Please be seated. Good afternoon, Your Honor.
Sean Greach from Yonkanawe on behalf of the debtors.
Your Honor, just two matters that are going forward
today. One is a status conference and then the
other is a further in -arm dip hearing. Start
with status if I could. I'd like to give an update
first on animal welfare. I think positive news.
At the beginning of this month, the debtors completed
the move of the dolphins from the Gulf World
Marine Park to various other locations. Gulf
World housed two varieties of dolphins, and one
of the reasons why I like doing bankruptcy is
you get to learn lots of things that you never
thought you would. There are two types of dolphins
that Gulf World housed. One is the bottlenose
dolphin. That's your terciops truncatus, your
honor. And the other is the more rare rough -toothed
dolphin, which is the stenobrenadensis. So there
may only be one other aquarium in the U .S. that
presently houses the Stenos, so we coordinated
with that facility, the Clearwater Marine Aquarium,
to get the Dettors Forest Stenos to that facility.
The Bottlenose Dolphins were rehomed in Marine
Land in St. Augustine and the Dolphin Connection
in the Florida Keys. All reports are that all
the animals are acclimating well to their new
locations. I need to say this is a challenging
process. It involved numerous facilities, staff
and vets from numerous facilities who made sure
that the animals were kept very safe every step
of the way. We had universities assisting with
fast tracking, animal health screening. We had
federal regulatory agencies helping to fast track
and give emergency waivers to move the dolphins.
And we had state and local authorities in Florida
who the debtor team worked with on a daily basis
as issues came to our attention and helped us
facilitate these transfers. So this was a significant
undertaking and I didn't want to make that. Turning
then to the first matter on the agenda, which
is the status comments regarding. Your Honor's
order enforcing the automatic stay. Your Honor
entered that order on June 5th. We're back here,
Your Honor, to provide an update and connection
with that order. We did file on Monday a report
from Mr. Wagstaff. It outlines some developments
which in our view are concerning. And it highlights
areas where Mr. Albor is continuing to interfere
with the debtor's operations. The report focused
on really three main categories. One is... Interference
with financial operations, second is interference
with access to records, and third is ongoing
legal actions in violation of Your Honor's order.
So first, interference with the financial operations.
Your Honor may recall at the hearing on the motion
to enforce the stay, we noted that Mr. Albor
had reported the debtors among all of their approximately
40 bank accounts had roughly $47 ,000 in the
bank. And this struck us as remarkable given.
given and really despite Mr. Albor's sworn testimony
that it was simply a low point as a result of
various costs that need to be paid and the park
revenues from the company's busy season were
due to come in. We discovered after finally being
granted access to the employees and the financial
records that at some point after the May 21st
hearing on the state violation motion. Mr. Albor
apparently went to a store, purchased a number
of point of service credit card scanning devices,
and used those devices to reroute all of the
Mexican park revenues into a non -better company
by the name of Proyectos Ejecutivos Sostentibles,
called PES. Mr. Albor apparently directed the
company's legal counsel, Ms. Esteban, to create
a backdated agreement. between Controladora Dolphin
and PES whereby Controladora would essentially
hand over operations of the Mexican parks and
all Mexican park revenues to PES and PES would
in addition receive some additional consideration
from Controladora Dolphin. I think we found today
there was also a backdated lease agreement that
Mr. Albor was negotiating in connection with
that transaction. We also have discovered, Your
Honor, Mr. Albor had been directing the Caribbean
affiliates to circumvent the debtor bank accounts
with respect to funds transferred upstream from
the Caribbean affiliates. Those affiliates funded
cash into an account held by Elysium Properties
Investment. We learned at Mr. Albor's deposition
back in May that Elysium Properties was a company
that Mr. Albor incorporated in Delaware about
10 years ago. and that it is a completely Albor
family -owned entity with Mr. Albor as its only
member. Mr. Albor insisted at his deposition
that Elysium did no business with the Dolphin
Company and had nothing to do with the Dolphin
Company at all. Our access to the bank records
shows that was not accurate. Exhibit F to Mr.
Wagstaff's report demonstrates over $263 ,000
being transferred from just two of the company's
Caribbean affiliates to Elysium in just the month
of May. 15 ,000 May 1, 12 ,000 May 6, over 55
,000 May 7, 23 ,000 on May 9, 78 ,000 May 13,
over 20 ,000 May 23, 50 ,000 on May 28, and over
10 ,000 on May 30. So RiverOn has taken steps
necessary to stop this ongoing diversion of the
estate's revenues in Mexico. We're doing what
we can to make sure that similar diversions of
revenues are not taking place in connection with
the other parks. Riveron has begun the process
of going back through the bank records to find
out where the money from PES has gone. What we
found is that the funds diverted to PES were
used to pay, for example, Mr. Albor's personal
legal counsel, Cervantes Diaz Gutierrez. That's
shown in Exhibit B to Mr. Aguagstaff's report.
The bank records from the Caribbean parks demonstrate
some irregularities as well. One example being
a payment made to Mr. Harris -Caston, who you
may remember was here in court on May 21, sitting
right next to Mr. Albor as his personal attorney.
There will be more, we suspect, as Riveron continues
to peel this onion. Just this morning, as I mentioned,
we found out about this lease agreement that
was apparently signed and backdated. And Riveron
is working feverishly to put together a reliable
cash flow budget and make sure operations remain
steady. Your honor, Mr. Albor has not provided
any information to assist us. The only thing
Mr. Albor has done in connection with addressing
his interference with the financial operations
is ask for debtor employees to provide information
regarding PES to Rivron. But even there, he suggested
that cooperation should be conditional, only
to the extent the parties are released from any
liability. We attached it to the report exhibit
C from Mr. Albor. Your honor, this is slow progress
in addressing Mr. Albor's misconduct. It's multiplied
the costs to the debtors in addressing this PES
scheme. And as I mentioned, we've gotten absolutely
no information regarding the Caribbean Park funds
diverted to Elysium, where those funds went,
why they went there, and when we should expect
them back. This has definitely put the debtors
in a tough position. We were forced to scramble
at the end of last week to make sure that there
were sufficient funds available in the company
accounts to pay payroll, which we did manage
to do. So that's interference with financial
information and assets. Interference with access
to records. Mr. Wagstaff's report also outlines
the pattern of interference, both overt and covert,
with respect to Riveron's efforts to obtain the
necessary records to operate the business, both
in the ordinary course and in the manner required
of a debtor in possession. It seems as though
every day progress is marred by some distraction
or delay tactic. Fortunately, Riveron has worked
closely with key debtor corporate employees and
developed a positive, trusting relationship with
them, which has allowed the debtors to make progress
in many areas. One area, however, where it's
notably not been the case is in the legal group.
As noted in Mr. Wagstaff's declaration, on Saturday,
Mr. Albor sent his personal driver, who we discovered
is on the debtor's payroll, to go to the headquarters
building and attempt to change the locks for
the legal department. Similarly, the company's
incumbent in -house counsel, Ms. Esteban, has
not willingly cooperated with any request of
her. In fact, Riveron learned that the debtor's
contract files are located in a locked room in
the headquarters, normally accessible only by
Ms. Esteban with the use of her fingerprint.
Exhibit G to the report is an email sent to Ms.
Esteban seeking her cooperation in accessing
the contract files. After not getting a response
to this, I emailed Mr. Albor's counsel on Friday
last week to try to resolve this and let him
know, absent cooperation, Riveron would be forced
to gain access to that building, that area of
the building by circumventing the fingerprint
access lock. Perhaps, uncoincidentally, the day
after that email was sent is the day that Mr.
Albor sent his driver to the headquarters to
change the lock for the entire legal department.
Ultimately, though, as Mr. Wagstaff's report
states, we were able to get Ms. Esteban to send
a notary to document the contract records that
were being collected from the contract room.
She sent that notary. The debtors had two notaries
there to similarly document the records. Again,
make a record of what we were taking out of that
building or out of that facility. However, just
as that process began, Mr. Albor shows up at
the headquarters and he threatens everyone that
he will contact the district attorney if they
continue this process. Again, the same district
attorney who dispatched multiple armed personnel
to the headquarters back in April when Mr. Albor
made such a demand of that office. So, Your Honor,
continued interference with access to the records.
Finally, legal actions and violations of your
order. Again, this is a black and white example
of Mr. Albor's ongoing contempt. Exhibit H is
another Amparo that Mr. Albor filed with the
assistance of Clyde & Co. challenging the dismissal
of the concursive mercantile and various other
orders entered in connection with that dismissal.
Your Honor, you'll recall that those are the
orders finding that the actions taken by the
debtors to obtain such dismissal were authorized,
appropriate, and not enjoined in any way. In
sum, Mr. Albor is continuing to wage the control
litigation that paragraph 4A of your order stated
he could not pursue without obtaining stay relief.
In addition, he stated in the papers that he
filed in Mexico, he filed in those Amparo papers
that he was serving as attorney in fact for Controladora
Dolphin, a statement that's completely inaccurate
as a matter of Mexican law and it's also inconsistent
with Your Honor's order, which concluded that
Mr. Albor has no authority to act on behalf of
the debtors. So Your Honor, this is all proof
positive of what we've suspected for some time.
Mr. Albor is defiantly violating the state and
not only simply by ignoring the effect of the
governance changes. Rather, the violations are
far more audacious and cynical than that. He's
attempted to appropriate state funds. He's threatened
debtor employees and advisors in an effort to
impede access to the records. He's ignored a
clear and unambiguous restriction on continuing
to prosecute the control litigation without getting
stay relief. There can be no doubt, Your Honor,
as to his willfulness in continuing to violate
the stay, and of his continuing and ongoing contempt
of the order. So, Your Honor, We're here today
asking the court for further help. Your honor,
paragraph nine of your order provided that the
court will set a hearing to determine actual
damages. It's clear the company has been actually
damaged by Mr. Albor's various schemes to exert
control over the debtor's assets, both prior
to the entry of that enforcement order and after
the entry of the enforcement order. So your honor,
we'd ask the court set a date for that hearing
on actual damages. We propose to have that hearing
set in phases. First, with respect to hard costs,
meaning professional fees and expenses related
directly to litigating with Mr. Albor and winning
compliance with the stay. And we'd ask your honor
to hear us on that at the July 23rd omnibus hearing.
We propose scheduling at a further hearing down
the line after Riveron has had the opportunity
to complete the deeper dive into the financial
records. And we ask that that later hearing we
consider other economic losses incurred by the
debtors in the form of lost revenue, unnecessarily
incurred costs borne by the debtors as a result
of the finance of the stay and assets diverted
by Mr. Albor for his personal interest and not
return to the estates. Finally, Your Honor, paragraph
11 provides that sanctions may be awarded in
appropriate circumstances to ensure no further
violations of the stay. Based on what we've learned
in just the The past two weeks, we submit that
these circumstances cry out for the imposition
of daily sanctions referenced in the order. There
doesn't appear to be any other way to impress
upon Mr. Albor the criticality of complying with
the stay. It seems as though Mr. Albor's attitude
is one of catch me if you can. Nearly each day
for the last two weeks, the result of that day
has been the need for some discussion with Mr.
Albor's council, which in some cases has resulted
in token compliance, but in many cases it's been
partial compliance, partial remedies, non -answers,
or an outright ignoring the request. So some
of the discussions with Mr. Albor's counsel appear
to result in more serious non -compliance, which,
again, I think goes to the point that we're not
in a position where Mr. Albor is intending to
comply with the order. Our employees and advisors
are continuing to be threatened by Mr. Albor's
threats to resort to local police. That's where
we were back in April, Your Honor. Your Honor
has an inherent power to issue sanctions and
punish noncompliance with the court's orders.
The debtors suggest that nothing less than a
daily sanction is likely to coerce Mr. Albor
to truly comply. We believe you're within your
power to act in furtherance of your order. Your
order gave Mr. Albor notice of the potential...
Results of his failure to comply and we believe
that your honor Should should should take take
take that take that order and and revise it to
impose a daily sanction In fact, we'd urge your
honor to do so to allow us to move forward in
an appropriate way with this case Your honor
we would ask that you that that you do that today
we believe that that was something that your
honors order previously contemplated. If you
look at the order, the order requested that Mr.
Albor submit a notification, a certification
when he had corrected the, corrected his violations
of the automatic stay. We have absolutely no
corrective certification, Your Honor. And in
fact, as noted, it does not appear that one is
in the offing. In fact, we're going the opposite
direction. So, Your Honor, we don't believe that
there's any way to move forward here other than
to impose a daily sanction. Okay, let me hear
from anybody else on that oral request. Thank
you, Your Honor. This is James Moon on behalf
of Mr. Elbor. Can you hear me okay? I can, Mr.
Moon. And, Your Honor, thank you for hearing
me. I'm actually the Florida Bar - conference
right now, so this is the best I can do, but
I really did want to make sure that I gave you
at least another side of what's going on with
respect to the hearing. The first thing I want
to point out, Your Honor, is we're here for a
status conference, and while I appreciate that
there's some very severe allegations here, I'd
like to point out that, number one, we just got
the declaration on Monday. We intend to respond
to it. I can tell you I'm literally holding in
my hand right now an English translation. of
an affidavit of the driver that they have accused
of going to change the legal department door
that has an affidavit that that he was there
for the personal office, not for the legal department.
In fact, was blocked by security cards when he
tried to go to Mr. Albor's office. So we would
submit that at the appropriate time, but just
pointing out procedurally first. And then I'd
like to get into a couple of the responding to
a couple of the allegations made, Your Honor.
Your Honor. What's been alleged here are some
allegations that there are continuing violations
of the stay and I'd like to put that aside and
talk about that as opposed to violations of your
stay enforcement order if you recall it you're
hearing your honor you made a very clear distinction
between Allegations of stay violations that you
wanted to see cease and you made very clear that
if there were any further Violations of your
order you would consider daily sanctions. So
I want to put those in two buckets. And you've
heard today, Your Honor, that there's about three
things that they're alleging that are problematic
in the declaration. The first has to do with,
I believe they said, access to records. Now,
Your Honor, if you look carefully at Mr. Wagstaff's
declaration, he alleges that Mr. Albor's personal
representatives are the ones that are somehow
advising the employees what records can and cannot
be turned over. There are two points I'd like
to make about that, Your Honor. First, you'll
recall that pursuant to the order, Mr. Albor
was to have his personal representatives in there
to make sure that his personal records were not
caught up in any records that were turned over
to the debtors. So on some level, there had to
be a gatekeeping function. Now, what was said
and to whom we don't know, that's not in the
declaration. I would like a chance. to test whatever
those allegations are. But what we hear are that
Mr. Albor's representative said something about
certain records. We don't know why. So I don't
know if they were telling the employees, well,
you can't turn that over because that's a personal
record. You can't turn that over because that
has nothing to do with the debtor's records.
That's another legal entity. I don't know because
we haven't taken discovery. So that's just a
procedural point on that specific issue, Your
Honor. The other thing is, you may have heard,
there seems to be an issue with Ms. Esteban,
who is the chief legal officer or was. It's not
really clear to me what her status is right now.
And she's filed, I think, some sort of a labor
dispute or something with respect to being terminated.
And so that's an issue all unto herself. She
doesn't want to cooperate until she's paid. But
that is not Mr. Alvore's doing. And Mr. Albor
only had personal representatives for access
to the building, Your Honor, not for everything
that goes on in that office, especially when
it's unclear whether Ms. Esteban was acting as
a chief legal officer at the time when she was
making those statements. So that's a factual
issue that we kind of need to drill down on,
Your Honor. So that's on the records. With respect
to the transfer to PES, Your Honor, that's an
important point. And I will tell you that when
I was notified of it, I immediately stepped into
action. And I think Mr. Gricher will back me
up here. Nearly every time something has come
up and he has reached out to me, I have immediately
responded. In fact, Your Honor, I can tell you
on one specific occasion, one of their employees
sent me an email, copied with a few other people,
telling me action that they were taking that
I saw. was clearly a violation of the stay order.
I did not wait for Mr. Greacher to contact me.
I reached out to him, and I actually talked to
Mr. Wagstaff, too, because that's how concerned
I was about what I was seeing. I stopped it in
its tracks. So I just want to be clear, Your
Honor, it's not an issue that, when they raise
something, we're not trying to address it. We
absolutely are. But let's talk about that PES,
and let's talk about the Elysium transfers. Your
Honor, those transfers occurred before your stay
enforcement order. So they may be additional
accusations of violations of the state, but they
are not violations of your enforcement order.
And nothing has happened with those accounts
since that time. With respect to PES, as soon
as I found out about it was about the same time
Mr. Gricher found out about it. And Mr. Albor
was very clear that they could talk to the owner
of PES. Get a full accounting of everything that
went in and out of those accounts And that those
accounts were used because it wasn't because
let me say this the reason those accounts were
open was not because The debtors got control
of the bank records is because they were frozen
your honor And what happened is once they were
frozen and those orders that remember that april
4th order They went to the banks I forget the
name of the largest one, but the BMBV or that
one. And they told them, they told Mr. Al Borden,
I believe they told the debtors that they have
to go to their legal department for review, but
until they're done with it, the records were
frozen. In the meantime, payroll needed to be
paid, dolphins needed to be fed, and that's why
they tried to bypass that. I'm not excusing it,
Your Honor. I'm not excusing it. But I'm telling
you that's what happened. And with respect to
any potential damages, That will come out when
they take a look at the accounting that's coming
from those records because they have full access
to them now. So, the point is, is I don't believe
that that's something that a daily sanction is
going to remedy at all. The same thing with the
lesion, Your Honor. Your Honor, we have procedures
in place. If transfers are coming out of debtor
estates, we have a procedure in place for clawing
those funds back, seeking avoidance, and they
are fully able to either take discovery, or file
an avoidance action to do so. But daily sanctioning
Mr. Albor for those when they have other remedies
that are actually pursuant to the bankruptcy
code are the appropriate remedy to do that. Your
Honor, I'd also talk about the fact that there
were talks about the driver. And as I mentioned,
we do have an affidavit that I only got this
morning because we had to get it translated.
But it is an affidavit signed by the driver talking
about the fact that he was not trying to change
locks on the legal department. In any event,
he didn't change anything. Those locks were not
changed by that driver. Now let's talk about
the Amparo, because that's something that I immediately,
I will tell you, made my eyebrows go up. I think
Mr. Gricher will back me up on that, too, as
soon as I heard about it. But let me be clear
about something there, Your Honor. Mr. Albor,
and I've had quite a few discussions with him
since finding out about this Amparo filing. Number
one, you may recall that we were at the hearing,
there were Mexican counsel present in the courtroom.
Those counsel were from the Cervantes firm, CDA,
which are Mr. Albor's personal attorneys. The
attorneys that filed that Amparo is Clyde and
Company. Your Honor, I haven't even spoken with
any of them since the beginning of this case.
I don't know what they were doing. I don't know
what their thought process was when they filed
it. I had been trying to determine that, I assure
you. But here's the point, Your Honor. Mr. Albor
is crystal clear that he is concerned about preserving
his constitutional rights in Mexico as a Mexican
citizen. The actions that he took were on advice
of counsel in Mexico. It did certainly did not
come from me, but he did get counsel from Mexico
that were emphatic that if he did not file the
Amparo, when he did, he would have waived all
rights to any of the dispute that he had. And
Your Honor, I can give you a little bit more
context of that. I'm not a Mexican lawyer, so
I'm going to give you broad strokes here, but
this is one of the things that I think at a further
hearing you're going to want to hear about. But
in any event, You know that there are a couple
of legal matters that were pending in Mexico.
One is a challenge to those March 28 corporate
governance resolutions. And the other has to
do with an amparo challenging the withdrawal
of the concursive mercantile. Remember, this
was not a dismissal. This is a withdrawal. And
therefore, the concursive mercantile court simply
accepted it and said, OK, well, if the person
that's in charge of Controladora wants to withdraw
it, who am I to say no? And allowed the withdrawal
to proceed. that has been challenged in an amparo.
The initial amparo on that matter was filed on
April 23rd, but it wasn't admitted because of
an internal appeal. And what has to happen, Your
Honor, under Mexican law, is they have to basically
extinguish all rights at the same time when they
do that, and at the same time, they had this
what was called a motion for reconsideration.
a recurso de revocation, which meant that the
Amparo couldn't be accepted until that was handled
and dealt with. Once it was, which was recently
and unfavorably to Mr. Albor, that allowed them
to procedurally continue the defense with filing
the Amparo. It does not in any way take control
of the debtors. It does not in any way change
their ability to operate. It is simply preserving
its constitutional rights. under Mexican law
and that's and there was a deadline to do that
your honor and that's why they filed it as I
Understand it and I'm sure you have more questions
about it your honor I certainly would too but
that needs to come at a later hearing but it's
certainly not the basis I think at this point
to incur daily sanctions for a couple of reasons
your honor number one If it's not doing anything
to change the ability of the debtors to operate
their companies, and the only thing that it's
doing is preserving his constitutional right
to have a higher court hear his appeal, which
has not been heard yet, Your Honor, then they're
not really being harmed by it as it stands now.
And I would be the first to say if it did, we
would all need to step in and do something, Your
Honor. But having said that, Your Honor, understand
that If Mr. Albor, his understanding from Mexican
counsel is if he withdraws that amparo, he will
forfeit his rights or may forfeit his rights
to any constitutional review of what occurred
here. And as you know, as you rightly pointed
out, this business was built by him over 20 -something
years. It is very dear to his heart and very
important to him. And so, no, he's not going
to give it up easily, but he certainly doesn't
want to give up his rights. But he is at the
point now, Your Honor, to make sure Your Honor
understands his willingness and duty to comply
with your order, that if he has to, he will withdraw
the emparo to make sure that you understand he
is not trying to violate your order. And keep
in mind, Your Honor, this was not something that
was done with my knowledge at all. So, you know,
I would have probably taken a different tack
if it were me, but the counsel that did this,
I haven't even been in contact with. Finally,
Your Honor, I would say with respect to the sanctions
that they want. Your Honor, we do have a procedure
in place for that. It's called 362K. And they
will have an opportunity to have a hearing on
whatever injury and whatever party thinks that
they were injured by any violations of the state.
With respect to a sanction for violating your
order, I think that requires us to take a look
at what is the damage that can be stopped by
entering those daily sanctions. To me, Your Honor,
a daily sanction is designed to do one of two
things. Force compliance or force them to stop
taking an action, whoever is the recipient. But
what action are we forcing to happen with the
daily sanction if you were to enter it? And what
action are we telling him to stop? He does not
have control of the PES accounts. There are no
further... Assets going to the Elysium accounts.
There's nothing to stop. It's there the only
thing left is an accounting to find out Where
that money was going and if the debtors believe
that there is a valid basis to do so they can
certainly bring an avoidance action your honor
So that would be my point about that And I'm
sorry. Let me just make sure I've got all my
So anyway, so that's what I think that you'll
have the opportunity at the hearing as mr. Breacher
laid out The only thing I would ask your honor
is I think we're gonna need a little bit more
time Before you set those hearings and it's not
because I don't think those things should be
teed up as soon as we can The problem is is if
they're going to submit that they want to have
a hearing on costs, I don't know what those costs
and fees are. I have not seen time records. I
don't know what has been categorized as what.
And typically, and I've actually done this before,
and actually analyzing the applications with
respect to trustee. But we need to look at those
and categorize them and whether they're subject
to challenge, whether there was duplicate billing,
and whether these fees would have been incurred
anyway as a matter of an ordinary course of a
Chapter 11. We need to have an opportunity to
take discovery. So I would submit, if they believe
that they have an ability or want to lay out
what those costs are that they're seeking recovery
for, they can do it with either something like
a motion to tax fees and costs, motion to assess
the injury. I think liabilities are already there
with respect to the automatic state issues. But
if they got something else, they can bring that
up and then tell us what is it that you want
to have monetarily come back and what's it based
on so that we can challenge that. And finally,
Your Honor, with respect to timing, the only
thing I ask is for a little bit more time for
Mr. Albor before you set that and preferably
after July. As a housekeeping matter, and I only
raised it at the last of my argument because
I didn't want it to get in the way of what I've
had to say substantively, I will be being replaced
as counsel. We are currently looking for substitution
of counsel and working quickly on that, Your
Honor. But as you can imagine, it's going to
take a few days to get that, and we're going
to need to have counsel up to speed with respect
to what's going on in this case, as you can see
even in the past month. It can be very complicated,
very quickly. But I don't want Mr. Albor's substantive
rights to be challenged. You can see just in
the applications, the legal array that's, you
know, the legal power that's arrayed against
them is going to need a little bit of time to
get up to speed with this new council. So I'd
only ask for a little bit of time for that, Your
Honor. These are very, very serious allegations
that have been made against Mr. Albor. And it
is severely interfering with the debtor's operations.
And we're concerned about financially, where
is this going to go? With all this money being
diverted, it's a major issue here. And that's
why the lenders are having to ask for this additional
dip. I'll just take maybe three or four minutes
just to not repeat many of the arguments that
were made by debtor's counsel, but to give this
court an appreciation of the lender's point of
view from this situation. First of all, Mr. Albor's
counsel seemed to me just now to go at great
lengths to explain that he was not aware of his
client's stay violations. No one's accusing his
counsel of being complicit in any stay violations.
We are, of course, concerned about Mr. Alvarez
violations of the automatic stay. We're essentially
asking the court for three things today, which
are expressly set forth in the court's order.
First is the per diem sanctions, which I'll revisit
in a moment. Second is a July 23rd hearing fees
and costs. And of course, as part of that process,
we would like it to be set for the hearing on
July 23rd. And of course, we're going to forward
all of our invoices for all the various professionals
involved detailing the time and expenses that
were set on that. Obviously, we're going to have
to redact a lot of the time entries to the extent
that they contain attorney -client privileged
information. But as is usually done in these
situations, we can categorize the time that was
spent. And then third, Your Honor, we'd like
the reserve for a hearing after July 23rd. on
damages to the business because it's going to
take some time for Riveron to make an assessment
of the damages to the business and to the value
of the lender's collateral as a result of all
of these stay violations. Your Honor, with respect
to the per diem sanctions, I think that there
is ample evidence on the record from before and
now in order to impose those sanctions. You know,
just briefly, Your Honor, in paragraph four of
the CRO's affidavit, he describes the diversion
of funds to PES by going to Costco and purchasing
point -of -sale terminals. Now, the argument
we just heard now was, well, that was done because
the bank accounts were frozen and the former
CEO needed a way in order to pay vendors and
suppliers in Mexico. Your Honor, that's not how
you comply with the automatic stay with this
court's order. The way you comply with the automatic
stay in this court order is you turn over the
receipts from the Mexican parks to the CRO so
that the CRO can then pay vendors and suppliers
in Mexico. You don't comply with the automatic
stay by setting up your own shadow banking system.
Second, what the CRO is described is the creation
of backdated agreements to convey the theme parks
of Mexico, which are the lenders collateral.
And also, we've heard on paragraph 10, evidence
of funds being diverted to personal accounts.
On the Amparo issue, Your Honor, I distinctly
recall, at the hearing, Mr. Alboros sitting in
the witness box and explaining that he wore three
hats with respect to Controlador Adolphin. He
was a director, he was an officer, and he was
a shareholder. And I'm quite confident, Your
Honor, that if - Look at the translations of
the Amparo that was recently filed just last
week or this week by Mr. Alvore. It was not in
his capacity as a shareholder. It was in his
capacity as a director or officer of Controladora
Dolphin, which is directly contrary to the express
terms of this court's order. This court was very
clear in that order in multiple places, stating
that Mr. Alvore should not hold himself out as
a director or officer of Controladora Dolphin
or pursue an illegal proceedings on behalf of
Controladora Dolphin. Your Honor, what I recall
is that, you know, Mr. Albor stated, and his
counsel's primary argument at the hearing on
stay enforcement, was that Mr. Albor was acting
in a good faith belief under Mexican law. It
is very clear from this court's order that he
is not to hold himself out as director officer
of Controladora, and he is continuing to do that.
as evidenced by the MPRO that was filed earlier
this week. We also have the CRO's affidavit testifying
that he installed POS machines as early as April,
and he was continuing to use those POS machines
even after this court entered the state enforcement
order. And I would submit to the court that those
two things are not actions that one takes in
a good faith belief. Because remember, also,
it's in the court orders of Mexico that he is
not to hold himself out as a director of officer
control at Hora. So Your Honor, the DIP lenders
here are in a bit of a quandary, right? These
stay violations, and we have to remind ourselves,
we're three months into this case. And this case
was filed, I believe it was March 31st. So we're
three months into this case, and we are still
dealing... or raising stay violations on a daily
basis. We do have control of the parks in Florida.
We do have control of the parks in Italy. Unfortunately,
from the perspective of the dip lenders, those
parks are what I would describe as cash neutral,
meaning that they generate enough... these state
violations. So who is funding the defense, if
you will, of all these state violations? The
dip lenders are. And that's why in a few moments,
you're about to hear a request for approval of
the amendment to upsize the dip by $10 million.
These state violations are substantial. They're
ongoing three months into the case. As Your Honor
saw, the debtors filed applications to retain
both the investment banker and a real estate
advisor in this case. We are hoping that what
will happen is that this case will pivot from
one being about trying to suppress state violations
to one that's going to be about selling the assets,
right? And once those assets are sold, hopefully
money will come into the state. of the dip lender
left unchecked. These stay violations will go
on for weeks. If we give the additional time
that Council for Mr. Albor was just arguing for,
all that's gonna do is give them more time to
continue to commit stay violations, which cost
the dip lender in two ways. One is the money
that goes out the door over the next several
weeks while these violations go on may never
be recovered. But two, every time it takes an
action in violation of the stay, It costs the
estate funds in terms of Riveron trying to redirect
things to bank accounts, Riveron trying to remove
unauthorized POS machines, and every time he
files an Amparo, when he filed the Amparo this
week, the debtor had to have their law firm,
the Guerra Law Firm, go into court in Mexico
to try and fend off those unauthorized filings.
It is a daily, massive incurring of expense to
fend off these state violations. And it's quite
obvious what his strategy is. His strategy is
to wear the lenders down. If I keep committing
these stay violations and I keep upping the ante
on the dip lenders, maybe they'll finally give
up. It's very clear that's what the strategy
is. So I understand, Your Honor, that we're asking
for, I'm sure it is not every day that this Court
has to impose daily sanctions on an individual
for violation of the stay. And I'm sure that
this Court doesn't take that lightly and it shouldn't.
But this is about as egregious of an example
that, quite frankly, I've seen in 25 years of
practice. Thank you. Mr. Greger, can you clarify
for me what is happening today with the receipts
at the Mexican parks? I could clarify what we
know, Your Honor, and this is the point. We know
what we know. We don't know what we don't know.
We know that... In connection with the Mexican
parks, Riveron has communicated with the employees
in the financial group of the debtors business
to redirect funds from the park revenues into
the BBVA debtor bank accounts. Do we know that
that has been done across the board? Do we know
that we've caught every single costco purchased
pos system and that there is no more money going
into some other bank account we don't and that
your honor is the point uh you know i i certainly
agree with mr moon and and and i appreciate the
many many calls he's taken from me over the past
couple of weeks with with daily requests i certainly
as as mr keenan said we certainly don't blame
him Excuse me, I hear someone's conversation.
Please mute your phones, your computers. Thank
you. But frankly, the fact that Mr. Moon is going
to be withdrawing from this case gives me even
greater concern that he's not going to be there
to answer those questions. So we are working
to get information, and Mr. Moon has assisted
with giving us this information, I think, as
best as he can get it. We certainly don't have
answers. We don't have answers across the board
as to whether we've caught all of these POS systems.
We don't have answers as to whether funds from
the various Caribbean subsidiaries are being
sent to Elysium or being sent elsewhere. We don't
have control over Elysium. We don't have access
to Elysium. So you ask a great question, Your
Honor, and it's one that I don't know. if I have
the answer to it. And it's why, Your Honor, we
suggest that a sanction is necessary. Okay. And
when does the sanction end? How do I know when
there's compliance then? Well, Your Honor, what
I would suggest is that you certainly have the
ability to fashion this in the way that you think
that's one option I think would be to set a hearing
at some point within a week, two weeks, whatever
the time may be, and we come back, and if we
need to have an evidentiary hearing on whether
he's complied or not, we can. And if he has,
perhaps you'd say, I'm not going to impose the
sanction. Again, the purpose here is to get compliance,
is to get full information. But I'm trying to
figure out what our procedural posture is. The
debtor is choosing the procedural posture in
which it's putting things in front of me. I am
not. Fine him $10 ,000 a day. Okay When do I
know that it stops? Okay, and that's what I'm
trying to figure out and I'm not sure and the
debtor so far hasn't given me Something that
I can do. Listen, I am NOT happy here I am NOT
happy that I am learning about the diversion
of estate assets a clear violation of the automatic
stay I am not happy that I'm hearing that there
is, that there are, is a lawyer for the debtors
who seems to be, and I say seems to be, because
I have no evidence, obstructing the debtors access
to books and records, contracts, areas in the,
headquarters facility that the debtors should
have access to. It's not clear to me quite frankly
that Mr. Albor is not the impetus of all of this,
that he is not creating the situation. It's not
clear to me that he isn't in fact creating a
situation where the employees are not cooperating.
But this is somewhat of an amorphous kind of
situation, okay? And I don't have any evidence
in front of me today. Okay, Mr. Wachstaff isn't
here. I don't have him on the stand. I have an
unsworn declaration. Not a declaration, I'm sorry.
I have an unsworn status report, preliminary
report. I have no evidence in front of me today.
And there are procedures for a debtor to follow,
but I've got to have evidence to support the
debtor's positions. Although I will say, it sounds
to me as in... if in fact Mr. Albor is violating
the state and possibly violating my order. When
I drafted the order, as I assume both sides and
the attorneys recognized, I carefully went through
each side's draft order to make certain that
I was comfortable, that I had evidence to support
what was in the order and Quite frankly where
I could I chose Language from mr. Alborz proposed
order hoping that that would mean he would be
more likely to follow it That may not be the
case From what I'm hearing so I have grave concerns
here about Mr. Albor's behavior from what I am
learning though. I don't have evidence yet on
what was in the CRO's status report And I of
course as we all know have concerns about The
animal welfare here I'm just not sure what the
debtor has given me and certainly what authority
the debtor has given me to impose on an oral
motion at a status conference with no evidence
that the sanction it wants. I am very happy to
schedule and I will schedule a hearing on July
23rd. And Mr. Moon, I understand that may create
a time crunch for your successor, but so be it.
That is because of Mr. Albor's conduct and not
the debtor's. So I will have that. Of course,
any damages the debtors seek at that time, they
should be immediately forwarded so that counsel,
whoever it is, has the opportunity to take a
look at it and challenge it, and that will be
an evidentiary hearing. Mr. Moon, you can tell
your client that I think you have represented
him very well, and that I personally think it's
a shame that you are going to be replaced. Unfortunately,
for your successor, he's gonna have to just get
in and get up to speed and deal with things.
And let me add this. I think I said it before,
but it is not workable to every day have to call
Mr. Albor's counsel to report on something. And
quite frankly, that shouldn't be counsel's function.
That is not counsel's function to be the... emergency
call every time Mr. Albor decides to do something.
So we're in a situation that is quite frankly
somewhat untenable. And even if I don't impose
a fine today, that doesn't mean that I won't
retroactively impose a fine starting today. So
Mr. Albor should be apprised of that, that I
may retroactively, depending on the evidence
I hear, impose a fine beginning today. Thank
you, Your Honor. If I could just add one more
thing, because Mr. Albor wanted to make sure
that I made this point, and I missed it in my
first presentation. But he has directed me previously,
and I have spoken with Mr. Gricher. of his willingness
to try to work with Mr. Wagstaff and talk with
him directly because he believes that there are
some of these issues he can resolve directly
if they just talk. He also believes there might
be some issues because of his experience with
the vendors and the issues that these parks have
with assisting in the success of these parks.
And he also told me he actually has had a conversation
with Mr. Wagstaff. I see Mr. Wagstaff is on the
Zoom, so maybe he can confirm it, but they have
spoken by phone and had discussed maybe meeting
when Mr. Wagstaff got back from, I believe it
was in Canada. So at least on that level, I'm
hopeful that there can be, we can like tone down
the litigation aspect of everything that's occurring
with every time there's a question. And some
of these questions can be resolved at the business
person level as opposed to the legal level, which
I always... I think is a much better way to do
it. But I'm just pointing that out for your honor
so that maybe you could make the representation
or have your thoughts as you would think that
that would be a good thing that they do talk.
And I realize there's a trust issue. But we don't
get anywhere if we're not talking. Mr. Moon,
talking is fine and it should occur at the business
level. But what is there to talk about? OK, that's
the question. What is there to talk about? Mr.
Watt staff is and I Forgotten Mr. Strong. Thank
you are in charge What they say goes? Mr. Albor
should no longer be involved in the debtors and
their operations What happens on a daily basis?
the receipts from the parks or quite frankly
even and they say this The welfare of the animals,
it's no longer his concern. It just isn't. So
there is nothing to talk about. Okay? So Mr.
Albor needs to understand that he is not in charge.
He is not in control of the operations of these
debtors. Those decisions are in the hands of
Mr. Strom and Mr. Wachstaff. And... He should
not be communicating with employees to suggest
in any way that they not cooperate with Mr. Wagstaff
and Mr. Strom and their representatives. All
communications, all direction should be coming
from Mr. Strom and Mr. Wagstaff. So while Mr.
Albor can certainly have a discussion with Mr.
Wagstaff, It's not a negotiation I agree with
that your honor and he wasn't even suggesting
that he was just suggesting as he comes into
this business and Trying to deal with the vendors
and all the issues that come up That he may have
some experience that he can bring to bear to
help because he does care about these companies
I'm simply conveying that message. It's not to
try to exercise control It's because he really
does care about these companies and I can tell
you Just from my discussions with him, and you
can imagine over the amount of years that he's
been with it, it's been a bumpy ride at the end
here. But I don't question at least that he does
care about the animals, Your Honor, so. Well,
I understand that and I appreciate that. But
at this point, if Mr. Wagstaff needs some assistance
or thinks that Mr. Albor's knowledge and history
is helpful. I'm sure he'll reach out. At this
point, though, Mr. Albor needs to step back,
and he needs to let Mr. Wagstaff and Mr. Strom
take control and not interfere in any way with
the operations of the company. So... I don't
know that I can enter an order today, but I hope
I've been real clear on what I expect. And I
will not hesitate to, in essence, retroactively
fine Mr. Albor if I find it appropriate. could
purge by showing full compliance with the stay
at a later date. Because if you look at your
order, Your Honor, what it says is that Mr. Albor
is to take the corrective measures that are listed
in paragraph four. And then in paragraph seven,
it states that Mr. Albor is to file a corrective
certification. This order came out on June 5th.
It's now. The corrective certification has not
been filed. I'd submit to the court that the
failure to file the corrective certification
would be grounds to impose the penalty, which
could be purged if the corrective certification
is filed by some later date and it's not contested
factually by the CRO. Because here's our concern,
Your Honor. He's been violating the automatic
stay every single day since this order came out.
We will continue to do it between now and July
23rd, even if we obtain compliance by July 23rd.
That's four more weeks of damage that we might
never recover. And so perhaps if the daily fine
is accruing, for again, for failure to file the
corrective certification, it's been since June
5th. I mean, normally I think a normal former
CEO of a debtor would file that within days.
desperate to show their compliance with the court's
order in the automatic stay. It's now two or
three weeks later, it's not on file. It's not
on file because he can't say that he's corrected
the automatic, made the corrective measures.
So let's impose the fine and this court can expunge
or purge the fine if he later files the corrective
certification and it's deemed to be accurate.
Perhaps that's a way in which we can actually
compel compliance, because to be frank, Your
Honor, if if we're going to set the hearing for
July 23rd, I would. Include the court to allow
us to be able to file an emergency motion between
now and then. I haven't stopped any of that.
As I said, the debtor has been deciding procedurally
how to handle this matter. I have not. Thank
you, Your Honor. Mr. Kenan stole my thunder.
I was going to point to paragraph seven. And
again, Your Honor, my suggestion had been that
the procedure that the debtors had chosen to
follow was what we thought was the procedure
that Your Honor had suggested, which was anticipating
that the next move here, if you will, was for
Mr. Albor to come into compliance with your order
and to certify that he had come into compliance
with your order. And given that we are three
weeks away and just three days ago, three business
days ago, Mr. Albor continued to violate your
order in black and white by filing an amparo
without asking your honor for relief from the
automatic state to do so and filing that allegedly
on behalf of the debtor, which your order said
that he did not have the right to do so. That's
why I say your honor, we seem to be going in
the wrong direction. And so your honor, we're
certainly happy to take. take the court's lead
and will certainly proceed with with the hearing
on the 23rd if that's that's that's the correct
approach but i'll just i just wanted to note
that that was for the hearing on the 23rd i'm
giving you the hearing on the 23rd this is not
my approach okay you asked for it i'm giving
it to you whether i will impose sanctions today
i'm going to think about i've heard the request
And I'm going to think about it, and I will either
issue an order or I won't. But I will give it
some thought. Thank you, Your Honor. That's all
I had. I appreciate the time. Let's move on to
the next matter. Your Honor, if I may, I think
that there's nothing else that requires me to
be here. I'd just like to ask to be excused,
if that's OK? Yes, certainly. Thank you, Your
Honor. I think we're going to pivot now to the
dip motion, which is agenda item number three.
Now I'll keep my comments brief. We're now on
the fourth iteration of our interim order. As
has been previewed previously with the court
and obviously today, given ongoing litigation
efforts and the enforcement compliance efforts
in this case, the debtors are in need of additional
liquidity and funding. to prosecute the Chapter
11 cases and to operate their businesses. As
you heard today, the debtors have obtained access
to their Mexican records and bank accounts and
they are obtaining access to the revenues that
are coming in as far as we know. So hopefully
that will be easing some of the burden going
forward. The River On team is working closely
with their Mexican counterparts to determine
cash flow needs and that kind of thing and are
working on a prospective budget for later on.
And we'll be updating the budget as additional
information becomes available. The donors have
requested and the lenders have agreed to fund
an additional $10 million in new money dip loans.
The debtors have submitted a budget in support
of that additional commitment along with a declaration
from Mr. Wagstaff detailing the funding need,
the debtors' liquidity constraints, the challenges
that the debtors have faced in these cases, and
the debtors' limited ability to source financing
from alternative sources. Mr. Wagstaff has been
in Mexico dealing with operational issues for
the past week or so. He is currently en route
from Mexico. We did ask the court for accommodations
that he could attend by Zoom today. He is present
on Zoom and available for cross -examination
if necessary. Although we understand today, which
I'll get to in a moment, that there are no objections
to the relief requested. So I don't anticipate
that anybody will need to cross -examine him.
So if there are no questions from the court,
we'd like to move Mr. Wagstaff's declaration
into evidence at this time. Any objections? I
hear none. It's admitted. The debtors submit
that the facts of these cases, additional financing
at this point, is imperative to pay payroll,
to satisfy operational expenses, etc. It's also
important in this case, Your Honor, to fund a
sale process. The debtors believe at this point
that we are at a pivot in the Chapter 11 cases
and that we can start to focus on more traditional
Chapter 11 efforts. Referenced earlier the debtors
did file retention applications for King Summit
as a real estate advisor and Green Hill as an
investment banker and those professionals have
been consulting with the debtors on a go -forward
sale process. We anticipate filing a sell motion
in the next few weeks. As part of the additional
agreement to provide additional funding in the
Chapter 11 cases The lenders have demanded certain
case milestones be implemented in the cases.
These are standard milestones and are intended
to put some structure and guardrails on the cases
to ensure an efficient process. Those have been
included in the supplement that we filed last
week. Governor, we did file, in addition to the
milestones, a proposed form of order with the
supplement. That was circulated to the Office
of the United States Trustee Council for the
committee and the two parties that formally objected
to the dip on a final basis. The order and the
budget attached to that supplement both reflect
the comments from those parties. And again, I
don't believe there's any objection from those
parties to the relief requested. We also received
informal comments from Miami -Dade County yesterday.
We have been discussing those with the lenders
and Miami -Dade, and this morning we did file
a further revised order to incorporate those
informal comments, and I believe that Miami -Dade
County's comments at this point have been resolved.
That comment was very limited. I can point you
to the section in the black line if necessary,
Your Honor, but the comment I don't think is
controversial, which is to say that the dip lean
to the extent appropriate under applicable law,
and then otherwise to the proceeds of those leases
and leasehold interests. In addition, we did
make one tweak to the milestones to fix a typo,
but that was the extent of the changes to the
further interim dip order. your honor the last
thing that i'll note is that there is a little
bit of a sense timing sensitivity here the debtors
are in need of the funding as soon as possible
and so we'd request your honor that if you have
no further questions and that there are no objections
to the relief requested that the order be entered
as soon as possible okay thank you let me hear
from others briefly if i may be heard your honor
I'm going to hear from Mr. Hazeltine first. He's
in the courtroom. Then I'll hear from you. Happy
to defer to those that are live, Your Honor.
Good afternoon, Your Honor. Bill Hazeltine of
Sullivan Hazeltine Allentown on behalf of Tradewinds.
And I first want to say it's good to see you
again. It's been quite a while. So just a brief
explanation. I don't want to go into detail because
it's very it's a little complicated. My client
situation is a little complicated. I don't want
to prompt any unnecessary responses. But my client
has a judgment lien that was recorded in Florida.
And it asserts a first priority lien ahead of
the first lien lenders on those assets. First
lien lenders, the debtors, and the second lien
lenders obviously don't agree with that. We followed
an objection seeking adequate protection in the
event that it's determined that my client is
not senior. As I read the order, if we were senior
to the first priority lanes, we'll also be senior
to the dip. Putting aside we did file an objection
to the what was supposed to be the final dip
that it what turned out to be I think the second
And I have reviewed the order that was attached
to the supplement last week We obviously were
concerned about the increase of 20 million new
money we 10 million dollars in new money But
I think this hearing has enlightened me quite
a bit on why that is the case. So we don't oppose
the entry of the order that was attached to the
supplement that was followed last week. Thank
you. Thank you. Mr. Gold. Thank you and good
afternoon, Your Honor. Ivan Gold of Allen Mackins
for Keyes Hotel Operator, Inc., which is doing
business as the Hawks K Resort. one of the debtor's
facilities, the one in the Keys, that has been
referred to. We have an objection at 146 on the
docket that has been pending for quite some time.
We do not dispute the debtor's need given the
circumstances that have brought us here today
for increased liquidity to continue to have the
estate's function in light of the continuing
disputes with Mr. Albor and Mexico. However,
we have a number of issues we've raised in our
objection. The ability of the lenders to seek
to impose a lien on a license agreement, which
we contend is not valid under Florida law, as
well as the bankruptcy code. The adequacy of
the budget, which is, to say the least, a moving
target under the circumstances of these cases.
whether and at what point a 506c waiver may be
appropriate. We've asked for adequate protection.
Obviously in the context of an interim order
that will take us to July 23rd, we do not have
objection to continue proceeding on an interim
basis. I just wanna remind the court, these are
some substantial issues and it sounds like we're
gonna have a lot of stuff to do on July 23rd
and I hope they do not get lost. in the process.
They also do relate to the sale process that
the debtor seeks to engage in. Obviously, our
concern is in the context of a license agreement
under Florida law, whether this is even a transferable
interest under the terms of the document. But
these are all issues for another day, but I just
wanted to make it clear that the entry of the
interim order does not prejudice any of that
stuff. We have continuing dialogue with the debtors,
and that will, of course, continue in advance
of the hearing. But just want to make sure that
we do not get elbowed out by the main event,
which has predominated in this case. But I said
at a prior hearing, and Ms. Melkey said it very
well in her comments on this motion, we still
have traditional Chapter 11 processes. to pursue
and we welcome the opportunity to present these
issues in that context. Thank you for listening,
Your Honor. Why is the dip so large in such a
short period of time? And the answer is simple.
The answer is that the parks outside of Mexico
are the ones we can control, the debtors can
control, and those are the parks that I would
describe as cash flow neutral. The park that
has 1 .7 million visitors a year and generates
a majority of the company's revenue are the parks
that are located, the dozen or so parks that
are located in Mexico. over which the CRO is
trying to still wrestle control. Your Honor,
I would like to point out that there is an event
of default in the DIP whereby if the debtors
lack control over their assets, that can be declared
as an event of default. We are not declaring
that event of default now, although we probably
could, and we certainly don't have any intentions
to do so in the near future. However, I just
wanted to make it clear at this hearing that
we're or a strategy here is to try and wear the
matters down. And, you know, for that reason,
I would, you know, just be, you know, I don't
want to ask the court upfront, but it is entirely
possible. I'm going to approve the dip with the
revised form of order. This is another interim
dip. The need has been shown by the declaration
in support, as well as the representations of
council. There's no objection on an interim basis
to this. Everyone's, the two objectors, objections
are preserved. for a final hearing or a future
hearing on another DIP. And I did review the
limited changes to the previous form of order.
They do seem pro forma and resolve an informal
objection. So I will approve the DIP again. The
only administrative comment I'll make is that
I believe my office is uploading an order as
we speak, so it'll be ready for you whenever
you're ready. That's fine. I'll take a look at
it. We'll get it entered this afternoon. Thank
you very much. Thank you. And I believe that's
all we have for today, so we're adjourned.