 00:41:59,120
is nothing wrong with notice there's nothing wrong with the certifications and

367
00:41:59,120 --> 00:42:02,800
there certainly is no issue regarding loss causation in the case against

368
00:42:02,800 --> 00:42:08,280
Twitter the defendants pointed out that the proposed lead plaintiffs the

369
00:42:08,280 --> 00:42:11,560
movements could not have experienced any losses because they sold before the

370
00:42:11,560 --> 00:42:16,040
corrective disclosure here everyone held through the corrective disclosure which

371
00:42:16,040 --> 00:42:21,640
was blocked by his decision to file for bankruptcy so there is absolutely no

372
00:42:21,640 --> 00:42:27,440
role they have to play and I would suggest if they do try to play a role it

373
00:42:27,440 --> 00:42:32,320
would be it would be specious because they just there is just nothing that

374
00:42:32,320 --> 00:42:38,600
they can do and finally your honor I wanted to say that the debtors emphasize

375
00:42:38,600 --> 00:42:42,440
again and again that they don't want their officers and directors to be

376
00:42:42,440 --> 00:42:46,480
distracted their officers and directors are seeking to release these claims they

377
00:42:46,480 --> 00:42:50,680
are focused at least in part on their own personal matters in this bankruptcy

378
00:42:50,680 --> 00:42:56,720
and allowing this very small step to go forward would require absolutely no

379
00:42:56,720 --> 00:43:00,200
further attention on their part and certainly no greater distraction or

380
00:43:00,200 --> 00:43:05,480
focus on themselves that they've already expressed thank you mr. Kalandra mr.

381
00:43:05,480 --> 00:43:10,960
gold your hand is raised good morning your honor Dan Gold from Sherman and

382
00:43:10,960 --> 00:43:15,440
Sir I represent the individual individual defendants in this security

383
00:43:15,440 --> 00:43:20,560
class actions I've been did thank you for letting us be heard we did not file a

384
00:43:20,560 --> 00:43:25,480
formal objection simply because the debtors are covering the issues and

385
00:43:25,480 --> 00:43:29,440
duplicate of paper did not seem to benefit the court and use the waste of

386
00:43:29,440 --> 00:43:34,920
the trance fees we want to address we do have a role to play in the lead

387
00:43:34,920 --> 00:43:41,440
plaintiff process where there are issues it is appropriate for us to weigh in and

388
00:43:41,440 --> 00:43:47,080
in particular the consolidation issue is it is a key one we do have the two

389
00:43:47,080 --> 00:43:53,080
cases the lead plaintiffs may not intend to be playing the music may not intend

390
00:43:53,080 --> 00:43:56,840
to move for consolidation that doesn't mean the defendants do not intend to be

391
00:43:56,840 --> 00:44:04,520
so at the appropriate time we can't have our two different lead plaintiffs

392
00:44:04,520 --> 00:44:09,000
appointed on behalf of the same class and two different courts there needs to

393
00:44:09,000 --> 00:44:14,360
be a degree of coordination and consolidation between the two courts the

394
00:44:14,360 --> 00:44:18,920
defendants have an interest and a role and important role to play and making

395
00:44:18,920 --> 00:44:22,440
sure that that happens and what I'm hearing from from at least one lead

396
00:44:22,440 --> 00:44:27,600
plaintiff movement is that we are now going to be forced to engage with six or

397
00:44:27,600 --> 00:44:34,240
seven individual clients to move on an expedited basis to get that coordination

398
00:44:34,240 --> 00:44:39,680
and consolidation among the courts taking away from the roles of them they

399
00:44:39,680 --> 00:44:44,800
don't have to play with with the debtors all right thank you mr. gold mr.

400
00:44:44,800 --> 00:44:51,000
Kalandra again your honor that's just simply not true if they want to move

401
00:44:51,000 --> 00:44:54,400
for consolidation in their papers they suggested that they would resist any

402
00:44:54,400 --> 00:45:00,760
consolidation motion but the there is nothing that defendants need to do with

403
00:45:00,760 --> 00:45:04,880
regard to a lead plaintiff motion in this case because they could only object

404
00:45:04,880 --> 00:45:10,480
to perhaps loss causation certification and notice and none of those they don't

405
00:45:10,480 --> 00:45:14,800
suggest that they are an issue because they are not and there won't be any need

406
00:45:14,800 --> 00:45:19,640
to wrangle multiple people under the release of the very narrow release that

407
00:45:19,640 --> 00:45:23,960
we are seeking will be the same lead plaintiff ordered in both cases and they

408
00:45:23,960 --> 00:45:29,480
will be dealing with exactly one lead plaintiff hopefully thank you all right

409
00:45:29,480 --> 00:45:39,800
thank you and finally miss verness thank you thank you your honor briefly mr.

410
00:45:39,800 --> 00:45:47,220
Kalandra seems awfully confident in what I think are opinions of what a court may

411
00:45:47,220 --> 00:45:54,240
or may not do while he thinks that no matter what argument mr. gold's clients

412
00:45:54,240 --> 00:45:59,480
have they will fail that's not for this court to decide mr. Kalandra mr. Atkin

413
00:45:59,480 --> 00:46:03,920
have you know come to the court and said well debtors didn't present anything

414
00:46:03,920 --> 00:46:07,840
that shows the notice are wrong that or this is not an adequate plaintiff it's

415
00:46:07,840 --> 00:46:11,760
not the debtors job the debtors aren't a defendant in that case we're not

416
00:46:11,760 --> 00:46:16,400
required to do that the point is your honor mr. Kalandra cannot absolutely say

417
00:46:16,400 --> 00:46:19,600
that he can't guarantee that the court won't allow the defendants to do

418
00:46:19,600 --> 00:46:23,560
something in addition you also have not heard in which we do believe is

419
00:46:23,560 --> 00:46:28,400
significant that you pointed out they have not committed to this being it this

420
00:46:28,400 --> 00:46:33,440
is not it your honor simply doing this is not going to be the end of this the

421
00:46:33,440 --> 00:46:36,760
reason they've asked for the reason they think they have irreparable harm is that

422
00:46:36,760 --> 00:46:41,320
they can come in again with a month prior to confirmation to ask this court

423
00:46:41,320 --> 00:46:48,240
for further things for example delay of the confirmation hearing and again your

424
00:46:48,240 --> 00:46:52,760
there is no irreparable harm each of these individuals in this purported

425
00:46:52,760 --> 00:46:57,280
class can do what they want to do to protect themselves the disclosure

426
00:46:57,280 --> 00:47:03,080
statement allows and gives everyone the information the plan allows an opt-out

427
00:47:03,080 --> 00:47:06,240
for the releases there's no irreparable harm hearing your honor we would just

428
00:47:06,240 --> 00:47:11,240
respectfully request that you deny the release requested by mr. Wyatt

429
00:47:11,240 --> 00:47:16,760
all right thank you all your honor can I make one last point and I I apologize

430
00:47:16,760 --> 00:47:26,480
for the free-for-all but miss Frenes keeps talking about irreparable harm I

431
00:47:26,480 --> 00:47:34,080
think the standard is a good cause and injecting an irreparable harm standard

432
00:47:34,080 --> 00:47:44,520
into this is just not correct we believe the good cause is is is obvious given

433
00:47:44,520 --> 00:47:50,520
the timing we've set it out if the individual defendants wanted to weigh in

434
00:47:50,520 --> 00:47:55,520
about consolidation they should have filed papers they didn't if they want

435
00:47:55,520 --> 00:48:01,560
the cases consolidated they can come in and file a motion tomorrow for limited

436
00:48:01,560 --> 00:48:07,880
relief from the injunction that's up to them but as mr. Kalandra pointed out

437
00:48:07,880 --> 00:48:14,760
consolidation is not is not the issue before the court and none of us can

438
00:48:14,760 --> 00:48:20,200
presuppose what the district court will say or do with respect to the lead

439
00:48:20,200 --> 00:48:25,920
plaintiff motions this is all about giving the district courts the

440
00:48:25,920 --> 00:48:32,320
opportunity to weigh in and what they do what they say what orders they entered

441
00:48:32,320 --> 00:48:37,040
and when they what orders they enter and when they enter them you know that's

442
00:48:37,040 --> 00:48:41,520
going to be up to them and and we'll have to deal with the consequences of

443
00:48:41,520 --> 00:48:52,360
that all right thank you thank you mr. Etkin well argued I appreciate the

444
00:48:52,360 --> 00:49:02,680
movements transparency and candor in coming to the court it's clear the

445
00:49:02,680 --> 00:49:09,720
purposes that would be served by the court modifying the stipulated adjunction

446
00:49:09,720 --> 00:49:14,760
and order that's already in place I agree with mr. Etkin the standard is

447
00:49:14,760 --> 00:49:18,880
cause is there cause to do so where I disagree is that I don't find cause I

448
00:49:18,880 --> 00:49:28,000
don't find any change in circumstances from when mr. Trey green and mr. Anthony

449
00:49:28,000 --> 00:49:38,160
LS from pronouncing correctly stipulated and agreed that for an essentially an

450
00:49:38,160 --> 00:49:44,480
exchange the opportunity to file the motions in advance of a deadline to do

451
00:49:44,480 --> 00:49:49,920
so and how important that was and the acknowledgement that their efforts

452
00:49:49,920 --> 00:49:56,840
cannot and should not impair the efforts of this debtor to reorganize those

453
00:49:56,840 --> 00:50:07,920
efforts included a hotly contested mediations several hotly contested

454
00:50:07,920 --> 00:50:15,000
mediation settlement settlements proceedings in front of mediators also

455
00:50:15,000 --> 00:50:24,400
in which the court took part in which has not been completed because there has

456
00:50:24,400 --> 00:50:33,920
been no confirmation of any plan yet the agreement that mr. Green and mr. Ellis

457
00:50:33,920 --> 00:50:39,520
acknowledged and through their stipulation was to allow the process to

458
00:50:39,520 --> 00:50:47,960
go forward not to restrain or handcuff the necessary participants so that it

459
00:50:47,960 --> 00:50:56,320
would impair and the insiders that it would impair the reorganization and we

460
00:50:56,320 --> 00:51:00,120
are on the cusp of a plan I don't know if the plans being going to be confirmed I

461
00:51:00,120 --> 00:51:07,320
don't know what the voting is going to be but we are on the cusp of having that

462
00:51:07,320 --> 00:51:13,200
I believe it's scheduled for September 26 certainly the prospects of a plan

463
00:51:13,200 --> 00:51:20,400
that would impact the claims of mr. Green and mr. Ellis were contemplated

464
00:51:20,400 --> 00:51:32,240
when the when the stipulation was agreed to there is no prejudice to either those

465
00:51:32,240 --> 00:51:38,280
defendants who were put in this adversary with the plaintiffs or mr.

466
00:51:38,280 --> 00:51:47,600
Wyatt in participating further in the chapter 11 process without a court

467
00:51:47,600 --> 00:51:53,360
appointed fiduciary on their behalf indeed that's where I disagree to the

468
00:51:53,360 --> 00:51:56,440
language it's been in the brief that class members should have a court

469
00:51:56,440 --> 00:52:04,360
appointed fiduciary for purposes of this chapter 11 these individuals these class

470
00:52:04,360 --> 00:52:10,600
members these proposed lead plaintiffs have counsel and even without counsel

471
00:52:10,600 --> 00:52:17,120
they have the ability to represent their interests and take issue with any

472
00:52:17,120 --> 00:52:24,640
aspects of the proposed plan that impacts and pairs their rights indeed

473
00:52:24,640 --> 00:52:31,680
and all counsel knows that there are opportunities apart from having a court

474
00:52:31,680 --> 00:52:37,460
designated by Dushi area as part of the class creditors often format hot

475
00:52:37,460 --> 00:52:44,800
committees and and retain counsel to to get themselves involved in the case and

476
00:52:44,800 --> 00:52:48,760
there's no surprise that we're at confirmation that that was contemplated

477
00:52:48,760 --> 00:52:54,400
the in the three months between the time the stipulation was entered that that

478
00:52:54,400 --> 00:53:00,520
was the opportunity I don't find cause I understand that mr. Ellis and mr. Green

479
00:53:00,520 --> 00:53:06,880
may consent to the motion to modify the stipulate injunction but that would

480
00:53:06,880 --> 00:53:12,980
operate as a back door for them to agree and allow it another party to come in to

481
00:53:12,980 --> 00:53:20,660
get more relief than they requested in the stipulation and again I see no

482
00:53:20,660 --> 00:53:26,120
prejudice it's not an issue of irreparable harm but the plan is an opt-out

483
00:53:26,120 --> 00:53:34,600
plan but more importantly these plaintiffs in the class action have an

484
00:53:34,600 --> 00:53:41,440
opportunity to engage with this court with respect to the merits of the plan

485
00:53:41,440 --> 00:53:48,240
and the process in the class action can proceed along the lines of the stipulated

486
00:53:48,240 --> 00:53:53,280
injunction what I will do to make sure because we don't know what happens on

487
00:53:53,280 --> 00:53:59,800
September 26th if there are other delays and I would agree that the class actions

488
00:53:59,800 --> 00:54:03,760
can't be delayed and terminably the debtor is supposed to have an opportunity

489
00:54:03,760 --> 00:54:09,320
to confirm a plan they have that opportunity on September 26 so I will

490
00:54:09,320 --> 00:54:16,160
carry the motion to September 26 and to see if it looks like the plan process is

491
00:54:16,160 --> 00:54:22,240
being retarded if there aren't votes or if there are certainly questions as to

492
00:54:22,240 --> 00:54:27,720
whether there is a viable plan then I think the court should take another look

493
00:54:27,720 --> 00:54:35,600
at letting these plaintiffs proceed in either of the courts or where the class

494
00:54:35,600 --> 00:54:42,880
actions are pending but the agreement in effect and the courts and in

495
00:54:42,880 --> 00:54:51,120
the court's view the proper basis to enter the stipulated injunction

496
00:54:51,120 --> 00:54:58,640
haven't changed and the circumstances haven't changed and the potential impact

497
00:54:58,640 --> 00:55:06,800
and the potential impairment of the ability to pursue a reorganization

498
00:55:06,800 --> 00:55:16,640
and the mechanics involved in reorganizing warrant did I well not

499
00:55:16,640 --> 00:55:23,480
granting the relief today but simply carrying the motion to September 26 so

500
00:55:23,480 --> 00:55:28,800
I'm not going to enter an order unless unless plaintiffs wish well it's

501
00:55:28,800 --> 00:55:32,520
movements wish for me to enter an order denying it out my inclination is to

502
00:55:32,520 --> 00:55:40,440
simply carry the matter to September 26 as the reckon does that do you prefer a

503
00:55:40,440 --> 00:55:44,720
denial I'm trying to save you time to having to refile in case the

504
00:55:44,720 --> 00:55:51,320
circumstances change well I understand your honor and we appreciate that and

505
00:55:51,320 --> 00:56:00,080
and we'll we'll live with carrying the motion to the 26th all right thank you

506
00:56:00,080 --> 00:56:07,760
counsel you're welcome to stay on for another interesting argument or you may

507
00:56:07,760 --> 00:56:25,680
be excused thank you your honor thank you thank you all