Okay. Good morning, everyone. This is Judge Kaplan.
We will be hearing the Del Monte Food Corporation
motions, uh, motions of Pacific Coast producers,
and mornings for our packing. Let me give those
an opportunity to adjust their screens. Good
morning, Judge. Nuts on Hammerman from Herbert
Smith Free House Kramer. for the terrace. Good
morning. Other appearances for movements. Good
morning, Your Honor. Good morning, Your Honor.
I'm sorry. Good morning, Your Honor. I'm going
to check you in from the lobby of Wamble Band
Dickinson for Pacific Coast producers. With me
on the line is Tom Willoughby from the lobby
of Perkins State for Gerald Willoughby, Pascuzzi,
and Rios. All right. Good morning, folks. Good
morning, your honor. Scott Zuber, Kiesa Shihani,
and John Tomasi on behalf of Co -Movement, the
Morningstar Packing Company LP, and Morningstar
Kings LLC. Also, my colleague Terry Friedman
is on the line as well. All right. Good morning.
Good morning, your honor. And we have for the
committee. Good morning, your honor. Kristen
Elliott of Kelly Dry and Warren. proposed co
-counsel for the Official Committee of Unsecured
Creditors. With me in the virtual courtroom are
several attorneys from the Morrison and Foster
law firm. In particular is Ms. Miranda Russell,
whose pro -Hoppechi application we filed on Friday.
Ms. Russell is prepared to address today's motion
on behalf of the committee, and we would respectfully
request that Your Honor allow her to appear and
address the court in connection with the motion
while that application is pending. Absolutely.
Welcome to New Jersey, Ms. Russell. Thank you.
Good morning, Your Honor. Thank you. All right.
Any other appearances? Needless to say, as a
remote hearing, throughout the course of the
proceeding, if you wish to be heard, if counsel
wishes to be heard, please use the raise hand
function if I haven't already called upon you.
I have had the opportunity to read through all
the... briefing and the declarations. I will
first turn to the co -movements. I don't know
if you've decided among yourselves who wishes
to lead off. Yes, Your Honor. Mr. Wojciech Young
is going to lead off on some of the preliminary
arguments and then to the extent the court will
allow, I would follow up with some specific discussions
regarding the environmental issues, D365, D3.
issues as well as the integration separability
of the two contracts. Thank you. All right. Thank
you. Mr. Young, good morning. Good morning, Your
Honor. Just as a preliminary matter, we have
made certain agreements, Your Honor, with our
friends on the other side with respect to the
admissibility of the three declarations that
have been submitted. in support and in opposition
to the motion. We do not believe that cross -examination
or other evidentiary hearing is necessary, but
of course to the extent the court believes otherwise,
we would reserve the right to have that hearing
at the appropriate time. As Mr. Zuber, you run
the reference, I will address primarily the issues
surrounding the product supply agreement, which
in a moving view raises the more urgent situation
in terms of timing. As we set forth in the papers
around it, the parties are subject to a product
supply agreement executed in January of this
year that was based as a result of the debtor's
decision to exit the tomato production business
and enter into a co -packing agreement with our
clients. Iraner, it probably cannot be understressed
that the timing of this case, of this situation,
makes this matter drastically different and more
urgent that Iraner perhaps has seen. in most
motions under section 365d2. That is because
the tomato packing season of 2025 has started
at the beginning of July, so just a little bit
over a month ago, and it is scheduled to conclude
at the very beginning of October. Pursuant to
the party's agreement, the runner of clients
are producing the entire volume of inventory
for the debtor. That inventory usually lasts
between a year and 18 months. That inventory
would be produced in total by October. And to
do so, PCP and the burning store party to the
supply agreement are required to expend significant
amount of resources to produce that inventory.
we set forth in a paper, Zerunner, that includes
over $20 million of expenses to produce product,
which obviously they are happy to do, but given
what the debtors are, there is no assurance whatsoever
at the moment that the product will be needed
for the estate, and even if the debtors end up
purchasing the product pursuant to the ordinary
timeline, It is doubtful and unclear certainly
that the debtors will have the necessary resources
to pay for the product. In order to make the
matters even more difficult, about 38 % of the
product that my client is producing is a product
that is custom made with special Del Monte recipe.
That product is likely difficult or perhaps impossible.
to sell outside of this context, outside of this
relationship. And, Your Honor, we are not talking
about a few cans of custom products. We are talking
about 400 ,000 cases of custom -made products,
in addition to the hundreds of thousands of the
more generic type product that PCP and Morningstore
are producing for the debtors. So here rather
we have made the motion requesting that the debtor
make a decision, admittedly, rather early on
in the case, whether or not to assume and assign,
or for now assume, the product -supply agreement,
Mr. Zuber will address a related issue stemming
from the lease, because the agreement, the lease
agreement and the product -supply agreement were
entered and were conditioned upon... Everyone
was conditioned upon the other when the police
signed both agreements back in January. You rather
in reply the debtors offer what I would call
primarily generic arguments in response. One
of which is well, it's early on the case and
they need a more greedy groom to decide what
to do with that contract. You rather if that
argument carried the day There will be no need
for relief under section 365D of the code, because
the normal response would be, of course, the
debtor needs more time, it's only two months,
give them six months. Perhaps in an ordinary
case, like in Enron and others cited in the debtors'
papers, where courts have given eight months,
for example, to decide, in those cases that was
probably reasonable, because those cases lasted
many years. This case will be over, your honor,
by... end of November with the sale of the assets
that the debtors contemplate entering into is
likely to conclude in November. So we don't have
three, four, five, six, seven months here for
the debtors to make a decision on this contract.
The timing is really imminent. $20 million of
out -of -pocket expense, you runner, is a large
sum for our client. My client, PCP, is a California
co -op. Its members are local farm farmers. They
don't have the luxury, your honor, of being 20
million dollars plus out of pocket just to perhaps
increase the chance for the debtors and other
creditors to potentially realize some benefit
from these contracts if they end up being assumed
as part of the sell process. Importantly, the
letters have been in default under the supplied
agreement for months prior to the petition date.
We set forth in our papers that one of the requirements
under the agreement to provide some level of
protection for the suppliers was for the market
to provide a $4 billion letter of credit. Despite
many requests prior to the petition date, And
even after the petition date, that LC was not
issued compliance with the agreement. About a
week or two ago, your honor, an LC was issued
and we have agreed to it to move the process
forward, but the LC as issued remains non -compliant
with the product supply agreement. And that is
for primarily one major reason. The supply agreement
is a five -year agreement that goes through the
2030 tomato production season. The LC that was
issued to Iran goes only to March 25 of next
year. So this LC is a six -month long LC. And
why do I say that that provides rather little
protection for the movements? Well, product is
not expected to be shipped at least in initial
phases, more likely until September or October.
The agreement provides for payment terms, quantity
to 30 days, depending on the situation. So, your
honor, we are looking at the earliest payment
by the debtors of the earliest possible invoice
to come likely end of October or more likely
in November. By that time, the salon of Assebuth
have closed. The initial invoices, arguably,
will be paid pursuant to the DIP budget. The
DIP budget, the outside date, is March of next
year. And we are told that that was the reason
why the debtors wanted to limit the LC to March
of 2026. But what happens to the board of the
product that remains with the movements, post
-production, which again will conclude... in
October, so just in a month and a half from now,
what happens to that product after March of next
year? Will the debtors order the product to wind
it down or to sell it off because it went to
the wind down? Your Honor, that's what the debtors
speculate they perhaps could do, but they do
not commit of doing it. They do not commit to
segregate any of the financing money to ensure
that the 20 plus million dollars of costs that
the movements are incurring solely for the debtors
benefit, then that money will be escrowed and
secured for the movements at the end of the day.
So in essence what the debtors are asking is
for the movements to entity to shelter the burden
of the debtors entire tomato inventory only for
the debtors to have the optionality of tell the
prospective bidders that they have access to
five years worth of tomato inventory, perhaps
more, but at the same time, the debtors are not
committing to pay for that. One of the potential
resolutions which we believe is viable is to
offer the movements an administrative claim,
not for the entire five years of the production.
because we understand the debtors would be hard
pressed to do that at the moment but it should
be an easy solution for the debtors to agree
and agree now that the movement should have an
allowed administrative claim only for the 2025
tomato pack season that should provide the movements
with comfort that there will be sufficient money
in the case assuming again that the state is
not administratively insolvent. At the same time,
provide the debtors with the security and the
benefit in discussions with their prospective
buyers, in discussions with their existing customers,
that they, in fact, will have sufficient inventory
on hand. So you're under, at the end of the day,
365D2 calls for a balancing test that you're
under. must entertain here. The balance of harms
should be spread equally under the current proposal
without the relief that the movement seek. It
is the movements that are scheduled to bear the
entire burden. Your Honor, we respectfully state
that that is simply not fair under the current
facts and circumstances. With respect to our
relief, Your Honor, request for state relief,
we ask for that because the agreement itself
contains deadlines applicable to both sides that
provide for termination of the agreement in situations
where cost is required and there are situations
where no cost is required. One of the deadlines
that is coming up is a deadline of October 21st
of this year. that enables one party to send
a termination notice, not for an imminent termination,
but to terminate the agreement at the end of
the initial five -year period. So that's part
of the relief you're under that we have also
requested. If the move -ins wanted to and they
have not yet made the decision to do so, they
could send a termination notice in accordance
with the agreement. So, Your Honor, I know I
said a lot. I would pause to see if Your Honor
has any questions. And if not, I will turn it
over to Mr. Zuber to address the least issue
that does not involve PCB. All right. Thank you,
Mr. Young. Mr. Zuber, good morning. Good morning,
Your Honor. Thank you. So, Your Honor, I wanted
to address two issues, the first being the so
-called integration or severability issue. As
the movements have set forth in particular, Morningstar,
because PCP is not a party to the leaseback agreement,
we've taken the position that the supply agreement
and the leaseback agreement are, in fact, integrated
related agreements such that they need to be
assumed or rejected together. They can't be separated.
So, you know, the debtor can't assume and take
the benefits of the supply agreement without
also assuming and taking the benefits or burdens
as they may be of the lease back agreement. The
debtors have taken the position and by way of
the committee and the lenders have all taken
the position that that issue is premature. That,
you know, nobody is... yet asked the court to
allow the assumption or rejection of one agreement
but not compel the assumption or rejection of
the other interrelated integrated agreement so
to the extent the court is inclined to defer
decision on that we would just request a couple
things one we would like to tee that issue up
for an evidentiary hearing sufficiently in advance
of the October 31st deadline by which either
party, again with or without cause, could seek
to terminate the supply agreement in accordance
with its terms. So one thing that I saw in the
response papers is the debtors say they intend
to be finished with the plant by September 28th.
They don't say whether they intend to reject
that agreement, but it would seem logical that
if they have no further use for the plant by
September 28th, that perhaps a way to move forward
with this integration issue is for the debtors
to file their notice of proposed rejection of
the lease agreement, at which point we could
say if we chose that they could only do so if
they also seek to reject the supply agreement
and we can have an evidentiary hearing on that
issue because depending upon how your honor were
to rule on that issue may determine how at least
Morningstar would like to proceed with respect
to termination or not terminating the supply
agreement. So we would prefer not to argue the
substance of the integration points today, particularly
because the other parties have taken the position
that it's not before the court and didn't address
the merits. We would certainly, if the court
is not inclined to grant the motion today, request
that that issue be deferred for another day.
But again, we would really need to have an evidentiary
hearing, if Your Honor would accommodate that.
And again, I think the mechanism potentially
could be a notice of proposed rejection as of
September 28th, and then we could adjudicate
whether the debtors would be permitted to reject
the lease agreement, but not reject the supply
agreement as well. So again, we believe that
these agreements are integrated, that they need
to be assumed or rejected completely together,
not piecemeal. You can't cherry pick, but again,
we would... We would reserve all substantive
legal arguments on that integration issue. Again,
we believe it should be an evidentiary hearing
where Your Honor could listen to the parties
discuss how those agreements came into being,
what the intent of the parties were, and to what
extent those agreements are integrated and should
be dealt with as one agreement. So that's our
position on the integration severability issue,
Your Honor. If Your Honor has questions, I'd
be happy to address them. Otherwise, I can move
on to my other small issue. No, thank you. I
understand it. Please move on. Okay, Your Honor,
the other issue that we raised, for lack of a
better description, I'll call it the 365D3 issue.
I would recognize that, you know, the motion
of compel did not directly request that the debtor
comply with section 365D3, but in the initial
Sherwood Declaration, certain environmental issues
and concerns were raised. The parties have engaged
in a number of discussions about these environmental
concerns. We've gone back and forth, and we really
have unfortunately not been able to come to an
agreement. But we would respectfully submit to
Your Honor that the consideration of the D3 and
post -petition compliance is of sufficient importance
from a health and safety consideration that Your
Honor should consider that today. Again, I don't
want to really rehash all the specific arguments
we made. Those are set forth in the two declarations.
But a big picture. You know, we believe that
the plant is not being operated with a safe and
properly functioning water system, that there
is necessary testing for things like lead and
copper and aluminum that are required to be done,
which haven't been done. And if they have been
done, we have not seen the results. The debtors
have taken the position that much of this is
pre -petition. They've also taken the position
that, you know, my client bought this property
back in an as is. condition, but as we said in
the papers, we believe that these are ongoing
post -petition compliance obligations. Dalmati
needs to comply with applicable environmental
laws. They need to make sure that the water system
is safe and operating properly. With all due
respect to the debtors, having bottled water
on site is not a substitute for a properly functioning
and safe water system. As indicated by Mr. Sherwood
in his supplemental declaration, there are these
flushes going on. There are 30 ,000 gallons of
water being flushed out to agricultural land.
We don't know if that water is clean. We don't
know if it's contaminated. The debtors have not
done the sampling and the testing. And again,
if they have... We have not seen the results.
They're supposed to do bacteria testing. They're
supposed to be testing for heavy metals. These
are real and significant environmental concerns.
So to the extent that the court is inclined,
we would like the debtor to be directed to comply.
They've indicated they will. They're aware of
their obligations under D3, that they intend
to comply. The question is, what are those obligations
and how do they comply? But again, I think these
are health and safety considerations. They're
discharging water. They're not testing. We don't
have a properly functioning water system. And
we believe that all of those are ongoing post
-petition obligations that they must address
under Section 365 D3. All right. Thank you, Mr.
Zuber. At this point, I don't have questions.
I may turn to both of you after further argument.
Let me hear from counsel for the debtor first.
Thank you. Thank you, Judge. Good morning, Your
Honor. Natan Hammerman from HSF Cramer on behalf
of the debtors. Can you hear me okay? Yes, I
can. Thank you. Wonderful. Thank you. We have
the feeling here that as much as Morningstar
and PCP would like to focus on other items, the
real motion before the court is a motion to compel
the debtors to assume or reject these contracts.
And that was made mere weeks after the petition
date and is being heard now less than two months
into this highly complex bankruptcy. The motion
is frankly unprecedented in its pace and it should
be denied as unwarranted. At the outset, Your
Honor, we'd like to note that movements have
failed to produce a single case supporting their
motion on an expedited timeline such as this
one. And this is true for any of the forms of
relief that they're asking for, accelerating
the assumption deadline, lifting the stay under
362, or request for adequate protection insofar
as one was actually made. Your honor's read the
papers, I don't need to go through everything,
but obviously the section 365 provides us 120
days to assume or reject non -residential leases
and until confirmation for other executive contracts.
Efforts to accelerate the schedule are routinely
denied. We cited numerous cases on this on page
11, paragraph 21 of our objection, and even in
the rare cases where a motion to compel is granted,
it's usually far later in the case and giving
a debtor far more time than here. And that was
paragraph 22 of our objection. We think the movements,
we know the movements bear the burden here. We
think they've utterly failed. The most important
consideration according to the case law is that
the court should consider motions to compel the
debtors time consistent with the broad purpose
of chapter 11, which is to permit the successful
rehabilitation of the debtors. Interests of creditors
collectively and the bankrupt estate as a whole
do not yield to the convenience or advantage
of one creditor out of many. That's the physician
health case that we cited on page 16 of our objection.
Here. The debtors are rightfully focused on rehabilitating
their business through a going concern sale process
to benefit and maximize value for all stakeholders.
All stakeholders deserve a sale process where
the bidders will bid as much as possible. And
to achieve that, the debtors want optionality.
They don't want the court to predetermine that
they must assume or reject a particular contract
because of the interests of one set of movements.
That would put the interests of that one set
of movements ahead of the interests of the estate
as a whole. Instead, the debtors should be able
to decide with the involvement of the eventual
buyers, or the debtors should be able to decide
based on their view of what's in the interests
of all stakeholders, not just one. And I would
note, Your Honor, that the intelligent case,
which we cited, 268 Bankruptcy Reporter 723 actually
says we're going to give time to assume or reject
because of a sale process that's ongoing. Move
-ins don't really have any answer to this. Their
focus is on themselves alone. At best, they pay
some lip service to the idea that the supply
agreement is valuable to the estate because it
supposedly has below market pricing, which in
our view actually militates against them because
it means the harm that would befall them as a
result of delayed rejection would be unlikely
to materialize. I won't run through all of the
factors, Your Honor. Those are in our papers.
I'm going to focus for a moment on the balance
of the harms here, which is I think where the
main play is. The harm to the debtors and by
extension all stakeholders is that this Chapter
11 proceeding may unravel. And I'll start again
with the sale process. It's self -evident to
us that in the midst of the sale process, movements
should not be able to force the debtors to decide
prematurely whether to continue these contracts,
one of which has the five -year term plus extensions.
Making the wrong decision could be costly and
reduce the debtor's eventual sale price, and
the detriment would be far in excess of the alleged
good to be achieved. by one individual supplier,
especially one who continues to receive post
-petition performance. There's not an alleged
non -payment of any kind and is not nearly as
at risk as it contends, which I'll get to in
a moment. The harm to the estate is multiplied
by the complexity of the case. There's over a
billion in assets and liabilities, over a thousand
claimants, and we should be allowed to figure
out what to do with this large number of contracts
on our pace. Many of the debtors' contracts work
exactly like the supply agreement here. And if
PCP and Morningstar get to jump the line with
premature relief, other vendors will try to do
the same, throwing these cases into disarray.
And even if those other motions are denied, the
distraction on the business during the critical
PAC season would be harmful. Now, the harm to
PCP and Morningstar, on the other hand, is, in
our view, speculative and effectively minimized.
As to the lease, I'll start there. Morningstar
actually failed to identify any harm by letting
the debtors decide on assumption or rejection
on the ordinary schedule. I'll come back to the
365D3 stuff in a moment. That's actually not
before the court, but they've not identified
any reason to accelerate the assumption or rejection
deadline. Any harm to them on that account. For
the supply agreement, there's actually multiple
reasons to conclude that the harm asserted by
PCP is overstated. First, They might have had
an argument if they didn't have the letter of
credit, but they do. That's what they bargained
for, and that should be the end of the matter.
Your Honor, we heard today the argument that
the letter of credit doesn't somehow comply with
the requirements of the product supply agreement.
That's not accurate. Product supply agreement
section 3 .1, which Your Honor has, does not
provide any requirement. except subparagraph
one of that section does not provide any requirement
that the letter of credit be of five year duration.
Letters of credit are not usually a five years
duration. So that would not work. That was not
a requirement here. There's no noncompliance.
They have the letter of credit. That is the protection
they bargained for. And the bargain for that
protection, knowing all of the things that they
came before you with today. that they would incur
massive costs at the beginning of the season,
according to them, knowing that they weren't
going to be paid for some time thereafter. Notwithstanding
that, the only protection they bargained for
in the product supply agreement was this $4 million
letter of credit. And that's what they have.
So in our view, that should be the beginning
and end. They have the protection they're entitled
to under the product supply agreement. But that's
not the only reason the harm. that they're concerned
about is overstated. We now also have, Your Honor,
the dip facility, which has been finalized, $165
million of new money. And that was obtained for
the express purpose of paying for the budgeted
costs of the 2025 pack season, which includes
tomato products. That's exactly the reason we
borrowed the money. That's what it's there for.
So, Your Honor, what else did this debtor say
about the LC and the DIP? They say that it's
going to expire in March, and movements might
sell their products later than that. But the
sale will be in November, and by that time, they'll
know for sure the state of their contract. So
the idea that the termination in March of the
LC or the DIP, that's not a justification for
accelerating anything here. The third mitigation
issue, Your Honor. The sale process contemplates
a going concern sale, and the debtors have a
stocking horse bid here for a going concern sale,
which includes the tomato business. Fourth, by
Move -In's own estimation, their hypothesized
harm, namely that no one buys their tomatoes,
is unlikely to occur. Move -ins repeatedly express
that the supply agreement is exceedingly valuable
and how foolish it would be for anybody not to
assume it. If Move -ins believe what they themselves
say, an assumption is either very likely or someone
will want to buy their tomatoes on wind down.
Fifth, the majority of the tomatoes are common
formula, what was called generic. They can be
resold. This reduces Move -ins economic exposure.
The limited exposure on the proprietary blends,
which only PCP is preparing, not Morningstar,
can be sold on Windown if the debtor's eventual
purchaser doesn't buy the tomato business. PCP
responds to that by arguing, well, maybe the
debtors will no longer have employees and won't
be able to sell the products on Windown. This
is kind of confusing. There'll still be a wind
down after the sale. If the tomato business is
not in the sale, the wind down entity could definitely
still sell the products. And again, more importantly,
this is not an issue for today, two months into
the case. There's nothing that prevents PCP and
Morningstar from bringing this motion again,
if the eventual buyers don't buy the tomato business,
if the wind down doesn't cover the products.
You know, in that circumstance, they could come
back, which would be you know, a more normal
time frame in which to bring a motion like this.
By then, everything that has been ordered and
delivered will have been paid for, and the exposure
will be far more limited. I want to make clear
a few other points about what the movements have
said and didn't say in reply and in argument
today. There's very little limited attempt to
balance any of the other factors that courts
consider. only the balance of the harm. They
don't deny exclusivity has ended. They don't
deny that this motion is inconsistent with the
congressional mandated scheme of Chapter 11.
They don't deny that the motion would be contrary
to Chapter 11's purpose. They concede there are
no cases in their favor. They fail to find any
precedent that supports their request. And they
don't even make any attempt to distinguish the
cases we cited in our response. They nevertheless
say, this case your honor this is the one why
do they say that because they say they're incurring
costs now and they're going to be paid later
that's no different than any other vendor in
this case and that's no different than many other
vendors in cases that were already cited in enron
for example which was cited the pardon moving
to compel assumption or rejection contended that
it would incur millions of dollars to expand
the gas pipeline that it might not ever get repaid,
and that that sum might not be necessary if there
was an assumption or rejection more quickly.
The court did not find that compelling. It said
the debtor is entitled to run its bankruptcy.
In the Mayor Pollack Steel Corp case, which we
cited, the party seeking early assumption or
rejected A rejection noted that it had to process
and ship scrap metal at costs before it ever
got paid. And the court denied the motion there,
too. And it spoke very tellingly. It said a creditor
would be paid less than the full amount owed
to it was no reason to accelerate a decision.
It's no answer, said the court, to argue. as
the movements did there, that it is a creditor,
among many others, which will probably be paid
less than the full amount owed to it under the
terms of any reorganizational plan of the debtor.
In other words, the idea that a vendor might
come out of pocket and might not get fully repaid
is not enough. And if anything, Your Honor, for
the reasons I said already, movements are less
sympathetic than most others here. The exposure
they complain about the costs that they have
to come out of pocket. That's something they
knew about when they entered into this agreement.
And what did they bargain for? A $4 million letter
of credit, and they got it. One last point that
I think bears mentioning on this. PCP and Morningstar
said in their reply papers that the court should
evaluate the present facts. That's at page five
of their reply. The present facts are that they
have the letter of credit. There is a final dip
to fund the PAC season. A sale process is underway.
There is a stocking horse bidder for a going
concern sale, and there are no allegations of
non -payment. Those are the present facts. Their
argument, by contrast, focuses on hypotheticals.
What happens if, what happens if the contract
is rejected, or if the sale cannot go forward,
or if a wind down entity doesn't purchase their
tomatoes. Those are not present facts. Those
are future speculations. So bottom line here,
Your Honor, the movement's primary relief should
be denied as unwarranted or best premature. The
debtors are entitled to their statutory mandated
time to assume or reject, and the facts and circumstances
here are not unique, let alone so amazingly unique.
that it should be the first case in the history
of the bankruptcy code where a motion to compel
assumption or reject it should be granted so
soon in the case. I'll turn briefly to some of
the other points if that's okay. Let me just
ask a quick question then I have a question which
you may be about to address. The debtor's anticipated
sale, the timing of it. Remind me the sale date.
The sale hearing is November 18th. I'm going
to ask you to address the issue of the integration
and whether or not, if the court denies the motion
this morning, whether we need an evidentiary
hearing on that issue. In other words, would
any buyer need to know what they're going to
Either assume or reject and whether the leases
both leases both Agreements need to be treated
as as one in that process will facilitate the
sale Okay, first of all, I got a note just while
you were talking that I got the date wrong It's
November 20th and not November 18. So let me
fix that As to integration, we would come to
that, or we'll come to it now, I guess. We don't
think you need to decide on that today, and I
think Mr. Zuber acknowledges that that does not
need to be decided today. We agree that if we
move to reject the lease and don't simultaneously
move to reject the supply agreement, that that
would be an appropriate time to consider that
issue. I'm not yet sure that we need an evidentiary
hearing on it. I suppose that should be something
that the parties discuss, not negotiate in the
middle of the court hearings. But do we need
a hearing before the sale hearing, before I have
to determine whether I am approving of a sale
or approving of assumption of potential agreements
as part of the sale? I think the answer to that
is no. but I do because I don't think that that's
necessarily the sale is dispositive of this issue
or that the sale turns on this issue. I do however
think that this may come up earlier than that
as Mr. Zuber correctly notes. We're planning
to finish using the facility on September 28th.
or thereabouts. And after that, I do think that
it would be appropriate time for a conversation
between us and Mr. Zuber. And if we agree that
we need to have an evidentiary hearing, we should
get one scheduled on that, particularly if, and
this is the conditionality that I'd like to preserve,
particularly if we would like to move forward
with rejection of one contract, the lease in
particular. and not yet be in a position to decide
or not want to reject the product supply agreement.
So what I would think on that one, although I
would have liked to have not done this on the
fly in the courtroom, is that we should get together
with Mr. Zuber. We should discuss that issue
and have a status conference at some point, presumably
right after September 28th, and come to your
honor with a plan and an approach on that. Fair
enough. Continue. Okay. Sure. Thank you. Okay.
Let me turn quickly to, and in that regard, Judge,
I would note that we're not conceding that this
is a true lease yet. That's an issue we're reserving
rights on. We'll come to that as well at a later
time, I think, Phil, not something that needs
to be decided today. There's a couple of forms
of alternative relief that were asked for in
the papers and a couple of different forms of
alternative relief that were asked for today.
On stay relief, I don't intend to spend very
long on that. Stay relief in our view is just
an end run around the breathing space provided
by 365. The court should reject it for the same
reason, that it should reject shortening debtors'
time to assume or reject. I think there was a
suggestion of allowing some future termination
notice to be issued now. This again to me, I'm
not quite sure I follow that new argument that
was presented today, but it doesn't seem to me
like a today issue, it's new. It would be detrimental
to the value of the contract if there was some
looming termination notice out there. And so
we don't think that that should be permitted
and we do think that that would be contrary to
the state. We don't think it's justified either,
as we pointed out in our papers. We don't think
we've done anything warranting termination. It's
true that the letter of credit was not issued
pre -petition, but there was not a notice of
termination and there was not a notice to cure
in accordance with the contract. And now the
letter of credit has been issued. And as I said,
it is fully compliant with the requirements of
3 .1 of the product agreement. Let me turn to
adequate protection briefly. We don't think the
movements are entitled to any sort of adequate
protection here. No cases were cited where a
court granted adequate protection in the form
of liens to an individual with an executory contract.
More important than that failure, however, is
that we believe movements are adequately protected.
The letter of credit, which I don't need to mention
again, the facility, the budget, the stocking
horse for a going concern sale. post -petition
obligations to continue to pay rent and pay for
goods, the rights under 503, 365D3, among others.
All of those are forms of adequate protection
that already exist, and we don't think there's
further adequate protection that anybody should
be entitled to here. There was a suggestion of
escrowing money. That's a new argument again
today. That's not how our ABL dip works. That
would not work. no other vendors are escrowing
money or money being escrowed for them, that
would bring down our ability to borrow and fund
things. So we don't think that that kind of suggestion
made offhand in court works. And so for that
reason, we think that that should be denied as
well. On reply, movements conflate the UCC concept
of adequate assurance of performance with adequate
protection. They didn't cite the UCC in their
moving papers. We don't think it was fair to
do so on reply, but it doesn't seem to us in
none of the cases they've cited support the idea
that the adequate assurance is a future performance
argument under the UCC, gives you an end run
around the bankruptcy code, the automatic stay,
or any provisions like that. That would strip
away many of the protections provided in the
bankruptcy code, and debtors, particularly debtors
who sell goods, would be bombarded with requests
from vendors to provide assurances. Nothing in
the cases, as I said, supports that. And the
court, for example, in Carlisle, which they cite,
actually goes against them. It said, first of
all, that was not even a purchase of goods case.
And the court there said that within the bankruptcy,
the idea of adequate assurances will fall considerably
short of an absolute guarantee of performance.
And what they're requesting here is a guarantee
of full performance. And we don't think they're
entitled to that here. Other comments, they claim
we repudiated the contract. We think this is
specious. Everybody's here fighting because everybody
knows that the contract was not repudiated. They've
threatened not to perform. They think that that
would violate the stay. They complain about lack
of communication. I think the documents and next
to the papers show that there has been ample
communication. They ask for a license to sell
branded products. Again, this is a subject that
can be tackled in December or February or March.
This is not something that we need to worry about
today. And all of these arguments, in our view,
are one of two things. They're trying to negotiate
with the court, or they're trying to throw things
at a wall to see what sticks. And speaking of
throwing things at the wall, for the first time
on Friday afternoon, we were told that there
is now a suggestion that the court should treat
this motion as one for relief under 365D3. This
is a brand new motion. They admit it in their
papers. They admit it here today. It's not before
you. If it will be presented to you, it should
be presented to you in the right way, and we
will respond to it. We do not agree that that
should be taken up today. New arguments raised
on the first time on reply are waived. But I
do want to preview a few things because I want
to put the court's mind at ease. We do not think
the health and safety arguments are meritorious
at all. We think they're just wrong. We did provide
bacteria and aluminum results. They were next
to our papers. That's Exhibit D, I think. It's
pages 72 to 86 of our DOC at 369, the Golding
Declaration. Showed bacteria is fine. Showed
aluminum is fine. We're continuing to do testing
on other things. That's true. And as the results
come in, we will deal with them. We don't think,
we don't understand at all why they think there's
30 ,000 gallons of wastewater spilling out onto
agricultural lands. We dispute that. That's a
disagreement, a factual disagreement among the
parties. We don't think that this is right. There's
no wastewater because there's no tomato processing
going on at this plant. So the idea that there's
some flushing of water onto agricultural lands,
we think that this is just wrong. We even provided
photographs, Your Honor, at the end of our, I
think it's page 86, of the same golden declaration
that shows this agricultural land in a bone -dry
condition. We think that this is just wrong.
And look, Your Honor, even if there are some
issues at Hanford, and let's keep in mind Hanford
was purchased, as is there is a release in the
agreement related to hazardous materials on site.
They themselves acknowledge that it is an obsolete,
inefficient plan, so there could very well be
some issues at Hanford. I don't want to say that
that might not exist. But everybody is going
to do what they need to do. We will perform,
we've said this over and over and over again,
we will perform in accordance with our 365D3
obligations while reserving all rights. We reserve
all rights as to whether it's a true lease. We
reserve all rights as to whether they're pre
-petition defaults or post -petition defaults.
We reserve the rights as to whether they're defaults
at all. But we don't think that's an issue for
today, and we don't think the situation is nearly
as dire as they seem to say. They actually have
the right under the lease to go on the property
and perform work themselves. They've not tried
to exercise that right, because I think they
know that these problems are not what they say
they are. I'll turn now to one point made in
reply, which is the Alcala Farms Water Treatment
Service Agreement. This is the ag lands that
water is supposedly flowing out onto, but we
dispute. And there was a contract, it was rejected,
a contract for treatment services by the Alcala
Farms folks. And they're contending that by rejecting
that contract, that leaves us exposed to environmental
concerns. We think this is both incorrect and
somewhat ironic, actually. It's incorrect because
Alcala was treating water wastewater, of which
there's not. There's no tomato packing. There's
no wastewater, a point they kind of continue
to miss or gloss over or dispute. We have a separate
third -party service provider that tests the
water and that provides other regulatory and
compliance services. Those are the folks whose
names appear on all of the exhibits to Mr. Golding's
declaration. Their comments about the Alcala
Farms water services contract are also a little
ironic. When the debtor was selling Hanford to
Morningstar Kings, we offered them, do you want
to assume this contract? We knew we didn't need
it because we weren't going to be processing
tomato there. And they said, you know what, no,
we don't need to assume that contract. So they
turned it down. Then when we filed the case and
we filed this rejection motion because we knew
there's no wastewater on this property, we called
them again and we said, hey, we've got this up
for rejection, particularly after they made this
motion. Do you want us to pull this rejection
motion? Do you want to assume this contract?
And they again said no. They didn't object to
the rejection. They didn't see this cause of
some sort of environmental concern. They didn't
see a thing. So to now come here and comment
about this seems a little bit disingenuous on
their part. And the last irony with respect to
this is that the Al -Qaeda service contract shows
precisely why we don't want the court to accelerate
assumption or rejection. single individual facility,
the Hanford facility. The debtors, in that case,
this pre -petition, went to their buyers, Morningstar
Kings, and said, do you want to assume or reject
this contract? We didn't predetermine that for
them. We asked them, what do they think? And
they said, no, we don't want this. And we honor
that as the seller. Now multiply that by whatever
-fold, ten -fold. That's what we've got going
in the sale process today before your honor.
We've got an entire business. We're going out
to the market. We are running a going concern
sale process. We want to be able to speak to
our buyers or make decisions that are in the
best interests of the estate as a whole. And
we don't think that it's right, just like it
wasn't right for Alcala for us to make decisions
for our buyer. We don't think, particularly as
to the product supply agreement, that it should
be right for us to make decisions for the buyer.
of the eventual tornado business. I spoke a little
bit about integration. I think that's all I've
got, your honor, unless you have questions for
me. I don't. Thank you very much. Thank you.
Let me hear from the committee council. Thank
you. Hi. Good morning. Miranda Russell, Morrison
and Forrester, proposed council for the official
committee of unsecured creditors. Your Honor,
the committee filed a joiner to the debtor's
objection at docket number 370. As stated therein,
the move -in's request is premature. The committee
is concerned that granting the request of relief
at this time would be prejudicial to other unsecured
creditors and potentially not in the best interest
of the debtor's estates. The debtor's sale process
has just begun, and assuming any contracts now
outside of that sale process could risk locking
in administrative expense claims that may not
be justified. The move -in's right to assert
administrative claims later in these cases is
fully reserved. The Committee agrees with the
debtors that the assumption or rejection process
should be done holistically, rather than filing
a state with an administrative expense at this
stage in the process that could also potentially
deter potential bidders, given the five -year
term of the contract at issue. The Committee's
diligence with respect to the move -in's contracts
remains ongoing, as well as the Committee's diligence
in connection with the larger sale process. For
example, the committee is continuing to review
the proposed form of stocking horse APA. The
movement's reply raised concerns that the debtor's
estates may be administratively insolvent. To
be clear, the committee is committed to ensuring
that following any restructuring transaction
in these cases, whether through a sale or otherwise,
first, that the go -forward Del Monte business
will be well -positioned to satisfy unsecured
claims, and second, that vendors and contract
counterparties were continuing to work with the
debtors during these cases are not left holding
the bag. To that end, the committee wants to
reserve the debtor's optionality and granting
the motion today cuts against that goal. The
committee respectfully asks that the court deny
the movement's motion without prejudice. Thank
you. All right. Thank you, counsel. Anyone else
wish to be heard on this matter before I come
back to move and see if they wish to respond?
All right. Let's turn back. Mr. Zuber? Yes, Your
Honor. I just had a couple of brief response
points. You know, I would point out, and as we
noted in our papers, you know, the supply agreement
provides that either party can terminate that
agreement with or without cause. So... You know,
as I think is black letter law, debtors in Chapter
11 don't get greater rights in bankruptcy than
they have outside of bankruptcy. So we respectfully
submit that Your Honor should not continue a
stay when it's just an exercise of a contractual
right that is, you know. they have a right without
cause. This is not, you know, a determination
of a 362B about whether a cause has been established
under B1. This is just an exercise of a contractual
right, and that right should not be expanded
or be made greater for the debtor's benefit just
because they're a bankruptcy. With respect to
the integration issue, I already suggested to
Your Honor that we believe it's appropriate to
have an evidentiary hearing sufficiently ahead
of that October 31 deadline. It doesn't sound
like Council is pushing back on that too much
except their suggestion that we just wait until
September 28th. See whether the debtors file
Notice of rejection that we can have a status
conference, you know, that's just going to delay
things to the point where we're going to be up
against a deadline You know having a status conference
the beginning of October for an evidentiary hearing
that we would respectfully submit we need a decision
on before October 31st doesn't really give us
enough time so we would ask that your honor consider
scheduling an evidentiary hearing sometime before
that especially since the debtors intend it would
appear to reject that lease there they say they're
going to be out of the facility that would seem
axiomatic, that they would seek to reject that
lease effective as of the 28th. And we would
ask the court to schedule an evidentiary hearing
prior to that. We'll certainly engage in ongoing
discussions with counsel. We've had a lot of
discussions about a lot of things. We will continue
to do that and to discuss these things in good
faith. But we would, again, implore the court
to schedule an evidentiary hearing to give us
an opportunity. prior october thirty -first to
have a decision on that issue and i think your
honor your honor was correct when uh... u .s.
debtors council you know when the buyer want
to know whether they need to assume or direct
the assumption assignment of both of these contracts
before they go through the sale i think that's
a very very important and good point you know
if if we're right and buyers know they have to
assume all the reject all they should know that
if we're wrong and your honor would allow them
to sever So be it but you know fire should know
that as well. So again, we would really just
be pushing respectfully to have a decision on
that integration issue by way of an evidentiary
hearing sufficiently ahead of the October 31st
deadline. Two other very quick points on the
365D3 issue. I recognize that the caption of
our motion didn't talk about compliance with
D3, but everybody recognizes that a debtor must
comply with D3, and we would submit that it's
really before the court on a de facto basis.
final point, and Mr. Young may want to address
this as well, but you know... Mr. Hammond had
said that, you know, the relief requested is
inconsistent with the statutory scheme. I would
suggest that that is not true. As Mr. Young pointed
out, 365 DE2, while it does provide a timeline
for assumption or rejection of non -residential
real property leases, it also says, but the court
can shorten that time. And that's why we're here.
If there was never a circumstance, as debtors
suggest, never in the history of the bankruptcy
world, where a court has compelled a debtor to
assume, to make a decision prior to the statutory
deadline, then the language of 365D2 will be
superfluous. There will be no point for it. And
we suggest again that this is the appropriate
case to shorten that time frame. All right. Thank
you, Mr. Zuber. Mr. Hammerman, before I get back
to you, Mr. Young, do you want to add anything?
Yes, Your Honor. I will be brief on the supply
agreement itself. My friends on the other side
continue to argue that the court should defer
the decision for the parties to see how the sub
-process plays out. And they argue that to do
it sooner would somehow be valid of the congressional
intent behind the bankruptcy in general. That
argument, frankly, seeks to create an exception
to 365D2. that does not exist in a bankruptcy
code. There is no exception that the court should
not provide for an orderly assumption rejection
during a pendency of a sale process. If Congress
wanted that to be a consideration, it would have
put the language in the code. And why, and I
continue to stress, why is timing important here?
Your Honor, timing is important because between
now and October, there are chances to mitigate
potential damages. If decision is delayed post
-October, substantially all of our 2025 pack
season expenses, that includes buying product,
packing, labeling, testing, etc., all that cost
would have been incurred by October. So this
is not a case where indecision can be delayed.
Debtors Council states that, well, we may do
something with the products in connection with
the sale if buyer may want it. And they say,
well, there is value to that, so we should not
reject it. So flipping the tables, if the debtors
believe there is value in that business, in the
tomato business, it should be an easy decision
for them to have that contract assumed now, or
at the very least, confirm that the movements
will have an administrative claim for all the
products produced for them, pursuant to the schedules
that the debtors have provided to the movements
in April for this year. So, in essence, the movements,
or rather the debtors, the committee and the
lenders, seek to place the entire burden of this
production on the movements and for the debtors
to likely reap the entire benefit if the contract
is assumed. In essence, the debtors do not want
to have any skin in this game whatsoever. And
that's not the purpose of section 365 B2, that
section, and the courts that analyze that section.
Talk about the balancing of harms. That is the
main factors that the courts consider. The debtor's
proposal does not take any harm away from the
movements and in fact the debtors argue that
the movements and only the movements should bear
the possibility of the harm which we view is
significant. For that reason, Your Honor, we
request that our motion be granted. Thank you.
Thank you, Mr. Young. Mr. Hammerman, last thoughts.
Yes, thank you, Judge. The right to terminate
in the supply agreement, we cited cases on this.
It's paragraph 47 of our objection. That does
not trump the automatic stay. That's well established
in law. Mr. Zuber also brought up the concept
of scheduling. The rejection motion, if one is
made, is the one that should determine the schedule.
That's when this issue should be heard. And so
we think it's premature at this time to be setting
evidentiary hearings. If we make a rejection
motion, that's when the court should schedule
an evidentiary hearing. I think we can work that
out with Mr. Zuber. I don't think that's something
the court needs to wade into today. I do think
that the status conference idea gives Mr. Zuber
an opportunity to come back to the court and
argue for a different schedule than the one that
perhaps we speak with him about. So whether the
status conference is exactly when we suggested
it or otherwise, I think it's premature at this
time to set a schedule, but I do expect that
we will be able to reach accommodation with Mr.
Zuber on that point. Talked about being consistent
with the statutory scheme, the idea that 365D2
has a has the ability to make a motion, it sure
does. And they've made it here, and the cases
that interpret that provision suggest that if
you're going against the grain of the 365D2 motion
is going against the grain of giving the debt
or the time that's afforded under the code, that
that is somewhat inconsistent with the statutory
scheme and there should be a good reason for
it here. And here we have a dispute as to whether
that is a good reason or not. Timing is important
for us to respond to Mr. Young. We have a sale
process going on here. We want that sale process
to succeed. We believe that the timing is very
important for us as well. We don't want things
to upset the apple cart. I don't mean to use
puns. Upset the apple cart in this case with
our sale process. And we want things to go as
well as possible on that sale process. Mr. Young's
clients entered into a contract. That contract
gave them a degree of security, which they have.
It gave them the exact predicament that they're
describing here. It gave that to them all along,
every year, every time, every season. That's
something they bargained for and agreed to. We
don't think that that is a particularly sympathetic
argument or that the court should be particularly
troubled by it, and certainly not to put the
interests of one creditor over all others. The
movements have their rights, with respect to
an administrative claim, the movements have whatever
rights they have under 503. Nobody is telling
them they can't make a 503 motion. That's not
the motion they made again. We don't think that
their products here qualify for that. We think
they have the security they were entitled to,
but they do have 503 as a future avenue. If anything
turns out to not be assumed or not be picked
up or the parade of horribles occurs, they have
those rights. They don't need that today. It
is not a today issue. I think that's all I have
here. All right. Thank you, counsel. Well argued
on all sides. Let me gather my thoughts. This
matter comes before the court on the motion filed
by Code Movement Specific Coast Producers and
Morningstar Packing Company and Morningstar Kings
LLC seeking relief under Section 365D2 to accelerate
or compel the debtor into seeking either the
assumption of rejection of the two agreements
at issue, a product supply agreement as well
as a real estate lease as part of a sale and
lease back arrangement. This court has jurisdiction
under 28 U .S .C. section 1334. This is a court
of matter under 28 U .S .C. section 157B. In
determining whether to impose a shortened or
accelerated deadline upon a debtor with respect
to assumption or rejection of an executory agreements,
as been noted in the papers by all parties, courts
consider a number of factors, including the nature
of the interests, Most importantly, the balance
of the harms to the parties, the purposes and
good to be achieved by accelerating the date.
The safeguards afforded the parties. The core
also is to take into account congressional scheme
and supporting the broad purposes of Chapter
11, which is to promote successful rehabilitation
of the debtors and to provide the debtor or debtors
with a breathing spell and making determinations
as to the viability and pecuniary benefits of
assumption and rejection with the harms involved
in respect to rejection. The court is taking
into account the stage of the case. whether there's
been a termination of exclusivity and also the
general complexity of the case. Those factors
were outlined in one of my colleagues' decisions
in G1 Holdings. I know it was cited in Enron.
Of those factors, the court focuses significantly
upon the balancing of the harm and the safeguards
afforded the litigants. The decision to assume
or reject is one where courts normally defer
to the business judgment of the debtor. The debtor
is in the best position to gauge whether or not
an agreement has value, whether that value outweighs
any detrimental impact. that would come with
rejection. And this deference to the business
judgment of the debtor in making the substantive
decision to assume or reject also applies to
the debtor's determination as to timing. When
is it in the best interest of the estate to make
this decision? Here, the debtor is supported
by the committee. seeking additional time after
a proposed sale process in order to determine
whether a five -year supply agreement would have
value to a purchaser as opposed to a knee -jerk
decision to assume the supply agreement which
would expose the estate to significant administrative
liabilities. You can tell from my comments I'm
going to deny the motion under 365v2 because
I believe the balance of our harms and the balancing
of the interests weigh in favor of the estate
at this juncture. And I do so because there are,
and this is also one of the factors, significant
safeguards that are in place in this situation.
Number one, the $20 million potential outlay
by the movements with respect to the product
supply agreement is not likely to be their exposure.
That outlay will be reduced by payments being
made consistent with the DIP budget, by sales
of inventory, and other elements which we're
going to... to discuss which will reduce their
costs. And it's important to note, and I agree
with counsel for the debtor, that the initial
outlay in this manner is part of the movement's
business plan. They do it, and it is consistent
with how these product supply agreements are
done throughout the industry. Advancing funds
is inherently risky, but it's part of the business
plan that was agreed to as part of the arrangement.
Also, the debtor's ability to not necessarily
purchase the entire supply is part of the contractual
arrangement agreed to by the parties. It is one
of the risks built into this process, and it
should come as no surprise. Now, when I mention
safeguards, yes, there are safeguards. I don't
think anybody disputes that over 60 % of the
potential inventory to be produced could be resold.
It is not of this debtor's brand. There's the
ability to seek administrative claim for any
unpaid costs associated with servicing the contract
post -petition, consisting with Section 503B.
There is a letter of credit that was put up.
to secure certain potential risks. I think it's
a four million dollar letter of credit. There
is an ongoing sale process where this very agreement
or agreements may indeed be assumed. And there
is a generous DIP budget which will allow for
continued ongoing payments. So there are these
safeguards that are already in place that are
frankly not available necessarily to all administrative
claimants or contract parties. And because of
this, this court is very leery of imposing upon
the debtor a shortened time period inconsistent
with the goals under Chapter 11 which support
rehabilitation and which may impede the sale
process. Indeed, potential purchasers need to
have time to evaluate the benefits and the merits
of the supply agreement, deciding whether or
not that the agreement is important, is beneficial,
is essential, and becomes part of any purchase
bid. It would undercut the debtors' efforts to
maximize the return to this estate if we were
to accelerate the process at this point. The
court is not considering the 365D3 issues at
this juncture. I am never sanguine about directing
parties to comply with the law. I think that's
a given. The debtor has responsibilities under
section 365D3 and in the event that there is
a malfeasance or a failure to to live up to its
obligations and responsibilities under the code
or under non -bankruptcy law. This court is certainly
willing to hear any matters on an expedited schedule
if warranted. But the court certainly doesn't
have a factual predicate to make any rule in
number 365 -D3 of disjuncture. I'm going to deny
the motion on the 365D2 without prejudice, of
course. To renew the motion, indeed, you can
contact, the Movements can contact Chambers at
a later date after the sale process, after November
20th, and seek to renew the motion without having
to necessarily file a new motion and prepare.
I don't want to add costs. There might have a
need for supplemental declarations, of course.
The issues may be further refined, but contacting
chambers and the court will get the matter on
its calendar as soon as possible. I did bring
up the issue as far as an evidentiary hearing
on the integration issue, because it indeed may
be pertinent to any sale. And I'm going to leave
it to the council who are all as... demonstrated,
very professional, very courteous, very responsible,
to meet and confer and develop a schedule, it's
warranted. I'm going to tell you that I will,
and this is for the court's ease, I need to carve
out days or else they get used up with other
matters. So I will carve out October 24th, it's
a Friday, and you might want to work with that
date as a hearing date. in advance of any sale.
It's a suggestion at this point. The court will
always accommodate any requests for a status
conference, informal phone call or Zoom, and
we can address it further and put in place any
further scheduling that you all can agree upon.
But at this juncture, I think all of the factors
weigh in favor of denying the motion without
prejudice. So for the reasons set forth, I'll
deny the motion. I will ask debtor's counsel
to submit a form of order consistent with the
ruling. Are there any questions I can address
for any counsel? Not for me. Thank you, Judge.
Your Honor, just I think that Mr. Young initially
mentioned several declarations. Will those be
put into evidence for the purpose for which we've
agreed that essentially not necessarily for the
truth, but just to have them as part of the evidentiary
record. Sure. Let's be clear. Can I have the
declaration? Let's give them exhibit numbers.
I don't believe there's any objection on all
sides. That's correct. The original declaration
of Mr. Sherwood was document number 175. There
was a declaration on the debtor side. I don't
have that number handy, but I believe that they
submitted a declaration. in opposition, and the
declaration of Matt Strong at Docket 174. And
then the supplemental declaration of Mr. Sherwood
was filed at? One moment, Your Honor. 179. 179?
No. 379. Let me just confirm and have it here.
That's the reply. 79 -1 is the supplemental.
operation of Mr. James Sherald. I'm sorry, Judge.
Mr. Goulding's declaration was 369. And I don't
have the exact words of our kind of arrangement
up in front of me that we negotiated, but I think
the agreement and the co -counsel will step in
if I don't have it right, is that these would
be admitted without without preventing any party
from cross -examining or without assuming that
the parties assume the truth of the, of the matters.
They're there for the court's consideration.
In other words, in the future, if there's an
evidentiary hearing, we can come back and cross
-examine. We can dispute the truth of things.
I know there's places where we can fit with one
another. All right. Council, any concerns with
that representation? That's correct. You're up.
No concern. So the four declarations that have
been cited will be admitted into evidence, two
on behalf of the movements and two on behalf
of the debtors. And we'll let the record rest
at this juncture. Thank you for your time. Have
a good day. Take care. Thank you, Judge.