WEBVTT

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I'll give everybody an opportunity to adjust

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their videos as well as I'll take the opportunity

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to adjust my video. All right, obviously we have

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close to 200, we're having some feedback. Let

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me... Let me just... Wait, wait, wait. We're

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gonna be okay. Can you all hear me? Somebody

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give me a thumbs up. And all right, let's continue.

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Actually, bear with. All right. Let's continue.

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Best laid plans never seem to work. So we're

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going to conduct Today's hearing remotely, apparently,

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clearly. We have over 200 participants. I will

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then, so I will ask all of you who wish to be

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heard to make use of the raise hand function,

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and we will do our best to identify you and ensure

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that you can be heard. We have several matters

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on, obviously. agenda has been filed in lieu

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of having everyone still playing unfortunately

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for camera here My apologies, folks. We're coming

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from the laptop camera, not that camera. So,

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what we will, still having staff give me a hand

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here. There we go. Oh, I feel so much better.

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Little things in life. All right. In lieu of

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having everyone enter appearances that could

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take up to an hour, I will ask for appearances

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when you are called upon. And that way we can

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move more efficiently and effectively. I know

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there's quite a few who wish to be heard. It's

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a complicated case. Obviously it's a case that

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the court is familiar with. But let me start

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and ask for appearances on behalf of the debtor.

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Good afternoon, Your Honor. Felice Yudgen, Kohlschacht

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PC, proposed co -counsel to the debtors. I am

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on the line with a bunch of other people from

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my firm who will present and I will have them

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make their appearances as they present later

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on, Your Honor. And I'd like to introduce to

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the court our co -counsel, Alice Eaton from the

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Paul Weiss firm, Your Honor. With respect to

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those parties, from on behalf of the debtors

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that are not admitted to practice before this

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court. We have submitted ProHoc Niche applications

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and I would request that they be heard this afternoon,

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Your Honor. That's not a problem. I know our

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clerk's office has received and reviewed numerous

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ProHoc applications. Many of them unfortunately

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are making use of or not making use of the local

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form order. We'll take the steps necessary to

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make sure that when they get entered, there'll

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be a local form order approving them. But for

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purposes of today, welcome to New Jersey, at

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least virtually. Thank you, Your Honor. I'm gonna

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turn the podium over to Ms. Eaton. But just really

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one quick housekeeping matter, Your Honor. Just

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to address the first two items that were on the

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agenda, which are the complex case designation

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and joint administration, which are two customary

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non -controversial applications to the court,

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and I would request that Your Honor enter those.

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I think they're pretty self -explanatory in terms

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of the relief that we are seeking. All right,

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thank you. As I will do, I'm sure repeatedly

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today, are there any objections? This is Jeff

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Sponder of the United States Trustee's Office,

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Your Honor. No objection. Thank you. So we'll

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mark both of those granted. Thank you. Thank

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you, Your Honor. And with that, I'll turn the

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podium over to our co -counsel. Ms. Eaton, good

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afternoon. Good afternoon, Your Honor. My name

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is Alice Eaton with Paul Weiss, and we're proposed

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Council, co -counsel to the debtors. And we're

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here on behalf of New Rite Aid LLC, and it's

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the affiliated debtors. We have a short presentation

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for Your Honor, but before I get to that, I just

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want to note for everyone on the Zoom, we all

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know that Rite Aid plays a critical role in providing

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essential medication and healthcare services.

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And at the company, we are committed to maintaining

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continuity of care throughout this process. Rite

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Aid's pharmacies are stocked and we are filling

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customer prescriptions without interruption.

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There have been some rumors about stores closing

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immediately and going dark, especially in New

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York. These rumors are not true. Later in the

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presentation, we'll talk about five stores, only

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five stores, that will be transferring prescriptions

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to other pharmacies in the ordinary course. Those

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prescriptions will continue to be available at

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the new pharmacy, and we have a chart that will

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identify those five stores. So we just wanted

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to clear up some of that, some of the press for

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everybody's benefit. Second, we want to let everybody

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know that our lenders support us and are funding

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this process, and we have sufficient liquidity

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for this process. We therefore will continue

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to have medications available. And we are paying

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our associates to show up to work, to dispense

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medications, and provide patient counseling.

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And our overarching goal through this process

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is to protect our customers, our employees, and

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our other stakeholders. We're doing that by providing

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structure. certainty and transparency through

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an orderly transfer of our prescription files

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to other pharmacies that will continue to fill

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those prescriptions and can offer opportunities

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for our pharmacists. And we'll also be selling

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our non -pharmacy assets at the same time. And

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the relief we're seeking here today is to allow

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us to begin all of this process. Prior to the

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hearing, Your Honor, we engaged in discussions

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with our key stakeholders, including our lenders

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who are represented by Chote, with McKesson,

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who is represented by Sidley, certain of our

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landlords, and I won't name all of their counsel.

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And nobody has reached out to us with an objection

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to the relief and the timeline of what we're

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seeking today. So before I go on to the presentation,

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I also want to introduce some of my other members

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of the Paul Weiss team. I'm here today with my

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colleagues, many of whom you may know, including

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Andy Rosenberg, Billy Claireman, Greg Laufer,

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Chris Hopkins, Sean Mitchell, Allison Benedon,

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Claudia Tobler, and Nick Krishbaud. This is among

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the team that you will hear from today. So why

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don't we get into, unless Your Honor has questions,

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we can go to our presentation. No, I appreciate

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it. I appreciate your opening comments. I always

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said, at least one of the benefits of having

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the remote hearings is the transparency, is the

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ability to get information out accurately among

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media outlets, social media, and I think it's

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important, especially for a case such as this.

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Thank you. But you can continue. Thank you, Your

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Honor. So why don't we go to page four of our

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presentation? And I'll give you a situation overview

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of sorts, Your Honor. Let's see. There we go.

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There we are. OK, terrific. So since emerging

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from Chapter 11 in August of 2024, Rite Aid's

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businesses have continued to experience a number

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of challenges. Unfortunately, these challenges

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have only intensified as a result of the rapidly

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evolving healthcare retail landscapes in which

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we operate and several of the business challenges

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that the company faced, we really didn't anticipate

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at the time it emerged from Chapter 11. So to

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address these various issues, over the past few

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months, we've been evaluating in coordination

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with our lenders several options to identify

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the best path forward. And after considering

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all of our alternatives, we determined that the

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only viable path forward for our customers, employees,

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creditors, and all of our stakeholders is to

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once again commence Chapter 11 proceedings and

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transition our pharmacy assets to our competitors.

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So we will use this case to pursue a value maximizing

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sale process for our assets while ensuring our

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customers continue to receive the medications

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and care they need. speak to later in this presentation,

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Your Honor. We're in active discussions with

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multiple potential purchasers of our assets,

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and we intend to use these cases to conclude

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those discussions and consummate the sales of

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our assets. So turn the page. Your Honor, our

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pharmacy business has remained strong and delivered

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exceptional care prior to, during, and after

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emerging from the prior bankruptcy case. Our

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pharmacists at Rite Aid are the heart of our

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business. Our pharmacists have gone above and

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beyond to provide care to customers for over

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60 years and continue to show up every day with

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the same dedication throughout and after the

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company's prior cases. They consistently delivered

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high standards of personalized care, trusted

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expertise, and essential services to support

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the everyday health and wellness needs of our

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communities. As a result, Rite Aid pharmacists

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are deeply rooted in their communities and have

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developed close personal relationships with many

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of the customers. Customers see our pharmacies

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as a key component of their healthcare journey,

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not just a place to pick up medications. Unfortunately,

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our non -pharmacy business or otherwise known

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as our front -end retail business, the high margin

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part of any retail business, significantly underperformed

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due to a variety of adverse circumstances. And

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it couldn't be turned around following our emergence

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from bankruptcy. Let's turn the page. Now, from

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the last case, Your Honor, you might recall our

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elixir business, our pharmacy benefits manager

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business. And following We have sold this business.

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We sold this business in the last case. And following

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that sale transaction, there's only one elixir

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entity remaining in the debtor's corporate structure.

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It's an entity called Elixir Insurance Company,

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or EIC. And that's the entity which historically

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offered drug benefits to eligible beneficiaries

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under Medicare Part D. As was the case in our

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prior chapter 11, EIC is not a debtor in these

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cases. And to provide you with an update, because

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you may hear about Elixir and EIC from other

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parties, EIC is currently undergoing a wind down

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under Ohio state law, and the debtors have been

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in contact with the applicable regulatory authorities,

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including the Ohio Department of Insurance. We've

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also been in contact with the Department of Justice

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regarding Elixir's wind down. Your Honor, may

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recall from the earlier case from our 2023 bankruptcy,

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EIC and Rite Aid entered into a settlement agreement

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with the Department of Justice and the Department

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of Health and Human Services with respect to

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claims asserted against EIC and other Rite Aid

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subsidiaries under the False Claims Act. And

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under that settlement, the parties, Rite Aid

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and EIC, agreed jointly to pay the United States

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$101 million in settlement of those claims. To

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date, we've made $56 million of these payments,

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and we are in contact with the Department of

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Justice regarding the outstanding $45 million

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amount. Let's go to the next page. Your Honor,

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some of these parties will be familiar to you.

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On behalf of the debtors, we have advising Paul

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Weiss as counsel and Cole Schatz, Alvarez and

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Marsal as financial advisor, Guggenheim Securities

00:14:49.509 --> 00:14:53.440
as investment banker, A &G as our Realty Advisor,

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and Kroll as our Claims and Noticing Agent. And

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we also note that the DIP Agents, Bank of America,

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Wells Fargo, and Capital One are advised by Choate,

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BRG, and Greenberg Trowrig. Your Honor, you've

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seen this slide before. This is a history of

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our company from its founding in 1962, our many

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acquisitions, our first chapter 11 case in 2023

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and our emergence in 2024. Let's go to the next

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page. Your honor, following the 2023 bankruptcy,

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this is now our footprint. You'll recall that

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we divested our Midwest business. And so we have

00:15:37.889 --> 00:15:42.970
our Northeast, our Mid -Atlantic business, our

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Pacific Northwest and California businesses.

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We have 1 ,277 retail stores across these 15

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states, and we have three distribution centers.

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And currently, we serve 8 million customers across

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these 15 states, and we dispense 2 million prescriptions

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every week. Let's go to the next page. So, Your

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Honor, this is a description of the two components

00:16:11.440 --> 00:16:13.860
of our business, the retail pharmacy and what

00:16:13.860 --> 00:16:17.370
we call the front -end business. They're symbiotic

00:16:17.370 --> 00:16:21.169
because our dedicated pharmacists deliver essential

00:16:21.169 --> 00:16:23.809
medications and care to our pharmacy customers,

00:16:23.830 --> 00:16:26.929
and that includes, as many of you know, immunizations

00:16:26.929 --> 00:16:32.230
and general health consultations. And our front

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-end retail business offers a variety of non

00:16:34.610 --> 00:16:36.549
-prescription products, including health and

00:16:36.549 --> 00:16:38.870
beauty aids, personal care items, convenience

00:16:38.870 --> 00:16:41.929
products. Now, historically, the prescription

00:16:41.929 --> 00:16:44.909
drug business drives a large volume of foot traffic

00:16:44.909 --> 00:16:47.470
to our stores, which drives revenue from these

00:16:47.470 --> 00:16:51.009
higher margin fund and sales if there is adequate

00:16:51.009 --> 00:16:58.190
inventory in stock for those products. This is

00:16:58.190 --> 00:17:03.769
our post -August 2024 capital structure, which

00:17:03.769 --> 00:17:09.069
will also be familiar to many involved. And we

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have approximately outstanding under an ABL facility,

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a filo liquidity facility, one and a half lien

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notes and three L notes. So, going back to why

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we're here today and what happened, Your Honor,

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when the company emerged from bankruptcy in August

00:17:36.299 --> 00:17:41.170
2024, we all made very rational and justifiable

00:17:41.170 --> 00:17:44.609
business assumptions that included expecting

00:17:44.609 --> 00:17:47.430
vendors to return to pre -filing trade terms

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and releasing deposits, which would have generated

00:17:50.289 --> 00:17:52.970
sufficient liquidity to be invested in the front

00:17:52.970 --> 00:17:56.410
-end business. We also expected to quickly secure

00:17:56.410 --> 00:17:58.630
incremental liquidity facilities at the time

00:17:58.630 --> 00:18:01.130
of emergence, which would further provide necessary

00:18:01.130 --> 00:18:04.509
liquidity for purchasing inventory and improving

00:18:04.509 --> 00:18:07.630
in stock rates. However, these assumptions did

00:18:07.630 --> 00:18:10.970
not materialize And Rite Aid's reality quickly

00:18:10.970 --> 00:18:12.990
became very different than what we all expected

00:18:12.990 --> 00:18:16.289
at emergence. It was the combination of adverse

00:18:16.289 --> 00:18:20.109
macroeconomic factors, including lower consuming

00:18:20.109 --> 00:18:23.130
spending resulting from inflation and higher

00:18:23.130 --> 00:18:25.710
interest rates, changing customer preferences,

00:18:26.609 --> 00:18:28.869
market uncertainty, and all of that significantly

00:18:28.869 --> 00:18:32.130
reduced revenue compared to projections. Many

00:18:32.130 --> 00:18:35.049
vendors maintained restricted payment terms and

00:18:35.049 --> 00:18:38.589
refused to return deposits. and we were unable

00:18:38.589 --> 00:18:41.630
to secure incremental liquidity facilities on

00:18:41.630 --> 00:18:44.930
the anticipated timeline. So as a result of these

00:18:44.930 --> 00:18:47.289
factors, the company did not have adequate cash

00:18:47.289 --> 00:18:50.150
to execute on a business model, which required

00:18:50.150 --> 00:18:54.269
a well -stocked front -end shelf. Now, this all

00:18:54.269 --> 00:18:56.109
happened, unfortunately, at the worst possible

00:18:56.109 --> 00:18:58.970
time, immediately ahead of the critical seasonal

00:18:58.970 --> 00:19:01.990
fourth quarter period when pharmacies typically

00:19:01.990 --> 00:19:05.190
have their highest sales volume. And as a result,

00:19:05.349 --> 00:19:08.910
the impact of these negative factors on our revenue

00:19:08.910 --> 00:19:13.049
is exacerbated. Let's go to the next. Your Honor,

00:19:13.130 --> 00:19:16.690
this just graphically shows the liquidity challenges

00:19:16.690 --> 00:19:22.990
that the company faced during 2024 and early

00:19:22.990 --> 00:19:26.670
2025 with these ongoing competitive and in a

00:19:26.670 --> 00:19:29.410
very competitive landscape in the retail pharmacy

00:19:29.410 --> 00:19:33.700
space. We simply had declining levels because

00:19:33.700 --> 00:19:36.099
we weren't able to restock our shelves and that

00:19:36.099 --> 00:19:38.440
problem persisted. We had declining inventory

00:19:38.440 --> 00:19:41.960
levels, which then led to a reduced borrowing

00:19:41.960 --> 00:19:45.180
base under our ABL facility. As a result of that,

00:19:45.460 --> 00:19:48.380
we had reduced liquidity because we had less

00:19:48.380 --> 00:19:50.900
borrowing base to borrow against and could not

00:19:50.900 --> 00:19:54.339
purchase additional inventory. So all of these

00:19:54.339 --> 00:19:56.799
effects compounded in real time, causing the

00:19:56.799 --> 00:19:59.759
company to fall further behind. on its goal of

00:19:59.759 --> 00:20:01.960
replenishing inventory to the level required

00:20:01.960 --> 00:20:04.200
to achieve revenue and cash flow projections.

00:20:06.220 --> 00:20:08.539
Let's go to the next page. So the company did

00:20:08.539 --> 00:20:11.539
not sit on its hands and sought to address all

00:20:11.539 --> 00:20:14.079
of these challenges through a variety of strategic

00:20:14.079 --> 00:20:17.500
initiatives. We implemented operational cost

00:20:17.500 --> 00:20:19.779
saving measures, including reductions in force

00:20:19.779 --> 00:20:22.839
among discretionary departments, managing labor

00:20:22.839 --> 00:20:26.680
hours, cost saving policies, consolidating distribution

00:20:26.680 --> 00:20:30.039
centers, managing supply chain, closely managing

00:20:30.039 --> 00:20:32.980
working capital and labor hours, and implementing

00:20:32.980 --> 00:20:36.940
lease modifications. We also engaged in footprint

00:20:36.940 --> 00:20:42.259
rationalization efforts, and those efforts that

00:20:42.259 --> 00:20:47.079
started during the bankruptcy of 2023 continued.

00:20:47.279 --> 00:20:50.480
and continue to this day. And it results in the

00:20:50.480 --> 00:20:53.339
ordinary course closure of 29 retail locations

00:20:53.339 --> 00:20:56.559
and definitive purchase agreements for the prescription

00:20:56.559 --> 00:21:00.380
files of another 63 stores. Now, Your Honor,

00:21:00.619 --> 00:21:03.440
we listed the five stores I raised at the top

00:21:03.440 --> 00:21:06.559
of our hearing. Certain of these stores are scheduled

00:21:06.559 --> 00:21:09.769
to close this week. And we'll be seeking relief

00:21:09.769 --> 00:21:12.529
in our store closing motion with respect to these

00:21:12.529 --> 00:21:15.069
stores. These are ordinary course transactions,

00:21:15.390 --> 00:21:18.069
but out of an abundance of caution, our store

00:21:18.069 --> 00:21:22.049
closing motion includes a notation in the order

00:21:22.049 --> 00:21:24.849
that any of the closings that occur before you

00:21:24.849 --> 00:21:28.049
enter that store closing order will be covered

00:21:28.049 --> 00:21:31.849
by that order. And again, these stores, as you

00:21:31.849 --> 00:21:34.170
can see, are in Peterborough, New Hampshire,

00:21:34.269 --> 00:21:37.690
Portland, Oregon. One store in Brooklyn. one

00:21:37.690 --> 00:21:40.009
in Vernon, Pennsylvania, and another in Cheshire,

00:21:40.210 --> 00:21:46.329
Connecticut. And the last of our initiatives,

00:21:46.430 --> 00:21:49.490
we amended our pre -petition ABL credit agreement

00:21:49.490 --> 00:21:52.589
in mid -January in an effort to unlock additional

00:21:52.589 --> 00:21:56.690
liquidity. And this liquidity was provided in

00:21:56.690 --> 00:22:01.630
the form of these certain escrow funds that were,

00:22:01.630 --> 00:22:05.950
it's called the CMSR. escrow that was created

00:22:05.950 --> 00:22:08.710
in the last bankruptcy case and also provided

00:22:08.710 --> 00:22:12.650
for a down of reductions in the minimum ABL availability

00:22:12.650 --> 00:22:18.990
covenant. So, as I've said before, our primary

00:22:18.990 --> 00:22:23.170
goal here in this Chapter 11 is to achieve value

00:22:23.170 --> 00:22:25.750
maximizing sales of our stores and our prescription

00:22:25.750 --> 00:22:28.490
to other pharmacy companies. And we're here today

00:22:28.490 --> 00:22:31.009
because a court -supervised Chapter 11 process

00:22:31.009 --> 00:22:33.990
is essential to do several very important things.

00:22:34.400 --> 00:22:39.119
First and foremost, continue to fill our prescriptions

00:22:39.119 --> 00:22:41.779
and eventually transfer those prescriptions in

00:22:41.779 --> 00:22:46.599
an orderly manner. Second is to preserve jobs

00:22:46.599 --> 00:22:49.180
for our employees and to preserve as many as

00:22:49.180 --> 00:22:52.640
possible through the opportunity for those employees

00:22:52.640 --> 00:22:55.720
to be interviewed and employed by the purchasers

00:22:55.720 --> 00:23:00.160
of our assets. And lastly, maximizing value.

00:23:00.299 --> 00:23:02.579
by moving forward with an organized, structured

00:23:02.579 --> 00:23:05.480
business sale on an expedited basis, first focusing

00:23:05.480 --> 00:23:08.980
on the sale of our pharmacy assets, whether that

00:23:08.980 --> 00:23:12.680
includes the scripts themselves, leases, or any

00:23:12.680 --> 00:23:16.200
of other assets that those purchasers seek to

00:23:16.200 --> 00:23:19.880
purchase, and then a second process for the remaining

00:23:19.880 --> 00:23:22.700
assets that will begin at the end of May and

00:23:22.700 --> 00:23:33.349
run into June. Let's go to the next slide. Just

00:23:33.349 --> 00:23:35.890
to give you some sense of our strategic sales

00:23:35.890 --> 00:23:39.210
process, which is being run by Guggenheim. We

00:23:39.210 --> 00:23:42.009
call it the strategic sales process. We call

00:23:42.009 --> 00:23:44.609
it the Guggenheim process. But basically, this

00:23:44.609 --> 00:23:52.289
is a process that began back in March. And there's

00:23:52.289 --> 00:23:56.130
been ongoing, the company has done ongoing evaluation

00:23:56.130 --> 00:23:59.210
of the sales process over time, but the Guggenheim

00:23:59.210 --> 00:24:03.349
was engaged in March. And through this process,

00:24:03.490 --> 00:24:07.089
the company sought to divest or monetize any

00:24:07.089 --> 00:24:11.269
of its assets. The mandate was quite broad. And

00:24:11.269 --> 00:24:13.450
the sale process that we're looking for you to

00:24:13.450 --> 00:24:16.809
approve today is really the conclusion of this

00:24:16.809 --> 00:24:20.650
robust month -long process that occurred, a marketing

00:24:20.650 --> 00:24:22.950
process that occurred pre -petition that was

00:24:22.950 --> 00:24:24.849
carried out by the debtors with the assistance

00:24:24.849 --> 00:24:29.009
of their banker Guggenheim. So to be clear, beginning

00:24:29.009 --> 00:24:32.839
in early March, Guggenheim contacted 38 parties,

00:24:33.119 --> 00:24:38.759
signed 21 NDAs, gave data room or VDR access

00:24:38.759 --> 00:24:42.279
to 20 parties, and there are 10 parties. As of

00:24:42.279 --> 00:24:44.480
the petition date, 10 parties still working.

00:24:45.339 --> 00:24:47.700
Since the petition date, we've received outreach

00:24:47.700 --> 00:24:51.759
from additional parties who have signed NDAs,

00:24:51.920 --> 00:24:54.599
were granted access, and now we believe we have

00:24:54.599 --> 00:24:59.259
15 -plus parties still working and working towards...

00:24:59.630 --> 00:25:04.750
the sale and the bid deadlines. So here are our

00:25:04.750 --> 00:25:07.509
milestones. This is just with respect to the

00:25:07.509 --> 00:25:09.829
sale process. There are separate milestones for

00:25:09.829 --> 00:25:13.789
the dip that key off of these dates. And as you

00:25:13.789 --> 00:25:17.089
can see, Your Honor, we have our pharmacy asset

00:25:17.089 --> 00:25:20.190
sale process, which as I said, can include leases,

00:25:20.569 --> 00:25:23.329
it can include other assets, but primarily it

00:25:23.329 --> 00:25:26.140
is focused. Anyone who wants to buy these pharmacy

00:25:26.140 --> 00:25:29.160
assets, they have to bid in connection with the

00:25:29.160 --> 00:25:31.819
pharmacy deadline. And then you have the remaining

00:25:31.819 --> 00:25:34.559
assets that are left over after we get through

00:25:34.559 --> 00:25:38.279
our prescription sales. The bid deadline is early

00:25:38.279 --> 00:25:42.640
in the morning on May 13th. The auction, if we

00:25:42.640 --> 00:25:47.420
need one, will begin on Wednesday, May 14th.

00:25:47.720 --> 00:25:50.440
Objections? I'm sorry, we'll file, apologies.

00:25:50.539 --> 00:25:54.940
We will file our proposed sale order on May 16th.

00:25:54.960 --> 00:25:58.740
The objection deadline will be the 19th and the

00:25:58.740 --> 00:26:01.779
sale hearing on May 21st. And as you can see

00:26:01.779 --> 00:26:04.000
from the right -hand column, the remaining asset

00:26:04.000 --> 00:26:09.539
sale process, indications of interest will be

00:26:09.539 --> 00:26:12.700
required by May 30th and that sale process goes

00:26:12.700 --> 00:26:16.940
through June with the sale hearing on June 25th.

00:26:22.029 --> 00:26:27.049
So, Your Honor, even though we've been moving

00:26:27.049 --> 00:26:30.369
quickly, we took the time, pre -petition, to

00:26:30.369 --> 00:26:32.450
make sure that we could coordinate with all of

00:26:32.450 --> 00:26:34.569
our various regulators. And as you can see from

00:26:34.569 --> 00:26:38.609
this list, there are many, to alert them to our

00:26:38.609 --> 00:26:41.910
Chapter 11 filing and our expectation that we

00:26:41.910 --> 00:26:45.230
would be selling our assets, selling the prescriptions,

00:26:45.329 --> 00:26:51.519
and transferring them to purchasers on a relatively

00:26:51.519 --> 00:26:56.880
expedited timeline. And as you can see here,

00:26:57.160 --> 00:27:00.519
most important at the bottom, in addition to

00:27:00.519 --> 00:27:02.740
the Department of Justice, it's the state attorney

00:27:02.740 --> 00:27:05.440
generals, the Drug Enforcement Administration,

00:27:05.960 --> 00:27:08.380
the Pennsylvania Governor's Office, the FTC,

00:27:08.880 --> 00:27:13.440
and the state boards of pharmacy in the 15 states

00:27:13.440 --> 00:27:18.430
in which we operate. So there are a few slides

00:27:18.430 --> 00:27:21.390
here about our proposed dip financing, and Mr.

00:27:21.609 --> 00:27:23.970
Hopkins will cover the dip motion. But just so

00:27:23.970 --> 00:27:27.009
you see it, we're asking the court's authority

00:27:27.009 --> 00:27:29.950
to enter into a dip facility that will give us

00:27:29.950 --> 00:27:35.269
$240 million of incremental liquidity on top

00:27:35.269 --> 00:27:41.230
of the existing $1 .7 billion that will convert

00:27:41.230 --> 00:27:43.930
from pre -petition loans to post -petition loans

00:27:43.930 --> 00:27:49.920
as we... as cash is swept down and we pay down

00:27:49.920 --> 00:27:53.680
the lenders under their existing loans. The pricing

00:27:53.680 --> 00:27:55.839
is here. Mr. Hopkins will go through it. It's

00:27:55.839 --> 00:27:58.240
a 12 -month loan. Let's go to the next page.

00:28:01.619 --> 00:28:06.400
Fees are paid in kind and the security is, and

00:28:06.400 --> 00:28:09.500
priority is, you know, it's a self -priming dip

00:28:09.500 --> 00:28:13.579
and it primes all of the existing ABL and will

00:28:13.579 --> 00:28:17.519
be senior. Let's go to the next page. The DIP,

00:28:17.839 --> 00:28:21.279
as Mr. Hopkins will walk through, has milestones

00:28:21.279 --> 00:28:26.299
that are keyed off of our sale process timeline.

00:28:27.859 --> 00:28:30.720
And Your Honor, as you can see, if you go back,

00:28:31.339 --> 00:28:37.119
we have a milestone of June 9th for entry of

00:28:37.119 --> 00:28:41.119
a final order. And so we will be asking for a

00:28:41.119 --> 00:28:45.049
final hearing on the approval of the DIP on a

00:28:45.049 --> 00:28:52.630
final basis in early June. We've included the

00:28:52.630 --> 00:28:56.390
budget and this is a slide we might refer to

00:28:56.390 --> 00:28:59.630
later as questions arise. This was filed on the

00:28:59.630 --> 00:29:06.349
docket and is available to all the parties. So,

00:29:06.390 --> 00:29:09.769
Your Honor, since we filed the cases, we've received

00:29:09.769 --> 00:29:14.680
a lot of questions from landlords and you know,

00:29:14.819 --> 00:29:17.559
parties that want to simply understand how the

00:29:17.559 --> 00:29:20.619
sale process affects their rights. Because we're

00:29:20.619 --> 00:29:23.319
proposing to sell all of our assets, that includes

00:29:23.319 --> 00:29:26.500
leases, and there are several different processes

00:29:26.500 --> 00:29:32.500
pursuant to which leases can be sold. And so

00:29:32.500 --> 00:29:36.519
here we have our global process. We're calling

00:29:36.519 --> 00:29:39.359
it the Guggenheim M &A process that is governed

00:29:39.359 --> 00:29:43.900
by the bidding procedures. Then we have sale

00:29:43.900 --> 00:29:47.680
of closing locations or alternatively our store

00:29:47.680 --> 00:29:51.059
closing motion, which is nearly identical to

00:29:51.059 --> 00:29:53.960
what was entered in the last case. And this really

00:29:53.960 --> 00:29:57.559
covers the ordinary course closures that arise.

00:29:58.160 --> 00:30:02.680
The one, two, three, six, it can be larger in

00:30:02.680 --> 00:30:05.759
number, but basically the very ordinary course

00:30:05.759 --> 00:30:10.150
prescription sale and store. uh, store sales

00:30:10.150 --> 00:30:13.509
that, uh, the company has engaged in, uh, you

00:30:13.509 --> 00:30:17.009
know, since its last bankruptcy. Then we have,

00:30:17.069 --> 00:30:21.150
um, a lease and fee -owned property sale procedure.

00:30:22.190 --> 00:30:26.690
And then we also have, um, a motion rejecting

00:30:26.690 --> 00:30:31.829
Cisnunk Pro Tunk, um, as well as an unexpired

00:30:31.829 --> 00:30:34.190
executive contract and non -residential lease

00:30:34.190 --> 00:30:36.970
rejection procedures motion. Let's turn to the

00:30:36.970 --> 00:30:39.769
next page because this will then make a lot more

00:30:39.769 --> 00:30:42.410
sense. It's like a spillover effect, Your Honor.

00:30:42.470 --> 00:30:45.849
We have all these processes and ultimately, at

00:30:45.849 --> 00:30:49.109
the end of the day, it all funnels over to the

00:30:49.109 --> 00:30:52.250
lease and executory contract rejection procedures.

00:30:52.710 --> 00:30:56.029
If your lease isn't assumed or rejected pursuant

00:30:56.029 --> 00:31:00.829
to our strategic Guggenheim process, if it's

00:31:00.829 --> 00:31:03.750
not rejected pursuant to our closing location

00:31:03.750 --> 00:31:08.279
sale, or our lease and auction procedures, we

00:31:08.279 --> 00:31:12.779
think that will cover 99 .9 % of all of our lease

00:31:12.779 --> 00:31:15.960
matters. If there's anything left after that,

00:31:16.299 --> 00:31:20.960
we will then file or rely on the first day pleading

00:31:20.960 --> 00:31:23.799
the lease and executory contract reduction procedures.

00:31:24.920 --> 00:31:28.119
So first you focus on the Guggenheim process,

00:31:28.279 --> 00:31:31.779
then the closing and location process. Then we

00:31:31.779 --> 00:31:35.259
go to the lease and fee property auction procedures,

00:31:35.420 --> 00:31:39.839
and then you go to really what would be one -off

00:31:39.839 --> 00:31:41.779
assumption or rejection if they weren't covered

00:31:41.779 --> 00:31:48.619
by all three sale processes before. So our first

00:31:48.619 --> 00:31:51.359
day agenda, just to put this up for your honor,

00:31:51.720 --> 00:31:55.180
for ease of reference, we're going to kick off

00:31:55.180 --> 00:31:57.740
with our bidding procedures motion. and then

00:31:57.740 --> 00:32:00.200
go to our dip financing motion and our store

00:32:00.200 --> 00:32:04.220
closing procedures and real property sale procedures

00:32:04.220 --> 00:32:06.539
motion. Those motions will be covered by Paul

00:32:06.539 --> 00:32:09.079
Weiss. Then we will hand over the podium to Cole

00:32:09.079 --> 00:32:12.039
Schatz, and they will cover the remaining motions,

00:32:12.980 --> 00:32:17.279
cash management, wages, et cetera. Your Honor,

00:32:17.380 --> 00:32:20.420
if we don't finish today, we will be asking for

00:32:20.420 --> 00:32:22.660
bridge orders, but my hope is that we will be

00:32:22.660 --> 00:32:26.440
able to finish the hearing. the hearing this

00:32:26.440 --> 00:32:31.039
afternoon, so orders can be entered today. So

00:32:31.039 --> 00:32:35.099
that is our presentation, Your Honor, and we

00:32:35.099 --> 00:32:38.059
believe, as I said earlier, that this is a necessary

00:32:38.059 --> 00:32:40.599
step to protect the interests of all of our stakeholders,

00:32:41.079 --> 00:32:43.779
and we at Rite Aid are committed to conducting

00:32:43.779 --> 00:32:46.339
an efficient and value -maximizing sale process.

00:32:47.299 --> 00:32:50.559
So, Your Honor, unless you have any questions,

00:32:51.079 --> 00:32:55.019
we can go into the first motion on the agenda,

00:32:55.279 --> 00:32:57.759
the motion for entry of an order approving our

00:32:57.759 --> 00:33:00.640
bid procedures. All right. I think it makes sense

00:33:00.640 --> 00:33:05.660
to take these matters consistent with the agenda.

00:33:06.019 --> 00:33:09.880
I will hear from parties who have concerns or

00:33:09.880 --> 00:33:14.299
who wish to take issue or object. Can we take

00:33:14.299 --> 00:33:19.400
down the slides? There we go. All right. So we

00:33:19.400 --> 00:33:22.799
have number three on the agenda, number 18 on

00:33:22.799 --> 00:33:26.480
the court's calendar, the motion for approving

00:33:26.480 --> 00:33:31.380
the auction and the bidding procedures. I have

00:33:31.380 --> 00:33:34.720
read through the declaration of Mr. Rifkin and

00:33:34.720 --> 00:33:38.720
the overall declaration of the Chief Transformation

00:33:38.720 --> 00:33:51.140
Officer. Excuse me? Thank you. Regarding overall,

00:33:51.460 --> 00:33:55.180
all of the first day matters as they pertain

00:33:55.180 --> 00:33:57.920
to this motion. Let me hear the motion, then

00:33:57.920 --> 00:34:01.599
I'll address, I see one hand raised already.

00:34:02.759 --> 00:34:07.009
Two hands. Your Honor, before we do that, I forgot.

00:34:07.210 --> 00:34:10.449
I apologize. Before we get to the motions, we'd

00:34:10.449 --> 00:34:12.610
like to move the declarations of Mr. Liebman,

00:34:13.010 --> 00:34:16.230
our Chief Transformation Officer, into evidence,

00:34:16.429 --> 00:34:19.409
as well as the declaration of Adam Rifkin of

00:34:19.409 --> 00:34:23.769
Guggenheim Partners and Elise Freya, our expert

00:34:23.769 --> 00:34:27.250
on consumer privacy issues. All right. Let me

00:34:27.250 --> 00:34:30.590
hear if there are any objections or any parties

00:34:30.590 --> 00:34:33.130
through counsel wish to... take the opportunity

00:34:33.130 --> 00:34:36.690
to cross -examine any of the witnesses with respect

00:34:36.690 --> 00:34:40.329
to their declarations, understanding that obviously

00:34:40.329 --> 00:34:45.849
everything's been filed on shortened time and

00:34:45.849 --> 00:34:50.730
on, for the most part, interim basis. Ms. Nelson,

00:34:50.750 --> 00:34:55.670
I see your hand raised. I don't know. Yes, Your

00:34:55.670 --> 00:35:00.170
Honor. I wanted to address the revised CPO declaration.

00:35:01.910 --> 00:35:05.070
We believe there are some significant gaps in

00:35:05.070 --> 00:35:07.670
that declaration that I can address in my argument

00:35:07.670 --> 00:35:10.769
again Related to the bid procedures order, but

00:35:10.769 --> 00:35:12.710
just wanted to lodge an objection noting that

00:35:12.710 --> 00:35:15.190
there are significant omissions And it is by

00:35:15.190 --> 00:35:19.849
no means a complete CPO Report under the bankruptcy

00:35:19.849 --> 00:35:22.489
code All right. I'll certainly hear from you

00:35:22.489 --> 00:35:27.550
further on it With respect to the declarations

00:35:27.550 --> 00:35:30.690
of through any council wish the opportunity to

00:35:30.690 --> 00:35:34.769
cross -examine. I have any of the declarants

00:35:34.769 --> 00:35:40.150
that have been identified? All right. The court

00:35:40.150 --> 00:35:43.289
will accept the declarations in lieu of direct

00:35:43.289 --> 00:35:49.269
testimony into evidence. We'll mark the declaration

00:35:49.269 --> 00:35:59.840
of Mark Liebman as D1. The declaration of Mr.

00:36:00.099 --> 00:36:09.800
Rifkin as D2, and the declaration of Elise Fresca,

00:36:10.099 --> 00:36:13.619
if I'm pronouncing it somewhat correctly, which

00:36:13.619 --> 00:36:16.659
certainly appeared in front of me before, as

00:36:16.659 --> 00:36:21.119
D3. And then I'll hear concerns again and objections

00:36:21.119 --> 00:36:27.539
in the course of the presentations. All right.

00:36:28.250 --> 00:36:31.889
Council want to continue with the bidding procedures

00:36:31.889 --> 00:36:38.989
motion? Yes, Your Honor. Your Honor, we have

00:36:38.989 --> 00:36:42.510
already spent some time outlining our sale milestones

00:36:42.510 --> 00:36:46.349
and our process. But just to be clear, we have

00:36:46.349 --> 00:36:50.110
our pharmacy asset process for May and our remaining

00:36:50.110 --> 00:36:53.570
asset sale process that will begin with indications

00:36:53.570 --> 00:36:56.429
of interest at the beginning of May and running

00:36:56.429 --> 00:37:00.940
through June. Parties who are party to NDA as

00:37:00.940 --> 00:37:04.119
of the petition date, they are, if they want

00:37:04.119 --> 00:37:08.139
to purchase pharmacy assets, which can also include,

00:37:08.199 --> 00:37:10.639
if they want, they can purchase leases as well,

00:37:10.659 --> 00:37:12.960
but if they want to purchase pharmacy assets,

00:37:13.420 --> 00:37:16.260
they are required to submit an indication of

00:37:16.260 --> 00:37:18.739
interest, pardon me, they're required to submit

00:37:18.739 --> 00:37:24.000
a bid and an APA by the bid deadline on May 13th.

00:37:24.099 --> 00:37:27.300
When we get to the conclusion, of our auction

00:37:27.300 --> 00:37:30.519
process, we will post a notice of what is remaining

00:37:30.519 --> 00:37:34.460
to be sold. And the remaining assets will go

00:37:34.460 --> 00:37:37.900
into the remaining asset sale process, which

00:37:37.900 --> 00:37:40.380
will continue forward with the indication of

00:37:40.380 --> 00:37:44.440
interest in May with the sale hearing at the

00:37:44.440 --> 00:37:47.960
end of June. There are, because of the sensitivity

00:37:47.960 --> 00:37:51.099
of our pharmacy assets, that's obviously where

00:37:51.099 --> 00:37:55.559
we want to seek expedited relief under Rule 6003

00:37:55.559 --> 00:37:59.179
for our remaining assets, which can include IP,

00:37:59.880 --> 00:38:03.219
our ice cream business, and other assets that

00:38:03.219 --> 00:38:06.960
we hold. They are not nearly as exigent in terms

00:38:06.960 --> 00:38:10.760
of a speedy transition. And so those can occur

00:38:10.760 --> 00:38:16.079
on a more ordinary timeline. However, I'll note

00:38:16.079 --> 00:38:20.630
that the Guggenheim mandate allowed, included

00:38:20.630 --> 00:38:23.670
the sale of all of these assets. And so the marketing

00:38:23.670 --> 00:38:27.789
process for assets has been ongoing for some

00:38:27.789 --> 00:38:30.690
time. And so what I'd like to do is I'd like

00:38:30.690 --> 00:38:33.750
to hand over the podium to my partner, Sean Mitchell,

00:38:34.510 --> 00:38:38.809
who will cover the remainder of the motion. And

00:38:38.809 --> 00:38:41.389
so I'll just quickly move my materials and allow

00:38:41.389 --> 00:38:52.300
Sean to take my seat. All right, thank you. Good

00:38:52.300 --> 00:38:56.460
afternoon. Good afternoon. John Mitchell from

00:38:56.460 --> 00:38:59.340
Paul Weiss proposed council for the debtors.

00:38:59.519 --> 00:39:03.380
All right, let me please proceed. Thank you,

00:39:03.400 --> 00:39:06.900
your honor. So, your honor, I believe we sent

00:39:06.900 --> 00:39:10.800
a revised form of order to your honor. We've

00:39:10.800 --> 00:39:13.500
been we've been hard at work for with with the

00:39:13.500 --> 00:39:15.059
number of parties who've reached out and given

00:39:15.059 --> 00:39:18.519
given feedback, given feedback on the form of

00:39:18.519 --> 00:39:21.940
order. I would like to describe a few of the

00:39:21.940 --> 00:39:24.579
most salient changes for Your Honor, and then

00:39:24.579 --> 00:39:26.940
I will propose to hear from those parties, and

00:39:26.940 --> 00:39:29.559
then we can hear from parties that have any further

00:39:29.559 --> 00:39:32.440
opposition to the order where I propose. Go.

00:39:32.880 --> 00:39:38.460
Proceed. So Your Honor, first, we connected with

00:39:38.460 --> 00:39:42.179
Mr. Sponder and Ms. Spinski from the Office of

00:39:42.179 --> 00:39:45.739
the United States Trustee, and there we made

00:39:45.739 --> 00:39:49.980
two We made two salient changes, the first of

00:39:49.980 --> 00:39:54.500
which is we adopted a final and interim dichotomy.

00:39:54.679 --> 00:39:57.940
So what we're asking your honor today is we're

00:39:57.940 --> 00:40:00.900
asking your honor today for a final order in

00:40:00.900 --> 00:40:04.579
respect of the pharmacy assets. And we're asking

00:40:04.579 --> 00:40:06.960
your honor for an interim order in respect of

00:40:06.960 --> 00:40:12.500
the remaining assets with a final hearing on

00:40:12.500 --> 00:40:21.010
May 21st. All right. That's the first piece.

00:40:21.809 --> 00:40:26.250
OK. Second piece is on the consumer privacy ombudsman.

00:40:27.530 --> 00:40:29.969
Your Honor, where we landed is that the debtors

00:40:29.969 --> 00:40:33.130
are seeking an order that they will relieve their

00:40:33.130 --> 00:40:37.050
privacy policies allow for the transfer of the

00:40:37.050 --> 00:40:39.730
other protected data. Therefore, the appointment

00:40:39.730 --> 00:40:42.849
of a consumer privacy ombudsman is not necessary.

00:40:44.409 --> 00:40:46.929
that party's rights to raise the issue in the

00:40:46.929 --> 00:40:53.030
future are reserved. All right, thank you. So

00:40:53.030 --> 00:41:00.070
that's the first batch changes. All right, continue.

00:41:01.070 --> 00:41:05.570
The second change stems from a meeting with Mr.

00:41:05.710 --> 00:41:08.750
Eman O 'Hagan from the United States Attorney's

00:41:08.750 --> 00:41:11.829
Office for the District of New Jersey. And there

00:41:11.829 --> 00:41:14.550
what the debtors have proposed to do, and this

00:41:14.550 --> 00:41:17.389
is in the revised form of order, is in connection

00:41:17.389 --> 00:41:19.550
with the sale process, the debtors propose to

00:41:19.550 --> 00:41:23.789
file the form APA that will be posted to the

00:41:23.789 --> 00:41:27.610
debtor's dating room this Friday. And then in

00:41:27.610 --> 00:41:29.809
connection with the winning bid, when it's filed,

00:41:29.929 --> 00:41:32.530
they will file a red line through that order

00:41:32.530 --> 00:41:46.139
to assist parties review of any changes. Continue,

00:41:46.360 --> 00:41:51.699
please. And then finally, we have a few clarifications

00:41:51.699 --> 00:41:58.300
stemming from discussions with parties representing

00:41:58.300 --> 00:42:01.760
landlords. So the clarification for the record

00:42:01.760 --> 00:42:05.820
is in respect of the assumption and assignment

00:42:05.820 --> 00:42:09.539
provisions for unexpired leases and executory

00:42:09.539 --> 00:42:12.380
contracts to be assumed and assigned to a bidder.

00:42:13.000 --> 00:42:15.619
And the clarification for the record, which which

00:42:15.619 --> 00:42:19.519
is also in the revised form of order, is that

00:42:19.519 --> 00:42:22.920
counterparties to an executory contract or uninspired

00:42:22.920 --> 00:42:25.960
leases to be assumed and assigned to a buyer

00:42:25.960 --> 00:42:31.519
will have 14 days. To clear up any confusion

00:42:31.519 --> 00:42:34.059
about that, vis -a -vis the objection deadlines

00:42:34.059 --> 00:42:38.380
for the seal itself. All right. Are those incorporated

00:42:38.380 --> 00:42:41.679
in the separate motion dealing with assumptions

00:42:41.679 --> 00:42:47.119
and rejection of the of the leases and executive

00:42:47.119 --> 00:42:50.679
agreements, or is that part, is that only limited

00:42:50.679 --> 00:42:54.380
as part of the sale motion? I believe it's part

00:42:54.380 --> 00:42:56.239
of the sale motion. Just part of the sale motion?

00:42:57.019 --> 00:42:59.239
The sale, the bidding procedures order that we're

00:42:59.239 --> 00:43:01.980
asking Your Honor to enter today. All right.

00:43:05.139 --> 00:43:09.019
And then finally, we were in contact with the

00:43:09.019 --> 00:43:12.679
FTC today. And the FTC asked us to confirm something

00:43:12.679 --> 00:43:16.480
on the record, which I shall do right now. So

00:43:16.480 --> 00:43:19.880
for the record, any sale under these procedures

00:43:19.880 --> 00:43:23.400
will comply with the debtor's privacy policies

00:43:23.400 --> 00:43:28.099
and state law, including with respect to the

00:43:28.099 --> 00:43:35.900
opt -out feature. And no customer data will be

00:43:35.900 --> 00:43:42.920
sold who has opted out. All right, we have that

00:43:42.920 --> 00:43:50.440
on the record. And is that your initial presentation?

00:43:51.500 --> 00:43:53.260
That's initial presentation, Your Honor. I would

00:43:53.260 --> 00:43:56.980
propose to hear from parties who have feedback,

00:43:57.019 --> 00:43:58.980
and then we'll take it from there. Thank you.

00:43:59.139 --> 00:44:01.860
I see a variety of hands. So let me first turn

00:44:01.860 --> 00:44:05.340
to the Office of the U .S. Trustee, Mr. Sponger.

00:44:07.369 --> 00:44:09.289
Thank you, Your Honor. Jeff Sponda from the Office

00:44:09.289 --> 00:44:12.809
of the United States Trustee. Your Honor, we

00:44:12.809 --> 00:44:14.969
have no objection to the entry of the order that

00:44:14.969 --> 00:44:17.110
incorporates the United States Trustee's proposed

00:44:17.110 --> 00:44:20.969
revisions and, as has been stated, will be final

00:44:20.969 --> 00:44:23.349
as to the pharmacy assets but interim as their

00:44:23.349 --> 00:44:27.489
remaining assets. Although the issue as to the

00:44:27.489 --> 00:44:29.949
consumer privacy ombudsman is reserved, Your

00:44:29.949 --> 00:44:34.030
Honor, even if the sales transactions are consistent

00:44:34.030 --> 00:44:37.340
with the privacy policies, we think a consumer

00:44:37.340 --> 00:44:40.239
privacy ombudsman should be appointed in these

00:44:40.239 --> 00:44:43.360
cases. Your honor, these cases are much different

00:44:43.360 --> 00:44:45.079
than the first cases where the goal of those

00:44:45.079 --> 00:44:48.260
cases was mainly to reorganize. These cases appear

00:44:48.260 --> 00:44:51.420
to be liquidation cases, and the debtors with

00:44:51.420 --> 00:44:53.900
their 8 million customers, as we were just advised,

00:44:54.500 --> 00:44:57.019
contain immense amounts of individuals, PII and

00:44:57.019 --> 00:44:59.820
PHI. The US trustee acknowledges that the debtors

00:44:59.820 --> 00:45:01.780
have again hired a consultant concerning the

00:45:01.780 --> 00:45:03.860
privacy issues, just like in the prior cases.

00:45:03.980 --> 00:45:07.159
But in these cases, being would appear to again

00:45:07.159 --> 00:45:09.800
be liquidating cases and independent third party

00:45:09.800 --> 00:45:11.860
should be appointed to look at these privacy

00:45:11.860 --> 00:45:14.659
issues, not the individual selected by the debtors.

00:45:15.699 --> 00:45:17.699
Just wanted to set that for your honor for the

00:45:17.699 --> 00:45:21.469
record. We know it's reserved, but. we think

00:45:21.469 --> 00:45:23.750
that this case is in a much different posture

00:45:23.750 --> 00:45:27.550
and your honor, even though the privacy policies

00:45:27.550 --> 00:45:31.030
may be in line with allowing the sale, still

00:45:31.030 --> 00:45:33.150
someone independent should look at these. Thank

00:45:33.150 --> 00:45:35.210
you, Your Honor. All right, thank you, Mr. Sponder.

00:45:35.869 --> 00:45:38.250
Let me turn to others who wish to be heard. Let

00:45:38.250 --> 00:45:42.070
me start. Ms. Nelson, Kimberly Nelson, let me

00:45:42.070 --> 00:45:46.829
have your appearance. Thank you, Your Honor.

00:45:46.829 --> 00:45:49.429
I realize I neglected to introduce myself properly

00:45:49.429 --> 00:45:51.969
last time. That's all right. Kimberly Nelson,

00:45:52.289 --> 00:45:55.250
Bankruptcy Council for the Federal Trade Commission.

00:45:56.489 --> 00:46:01.030
And while I appreciate the prior statement regarding

00:46:01.030 --> 00:46:03.349
our interest, it doesn't fully resolve everything

00:46:03.349 --> 00:46:07.010
we're here to talk about. Your Honor might recall

00:46:07.010 --> 00:46:10.869
that we entered into an order with the debtors

00:46:10.869 --> 00:46:14.030
in its prior case, and one of the provisions

00:46:14.030 --> 00:46:16.510
of the orders relates to misrepresentations.

00:46:17.030 --> 00:46:20.659
And the debtors are... prohibited from misrepresenting

00:46:20.659 --> 00:46:23.519
the extent to which they maintain privacy of

00:46:23.519 --> 00:46:25.940
covered information. Covered information under

00:46:25.940 --> 00:46:34.179
our order includes things like PII and PHI. This

00:46:34.179 --> 00:46:36.860
is with the caveat that we've had less than 24

00:46:36.860 --> 00:46:40.199
hours to review all of this information Regarding

00:46:40.199 --> 00:46:43.820
these sales and to clarify the prior representation

00:46:43.820 --> 00:46:46.159
made on the record. We were not contacted pre

00:46:46.159 --> 00:46:49.980
-prepedition. We were contacted yesterday regarding

00:46:49.980 --> 00:46:54.539
this filing so one of the concerns we we see

00:46:54.539 --> 00:46:59.360
right off the bat is the the definition of pharmacy

00:46:59.360 --> 00:47:03.199
assets and what is prescription data or PHI or

00:47:03.210 --> 00:47:06.610
information that is allowed to be transmitted

00:47:06.610 --> 00:47:10.269
under HIPAA, it's not clear whether that includes

00:47:10.269 --> 00:47:14.769
PII. So you can be a pharmacy customer of Rite

00:47:14.769 --> 00:47:18.809
Aid, but also not have a prescription with Rite

00:47:18.809 --> 00:47:21.650
Aid, and they still have lots of PII on you because

00:47:21.650 --> 00:47:27.389
you're a customer of the store. So what's not

00:47:27.389 --> 00:47:31.369
clear is what exactly is being sold. what customer

00:47:31.369 --> 00:47:34.590
data is being sold. Is it PII? Is it PHI? Is

00:47:34.590 --> 00:47:37.989
it both? And we think that's a really important

00:47:37.989 --> 00:47:41.769
distinction to draw in this context because pharmacy

00:47:41.769 --> 00:47:44.150
data has a particular value, customer data has

00:47:44.150 --> 00:47:46.590
a particular value, and we just don't know whether

00:47:46.590 --> 00:47:49.550
it's jumbled together or separate or what is

00:47:49.550 --> 00:47:53.909
happening here. So for that reason, we think

00:47:53.909 --> 00:47:58.090
the finding in paragraph 25 of the order is premature.

00:47:59.039 --> 00:48:02.059
because there's just not enough evidence to understand

00:48:02.059 --> 00:48:05.719
what privacy policies govern the sale of certain

00:48:05.719 --> 00:48:10.760
assets here, certain data assets, that is, and

00:48:10.760 --> 00:48:13.860
whether or not everything is actually being confided

00:48:13.860 --> 00:48:17.480
with. Which brings me to my second point, which

00:48:17.480 --> 00:48:23.519
is the revised CPO report. Some of the problems

00:48:23.519 --> 00:48:27.010
that we noticed right off the bat was There's

00:48:27.010 --> 00:48:30.710
no analysis of whether the customer data collected

00:48:30.710 --> 00:48:34.750
for consumers who opted out might be sold or

00:48:34.750 --> 00:48:36.769
how it's being treated or how it's been filtered

00:48:36.769 --> 00:48:41.389
out. And absent that clarification, again, there's

00:48:41.389 --> 00:48:43.489
no assurance other than what was just stated

00:48:43.489 --> 00:48:45.489
on the record today that they don't intend to

00:48:45.489 --> 00:48:49.230
sell the opt -out customer data. Secondly, there's

00:48:49.230 --> 00:48:55.900
no mention of our order. And under 363, B1, B2,

00:48:56.860 --> 00:48:59.420
the ombudsman should be reviewing not only the

00:48:59.420 --> 00:49:02.360
privacy policy, but other applicable law. Our

00:49:02.360 --> 00:49:06.840
order is other applicable law. And I think it's

00:49:06.840 --> 00:49:10.420
a glaring oversight for any CPO not to be looking

00:49:10.420 --> 00:49:14.400
at our order in conjunction with this sale. And

00:49:14.400 --> 00:49:18.980
finally, there's no analysis in the revised CPO

00:49:18.980 --> 00:49:22.599
report that was filed about state -specific provisions

00:49:22.599 --> 00:49:26.500
and how they affect the sale of assets. It's

00:49:26.500 --> 00:49:29.280
mentioned in a footnote, but it's not analyzed.

00:49:29.679 --> 00:49:32.579
So, for example, the current privacy policy,

00:49:32.659 --> 00:49:35.059
the one that was amended less than a week before

00:49:35.059 --> 00:49:39.280
the case was filed, says in a state -specific

00:49:39.280 --> 00:49:42.739
provision, California's in particular, that Only

00:49:42.739 --> 00:49:47.460
certain specific identified personal PII type

00:49:47.460 --> 00:49:51.000
assets can be sold, and no others can be sold

00:49:51.000 --> 00:49:54.079
of California customers. And there's just no

00:49:54.079 --> 00:49:57.420
analysis of whether or how the sale complies

00:49:57.420 --> 00:50:01.760
with that specific provision of the privacy policy.

00:50:01.880 --> 00:50:05.500
And again, if... If that is sold, if that California

00:50:05.500 --> 00:50:08.280
customer data is sold in violation of the privacy

00:50:08.280 --> 00:50:10.920
policy, that's a misrepresentation under our

00:50:10.920 --> 00:50:13.320
order which is then likely an order violation.

00:50:13.780 --> 00:50:17.260
So you can see how these issues compound when

00:50:17.260 --> 00:50:19.880
it's analyzed in conjunction with our order.

00:50:21.159 --> 00:50:23.519
So again, these are just a few of the things

00:50:23.519 --> 00:50:27.159
that we saw in the last 24 hours, and we'll keep

00:50:27.159 --> 00:50:29.800
working on it and obviously keep discussing things

00:50:29.800 --> 00:50:32.940
with the debtors. But given the extremely accelerated

00:50:32.940 --> 00:50:35.920
timeline that we're under here, this is a lot

00:50:35.920 --> 00:50:38.280
of really important information to be missing

00:50:38.280 --> 00:50:41.179
from a sale involving customer data, whether

00:50:41.179 --> 00:50:45.219
it's PII or PHI. All right. Thank you, Ms. Nelson.

00:50:46.679 --> 00:50:50.099
I'm sure I'll turn at some point to debtors council.

00:50:50.360 --> 00:50:54.199
to address these issues or lay out a format for

00:50:54.199 --> 00:50:57.679
addressing these issues. Let me hear from others.

00:50:58.000 --> 00:51:01.920
Ms. Hellman, let me have your appearance. Good

00:51:01.920 --> 00:51:04.380
afternoon, Your Honor. Leslie Hellman for Ballard's

00:51:04.380 --> 00:51:07.980
Bar on behalf of a number of the debtors' landlords.

00:51:08.820 --> 00:51:12.460
Current total number right now is north of 50

00:51:12.460 --> 00:51:16.900
locations, including Federal Realty, Fairview,

00:51:17.320 --> 00:51:22.349
Hattenski, Crabco. sterling realty income spirit

00:51:22.349 --> 00:51:25.809
and Weiss markets your honor. I'm also local

00:51:25.809 --> 00:51:28.690
council to another landlord council Ivan gold

00:51:28.690 --> 00:51:31.250
who is I see has his hand raised as well and

00:51:31.250 --> 00:51:34.710
has and Would request permission for him to speak

00:51:34.710 --> 00:51:37.869
at the appropriate time. That's your honor. We

00:51:37.869 --> 00:51:43.110
did work with Mr Mitchell and mr SS on the our

00:51:43.110 --> 00:51:45.670
comments with respect to the proposed bidding

00:51:45.670 --> 00:51:48.690
procedures and the expedited timeline as you

00:51:48.690 --> 00:51:53.429
can Imagine our biggest concern was having to

00:51:53.429 --> 00:51:58.070
respond to a sale of a lease on no less than

00:51:58.070 --> 00:52:01.849
one business day's notice. And even though, because

00:52:01.849 --> 00:52:04.590
the bid procedures didn't provide for separate

00:52:04.590 --> 00:52:07.110
assumption and assignment procedures for the

00:52:07.110 --> 00:52:09.809
leases themselves to the extent that a bidder

00:52:09.809 --> 00:52:13.690
was seeking a transfer of the lease as part of

00:52:13.690 --> 00:52:17.030
a larger sale. And we did receive that clarification

00:52:17.030 --> 00:52:20.760
that any transfer or sale of a lease as part

00:52:20.760 --> 00:52:23.500
of this larger sale whether it's the pharmacy

00:52:23.500 --> 00:52:26.860
asset sale or the remaining asset sales will

00:52:26.860 --> 00:52:32.800
be on 14 days notice upon notice of the successful

00:52:32.800 --> 00:52:35.619
bidder of those assets. So we will have a full

00:52:35.619 --> 00:52:41.539
14 days prior in time to any approval of the

00:52:41.539 --> 00:52:44.679
sale and a transfer of those assets to the buyer

00:52:44.679 --> 00:52:50.119
if the objection can be resolved, then the transfer

00:52:50.119 --> 00:52:53.900
can occur earlier. If the objection cannot be

00:52:53.900 --> 00:52:56.599
resolved, I'm sure that we will then seek a hearing

00:52:56.599 --> 00:52:59.940
before Your Honor in which to have a determination

00:52:59.940 --> 00:53:02.860
on that objection. But with that clarification,

00:53:03.139 --> 00:53:05.960
that there will be actually actual notice and

00:53:05.960 --> 00:53:09.079
adequate time to review the buyer and object

00:53:09.079 --> 00:53:11.699
if necessary, that would resolve our issues.

00:53:11.780 --> 00:53:14.780
There were other minor changes to the order at

00:53:14.780 --> 00:53:16.980
the request of the landlords and we do appreciate

00:53:16.980 --> 00:53:19.460
the debtors working with us expeditiously to

00:53:19.460 --> 00:53:22.599
resolve those issues. All right, thank you, Ms.

00:53:22.679 --> 00:53:26.619
Holliman. I appreciate identifying those issues.

00:53:27.039 --> 00:53:29.800
I'll turn to Mr. Gold now and hear from him as

00:53:29.800 --> 00:53:33.420
well. Thank you and good afternoon, Your Honor.

00:53:34.239 --> 00:53:36.340
I've been gold for a number of the debtor's landlord's

00:53:36.340 --> 00:53:40.719
current headcount in the 20s. I join in Ms. Heilman's

00:53:40.719 --> 00:53:44.079
comments. I'd like to thank Mr. Mitchell and

00:53:44.079 --> 00:53:46.920
his colleagues for working with us on short notice.

00:53:47.539 --> 00:53:49.639
To respond to one of your Honor's inquiries,

00:53:49.960 --> 00:53:53.639
what we focused on initially was harmonizing.

00:53:53.719 --> 00:53:56.579
As Ms. Eaton outlined, there are multiple potential

00:53:56.579 --> 00:53:59.380
paths for leases to be assumed and assigned in

00:53:59.380 --> 00:54:02.559
this case through the variety of the transactions

00:54:02.559 --> 00:54:05.280
that are being pursued by these states. So one

00:54:05.280 --> 00:54:07.539
of our first goals was to harmonize the procedures.

00:54:07.849 --> 00:54:09.650
to make sure they lined up. And that's where

00:54:09.650 --> 00:54:14.349
you see this 14 -day procedure now is, to a certain

00:54:14.349 --> 00:54:17.670
degree, uniform among the procedures. So the

00:54:17.670 --> 00:54:20.269
landlords will have that 14 -day period, notwithstanding

00:54:20.269 --> 00:54:24.590
the short fuse on the sale transaction, which

00:54:24.590 --> 00:54:28.769
is necessary in some cases. That 14 -day period

00:54:28.769 --> 00:54:31.590
will still exist. Hopefully many of these buyers

00:54:31.590 --> 00:54:36.559
we will recognize. We have a safety valve procedure

00:54:36.559 --> 00:54:40.179
if we do have to come back to Your Honor. Obviously,

00:54:40.360 --> 00:54:42.659
as is common in every lease -centric Chapter

00:54:42.659 --> 00:54:46.460
11, if the dispute simply relates to cure, we

00:54:46.460 --> 00:54:48.699
have mechanisms for that so the transaction can

00:54:48.699 --> 00:54:52.340
go forward. So again, shout out, thank you to

00:54:52.340 --> 00:54:54.519
the debtor team for that. I just wanted to add

00:54:54.519 --> 00:54:57.780
one more clarification, Your Honor. This motion

00:54:57.780 --> 00:55:01.940
sought in the motion... what appeared to be a

00:55:01.940 --> 00:55:05.900
blanket advance 6004 -6006 waiver with respect

00:55:05.900 --> 00:55:08.760
to the transactions going forward. The order

00:55:08.760 --> 00:55:12.960
itself, however, and that can be found in the

00:55:12.960 --> 00:55:15.619
proposed order that accompanied the motion at

00:55:15.619 --> 00:55:20.019
paragraph 36, made it clear that or at least

00:55:20.019 --> 00:55:24.219
provides that 6004 -6006 waiver applies to the

00:55:24.219 --> 00:55:26.940
procedures itself. And we have no objection to

00:55:26.940 --> 00:55:29.059
it applying to the procedures itself because

00:55:29.389 --> 00:55:31.449
The second we conclude today, the data is going

00:55:31.449 --> 00:55:33.269
to be off and running to the extent they're not

00:55:33.269 --> 00:55:37.230
already moving. But each of the various transactions

00:55:37.230 --> 00:55:39.210
that are contemplated by the bidding procedures

00:55:39.210 --> 00:55:42.670
order will themselves present different circumstances.

00:55:43.150 --> 00:55:46.730
And we are not here today to argue whether a

00:55:46.730 --> 00:55:50.750
6004, 6006 waiver or a shortening of time would

00:55:50.750 --> 00:55:53.469
be appropriate for one of the multitude of potential

00:55:53.469 --> 00:55:56.389
transactions. I just want to clarify on the record

00:55:56.389 --> 00:56:00.429
that We're talking about 6004, 6006 as to the

00:56:00.429 --> 00:56:02.869
bidding procedures order. The debtor is free,

00:56:03.329 --> 00:56:05.469
you know, clear. We're not hampering the debtor.

00:56:05.650 --> 00:56:07.730
The debtor is absolutely free to request that

00:56:07.730 --> 00:56:10.289
in connection with subsequent transaction. And

00:56:10.289 --> 00:56:12.190
as we say, we'll cross those bridges when we

00:56:12.190 --> 00:56:14.949
come to them. But just wanted to get that clarification

00:56:14.949 --> 00:56:17.750
on the record, Your Honor. And again, thank the

00:56:17.750 --> 00:56:20.710
debtor team for helping us narrow and resolve

00:56:20.710 --> 00:56:24.150
so many issues. Great. Thank you. And yes, so

00:56:24.150 --> 00:56:27.360
just for clarification and debtors council can

00:56:27.360 --> 00:56:30.579
confirm at a later point. The waivers with respect

00:56:30.579 --> 00:56:35.420
to rule 6004 and 6006 relate to this pending

00:56:35.420 --> 00:56:38.280
motion and the bidding procedure is not to the

00:56:38.280 --> 00:56:40.719
substantive approval of the sale or any specific

00:56:40.719 --> 00:56:44.440
sale or assumption or assignments. Thank you.

00:56:44.719 --> 00:56:49.980
Mr. Fleischer. Good afternoon, your honor. Thank

00:56:49.980 --> 00:56:52.880
you. Scott Fleischer, Parkland -Aidman, counsel

00:56:52.880 --> 00:56:54.659
to a number of the debtors landlords as well.

00:56:54.679 --> 00:56:57.309
We had the Same concern about the potential lack

00:56:57.309 --> 00:57:00.510
of notice for leases there, so glad to get that

00:57:00.510 --> 00:57:04.289
14 -day period confirmed. And like other council,

00:57:04.349 --> 00:57:07.150
we're also trying to harmonize the other proposed

00:57:07.150 --> 00:57:09.570
orders here. So just for your honor's clarification,

00:57:10.449 --> 00:57:13.590
in the lease assumption assignment rejection

00:57:13.590 --> 00:57:16.789
procedures motion, that's now just turning into

00:57:16.789 --> 00:57:20.050
a lease rejection procedures motion to eliminate

00:57:20.050 --> 00:57:22.570
one of the avenues that could cause this confusion.

00:57:22.920 --> 00:57:26.179
about where these lie. So again, the 14 days

00:57:26.179 --> 00:57:28.280
notice will be here. And then there were some

00:57:28.280 --> 00:57:31.239
emails going on when we get to it, the lease

00:57:31.239 --> 00:57:34.719
sale and field property procedures motion about

00:57:34.719 --> 00:57:36.679
making sure landlords have appropriate notice

00:57:36.679 --> 00:57:39.219
there as well. So just highlighting that issue

00:57:39.219 --> 00:57:41.780
for when we get there. All right. Thank you.

00:57:42.199 --> 00:57:45.179
So for the most part, you just want to lay the

00:57:45.179 --> 00:57:49.059
groundwork for concerns on the notice as you're

00:57:49.059 --> 00:57:51.179
going forward with respect to the individual

00:57:51.179 --> 00:57:53.880
assumption assignment. transactions that are

00:57:53.880 --> 00:57:56.119
contemplated. Thank you. Yes, Your Honor. Thank

00:57:56.119 --> 00:57:58.460
you. Thank you, Mr. Fleischer. All right. I'm

00:57:58.460 --> 00:58:01.800
looking. I don't see other hands. As soon as

00:58:01.800 --> 00:58:05.019
I say that, you know what happens. Ms. VanEck?

00:58:06.039 --> 00:58:07.980
Good afternoon, Your Honor. Sorry for the late

00:58:07.980 --> 00:58:10.539
hint. Melissa VanEck on behalf of the Commonwealth

00:58:10.539 --> 00:58:13.739
of Pennsylvania. I'm here, Your Honor, to just

00:58:13.739 --> 00:58:16.139
highlight we did not have an opportunity to reach

00:58:16.139 --> 00:58:19.530
out to debtors council. But we would like the

00:58:19.530 --> 00:58:23.070
cell motion to include reference to our injunctive

00:58:23.070 --> 00:58:26.429
terms that were negotiated as part of the settlement

00:58:26.429 --> 00:58:29.690
in the first case. And as part of that agreement,

00:58:29.869 --> 00:58:33.949
the injunctive terms were to be complied with

00:58:33.949 --> 00:58:36.789
by any purchaser of Rite Aid. And we just want

00:58:36.789 --> 00:58:40.269
to make sure that that is included or at least

00:58:40.269 --> 00:58:43.170
referenced in the proposed order. so that third

00:58:43.170 --> 00:58:45.570
parties know that they do have to comply with

00:58:45.570 --> 00:58:48.110
those terms. And again, my apologies. We did

00:58:48.110 --> 00:58:50.469
not have the opportunity to reach out to debtors

00:58:50.469 --> 00:58:55.489
council prior to the hearing. Understood. Not

00:58:55.489 --> 00:58:57.570
an issue. Thank you. Thank you, Ms. Vennick.

00:58:58.449 --> 00:59:01.170
All right. I still see a hand, Mr. Fleischer.

00:59:01.429 --> 00:59:05.670
I assume that was just residual. All right. Mr.

00:59:05.789 --> 00:59:08.929
Mitchell, do you want to address any of the concerns

00:59:08.929 --> 00:59:11.309
that have been raised? I do. Thank you, Your

00:59:11.309 --> 00:59:16.230
Honor. So starting with, I believe, Ms. Nelson.

00:59:16.550 --> 00:59:19.590
Yes. Ms. Nelson's concerns. So the first point

00:59:19.590 --> 00:59:22.989
I make is this is not a consumer privacy ombudsman

00:59:22.989 --> 00:59:26.750
report. This is a declaration in support of bidding

00:59:26.750 --> 00:59:28.849
procedures. And what we're asking, Your Honor,

00:59:29.329 --> 00:59:32.250
to enter today, the relief that we're seeking,

00:59:32.789 --> 00:59:35.170
is the relief to set up the framework to get

00:59:35.170 --> 00:59:38.210
the best value for the assets. Your Honor. And

00:59:38.210 --> 00:59:40.590
in this framework, we're asking for certain deadlines.

00:59:40.769 --> 00:59:43.369
We're asking for certain hearings. And of course,

00:59:43.429 --> 00:59:45.730
we will be back before your honor for the ultimate

00:59:45.730 --> 00:59:47.969
authority to make us to make the sale under Section

00:59:47.969 --> 00:59:51.730
363. And for that, we will file a proposed sale

00:59:51.730 --> 00:59:54.670
order with your honor. But today, we are not

00:59:54.670 --> 00:59:58.010
actually seeking authority for the sale. And

00:59:58.010 --> 01:00:00.369
for that, this is not a consumer product. It's

01:00:00.369 --> 01:00:04.889
too much privacy. I think kind of related point

01:00:04.889 --> 01:00:07.809
there is that What I heard is a potential sale

01:00:07.809 --> 01:00:11.889
issue. It's unclear whether the sale will do

01:00:11.889 --> 01:00:13.550
this. It is unclear whether the sale will do

01:00:13.550 --> 01:00:15.210
that. Well, the reason it is unclear whether

01:00:15.210 --> 01:00:18.170
the sale will do X, Y, or Z is that there is

01:00:18.170 --> 01:00:20.650
no sale before your honor yet. So I think that's

01:00:20.650 --> 01:00:23.250
an issue better handled when there is a sale

01:00:23.250 --> 01:00:31.090
presented to your honor. Third point I'd make

01:00:31.090 --> 01:00:35.789
is that The finding that Ms. Nelson mentioned

01:00:35.789 --> 01:00:39.369
in connection with our addressing the U .S. trustees'

01:00:39.550 --> 01:00:43.869
comments, now that finding reads that the debtors

01:00:43.869 --> 01:00:47.409
assert that the proposed sale transactions are

01:00:47.409 --> 01:00:50.389
consistent with their privacy policies and therefore

01:00:50.389 --> 01:00:52.389
a consumer privacy ombudsman is not required.

01:00:53.070 --> 01:00:55.389
So there's actually not even a finding anymore

01:00:55.389 --> 01:00:58.050
that the debtors did not make these certain disclosures

01:00:58.050 --> 01:01:01.429
on their policies. It's just a finding as to

01:01:01.429 --> 01:01:03.909
the debtor's assertion their policies say this

01:01:03.909 --> 01:01:07.630
or do that. And then of course... I'm not being...

01:01:07.630 --> 01:01:09.969
Let me just clarify. I'm not being asked to rule

01:01:09.969 --> 01:01:13.670
today on the appointment of an appointment. Correct?

01:01:13.670 --> 01:01:16.949
Correct. And I have not heard anyone make a motion

01:01:16.949 --> 01:01:19.710
on short notice for an appointment of one. Okay.

01:01:27.130 --> 01:01:33.860
Anything else? And then the last point is to

01:01:33.860 --> 01:01:38.380
address Ms. Van Eck, I believe. I think that,

01:01:38.539 --> 01:01:42.639
too, is an issue for the sale order. And we're

01:01:42.639 --> 01:01:45.300
more than happy to work with the government on

01:01:45.300 --> 01:01:51.800
this. All right. Thank you. Anyone else wish

01:01:51.800 --> 01:01:54.420
to be heard? At some point, I do want to hear

01:01:54.420 --> 01:01:57.039
from the lenders. Probably it's more appropriate

01:01:57.039 --> 01:02:03.019
when we address the dip finance motion. At this

01:02:03.019 --> 01:02:05.920
juncture, what's before the court is the approval

01:02:05.920 --> 01:02:12.840
on a recognizably truncated schedule for bidding

01:02:12.840 --> 01:02:18.920
procedures and the process and parameters of

01:02:18.920 --> 01:02:22.059
the sale of both the pharmacy assets and the

01:02:22.059 --> 01:02:29.419
non -pharmacy assets. The court... appreciates

01:02:29.419 --> 01:02:34.659
the the need for an expedited process and recognizes

01:02:34.659 --> 01:02:37.860
that this is not even though it's a retail case

01:02:37.860 --> 01:02:41.360
in some respects there's more to it it's not

01:02:41.360 --> 01:02:44.659
simply a retail case involving the sale of books

01:02:44.659 --> 01:02:49.340
or shoes or fast food or car washes we're dealing

01:02:49.340 --> 01:02:54.480
with we're addressing health care needs when

01:02:54.480 --> 01:03:04.920
you hear the numbers of over eight million individuals

01:03:04.920 --> 01:03:11.400
getting their pharmaceutical needs or medicinal

01:03:11.400 --> 01:03:14.780
needs addressed, the millions of transactions,

01:03:15.659 --> 01:03:20.780
and the court is going to support a process that

01:03:20.780 --> 01:03:26.099
ensures that it's a free -flowing process that

01:03:26.059 --> 01:03:30.300
Those who will be acquiring these assets as well

01:03:30.300 --> 01:03:36.360
as those who are going to help facilitate the

01:03:36.360 --> 01:03:40.860
process can do so in an efficient, orderly, and

01:03:40.860 --> 01:03:46.000
quick process to ensure continuity for the benefit

01:03:46.000 --> 01:03:51.219
of customers, continuity for the benefit of the

01:03:51.219 --> 01:03:55.300
pharmacists involved, and continuity for the

01:03:55.300 --> 01:03:59.989
benefit. of the employees. It all works together.

01:04:00.170 --> 01:04:02.869
The stores need to continue their operations

01:04:02.869 --> 01:04:11.030
and to work in assisting the orderly transfer,

01:04:11.550 --> 01:04:13.429
and we'll do so in a quick process, which is

01:04:13.429 --> 01:04:18.570
why I'm going to approve this expedited time

01:04:18.570 --> 01:04:22.630
frame. The objection that I want to thank both

01:04:22.760 --> 01:04:25.460
Council for those who've raised objections and

01:04:25.460 --> 01:04:28.079
concerns, as well as debtors council for having

01:04:28.079 --> 01:04:31.380
addressed and undertaken so much of the work

01:04:31.380 --> 01:04:39.340
prior to this hearing, obviously. And I think

01:04:39.340 --> 01:04:42.960
it becomes obvious that this has not been a 60

01:04:42.960 --> 01:04:46.420
day marketing period or a 30 day marketing period.

01:04:48.019 --> 01:04:50.420
It's really been a two year marketing period.

01:04:53.119 --> 01:04:58.079
I think the professionals have done well in addressing

01:04:58.079 --> 01:05:02.059
the immediate needs on an interim basis. I'm

01:05:02.059 --> 01:05:07.159
going to approve the bidding procedures subject

01:05:07.159 --> 01:05:11.400
obviously to a reservation of all rights to take

01:05:11.400 --> 01:05:13.800
issue with the concerns that have been raised

01:05:13.800 --> 01:05:19.500
and I agree seem to be more sale objections than

01:05:19.500 --> 01:05:23.690
process objections. They can be raised at the

01:05:23.690 --> 01:05:27.329
appropriate hearing, whether it be the May 21st

01:05:27.329 --> 01:05:31.050
hearing or the June 25th scheduled hearing for

01:05:31.050 --> 01:05:34.469
non -pharmacy assets. We'll address them then

01:05:34.469 --> 01:05:40.449
if they remain unresolved. With all these orders,

01:05:40.969 --> 01:05:43.650
I would like to take the opportunity to review

01:05:43.650 --> 01:05:49.139
the redlined and marked up versions. You let

01:05:49.139 --> 01:05:52.539
me know that you're from debtors council. I would

01:05:52.539 --> 01:05:55.719
like to enter these orders in an orderly fashion,

01:05:56.039 --> 01:06:00.719
possibly tomorrow morning by like 10 a .m. But

01:06:00.719 --> 01:06:03.599
it'll give me the opportunity tonight to review

01:06:03.599 --> 01:06:06.780
the changes to the orders. Does that pose a problem?

01:06:08.940 --> 01:06:16.099
I think it does, your honor. Okay, I'm told that

01:06:16.099 --> 01:06:18.159
especially with respect to the death. We're going

01:06:18.159 --> 01:06:21.159
to need to seek an order today. Oh, okay. I was

01:06:21.159 --> 01:06:24.000
talking about the sale order. Talk about the

01:06:24.000 --> 01:06:26.659
sale order. Do you need that entered today, the

01:06:26.659 --> 01:06:31.000
bidding procedures order? Your Honor, I do think

01:06:31.000 --> 01:06:33.179
it's important to have the order entered today

01:06:33.179 --> 01:06:35.780
so we can have the comfort that the parties can

01:06:35.780 --> 01:06:40.260
move forward. Do I have a final version of what's

01:06:40.260 --> 01:06:47.150
been marked up? Yes. Oh, don't ask me. I just

01:06:47.150 --> 01:06:50.269
want to ensure that I have, I don't want to confuse

01:06:50.269 --> 01:06:52.210
the dock and start entering orders when there's

01:06:52.210 --> 01:06:54.869
been language changes. I could take the time

01:06:54.869 --> 01:06:56.909
after the hearing, assuming we get done in time,

01:06:57.110 --> 01:06:59.409
to have them entered, but where do we stand as

01:06:59.409 --> 01:07:03.409
far as getting the language? Your Honor, Felice

01:07:03.409 --> 01:07:06.369
Jodgen from Coleshoth. To the extent that revised

01:07:06.369 --> 01:07:09.530
redline orders are not in your inbox, we will

01:07:09.530 --> 01:07:12.050
ensure that immediately following the hearing

01:07:12.050 --> 01:07:15.349
that you have the most updated versions of the

01:07:15.349 --> 01:07:18.079
order. All right. Well, if that's the case, I'll

01:07:18.079 --> 01:07:20.019
make sure they get entered then. Ms. Nelson?

01:07:21.880 --> 01:07:23.719
Yes. Thank you, Your Honor. Kimberly Nelson.

01:07:24.280 --> 01:07:27.019
I'd like a copy of these red lines since we have

01:07:27.019 --> 01:07:30.820
not been given a courtesy copy. I think that's

01:07:30.820 --> 01:07:35.199
fair. Absolutely. We'll get that to you. We will

01:07:35.199 --> 01:07:37.480
get that to you. Make sure they get anything

01:07:37.480 --> 01:07:42.159
sent down to the court. Make sure they get circulated

01:07:42.159 --> 01:07:46.210
as appropriate. All right. For the record, the

01:07:46.210 --> 01:07:51.329
court will grant the motion as requested and

01:07:51.329 --> 01:07:55.750
we'll review the order once we finish this afternoon.

01:07:57.590 --> 01:08:17.020
I think that takes us to the dip. Good afternoon,

01:08:17.199 --> 01:08:20.039
Your Honor. Can you hear me okay? Yes, I can.

01:08:20.159 --> 01:08:23.760
Good afternoon. For the record, Christopher Hopkins

01:08:23.760 --> 01:08:25.680
of Paul Weiss, Ripken, Morton, and Garrison has

01:08:25.680 --> 01:08:28.140
proposed co -counsel to the debtors. It's good

01:08:28.140 --> 01:08:31.220
to be back before Your Honor and reiterate all

01:08:31.220 --> 01:08:33.640
my colleagues' comments, thanking the Court,

01:08:33.779 --> 01:08:35.520
the U .S. Trustee, and everybody else who's been

01:08:35.520 --> 01:08:37.520
working with us since the petition date to try

01:08:37.520 --> 01:08:40.880
to get these issues resolved. So the next item

01:08:40.880 --> 01:08:44.020
on the agenda is the dip motion, which was filed

01:08:44.020 --> 01:08:48.239
at docket number 41. We filed the first day declaration

01:08:48.239 --> 01:08:51.659
from Mr. Liebman, which has already been entered

01:08:51.659 --> 01:08:54.300
into evidence. That was filed at docket number

01:08:54.300 --> 01:08:57.220
24. And then just for completeness, Your Honor,

01:08:58.079 --> 01:09:01.039
the diff budget, which is technically exhibit

01:09:01.039 --> 01:09:04.460
C to the motion, but was filed later in the day,

01:09:05.800 --> 01:09:09.199
was filed at docket number 67. All right. Thank

01:09:09.199 --> 01:09:12.479
you. So, Your Honor, we're here today seeking

01:09:12.479 --> 01:09:16.279
approval of a $1 .94 billion DIP facility that

01:09:16.279 --> 01:09:19.619
will be provided by Bank of America and the other

01:09:19.619 --> 01:09:22.479
lenders under our pre -petition ABL facility,

01:09:23.060 --> 01:09:26.479
together with related mechanics for the consensual

01:09:26.479 --> 01:09:28.880
use of cash collateral, all on the terms set

01:09:28.880 --> 01:09:31.520
forth in the interim order and the DIP documents.

01:09:33.079 --> 01:09:36.140
The structure of the DIP is similar to the exit

01:09:36.140 --> 01:09:38.850
ABL. that your honor approved in the last go

01:09:38.850 --> 01:09:42.390
round in that it has a revolving facility that's

01:09:42.390 --> 01:09:45.630
being sized at 1 .7 billion. And then there's

01:09:45.630 --> 01:09:49.270
a philo facility that's at 240 million. This

01:09:49.270 --> 01:09:53.149
is a 12 month facility. And with these arrangements,

01:09:54.270 --> 01:09:56.649
pursuant to the terms of the, you know, dip docs

01:09:56.649 --> 01:10:02.149
and approved budget, you know, we will the difficulty

01:10:02.149 --> 01:10:04.789
is going to provide the essential funding necessary.

01:10:04.989 --> 01:10:08.810
to ensure these cases are a success. It took

01:10:08.810 --> 01:10:11.449
extensive negotiations with the DIP lenders to

01:10:11.449 --> 01:10:14.050
reach consensus on the terms of the DIP facility.

01:10:15.890 --> 01:10:18.529
And we really believe, for all the reasons set

01:10:18.529 --> 01:10:20.949
forth in Mr. Lehman's declaration, that this

01:10:20.949 --> 01:10:24.090
financing is not only the best, but it's really

01:10:24.090 --> 01:10:28.390
the only viable financing that was available

01:10:28.390 --> 01:10:35.210
to the debtors to fund these cases. Sorry, Your

01:10:35.210 --> 01:10:37.949
Honor. Without the consensual use of cash collateral

01:10:37.949 --> 01:10:40.890
and the incremental liquidity that's being made

01:10:40.890 --> 01:10:44.949
available under the DIP facility, it's really

01:10:44.949 --> 01:10:47.449
essential to provide confidence to our customers,

01:10:47.649 --> 01:10:50.489
our employees, our vendors, and all of our other

01:10:50.489 --> 01:10:54.470
stakeholders who we need to make sure that this

01:10:54.470 --> 01:10:59.250
process is as successful as possible. So with

01:10:59.250 --> 01:11:01.770
that context, turning to the terms of the DIP

01:11:01.770 --> 01:11:05.710
itself. So it's a 12 -month facility. As I said,

01:11:05.810 --> 01:11:10.869
it's a $1 .7 billion revolver and a $240 million

01:11:10.869 --> 01:11:15.810
bilo. Under the terms of the DIP facility, the

01:11:15.810 --> 01:11:19.449
DIP lenders have agreed to modify certain covenants

01:11:19.449 --> 01:11:23.750
and other provisions of the existing exit ABL.

01:11:24.799 --> 01:11:27.680
That unlocks incremental liquidity for the debtors,

01:11:27.779 --> 01:11:30.319
in addition to the cash collateral that we're

01:11:30.319 --> 01:11:34.720
allowed to access during the case. And that is

01:11:34.720 --> 01:11:38.140
really essential to ensure that, as your honor

01:11:38.140 --> 01:11:40.739
knows, things happen in Chapter 11, and that

01:11:40.739 --> 01:11:43.300
incremental liquidity provides a cushion to ensure

01:11:43.300 --> 01:11:47.000
that all of our operations continue uninterrupted,

01:11:47.060 --> 01:11:49.739
all of the obligations that come up, the critical

01:11:49.739 --> 01:11:53.899
trade of the case gets paid. It's really essential

01:11:53.899 --> 01:11:59.000
to the overall process. Similar to the DIP in

01:11:59.000 --> 01:12:03.560
the last case, the way the DIP works is it provides

01:12:03.560 --> 01:12:07.140
for an interim roll up of the pre -petition ABL

01:12:07.140 --> 01:12:12.060
on a creeping basis. So as Your Honor may remember,

01:12:12.800 --> 01:12:16.439
we've been in cash dominion. Since the since

01:12:16.439 --> 01:12:19.060
we emerged from bankruptcy and so every day all

01:12:19.060 --> 01:12:21.199
of our cash is swept down to the banks So the

01:12:21.199 --> 01:12:24.319
way that interim roll -up will function You know

01:12:24.319 --> 01:12:26.500
every day we get operating receipts at the end

01:12:26.500 --> 01:12:28.699
We make disbursements throughout the day pursuant

01:12:28.699 --> 01:12:30.859
to the agreed budget at the end of the day Our

01:12:30.859 --> 01:12:33.760
cash balance is swept by the banks and the following

01:12:33.760 --> 01:12:38.060
day There's a new advance and so over time those

01:12:38.060 --> 01:12:41.180
you know the the sweeps pay down the old ABL

01:12:41.180 --> 01:12:43.619
The advances are issued under the new revolver

01:12:43.760 --> 01:12:45.760
And that is the creeping roll -up that we're

01:12:45.760 --> 01:12:48.739
asking for approval of today on an interim basis.

01:12:50.260 --> 01:12:52.500
There's no other roll -up being approved today

01:12:52.500 --> 01:12:56.399
upon entry of a final order. The DIP documents

01:12:56.399 --> 01:12:58.920
do provide for a full roll -up of the pre -petition

01:12:58.920 --> 01:13:04.000
ADL. And I would note, Your Honor, that in this

01:13:04.000 --> 01:13:06.600
goes to some of the hard -fought negotiations

01:13:06.600 --> 01:13:10.000
we had getting into the case, the interim roll

01:13:10.000 --> 01:13:13.789
-up does actually save the estates approximately

01:13:13.789 --> 01:13:18.729
$450 ,000 in interest expense because the rate,

01:13:19.449 --> 01:13:22.050
the interest rates on the post -petition dip

01:13:22.050 --> 01:13:25.310
facility are actually inside of the default rates

01:13:25.310 --> 01:13:27.430
under the old facility. So there's less interest

01:13:27.430 --> 01:13:30.189
expense being incurred by the estates as the

01:13:30.189 --> 01:13:34.329
dip rolls up over the interim period. There is

01:13:34.329 --> 01:13:37.529
a fee package for the dip lenders. They get a

01:13:37.819 --> 01:13:41.140
upfront fee that's paid in kind equal to 1 %

01:13:41.140 --> 01:13:44.939
of the revolver, 1 .5 % of the phyllo. There

01:13:44.939 --> 01:13:49.140
is an exit fee that's payable at maturity, but

01:13:49.140 --> 01:13:51.520
importantly, you know, there are crediting mechanics

01:13:51.520 --> 01:13:55.720
where any portion of the dip that is permanently

01:13:55.720 --> 01:13:58.640
repaid prior to six months, there's no exit fee

01:13:58.640 --> 01:14:00.979
charged on those amounts, and any amount that's

01:14:00.979 --> 01:14:04.399
prepaid prior to nine months, 50 % discount to

01:14:04.399 --> 01:14:09.729
the exit fee. The aggregate exit fee is 10%.

01:14:09.729 --> 01:14:11.989
Your honor may have read in the DIPP papers that

01:14:11.989 --> 01:14:16.109
there was also a backstop fee of 10%, but that

01:14:16.109 --> 01:14:20.109
has been rendered irrelevant because 100 % of

01:14:20.109 --> 01:14:22.050
the pre -petition lenders are participating in

01:14:22.050 --> 01:14:24.909
the facility. And that backstop fee was only

01:14:24.909 --> 01:14:28.789
intended to cover participating DIPP lenders

01:14:28.789 --> 01:14:31.449
who overfunded their pre -petition commitments.

01:14:33.729 --> 01:14:36.489
Otherwise, you know, it's a pretty customary

01:14:36.489 --> 01:14:40.369
set of covenants, including, you know, the standard

01:14:40.369 --> 01:14:43.729
budget approval process and related variance

01:14:43.729 --> 01:14:46.590
testing on receipts and disbursements. We are

01:14:46.590 --> 01:14:49.770
agreeing to a milestone schedule that, you know,

01:14:50.029 --> 01:14:52.449
effectively tracks to the dates that Your Honor

01:14:52.449 --> 01:14:54.210
just approved in connection with the bidding

01:14:54.210 --> 01:14:59.220
procedures. For our other... secured creditors.

01:14:59.579 --> 01:15:01.600
As Your Honor recalls, we have two series of

01:15:01.600 --> 01:15:05.300
secured notes and a portion of the obligations

01:15:05.300 --> 01:15:07.520
owed to McKesson under the supply agreement are

01:15:07.520 --> 01:15:12.359
also subject to liens. There will be replacement

01:15:12.359 --> 01:15:14.500
liens and super priority claims to the extent

01:15:14.500 --> 01:15:18.119
of any post -petition diminution in value. The

01:15:18.119 --> 01:15:22.300
pre -petition ABL is getting fees and default

01:15:22.300 --> 01:15:25.060
interest until the roll -up is completed. And

01:15:25.060 --> 01:15:27.159
then the rights of the other pre -petition secured

01:15:27.159 --> 01:15:29.600
parties outside of the ABL to seek additional

01:15:29.600 --> 01:15:33.859
adequate protection are preserved. Otherwise,

01:15:33.960 --> 01:15:36.680
just to hit some other points, there's a customary

01:15:36.680 --> 01:15:40.819
carve out. There are no statutory waivers contemplated

01:15:40.819 --> 01:15:44.979
for today. So 506C and 552B are up for approval

01:15:44.979 --> 01:15:50.720
at the final hearing. And otherwise, customary

01:15:50.720 --> 01:15:53.789
challenge period. Six we're asking for 60 days

01:15:53.789 --> 01:15:57.130
after entry of the interim order or respect to

01:15:57.130 --> 01:16:00.210
the committee 60 days after If the committee

01:16:00.210 --> 01:16:02.609
is appointed which is mr. Sponger said we hope

01:16:02.609 --> 01:16:07.270
is you know sometime next week So with that your

01:16:07.270 --> 01:16:09.550
honor, I mean that's the high -level presentation

01:16:09.550 --> 01:16:11.949
obviously if your honor has any questions about

01:16:11.949 --> 01:16:15.310
the facility I'm happy to answer them Otherwise,

01:16:15.310 --> 01:16:18.609
I know we've gotten some comments from the US

01:16:18.609 --> 01:16:22.159
trustee and a few other parties that we've been

01:16:22.159 --> 01:16:24.500
trying to incorporate into a revised form of

01:16:24.500 --> 01:16:27.779
order that will submit to chambers. One change

01:16:27.779 --> 01:16:30.119
I would highlight that was requested by the U

01:16:30.119 --> 01:16:32.359
.S. trustee, which I think the banks are prepared

01:16:32.359 --> 01:16:36.579
to agree to, is that the filed version of the

01:16:36.579 --> 01:16:40.039
order contemplated liens on avoidance actions

01:16:40.039 --> 01:16:42.359
in their proceeds upon entry of the interim order.

01:16:42.880 --> 01:16:46.279
The banks have agreed to defer that to entry

01:16:46.279 --> 01:16:49.970
of the file. When are you looking for the final?

01:16:51.090 --> 01:16:53.909
Where are we fitting that final in among these

01:16:53.909 --> 01:16:58.109
milestones? So Your Honor, I believe if we're

01:16:58.109 --> 01:17:00.109
going to have our second day hearing on June

01:17:00.109 --> 01:17:03.470
6th that that falls within the dip milestone

01:17:03.470 --> 01:17:07.689
for entry of the final order. The milestone is

01:17:07.689 --> 01:17:14.630
35 days after the petition date. Okay, so June

01:17:14.630 --> 01:17:25.279
6th is a Friday. I would peg it at 1130 in the

01:17:25.279 --> 01:17:29.720
morning. But let me hear from others first before

01:17:29.720 --> 01:17:37.060
we solidify that. Before I turn to anyone else

01:17:37.060 --> 01:17:38.840
with a raised hand, Mr. Hopkins, do you have

01:17:38.840 --> 01:17:42.000
anything else? Unless you have questions for

01:17:42.000 --> 01:17:43.539
me, Your Honor, I do not have anything else.

01:17:44.500 --> 01:17:46.479
Not at this juncture. I've read through the...

01:17:47.060 --> 01:17:50.079
the motion and the supporting documents. Mr.

01:17:50.260 --> 01:17:53.579
Ventola, good afternoon. Good afternoon, Your

01:17:53.579 --> 01:17:55.739
Honor. I hope you can hear me okay. I can, thank

01:17:55.739 --> 01:17:57.659
you. It's good to see you, Your Honor. Thank

01:17:57.659 --> 01:17:59.960
you for the opportunity to be heard today. So,

01:18:00.039 --> 01:18:01.819
just wanted to briefly echo some of the comments

01:18:01.819 --> 01:18:04.340
that Mr. Hopkins made. This was an extraordinarily

01:18:04.340 --> 01:18:08.060
complex process to get where we are today. We

01:18:08.060 --> 01:18:11.689
worked... cooperatively but at arm's length in

01:18:11.689 --> 01:18:14.630
a fiercely negotiated DIP process with the debtor

01:18:14.630 --> 01:18:16.289
and its advisors, and we're very pleased we got

01:18:16.289 --> 01:18:19.689
here. I would note, again, echoing Mr. Hopkins,

01:18:19.850 --> 01:18:22.810
that all 21 banks in the pre -petition facility

01:18:22.810 --> 01:18:25.630
have agreed to participate in the DIP, subject

01:18:25.630 --> 01:18:28.270
to the court's approval, of course, and that

01:18:28.270 --> 01:18:30.729
is a really noteworthy accomplishment under these

01:18:30.729 --> 01:18:33.229
circumstances, Your Honor. So you noted earlier

01:18:33.229 --> 01:18:34.689
you wanted to hear from the lenders. I'm here.

01:18:34.810 --> 01:18:36.750
I should have noted at the beginning. I'm representing

01:18:36.750 --> 01:18:39.409
Bank of America as the pre -petition ABL agent

01:18:39.409 --> 01:18:42.470
and proposed DIP agent. Happy to answer any questions

01:18:42.470 --> 01:18:45.149
at all that the court may have, of course. I

01:18:45.149 --> 01:18:47.289
did want to confirm one point that Mr. Hopkins

01:18:47.289 --> 01:18:50.810
made with a clarification. If we are able to

01:18:50.810 --> 01:18:53.390
reach a consensual form of interim order today

01:18:53.390 --> 01:18:56.529
and it's entered as planned, the lenders have

01:18:56.529 --> 01:19:00.529
agreed that the lien on avoidance actions and

01:19:00.529 --> 01:19:02.420
the proceeds of avoidance actions would be deferred

01:19:02.420 --> 01:19:05.359
to the final hearing. With the exception, Your

01:19:05.359 --> 01:19:08.500
Honor, of any claims under Section 549 of the

01:19:08.500 --> 01:19:11.819
Code, we don't expect there to be any unauthorized

01:19:11.819 --> 01:19:14.340
post -petition transfers, but if there are, I

01:19:14.340 --> 01:19:17.420
think it's very customary for the DIP liens to

01:19:17.420 --> 01:19:19.739
attach to that type of avoidance action, and

01:19:19.739 --> 01:19:21.960
I'm nearly certain we had a comparable provision

01:19:21.960 --> 01:19:24.220
in the interim DIP order in the first case, Your

01:19:24.220 --> 01:19:27.579
Honor. So again, here for any questions you may

01:19:27.579 --> 01:19:30.539
have, but again, pleased to be here today. Thank

01:19:30.539 --> 01:19:33.750
you. All right, thank you. At this point, I'd

01:19:33.750 --> 01:19:35.789
prefer to hear from others. If I have, I'll come

01:19:35.789 --> 01:19:37.329
back to you, Mr. Ventolo. Thank you for your

01:19:37.329 --> 01:19:44.210
time. Thank you. Mr. Sponder? Thank you, Your

01:19:44.210 --> 01:19:45.770
Honor. Jeff Sponder from the Office of the United

01:19:45.770 --> 01:19:48.489
States Trustee. Your Honor, we're providing a

01:19:48.489 --> 01:19:51.560
final request of revisions on this morning. We

01:19:51.560 --> 01:19:53.779
realize that an interim order will be entered,

01:19:54.140 --> 01:19:55.779
but would like to reserve our rights with respect

01:19:55.779 --> 01:19:58.300
to the revisions that we raised. There were about

01:19:58.300 --> 01:20:01.020
eight or nine specific revisions, one of which

01:20:01.020 --> 01:20:04.199
has already been decided, and we appreciate that.

01:20:04.399 --> 01:20:06.640
With respect to the avoidance actions, Your Honor,

01:20:06.899 --> 01:20:11.060
I would note that I understand from Banks Council

01:20:11.060 --> 01:20:14.779
the 549 issue, but I did hear that there is gonna

01:20:14.779 --> 01:20:17.420
be a possible issue with McKesson as to whether

01:20:17.420 --> 01:20:20.409
or not the... what however much money I think

01:20:20.409 --> 01:20:22.989
was 400 million or something is going to be is

01:20:22.989 --> 01:20:25.670
a pre petition payment or a post petition payment.

01:20:25.869 --> 01:20:27.729
So it could be an unlawful post petition payment.

01:20:27.970 --> 01:20:30.550
So I know of one right there. But that's something

01:20:30.550 --> 01:20:32.689
that we can discuss. I wasn't sure if that was

01:20:32.689 --> 01:20:37.779
in the the order of the first case. But your

01:20:37.779 --> 01:20:39.199
honor, with respect to the roll ups, just so

01:20:39.199 --> 01:20:41.119
that you're aware, paragraph 12 does include

01:20:41.119 --> 01:20:43.340
language allowing the court to fashion an appropriate

01:20:43.340 --> 01:20:45.819
remedy upon a successful challenge to the roll

01:20:45.819 --> 01:20:52.439
ups. So that gives me some comfort in allowing

01:20:52.439 --> 01:20:55.020
the interim roll up. Again, there's gonna be

01:20:55.020 --> 01:20:57.119
another roll up at the final and hopefully we'll

01:20:57.119 --> 01:21:01.470
have committees in to deal with that. One issue,

01:21:01.789 --> 01:21:03.930
main issue that I had before this order can get

01:21:03.930 --> 01:21:06.850
entered, even if we don't go through my other

01:21:06.850 --> 01:21:09.770
issues, is there, there's reference to a paragraph

01:21:09.770 --> 01:21:12.250
numbers, and I think the reference is, is wrong.

01:21:12.970 --> 01:21:14.770
There are a lot of references to paragraph 11,

01:21:15.010 --> 01:21:17.369
which should be paragraph 12, which is actually

01:21:17.369 --> 01:21:21.529
the challenge paragraph. So those, those need

01:21:21.529 --> 01:21:23.689
to be changed for purposes of the interim order.

01:21:26.939 --> 01:21:30.880
we need to clean up. Yes, and my other issues,

01:21:31.060 --> 01:21:33.180
I mean I've already sent over to council, it's

01:21:33.180 --> 01:21:36.939
an interim order. I would hope that we can quickly

01:21:36.939 --> 01:21:39.920
resolve those issues. I will note for your honor

01:21:39.920 --> 01:21:43.340
that page 108 provides that the DIP lenders are

01:21:43.340 --> 01:21:45.539
not responsible for funding in the carve out

01:21:45.539 --> 01:21:49.550
any success. transaction or similar type of fees.

01:21:49.930 --> 01:21:52.890
And I haven't seen that before. Just wondering

01:21:52.890 --> 01:21:55.149
though how the debtors will be able to pay that

01:21:55.149 --> 01:21:58.090
if those fees will exist. Again, we haven't seen

01:21:58.090 --> 01:22:00.430
any retention applications I would suspect from

01:22:00.430 --> 01:22:03.710
Guggenheim or the investment banker, I think

01:22:03.710 --> 01:22:06.210
they're the investment banker. So I'm not sure

01:22:06.210 --> 01:22:09.750
how that will work. But. I can go through those

01:22:09.750 --> 01:22:12.770
issues briefly, Your Honor. I do know one of

01:22:12.770 --> 01:22:16.050
which is I think that they're seeking the challenge

01:22:16.050 --> 01:22:19.510
period, 60 days for parties of interest from

01:22:19.510 --> 01:22:23.069
the interim order. We typically ask and get 60

01:22:23.069 --> 01:22:26.109
days from the final order. So that was one thing

01:22:26.109 --> 01:22:29.430
that we included in there. We also included some

01:22:29.430 --> 01:22:33.390
other myths as well. Thank you, Your Honor. All

01:22:33.390 --> 01:22:36.529
right. Thank you. I'll hear from Dennis Council

01:22:36.529 --> 01:22:42.340
on... what they're prepared to address. Mr. Toomey?

01:22:46.739 --> 01:22:48.880
Good afternoon, Judge Kaplan. Can you hear me

01:22:48.880 --> 01:22:52.399
okay? I can. Good afternoon. Great. Just for

01:22:52.399 --> 01:22:54.159
the record, Your Honor, Dennis Toomey with Sidley

01:22:54.159 --> 01:22:57.960
Austin on behalf of McKesson Corporation. Your

01:22:57.960 --> 01:23:00.140
Honor, I just wanted to make a few points and

01:23:00.140 --> 01:23:02.680
we'll only take a couple of minutes here. Just

01:23:02.680 --> 01:23:04.819
by way of quick background, and as I'm sure Your

01:23:04.819 --> 01:23:07.939
Honor recalls, McKesson is the supplier. of about

01:23:07.939 --> 01:23:12.060
90 % of the dollar volume of the debtor's prescription

01:23:12.060 --> 01:23:15.760
drugs. And McKesson's deliveries to Rite Aid

01:23:15.760 --> 01:23:18.600
can total anywhere from $20, $30, $40 million

01:23:18.600 --> 01:23:23.399
or more products per day. Since we emerged or

01:23:23.399 --> 01:23:26.119
since Rite Aid emerged from bankruptcy last year,

01:23:26.520 --> 01:23:28.899
the relationship's been governed by a new supply

01:23:28.899 --> 01:23:31.619
agreement that we negotiated coming out of that

01:23:31.619 --> 01:23:34.880
case. And the new agreement contains some protections

01:23:34.880 --> 01:23:37.359
for McKesson. that the prior agreement didn't

01:23:37.359 --> 01:23:42.079
have, for example, caps on trade credit and an

01:23:42.079 --> 01:23:45.000
ability for McKesson to adjust those caps. And

01:23:45.000 --> 01:23:47.739
it also provided for McKesson to receive a second

01:23:47.739 --> 01:23:51.079
lien, as you've heard earlier, for its outstanding

01:23:51.079 --> 01:23:53.819
trade debt. Those were among the provisions.

01:23:55.340 --> 01:23:58.079
Turning to where we are today, McKesson is owed

01:23:58.079 --> 01:24:01.640
at least $130 million of trade debt as of the

01:24:01.640 --> 01:24:04.850
petition date. That's not an agreed -upon number,

01:24:04.930 --> 01:24:08.869
which I'll touch on again momentarily. All of

01:24:08.869 --> 01:24:10.710
that amount, Your Honor, again, falls within

01:24:10.710 --> 01:24:14.409
the confines of Section 503B9, since it all stems

01:24:14.409 --> 01:24:16.810
from product that was delivered in the days leading

01:24:16.810 --> 01:24:20.210
up to the filing. And it's also secured by that

01:24:20.210 --> 01:24:24.250
second lien that I mentioned a minute ago. As

01:24:24.250 --> 01:24:27.250
Ms. Eaton noted, McKesson has continued to supply

01:24:27.250 --> 01:24:31.890
Rite Aid since Monday's filing. Your Honor, Big

01:24:31.890 --> 01:24:34.270
picture, we do not believe McKesson is obligated

01:24:34.270 --> 01:24:37.069
to extend post -petition credit or take on any

01:24:37.069 --> 01:24:39.010
post -petition credit risk from the debtors.

01:24:39.630 --> 01:24:41.369
Our understanding from our discussion with Debtors'

01:24:41.510 --> 01:24:42.850
Council, however, over the last couple of days

01:24:42.850 --> 01:24:45.810
is that this won't be an issue because the debtors

01:24:45.810 --> 01:24:48.630
intend to pay McKesson effectively one day in

01:24:48.630 --> 01:24:52.569
advance during the bankruptcy cases. And my understanding

01:24:52.569 --> 01:24:55.590
is that the DIP budget will permit the debtors

01:24:55.590 --> 01:24:58.949
to make such payments. Just a couple of final

01:24:58.949 --> 01:25:02.710
notes, Your Honor. We did have a few. We had

01:25:02.710 --> 01:25:04.529
some comments on the dip order. I think some

01:25:04.529 --> 01:25:06.630
of them have been accepted. I think if you are

01:25:06.630 --> 01:25:09.750
still open and if not resolved, we will seek

01:25:09.750 --> 01:25:12.029
to resolve them between now and the final hearing

01:25:12.029 --> 01:25:14.729
or otherwise. Obviously we will file something

01:25:14.729 --> 01:25:16.329
in advance of the final hearing to the extent

01:25:16.329 --> 01:25:20.229
we need to. We're just now getting in the loop

01:25:20.229 --> 01:25:23.189
on the McKesson side on the debtors game plan

01:25:23.189 --> 01:25:26.880
for sales and store closings. Obviously. All

01:25:26.880 --> 01:25:30.060
of that impacts the supply relationship. So we'll

01:25:30.060 --> 01:25:32.020
need to better understand how all of it will

01:25:32.020 --> 01:25:34.199
work. And the debtors have committed to help

01:25:34.199 --> 01:25:36.100
get the McKesson. Is there anything exciting

01:25:36.100 --> 01:25:42.279
in the last? Finally, just a point I alluded

01:25:42.279 --> 01:25:44.720
to a minute ago, we have a disagreement with

01:25:44.720 --> 01:25:46.939
the debtors involving the characterization of

01:25:46.939 --> 01:25:49.960
a payment that was made on Monday. If it doesn't

01:25:49.960 --> 01:25:53.420
get resolved, we do expect to be back in front

01:25:53.420 --> 01:25:56.060
of your honor in the relatively near term. the

01:25:56.060 --> 01:25:58.380
debtors have agreed, as I understand it, that

01:25:58.380 --> 01:26:00.779
if McKesson is correct in its view of this issue,

01:26:00.880 --> 01:26:03.800
that the debtors will have the ability to pay

01:26:03.800 --> 01:26:06.479
under the dip, and otherwise it will pay McKesson

01:26:06.479 --> 01:26:09.340
the corresponding amount in dispute, again, if

01:26:09.340 --> 01:26:12.800
McKesson is correct in that dispute. So I just

01:26:12.800 --> 01:26:14.439
wanted to put that on your honors radar in case

01:26:14.439 --> 01:26:17.300
we have to come back before you. In the meantime,

01:26:17.500 --> 01:26:19.699
McKesson will reserve all its rights with respect

01:26:19.699 --> 01:26:22.949
to today's motions for the final hearing. That's

01:26:22.949 --> 01:26:24.770
all I have, Your Honor. Thank you. All right.

01:26:24.770 --> 01:26:27.409
Thank you, counsel. And if needed, you'll all

01:26:27.409 --> 01:26:31.390
know where to find me. So thank you. All right.

01:26:31.869 --> 01:26:36.569
Mr. McCullough. Good afternoon, Your Honor. I'm

01:26:36.569 --> 01:26:39.210
appearing on behalf of Green Dot Corporation

01:26:39.210 --> 01:26:43.010
and Green Dot Bank. I was only engaged this morning,

01:26:43.010 --> 01:26:45.449
so I have not yet submitted a pro hoc Vichay

01:26:45.449 --> 01:26:48.270
application or associated with New Jersey Council,

01:26:48.329 --> 01:26:51.210
but intend to do so promptly if I may be heard.

01:26:51.649 --> 01:26:54.050
Absolutely. Go ahead. Thank you, Your Honor.

01:26:54.710 --> 01:26:57.510
Green Dot Corporation and Green Dot Bank have

01:26:57.510 --> 01:27:01.210
a relationship with Rite Aid whereby Rite Aid

01:27:01.210 --> 01:27:04.670
sells prepaid debit cards and other financial

01:27:04.670 --> 01:27:07.470
products to its customers. And then those customers

01:27:07.470 --> 01:27:09.689
may have the opportunity to come back to Rite

01:27:09.689 --> 01:27:12.569
Aid and to reload the cards. And what that means

01:27:12.569 --> 01:27:16.090
is that every day, RightAid receives possession

01:27:16.090 --> 01:27:18.449
of funds from those customers, which under the

01:27:18.449 --> 01:27:20.789
terms of the agreement, it's then required to

01:27:20.789 --> 01:27:23.949
hold in trust and then to disperse promptly to

01:27:23.949 --> 01:27:26.289
Green Dot. In the meantime, Green Dot, of course,

01:27:26.390 --> 01:27:29.930
is required to supply services and advance credit

01:27:29.930 --> 01:27:34.729
to the customers. Those disbursements have, I

01:27:34.729 --> 01:27:37.310
understand, been interrupted as a result of the

01:27:37.310 --> 01:27:39.859
bankruptcy filing. We've received indications

01:27:39.859 --> 01:27:42.720
that they will be resumed, but I want to make

01:27:42.720 --> 01:27:44.939
two points in connection with this motion and

01:27:44.939 --> 01:27:46.859
in connection with the cash management motion.

01:27:47.600 --> 01:27:50.300
First, my understanding is the dip notion would

01:27:50.300 --> 01:27:53.619
not cause liens to attach to any property that

01:27:53.619 --> 01:27:56.079
doesn't actually belong to the debtor, as we

01:27:56.079 --> 01:27:58.819
believe these funds would not. If, of course,

01:27:58.920 --> 01:28:02.899
the dip lenders or the debtor in possession have

01:28:02.899 --> 01:28:04.520
a different view, we'd want to get that out on

01:28:04.520 --> 01:28:07.659
the table. And then second, with respect to the

01:28:07.659 --> 01:28:10.640
disbursements, it's important that those disbursements

01:28:10.640 --> 01:28:13.680
do resume promptly so that we can continue to

01:28:13.680 --> 01:28:16.699
provide the service supply product to Rite Aid

01:28:16.699 --> 01:28:20.000
and avoid any suspension in services and perhaps

01:28:20.000 --> 01:28:22.329
a fight in front of the court. So I wanted to

01:28:22.329 --> 01:28:24.170
make those two points. I don't think it prevents

01:28:24.170 --> 01:28:26.850
the entry of the interim orders that have been

01:28:26.850 --> 01:28:28.989
proposed today, but I wanted to alert you to

01:28:28.989 --> 01:28:30.949
this issue, let you know that we'll be working

01:28:30.949 --> 01:28:33.189
with the debtors and other council in an effort

01:28:33.189 --> 01:28:35.069
to make sure that they're appropriately addressed

01:28:35.069 --> 01:28:37.449
in the final hearing and of course to come to

01:28:37.449 --> 01:28:41.109
you earlier than that if for some reason disbursements

01:28:41.109 --> 01:28:43.250
don't promptly resume or there is some question

01:28:43.250 --> 01:28:46.569
about the safety and sanctity of the funds that

01:28:46.569 --> 01:28:50.489
debtors are holding. All right, so we're carving

01:28:50.489 --> 01:28:54.390
out noting that for the Inclusion in the final

01:28:54.390 --> 01:28:57.789
order when we get there so when we get there

01:28:57.789 --> 01:29:01.689
Thank you. Thank you. Mr. Gold see your hand

01:29:01.689 --> 01:29:05.470
Thank you again your honor just very briefly

01:29:05.470 --> 01:29:08.390
First another thank you to the debtor and lender

01:29:08.390 --> 01:29:11.090
teams as interim debt orders go. This one was

01:29:11.090 --> 01:29:13.789
pretty good in terms of anticipating landlord

01:29:13.789 --> 01:29:17.079
issues and incorporated the experience of the

01:29:17.079 --> 01:29:19.460
first case, and we only have minor comments.

01:29:19.979 --> 01:29:22.439
Just in terms of a preview of coming attractions,

01:29:22.500 --> 01:29:25.859
however, as has been noted, the budget was just

01:29:25.859 --> 01:29:29.420
was separately filed. And we do anticipate stuff

01:29:29.420 --> 01:29:31.340
around will be an issue in this case that will

01:29:31.340 --> 01:29:34.359
have to be addressed. Obviously, tying that with

01:29:34.359 --> 01:29:36.640
other comments throughout the hearing that will

01:29:36.640 --> 01:29:39.899
await the appointment of a committee and the

01:29:39.899 --> 01:29:43.029
retention of committee counsel. But that's just

01:29:43.029 --> 01:29:45.890
an issue we will be working with the debtors

01:29:45.890 --> 01:29:48.930
and the lenders and the UCC going forward in

01:29:48.930 --> 01:29:51.850
advance of the final hearing, which you've tentatively

01:29:51.850 --> 01:29:54.649
identified for early June. Thank you, Your Honor.

01:29:55.010 --> 01:29:58.229
All right. Thank you. Ms. Ringer, another familiar

01:29:58.229 --> 01:30:02.489
face. Good afternoon, Your Honor. Good afternoon.

01:30:04.820 --> 01:30:07.520
I'm actually appearing in this case on behalf

01:30:07.520 --> 01:30:11.399
of an ad hoc group of secured note holders. I

01:30:11.399 --> 01:30:13.439
wanted to just appear quickly for the record.

01:30:14.100 --> 01:30:16.479
We have no objection to the entry of the interim

01:30:16.479 --> 01:30:19.840
dip order. We support its entry. I did just want

01:30:19.840 --> 01:30:21.279
to note for the record that there are a couple

01:30:21.279 --> 01:30:23.359
of items that we're discussing with the dip lenders

01:30:23.359 --> 01:30:27.600
and the debtors. be able to get those resolved

01:30:27.600 --> 01:30:31.140
before the final hearing. But I just wanted to

01:30:31.140 --> 01:30:33.579
note that for the record and indicate that we're

01:30:33.579 --> 01:30:35.220
supportive of the entry of the interim bid order

01:30:35.220 --> 01:30:38.319
today. All right, thank you, Ms. Winger. Thank

01:30:38.319 --> 01:30:40.180
you, Your Honor. All right, Mr. Hopkins, let

01:30:40.180 --> 01:30:45.079
me turn back to you. I know Mr. Sponder raised

01:30:45.079 --> 01:30:49.659
some specific issues. Yes, Your Honor. So let

01:30:49.659 --> 01:30:51.680
me kind of take them a bit out of order. Sure.

01:30:51.680 --> 01:30:55.699
So on Guggenheim's fees, There's actually language

01:30:55.699 --> 01:30:58.119
in the bidding procedures order that addresses

01:30:58.119 --> 01:31:01.199
that. As a general matter, they'll be paid out

01:31:01.199 --> 01:31:04.479
of the proceeds of the sales, and the language

01:31:04.479 --> 01:31:07.439
around that will be embodied in the sale orders.

01:31:08.039 --> 01:31:10.619
So that's why they're not. The success fees aren't

01:31:10.619 --> 01:31:12.899
in the carve -out because the idea is that they're

01:31:12.899 --> 01:31:16.039
paid directly as the proceeds come in under the

01:31:16.039 --> 01:31:20.229
applicable sale transactions. Just briefly on

01:31:20.229 --> 01:31:23.329
the challenge period, Your Honor. So just a couple

01:31:23.329 --> 01:31:27.390
things. So, you know, I think, you know, one,

01:31:27.869 --> 01:31:31.029
all of the liens and claims here have been approved

01:31:31.029 --> 01:31:35.689
pursuant to orders of this court. So while, yes,

01:31:35.789 --> 01:31:37.630
everyone should get an opportunity to take a

01:31:37.630 --> 01:31:40.149
look at those things, I think this is not a case

01:31:40.149 --> 01:31:44.090
where it's going to be a complex analysis on

01:31:44.090 --> 01:31:47.189
the validity of those liens and claims. The cases

01:31:47.189 --> 01:31:52.319
do need to move quickly. 60 days is not a particularly

01:31:52.319 --> 01:31:54.939
short period of time, particularly given that

01:31:54.939 --> 01:31:57.020
there, you know, it's really only been a six

01:31:57.020 --> 01:31:58.939
or seven month period that's gonna be relevant

01:31:58.939 --> 01:32:04.039
to a challenge anyway. And, you know, I think

01:32:04.039 --> 01:32:06.600
it's, given that the committee is gonna have

01:32:06.600 --> 01:32:11.119
60 days, I think it is reasonable. And it's also,

01:32:11.359 --> 01:32:13.569
you know, it could be part of it. To the extent

01:32:13.569 --> 01:32:15.090
the committee does have an issue with it, we

01:32:15.090 --> 01:32:16.909
can obviously address it together with the DIP

01:32:16.909 --> 01:32:19.289
lenders between now and entry of the final order.

01:32:20.090 --> 01:32:23.149
But with that, otherwise, and yes, we will address

01:32:23.149 --> 01:32:26.609
Mr. Sponder's cleanup. Obviously, the order was

01:32:26.609 --> 01:32:29.050
changing significantly in the lead up to the

01:32:29.050 --> 01:32:35.810
filing. So that was our miss. On the comments

01:32:35.810 --> 01:32:38.109
from McKesson's council, I'll just say that we

01:32:38.109 --> 01:32:41.239
generally agree. We hope we can get things. Resolves

01:32:41.239 --> 01:32:43.039
and but we obviously we know where to find your

01:32:43.039 --> 01:32:48.500
honor And then finally, I always take great pride

01:32:48.500 --> 01:32:51.079
in any kind of compliment from mr. Gold. So I

01:32:51.079 --> 01:32:55.880
appreciate that Unless your honor has any other

01:32:55.880 --> 01:32:57.600
questions for me I mean, I think our plan is

01:32:57.600 --> 01:32:59.760
to to circulate an updated order. Obviously,

01:32:59.760 --> 01:33:01.920
we got to get the banks to sign off on that We'll

01:33:01.920 --> 01:33:05.100
send it to mr. Sponder so he can review how we've

01:33:05.100 --> 01:33:09.899
incorporated his changes, but Unless there were

01:33:09.899 --> 01:33:11.779
other questions for me, Your Honor, coming out

01:33:11.779 --> 01:33:13.399
of the comments from the other parties, I think

01:33:13.399 --> 01:33:15.699
that's all we have. Unless Mr. Ventola would

01:33:15.699 --> 01:33:18.479
like to add anything here. I'll turn to Mr. Ventola

01:33:18.479 --> 01:33:23.039
in a second. My only concern is, I guess it's

01:33:23.039 --> 01:33:25.039
the downside of starting an afternoon hearing,

01:33:25.279 --> 01:33:29.100
is we get crushed for time. And you all tend

01:33:29.100 --> 01:33:32.600
to work much later hours than our court staff.

01:33:33.000 --> 01:33:36.359
So we need to coordinate. If you need an order

01:33:36.359 --> 01:33:43.979
entered, today, we need to at least focus on

01:33:43.979 --> 01:33:46.199
trying to get it down to us as soon as possible,

01:33:46.500 --> 01:33:49.600
coordinate with my chambers. I'll make sure that

01:33:49.600 --> 01:33:54.079
the clerk's office knows it's coming. I believe

01:33:54.079 --> 01:33:55.840
it's being updated in real time, Your Honor,

01:33:56.000 --> 01:33:58.159
so hopefully this can all be done very quickly.

01:33:58.539 --> 01:34:00.760
And we apologize for imposing on the court, but

01:34:00.760 --> 01:34:03.750
we do need to... turn our bank accounts back

01:34:03.750 --> 01:34:05.829
on in the morning and start getting money out

01:34:05.829 --> 01:34:08.810
to keep operations running smoothly. Understood.

01:34:09.189 --> 01:34:11.750
Just coordinate with my keep my chambers of what

01:34:11.750 --> 01:34:17.170
you all do in the loop. Mr. Ventola? Thank you

01:34:17.170 --> 01:34:19.890
your honor. I did want to address the challenge

01:34:19.890 --> 01:34:23.619
period point as well. In light of how quickly

01:34:23.619 --> 01:34:25.739
this case is moving, we do think having it triggered

01:34:25.739 --> 01:34:30.039
off the interim order and or the appointment

01:34:30.039 --> 01:34:32.420
of the committee, having the 60 days go from

01:34:32.420 --> 01:34:34.819
then is important here. I will certainly tell

01:34:34.819 --> 01:34:37.220
the court we are prepared to share perfection,

01:34:37.579 --> 01:34:40.800
evidence, documentation to any committee. immediately

01:34:40.800 --> 01:34:43.600
upon their appointment and I do understand that

01:34:43.600 --> 01:34:45.960
the US trustee is moving quickly to get a committee

01:34:45.960 --> 01:34:48.520
formed which we really appreciate but we will

01:34:48.520 --> 01:34:51.140
not in any way be an obstacle to providing whatever

01:34:51.140 --> 01:34:54.060
needs to be reviewed for people to get comfortable

01:34:54.060 --> 01:34:56.720
with any challenge issues. And we, of course,

01:34:56.800 --> 01:34:58.600
are quite confident there are no challenge issues

01:34:58.600 --> 01:35:00.500
given what you've already heard and already know

01:35:00.500 --> 01:35:03.079
about the lending facilities. And then just,

01:35:03.279 --> 01:35:05.680
I also wanted to address the point that Mr. McCullough

01:35:05.680 --> 01:35:08.539
raised with regard to Green Dot Bank. We don't

01:35:08.539 --> 01:35:10.659
believe the debtors are granting liens on property

01:35:10.659 --> 01:35:13.760
that is not theirs, nor could they, so we are

01:35:13.760 --> 01:35:17.760
not seeking any liens against property not of

01:35:17.760 --> 01:35:19.880
the estate. And again, if there's any other questions

01:35:19.880 --> 01:35:21.539
you have, Your Honor, please let me know. Thank

01:35:21.539 --> 01:35:25.600
you. All right, thank you. Mr. Sponger? Thank

01:35:25.600 --> 01:35:27.140
you your honor Jeff Sponger from the office the

01:35:27.140 --> 01:35:29.159
United States trustee your honor as you know

01:35:29.159 --> 01:35:32.560
it is normal To have the 60 days from the final

01:35:32.560 --> 01:35:34.680
order for parties and interest and then 60 days

01:35:34.680 --> 01:35:37.579
from appointment of the committee With respect

01:35:37.579 --> 01:35:39.960
to the committee my thought here is if your honor

01:35:39.960 --> 01:35:42.979
wants to do something different is to make both

01:35:43.500 --> 01:35:45.460
uh... sixty days from the appointment of the

01:35:45.460 --> 01:35:47.819
committee uh... will try to get that in as quick

01:35:47.819 --> 01:35:50.060
as possible i also realize that the second hearing

01:35:50.060 --> 01:35:52.739
isn't going to be a total of six a month away

01:35:52.739 --> 01:35:55.420
uh... so i i i understand that be a lot of time

01:35:55.420 --> 01:35:58.140
but my thought was made as a compromise to do

01:35:58.140 --> 01:36:00.779
sixty days for partisan interest in the committee

01:36:00.779 --> 01:36:02.720
from the appointment of the committee thank you

01:36:02.720 --> 01:36:05.699
all right thank you miss wonder uh... with respect

01:36:05.699 --> 01:36:10.319
to the with respect to the challenge period yes

01:36:10.319 --> 01:36:13.739
it is normal and the court supports normally

01:36:13.739 --> 01:36:17.619
having that challenge period run from the final

01:36:17.619 --> 01:36:23.119
order. I think it's a good thing we don't normally

01:36:23.119 --> 01:36:28.020
have Chapter 22s. It's not something that we

01:36:28.020 --> 01:36:32.920
strive for. But when we have it, the fact of

01:36:32.920 --> 01:36:37.000
the matter is much of what's been put in place

01:36:37.000 --> 01:36:40.909
as far as liens was a direct result of what went

01:36:40.909 --> 01:36:45.270
on in the prior case a year and a half ago, or

01:36:45.270 --> 01:36:50.189
if that long, or eight months ago. So it's a

01:36:50.189 --> 01:36:57.170
narrow window to examine. It's a smaller path

01:36:57.170 --> 01:37:01.970
to have to proceed upon by any committee. What

01:37:01.970 --> 01:37:05.250
I'm going to do is order, include in the order

01:37:05.250 --> 01:37:07.829
and permit the 68th challenge period to run from

01:37:07.829 --> 01:37:12.279
the interim. If... During and if there's a problem

01:37:12.279 --> 01:37:14.199
with the appoint and there's delays with the

01:37:14.199 --> 01:37:15.779
appointment of a committee and the committee

01:37:15.779 --> 01:37:20.479
has an issue and requires more time They can

01:37:20.479 --> 01:37:23.100
get in front of me. I won't make sure that happens

01:37:23.100 --> 01:37:25.779
and I'll hear why they need more time And if

01:37:25.779 --> 01:37:30.619
it's reasonable, I'll address it but I Given

01:37:30.619 --> 01:37:32.560
the circumstances of this case I think it is

01:37:32.560 --> 01:37:34.180
appropriate to move forward quickly and I think

01:37:34.180 --> 01:37:37.420
it's appropriate to start the clock with the

01:37:37.420 --> 01:37:40.239
appointment of the interim with the execution

01:37:40.239 --> 01:37:45.819
or the entry of the interim order. Most of the

01:37:45.819 --> 01:37:48.760
other issues that have been raised will be addressed

01:37:48.760 --> 01:37:50.600
as part of the final hearing. We'll fix that

01:37:50.600 --> 01:37:54.000
for June 6th at 1130 and I will go ahead and

01:37:54.000 --> 01:38:00.880
I will approve the finance on interim basis as

01:38:00.880 --> 01:38:06.060
discussed and described. All right. I believe

01:38:06.060 --> 01:38:11.899
that takes us to The, uh, fifth item on the agenda,

01:38:12.739 --> 01:38:16.560
uh, and I'll hear from Denver's Council. Thank

01:38:16.560 --> 01:38:18.560
you, Your Honor. I'll cede the podium to my colleague,

01:38:18.699 --> 01:38:37.460
Nick Criswold. Great, thank you. Your honor Nicholas

01:38:37.460 --> 01:38:41.579
Chris love all of ice those counsel to the debtors

01:38:41.579 --> 01:38:43.859
The next item on the agenda is docket number

01:38:43.859 --> 01:38:48.279
25, which is the closing procedures motion Your

01:38:48.279 --> 01:38:51.199
honor we filed the form of order at docket number

01:38:51.199 --> 01:38:53.819
60 and we will have some changes We've been in

01:38:53.819 --> 01:38:56.579
discussions with a number of the stakeholders

01:38:56.579 --> 01:38:59.000
and landlords trade counterparties in the US

01:38:59.000 --> 01:39:02.220
trustee The revised order will reflect comments

01:39:02.220 --> 01:39:04.319
from landlords regarding side letters, other

01:39:04.319 --> 01:39:06.739
changes largely conforming to the orders entered

01:39:06.739 --> 01:39:10.899
in the 2023 cases. Language reflective of discussions

01:39:10.899 --> 01:39:13.300
with the U .S. trustee regarding the debtor's

01:39:13.300 --> 01:39:15.140
consumer privacy policies as well as the payment

01:39:15.140 --> 01:39:22.779
of the consulting fees. And then some certain

01:39:22.779 --> 01:39:25.920
trade vendor language that also would be included.

01:39:26.100 --> 01:39:27.819
One thing to flag, we've been in discussions

01:39:27.819 --> 01:39:30.729
with Council to the dip agent and the consultants

01:39:30.729 --> 01:39:33.069
and are tailoring additional functionality around

01:39:33.069 --> 01:39:36.010
the consulting the consultants fees While we

01:39:36.010 --> 01:39:38.069
are not yet finalized there the parties are in

01:39:38.069 --> 01:39:40.369
close coordination and hope to come to a resolution

01:39:40.369 --> 01:39:42.930
shortly after the hearing and we intend to submit

01:39:42.930 --> 01:39:45.989
a proposed Consensual interim order along with

01:39:45.989 --> 01:39:50.250
red lines once that it's been finalized your

01:39:50.250 --> 01:39:53.119
honor the The relief requested under the motion

01:39:53.119 --> 01:39:56.779
is substantially similar to the relief that was

01:39:56.779 --> 01:40:00.199
granted in 2023 cases, and accordingly, we would

01:40:00.199 --> 01:40:04.899
request that Your Honor grant this order subject

01:40:04.899 --> 01:40:08.560
to, obviously, the caveat on the consultant's

01:40:08.560 --> 01:40:12.720
PEPs. All right. Thank you. Mr. Sponder, any

01:40:12.720 --> 01:40:15.300
issues you wish to raise? Thank you, Your Honor.

01:40:15.460 --> 01:40:17.199
Jeff Sponder from the Office of the United States

01:40:17.199 --> 01:40:19.340
Trustee. The United States Trustee has no objection

01:40:19.340 --> 01:40:22.939
to the entry of the interim order as we understand

01:40:22.939 --> 01:40:24.840
our requested revisions have been or will be

01:40:24.840 --> 01:40:27.439
incorporated in the proposed interim order. Thank

01:40:27.439 --> 01:40:31.220
you, Your Honor. All right. And I'm going to

01:40:31.220 --> 01:40:32.979
keep moving forward with the calendar unless

01:40:32.979 --> 01:40:36.460
I see raised hands. And since I see no raised

01:40:36.460 --> 01:40:41.819
hands, then I'm going to grant the motion on

01:40:41.819 --> 01:40:44.760
interim basis, final hearing. Same day, same

01:40:44.760 --> 01:40:48.439
time, June 6, 1130. Thank you, Your Honor. Thank

01:40:48.439 --> 01:40:51.500
you. I will hand the podium over to my colleague.

01:40:53.880 --> 01:41:02.119
That chair is getting a workout. Good afternoon,

01:41:02.239 --> 01:41:04.279
Your Honor. Claudia Tobler, proposed council

01:41:04.279 --> 01:41:08.180
for the debtors. I'm here to seek entry of the

01:41:08.180 --> 01:41:10.560
leaps and feet owned property auction and sale

01:41:10.560 --> 01:41:15.359
motion, which is docket number 22. Like my colleague

01:41:15.359 --> 01:41:19.199
who just presented the location sale procedures

01:41:19.199 --> 01:41:23.340
motion, we did get numerous comments from various

01:41:23.340 --> 01:41:26.119
stakeholders, including the U .S. trustees and

01:41:26.119 --> 01:41:30.840
various landlords. I will say that we have incorporated

01:41:30.840 --> 01:41:33.199
most of those comments into a revised form of

01:41:33.199 --> 01:41:37.220
order. They address issues such as timing of

01:41:37.220 --> 01:41:39.939
objections, notice, et cetera. These are procedural

01:41:39.939 --> 01:41:42.399
motions that are intended to establish a streamlined

01:41:42.399 --> 01:41:45.600
auction and sale process for leases and fee on

01:41:45.600 --> 01:41:48.060
process properties as they become available from

01:41:48.060 --> 01:41:50.020
the other sale procedures that have been previously

01:41:50.020 --> 01:41:52.779
described. And a lot of the comments go around

01:41:52.779 --> 01:41:55.319
providing a little bit more structure and transparency

01:41:55.319 --> 01:41:57.840
around those procedures, especially as it relates

01:41:57.840 --> 01:42:01.500
to notice. So I will have a few statements that

01:42:01.500 --> 01:42:03.819
I'll make on the record that I think will supplement

01:42:03.819 --> 01:42:06.420
what we've agreed to in connection with the revised

01:42:06.420 --> 01:42:09.819
orders. In particular, and one thing that has

01:42:09.819 --> 01:42:12.659
been mentioned earlier in terms of making these

01:42:12.659 --> 01:42:15.380
various procedures relating to specialty leases

01:42:15.380 --> 01:42:18.539
more synchronized, I can state on the record,

01:42:18.659 --> 01:42:21.119
again, this is as it relates to docket number

01:42:21.119 --> 01:42:25.159
22, that we will agree to extend the objection

01:42:25.159 --> 01:42:28.000
deadline 14 days from the date on which the notice

01:42:28.000 --> 01:42:30.060
of the auction and hearing are filed on the docket.

01:42:30.489 --> 01:42:32.829
That's the general objection deadline to the

01:42:32.829 --> 01:42:35.970
sale of the lease. Once a lease has been selected

01:42:35.970 --> 01:42:39.489
for sale after an auction, there will be a specific

01:42:39.489 --> 01:42:42.109
objection deadline three days prior to the auction.

01:42:42.109 --> 01:42:45.409
It's based on the selected buyers, adequate assurance,

01:42:45.510 --> 01:42:48.310
and similar other types of objection bases that

01:42:48.310 --> 01:42:50.750
couldn't have been raised previously. Again,

01:42:50.789 --> 01:42:53.529
we've spoken to various councils of the landlords.

01:42:53.710 --> 01:42:56.609
We have also incorporated comments from the U

01:42:56.609 --> 01:43:01.000
.S. trustee into the revised procedures. sure

01:43:01.000 --> 01:43:03.960
as I sit here right now that we've resolved everything,

01:43:03.960 --> 01:43:06.659
and I do want to make sure to give council opportunities

01:43:06.659 --> 01:43:09.619
to raise anything that we haven't addressed to

01:43:09.619 --> 01:43:11.720
the extent we haven't. I think it's just a matter

01:43:11.720 --> 01:43:14.899
of wordsmithing, and I'm optimistic that we'll

01:43:14.899 --> 01:43:16.880
be able to get your final revised form of order

01:43:16.880 --> 01:43:19.279
addressing all of these points before the close

01:43:19.279 --> 01:43:23.020
of business today. And with that, Your Honor,

01:43:23.100 --> 01:43:25.140
unless you have any questions in terms of what

01:43:25.140 --> 01:43:28.439
the motion overall provides, which is basically

01:43:28.439 --> 01:43:30.659
a process very similar to what you would see

01:43:30.659 --> 01:43:33.460
ordinarily for executory contracts except it

01:43:33.460 --> 01:43:35.479
allows to bundle leases and fee owned properties

01:43:35.479 --> 01:43:37.520
as again they fall out of the other processes.

01:43:38.239 --> 01:43:41.100
We would ask for entry and approval of the order

01:43:41.100 --> 01:43:44.060
on an interim basis with a final order to be

01:43:44.060 --> 01:43:48.619
held entered and hearing held on June 6. All

01:43:48.619 --> 01:43:51.100
right. Thank you. Let me go to the raised hands.

01:43:51.439 --> 01:43:58.029
Mr. Fleischer. Good afternoon, Scott Fleischer,

01:43:58.130 --> 01:44:00.010
Barclay Damon on behalf of a number of the letters

01:44:00.010 --> 01:44:04.069
of landlords. We do appreciate the 14 -day clarification

01:44:04.069 --> 01:44:07.149
because that was one of the issues that was still

01:44:07.149 --> 01:44:09.750
pending when the hearing was beginning, so happy

01:44:09.750 --> 01:44:13.329
to hear that part. It sounds still like there's

01:44:13.329 --> 01:44:16.430
going to be potentially two objections that landlords

01:44:16.430 --> 01:44:19.510
have to make. It's that initial one with 14 days

01:44:19.510 --> 01:44:22.430
notice, but then if it's subject to an auction,

01:44:22.789 --> 01:44:24.890
then there's some other sort of procedure that's

01:44:24.890 --> 01:44:26.989
going along with it. And I understand they say

01:44:26.989 --> 01:44:30.010
it would be three days prior to a sale hearing,

01:44:30.050 --> 01:44:32.750
but it's sort of unclear how many days there

01:44:32.750 --> 01:44:35.449
could be in between when an auction would end

01:44:35.449 --> 01:44:39.229
and then. So I think we need some further clarification

01:44:39.229 --> 01:44:41.210
that there would be due process on that point.

01:44:41.470 --> 01:44:43.590
And really, that would be the portion where the

01:44:43.590 --> 01:44:46.449
landlords really need the most notice, right?

01:44:46.449 --> 01:44:49.210
Because that's when the proposed assignee is

01:44:49.210 --> 01:44:51.270
going to be made clear when adequate assurance

01:44:51.270 --> 01:44:54.130
information needs to be provided. So I just wanted

01:44:54.130 --> 01:44:58.810
to get some more. On that one. All right. Thank

01:44:58.810 --> 01:45:03.510
you. Ms. Heilman? Thank you, Your Honor, for

01:45:03.510 --> 01:45:06.350
the record. Again, Leslie Heilman, Ballard Spar

01:45:06.350 --> 01:45:08.630
on behalf of a number of the debtors landlords

01:45:08.630 --> 01:45:11.649
as noted on the record earlier in this hearing.

01:45:12.010 --> 01:45:16.750
Your honor, Mr. Fleischer has pointed out the

01:45:16.750 --> 01:45:19.409
crux of the remaining issue on this. We have

01:45:19.409 --> 01:45:21.470
worked with the debtors and they have incorporated

01:45:21.470 --> 01:45:23.670
a number of comments that we raised prior to

01:45:23.670 --> 01:45:26.569
the caring to resale procedures order. And we

01:45:26.569 --> 01:45:29.369
don't take any issue with the debtors seeking

01:45:29.369 --> 01:45:33.350
approval of procedures to run an auction process

01:45:33.350 --> 01:45:35.729
and solicit bids for the sale of their leases.

01:45:36.130 --> 01:45:39.609
And in my understanding of the timeline is that

01:45:39.680 --> 01:45:42.800
for those auction procedures, they're proposing

01:45:42.800 --> 01:45:47.319
that they file an auction notice that will identify

01:45:47.319 --> 01:45:49.939
when the auction will be held and when objections

01:45:49.939 --> 01:45:53.180
to the auction procedures will need to be raised,

01:45:53.260 --> 01:45:56.359
which I understand that is. So it's my understanding

01:45:56.359 --> 01:46:00.199
it's a 21 day notice process in which parties

01:46:00.199 --> 01:46:03.699
will have 14 days to object to the notice and

01:46:03.699 --> 01:46:05.920
auction procedure. So the notice of the auction

01:46:05.920 --> 01:46:08.880
itself. What is missing from these procedures

01:46:08.880 --> 01:46:11.899
is when there is a auction held and then there's

01:46:11.899 --> 01:46:15.439
a notice of successful bidder. The procedures

01:46:15.439 --> 01:46:19.140
are silent as to the time frame in which to notice

01:46:19.140 --> 01:46:22.500
the successful bidder and to raise specific objections

01:46:22.500 --> 01:46:24.939
to the successful bidder and get to a hearing.

01:46:25.340 --> 01:46:29.880
So if I understand Ms. Togler correctly. They're

01:46:29.880 --> 01:46:32.739
going to file a notice and we will have 14 days

01:46:32.739 --> 01:46:35.680
in which to file general objections to any sale

01:46:35.680 --> 01:46:39.060
and release and auction process. Then the auction

01:46:39.060 --> 01:46:42.899
will be held and then there will be a further

01:46:42.899 --> 01:46:45.420
time in which we'll have three days prior to

01:46:45.420 --> 01:46:49.479
a hearing to object to the successful bidder.

01:46:49.699 --> 01:46:54.819
Based on my calculations, if it's a 21 -day process

01:46:54.819 --> 01:46:57.500
and the auction is held at or around the time

01:46:57.500 --> 01:47:00.420
of the 14 -day objection deadline, that means

01:47:00.420 --> 01:47:02.960
the auction only leaves seven days before the

01:47:02.960 --> 01:47:05.060
sale hearing. So if we have a successful bid

01:47:05.060 --> 01:47:08.500
notice filed on the 14th day, that only gives

01:47:08.500 --> 01:47:11.899
us less than seven days prior or four days in

01:47:11.899 --> 01:47:14.319
which to object to the actual successful bidder.

01:47:14.600 --> 01:47:17.119
And this is a little different than the sale

01:47:17.119 --> 01:47:19.880
processes that were approved by Your Honor in

01:47:19.880 --> 01:47:22.680
the first case, as well even with connection

01:47:22.680 --> 01:47:25.760
with the expedited bidding procedures that are

01:47:25.760 --> 01:47:28.420
being approved for the sale of the pharmacy assets

01:47:28.420 --> 01:47:31.199
and the remaining assets. What these procedures

01:47:31.199 --> 01:47:35.439
set up is for a sale of leases either on an individual

01:47:35.439 --> 01:47:38.619
basis or lots of leases or designation rights

01:47:38.619 --> 01:47:41.600
to third -party assignments who are not going

01:47:41.600 --> 01:47:44.989
to be continuing to operate pharmacies. and who

01:47:44.989 --> 01:47:48.250
are so there's a lot more that goes into and

01:47:48.250 --> 01:47:50.590
we need the time from the time the successful

01:47:50.590 --> 01:47:54.069
bidder is identified in which to have adequate

01:47:54.069 --> 01:47:57.149
and reasonable notice. This process has been

01:47:57.149 --> 01:48:00.869
approved recently as recent and similar processes

01:48:00.869 --> 01:48:04.210
in Big Watts, Joanne's and Party City where there

01:48:04.210 --> 01:48:07.699
has been numerous rounds of Mesa's soul. And

01:48:07.699 --> 01:48:11.220
in each of those, there was 14 days or 21 days

01:48:11.220 --> 01:48:14.539
notice of those actual sales in which we went

01:48:14.539 --> 01:48:18.199
from an auction or a notice of a successful bidder

01:48:18.199 --> 01:48:21.279
to final approval bias at a sale hearing. And

01:48:21.279 --> 01:48:24.140
we needed each, I can assure you, Your Honor,

01:48:24.300 --> 01:48:27.699
we needed every day of that notice because we're

01:48:27.699 --> 01:48:31.859
looking at essentially a mini, potentially a

01:48:31.859 --> 01:48:35.840
mini contested trial with respect to each and

01:48:35.840 --> 01:48:39.199
every lease. and each and every assignee. And

01:48:39.199 --> 01:48:42.939
there was over 240 maces sold in Bay Blot. There

01:48:42.939 --> 01:48:45.960
was over, I'm sorry, it was 300 and some in Bay

01:48:45.960 --> 01:48:49.560
Blot, over 240 maces in Cardi City. And those

01:48:49.560 --> 01:48:52.159
weren't just to a single buyer. They were to,

01:48:52.520 --> 01:48:56.439
at any given time, we had 10 maces in play in

01:48:56.439 --> 01:48:58.359
which were being sold to 10 different buyers.

01:48:58.960 --> 01:49:02.699
So the point in time from the time the successful

01:49:02.699 --> 01:49:06.600
bidder is identified, to a potential hearing,

01:49:07.020 --> 01:49:09.220
Your Honor, is the timeframe that we are most

01:49:09.220 --> 01:49:11.939
concerned about and the procedures are silent

01:49:11.939 --> 01:49:14.859
and actually just lead to the discretion of the

01:49:14.859 --> 01:49:19.119
debtor to establish a timeline on some reasonable

01:49:19.119 --> 01:49:21.439
notice that they believe is reasonable for the

01:49:21.439 --> 01:49:24.199
net. So that is our issue, Your Honor. I think

01:49:24.199 --> 01:49:27.479
that in order to harmonize the different procedures,

01:49:27.939 --> 01:49:31.510
we would... we would at a minimum require at

01:49:31.510 --> 01:49:34.909
least 14 days notice from the time the successful

01:49:34.909 --> 01:49:38.310
bidder is identified in which to object. And

01:49:38.310 --> 01:49:40.829
in the other processes that have been held, is

01:49:40.829 --> 01:49:45.470
a hearing was only scheduled if necessary, if

01:49:45.470 --> 01:49:47.949
an order, a consensual order couldn't be reached.

01:49:48.229 --> 01:49:51.689
And that was on, I think, seven or 10 days notice.

01:49:52.000 --> 01:49:55.000
of a hearing date. So we don't necessarily need

01:49:55.000 --> 01:49:59.079
to set a hearing on at least asset sale procedures

01:49:59.079 --> 01:50:04.079
today, but we do need at least adequate notice

01:50:04.079 --> 01:50:07.680
of who the buyer is, what the cure is, what their

01:50:07.680 --> 01:50:09.539
adequate assurance is, and then a reasonable

01:50:09.539 --> 01:50:12.239
period of time in which to review that and raise

01:50:12.239 --> 01:50:15.640
objections if necessary. All right. Thank you.

01:50:15.699 --> 01:50:18.640
Thank you for clarifying. Mr. Gold, and then

01:50:18.640 --> 01:50:22.989
I'll get to Mrs. Fonder. Thank you again, Your

01:50:22.989 --> 01:50:24.869
Honor. Ivan Gold for a number of the debtors'

01:50:25.149 --> 01:50:27.750
landlords. I would just like to join in Ms. Heilman's

01:50:27.750 --> 01:50:29.909
comments and note to the court that the simplest

01:50:29.909 --> 01:50:33.810
way to look at how these procedures are different

01:50:33.810 --> 01:50:37.909
is, as Ms. Heilman said, these are harder assignments.

01:50:38.590 --> 01:50:42.289
The first round is pharmacy buyers. The use under

01:50:42.289 --> 01:50:44.609
shopping center leases is going to be the same.

01:50:45.470 --> 01:50:48.189
These are the processes where a pharmacy buyer

01:50:48.189 --> 01:50:51.010
did not take the lease. So again, depending on

01:50:51.010 --> 01:50:53.430
the lease terms, we could see a multitude of

01:50:53.430 --> 01:50:58.770
potential alternate uses being proposed for literally

01:50:58.770 --> 01:51:03.510
hundreds of leases from this debtor and compressed

01:51:03.510 --> 01:51:06.310
the time period to deal with the broader list

01:51:06.310 --> 01:51:08.829
where a significant number of the debtors leases

01:51:08.829 --> 01:51:10.590
are subject to the heightened shopping center

01:51:10.590 --> 01:51:15.289
standards. A quick runway of single digit days

01:51:15.289 --> 01:51:18.189
and not even business days, but calendar days.

01:51:18.789 --> 01:51:21.630
Under the three days the debtors have thrown

01:51:21.630 --> 01:51:23.909
out there, it literally could be the old Friday

01:51:23.909 --> 01:51:27.170
to Monday. And the issues that would be confronted

01:51:27.170 --> 01:51:30.750
in these lease sales are more complex and more

01:51:30.750 --> 01:51:34.069
varied than would be presented in the first round

01:51:34.069 --> 01:51:37.390
where we got 14. So I think that's the lens you

01:51:37.390 --> 01:51:39.689
should look at this. We understand the need to

01:51:39.689 --> 01:51:43.449
liquidate these assets for the benefit of multiple

01:51:43.449 --> 01:51:46.649
stakeholders in this case. But when you consider...

01:51:48.039 --> 01:51:50.880
arranging for witnesses, arranging for negotiations

01:51:50.880 --> 01:51:54.260
to avoid taking time of your honor. When your

01:51:54.260 --> 01:51:57.000
practice teaches us if a deadline is three to

01:51:57.000 --> 01:51:58.880
five days away, particularly if it's an intervening

01:51:58.880 --> 01:52:01.380
weekend, you just file an objection because you

01:52:01.380 --> 01:52:05.899
got to, as opposed to taking time to potentially

01:52:05.899 --> 01:52:09.340
work out a consensual structure. So I just want

01:52:09.340 --> 01:52:11.479
to echo Ms. Heilman's comments and point out

01:52:11.479 --> 01:52:13.720
to your honor, these are the hard ones. Thank

01:52:13.720 --> 01:52:17.250
you. All right, thank you. Before I address those

01:52:17.250 --> 01:52:20.369
issues, Mr. Sponder? Thank you, Your Honor. Jeff

01:52:20.369 --> 01:52:21.869
Sponder from the Office of the United States

01:52:21.869 --> 01:52:24.109
Trustee. Your Honor, no objection to the entry

01:52:24.109 --> 01:52:26.210
of the interim order as the U .S. Trustee requested

01:52:26.210 --> 01:52:28.670
revisions have been or will be incorporated in

01:52:28.670 --> 01:52:30.930
the interim order. Thank you, Your Honor. All

01:52:30.930 --> 01:52:36.510
right. So it sounds like we're close, but there

01:52:36.510 --> 01:52:40.729
needs to be some tweaking or some more work done.

01:52:40.869 --> 01:52:45.560
I think Ms. Tolley acknowledged it. I have a

01:52:45.560 --> 01:52:49.520
calendar tomorrow as well. To the extent the

01:52:49.520 --> 01:52:51.760
parties can't agree on language for an interim

01:52:51.760 --> 01:52:55.619
order and you can get it down to us today, great.

01:52:56.180 --> 01:52:59.859
We'll enter it. If you can tweak it tomorrow

01:52:59.859 --> 01:53:04.760
morning, great. If you need or if you want the

01:53:04.760 --> 01:53:08.140
court, with respect to the interim order, to

01:53:08.140 --> 01:53:12.619
come down and decide if there's an issue that...

01:53:12.510 --> 01:53:15.310
you can't resolve, it has to be included in the

01:53:15.310 --> 01:53:18.710
interim order, then I'm going to leave open 1130

01:53:18.710 --> 01:53:23.210
tomorrow morning after my ordinary Thursday morning

01:53:23.210 --> 01:53:26.649
calendar and I can address this or if we have

01:53:26.649 --> 01:53:30.270
other motions, just language issues or you need

01:53:30.270 --> 01:53:34.130
the court to make a call. For the most part what

01:53:34.130 --> 01:53:36.430
I'm hearing is nobody's really jumping up and

01:53:36.430 --> 01:53:40.750
down against the order, the interim order. It's

01:53:40.750 --> 01:53:47.560
just concerns on some of the timing as part of

01:53:47.560 --> 01:53:50.520
the process. If the parties can agree, great.

01:53:50.539 --> 01:53:54.560
If not, I'll make the call tomorrow if it can't

01:53:54.560 --> 01:53:59.039
wait until the final hearing. All right? So we'll

01:53:59.039 --> 01:54:01.279
mark it granted in order to be submitted, but

01:54:01.279 --> 01:54:04.619
you'll let my chambers know with this or any

01:54:04.619 --> 01:54:07.479
other motion coming down the pike this afternoon

01:54:07.479 --> 01:54:11.119
if you need the court's attention additionally

01:54:11.119 --> 01:54:15.850
tomorrow. Hopefully it'll get resolved. So before

01:54:15.850 --> 01:54:19.289
we get to the seventh matter on the agenda, my

01:54:19.289 --> 01:54:21.229
staff here needs to take a five -minute break.

01:54:21.770 --> 01:54:26.210
So we'll just put you all on hold. Don't go anywhere.

01:54:26.850 --> 01:54:29.569
We'll just turn off the video and the audio.

01:54:30.350 --> 01:54:33.130
Thank you. Be back in five. Thank you, Your Honor.

01:54:33.569 --> 01:54:41.449
Thanks. And we are back. But everybody else...

01:54:41.680 --> 01:54:52.619
Come back as well Looking for debtors council

01:54:52.619 --> 01:55:00.180
who wants to There we go who's taking the chair

01:55:00.180 --> 01:55:09.789
Your honor, please get in from coal shots If

01:55:09.789 --> 01:55:12.930
we're ready to move on to the next agenda item,

01:55:13.510 --> 01:55:15.949
Mark Zuckerman from Cole Shots is going to handle

01:55:15.949 --> 01:55:18.729
the next item on the agenda, which is number

01:55:18.729 --> 01:55:23.470
seven on the agenda. We are ready. Mr. Zuckerman.

01:55:27.130 --> 01:55:31.869
He has to. Can't hear you. There you go. Can

01:55:31.869 --> 01:55:33.869
you hear me now, Your Honor? Yes, we can. Thank

01:55:33.869 --> 01:55:36.350
you. Good afternoon. Good afternoon. For the

01:55:36.350 --> 01:55:39.420
record, Mark Zuckerman from Cole Shots. for the

01:55:39.420 --> 01:55:43.439
debtors. Your honor, I'll be presenting the cash

01:55:43.439 --> 01:55:45.899
management motion and the wages motion, which

01:55:45.899 --> 01:55:49.800
are numbers seven and eight on the agenda. Hopefully,

01:55:50.359 --> 01:55:52.260
I think we'll be able to go through these two

01:55:52.260 --> 01:55:56.439
pretty quickly. Starting with cash management,

01:55:56.579 --> 01:56:00.020
which was filed as docket number 23. Your honor,

01:56:00.140 --> 01:56:02.180
the debtors are seeking authority to continue

01:56:02.180 --> 01:56:04.399
using their cash management system in the ordinary

01:56:04.399 --> 01:56:08.010
course. I'll just say that the cash management

01:56:08.010 --> 01:56:10.750
system is substantially the same as when the

01:56:10.750 --> 01:56:14.029
debtors filed in 2023, except simplified because

01:56:14.029 --> 01:56:17.010
they sold the Elixir business. So there are now

01:56:17.010 --> 01:56:19.090
only four non -debtor accounts. They're all with

01:56:19.090 --> 01:56:21.729
Elixir Insurance Company, and there's the minimus

01:56:21.729 --> 01:56:23.609
activity, and the debtors don't expect to have

01:56:23.609 --> 01:56:27.729
any cash transactions with those accounts. We've

01:56:27.729 --> 01:56:30.310
provided the U .S. Trustee's office with a draft

01:56:30.310 --> 01:56:33.890
of the motion before it was filed. uh, we incorporated

01:56:33.890 --> 01:56:38.569
their comments to the interim order. Um, so unless

01:56:38.569 --> 01:56:41.229
there are any other comments, Your Honor, we'd

01:56:41.229 --> 01:56:44.149
ask that the, um, interim relief be granted and

01:56:44.149 --> 01:56:48.909
the proposed interim order be entered. Mr. Sponder.

01:56:50.489 --> 01:56:51.850
Good afternoon, Your Honor. Jeff Sponder from

01:56:51.850 --> 01:56:54.090
the Office of the United States Trustee. Um,

01:56:54.090 --> 01:56:56.819
as I'm gonna say to most of these, um, motions

01:56:56.819 --> 01:56:58.779
and orders, Your Honor. We have no objection

01:56:58.779 --> 01:57:01.659
to the entry of the interim order, as we understand

01:57:01.659 --> 01:57:03.699
the U .S. Trustee requested revisions have been

01:57:03.699 --> 01:57:05.619
or will be incorporated in the interim order.

01:57:05.800 --> 01:57:07.159
Thank you, Your Honor. All right. I'll just check

01:57:07.159 --> 01:57:09.859
in with you with each one. Thank you, Your Honor.

01:57:10.140 --> 01:57:13.409
Mr. Vandola. Thank you, Your Honor. John Ventola

01:57:13.409 --> 01:57:15.310
on behalf of Bank of America. We don't have any

01:57:15.310 --> 01:57:17.329
comments on the order, and we certainly support

01:57:17.329 --> 01:57:19.770
its entry. I would just ask, Your Honor, at the

01:57:19.770 --> 01:57:21.970
risk of imposing on you and your staff, this

01:57:21.970 --> 01:57:23.550
is another order that would be good to get entered

01:57:23.550 --> 01:57:26.510
today, in conjunction with the dip, just to make

01:57:26.510 --> 01:57:29.529
sure there's no interruptions or the like in

01:57:29.529 --> 01:57:31.850
the debtors' banking services. So otherwise,

01:57:32.050 --> 01:57:34.890
we support the motion, the order as is. Thank

01:57:34.890 --> 01:57:37.449
you, Your Honor. Our goal is to get them all

01:57:37.449 --> 01:57:39.750
entered today. Great, thank you. What I'm going

01:57:39.750 --> 01:57:44.189
to ask is debtors council, do it collectively.

01:57:44.250 --> 01:57:48.550
I don't want it to come in on a rolling basis

01:57:48.550 --> 01:57:50.689
because then we just never know when there's

01:57:50.689 --> 01:57:53.329
another order coming in. Send them all to us,

01:57:53.409 --> 01:57:58.369
send it down to our chambers email address. Our

01:57:58.369 --> 01:58:04.430
staff can get, with just a note that they've

01:58:04.430 --> 01:58:09.609
all been agreed to or or the original without

01:58:09.609 --> 01:58:14.529
any modifications. And we'll get them entered.

01:58:16.829 --> 01:58:19.909
Number eight, Mr. Zuckerman. Thank you, Judge.

01:58:20.210 --> 01:58:23.189
Next up is the wages motion that was filed as

01:58:23.189 --> 01:58:26.470
docket number 14. First, I'd just like to thank

01:58:26.470 --> 01:58:29.130
the court for entering the emergency, what I'll

01:58:29.130 --> 01:58:32.010
refer to as the emergency payroll order. The

01:58:32.010 --> 01:58:35.250
company needed that order entered to ensure that...

01:58:35.260 --> 01:58:38.420
payroll checks that I had issued would be honored

01:58:38.420 --> 01:58:40.920
during this lag period between the petition date

01:58:40.920 --> 01:58:43.119
and entry of an interim order. So thank you for

01:58:43.119 --> 01:58:47.359
that. Your honor, goes without saying, the debtor's

01:58:47.359 --> 01:58:49.880
employees are the lifeblood of the company. The

01:58:49.880 --> 01:58:52.159
importance of the employees to this process can't

01:58:52.159 --> 01:58:55.439
be overstated. We're seeking authority to continue

01:58:55.439 --> 01:58:58.260
and pay associate compensation and benefits in

01:58:58.260 --> 01:59:00.359
the ordinary course during the interim period.

01:59:01.380 --> 01:59:04.909
We're not seeking authority to pay any insiders

01:59:04.909 --> 01:59:07.670
and we're not seeking authority to pay any amounts

01:59:07.670 --> 01:59:11.130
in excess of the statutory priority caps during

01:59:11.130 --> 01:59:14.470
the interim period. Again we provided the US

01:59:14.470 --> 01:59:16.569
trustee's office with a draft of the motion before

01:59:16.569 --> 01:59:19.329
it was filed and incorporated their comments

01:59:19.329 --> 01:59:22.430
before it was filed. So unless there are any

01:59:22.430 --> 01:59:24.510
other comments or questions we would ask that

01:59:24.510 --> 01:59:26.750
the court grant the interim relief and enter

01:59:26.750 --> 01:59:31.159
the interim wages order. Mr. Sponger. Thank you

01:59:31.159 --> 01:59:32.779
your honor Jeff spawner from the office the United

01:59:32.779 --> 01:59:35.460
States trustee no objection to the entry of this

01:59:35.460 --> 01:59:38.699
interim order as We understand that the u .s.

01:59:38.779 --> 01:59:40.560
Trustees requested revisions have been or will

01:59:40.560 --> 01:59:42.760
be incorporated into the interim order. Thank

01:59:42.760 --> 01:59:48.359
you all right Motion is granted. Thank you Thank

01:59:48.359 --> 01:59:51.279
you judge with that. I am going to turn the virtual

01:59:51.279 --> 01:59:54.619
podium over to my colleague Miss Hartlett who

01:59:54.619 --> 01:59:59.649
will be taking the next items on the agenda All

01:59:59.649 --> 02:00:03.529
right, thank you. Good afternoon, Your Honor.

02:00:03.649 --> 02:00:05.869
For the record, Melissa Hartlip of Cold Shots

02:00:05.869 --> 02:00:09.510
proposed co -counsel to the debtors. Thank you

02:00:09.510 --> 02:00:11.670
for accommodating our schedule this afternoon.

02:00:11.949 --> 02:00:13.909
And this is my first time appearing in this district,

02:00:13.930 --> 02:00:16.829
so it's a pleasure to be here. Welcome. Thank

02:00:16.829 --> 02:00:20.510
you. First on my list of items before you today

02:00:20.510 --> 02:00:23.189
is the debtors' motion authorizing the debtors

02:00:23.189 --> 02:00:25.850
to file consolidated lists of their 50 largest

02:00:25.850 --> 02:00:28.590
unsecured creditors and their creditor matrix

02:00:28.590 --> 02:00:31.989
and to redact certain personally identifiable

02:00:31.989 --> 02:00:34.470
information related to the individuals. This

02:00:34.470 --> 02:00:36.750
is found at agenda item number nine and docket

02:00:36.750 --> 02:00:40.489
number five. Importantly, we worked with the

02:00:40.489 --> 02:00:42.229
Office of the United States Trustee in advance

02:00:42.229 --> 02:00:46.229
of filing and I believe agreed upon the language

02:00:46.229 --> 02:00:50.109
in the proposed order that was attached to the

02:00:50.109 --> 02:00:53.770
motion that was filed and unless your honor has

02:00:53.770 --> 02:00:56.430
any further questions we would respectfully request

02:00:56.430 --> 02:01:00.170
entry of the interim proposed order seems mr

02:01:00.170 --> 02:01:02.649
sponder thank you your honor jeff sponder from

02:01:02.649 --> 02:01:04.970
the office of the united states trustee as you

02:01:04.970 --> 02:01:07.550
suspect uh your honor no objection to the entry

02:01:07.550 --> 02:01:09.829
of the interim order as the u .s trustee requested

02:01:09.829 --> 02:01:11.489
revisions have been it will be incorporated into

02:01:11.489 --> 02:01:13.710
the interim order thank you your honor should

02:01:13.710 --> 02:01:17.510
just have that as a screen saver all right granted

02:01:19.120 --> 02:01:21.899
Thank you. Next I turn to agenda item number

02:01:21.899 --> 02:01:24.500
10, the debtors request for an extension, the

02:01:24.500 --> 02:01:26.140
deadline to file their schedules and statements

02:01:26.140 --> 02:01:28.680
of financial affairs. This is found at docket

02:01:28.680 --> 02:01:31.420
number seven in this order that debtors request

02:01:31.420 --> 02:01:33.800
a 28 -day extension to file their statements

02:01:33.800 --> 02:01:37.140
and schedules and this would push the deadline

02:01:37.140 --> 02:01:41.359
to June 20th. We have agreed upon the state with

02:01:41.359 --> 02:01:43.340
the Office of United States Trustee and accordingly

02:01:43.340 --> 02:01:46.000
respectfully request entry of the proposed order.

02:01:47.060 --> 02:01:51.000
Any change to the time frame? Mr. Sponder? Thank

02:01:51.000 --> 02:01:52.380
you, Your Honor. Jeff Sponder from the Office

02:01:52.380 --> 02:01:54.600
of the United States Trustee. Yes, the time frame

02:01:54.600 --> 02:01:57.699
was changed to June 20th and agreed upon. Just

02:01:57.699 --> 02:02:00.699
to alert the court, the United States Trustee

02:02:00.699 --> 02:02:05.640
may conduct a 341 without the schedules in early

02:02:05.640 --> 02:02:08.020
June. Just, you know, we knew we couldn't get

02:02:08.020 --> 02:02:11.359
it done before the first sale, but we can try

02:02:11.359 --> 02:02:16.159
and get it done before the second sale. I just

02:02:16.159 --> 02:02:17.500
wanted to put that out there, that that might

02:02:17.500 --> 02:02:20.220
be what our plan is for this. But June 20th for

02:02:20.220 --> 02:02:23.760
schedules is fine and we have no objection to

02:02:23.760 --> 02:02:25.520
the entry of this order, Your Honor. Great. Thank

02:02:25.520 --> 02:02:30.060
you. Makes sense. Motion granted. Thank you,

02:02:30.060 --> 02:02:32.880
Your Honor. Next, I turn to the debtor's application

02:02:32.880 --> 02:02:36.079
to appoint Kroll as their claims noticing agent,

02:02:36.439 --> 02:02:38.899
found at agenda item number 11 and docked at

02:02:38.899 --> 02:02:43.170
item number 18. With respect to this application,

02:02:43.409 --> 02:02:45.829
a declaration from Benjamin Steele was filed

02:02:45.829 --> 02:02:48.630
in support of the application and attached to

02:02:48.630 --> 02:02:51.369
the application as Exhibit B. At this time, I

02:02:51.369 --> 02:02:53.329
would like to move that declaration into evidence

02:02:53.329 --> 02:03:02.170
as necessary. Motion granted. Thank you. And

02:03:02.170 --> 02:03:06.789
we would also respectfully request entry of the

02:03:06.789 --> 02:03:10.289
order related to Kroll's protection application.

02:03:10.510 --> 02:03:14.550
Yes. Thank you. Is this Sponda or Eddie? Did

02:03:14.550 --> 02:03:16.649
you have an issue with it? Thank you, Your Honor.

02:03:16.750 --> 02:03:18.590
Jeff Sponda from the Office, United States Trustee.

02:03:18.949 --> 02:03:22.050
We did not have an issue with the order. I believe

02:03:22.050 --> 02:03:24.369
all of our revisions were made, so they were

02:03:24.369 --> 02:03:28.130
incorporated. So we don't object to the entry

02:03:28.130 --> 02:03:29.350
of this interim order. Thank you, Your Honor.

02:03:29.670 --> 02:03:34.529
Great. Thank you. Next, I turn to the debtor's

02:03:34.529 --> 02:03:36.710
utility matching, which is filed at docket number

02:03:36.710 --> 02:03:39.229
12 and is also listed as agenda item number 12.

02:03:39.470 --> 02:03:41.430
Through this motion, the debtors seek to establish

02:03:41.430 --> 02:03:45.130
an adequate assurance account and approval of

02:03:45.130 --> 02:03:47.590
related adequate assurance procedures. We have

02:03:47.590 --> 02:03:49.750
received some comments from certain landlords

02:03:49.750 --> 02:03:52.029
and have revised their proposed order to address

02:03:52.029 --> 02:03:54.909
those comments, which will be submitted to Your

02:03:54.909 --> 02:03:58.529
Honor. And with these changes, we believe that

02:03:58.529 --> 02:04:01.630
this motion is fully conceptual, and unless Your

02:04:01.630 --> 02:04:03.409
Honor has any further questions, respectfully

02:04:03.409 --> 02:04:06.590
request entry to the proposed order. All right,

02:04:06.649 --> 02:04:09.130
I don't see landlord's counsel with raised hands.

02:04:09.250 --> 02:04:11.930
Mr. Sponder. Thank you, Your Honor. Jeff Sponder

02:04:11.930 --> 02:04:13.270
from the Office of the United States Trustee.

02:04:13.750 --> 02:04:15.590
And I'm sorry to do this, Your Honor, but now

02:04:15.590 --> 02:04:18.170
that I thought about it, going back through several

02:04:18.170 --> 02:04:19.909
of these orders, they are interim orders, so

02:04:19.909 --> 02:04:21.989
there are going to need to be final hearings.

02:04:22.050 --> 02:04:25.130
And I would propose the same date of June 6th

02:04:25.130 --> 02:04:28.569
at 1130 for, let's just say, all of the interim

02:04:28.569 --> 02:04:31.859
orders. I apologize for not mentioning that because

02:04:31.859 --> 02:04:33.619
I know some of them got changed from regular

02:04:33.619 --> 02:04:36.020
orders to interim. Well, actually I was going

02:04:36.020 --> 02:04:37.699
to raise it because you mentioned it with the

02:04:37.699 --> 02:04:43.060
appointment of Kroll. Is Kroll an interim? Kroll

02:04:43.060 --> 02:04:45.720
is not an interim, Your Honor. I believe rejection

02:04:45.720 --> 02:04:47.460
is not an interim. So there are some that are

02:04:47.460 --> 02:04:49.779
not interim. But I know the ones that we just

02:04:49.779 --> 02:04:51.479
went through, other than the noticing claims

02:04:51.479 --> 02:04:54.039
agents and the extension of file. So credit or

02:04:54.039 --> 02:04:56.439
matrix, wages and cash management, I believe

02:04:56.439 --> 02:05:00.539
are all interim orders. um to clarify yeah um

02:05:00.539 --> 02:05:04.880
and we'll use that june 6 date at 11 30 for all

02:05:04.880 --> 02:05:07.000
for all of them thank you thank you for bringing

02:05:07.000 --> 02:05:10.369
that up As for utilities, Your Honor, I was busy

02:05:10.369 --> 02:05:15.670
with the dip the last day or so. So I had a question

02:05:15.670 --> 02:05:17.810
for debtors council, which was whether or not

02:05:17.810 --> 02:05:20.750
the amount of the adequate protection was included

02:05:20.750 --> 02:05:24.350
in the motion or in the order. So just if they

02:05:24.350 --> 02:05:27.050
can confirm that, as long as the amount's there,

02:05:27.130 --> 02:05:29.689
I didn't have any issue with the amount. I just

02:05:29.689 --> 02:05:31.090
thought it needed to be in there. Thank you,

02:05:31.090 --> 02:05:34.789
Your Honor. Yes, Your Honor, I can confirm that

02:05:34.789 --> 02:05:38.590
we included the amount in both the motion and

02:05:38.590 --> 02:05:42.470
the proposed order. Great. All right, then granted

02:05:42.470 --> 02:05:46.430
as an interim. Thank you, Your Honor. And finally,

02:05:46.710 --> 02:05:49.510
last on my agenda before you today is the debtor's

02:05:49.510 --> 02:05:52.350
motion to reject certain executive contracts

02:05:52.350 --> 02:05:55.449
and leases affected as of the petition date,

02:05:55.789 --> 02:05:58.470
which is item number 13 on today's agenda and

02:05:58.470 --> 02:06:01.550
found at docket number 21. through this order,

02:06:01.689 --> 02:06:03.569
the debtors request to reject certain contracts

02:06:03.569 --> 02:06:06.050
and a limited number of leases effective as of

02:06:06.050 --> 02:06:08.649
the petition date. We have received some comments

02:06:08.649 --> 02:06:13.909
from landlords related to if the debtors have

02:06:13.909 --> 02:06:17.069
surrendered the relevant premises as of the petition

02:06:17.069 --> 02:06:20.789
date. We have inserted language into the proposed

02:06:20.789 --> 02:06:22.529
order which will be submitted to Your Honor that

02:06:22.529 --> 02:06:25.170
we believe addresses those concerns and unless

02:06:25.170 --> 02:06:27.449
Your Honor has any further questions, we would

02:06:27.449 --> 02:06:29.829
respectfully request entry of the proposed order.

02:06:30.390 --> 02:06:33.170
All right, Ms. Raviella, I hope I'm pronouncing

02:06:33.170 --> 02:06:39.430
it right. Can you hear me, Your Honor? Yes, I

02:06:39.430 --> 02:06:41.630
can. Thank you. Thank you, Your Honor. Jennifer

02:06:41.630 --> 02:06:44.329
Ravelli of Kelly Dry and Warren on behalf of

02:06:44.329 --> 02:06:47.670
certain landlords in this case. Your Honor, prior

02:06:47.670 --> 02:06:49.409
to today's hearing, we reached out to debtors

02:06:49.409 --> 02:06:51.850
council and attempted to resolve our concerns

02:06:51.850 --> 02:06:53.850
with many of the orders. We appreciate their

02:06:53.850 --> 02:06:57.220
inclusion of those comments. As it relates to

02:06:57.220 --> 02:06:59.500
the rejection order, I rise to note a couple

02:06:59.500 --> 02:07:02.100
of points. Given that we're only a couple of

02:07:02.100 --> 02:07:03.800
days into the case, we're still working with

02:07:03.800 --> 02:07:06.619
our clients to determine if this motion actually

02:07:06.619 --> 02:07:08.859
impacts any of their locations. But since it's

02:07:08.859 --> 02:07:11.779
a final order, we feel it's necessary to make

02:07:11.779 --> 02:07:15.220
a clarification at this point. The change to

02:07:15.220 --> 02:07:18.359
paragraph seven, I believe, in the... Let me

02:07:18.359 --> 02:07:23.869
make sure I have the number right. Sorry, it's

02:07:23.869 --> 02:07:26.329
paragraph nine in the revised version of the

02:07:26.329 --> 02:07:29.729
order, if your honor has that one. Okay. That

02:07:29.729 --> 02:07:32.689
was a clarification to resolve a concern we had,

02:07:32.829 --> 02:07:35.590
which was that this order, it's a final order,

02:07:35.689 --> 02:07:37.869
it provides that the rejection is effective as

02:07:37.869 --> 02:07:40.489
a petition date, but we don't yet have confirmation

02:07:40.489 --> 02:07:42.869
that all the locations were actually vacated

02:07:42.869 --> 02:07:45.029
as of that date. So this is sort of a compromise

02:07:45.029 --> 02:07:47.649
that to the extent our client is impacted by

02:07:47.649 --> 02:07:49.430
the motion, but the premises actually hasn't

02:07:49.430 --> 02:07:51.430
been surrendered, they can go in and re -key.

02:07:51.739 --> 02:07:54.399
And we would just reserve the right to the extent

02:07:54.399 --> 02:07:58.479
that that factual situation arises to potentially

02:07:58.479 --> 02:08:00.239
bring that issue back in front of your honor

02:08:00.239 --> 02:08:02.380
if we believe that a different rejection date

02:08:02.380 --> 02:08:04.699
is appropriate at that time. I don't think that's

02:08:04.699 --> 02:08:06.380
going to happen. I just wanted to note on the

02:08:06.380 --> 02:08:08.539
record that since we are doing this at a pretty

02:08:08.539 --> 02:08:10.479
fast pace on the first day, to the extent we

02:08:10.479 --> 02:08:12.720
find that out, we would just reserve our right

02:08:12.720 --> 02:08:15.199
to bring that back before the court. All right.

02:08:15.600 --> 02:08:17.899
You don't need that language in the order. You

02:08:17.899 --> 02:08:22.250
just want a record? Right. And then the second

02:08:22.250 --> 02:08:26.310
issue, Your Honor, and now we're looking at paragraph

02:08:26.310 --> 02:08:31.630
12 and the revised order, original paragraph

02:08:31.630 --> 02:08:35.850
10. This is sort of the dip order paragraph,

02:08:35.970 --> 02:08:40.010
I'll refer to it as. We had asked that the debtors

02:08:40.010 --> 02:08:43.829
would strike the last sentence of this paragraph,

02:08:44.170 --> 02:08:46.609
which says, to the extent there is any inconsistency

02:08:46.609 --> 02:08:48.630
between the terms of the dip order and disorder,

02:08:48.789 --> 02:08:52.109
the terms of the dip order shall control. We

02:08:52.109 --> 02:08:54.250
just don't believe that's appropriate in a lease

02:08:54.250 --> 02:08:56.289
rejection order. Is there something in this order

02:08:56.289 --> 02:08:58.970
that they believe there is a conflict with the

02:08:58.970 --> 02:09:01.229
DIP order? We'd like to know now to resolve that

02:09:01.229 --> 02:09:03.729
issue. I'm not sure I raised that issue with

02:09:03.729 --> 02:09:05.630
debtors council prior to the hearing and I don't

02:09:05.630 --> 02:09:09.029
know if they have resolved it or been able to

02:09:09.029 --> 02:09:15.670
strike that. All right well here before I turn

02:09:15.670 --> 02:09:19.029
back debtors council let me go to Mr. Fleischer.

02:09:19.359 --> 02:09:22.300
and see if, so that at least debtors council

02:09:22.300 --> 02:09:26.819
can address all the issues. Mr. Fleischer. Thank

02:09:26.819 --> 02:09:29.079
you again your honor, Scott Fleischer, Barclay

02:09:29.079 --> 02:09:31.539
Damien on behalf of a number of the debtors landlords.

02:09:31.979 --> 02:09:34.760
We have a client with a location that's on this

02:09:34.760 --> 02:09:36.920
projection motion and do appreciate the language

02:09:36.920 --> 02:09:40.239
that went in there on being able to re -key now.

02:09:40.260 --> 02:09:42.899
I was getting some emails on that property during

02:09:42.899 --> 02:09:45.159
the hearing and it appears that they're still

02:09:45.159 --> 02:09:48.180
trying to auction off some of the FF &E. that's

02:09:48.180 --> 02:09:50.960
remaining in there. So again, similar type of

02:09:50.960 --> 02:09:54.239
issue. We're fine, right, with being able to

02:09:54.239 --> 02:09:56.779
just go in and rekey now. We don't want someone,

02:09:56.960 --> 02:09:59.180
right, an employee of write8 or otherwise sort

02:09:59.180 --> 02:10:01.779
of with a different idea about the premises.

02:10:02.020 --> 02:10:04.840
So if we got some clarity on this one in particular,

02:10:05.399 --> 02:10:07.680
that's fine. Maybe we can take this one out of

02:10:07.680 --> 02:10:10.829
the order for now and make sure. that can be

02:10:10.829 --> 02:10:13.390
dealt with appropriately, but wanted to raise

02:10:13.390 --> 02:10:16.550
that specific issue. This is a location that's

02:10:16.550 --> 02:10:22.170
in Keene, New Hampshire. All right. And Mr. Sponder.

02:10:23.949 --> 02:10:25.369
Thank you, Your Honor. Jeff Sponder from the

02:10:25.369 --> 02:10:27.130
Office of the United States Trustee. Your Honor,

02:10:27.270 --> 02:10:29.229
we had no objection to the entry of this interim

02:10:29.229 --> 02:10:33.890
order or to this order. as our changes were going

02:10:33.890 --> 02:10:37.850
to be included, I kind of jumped ahead there

02:10:37.850 --> 02:10:40.270
that maybe perhaps based on these issues that

02:10:40.270 --> 02:10:44.130
this should be maybe an interim order. But I'll

02:10:44.130 --> 02:10:46.930
leave that to the other parties. Thank you, Your

02:10:46.930 --> 02:10:52.449
Honor. Thank you. Ms. Hartlip? I'm sorry. Ms.

02:10:54.189 --> 02:10:58.149
Hartlip, what's your preference? Should it be

02:10:58.149 --> 02:11:00.189
an interim order to give you time to address

02:11:00.189 --> 02:11:03.119
these issues? I believe our preference is to

02:11:03.119 --> 02:11:05.840
have an order entered today. To the extent that

02:11:05.840 --> 02:11:08.600
there's specific issues, like with respect to

02:11:08.600 --> 02:11:11.020
the Keen New Hampshire store, we can serve up

02:11:11.020 --> 02:11:13.359
with the debtors, advisors, and Mr. Flesher offline

02:11:13.359 --> 02:11:16.279
to confirm that information prior to submitting

02:11:16.279 --> 02:11:20.279
the order to your honor. And with respect to

02:11:20.279 --> 02:11:24.079
Ms. Reveal's concerns regarding the dip order

02:11:24.079 --> 02:11:27.500
language, I believe that we are confirming with

02:11:27.500 --> 02:11:31.069
the lenders that that modification of language

02:11:31.069 --> 02:11:33.590
is acceptable, and that was also something that

02:11:33.590 --> 02:11:35.770
we addressed prior to submitting to Your Honor.

02:11:36.409 --> 02:11:40.029
All right, well then we'll talk this up to, you'll

02:11:40.029 --> 02:11:41.890
agree on the language. If there's a problem,

02:11:41.909 --> 02:11:44.529
we can address it tomorrow. You'll let my chambers

02:11:44.529 --> 02:11:48.970
know. All right? Yes. Thank you, Your Honor,

02:11:49.069 --> 02:11:52.109
and unless you have any further questions subject

02:11:52.109 --> 02:11:55.470
to agreement upon that language, we would request

02:11:55.470 --> 02:11:59.100
entry of that order. The motion will be granted

02:11:59.100 --> 02:12:02.960
or to be submitted. If there's an issue, we'll

02:12:02.960 --> 02:12:05.579
take it up tomorrow. Thank you. Thank you, Your

02:12:05.579 --> 02:12:09.159
Honor. And with that, that concludes the matters

02:12:09.159 --> 02:12:11.359
that I have before you today, Your Honor, and

02:12:11.359 --> 02:12:14.279
I would like to speak at the virtual podium to

02:12:14.279 --> 02:12:18.680
my colleague, Bryant Sherbrooke. All right. Thank

02:12:18.680 --> 02:12:24.319
you. Number 14, I believe. Yes. Good afternoon,

02:12:24.380 --> 02:12:26.439
Your Honor. Can you hear me okay? I can. Good

02:12:26.439 --> 02:12:30.670
afternoon. Good afternoon. I'm going to be presenting

02:12:30.670 --> 02:12:33.449
the next three items on the agenda, beginning

02:12:33.449 --> 02:12:37.069
with item number 14, which is the debtor's insurance

02:12:37.069 --> 02:12:41.630
motion, which appears at docket number 11. The

02:12:41.630 --> 02:12:45.529
debtors are parties to various insurance policies

02:12:45.529 --> 02:12:48.649
and surety bonds, which are listed in Exhibits

02:12:48.649 --> 02:12:54.229
C and D of the motion. Those items are standard

02:12:54.229 --> 02:12:58.170
in the debtor's industry. As a practical matter,

02:12:58.670 --> 02:13:01.630
those insurance policies and surety bonds are

02:13:01.630 --> 02:13:05.430
necessary for the debtor's ongoing operations

02:13:05.430 --> 02:13:08.789
and in certain circumstances are required by

02:13:08.789 --> 02:13:11.329
operation of law in the jurisdictions which they

02:13:11.329 --> 02:13:16.250
operate. The debtors seek authorization to satisfy

02:13:16.250 --> 02:13:18.810
any amounts owed under those policies and surety

02:13:18.810 --> 02:13:22.050
bonds pre -petitioned and to continue performing

02:13:22.050 --> 02:13:24.850
their obligations on a post -petition basis.

02:13:26.079 --> 02:13:28.899
We circulated a draft of the motion to the Office

02:13:28.899 --> 02:13:32.300
of the United States Trustee prior to the petition

02:13:32.300 --> 02:13:35.720
date and have incorporated the U .S. Trustee's

02:13:35.720 --> 02:13:38.920
comments. And unless there are any additional

02:13:38.920 --> 02:13:42.199
questions regarding this motion, we would request

02:13:42.199 --> 02:13:45.659
entry of the interim order. All right. Mr. Spodder?

02:13:46.260 --> 02:13:47.859
Thank you, Your Honor. Jeff Sponger from the

02:13:47.859 --> 02:13:49.560
Office of the United States Trustee. We have

02:13:49.560 --> 02:13:51.279
no objection to the entry of the interim order

02:13:51.279 --> 02:13:54.020
as was just stated that we believe our revisions

02:13:54.020 --> 02:13:55.720
have been or will be incorporated into the interim

02:13:55.720 --> 02:13:57.859
order. Thank you, Your Honor. All right. Thank

02:13:57.859 --> 02:14:00.880
you. Motion granted. Order to be entered. Order

02:14:00.880 --> 02:14:02.819
to be submitted. Thank you very much. The next

02:14:02.819 --> 02:14:06.600
item on the agenda is item number 15, which is

02:14:06.600 --> 02:14:09.159
the debtors critical vendor motion, which will

02:14:09.159 --> 02:14:13.640
be found at docket number 16. The debtors seek

02:14:13.640 --> 02:14:16.579
to pay certain pre -petition amounts owed to

02:14:16.579 --> 02:14:21.359
various critical vendors. The debtors are in

02:14:21.359 --> 02:14:24.680
the business of providing retail pharmaceutical

02:14:24.680 --> 02:14:29.300
products to people, their customers. It's integral

02:14:29.300 --> 02:14:34.500
that these vital items be continued to continue

02:14:34.500 --> 02:14:39.319
to be provided to the debtors' customers. The

02:14:39.319 --> 02:14:43.140
debtors are seeking to pay $3 million, up to

02:14:43.140 --> 02:14:46.640
$3 billion, to their critical offenders. All

02:14:46.640 --> 02:14:50.659
of that is up front in the interim order. We

02:14:50.659 --> 02:14:52.600
circulate a draft of the critical offenders'

02:14:52.619 --> 02:14:55.039
motion to the Office of the United States Trustee

02:14:55.039 --> 02:14:58.279
prior to the petition date. And we've incorporated

02:14:58.279 --> 02:15:01.420
the U .S. Trustee's comments. And unless there

02:15:01.420 --> 02:15:03.819
are any other questions with respect to the motion,

02:15:04.300 --> 02:15:06.579
we would respect the interim order be entered.

02:15:07.640 --> 02:15:10.130
Mr. Sponger? Thank you, Your Honor. Jeff Sponda

02:15:10.130 --> 02:15:11.729
from the Office of the United States Trustee.

02:15:12.149 --> 02:15:13.529
Your Honor, no objection to the entry of the

02:15:13.529 --> 02:15:15.609
interim order as the U .S. Trustee requested

02:15:15.609 --> 02:15:17.810
visions have been and will be incorporated in

02:15:17.810 --> 02:15:19.810
the interim order. With that said, Your Honor,

02:15:20.050 --> 02:15:21.970
we're not sure that there should be many critical

02:15:21.970 --> 02:15:23.829
vendors concerning the posture of this case,

02:15:24.010 --> 02:15:26.430
or there should only be a few. Thank you, Your

02:15:26.430 --> 02:15:31.210
Honor. Thank you. Makes sense. We'll leave the

02:15:31.210 --> 02:15:35.029
final hearing for June 6th, 1130. We'll mark

02:15:35.029 --> 02:15:37.890
this order to be submitted. Thank you. Thank

02:15:37.890 --> 02:15:40.750
you, Your Honor. And then the last item that

02:15:40.750 --> 02:15:43.409
I will be presenting today, which is item number

02:15:43.409 --> 02:15:46.430
16 on the agenda, that's the debtor's customer

02:15:46.430 --> 02:15:51.029
programs motion. The debtors seek to continue

02:15:51.029 --> 02:15:54.770
certain customer programs as amended and described

02:15:54.770 --> 02:15:58.989
in the motion on a post petition basis and to

02:15:58.989 --> 02:16:01.850
honor any pre -petition obligations listed in

02:16:01.850 --> 02:16:06.670
the motion. The highlight items, so to speak,

02:16:06.890 --> 02:16:12.609
are to take gift cards issued by the debtors

02:16:12.609 --> 02:16:16.229
for the next 30 days after entry of the interim

02:16:16.229 --> 02:16:19.350
order, and the debtors will continue to accept

02:16:19.350 --> 02:16:23.369
returns over that same 30 -day period. The debtors

02:16:23.369 --> 02:16:25.529
will provide notices on their website in their

02:16:25.529 --> 02:16:28.750
stores and at their cash registers of the change

02:16:28.750 --> 02:16:33.239
in these respective policies. We submitted a

02:16:33.239 --> 02:16:35.219
draft of the motion to the office of the United

02:16:35.219 --> 02:16:38.159
States trustee prior to the petition date and

02:16:38.159 --> 02:16:40.940
We have incorporated the various comments of

02:16:40.940 --> 02:16:45.680
the US trustee in a revised order Unless your

02:16:45.680 --> 02:16:47.600
honor has any additional questions regarding

02:16:47.600 --> 02:16:50.899
the motion. We respect entry and we request entry

02:16:50.899 --> 02:16:54.819
of the interim order Mr. Sponder, thank you counsel.

02:16:54.940 --> 02:16:57.469
Mr. Sponder Thank you, your honor Jeff spawner

02:16:57.469 --> 02:16:59.870
from the office the United States trustee your

02:16:59.870 --> 02:17:02.870
honor with respect to the customer programs or

02:17:02.870 --> 02:17:04.530
Interim order we have no objection to the entry

02:17:04.530 --> 02:17:06.829
the interim order as we understand our revisions

02:17:06.829 --> 02:17:08.969
are going to be incorporated But your honor I

02:17:08.969 --> 02:17:10.709
have no problem doing the same thing for the

02:17:10.709 --> 02:17:14.250
next five or six the last of them But my answer

02:17:14.250 --> 02:17:16.389
for all of these are is going to be the same

02:17:16.389 --> 02:17:18.850
that we have no objection to the entry of taxes

02:17:18.850 --> 02:17:21.930
rejection procedures Diminished asset transactions

02:17:21.930 --> 02:17:25.840
record date claims trading and the NOL or order

02:17:25.840 --> 02:17:29.559
interim orders being entered as our, I believe

02:17:29.559 --> 02:17:32.959
our revisions have been incorporated. Thank you,

02:17:33.020 --> 02:17:36.180
Your Honor. We could have cut down a half hour

02:17:36.180 --> 02:17:40.399
on this if we did this earlier. Thank you, Your

02:17:40.399 --> 02:17:42.540
Honor. Thank you. At this time, I would like

02:17:42.540 --> 02:17:45.840
to pass the virtual podium to my colleague, Andreas

02:17:45.840 --> 02:17:50.819
Milioreses. All right. Good afternoon, Your Honor.

02:17:50.879 --> 02:17:53.920
Andreas Milioreses. cold shots, PCA appearing

02:17:53.920 --> 02:17:57.100
on behalf of the debtors. The first, I'll be

02:17:57.100 --> 02:17:58.700
presenting the balance of the motions today.

02:17:58.879 --> 02:18:02.299
The first motion that I'll be. Presenting is

02:18:02.299 --> 02:18:05.280
the debtors motion for interim and final orders

02:18:05.280 --> 02:18:07.459
authorizing the debtors to remit and pay taxes

02:18:07.459 --> 02:18:09.559
and fees in the ordinary course and to engage

02:18:09.559 --> 02:18:11.659
in tax planning activities which was filed at

02:18:11.659 --> 02:18:14.500
docket number six. The debtors estimate that

02:18:14.500 --> 02:18:17.239
as of the petition date they owe 41 .3 million

02:18:17.239 --> 02:18:20.360
in accrued but unpaid taxes and fees of which

02:18:20.360 --> 02:18:22.500
19 .8 million will become due in the interim

02:18:22.500 --> 02:18:25.319
period. As your honor is aware this motion was

02:18:25.319 --> 02:18:27.459
circulated to the U .S. trustee their comments

02:18:27.459 --> 02:18:29.479
were incorporated prior to filing and unless

02:18:29.479 --> 02:18:31.629
you're Honor has any questions, we would respectfully

02:18:31.629 --> 02:18:35.729
request entry of the order. Granted. Next. Great.

02:18:36.610 --> 02:18:41.469
The next item on the agenda is the debtor's motion

02:18:41.469 --> 02:18:45.110
to establish procedures to reject, assume, or

02:18:45.110 --> 02:18:47.309
assume and assign, executive contracts and unexpired

02:18:47.309 --> 02:18:50.629
leases filed at docket number 15. As noted earlier

02:18:50.629 --> 02:18:52.610
on the record, based on comments received from

02:18:52.610 --> 02:18:54.870
certain parties since filing, the debtors have

02:18:54.870 --> 02:18:57.590
agreed to remove the assumption procedures from

02:18:57.590 --> 02:19:00.250
the request of relief. So the proposed form of

02:19:00.250 --> 02:19:03.049
order will only include procedures to reject.

02:19:03.909 --> 02:19:05.909
The proposed order was also circulated to the

02:19:05.909 --> 02:19:07.809
U .S. Trustee. Their comments to the order have

02:19:07.809 --> 02:19:10.090
been incorporated. And unless Your Honor has

02:19:10.090 --> 02:19:12.790
any questions, we would respectfully request

02:19:12.790 --> 02:19:15.389
entry of the interim order as revised to remove

02:19:15.389 --> 02:19:19.069
the assumption procedures. All right. Granted

02:19:19.069 --> 02:19:23.889
as revised. Thank you. The next item on the agenda,

02:19:24.010 --> 02:19:26.370
Your Honor, is the de minimis assets motion.

02:19:26.590 --> 02:19:30.149
which was filed at docket number eight. The debtors

02:19:30.149 --> 02:19:33.729
by this motion seek to establish authority to

02:19:33.729 --> 02:19:36.469
use, sell or transfer de minimis assets to a

02:19:36.469 --> 02:19:39.950
buyer or group of related buyers with an aggregate

02:19:39.950 --> 02:19:42.989
sale price of less than five million. The debtors

02:19:42.989 --> 02:19:46.930
also seek procedures to abandon assets which

02:19:46.930 --> 02:19:49.049
cannot be sold at a price greater than the cost

02:19:49.049 --> 02:19:51.790
of liquidating such assets or which are no longer

02:19:51.790 --> 02:19:54.739
needed for the debtor's operations. The debtors

02:19:54.739 --> 02:19:56.440
submit that these procedures will provide an

02:19:56.440 --> 02:19:58.659
efficient process by which the debtors may engage

02:19:58.659 --> 02:20:01.319
in de minimis asset transactions while providing

02:20:01.319 --> 02:20:05.440
adequate notice to the parties. Again, we circulated

02:20:05.440 --> 02:20:08.079
this order to the U .S. Trustee's office. We've

02:20:08.079 --> 02:20:10.559
incorporated their comments. We've also incorporated

02:20:10.559 --> 02:20:12.959
comments received from various parties since

02:20:12.959 --> 02:20:15.340
the filing. And unless Your Honor has any questions,

02:20:15.500 --> 02:20:17.559
we would respectfully request entry of the interim

02:20:17.559 --> 02:20:23.389
order. All right. Mr. Fleischer. Yes, sir. I'm

02:20:23.389 --> 02:20:25.649
against Scott Fleischer, Barclay Damon. Just

02:20:25.649 --> 02:20:27.750
a clarification for this one. We had received

02:20:27.750 --> 02:20:31.549
from the debtors to be clear that no leases would

02:20:31.549 --> 02:20:34.350
be proposed to be assigned under this order as

02:20:34.350 --> 02:20:36.889
well, just to not write clouded and leave it

02:20:36.889 --> 02:20:39.149
to the motions we've described earlier. So just

02:20:39.149 --> 02:20:40.809
wanted to put that on the record and make sure

02:20:40.809 --> 02:20:42.889
the agreement was clear. We're not going to squeeze

02:20:42.889 --> 02:20:46.110
in a lease under the de minimis assets. Right.

02:20:46.809 --> 02:20:48.690
Incorporated language should provide for that.

02:20:49.110 --> 02:20:55.899
All right. Thank you. Thank you. Thank you. The

02:20:55.899 --> 02:20:59.000
next motion on the agenda is the debtor's motion

02:20:59.000 --> 02:21:01.680
for interim and final orders establishing a record

02:21:01.680 --> 02:21:04.840
date for notice and sell -down procedures and

02:21:04.840 --> 02:21:07.139
procedures for notification and trading and certain

02:21:07.139 --> 02:21:09.159
claims against the debtor's estates which was

02:21:09.159 --> 02:21:11.840
filed at docket number nine. The purpose of this

02:21:11.840 --> 02:21:14.020
motion is to establish procedures that will allow

02:21:14.020 --> 02:21:16.899
the debtors to monitor claims against the estates

02:21:16.899 --> 02:21:19.739
so that the debtors can preserve their tax attributes

02:21:19.739 --> 02:21:24.079
for potential future use. This interim order

02:21:24.079 --> 02:21:26.260
again includes comments from the Office of the

02:21:26.260 --> 02:21:28.139
United States Trustee, and unless your honor

02:21:28.139 --> 02:21:30.340
has any questions, we would respectfully request

02:21:30.340 --> 02:21:33.120
entry of the order. I don't have any questions.

02:21:33.340 --> 02:21:35.040
I've entered this order countless times. I'm

02:21:35.040 --> 02:21:38.879
not sure I ever really understood it. That's

02:21:38.879 --> 02:21:43.079
motion granted. Thank you, your honor. The final

02:21:43.079 --> 02:21:46.020
motion on the agenda. is the debtor's motion

02:21:46.020 --> 02:21:48.600
for interim and final orders approving notification

02:21:48.600 --> 02:21:50.899
and hearing procedures for certain transfers

02:21:50.899 --> 02:21:53.719
of and declarations of worthlessness with respect

02:21:53.719 --> 02:21:55.680
to the debtor's common stock, which was filed

02:21:55.680 --> 02:21:59.959
at docket number 10. Similar to the claims trading

02:21:59.959 --> 02:22:05.319
motion, this motion will set procedures that

02:22:05.319 --> 02:22:07.340
will allow the debtors to monitor trading and

02:22:07.340 --> 02:22:10.959
common stock of the debtor new Rite Aid LLC to

02:22:10.959 --> 02:22:13.420
maintain tax attributes for the debtor's future

02:22:13.420 --> 02:22:16.129
use. Again, this order was shared with the United

02:22:16.129 --> 02:22:17.989
States Trustee. Their comments were included.

02:22:18.750 --> 02:22:20.629
And unless Your Honor has any questions, we would

02:22:20.629 --> 02:22:22.549
respectfully request that the Court enter the

02:22:22.549 --> 02:22:26.510
interim order. All right. Well, thank you, Mr.

02:22:26.510 --> 02:22:30.409
Miller. Your motion is granted. The Court will

02:22:30.409 --> 02:22:33.690
enter the order. With that, Your Honor, that

02:22:33.690 --> 02:22:35.590
concludes our presentation on the orders that

02:22:35.590 --> 02:22:39.170
are before you today. I will turn the podium

02:22:39.170 --> 02:22:42.750
over to pro -counsel if they want to address

02:22:42.750 --> 02:22:46.190
anything on the record. I believe we've set the

02:22:46.190 --> 02:22:50.690
final hearing on these motions. Yes, June 6th.

02:22:50.770 --> 02:22:53.489
Ms. Eaton? Thank you, Mr. Miller. Ms. Eaton,

02:22:53.610 --> 02:22:56.809
anything else to follow up on? Just one item,

02:22:56.909 --> 02:22:59.409
Your Honor. I believe just for the good order

02:22:59.409 --> 02:23:02.459
of the record. We know that there are several

02:23:02.459 --> 02:23:05.739
pending appeals from the prior bankruptcy case,

02:23:05.780 --> 02:23:07.940
as well as various motions that are pending.

02:23:08.500 --> 02:23:11.979
It's the company's view that all the activity

02:23:11.979 --> 02:23:16.159
from the prior case has stayed. And we did not

02:23:16.159 --> 02:23:18.680
ask, Your Honor, for a comfort order of any sort,

02:23:18.680 --> 02:23:20.600
but I just would like the record to reflect,

02:23:20.639 --> 02:23:23.440
if you agree, that those matters are stayed and

02:23:23.440 --> 02:23:26.920
will be addressed later in the course of this

02:23:26.920 --> 02:23:30.239
case as required. Thank you for that. It's important.

02:23:30.510 --> 02:23:33.350
I know my colleagues on the district court have

02:23:33.350 --> 02:23:36.170
matters on their plates with pending appeals.

02:23:36.610 --> 02:23:39.450
They need to know what to do or what needs to

02:23:39.450 --> 02:23:42.030
be done or what doesn't need to be done. The

02:23:42.030 --> 02:23:45.329
same for my chambers receiving calls on pending

02:23:45.329 --> 02:23:49.590
matters. So the court takes the view at this

02:23:49.590 --> 02:23:55.629
juncture that they are stayed. I see hands raised.

02:23:55.629 --> 02:24:00.649
Mr. Tarosian. Good afternoon, your honor. It's

02:24:00.649 --> 02:24:05.870
good to see you again. Jeff Tarosian for Med

02:24:05.870 --> 02:24:08.809
Impact. I have not filed a formal appearance

02:24:08.809 --> 02:24:12.450
in this matter yet, but we've been watching to

02:24:12.450 --> 02:24:14.530
hear if there was any mention of the appeals.

02:24:15.069 --> 02:24:19.809
We take a different view. The appeals are that

02:24:19.809 --> 02:24:23.649
the new bankruptcy does not constitute an automatic

02:24:23.649 --> 02:24:26.010
stay against the pending appeals because the

02:24:26.010 --> 02:24:30.260
pending appeals are appeals from motions brought

02:24:30.260 --> 02:24:34.739
by the prior debtors to enforce orders against

02:24:34.739 --> 02:24:37.579
Med Impact, and Med Impact is appealing that.

02:24:37.739 --> 02:24:40.000
So those were not cases where Med Impact was

02:24:40.000 --> 02:24:43.100
suing the debtors, the prior debtors, or the

02:24:43.100 --> 02:24:46.340
current debtors. Those are appeals of actions

02:24:46.340 --> 02:24:50.000
brought by the prior debtors against Med Impact.

02:24:50.200 --> 02:24:53.680
So we don't believe the current case has an automatic

02:24:53.680 --> 02:24:57.020
stay that would affect those appeals. Fair enough.

02:24:57.879 --> 02:25:00.799
So I'm not going to make a call, obviously. I'm

02:25:00.799 --> 02:25:03.459
not even sure which court has jurisdiction to

02:25:03.459 --> 02:25:08.200
make that call, given normally a bankruptcy court

02:25:08.200 --> 02:25:10.479
loses jurisdiction over a matter once it's subject

02:25:10.479 --> 02:25:14.920
to an appeal. It may be that you all have to

02:25:14.920 --> 02:25:17.360
debate that one out in front of the district

02:25:17.360 --> 02:25:22.079
court. I primarily wanted it was focusing on

02:25:22.079 --> 02:25:26.399
I have several claims objection, cure objections,

02:25:26.920 --> 02:25:32.729
and the like. But your concerns or reservation

02:25:32.729 --> 02:25:34.489
of rights, we'll call it that way, our position

02:25:34.489 --> 02:25:40.590
is noted. And I'm sure my colleagues in the district

02:25:40.590 --> 02:25:43.750
court can address it. Thank you. Thank you, Your

02:25:43.750 --> 02:25:45.069
Honor. Good to see you again. Good to see you

02:25:45.069 --> 02:25:52.379
again. Anyone else? Ms. Eaton. So your honor

02:25:52.379 --> 02:25:54.659
we've we've concluded everything for the day

02:25:54.659 --> 02:25:57.340
and I just want to thank you and your chambers

02:25:57.340 --> 02:26:04.180
for accommodating our our Last -minute requests

02:26:04.180 --> 02:26:06.680
all of your time today working late getting these

02:26:06.680 --> 02:26:09.079
orders entered. We are we are deeply appreciative

02:26:09.079 --> 02:26:12.479
of your assistance today So that's all the debtors.

02:26:12.479 --> 02:26:16.500
Thank you. My pleasure I'm going to work under

02:26:16.500 --> 02:26:18.879
the assumption that I will not be seeing you

02:26:18.879 --> 02:26:22.469
all at 1130 that you'll hash out Any issues that

02:26:22.469 --> 02:26:26.069
remain with language, but if the court is needed

02:26:26.069 --> 02:26:30.250
we are available As again, just send please send

02:26:30.250 --> 02:26:36.209
down all the orders Well, we'll coordinate with

02:26:36.209 --> 02:26:39.709
Cole shots to make sure you get Singular emails

02:26:39.709 --> 02:26:42.629
instead of multiple emails. Thank you. Appreciate

02:26:42.629 --> 02:26:46.770
it. Take care folks court is adjourned Thank

02:26:46.770 --> 02:26:47.030
you