Good afternoon everyone please be seated.
This is Judge Sticklter on the record in Prime Court Technologies case number 2311161.
Good afternoon.
I would just hand in a copy.
So turning to the agenda, I'd like to thank Your Honor for entering orders prior to today
on items 135.
I just wanted to just stress to you about this and they have agreed to a further extension
through October 18th, our next hearing.
And I have a red line.
Okay, yes please.
Thank you.
And in the red line you'll see that it's basically just a red line.
Okay, I'll just hand it over to Judge Sticklter.
Mr. Cudia, do you want to be heard?
Good afternoon Your Honor, Judge Cudia for the United States Trustee.
Ms. Candidate is correct.
We do consent to the further interim order 345 release.
Okay, thank you.
We will get that in.
Item 7 on the agenda is our request for conditional approval of the disclosure statement as well
as the approval of proposed solicitation, voting, and noticing procedures, our proposed
confirmation timeline, and the forms of solicitation and noticing procedures.
We filed our initial planned disclosure statement on September 8th and adopted numbers 92 and
93.
And since that time we've been working with a number of parties to make adjustments, changes,
and negotiate some resolutions to concerns that have been raised with the internal objections
for comments and formal objections by our court.
In particular, we've been working very, very closely with the U.S. Justice Office and the
committee.
And indeed, I think we've been working around the clock and we've got to really down to
the wire with the committee on this one.
So I want to thank the U.S. Justice Office and the committee for working so cooperatively
and quickly with us.
We have incorporated some changes to enough burdens of the planned disclosure statement
that we filed on the 2nd of October, which was Monday.
Those were at docket numbers 235 and 236.
And yesterday and very late we filed new versions, which incorporate even more.
You mean this morning?
Yes.
My days and nights are blending together.
But yes, today you filed amended.
Yes.
Thank you for that, Judge.
It was today.
At docket numbers 251.
And we also filed and revised the current conditional approval order this morning at docket numbers
252.
And if you would please, the court, I'd like to provide an overview of the planned disclosure
statement before I turn to objections.
Yes, that would be great.
So, Your Honor, we believe that the disclosure statement contains adequate information that
would allow voting parties to make an informed decision to vote over to reject or accept
the plan.
Among other things, the disclosure statement provides information concerning the debtor's
business, organizational structure, capital structure, the key events that led to these
cases, as well as the major events that have happened in those foreign cases.
It provides an overview of the plan, including a classification and treatment of claims of
interest.
It outlines the potential risk factors associated with the plan.
And also includes a liquidation analysis demonstrating the difference between recoveries
under this plan versus a typical Chapter 7.
That we filed our liquidation analysis today at docket number 253.
Does Your Honor want to copy?
I do.
It also includes an explanation of the plan structure, including what I'll call the one
and a half, two and a half toggles, rather.
So, specifically, there are a number of restructuring events that are possible under the plan.
And the first is a sale transaction, which would be consummated outside of the plan versus
Chapter 163.
And then the plan administrator would then wind out with a residual estate.
There's also the possibility of a reorganization transaction, where a third party gets the
capital contribution in exchange for 100% of the equity interest under reorganized debtors.
And if those two fail or are not consummated, the plan would then toggle through a straight
liquidation.
The disclosure statement also includes a description of the releases under the plan.
And just to sort of put down the record, former directors and officers are not released for
review under the plan.
And with certain exceptions, current directors and officers are also not released for review.
And those are, current directors and officers are not released with respect to what we're
calling 98-F wallet costs of action or avoidance action, other avoidance actions other than
those related to ordinary course benefit and wages.
But current directors and officers are expropriated under the plan.
The disclosure statement also includes the description of who qualifies in the releasing
party, as well as the opt-out procedures.
And under those, all parties in the opt-out of the releases, the voting parties can check
the opt-out box on the ballot, and the non-voting creditors in this include the box as well.
So those parties can either file a formal objection to the releases with the court,
or they can just check that box and return it to the print data.
And of course, voting parties can also file formal objections with respect.
Your Honor, turning to the objection and informal comments, many of them fell into two buckets
in my mind, disclosure objections and confirmation objections.
And I believe we've rebutted all of those, if not all, with the disclosure objections
through language of the plan disclosure statement.
The disclosure objections were focusing primarily on maintaining the status quo established under
the final cash management order, and including information regarding the debtor's investigation
and when it will be completed, and also available insurance.
And these changes to the extent we could to the plan disclosure statement, and I'll just
put into the record where they are.
And the disclosure statement, it's section 6.4 and 7H6A, and sorry, 6H6A and 7A2, and
above in Article 2.4 of the plan.
And I also believe there's something in 6.9.
Do you think there's something, I'm sorry, I didn't hear that.
And Article 6.9 is on that as well.
I think that's just gotten broken for a court.
So your Honor, with respect to the detail that we provided about the investigation,
I expect folks are going to be unhappy, they would like more.
But what I'll say is that we are investigating the 98 FWALA issues as well as the property
and estate issues as quickly as we can.
These are very complicated issues.
We are being as thoughtful as we can, and we're working as fast as we can, but either
at this time we have nothing more to report than what's in the disclosure statement,
or we cannot report more, we need to jeopardize the investigation.
So what we've tried to do is balance the disclosures against where we are in the investigation.
And in terms of when we'll be completed, we are taking a very thoughtful and careful approach.
So at this time we don't have enough data to when those matters will be completed,
either one of them, but we're working as quickly as we can.
We're serving 2004 notices.
We believe we're going to file a 2004 motion today, perhaps in a short time,
so we can have it for only 18, but we're doing our best here.
So we're doing what we can, but we don't have a definitive outside date.
Let me ask you, if you discovered information that you could share,
would you file like a supplement if you had it prior to the plan supplement?
Yes, yes.
I believe what I usually do in the case is I file a sort of a supplement to the disclosure statement
at the time of the plan supplement that explains the changes from the disclosure statement that was solicited.
And of course, we only anticipate recovery getting better, not worse, than the defendant on trial,
or if that was sent beyond trial later today.
So yes, we would definitely do that, Your Honor.
And the confirmation objections were really related to the scope of the releases,
which we've been negotiating with the committee very closely.
And the treatment of claims, specifically cryptocurrency and FIA currency and customer accounts,
which is touching on the property use date issue, which we haven't settled on yet.
And with respect to confirmation objections, it's our position that virtually no one's ever preserved
until the final hearing.
We're not really being prejudiced by pushing those off.
With that, I just want to walk, Your Honor, through changes being made since the final hearing,
which was earlier, well, not early this morning.
But I don't believe you have them.
Okay, so perhaps...
Well, maybe I should hear from objectors.
I don't even know who's a live objection right now.
I'm sorry, what?
I don't even know who are live objections right now.
I believe we have...I can run through what I believe has happened.
I believe that we have resolved Allegheny Abelty objection by including the other secure claims talks,
which was inadvertently left out.
With respect to T.P. Labs, I believe we have resolved their disclosure objection by including language in 2.4 of the plan,
but that they might want to put something on the record with respect to their reservation of rights to confirmation.
And our claimant was a joiner to T.P. Labs.
I'm not sure.
I think they still have concerns about their disclosures with respect to the investigation.
It's part of the note.
And then AnchorCoin, we made a number of changes to the plan to address their concerns,
and we did send the revised change pages to them before the hearing,
but I have not heard from them one way or another, so I will see if we can do any of the objections.
If parties could just let me know where we stand.
If you're on this room with any specific questions, would you like us to do the reactivation for us?
Well, I'd like to start with the objection, and then I'm assuming that you're in line with the debtor and the response.
Okay. So why don't we hear from objectors so the committee can respond together with the debtors.
And let's take an objector at a time.
Good afternoon, Your Honor.
Good afternoon.
My name is Susan M. Smith and I'm the Pepper Hamilton Standards on behalf of AnchorCoin. AnchorCoin did found an objection at Doct. No. 221 and specifically raised three objections to the disclosure statement. Our first objection was that the initial disclosure statement didn't mention any of the resolutions reached in the final cash man order.
There is language that has been added in 2.4 of the plan to address that the customer account funds will be for transfer.
And so we might have a tweak or two here or there in the plan, but we're still inactive discussions with the debtors counsel. And we're comfortable at this point with proceeding and just reserve on that for confirmation.
Our second objection is that there was inadequate information with respect to claims that were being released for available insurance.
The debtors did address the DNO insurance and added additional disclosures there, but with respect to estate claims that were being released, that's still an open issue from our perspective, which tied directly into our third objection, which is that the debtors current directors and officers should not be released from any estate or third party claims in positive action.
And it's our understanding that the debtors counsel has this preview that the debtors are proposing to release current directors and officers with respect to claims except for the defined non-released DNO claims.
But the plan disclosure that we find are very confusing on this point. So nowhere in the definition of released parties are the current directors listed.
But then the end of the definition says, quote, notwithstanding the foregoing, the directors and officers against whom the debtors hold non-released DNO claims as of the petition date shall not be released parties under the plan.
But I've noted that definition of released parties only includes eight separate parties and none of them are the current DNOs.
So it's our position that the plan disclosure statement needs to be amended to make clear exactly what releases the debtors are proposing to grant to current directors and officers with respect to those non-released DNO claims.
And then coupling on to the end of this, the disclosure statement in our position lacks adequate information as to what claims are being released for current DNOs, what the value of those claims are, as well as what the contribution is that the DNOs are making in exchange for those releases.
So we understand that there are ongoing investigations, but there's no other discussion of what these claims may be, what their value are, and it's really not adequate information to provide voting creditors with a reasonable understanding of what the plan is doing to make an informed judgment as to how to vote on the plan.
Therefore, we would respectfully request that the court require an amendment to the disclosure statement to add sufficient information regarding what claims are being released, and the estimated value, and what contribution is being made in exchange.
And then just with respect to confirmation, do you reserve the right to bring in confirmation objections related to the third party and end plan debtor releases?
I don't know what that got. I'm happy to answer the questions you may have.
I'd like to hear from the debtor or the committee of their position. And I know you were just getting documents, so I don't know if you heard the end of that.
Your Honor, so a couple things. Mr. Bennett told me that I may have misstated the discover the releases for the current DNOs. They are not released parties with protection ID and a valid process of action. I wanted to make that clear.
So I have the red line now. May I approach the panel?
Certainly.
Is this just a black line of edits since this morning?
Your Honor, in the disclosure statement, we added a description of the release party.
It's the 236th.
It says, importantly, certain claims in how the action are preserved against current officers and directors, subject to applicable limitations and the debtor should not propose to release all the directors and officers under the plan.
I went through what I think that the plan is key in terms of what the releases are related to. And I hate to jump around on this, but in the red line of the plan.
The red line you just gave me.
Okay.
We were otherwise willing to modify the action against one of the officers.
So maybe I'm just doing the leads, but I don't know that it's most clear.
And we tried to work with anchor points to make it clear.
I think that's a confirmation issue and that might change between now and then. So their rights with reflected are preserving my mind. And if we get some of the current government stage, perhaps the solution is to release directors and officers as part of the plan.
Good afternoon.
These folks have not been sleeping for days.
So, and so what we're talking about in terms of what's easy and lots of other cases.
Here, it's like almost no one's released. And whatever investigation is yielding will whatever value is accreted as a result of that. And as Mr.
Now when we get to the supplement time, there's more information that's yielded that will be made available to everyone. So it's the same version.
It's really the people who are working on this bankruptcy case, it's really the people who are on the special committee. Right. And not that much more. So, are there people who are at the company who are no longer there?
Anybody related to the 98F issue? No releases. Any individual claims that creditors have? No releases. We can't really delineate all of those people, because it's sort of everybody.
I don't know if that's really where the confusion lies as to why somebody might say there's not enough disclosure. There is enough disclosure, it's that there's not a lot of releases going on.
That's probably what, I think that's what this new language, I'm just reading for the first time, we're working very fast. Right, I understand. Effectively says.
Maybe, maybe anchor points council, I think she just got opportunity to look at it. So maybe. Yes, certainly.
Okay.
I appreciate that.
Excuse me, does that resolve all of anchor coins issues, understanding that you're reserving rights for confirmation hearing.
I guess I'm a little concerned with the ongoing investigation.
What would it be, what information would you contemplate could be provided that would answer your question in light of the fact that it's ongoing investigation.
Don't worry, I have an issue with the plan supplement date. It's not compliant with the local rules.
I mean, what might be at stake and also on the flip side of what contribution is being made by five parties to be released related to that.
Well, let me, I want to resolve the one outstanding issue here.
Since we're client mid objection. So, is there any additional information that could be provided with respect to investigations.
What happens if you have nothing available at the time of the confirmation hearing. That's, that's one of my overall arch arching concerns here.
And I appreciate comments that were made to me at the prior hearing about these types of cases lose money and they need to run on a parallel track.
But as a consequence of that, you don't have the information that you might otherwise have available if you were waiting a couple of weeks, but I don't know if that means weeks or months or years for an investigation.
I think that, you know, it's not out of the realm of possibility.
But, you know, it can go two ways, right.
whether we agree under a certain contract
that it's not property of the estate
or whether we want to bring it to your honor
for you to decide whether it's property of the estate
based on our analysis.
So those motions will be coming.
We are serving, we've been active in the 2004 process
and we'll be serving those 2004 motions
and bringing as much as we can to your honor
to decide before confirmation,
but there's a mechanism set up in the plan
so that if those continue,
there'll be somebody to carry that on post effective date.
But before, by the time we get to confirmation,
now we will know which type of transaction we have
and what the value is of that transaction.
So we will have additional information for creditors,
but I can't commit to a timeline on the investigation piece.
So, please.
Please.
I'll just start on behalf of the committee.
Your honor, I think it's important to understand
the fundamental nature of this plan
as it compares against other plans
for disclosure purposes.
This is not a reorganizing company plan.
We are not rehabilitating a business,
going into dishings and delivering stock to people
and hoping for the best.
Right.
This is a sale of a non-operational business
and that may be the path, it may be a different path.
This is a transitional plan.
This is a plan that takes where we are in bankruptcy
with all this administrative expense,
with all of the burden on your honor's docket,
and says let's wrap it up, tie it up,
and wind it down according to
what value created going forward.
I view those as more transitional plans.
Okay.
The nature of disclosure in the former matter,
the typical widget reorganization is
what am I getting, how am I getting it,
what is it worth, what can I do with it?
Right.
In that scenario, if I'm getting stock,
if I'm getting a beneficial interest in a recreation trust,
if there's gonna be causes of action,
of course you wanna know exactly what it is I'm getting,
how I'm getting it, what it's worth.
When you're in a transitional plan
where we're using the means of chapter 11
to wrap up in a very cost effective, efficient,
and value accretive for the creditors,
and we don't yet know those things,
respectfully, your honor, nobody knows
what's in it, how it's gonna be, where it's gonna go,
because that's not the nature of the plan,
that's not the nature of our case.
We can't let our fingers stick it up a mirror
and know how these things go
because we don't know the answer to those questions,
and sit down and say well we can't get
a disclosure statement approved,
and people won't know how to vote on whether or not
wrapping it up is the better way to go.
I don't think that's what 1125 does in this context,
granted in other contexts, but that's not us here.
Your honor, I had a few words that I wanted to say
about what we're doing today,
but I wanted to address that.
Okay.
Is it now or the time?
Yeah, go ahead.
Okay, thank you.
The committee's position for purposes of care,
we follow the reservation of rights,
and we have no issue with what we've requested
by the debtor today, and in saying that,
I want to acknowledge something too.
These folks have worked awfully hard,
and they have met us more than halfway
to accommodate the committee's informational needs,
negotiating requests, making concessions,
achieve a deal that I think from a plan perspective,
we're almost there.
Okay, I'm incredibly thankful,
and I'm honored to work with them,
they did a great job.
And the board as well, the professionals especially.
We're not today on board with a plan,
and that's not that there's things in the plan
that are making us uncomfortable,
it's that this case is moving extremely quickly.
For reasons that have to do with,
as I just mentioned before,
we're not reorganizing or building a business,
we're running a self-processing or wrapping up the case.
But it's kind of the old novel theory,
it's what's below the surface of the water,
you know, you write a good novel,
it's the only little bit that you see,
it's what's below the surface.
This is complicated, this is a complicated case,
and this company historically operated
in a complicated and important way
in a rather large ecosystem,
and we're trying to get to all of that stuff here.
And there's an M&A process going on.
We think we're gonna be supportive,
and we think that we'll be in a position
to announce that support very quickly,
maybe a week or two.
But we're not there just today,
we have some time down on the count of days just yet.
We provided debtors council with a draft
of a letter of support,
a typical creditors committee letter of support.
I do not believe it's been presented
to your honor for approval.
My understanding of the way that we've been operating
under this is that, first off,
I don't have authority to release that letter
or authorize the debtors to release it to creditors
just yet for working to achieve that.
And I understand from the debtors' perspective
that their view would be that the letter,
since they have signed off, I believe,
on the letter form,
would be acceptable from their perspective.
I just don't wanna be in 1125 risk
of having either we submit that letter directly
or the debtor do it,
and then I go on with having the opportunity to approve it.
I've certainly been involved in cases
before many judges in Delaware where it was fine,
as long as the debtor approved it
and didn't need judicial increment or,
but I don't wanna be presumptuous along those lines.
So that procedure looks for us
if it works for your honor.
If you would like to, if you think that-
I'd like to review it before it goes out.
Excuse me, Your Honor.
I'd like to review it before it goes out.
Certainly.
Your Honor, any questions for me?
I don't, not now.
Thank you.
Yeah, I wasn't sure if we had the final version of that.
No, that's-
Whether it's, is your sir,
if it wants to file it, do you want to know?
I didn't know.
Yeah, it's not-
It did, once you finalize it.
I don't, yeah, I don't wanna see it until-
Well, okay, so presuming, presuming that-
Because I understand the committee
hasn't approved it yet, correct?
I believe the committee has approved the form of the letter,
but we're not yet positioned to announce
that we're public- Right.
That we have some things that we have to do first.
Assuming that we get to that point,
then I would be authorized to tender it to the debtors
for solicitation or otherwise publicize it.
But if your Honor wants, it believes it,
and we think that makes a lot of sense.
Should we do it under sort of a certification of counsel
or notice?
A notice is fine.
Okay, and as long, well, I wanna be sure that
whatever order we're doing today would enable.
I'm a little bit confused, procedure-wise, I notice it up,
but do I file a motion for a motion for further
improvement process?
Your Honor, it can't incline to approve the letter.
We can include it as a revised proposed form of order
and we can do it.
Yeah, I just wanna see it.
So notice, and then that's it.
Thank you.
Would you like me to walk through you now,
the revenue, so we can hand it up?
Yes, let's walk through them, and I understand
that Anchor Queen still has an open issue,
but let's walk through the changer.
So since we filed the chapter one of the plan
early this morning, we've had a number of changes
for the community and connections as well.
The first one is in 1.142, actually 1.142.
And we deleted the concept of release date,
federal compromised cause of action because we created
a defined term called a speedier cause of action
as we're simplified, they're saying,
which that's a clean up.
The creditors litigation trust agreement,
we are allowing the, you created a creditors
to prepare it, how it was originally drafted
in a prior version was that they had to be,
it had to be, it was really accessible to the committee,
but now it's just to us.
So there's sort of spearheading that agreement
as well as the plan of interest for each
speedier agreement.
Okay.
In 1.145, I'm sorry, 1.45, that was a change
with the other questions.
Same with 1.54.
And same with 1.87, it'd be eight.
And eight, nine.
Bear with me just a second.
Okay.
In 1.101, this is a change right between the
speedier cause of action and the speedier cause of action.
In 1.149, again, we deleted that phrase
because we corrected that with another defined term
that was a clean up change.
And that's the same in 1.165.
In 1.166, speedier changes at request of the US,
I'm sorry, committee, but we've also made some clarifying
changes.
Okay, I'm seeing that they're not being made into
the straps.
So when we file the plan after this hearing,
I'll make those changes.
But essentially, in the wind down better assets,
for A, with respect to the cryptocurrency and the
98th wallet and the insurance policies in C
and the books and records in F, we had a qualifier
that unless there's something to the contrary
in the 10th supplement, a 10th supplement document
or the restructuring transaction memorandum just to
account for whatever the transaction ends up looking like,
maybe there's a policy that needs to stay with the buyer.
Or if the cash provided by the buyer satisfies all of
the claims, they should be able to retain the 98th wallet
and access, things like that.
So just to sort of caveat it, make sure that it's not,
we're not misrepresenting anything.
Number 1.168 is another change from page 3.2.
And 2.4, these are clean up changes.
We've made a number of changes before the hearing
to this paragraph to resolve paragraph objections,
including with respect to the status quo piece
regarding the added purchase of currency
in customer accounts.
We added transfer to this for anchor points so that
it was clear that it really did maintain the status quo.
This transfer was also covered in that final cash
management order.
Article 3.6, these are changes by the committee,
which we agree to.
And then in terms of the next page, you're going to see
in each class of coin of, these are the subclasses
in class 3, the demo on secured cutters.
We've added at the committee's request this sort of
sub paragraph need, which my understanding is some cash
or cryptocurrency is allocated to a particular subclass.
If it's not used, they can reshuffle that into another class,
which we thought was appropriate.
Who described, I mean I understand what the papers say,
but on a more granular level, who are the creditors
in the three classes, class 3 and its subclasses?
So it's the general unsecured creditors for each debtor,
and it's the trade creditors and the customers.
Right, so are there many trade creditors?
Or is this primarily customers?
I think between the amount of trade debt and customer debt,
it's definitely customer debt heavy.
On the next page, I guess it's 33, number 6.7.
Before you get there, can I just ask you, because we're here,
explain to me the convenience class, class 4.
So we've learned that we have a number, a large amount actually
of claims that are very small and we just don't have creditors,
and we've learned that they're very small claims,
and we wanted to give them the opportunity to elect
to have the convenience class where they can get their money faster,
they don't have to participate in the claims reconciliation process
or anything like that.
And we thought that given sort of the nature of crypto
and the diverse cryptocurrency holder body,
that this might be attractive to people with lower rate base claims.
But it doesn't, does it identify the amount?
Yes.
I'm sorry, I must have missed it.
Maybe it's a definition.
No, I think it's just not in this red line maybe,
because I think it just changed to this,
and the red line that we filed this morning and...
Are you asking for the dollar threshold?
Yes.
That's $300 per dollar.
Oh, okay.
And just for context, that's more than 20,000 claims
that we can eliminate through that mechanism.
Of course, the administrative costs are not given with that.
It seems worthwhile here.
Okay.
Thank you for that clarification.
Okay, I think you're at 6.6 maybe.
Yes.
So, of each 33 at the top, in a prior version,
we had given the criteria to pay pretty broad,
and including with respect to potentially adverse tax consequences
to their constituent.
And what we've added here is that we can't reduce any of their
consent rights into the planning.
On the next page, I think it's just cleanup.
And then 6.9.
In discussions with the CETI, we have expanded the definition
of the DNO claims to include positive actions related to
redemption of equity by the debtors.
I don't know that a lot of details aren't on it,
but we agree that that would be a good fit.
And so a lot of these changes are to clarify that,
and also to, at the end of that paragraph,
talk about what we discussed today with respect to the avoidance
of these actions for directors and officers,
current directors and officers.
Turning to page 38, another one of those inept units.
And on page 40, we agree to make this modification,
putting some of the appropriate plan in the administrator.
This is the rights and duties of the plan administrator section.
Same with 41.
And page 46, another one of the cleanups.
Right above 6.16 is more clean up,
and then 6.16 is modified to, you know,
explain, cover all insurance policies, not just DNO policies.
On 6.21, we originally had the debtors prior to maybe
identifying the best cause of action,
and now that we've kicked that out, we're okay with that.
On page 46, the changes to the prior insurance section I just
discussed, obviously, so we agree to believe them.
Those are all the changes to the plan for today.
Okay.
Yes, please.
Any of these changes might be just implementing the changes
that we just discussed, so I'll take a look at those.
So it's number one.
So I think it brings us all the way to 86,
which is I discussed earlier about we put an explanation of
the releases and actual vision in the disclosure statement to
try and address everyone's concerns so that, you know,
people didn't have to parse through all the definitions.
So that's the last reference back to where they defined more
information.
Just I think on page 87, I think each of the release
professionals is duplicative of the preceding page, bullet point 6.
Oh, they're exculpated.
No, no, no, that was my misreading.
Sorry.
That happens when you publicly read things.
Okay.
I do not.
Actually, I don't really want to discuss the order until we go
through objections, and I also would like an explanation on
the liquidation analysis because I don't understand it.
And I understand that that's for another day, but I need to
determine that this is, that I don't have a feasibility issue
that would preclude solicitation.
And maybe we should just wait until we hear from an objector,
but at some point I'm going to want to hear from it, pull on it,
but I want to hear from objectors first.
So I think where we left off with respect to objections was
AnchorCoin still having an open issue with respect to what was
being disclosed with respect to investigation.
Is that correct?
Yes, Your Honor.
So I was pinching a bit today, catching up from being out last
week.
I do think that the changes to, I think you said, the 6.9,
changing the card out from the current letters, current
directors and officers being released for only the 98-F wallet
causes of action to the broader all claims and causes of action.
Going through that just now is very helpful to see more
specifically.
So my understanding then is that the only thing that current
directors and officers are being released for is the order and
course of major ordinance actions.
And so with that, Your Honor, I think we could stand down on the
fact that the order is not being released.
Okay.
And is that, her understanding is correct.
Your Honor, almost.
They're not being released for anything but the ordinance
actions, but also if they're not found liable with respect to
the 98-F issues, it will be released from those.
Again, they are ex-publicated.
Well, so I guess it does kind of bring us back to how do we
know what the creditors are agreeing to release or not
release if they don't have any insight into what stuff the
investigation is or what things were looked at or something
like that.
I'm sorry, Mr. Stark.
I can't hear you.
Oh, are you talking?
Do you need a minute?
No.
So he was asking if it was related to the release of the
extradition.
I didn't hear the extradition related to post-petition
activities.
That's our concern.
Our concern is with the release and hearing that if the
investigation shows that a current director and officer is
not liable for a 98-X wallet cause of action, I think it
comes back to our client and other creditors concerned of how
do we know what that investigation entailed, what
causes and things of action were looked at and evaluated and
found to not be liable for if one needs to accept a claim that
would release them before we know the outcome of what steps
were taken.
Yes, please.
There's no releases.
All that's happening is it's channeled to insurance.
It's a mechanic that is used in many, many, many, many, many
of the plans that I've been involved in.
Never once has anybody said to me it has to delineate before
in the disclosure statement what and how.
In cases where the knowledge is ready and available, we don't
have to do that.
We don't have the information ready and available.
People are voting as whether or not on the whole the deal is
sufficient.
If you don't like the deal, vote against it.
If you want to do something else, let us know.
But there isn't information to add and no one's getting the
leases.
It's just if they're found liable, it's done by the
insurance, not their own personal accounts.
I don't think that's what the plan says.
My point was not that they're being released.
It was that if they're not liable and they have to get a
call issued, then they're off the hook.
If it's decided that they weren't receiving no knowledge,
nothing would get these issues, then they're just not liable.
It's not a release.
It's just that we're probably that we're just being.
You're saying under the plan they are not released.
Right.
If there's subsequent litigation post-effectivity and they are
found not liable, it is what it is.
But they are not getting a release.
No.
With our presentation, you're saying that they are not
released.
It's just a matter of if they're found liable or not.
Okay.
Thank you.
Other objectors?
John Weiss of Paschman Stein,
Walter Hayden on behalf of both Tiki Labs Inc.
and Allegheny Casualty Company.
Good afternoon, Mr. Weiss.
Thank you, Judge Nichols.
With respect to Allegheny Casualty,
whom I'll speak for today,
and then I will seat the podium to my co-counsel,
Tracy Shafroth from the Keller Fentanyl Nudie Fund.
With respect to Allegheny Casualty,
we appreciate the debtors adding the secure class to the plan.
We do have issues that we'll have to address in connection
with the plan with respect to overall treatment and
collateral that we're holding, et cetera.
We anticipate continuing to work with the debtors.
Those discussions have begun and we'll simply preserve rights
vis-à-vis plan issues to be addressed at that time if necessary.
And other than that,
if I could just turn the podium over please to my co-counsel.
And with that introduction,
I believe she'll be speaking for Tiki Labs.
Okay.
Thank you.
Ms. Shafroth?
It's Shafroth.
Thank you, Your Honor.
I'm sorry, pronounce that again.
Tracy Shafroth.
Okay.
Good afternoon.
Good afternoon, Your Honor.
I'm with Keller Fentanyl Nudie Fund, LLP.
As Mr. Weiss mentioned,
we represent Tiki Labs, Inc.,
doing business as Audius, Inc.
So we appreciate all of the work that the debtors have done to
address the objections to the extent they can at this point.
It's a closure statement,
but we did want to make sure we preserved our rights with respect to
those objections.
Tiki Labs holds a significant amount of cryptocurrency in a customer
custody account.
And so the determination of non-estate assets in the account treatment
issues are of paramount importance to Tiki.
We appreciate that the debtors added language,
making it clear that they would not take tokens subject to customer
equipment without a court order.
But at this point,
without an understanding of the debtors, you know,
the debtors have not taken a position yet on whether customer
custody accounts or the cryptocurrencies in those accounts are a state
property and how those will be treated.
So without that information,
Tiki Labs doesn't have adequate information to be able to make an informed
vote on the plan.
So at this point,
we just wanted to make sure that we preserve Tiki Labs rights to raise
those objections to the adequacy of the information in conjunction with the
final approval of the disclosure statement and the confirmation of the
plan.
Bear with me a second.
Let me ask the debtors.
I'm looking at local rule 30 17 to objections not made at the time of the
hearing on voting procedures, form and notice and form of ballot.
Aren't considered at the time of confirmation.
Is it the debtors position that Tiki can reserve its right with respect to
customer accounts to the hearing of the confirmation hearing to address the
adequacy of the disclosure statement?
Yes.
Okay.
Do you have any issues with that position or the committee?
Yes.
But as to Tiki,
the U.S. trustee doesn't take a position whether those issues are reserved
regarding adequacy of the disclosure statement.
Okay.
Terrific.
Thank you.
And Mr. Kudia, let me thank you.
I can tell the U.S. trustee had a hand in many of the modifications and I
appreciate that.
Okay.
All right.
Were there any other issues with respect to Tiki?
No, that was it, Your Honor.
Thank you.
Okay.
Thank you.
Other.
Your Honor, this is David Newman.
I'm a client of the U.S.
Trustee Development on behalf of CoinBits.
I filed a joiner to Ms.
Schaffroth's objection.
It was just very well written and really encapsulated the concerns that my
client has.
We, my client and its users are the owners of about a little over 100
bitcoins out of, I believe, a pool of 300 bitcoins that the debtors have under
their trust, under various trust agreements.
And our only concern is that we know that as far as we can tell from the
disclosure statement that Bitcoin, BTC, was never involved at all in this
wallet issue.
And so our concern is without knowing the timing of the supplement and then
knowing at least a statement as to where the matter is currently, just where
the investigation is, is it ongoing, what stage it's at.
It's really hard to get over our objections to the fact that our ownership
in BTC and the process with regards to resolving the ownership issues as to
BTC are not disclosed in any way in the disclosure statement as those BTC
issues, the Bitcoin issues are unique to Bitcoin holders as it doesn't seem
like anything was, that any issues in this case affected the BTC.
The BTC rights under the FireBlox technology that was used to maintain
wallets in this case.
Let me hear from the debtors.
I can't put more information in if I don't have it.
Yes.
That's sufficient for us, Your Honor.
So I would encourage you to continue to talk and your issue is reserved for the
final hearing.
No, actually, sorry.
And let me just reiterate to Mr. Newman, today's approval of a disclosure
statement would be only on the interim basis.
So it will be readdressed.
Your Honor, I really do appreciate it.
Thank you so much for the opportunity to appear before you.
I do appreciate it.
Certainly.
I would like explanation.
I appreciate liquidity.
I mean, the liquidation analysis is not before me today.
But I could not or did not understand that I, I'm afraid I didn't bring it out
here with me, how party accreditors received more in an 11 than a 7 based on
the analysis that was attached.
With your honor's permission, I would ask Mr. Martinez to come to the program
and walk down through this.
Okay.
Could you just wait a second while I find the report that was actually provided?
I'm sorry, Your Honor.
I can't find my copy of the report.
That's all.
Just give me a second.
I have it.
Good afternoon.
I don't wait one second.
We're more into this as we get into the Botanicalieties because they're
sold and Kate has a focus on them.
You can move us to some of yourVoice directly to that other population.
I want to put this to the vote.
Section 10, if you've ever had an sama.
Since he's a financial adviser I would have him sworn in.
You can stand there, sir.
But you're going to be sworn in.
Could you please raise your right hand.
Thank you.
Thank you Mr. Murphy.
I had a question about the liquidation analysis because I don't appreciate how, I understand
this says there would be a creditor would receive more an 11 than a 7, but I don't
understand based on the numbers that are attached. Particularly I'm looking at the Chapter 11
orderly wind down that's on page 13 of 14 versus the Chapter 7 liquidation that's on
page 14 of 14 where it reflects an 81.4% recovery as a mid-case to Chapter 7 and yet if I look
at the Chapter 11 orderly wind down it breaks it out for customer claims trade convenience
contract and it seems to be a lesser percentage to me.
I'd like to recalculate that, that's an error.
Oh okay because I'm like, all right, you know what would it be helpful if we took a quick
break?
Yes.
Okay, all right, all right that would be very helpful because I didn't want to make a representation
about something being patently unconfirmable if there's an error. So why don't we take
10 minutes?
Okay, all right, let's take a, we'll stand and recess for 10 minutes.
Okay, all right.