I'm Sean Greacher from Young Conaway on behalf
of the debtors. Your Honor, we generally start
these cases with a status update. Let's give
you a quick one. On the first day hearing, you'll
recall Mr. Braden described the three phases
we anticipated in this case. Phase one being
stabilizing proper management and oversight of
the business, ensuring animal safety and necessary
operational controls in connection with the Chapter
11. getting our arms around the financial operations
of the business, digging into the company books
and records, complying with reporting requirements
called for by the rules, and determining the
best path forward through this process from an
operational standpoint. Your Honor, we feel like
we are getting close to closing out most of phase
one. Sadly, it took much longer and was much
more costly than anyone hoped. I think that that
was caused largely by Mr. Albor's willful stable
violations, and we still do have some gaps. We'll
talk about those later today. Unfortunately,
we've uncovered a number of operational challenges
resulting from some of prior management decisions
which the Rebron team has been tackling. Phase
two of the case was state value maximization.
That process is now underway, and we expect this
to kick into full steam as the phase one process
starts to taper off. The advisors, Greenhill
and Keene Summit, have kicked off the marketing
process. We hope that the procedural orders related
to future sales will help us move forward quickly.
to preserve and generate as much value as possible.
We've received substantial interest from various
parties as to a number of assets and we're optimistic
that the process will be successful. And then
we talked about phase three. We now do have most
of the books and records preserved. We're learning
more and more each day about how these companies
were run and we will be poised for a full investigation
and accounting of the historical issues related
to these debtors. So I think... In some, we are
moving forward. This has been a challenging case
so far. We are hopeful that we are getting to
a place where this becomes run more like a normal
Chapter 11 case in short order. So with that,
unless Your Honor has any questions, I propose
we just kick into the agenda. Let Mr. Kashanash
step up. Thank you. I do not have any questions.
Jared Toshinosh from Young Conway, Starr and
Taylor on behalf of the debtors. I'll be handling
the miscellaneous asset sale procedures and the
bidding procedures motions. But first, a little
housekeeping matter. We did submit a declaration
from our investment banker, Mr. Jakub Malechko,
at docket number 364. Mr. Malechko is appearing
virtually today and we thank your honor for allowing
that. So with that, we would... Respectfully
move in to evidence the declaration of Mr. Molechko.
Is there any objection? I hear none, it's admitted.
Does anyone wish to cross examine or is going
to wish to cross examine Mr. Molechko? I hear
no one. Thank you, Your Honor. Mr. Molechko has
actually an immovable conflict towards the end
of the act. So unless your honor has any questions
for him, we would respectfully request that he
be permitted to leave the virtual hearing when
appropriate. I don't think I have questions for
him. I have some questions. We'll get to them.
Okay, your honor. Sounds good. Thank you very
much. So starting with the miscellaneous asset
sale procedures motion. I think before we get
into it, it's important to sort of take a step
back and set some context for when we were preparing
these motions about a month ago. First, the debtors'
assets, as you know, comprise a very diverse
set of assets, both in terms of your geography
and the types of assets. They range from parks,
equipment, and obviously to animals. Moreover
some some properties are going to be sold as
going concern sales while others may just be
sold for the real estate And obviously in addition
to those levels of complexity You have all the
issues that mr. Greacher was just referencing
a moment ago where we have been struggling obtained
control of the books and records. So when we
started out, this was sort of a black box. And
as we've progressed through these cases, it has
become less and less of a black box. But we did
need to file the motions, and we needed to do
so in order to be ready to basically hit the
ground running when the time came. And that time
is now. those levels of complexity to address
those. We created a framework that we thought
provided flexibility while also building in what
we believe to be appropriate notice to parties
in interest. But now that we have studied the
ship, we are hopeful that this will, as Mr. Reacher
also alluded to, become more of a normal standard
sale process where we can hopefully group as
many assets together and we are not running multiple.
parallel sale process at the same time. I think
that would, we are trying our best to be efficient
as possible while also progressing in a way that
maximizes the value of the debtors complex asset
structure. So with that sort of high level background,
I guess I've moved into the miscellaneous asset
sale procedure motion, which is agenda item number
eight and docket number 298. I don't think I
need to add much to what I've already said and
what's set forth in the motion. These miscellaneous
asset sales are, again, designed to provide efficiency
and flexibility to the debtors in monetizing
their various assets. And with respect to this
particular motion, we have three categories of
assets, the real property, the personal property,
and the animals, all with their varying thresholds
and notice periods. But with that, I guess I
would open it up to your honor to address any
questions that you have. Well, the big questions
I do have, I guess, on this cell motion is with
respect to the animals, which are included, and
who is getting notice. with respect to the sale
of a particular animal or group of animals. Because
I did not see in this motion any notice to any
regulatory body that's responsible for animal
welfare. Understood and I think I think we would
give them notice but I think we can make that
more explicit in the order in by adding into
the notice parties all applicable regulators,
if that would solve your honor's concern. I think
it's a must. It's not discretionary. And they
need to get notice of any sale of any animal.
And I would like in here who that is. I would
like the applicable regulatory entities specified.
The debtors should know who those entities are,
the regulators or whoever they are, and they
need to be notified on every sale of any animal.
Or if something's, I can't imagine, you're abandoning
any animal or whatever the situation might be.
But I thought that was a notable... hole in these
procedures. I think the miscellaneous asset sale
notice to the extent that it deals with an animal
needs to also include how that animal is being
transported. how it's being protected, et cetera.
There needs to be more. This is a unique, in
this aspect, and maybe only this aspect, this
debtor is unique and, you know, the multiple
sales or we're selling it in piece parts or they're
not going concerned, none of that is atypical.
I think the only atypical part of this the sale
motion is that we're dealing with animals. And
so that's going to be my question on every sale
or other disposition of any animals is how are
they being cared for? How are they being transported?
Who's overseeing it? Do the regulators have the
appropriate notice? That's what I'm gonna be
looking for. So that needs to be specifically
put in here By no means were the debtors Attempting
to flout any of their responsibilities to regulators.
We are very keen and acutely aware of all the
regulations and we Understood if any there is
any disposition of animals We certainly were
intending to follow and provide notice to all
the regulators, but I agree that we can include
this more explicitly in the order and notice.
And I should note, you mentioned abandoning.
We do not, this is not like the other de minimis
asset sales. I did a control F for abandoned
before I got here and there is no mention of
abandonment. So this procedure will not be dealing
with abandonment. But we appreciate your honors
comments and we will incorporate those. The only
issue that I had with the de minimis sale motion.
So if you revise that form of order submitted
under certification after it's been circulated,
I anticipate signing it. Understood, Your Honor.
And for the notice, I guess we will put in a
bracket to be updated as applicable if and when
an animal is sold. Say that again? Just for purposes
of submitting the order under COC. In the notice,
we will put a bracket in for basically who will
be in charge of the transportation to be updated
at the applicable time when an animal is sold.
To make it clear when the order goes out that
if and when we sell an animal, that bracket will
be updated with all the necessary information.
Thank you. Thank you, your honor. So moving on
to the bidding procedures motion. We did receive
several comments from several parties. And first,
I'd like to thank the Office of the United States
Trustee, Ms. Leamy is here, who is filling in
for Ms. McCollum, who is filling in for Mr. Hackman.
We thank all of them for participating and their
responses. I believe they were very additive
in this regard. But after we, and we did submit
a COC, resolving the various comments from the
parties, but when we heard from Your Honor's
chambers that there was questions, alarm bells
went off at the offices of Young Conway, and
we did a more thorough scrub of the order. We
didn't want to market too much further after
we submitted a COC, but we did catch some more
issues that... may be helpful to your honor.
And we did circulate an incremental red line
to various parties, including the United States
trustee, the official committee of on -secret
creditors, and all the other respondents who
did provide comments to the form of order. I
do have an incremental red line. It is just seven
pages, mostly clarifying changes. controversial
and as I said I believe all the parties who received
this I circulated a few hours ago they most if
not all responded with saying they do not object
but just to quickly walk through the incremental
red line this first one on page 8 follow this
just clarifies that the objection will be filed
following the filing of a stocking horse notice
rather than just simply thereafter which was
a little unclear On paragraph 15, when the debtors
are serving the bidding procedures, we have added
to the extent not already served. I believe that
came about because the bidding procedures were
originally attached to the motion. And so now
we have included the bidding procedures as a
exhibit to the order. So I think paragraph 15
would have been a little duplicative in terms
of serving. So that is the reason you see that
to the extent not already served. The next one
on paragraph 21, Electronical is, I don't think
a word, although Spellcheck did not catch that.
This I would say is the more substantive change,
but again, it is not prejudicial because this
is with respect to the service of a cure notice.
We had originally put in service on bid procedure
notice parties, which actually as a defined term
included the creditor matrix. And we don't, I
don't think we ever serve cure notices on the
entire creditor matrix. So here we've changed
that to the non -debtor contract counterparties
and all those entitled to notice. The next one,
again, is a clarifying change, just making clear
that the objection we are speaking about with
respect to the designated contract is with respect
to the assumption and assignment of the designated
contract. Paragraph 26, again, electronical,
and then in the first sentence, rather than,
say, listed above. we were more specific and
put in paragraph 25, which sets out the actual
specific items that we are referencing there.
Paragraph 17, this discusses objections to the
proposed form of adequate assurance. This was,
I think, a holdover that was not updated when
we received comments from the landlord. It basically
says that the original order had said that the
objection will be heard at the sale hearing or
supplemental designated contract hearing. But
we have since changed that in connection with
some comments that we received. So we just simply
put in accordance with this bidding procedures
order. And then again, the last one is paragraph
32. And that is just, again, a clarifying change
that. an objection must be filed no later than
three business days, but it can be filed earlier
than three business days. So that's the incremental
changes from what was filed as a COC at docket
number 369. And again, I won't say, I don't think
I need to say much more than my introductory
remarks with respect to the bidding procedures.
We designed them in a way that we hoped balanced
the need for flexibility in these cases while
also providing adequate notice to all parties
in interest. So with that, again, I will open
it up to your honor for your questions. I do
have questions regarding the contract assumption
and assignment procedures. And I'm not sure quite
frankly if the motion differs from the order.
But I flagged some things in the in the motion
and particularly on page 31. This is 31 of the
motion. I just want to make sure I understand
what's happening. Because of the way that these
notices are going out, are people going to be,
counter -contract parties, going to be receiving
more than one notice with respect to their contracts?
Are they gonna have to keep looking for something
else in the mail that says you may be impacting
their contract? Because that's how it struck
me as I was reading this, and I could be wrong.
Well, first it starts, you know, we're going
to post on the website. That's not noticed to
anybody, posting on a website. Okay? So do I
have to look on the website? Is it going to be
changing? How many notices am I going to get?
It just seemed to be a little unclear to me of
all the places that a contract party is going
to be expected to look to protect their rights.
Sir, I believe the case website and the various
provisions related thereto were... were included
as just a backup means to in case other in case
parties wanted to look or More of a belt and
suspenders sort of approach with respect to whether
They will be receiving multiple notices. I I
don't I don't believe that would be the case
but If if it is unclear that it's something that
we can revise to make clear that I think the
way it was structured or supposed to be structured
was the contract counterparties will be getting
a notice as they typically do with respect to
the cures. And if there's any amendments to that,
we would file a supplemental contract notice.
But I believe, I understand your honor's concern
with respect to how this is structured or at
least phrased. We can. Clean this up a bit to
make it clear that they will only be receiving
one notice. I think this was. More like I said,
a belt and suspenders not not meant to confuse
anyone, but I understand your honors concern.
OK. Footnote on this page. For the avoidance
of doubt, the failure by the debtors to list
a contract. On the designated contract list shall
not be deemed an admission that it's not executory.
and not subject to assumption and assignment,
and the proposed cure cost for any such contract
shall be deemed zero. I don't get that. If you
didn't put it on the designated contract list,
there's nothing to deem zero. You gotta send
a notice to somebody and you gotta send them
a cure amount. I'm not gonna deem somebody zero
by the absence of the contract on the designated
contract list. And I don't know that I found
that in the order, but since it's in the motion,
I'm raising it. If it's in the order, or if it's
in any of these notices, it needs to come out.
I don't believe it is, but we will scrub the
order of notices to make sure it comes out. Paragraph
40. A counterparty to a designated contract listed
on the notice of assumption and assignment may
file an objection only if such objection is to
the proposed assumption and assignment. of the
applicable designated contract or the proposed
cure costs. What does that mean? They can't file
an objection on some other basis? Am I limiting
objections that people can file? Again, I'm not
sure I saw this in the order, but it's here in
the motion. And it's to me an unusual provision.
I do I think that was referencing specifically
with respect to their if they receive and I don't
think it's precluding them from raising an objection
with respect to the sale or otherwise but if
you are listed on the notice as a contract counterparty
if you are objecting to these to the the notice
itself that would be limited to the assumption
of assignment of such contract, but I don't think
that is precluding. I'm not going to make someone
file three different objections. They can file
one objection to anything they have. If they
want to file more than one objection and separate
out their notice and cure amount from their cell
objection, they can, but I'm not precluding people
from filing one objection to whatever it is they
think they have a right to object to. So if that's
in the order and I missed it, that's got to come
out. Okay. Understood. I don't think it is. I
will double check. I'm not sure if it is. I don't
think it is, but we will double check to make
sure. Yeah. Paragraph 41 suggests the same thing.
So it's a counterparty to a designated contract.
If they file a designated contract objection
that is consistent with the requirements set
forth above, then something happens. I'm not
getting that granular, okay? They file an objection,
they file an objection. We deal with it. It doesn't
have to be consistent with some preconceived
notion that the debtor has about how that objection
should look. Again, I think these are unusual
provisions and unnecessary. I'm looking at the
order now. The red line with the CO5. The red
line. Okay. I'm not sure I fully appreciate the
sliding scale you have here on all the different
days. Somewhere I thought the sale objection
deadline was 30 days after service and here it's
15 to 60 days. So how does the when does the
15 days kick in versus the 30 days? I believe
you are referencing paragraph. 32 says. Objection
to any sale transaction. must be filed no later
than the date that is 30 days from the bid procedures
trigger date. Yes. And then in your timeline
back in paragraph two, the bid procedures trigger
date is day zero. And sale objection deadline
is 15 to 60 days. So how does that comport with
paragraph 32? Yes, this was something that we
also saw and thought that we would discuss. I
think with paragraph 32, this is a no later than
date. I think nothing in this chart that you're
referencing was meant to deviate from any local
rules or notice requirements. So I think the
day 15 sale objection deadline is we would go
out with, in some circumstances, the regular
21 days notice with an objection deadline of
15 days out. We're in no way attempting to deviate
from any of the rules, and we can set the objection
deadline for date 30 in the chart to make it
clear and comport with paragraph 32. And with
respect to the outside date of day 60, that I
think just reflects the potential for the debtors
to set a later date. necessary which would be
beneficial to creditors and provide more notice
but if there are anything that we could clarify
with respect to this chart. I appreciate the
attempt to try to build in flexibility but I
think you've actually confused many things in
doing that and I'm not sure it was necessary.
I can tell you right now that if anybody misses
a date, there's going to be a lot of leeway given
to people because I think this is confusing.
If 30 days is an outside date and you make something
15 and somebody thought they had 30 days because
they read this, they're going to get 30 days.
So I think it's confusing. And I don't know how
sitting up here on the bench to make your order
not confusing, okay, with respect to these sliding
scale days. But I'm gonna give people leeway
that miss a deadline because of these sliding
scales and the inconsistencies. So that's all
I'm saying. If these notices go out, we will
be clear on the specific days. I think the point
of this order was to provide a sense of the potential
timeline in connection with these sales, but
when we do file a trigger notice, it will say
your objection deadline is day X. Okay, and what
deadline am I approving with respect to that
if it's not in here and it's not clear? I think
you would be approving, if your honor agrees,
with paragraph 32, the objection deadline set
forth, it shall be no later than 30 days, unless...
Well, I'm more concerned with it's no earlier
than. No later than doesn't, doesn't, doesn't
bother me at all. It's the no earlier than. If
you said something for seven days, that's no
later than 30, but I might have a problem with
seven days. So it's really the no earlier than
that I care about, and that matters for purposes
of appropriate notice, not that outside date.
30 days is fine for notice of a sale, I think,
under our rules, but seven days would not be.
So I find this order confusing on the dates.
Understood. I think in paragraph 32, Would it
be acceptable to change it from no later than
to no earlier than? I think it should be no earlier
than. I think that no later than doesn't matter.
Understood, so we will change paragraph 32 to
no earlier than. No earlier than whatever the
rules provide. Correct. Whatever date that is,
which I don't know off the top. And then we will
change the chart from day 15 to day 30. However.
your chart works, I will confess to finding the
chart confusing. Understood and like I said,
this was unique circumstances and I don't think
you'll ever see this chart again, God willing.
You should put that in the order somewhere. But
yes, like I said, this chart was meant to set
up basically parameters for how the sale process
is going to play out to give parties at least
some sort of idea as to when they would expect
the various time, how the process would play
out and the various dates. But when we file the
applicable notices, we will do so in a way that
comports with the date ranges set forth in this
chart, but they will be exact dates to make clear.
It will not be we are we are having an auction
sometime in the future between days 35 30 and
35 and 80 it will be we are having an auction
on day Whatever day 40 is that will be the day
that is in the in the in the notice I think the
attempt was for your honor to approve as long
as the dates that we set forth in whatever notice
that we file. As long as the dates fall into
these date ranges, that is what we are asking
Your Honor to approve. Yes. We're back to posting
again on this site, but everybody's going to
get their individual notice. Correct. And if
it's no cure costs, you're going to put a zero
in there. What are the DCL instructions that
are referenced in this paragraph? Those are the
instructions I believe to access the case website.
on paragraph 39, page 31, instructions regarding
how to view the list on the case website. Last
sentence says if there is no objection, this
is to a supplemental designated contract. Then
the debtors shall obtain an order of the court.
Including by filing a certification of no objection
shall should be May. Paragraph 29, I view this
as substantive and we're in a procedural order.
So why should this paragraph be included in a
procedural order? the designated contract list
and I think the debtors would need some certainty
with respect to if they don't receive any objections
or otherwise notified by the contract counterparty
that they don't agree with whatever is being
set forth and the information being provided.
The debtors should know at that time and should
be given certainty with respect to what the cure
cost is going to be. I'll deal with what happens
if somebody doesn't file an appropriate objection
when they don't file the objection. But this
is prejudging what's going to happen, and it
even envisions a subsequent order of the court.
So I think that happens in the future. So I'm
not going to approve this. This is not procedural.
Understood. We will strike paragraph 29. Paragraph.
31 has what I think is an unusual provision in
it, in the middle. It says unless the court orders
otherwise, the sale hearing shall be an evidentiary
hearing on matters relating to the sale transactions
and there will be no further bidding at the sale
hearing. I don't expect there will be, but why
is that in this order? Again, I think I'd go
back to the finality and certainty that we were
at. Yeah, I'll deal with that when we get to
the order. That suggests that an auction could
never be reopened. It suggests all kinds of things.
And I'm just not, that's substantive. Throughout
the procedures, the lenders have consultation
rights unless they become a bidder and exercise
their credit bid rights. When do they have to
make that decision? When do other parties get
to know whether or not the lenders are going
to credit bid on particular assets? I believe
it would be the bid deadline. Well, for each
sale, the lenders will have to indicate by the
bid deadline whether or not they're going to
credit bid. And once they do, then for purposes
of that sale, they are no longer a consultation
party. Those are my comments and questions. The
extent that I've got bid procedures here that
reflect anything that needs to be changed and
needs to be changed in the bid procedures. I
see paragraph 38 of the sale order which says
to the extent this bidding procedures order is
inconsistent with any prior order or pleading
with respect to the motion this governs I think
that's fine. I believe that's cabin to this motion
and nothing else that I'm doing or have done.
So with those clarifications and with revisions
made consistent with this discussion, I will
approve the sale procedures. Does anyone wish
to be heard? Good to see you, Your Honor. Ivan
Gold of Allen Mackins for Keys Hotel Operator
Inc., which is the Hawks Cave Resort. First,
I want to thank the debtor for working with us
on a number of informal comments. And I only
rise because your colloquy with counsel for the
debtors kind of raised an issue that I think
deserves a little clarification. And that relates
to your concern you expressed regarding how many
notices. And are we looking at multiple objections?
And I appreciate the need for flexibility here.
The debtor is not only selling unique assets.
You know, we're not selling two forklifts on
an F -150. And the likelihood of a global going
concern sale in here, global meaning global,
is it's not impossible, but it is the less likely
outcome. We're more looking at geographical pods,
single locations, et cetera. I think the intent
of the charge, which confused the heck out of
me too, is to create flexibility that we may
have several tracks here. And I get all of that.
And what we were looking in our comments was
for minimums to assure some level of due process
in this process. But your concerns you raised
regarding the motion, paragraphs 40 and 41, and
then the order, paragraph 32, highlighted this
question for me. And to the extent I may have...
Missed this in my discussions with the debtor.
I apologize, but I think it goes right to your
honor's question. Is paragraph 32 contemplates
an objection to put a sale transaction? That's
different from the procedures. That of a notice
of intended assumption and assignment. Am I so
for example, and this shouldn't be surprised
anybody because we've raised it in prior pleadings
is we have concerns that. the agreement by which
the debtor operates at my client's property may
not, as a matter of state law, even be assignable.
And our discussions with the debtors, we reserve
that issue. And so that's an open understanding
that we have. But as I read these procedures
and I listen to your question, the question is,
do I need to file a separate objection that this
isn't assignable, separate and apart from whatever
cure? adequate assurance objections I have and
you know given the nature of the debtor's operations
I may not be the only party with that concern
but again are we am I looking at multiple objections
I don't have a problem with the second notice
or do I save that for when we have a buyer for
my property as opposed to this earlier you know
more metaphysical objection to selling it in
the first place If I were you, I'd raise it the
first opportunity I had. Well, I already have,
but yes, it could be early and often could be
the answer to that. But, you know, the question
is, is the way these procedures are drafted,
it would appear that we are required to file
two separate objections. Now, the first one doesn't
necessarily have to be elaborate because we've
already raised it. But it does, you know, you
would ask that question. And so I just wanted
to... approach with a real life example so that
you could kind of get clarity before we delve
any further into these procedures. Well, my thought
was that people shouldn't be constrained in the
objections that they are filing to, you can only
file a cure objection, an assumption, an adequate
assurance objection. You can file whatever objection
you want. And again, this is where I'm going
to give some people some leeway because I think
these procedures are confusing. Let me hear if
the debtors have a response to Mr. Gold's example
of how counter contract parties are supposed
to respond to the various notices they're getting.
The point of the cure notice was to notify parties
that they have to object to that cure at that
time. They can raise sale objections at a later
date pursuant to the order. But it was not meant
to preclude people from raising multiple objections
or how they choose to do so, only providing a
deadline with respect to cure costs and the assumption
and assignment notice. which I believe is fairly
typical. And to the extent the motion is inconsistent
with that, I would not want to be the lawyer
arguing to you that the motion controls over
the order. It says any and all objections to
any sale transaction must be filed no later than
a date that is 30 days from the bid procedure's
trigger date. Well, how does that intersect with
all this other stuff they're doing? I mean, that's
not my cure notice. No, it isn't. So this is
something else. This is something else. And how
do we reconcile this something else with the
cure notice is my fundamental question. Well,
I don't think it's unusual to have the cure notices
go out in the beginning of a sale process so
that the debtor can understand and the prospective
purchasers can understand what the cure obligations
are with respect to any particular contract.
But my point is now I'm up to three. I got a
cure notice and a cure response. We all agree
at the back end once we identify a notice of
successful bidder. Now we've got one in the middle
that you can't sell my property. So now we've
got three. I've got three notices. I've got three
objections. Is that different than normal? Three's
a lot. Two is not unusual to your point, but
I just want to clarify. I just want to make sure
I understand when I walk out of here. Which one
should I eliminate? I mean, that's the question.
Which one gets eliminated? There are three different
separate things. Because of the way this is developed
where you have to file an objection before the
auction has taken place, which we can all discuss
the merits offline at some conference, but that's
how it's developed, right? So so that does put
in. Well, I understand your honor, and it's traditional
to have a cure notice prior to the auction, so
everybody knows what they're bidding. They have
to stipulate it. I understand the. filing of
an adequate assurance objection once buyers have
digested the cure notice and the other due diligence
information. They've decided to bid, the debtor
selects them, they tell us, and then we have
the right to object or consent to the proposed
assignment. So those two pillars are normal.
It's the third one is what, you know, do I, you
know, I just want to walk out of here understanding
and. Know that I'm on the same page with you
that these procedures contemplate. I've got a
third pleading to file somewhere in the middle
That would raise the sale ability of the asset
that that's not something I can do after the
auction. I can't wait Under these procedures
or do I have to do it on this paragraph 32 timeline
and Where that 30 days and how that fits in the
chart, you know, I don't even know that this
will be the second one Could end up with the
30 days, it could be the third one. I don't know.
That's where I'm confused having heard your colloquy.
Do you have any response? I agree with your Honor's
initial inclination. I don't think that this
is part, this aspect of things are particularly
different. You have an assumption and assignment
deadline. and you file an objection to the assumption
and assignment. If you don't agree that the property
that is being sold, which Mr. Gold will know
what property is being sold, I mean, he only
has, his landlord has one lease that it is responsible
for. It will be involved. It will know who is
bidding. It will know what asset, which is the
lease, is being sold. I don't know about other
parties, but Mr. Gold can file an objection to
this. He basically has. But I don't think this
is particularly different than how normal sale
processes run. Setting aside the chart, which
I understand is not the model of clarity, but
this particular aspect of things is not different.
You have an assumption assignment deadline. You
have a sale deadline. And then if you don't agree
with the successful bidder or the backup bidder,
then you can object to the identity of the bidder.
That is not strange or unique in any way. It
isn't. I think it's the sliding scale nature
of things that makes things more difficult here.
I think your notices need to be very clear as
to what they're noticing when people go out.
when they go out, so that people understand their
deadlines for objecting. And I will say now,
without giving anybody any legal advice, I am
not restricting any objection that is filed to
only, for example, the cure costs. If you've
got... any objection with respect to a contract
just put it all in that first objection and you'll
be okay in terms of notice as far as timeliness
as far as I'm concerned so I would I would not
wait and try to figure out wait I can wait on
this objection until this later day I wouldn't
do that understood and to be again perfectly
clear we're not that chart will not be in the
notices that when they go out That chart will
be filled in with exact dates that comport with
the time ranges set forth in the chart. That
was the entire purpose of the chart, to set forth
date ranges for everyone in your honor to see.
As long as the dates within the process fall
within those date ranges, that is what we were
seeking approval of. When we go out with the
notices, they will be exact dates. And I understand
that... Leaveway will be given. I wouldn't expect
anything else. I mean, I understand the unique
circumstances of these cases, but we are going
to go out with clear notice. And when we deal
with whatever objections may be, we will deal
with them then. But in terms of assumption of
assignment and identity of bidders, like I said
before, I think that is the normal part for the
course forbidding procedure. Bill Hazeltine on
behalf of Tradewinds LPD. Tradewinds filed an
objection to credit bidding because we assert
a first priority lien on the assets in Florida.
And we have worked it out with language in the
bidding procedures that says that any party can
object to credit bidding at the time of the sale
objection. Yes. And that satisfies our concern.
Thank you. Thank you, Your Honor. I'll look for
that revised form of order. Thank you, Your Honor.
Your Honor, Sean Greacher again. Okay, I'm sorry,
one second. With respect to this order as well,
I did notice here on notice was going to regulators,
who I assumed were regulators over animal welfare.
But I think that should be specified in this
order as well, as to who the regulators are that
are going to receive notice. Understood. Thank
you, Your Honor. Thank you. Your honor the debtors
first seek to admit the declaration of mr. Wagstaff,
which was followed at docket number three three
three As well as exhibits to it a through J Is
that in the exhibit binder or is that? You'll
see in your binder right behind tab one is the
declaration and then behind that are tabs A through
J. Yes, which which aligned with how they were
identified in the declaration. OK, thank you.
Let me ask is there any objection to. Mr. Wax
staffs declaration coming into evidence. I hear
none. Let me ask this. I do not see Mr. Albor
in the courtroom and I know Mr. Moon and Mr.
Hughes and Cowles have withdrawn. I permitted
their withdrawal. Is Mr. Albor going to appear
today or is he represented by anyone in the courtroom?
Thank you, Your Honor. I'll just note for the
record that exhibits DNF to the declaration were
filed under seal and which was approved by an
order of the court. There are banking records
involving third -party non -debtors, which is
why we put them under seal, Your Honor. D and
E? DNF. Okay, thank you. And then, Your Honor,
before we turn the podium back over to Mr. Greacher,
the debtors would offer a brief proffer from
Mister backstaff that is intended to cover events
that have occurred since his declaration was
filed on July 9 as well as. If you recall, Your
Honor, the debtors also filed what I'll call
a sanctions notice was debtors notice of submission
of costs in connection with orders enforcing
the automatic stay and imposing sanctions sanctions
at docket number 355. So I'll proceed with. Thank
you, your honor. With respect to the stay enforcement
motion, if called to testify, Mr. Wagstaff would
testify about Mr. Albers and Ms. Esteban's actions
that have occurred or continue to occur since
the filing of his declaration on July 9, 2025.
Mr. Wagstaff would testify that Mr. Albers and
Ms. Esteban have continued to be uncooperative
and have failed to turn over the records to the
debtors and have continued their refusal to provide
access to the records. He would testify that
Ms. Esteban has expressly conditioned the turnover
records on a legal release and a payment of estate
funds for alleged severance due to her. He would
say Mr. Albert has refused or otherwise failed
to return the keys to the debtor's legal department
offices at the headquarters. Mr. Ragsdale would
testify that Mr. Albert has refused to return
the funds transferred to PES in connection with
the operation of the debtor's Mexican parks.
and has not returned the funds transferred by
PES to his personal attorneys at the CDAA firm.
Mr. Ragsiff would testify that Mr. Albert has
not provided the debtors with bank records of
PES or Elysium, which would allow the debtors
to trace the flow of estate funds through PES
and Elysium. He would also testify that Mr. Albert
and Ms. Esteban have not returned the funds transferred
to Elysium. Have to Mr. Wags that would testify
that state violations that he has identified
since his declaration was filed include Mr. Albert's
email response dated July 14 2025 and that's
a tab to your honor and your honor. USC and also
as we did with some of the emails that were attached
to his declaration, we included at the back end.
For your honor's benefit, a machine -generated
English translation, which Mr. Wagstaff, if you
recall, is fluent in Spanish. He would testify
that this is an accurate translation, at least
as machine -generated. Importantly, your honor,
I think with reference to tab two, Mr. Wagstaff
would say the important parts of Mr. Albert's
email would that... Mr. Albar alleges that payments
made by PES directly to CDA were made on his
behalf, by his order, and that the legal services
that he received were personally provided to
him by CDA. Mr. Baxdaf would note that the funds
paid to the CDA firm by PES do not constitute
property of the debtors and were from the cash
flows of PES itself. That's what Mr. Albar says.
And that Mr. Albar says the deposits from Controlador
Dolphin to the PES account were recurrent. and
began months prior to the petition date. Again,
that's all what Mr. Alvarez says in his email.
What Mr. Wagstaff would testify is based upon
these statements in this June, I'm sorry, July
14 email, Mr. Wagstaff and his team at Riveron
investigated the flow of funds through the PES
bank account. Based upon that investigation,
Riveron determined that the average monthly deposits
to this PES account between September 2024 in
March 2025 was approximately $600 ,000 a month.
And that the monthly credits from the account
or debits, yeah, debits, sorry, from the account
during that same period of time was also roughly
$600 ,000. However, the rerun determined that
in the months of April 2025 and May 2025, after
the debtors had commenced their proceedings and
began trying to take control of the Dolphin Company,
PS noted that monthly deposits into the PS account
were approximately $3 .7 million in April 2025
and approximately $4 million in May 2025. And
during those same two months, funds flowing out
of that account in April 2025 were $3 .2 million
approximately and approximately $4 .3 million.
May 2025 so a dramatic increase in both funds
going to that account and out of that account
post -petition and your honor just to help Maybe
just pictures worth a thousand words tab four
is a demonstrative in your binder that reflects
The credits and debits to that PS account during
those months. I just talked about Your honor
lastly with respect to the sanctions notice that
and if you the sanctions notice your honor is
Tab 3 debtors will seek to admit that into evidence
And your honor tab 3 itself also has tabs a through
f which has reflected on the notice are the the
breakdowns of the various professionals that
have worked perform work on behalf of the debtors
of states in terms of enforcing the court's orders,
as well as the automatic state violations actions
taken to combat Mr. Albert's actions. Okay, top
three. Is there any objection to the admission?
I hear none. It's admitted. Right, Your Honor.
Lastly, Mr. Baxeff would testify that he and
along invoices and or summaries of fees incurred
and that based upon his involvement and understanding
of the work performed on behalf of the debtors
that the amounts the work reflected in the invoices
was appropriate in scope and necessary to combat
Mr. Alvarez actions. I think your honor with
that unless you have any questions for me from
an evidentiary perspective I'll turn it back
over to Mr. Reacher. Exhibit or tab four is a
demonstration. And tab two is the email. That's
the email we seek to admit as an admission by
Mr. Albor. Is there any objection? I hear none.
It's admitted. Thank you, Your Honor. Once again,
we're here before your honor seeking enforcement
of fundamental protections of the bankruptcy
code, specifically the automatic stay and to
compel compliance with the court's prior orders,
the turnover and the stay enforcement order as
a result of the ongoing non -compliance by Mr.
Albor and Ms. Ed Simon. We're also here seeking
a determination of liability for the direct cost
borne by the state as a result of the willful
violations that the court found in connection
with the prior orders. Your honor. As you heard
from the testimony and you saw on the pleadings,
Mr. Albor continues to obstruct the debtor's
access to critical business records and assets,
has engaged in conduct that directly undermine
the administration of these estates. Mr. Albor
has not complied with Your Honor's orders. In
fact or in spirit, in fact the declaration that
Mr. Wagstaff filed provides a laundry list of
ongoing violations and efforts to undermine Mr.
Strong's and Mr. Wagstaff's proper operation
of the business. This introduces unnecessary
cost and risk to the operations. It puts into
jeopardy the debtor's ongoing ability to run
the business and care for the animals. Your Honor,
we notified the Court of many of these issues
back on June 26th. Since then, Mr. Albor has
done little or nothing to bring himself into
further compliance with the stay of your order.
So I'll point out a few of those issues. Again,
interference with assets and financial information.
As we noted last month, Mr. Albor attempted to
assign assets and rights of the debtors away
from the debtors, funnel them through a company
called Proyectos Ejecutivos Sostentibles, PES
for short. 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 Controlador Adolphin at correspondence in
that backdated agreements attached to Mr. Wagstaff's
declaration in Exhibit A. Similarly, Mr. Albor
directed Dolphin Management to circumvent the
debtors' bank accounts with respect to Caribbean
affiliate funds and deposit them into an account
held by Elysium Properties and Investment, which
we learned through deposition testimony that
is a company Mr. Albor incorporated in Delaware
about 10 years ago. to be a family -owned entity
of which he is the only member. The records show
over $263 ,000 transferred from just two of the
company's Caribbean affiliates to Elysium in
the month of May. Further, the records we've
been able to retrieve also show that these Caribbean
bank accounts where Dolphin Company funds were
diverted were used to pay Mr. Albor's personal
legal counsel in Mexico. So what we know is that
Mr. Albor has orchestrated these schemes to divert
estate revenues into the non -debtor entities,
PES and Elysium, after originally claiming that
no estate funds were dissipated on account of
non -debtor obligations. I want to be clear about
this. Mr. Albor did not tell you the truth under
oath when he was asked about estate revenues.
If you look at pages 149 to 150 of the transcript
of that May 21st hearing where he was on the
stand, Mr. Albor's counsel asked him point blank
why the estate's balances, bank balances were
so low in the reports that his counsel produced
to the debtors. The truthful answer... I have
been diverting estate revenues to non -debtor
accounts that I control at PES and Elysium. Mr.
Elboer did not come clean. He provided the debtors
with partial misleading information prior to
that hearing and fabricated a story that just
the day before the company had lots of cash,
but they had to pay all of that money on account
of various estate obligations and that the debtors'
bank accounts were on the verge of being replenished
by revenues that were due to come in. His representations
in his, quote, certification of compliance, particularly
based on Mr. Wagstaff's testimony, should be
viewed in that light. They're just simply not
credible. And Mr. Albor, as you noted, chose
not to come here today to sit under penalty of
perjury to try to justify those statements. Mr.
Wagstaff's declaration also includes two documents
that evidence some of Mr. Albor's misconduct.
Again, to justify the story that PES had some
rightful claim to those revenues, there was this
contract that was fabricated. And further, and
second, despite the testimony that no estate
funds were used to pay personal obligations,
Exhibit C of Mr. Wagstaff's declaration shows
the bank records indicating that payments that
should have gone to the estate were used to pay
personal counsel. They were paid to PES, they
were paid to CDA, They were paid to Mr. Kasten,
and they were paid to a company called Inversiones
Garifon, G -A -R -R -A -F -O -N, which we just
learned days ago is another entity managed by
Mr. Albor. Mr. Wagstaff has demanded all the
records and information related to these transfers.
Our team continues to uncover further details
each day, and it appears that these schemes go
even deeper than just the activities that we
indicated in the... declaration may have begun
even pre -petition. It's critical, Your Honor,
that the debtors be provided with access to the
full and accurate records and documents, both
the physical records, contracts and corporate
documents, and the records related to the diversion
of assets, particularly the diversion of these
funds into the PES and Elysian accounts that
were done in an effort to circumvent the impact
of Mr. Albor has simply failed to provide us
with access. Going to the issue of the company
books and records, Mr. Albor and Ms. Esteban
have repeatedly refused to turn over those books
and records despite the multiple orders requiring
them to do so. Rather than cooperating with the
transition of these documents, Mr. Albor actively
has interfered. We provided correspondence from
Mr. Albor indicating that he would direct debtor
employees with access to information. regarding
these schemes to provide it. He conditioned that,
though, on those parties being released from
any liability. After promising to personally
accompany the debtors' advisors to the headquarters
to complete the process of documenting and retrieving
the records, and as well as promising to appear
and discuss with Mr. Wagstaff and his team all
the information regarding these PES and Elysium
transactions, he decided the day before the plan
meeting he would not appear. employees who were
appointed at the directors of PES, appointing
himself alone as the director of PES, thereby
further obscuring and making it more difficult
to understand the information and understand
the nature of the assets that were related to
this scheme. Further, he sent his driver to change
locks at the building, and he was unsuccessful
in accomplishing that, and when the company began
the process of accessing documents while Mr.
Albor personally disrupted the process of collecting
those legal documents, threatened the debtor's
staff, and demanded that they turn over their
keys to the building under threat of criminal
prosecution. And now recall, Mr. Albor testified,
again untruthfully, that there weren't any paper
records in the Cancun headquarters in the first
place. Again, the May 21st hearing transcript,
page 162, he says all the paper records were
in the parks. It's not true, Your Honor. Mr.
Albor has concocted a new story. that instead
of the debtor's records being readily available
and not commingled with any other non -debtor
property, which is what he testified to prior
to the hearing on the stay enforcement, the records
were now apparently held in a portion of the
building that he no longer had any control over.
He instead advised that he has leased that portion
of the building to his personal attorney, Ms.
Esteban, who is also acting as general counsel
to the company, and therefore Mr. Albor suggests
that he can't do anything more to comply with
the court's order. That's Exhibit H to Mr. Wagstaff's
declaration. Of course, this is inconsistent
with his verified response on April 28th. It's
inconsistent with his deposition testimony when
he asked who was in physical control of the data
records located in headquarters. It's inconsistent
with his testimony in this courtroom. In fact,
if you look at docket number 155, his supplemental
response, the statement is, Mr. Albor remains
willing to grant Mr. Wagstaff and his team supervised
access to any physical records located in his
office that cannot be shared electronically.
When he testified here, he insisted only that
the debtors need to simply agree to a respectful
protocol with him. Him alone, not in his Estevan,
to access all the debtor records in the headquarters
buildings. And after the court codified that
protocol in the order, Mr. Albor took every single
possible step he could to disrupt and interfere
with the debtor's operation and management. Your
honor, whether Mr. Albor has put Ms. Esteban
up to conspiring with him to continue to stonewall
the debtors from accessing these records, or
if she's acting on her own record, Ms. Esteban
has similarly not complied with the debtor's
demand for cooperation and access. What notice
has Ms. Esteban got of anything? Well, so we
thought, she is an employee. What notice has
she got? She's received electronic mail, and
I believe we sent her a physical mail. Has she
been served with a notice of motion? You can
continue. I really have some basic procedural
questions about what's in front of me and what
I can do. At the previous hearing, I said we
would go forward with the damages hearing today.
As I understand it, that's now exhibit F, the
notice of submission of Costs is what the debtors
filed in response to that. I didn't get any legal
authority for what it is that I can order under
362k, which I take it, or maybe I should ask
you. What provision of the code do you think
I'm ordering sanctions under or damages? So you're
all right. We think it is... It is under 362K
and we think it's under your prior sanctions
order. I think your prior sanctions order indicated
that sanctions would be imposed. Sanctions are
different than damages. So talk to me, I have
no authority in front of me on 362K or quite
frankly on sanctions. But, and I've requested
it before, okay, is what do you want? And what
authority is there for me to grant what you want?
And so I don't have anything in front of me that
tells me how I apply 362K and what the standards
are and how I should view the evidence. So Your
Honor, I would suggest that I'll go back to our
briefing and our argument in connection with
the prior hearing. I believe that we submitted
You know a handful of cases and I believe Make
sure that I have that right I But I think we
spoke about these cases in in connection with
the follow -up hearing The follow -up hearing
was for sanctions and I entered a sanctions order
and I did a $10 ,000 a day Order on sanctions
Now you want damages Yes, those are different
at least I think they're different maybe I'm
wrong, but I don't have the briefing in front
of me on 362 K if that is the provision that
you're relying on And you are I think we did
we did raise this in connection with the hearing
It was the hearing where your honor asked us
to come back and argue with respect to the evidence.
It was the hearing after the evidentiary hearing.
We came back and your honor asked us to provide
you with a discussion of what the appropriate
remedies were. What we had indicated was that
there were sort of two paths. One is section
362K indicates that. that the sanctions are appropriate
to a corporate debtor. We also cited Judge Dorsey's
opinion in the NNN 400 case where he said that
under section 105, any type of order, whether
it's injunctive, compensative, or punitive, as
long as it's necessary or appropriate to carry
out the provisions of the code, are authorized.
So you're coming to me under 105, and that's
it? No, I think that 362K gives you the right.
And I think if you look at the Atlantic Business
case, the Atlantic Business case indicated, and
Judge Goldblatt acknowledged this in the Health
Care Real Estate Partners case, that 362K is
applicable to corporate debtors. What I'm saying
is that even if 362K weren't applicable, Judge
Dorsey, under the NNN 400 case, has imposed sanctions.
I'm talking about sanctions. There's two things
going on in this hearing today. One is you filed
another motion to enforce, okay? That's one thing.
Then we're supposed to have a hearing on damages,
okay? Damages to me, at least I think that's
what my order said. Let me just double check.
Yeah, an evidentiary hearing is scheduled for
July 23rd at 10 for determination of the damages,
if any. Mr. Albor is liable for based on cost
to the estate of responding to Mr. Albor's actions.
Yes, okay, so That's what was requested I said
that's what I ordered 362 K It's not apparent
to me exactly how one applies that in every situation
It just says it just says that You recover actual
damages, including costs and attorney's fees,
and in appropriate circumstances may recover
punitive damages. And Your Honor, all we are
asking for today and all the notice asked for
today is the costs and attorney's fees. That
was the notice that was filed. And so Your Honor,
that's all we're asking for today. We believe
that there are other types of damages that could
be sought. But today, All we're asking for are
the costs and attorney's fees, which are reflected
in the notice. So you're not asking anything
with respect to the notice of motion and the
motion that was filed at docket 332? Not with
respect to further costs and attorney's fees.
What are you requesting on that? On that one,
we do have a form of order. It's attached. The
requests are, again, for the parties to provide
us with the records, the records related to the
debtors and the debtors' estates, the documents
related to PES and Elysium, and the return of
the funds that were diverted. So if you look
at paragraph 5, 6, and 7 of that form of order,
those are the requests from the additional motion.
like a written submission discussing the authority
under which I can assess the costs and damages
and what can be assessed because I don't have
it in written form even if you may have thrown
some cases at me during argument in a previous
hearing and and I want to ensure and I got I
think respect to how these costs were put together
but for example I see in the young Conaway submission
prepare for and participate in meeting with young
Conaway ray first day hearing issues well I don't
know that first day hearing issues get charged
to mr. Albor okay I saw some and maybe they do
but I need I need some a written submission with
authority. It looked like some of the submissions
were broad. I think Riveron had some as well
that seemed very broad to me where I couldn't
discern just from looking at the document that
that was in fact something done and received.
to Mr. Albor. And then I think I need authority
for why Baker and McKinsey's fees can be assessed
as damages. Maybe they can, I don't know. But
I have no authority that tells me that I can
assess the lender's fees, attorney's fees and
costs to Mr. Albor. Okay, so your honor, we're
happy to put together a written submission, you
know, and just for the avoidance of doubt. It
sounds like the question is not that, you know,
whether or not the costs are, whether or not
costs are Give me authority. Just give me authority
on everything you want. Don't make an assumption
that I know how to apply 362K because I think
maybe I've done it once. Okay? And it doesn't,
it's not just that apparent to me. The first
question you already talked about was can you
even do it in a corporate case? Well, yes, there's
authority for that. I understand that. Okay?
I haven't looked at it, but I understand that.
That's an issue. The other issues are, how do
I interpret and apply this section? And for example,
can the lender's fees and expenses be charged
to Mr. Albor or assessed as damages and costs?
Maybe they can, I don't know. I just want the
authority on how I apply this section. Okay,
I understand, John. So I think that that relates
to... The fees and costs point and we will. We'll
endeavor to provide additional. Briefing in connection
with that. Unless you have your honor has any
other questions on that. I didn't want to make
a couple more statements in connection with.
And I also want in that submission, then the
service that was done. On both Mr Albor and Miss.
Miss Esteban, but in particular, Mr. Miss Esteban,
who's not here before me. That's I guess different.
That's on the that's on the motion. On the costs,
I guess you're not asking to chart to charge
these costs against her, are you? No, OK, I so
that's fine. I'm I'm now confusing the two things
on the motion. I want I want evidence of the
service. Very well, Your Honor. I guess just
a couple of other points, if I could. Certainly.
And I guess my question is whether Your Honor
is prepared to enter an order with respect to
the further violations of Mr. Albor. I'll review
the evidence, and I will enter an order that
I think that is appropriate. And again, apologies,
Your Honor, if I'm missing something. I thought
the evidence you were looking for was with respect
to the assessment of the costs. I will review
the evidence that was just presented to me. Mr.
Watt staff's declaration and the submissions,
for example, I heard in your argument, though
I don't know that it's in the evidence, I heard
argument about pre -petition actions. I don't
think those could be a violation of the state.
So I need to, I am going to consider the evidence
that was presented and I will issue an appropriate
order. I don't know if it will be exactly the
order that has been submitted, but I will consider
the evidence submitted on the motion and the
proposed form of order and make a decision on
that. Okay. Okay. I understand your honor. If
I, if I could though, a couple of other remarks
with respect to some of the additional. And one
would be the declaration that was filed by Mr.
Duenas. So, and again, I'll note first of all,
Mr. Duenas is not here. Well, is that part of
the evidence? Was that submitted? Is that attached
to the declaration? So, Mr. Duenas' declaration
was filed. It's at docket number 305, and it's
tab D to the agenda item. Well, that's not evidence.
I have an evidentiary record. Correct. I'd like
to make it. This was filed by Mr. Albor's attorney.
OK, but it's not part of the evidence, is it?
I have an evidentiary record. People file stuff
all the time. I have an evidentiary record, and
I don't. know that that declaration was submitted
in the evidence. That's what I'm asking. Did
Mr. Nyberg today submit that declaration into
evidence? I don't think he did. I could be wrong
if it could be attachment to Mr. Wackstaff's
declaration. No, no. No, it's not. This is Mr.
Albor's attorney in Mexico. Yes. So why are I
considering that? I have an evidentiary record.
OK. If Your Honor is disregarding that declaration
in its entirety, then. I don't have any problem,
but I just wanted to make it clear that we. It's
not part of the evidentiary record. Okay. Okay.
All right. Very good, Your Honor. All right.
Well, so I think that we have our marching orders.
We'll prepare a further submission with respect
to the damages. Your Honor will review that.
We'll review the. record this before you today
in our further motion, and we will await further
word from Your Honor on that. Very good. All
right. Thank you, Your Honor. I don't believe
we have anything else for the Court today. Thank
you very much, then, for adjourned.