WEBVTT

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Okay. Good morning, everyone. This is Judge Kaplan.

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We will be hearing the Del Monte Food Corporation

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motions, uh, motions of Pacific Coast producers,

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and mornings for our packing. Let me give those

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an opportunity to adjust their screens. Good

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morning, Judge. Nuts on Hammerman from Herbert

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Smith Free House Kramer. for the terrace. Good

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morning. Other appearances for movements. Good

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morning, Your Honor. Good morning, Your Honor.

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I'm sorry. Good morning, Your Honor. I'm going

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to check you in from the lobby of Wamble Band

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Dickinson for Pacific Coast producers. With me

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on the line is Tom Willoughby from the lobby

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of Perkins State for Gerald Willoughby, Pascuzzi,

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and Rios. All right. Good morning, folks. Good

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morning, your honor. Scott Zuber, Kiesa Shihani,

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and John Tomasi on behalf of Co -Movement, the

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Morningstar Packing Company LP, and Morningstar

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Kings LLC. Also, my colleague Terry Friedman

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is on the line as well. All right. Good morning.

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Good morning, your honor. And we have for the

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committee. Good morning, your honor. Kristen

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Elliott of Kelly Dry and Warren. proposed co

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-counsel for the Official Committee of Unsecured

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Creditors. With me in the virtual courtroom are

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several attorneys from the Morrison and Foster

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law firm. In particular is Ms. Miranda Russell,

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whose pro -Hoppechi application we filed on Friday.

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Ms. Russell is prepared to address today's motion

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on behalf of the committee, and we would respectfully

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request that Your Honor allow her to appear and

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address the court in connection with the motion

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while that application is pending. Absolutely.

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Welcome to New Jersey, Ms. Russell. Thank you.

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Good morning, Your Honor. Thank you. All right.

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Any other appearances? Needless to say, as a

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remote hearing, throughout the course of the

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proceeding, if you wish to be heard, if counsel

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wishes to be heard, please use the raise hand

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function if I haven't already called upon you.

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I have had the opportunity to read through all

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the... briefing and the declarations. I will

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first turn to the co -movements. I don't know

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if you've decided among yourselves who wishes

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to lead off. Yes, Your Honor. Mr. Wojciech Young

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is going to lead off on some of the preliminary

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arguments and then to the extent the court will

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allow, I would follow up with some specific discussions

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regarding the environmental issues, D365, D3.

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issues as well as the integration separability

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of the two contracts. Thank you. All right. Thank

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you. Mr. Young, good morning. Good morning, Your

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Honor. Just as a preliminary matter, we have

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made certain agreements, Your Honor, with our

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friends on the other side with respect to the

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admissibility of the three declarations that

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have been submitted. in support and in opposition

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to the motion. We do not believe that cross -examination

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or other evidentiary hearing is necessary, but

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of course to the extent the court believes otherwise,

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we would reserve the right to have that hearing

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at the appropriate time. As Mr. Zuber, you run

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the reference, I will address primarily the issues

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surrounding the product supply agreement, which

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in a moving view raises the more urgent situation

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in terms of timing. As we set forth in the papers

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around it, the parties are subject to a product

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supply agreement executed in January of this

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year that was based as a result of the debtor's

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decision to exit the tomato production business

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and enter into a co -packing agreement with our

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clients. Iraner, it probably cannot be understressed

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that the timing of this case, of this situation,

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makes this matter drastically different and more

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urgent that Iraner perhaps has seen. in most

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motions under section 365d2. That is because

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the tomato packing season of 2025 has started

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at the beginning of July, so just a little bit

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over a month ago, and it is scheduled to conclude

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at the very beginning of October. Pursuant to

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the party's agreement, the runner of clients

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are producing the entire volume of inventory

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for the debtor. That inventory usually lasts

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between a year and 18 months. That inventory

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would be produced in total by October. And to

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do so, PCP and the burning store party to the

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supply agreement are required to expend significant

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amount of resources to produce that inventory.

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we set forth in a paper, Zerunner, that includes

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over $20 million of expenses to produce product,

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which obviously they are happy to do, but given

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what the debtors are, there is no assurance whatsoever

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at the moment that the product will be needed

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for the estate, and even if the debtors end up

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purchasing the product pursuant to the ordinary

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timeline, It is doubtful and unclear certainly

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that the debtors will have the necessary resources

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to pay for the product. In order to make the

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matters even more difficult, about 38 % of the

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product that my client is producing is a product

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that is custom made with special Del Monte recipe.

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That product is likely difficult or perhaps impossible.

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to sell outside of this context, outside of this

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relationship. And, Your Honor, we are not talking

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about a few cans of custom products. We are talking

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about 400 ,000 cases of custom -made products,

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in addition to the hundreds of thousands of the

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more generic type product that PCP and Morningstore

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are producing for the debtors. So here rather

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we have made the motion requesting that the debtor

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make a decision, admittedly, rather early on

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in the case, whether or not to assume and assign,

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or for now assume, the product -supply agreement,

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Mr. Zuber will address a related issue stemming

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from the lease, because the agreement, the lease

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agreement and the product -supply agreement were

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entered and were conditioned upon... Everyone

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was conditioned upon the other when the police

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signed both agreements back in January. You rather

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in reply the debtors offer what I would call

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primarily generic arguments in response. One

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of which is well, it's early on the case and

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they need a more greedy groom to decide what

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to do with that contract. You rather if that

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argument carried the day There will be no need

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for relief under section 365D of the code, because

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the normal response would be, of course, the

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debtor needs more time, it's only two months,

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give them six months. Perhaps in an ordinary

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case, like in Enron and others cited in the debtors'

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papers, where courts have given eight months,

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for example, to decide, in those cases that was

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probably reasonable, because those cases lasted

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many years. This case will be over, your honor,

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by... end of November with the sale of the assets

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that the debtors contemplate entering into is

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likely to conclude in November. So we don't have

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three, four, five, six, seven months here for

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the debtors to make a decision on this contract.

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The timing is really imminent. $20 million of

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out -of -pocket expense, you runner, is a large

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sum for our client. My client, PCP, is a California

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co -op. Its members are local farm farmers. They

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don't have the luxury, your honor, of being 20

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million dollars plus out of pocket just to perhaps

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increase the chance for the debtors and other

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creditors to potentially realize some benefit

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from these contracts if they end up being assumed

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as part of the sell process. Importantly, the

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letters have been in default under the supplied

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agreement for months prior to the petition date.

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We set forth in our papers that one of the requirements

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under the agreement to provide some level of

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protection for the suppliers was for the market

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to provide a $4 billion letter of credit. Despite

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many requests prior to the petition date, And

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even after the petition date, that LC was not

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issued compliance with the agreement. About a

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week or two ago, your honor, an LC was issued

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and we have agreed to it to move the process

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forward, but the LC as issued remains non -compliant

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with the product supply agreement. And that is

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for primarily one major reason. The supply agreement

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is a five -year agreement that goes through the

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2030 tomato production season. The LC that was

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issued to Iran goes only to March 25 of next

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year. So this LC is a six -month long LC. And

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why do I say that that provides rather little

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protection for the movements? Well, product is

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not expected to be shipped at least in initial

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phases, more likely until September or October.

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The agreement provides for payment terms, quantity

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to 30 days, depending on the situation. So, your

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honor, we are looking at the earliest payment

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by the debtors of the earliest possible invoice

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to come likely end of October or more likely

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in November. By that time, the salon of Assebuth

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have closed. The initial invoices, arguably,

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will be paid pursuant to the DIP budget. The

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DIP budget, the outside date, is March of next

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year. And we are told that that was the reason

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why the debtors wanted to limit the LC to March

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of 2026. But what happens to the board of the

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product that remains with the movements, post

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-production, which again will conclude... in

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October, so just in a month and a half from now,

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what happens to that product after March of next

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year? Will the debtors order the product to wind

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it down or to sell it off because it went to

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the wind down? Your Honor, that's what the debtors

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speculate they perhaps could do, but they do

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not commit of doing it. They do not commit to

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segregate any of the financing money to ensure

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that the 20 plus million dollars of costs that

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the movements are incurring solely for the debtors

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benefit, then that money will be escrowed and

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secured for the movements at the end of the day.

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So in essence what the debtors are asking is

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for the movements to entity to shelter the burden

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of the debtors entire tomato inventory only for

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the debtors to have the optionality of tell the

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prospective bidders that they have access to

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five years worth of tomato inventory, perhaps

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more, but at the same time, the debtors are not

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committing to pay for that. One of the potential

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resolutions which we believe is viable is to

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offer the movements an administrative claim,

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not for the entire five years of the production.

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because we understand the debtors would be hard

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pressed to do that at the moment but it should

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be an easy solution for the debtors to agree

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and agree now that the movement should have an

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allowed administrative claim only for the 2025

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tomato pack season that should provide the movements

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with comfort that there will be sufficient money

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in the case assuming again that the state is

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not administratively insolvent. At the same time,

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provide the debtors with the security and the

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benefit in discussions with their prospective

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buyers, in discussions with their existing customers,

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that they, in fact, will have sufficient inventory

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on hand. So you're under, at the end of the day,

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365D2 calls for a balancing test that you're

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under. must entertain here. The balance of harms

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should be spread equally under the current proposal

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without the relief that the movement seek. It

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is the movements that are scheduled to bear the

00:14:37.679 --> 00:14:42.279
entire burden. Your Honor, we respectfully state

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that that is simply not fair under the current

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facts and circumstances. With respect to our

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relief, Your Honor, request for state relief,

00:14:55.070 --> 00:14:59.149
we ask for that because the agreement itself

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contains deadlines applicable to both sides that

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provide for termination of the agreement in situations

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where cost is required and there are situations

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where no cost is required. One of the deadlines

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that is coming up is a deadline of October 21st

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of this year. that enables one party to send

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a termination notice, not for an imminent termination,

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but to terminate the agreement at the end of

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the initial five -year period. So that's part

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of the relief you're under that we have also

00:15:37.230 --> 00:15:41.690
requested. If the move -ins wanted to and they

00:15:41.690 --> 00:15:44.809
have not yet made the decision to do so, they

00:15:44.809 --> 00:15:47.789
could send a termination notice in accordance

00:15:47.789 --> 00:15:52.519
with the agreement. So, Your Honor, I know I

00:15:52.519 --> 00:15:54.340
said a lot. I would pause to see if Your Honor

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has any questions. And if not, I will turn it

00:15:57.580 --> 00:16:01.039
over to Mr. Zuber to address the least issue

00:16:01.039 --> 00:16:04.620
that does not involve PCB. All right. Thank you,

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Mr. Young. Mr. Zuber, good morning. Good morning,

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Your Honor. Thank you. So, Your Honor, I wanted

00:16:11.610 --> 00:16:14.429
to address two issues, the first being the so

00:16:14.429 --> 00:16:17.470
-called integration or severability issue. As

00:16:17.470 --> 00:16:20.389
the movements have set forth in particular, Morningstar,

00:16:21.289 --> 00:16:23.750
because PCP is not a party to the leaseback agreement,

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we've taken the position that the supply agreement

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and the leaseback agreement are, in fact, integrated

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related agreements such that they need to be

00:16:33.149 --> 00:16:37.159
assumed or rejected together. They can't be separated.

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So, you know, the debtor can't assume and take

00:16:40.179 --> 00:16:41.940
the benefits of the supply agreement without

00:16:41.940 --> 00:16:45.320
also assuming and taking the benefits or burdens

00:16:45.320 --> 00:16:49.559
as they may be of the lease back agreement. The

00:16:49.559 --> 00:16:51.879
debtors have taken the position and by way of

00:16:51.879 --> 00:16:53.620
the committee and the lenders have all taken

00:16:53.620 --> 00:16:56.279
the position that that issue is premature. That,

00:16:56.279 --> 00:16:59.299
you know, nobody is... yet asked the court to

00:16:59.299 --> 00:17:02.120
allow the assumption or rejection of one agreement

00:17:02.120 --> 00:17:05.059
but not compel the assumption or rejection of

00:17:05.059 --> 00:17:09.240
the other interrelated integrated agreement so

00:17:09.240 --> 00:17:11.460
to the extent the court is inclined to defer

00:17:11.460 --> 00:17:15.220
decision on that we would just request a couple

00:17:15.220 --> 00:17:18.490
things one we would like to tee that issue up

00:17:18.490 --> 00:17:20.930
for an evidentiary hearing sufficiently in advance

00:17:20.930 --> 00:17:25.210
of the October 31st deadline by which either

00:17:25.210 --> 00:17:27.589
party, again with or without cause, could seek

00:17:27.589 --> 00:17:29.990
to terminate the supply agreement in accordance

00:17:29.990 --> 00:17:34.230
with its terms. So one thing that I saw in the

00:17:34.230 --> 00:17:36.470
response papers is the debtors say they intend

00:17:36.470 --> 00:17:40.730
to be finished with the plant by September 28th.

00:17:40.730 --> 00:17:43.089
They don't say whether they intend to reject

00:17:43.089 --> 00:17:45.670
that agreement, but it would seem logical that

00:17:45.670 --> 00:17:48.309
if they have no further use for the plant by

00:17:48.309 --> 00:17:51.309
September 28th, that perhaps a way to move forward

00:17:51.309 --> 00:17:54.029
with this integration issue is for the debtors

00:17:54.029 --> 00:17:56.849
to file their notice of proposed rejection of

00:17:56.849 --> 00:17:58.990
the lease agreement, at which point we could

00:17:59.930 --> 00:18:02.769
say if we chose that they could only do so if

00:18:02.769 --> 00:18:05.029
they also seek to reject the supply agreement

00:18:05.029 --> 00:18:07.690
and we can have an evidentiary hearing on that

00:18:07.690 --> 00:18:10.509
issue because depending upon how your honor were

00:18:10.509 --> 00:18:14.650
to rule on that issue may determine how at least

00:18:14.650 --> 00:18:16.769
Morningstar would like to proceed with respect

00:18:16.769 --> 00:18:19.289
to termination or not terminating the supply

00:18:19.289 --> 00:18:23.049
agreement. So we would prefer not to argue the

00:18:23.049 --> 00:18:25.789
substance of the integration points today, particularly

00:18:25.789 --> 00:18:29.210
because the other parties have taken the position

00:18:29.210 --> 00:18:30.950
that it's not before the court and didn't address

00:18:30.950 --> 00:18:33.450
the merits. We would certainly, if the court

00:18:33.450 --> 00:18:36.930
is not inclined to grant the motion today, request

00:18:36.930 --> 00:18:38.690
that that issue be deferred for another day.

00:18:38.710 --> 00:18:42.230
But again, we would really need to have an evidentiary

00:18:42.230 --> 00:18:44.430
hearing, if Your Honor would accommodate that.

00:18:45.150 --> 00:18:47.430
And again, I think the mechanism potentially

00:18:47.430 --> 00:18:51.410
could be a notice of proposed rejection as of

00:18:51.410 --> 00:18:53.910
September 28th, and then we could adjudicate

00:18:53.910 --> 00:18:57.269
whether the debtors would be permitted to reject

00:18:57.269 --> 00:19:01.509
the lease agreement, but not reject the supply

00:19:01.509 --> 00:19:05.269
agreement as well. So again, we believe that

00:19:05.269 --> 00:19:07.309
these agreements are integrated, that they need

00:19:07.309 --> 00:19:09.849
to be assumed or rejected completely together,

00:19:10.369 --> 00:19:12.829
not piecemeal. You can't cherry pick, but again,

00:19:12.930 --> 00:19:16.430
we would... We would reserve all substantive

00:19:16.430 --> 00:19:18.750
legal arguments on that integration issue. Again,

00:19:18.750 --> 00:19:20.690
we believe it should be an evidentiary hearing

00:19:20.690 --> 00:19:22.869
where Your Honor could listen to the parties

00:19:22.869 --> 00:19:25.630
discuss how those agreements came into being,

00:19:25.970 --> 00:19:29.450
what the intent of the parties were, and to what

00:19:29.450 --> 00:19:31.670
extent those agreements are integrated and should

00:19:31.670 --> 00:19:34.970
be dealt with as one agreement. So that's our

00:19:34.970 --> 00:19:37.630
position on the integration severability issue,

00:19:37.890 --> 00:19:39.529
Your Honor. If Your Honor has questions, I'd

00:19:39.529 --> 00:19:41.170
be happy to address them. Otherwise, I can move

00:19:41.170 --> 00:19:44.450
on to my other small issue. No, thank you. I

00:19:44.450 --> 00:19:47.309
understand it. Please move on. Okay, Your Honor,

00:19:47.309 --> 00:19:50.589
the other issue that we raised, for lack of a

00:19:50.589 --> 00:19:53.430
better description, I'll call it the 365D3 issue.

00:19:54.349 --> 00:19:57.009
I would recognize that, you know, the motion

00:19:57.009 --> 00:20:00.289
of compel did not directly request that the debtor

00:20:00.289 --> 00:20:04.569
comply with section 365D3, but in the initial

00:20:04.569 --> 00:20:07.950
Sherwood Declaration, certain environmental issues

00:20:07.950 --> 00:20:10.990
and concerns were raised. The parties have engaged

00:20:10.990 --> 00:20:14.670
in a number of discussions about these environmental

00:20:14.670 --> 00:20:19.250
concerns. We've gone back and forth, and we really

00:20:19.250 --> 00:20:21.730
have unfortunately not been able to come to an

00:20:21.730 --> 00:20:23.690
agreement. But we would respectfully submit to

00:20:23.690 --> 00:20:27.230
Your Honor that the consideration of the D3 and

00:20:27.230 --> 00:20:30.009
post -petition compliance is of sufficient importance

00:20:30.009 --> 00:20:34.269
from a health and safety consideration that Your

00:20:34.269 --> 00:20:37.349
Honor should consider that today. Again, I don't

00:20:37.349 --> 00:20:40.269
want to really rehash all the specific arguments

00:20:40.269 --> 00:20:43.009
we made. Those are set forth in the two declarations.

00:20:43.309 --> 00:20:47.029
But a big picture. You know, we believe that

00:20:47.029 --> 00:20:51.210
the plant is not being operated with a safe and

00:20:51.210 --> 00:20:54.390
properly functioning water system, that there

00:20:54.390 --> 00:20:58.309
is necessary testing for things like lead and

00:20:58.309 --> 00:21:01.210
copper and aluminum that are required to be done,

00:21:01.690 --> 00:21:03.170
which haven't been done. And if they have been

00:21:03.170 --> 00:21:05.630
done, we have not seen the results. The debtors

00:21:05.630 --> 00:21:08.470
have taken the position that much of this is

00:21:08.470 --> 00:21:10.710
pre -petition. They've also taken the position

00:21:10.710 --> 00:21:13.089
that, you know, my client bought this property

00:21:13.089 --> 00:21:16.619
back in an as is. condition, but as we said in

00:21:16.619 --> 00:21:19.259
the papers, we believe that these are ongoing

00:21:19.259 --> 00:21:23.519
post -petition compliance obligations. Dalmati

00:21:23.519 --> 00:21:25.740
needs to comply with applicable environmental

00:21:25.740 --> 00:21:27.839
laws. They need to make sure that the water system

00:21:27.839 --> 00:21:30.859
is safe and operating properly. With all due

00:21:30.859 --> 00:21:32.779
respect to the debtors, having bottled water

00:21:32.779 --> 00:21:35.539
on site is not a substitute for a properly functioning

00:21:35.539 --> 00:21:39.319
and safe water system. As indicated by Mr. Sherwood

00:21:39.319 --> 00:21:41.779
in his supplemental declaration, there are these

00:21:41.779 --> 00:21:44.220
flushes going on. There are 30 ,000 gallons of

00:21:44.220 --> 00:21:46.200
water being flushed out to agricultural land.

00:21:46.559 --> 00:21:48.319
We don't know if that water is clean. We don't

00:21:48.319 --> 00:21:50.599
know if it's contaminated. The debtors have not

00:21:50.599 --> 00:21:52.680
done the sampling and the testing. And again,

00:21:52.720 --> 00:21:55.380
if they have... We have not seen the results.

00:21:56.160 --> 00:21:58.000
They're supposed to do bacteria testing. They're

00:21:58.000 --> 00:22:00.359
supposed to be testing for heavy metals. These

00:22:00.359 --> 00:22:03.079
are real and significant environmental concerns.

00:22:04.799 --> 00:22:06.700
So to the extent that the court is inclined,

00:22:06.859 --> 00:22:09.160
we would like the debtor to be directed to comply.

00:22:09.460 --> 00:22:11.589
They've indicated they will. They're aware of

00:22:11.589 --> 00:22:13.569
their obligations under D3, that they intend

00:22:13.569 --> 00:22:16.589
to comply. The question is, what are those obligations

00:22:16.589 --> 00:22:19.109
and how do they comply? But again, I think these

00:22:19.109 --> 00:22:21.670
are health and safety considerations. They're

00:22:21.670 --> 00:22:23.990
discharging water. They're not testing. We don't

00:22:23.990 --> 00:22:26.650
have a properly functioning water system. And

00:22:26.650 --> 00:22:29.990
we believe that all of those are ongoing post

00:22:29.990 --> 00:22:32.509
-petition obligations that they must address

00:22:32.509 --> 00:22:38.869
under Section 365 D3. All right. Thank you, Mr.

00:22:39.069 --> 00:22:42.400
Zuber. At this point, I don't have questions.

00:22:42.500 --> 00:22:47.460
I may turn to both of you after further argument.

00:22:47.980 --> 00:22:50.680
Let me hear from counsel for the debtor first.

00:22:50.980 --> 00:22:53.559
Thank you. Thank you, Judge. Good morning, Your

00:22:53.559 --> 00:22:56.299
Honor. Natan Hammerman from HSF Cramer on behalf

00:22:56.299 --> 00:23:00.019
of the debtors. Can you hear me okay? Yes, I

00:23:00.019 --> 00:23:04.269
can. Thank you. Wonderful. Thank you. We have

00:23:04.269 --> 00:23:06.769
the feeling here that as much as Morningstar

00:23:06.769 --> 00:23:10.069
and PCP would like to focus on other items, the

00:23:10.069 --> 00:23:13.269
real motion before the court is a motion to compel

00:23:13.269 --> 00:23:15.589
the debtors to assume or reject these contracts.

00:23:16.210 --> 00:23:18.650
And that was made mere weeks after the petition

00:23:18.650 --> 00:23:21.029
date and is being heard now less than two months

00:23:21.029 --> 00:23:24.349
into this highly complex bankruptcy. The motion

00:23:24.349 --> 00:23:28.890
is frankly unprecedented in its pace and it should

00:23:28.890 --> 00:23:31.880
be denied as unwarranted. At the outset, Your

00:23:31.880 --> 00:23:33.779
Honor, we'd like to note that movements have

00:23:33.779 --> 00:23:36.880
failed to produce a single case supporting their

00:23:36.880 --> 00:23:38.980
motion on an expedited timeline such as this

00:23:38.980 --> 00:23:41.819
one. And this is true for any of the forms of

00:23:41.819 --> 00:23:44.059
relief that they're asking for, accelerating

00:23:44.059 --> 00:23:46.640
the assumption deadline, lifting the stay under

00:23:46.640 --> 00:23:50.700
362, or request for adequate protection insofar

00:23:50.700 --> 00:23:54.460
as one was actually made. Your honor's read the

00:23:54.460 --> 00:23:56.000
papers, I don't need to go through everything,

00:23:56.160 --> 00:23:59.799
but obviously the section 365 provides us 120

00:23:59.799 --> 00:24:02.220
days to assume or reject non -residential leases

00:24:02.220 --> 00:24:06.759
and until confirmation for other executive contracts.

00:24:07.220 --> 00:24:10.779
Efforts to accelerate the schedule are routinely

00:24:10.779 --> 00:24:13.880
denied. We cited numerous cases on this on page

00:24:13.880 --> 00:24:17.640
11, paragraph 21 of our objection, and even in

00:24:17.640 --> 00:24:20.720
the rare cases where a motion to compel is granted,

00:24:21.279 --> 00:24:24.589
it's usually far later in the case and giving

00:24:24.589 --> 00:24:27.210
a debtor far more time than here. And that was

00:24:27.210 --> 00:24:31.430
paragraph 22 of our objection. We think the movements,

00:24:31.569 --> 00:24:33.789
we know the movements bear the burden here. We

00:24:33.789 --> 00:24:36.829
think they've utterly failed. The most important

00:24:36.829 --> 00:24:40.910
consideration according to the case law is that

00:24:40.910 --> 00:24:43.630
the court should consider motions to compel the

00:24:43.630 --> 00:24:46.130
debtors time consistent with the broad purpose

00:24:46.130 --> 00:24:49.210
of chapter 11, which is to permit the successful

00:24:49.210 --> 00:24:54.869
rehabilitation of the debtors. Interests of creditors

00:24:54.869 --> 00:24:58.170
collectively and the bankrupt estate as a whole

00:24:58.170 --> 00:25:00.890
do not yield to the convenience or advantage

00:25:00.890 --> 00:25:03.230
of one creditor out of many. That's the physician

00:25:03.230 --> 00:25:06.589
health case that we cited on page 16 of our objection.

00:25:07.210 --> 00:25:11.950
Here. The debtors are rightfully focused on rehabilitating

00:25:11.950 --> 00:25:14.990
their business through a going concern sale process

00:25:14.990 --> 00:25:19.250
to benefit and maximize value for all stakeholders.

00:25:19.609 --> 00:25:23.369
All stakeholders deserve a sale process where

00:25:23.369 --> 00:25:26.390
the bidders will bid as much as possible. And

00:25:26.390 --> 00:25:28.609
to achieve that, the debtors want optionality.

00:25:28.960 --> 00:25:32.000
They don't want the court to predetermine that

00:25:32.000 --> 00:25:34.599
they must assume or reject a particular contract

00:25:34.599 --> 00:25:37.039
because of the interests of one set of movements.

00:25:37.680 --> 00:25:39.700
That would put the interests of that one set

00:25:39.700 --> 00:25:42.220
of movements ahead of the interests of the estate

00:25:42.220 --> 00:25:44.960
as a whole. Instead, the debtors should be able

00:25:44.960 --> 00:25:47.779
to decide with the involvement of the eventual

00:25:47.779 --> 00:25:50.539
buyers, or the debtors should be able to decide

00:25:50.539 --> 00:25:52.319
based on their view of what's in the interests

00:25:52.319 --> 00:25:55.680
of all stakeholders, not just one. And I would

00:25:55.680 --> 00:25:57.640
note, Your Honor, that the intelligent case,

00:25:57.799 --> 00:26:02.769
which we cited, 268 Bankruptcy Reporter 723 actually

00:26:02.769 --> 00:26:05.750
says we're going to give time to assume or reject

00:26:05.750 --> 00:26:08.910
because of a sale process that's ongoing. Move

00:26:08.910 --> 00:26:11.049
-ins don't really have any answer to this. Their

00:26:11.049 --> 00:26:14.769
focus is on themselves alone. At best, they pay

00:26:14.769 --> 00:26:17.539
some lip service to the idea that the supply

00:26:17.539 --> 00:26:20.279
agreement is valuable to the estate because it

00:26:20.279 --> 00:26:23.079
supposedly has below market pricing, which in

00:26:23.079 --> 00:26:24.980
our view actually militates against them because

00:26:24.980 --> 00:26:27.700
it means the harm that would befall them as a

00:26:27.700 --> 00:26:29.640
result of delayed rejection would be unlikely

00:26:29.640 --> 00:26:33.500
to materialize. I won't run through all of the

00:26:33.500 --> 00:26:35.319
factors, Your Honor. Those are in our papers.

00:26:35.380 --> 00:26:38.039
I'm going to focus for a moment on the balance

00:26:38.039 --> 00:26:40.279
of the harms here, which is I think where the

00:26:40.279 --> 00:26:44.019
main play is. The harm to the debtors and by

00:26:44.019 --> 00:26:46.750
extension all stakeholders is that this Chapter

00:26:46.750 --> 00:26:49.490
11 proceeding may unravel. And I'll start again

00:26:49.490 --> 00:26:51.809
with the sale process. It's self -evident to

00:26:51.809 --> 00:26:54.990
us that in the midst of the sale process, movements

00:26:54.990 --> 00:26:57.589
should not be able to force the debtors to decide

00:26:57.589 --> 00:27:00.250
prematurely whether to continue these contracts,

00:27:00.410 --> 00:27:03.250
one of which has the five -year term plus extensions.

00:27:04.069 --> 00:27:07.049
Making the wrong decision could be costly and

00:27:07.049 --> 00:27:09.630
reduce the debtor's eventual sale price, and

00:27:09.630 --> 00:27:12.069
the detriment would be far in excess of the alleged

00:27:12.069 --> 00:27:15.769
good to be achieved. by one individual supplier,

00:27:15.990 --> 00:27:18.849
especially one who continues to receive post

00:27:18.849 --> 00:27:20.829
-petition performance. There's not an alleged

00:27:20.829 --> 00:27:25.569
non -payment of any kind and is not nearly as

00:27:25.569 --> 00:27:27.809
at risk as it contends, which I'll get to in

00:27:27.809 --> 00:27:32.049
a moment. The harm to the estate is multiplied

00:27:32.049 --> 00:27:34.150
by the complexity of the case. There's over a

00:27:34.150 --> 00:27:36.690
billion in assets and liabilities, over a thousand

00:27:36.690 --> 00:27:39.029
claimants, and we should be allowed to figure

00:27:39.029 --> 00:27:41.170
out what to do with this large number of contracts

00:27:41.170 --> 00:27:46.250
on our pace. Many of the debtors' contracts work

00:27:46.250 --> 00:27:49.390
exactly like the supply agreement here. And if

00:27:49.390 --> 00:27:51.990
PCP and Morningstar get to jump the line with

00:27:51.990 --> 00:27:54.910
premature relief, other vendors will try to do

00:27:54.910 --> 00:27:57.369
the same, throwing these cases into disarray.

00:27:57.670 --> 00:28:00.289
And even if those other motions are denied, the

00:28:00.289 --> 00:28:02.390
distraction on the business during the critical

00:28:02.390 --> 00:28:06.750
PAC season would be harmful. Now, the harm to

00:28:06.750 --> 00:28:09.869
PCP and Morningstar, on the other hand, is, in

00:28:09.869 --> 00:28:12.869
our view, speculative and effectively minimized.

00:28:13.500 --> 00:28:16.259
As to the lease, I'll start there. Morningstar

00:28:16.259 --> 00:28:19.240
actually failed to identify any harm by letting

00:28:19.240 --> 00:28:21.420
the debtors decide on assumption or rejection

00:28:21.420 --> 00:28:23.700
on the ordinary schedule. I'll come back to the

00:28:23.700 --> 00:28:26.559
365D3 stuff in a moment. That's actually not

00:28:26.559 --> 00:28:28.579
before the court, but they've not identified

00:28:28.579 --> 00:28:31.220
any reason to accelerate the assumption or rejection

00:28:31.220 --> 00:28:34.940
deadline. Any harm to them on that account. For

00:28:34.940 --> 00:28:37.059
the supply agreement, there's actually multiple

00:28:37.059 --> 00:28:39.380
reasons to conclude that the harm asserted by

00:28:39.380 --> 00:28:42.900
PCP is overstated. First, They might have had

00:28:42.900 --> 00:28:45.019
an argument if they didn't have the letter of

00:28:45.019 --> 00:28:47.859
credit, but they do. That's what they bargained

00:28:47.859 --> 00:28:49.880
for, and that should be the end of the matter.

00:28:50.579 --> 00:28:52.799
Your Honor, we heard today the argument that

00:28:52.799 --> 00:28:55.779
the letter of credit doesn't somehow comply with

00:28:55.779 --> 00:28:58.559
the requirements of the product supply agreement.

00:28:59.059 --> 00:29:01.220
That's not accurate. Product supply agreement

00:29:01.220 --> 00:29:04.180
section 3 .1, which Your Honor has, does not

00:29:04.180 --> 00:29:07.609
provide any requirement. except subparagraph

00:29:07.609 --> 00:29:09.849
one of that section does not provide any requirement

00:29:09.849 --> 00:29:13.289
that the letter of credit be of five year duration.

00:29:13.910 --> 00:29:15.789
Letters of credit are not usually a five years

00:29:15.789 --> 00:29:19.910
duration. So that would not work. That was not

00:29:19.910 --> 00:29:22.390
a requirement here. There's no noncompliance.

00:29:22.490 --> 00:29:24.990
They have the letter of credit. That is the protection

00:29:24.990 --> 00:29:27.750
they bargained for. And the bargain for that

00:29:27.750 --> 00:29:30.670
protection, knowing all of the things that they

00:29:30.670 --> 00:29:33.769
came before you with today. that they would incur

00:29:33.769 --> 00:29:35.849
massive costs at the beginning of the season,

00:29:36.210 --> 00:29:39.410
according to them, knowing that they weren't

00:29:39.410 --> 00:29:43.069
going to be paid for some time thereafter. Notwithstanding

00:29:43.069 --> 00:29:45.990
that, the only protection they bargained for

00:29:45.990 --> 00:29:48.769
in the product supply agreement was this $4 million

00:29:48.769 --> 00:29:51.849
letter of credit. And that's what they have.

00:29:52.190 --> 00:29:55.589
So in our view, that should be the beginning

00:29:55.589 --> 00:29:57.849
and end. They have the protection they're entitled

00:29:57.849 --> 00:30:00.670
to under the product supply agreement. But that's

00:30:00.670 --> 00:30:03.549
not the only reason the harm. that they're concerned

00:30:03.549 --> 00:30:07.289
about is overstated. We now also have, Your Honor,

00:30:07.349 --> 00:30:10.549
the dip facility, which has been finalized, $165

00:30:10.549 --> 00:30:15.450
million of new money. And that was obtained for

00:30:15.450 --> 00:30:19.329
the express purpose of paying for the budgeted

00:30:19.329 --> 00:30:23.450
costs of the 2025 pack season, which includes

00:30:23.450 --> 00:30:26.329
tomato products. That's exactly the reason we

00:30:26.329 --> 00:30:28.269
borrowed the money. That's what it's there for.

00:30:32.039 --> 00:30:34.740
So, Your Honor, what else did this debtor say

00:30:34.740 --> 00:30:37.339
about the LC and the DIP? They say that it's

00:30:37.339 --> 00:30:40.240
going to expire in March, and movements might

00:30:40.240 --> 00:30:43.079
sell their products later than that. But the

00:30:43.079 --> 00:30:45.539
sale will be in November, and by that time, they'll

00:30:45.539 --> 00:30:48.619
know for sure the state of their contract. So

00:30:48.619 --> 00:30:51.559
the idea that the termination in March of the

00:30:51.559 --> 00:30:55.420
LC or the DIP, that's not a justification for

00:30:55.420 --> 00:31:01.099
accelerating anything here. The third mitigation

00:31:01.099 --> 00:31:05.640
issue, Your Honor. The sale process contemplates

00:31:05.640 --> 00:31:08.619
a going concern sale, and the debtors have a

00:31:08.619 --> 00:31:11.599
stocking horse bid here for a going concern sale,

00:31:11.640 --> 00:31:16.099
which includes the tomato business. Fourth, by

00:31:16.099 --> 00:31:18.859
Move -In's own estimation, their hypothesized

00:31:18.859 --> 00:31:21.579
harm, namely that no one buys their tomatoes,

00:31:22.059 --> 00:31:25.819
is unlikely to occur. Move -ins repeatedly express

00:31:25.819 --> 00:31:28.519
that the supply agreement is exceedingly valuable

00:31:28.519 --> 00:31:30.960
and how foolish it would be for anybody not to

00:31:30.960 --> 00:31:33.960
assume it. If Move -ins believe what they themselves

00:31:33.960 --> 00:31:37.180
say, an assumption is either very likely or someone

00:31:37.180 --> 00:31:39.859
will want to buy their tomatoes on wind down.

00:31:40.660 --> 00:31:43.119
Fifth, the majority of the tomatoes are common

00:31:43.119 --> 00:31:47.559
formula, what was called generic. They can be

00:31:47.559 --> 00:31:50.900
resold. This reduces Move -ins economic exposure.

00:31:51.319 --> 00:31:54.539
The limited exposure on the proprietary blends,

00:31:55.039 --> 00:31:57.660
which only PCP is preparing, not Morningstar,

00:31:58.039 --> 00:32:00.299
can be sold on Windown if the debtor's eventual

00:32:00.299 --> 00:32:08.259
purchaser doesn't buy the tomato business. PCP

00:32:08.259 --> 00:32:11.220
responds to that by arguing, well, maybe the

00:32:11.220 --> 00:32:13.579
debtors will no longer have employees and won't

00:32:13.579 --> 00:32:17.559
be able to sell the products on Windown. This

00:32:17.559 --> 00:32:20.359
is kind of confusing. There'll still be a wind

00:32:20.359 --> 00:32:22.759
down after the sale. If the tomato business is

00:32:22.759 --> 00:32:26.180
not in the sale, the wind down entity could definitely

00:32:26.180 --> 00:32:29.279
still sell the products. And again, more importantly,

00:32:29.440 --> 00:32:31.839
this is not an issue for today, two months into

00:32:31.839 --> 00:32:35.640
the case. There's nothing that prevents PCP and

00:32:35.640 --> 00:32:38.140
Morningstar from bringing this motion again,

00:32:38.539 --> 00:32:41.599
if the eventual buyers don't buy the tomato business,

00:32:42.000 --> 00:32:44.779
if the wind down doesn't cover the products.

00:32:45.559 --> 00:32:47.799
You know, in that circumstance, they could come

00:32:47.799 --> 00:32:50.859
back, which would be you know, a more normal

00:32:50.859 --> 00:32:53.519
time frame in which to bring a motion like this.

00:32:53.579 --> 00:32:57.019
By then, everything that has been ordered and

00:32:57.019 --> 00:33:00.200
delivered will have been paid for, and the exposure

00:33:00.200 --> 00:33:03.480
will be far more limited. I want to make clear

00:33:03.480 --> 00:33:06.160
a few other points about what the movements have

00:33:06.160 --> 00:33:09.319
said and didn't say in reply and in argument

00:33:09.319 --> 00:33:12.440
today. There's very little limited attempt to

00:33:12.440 --> 00:33:14.319
balance any of the other factors that courts

00:33:14.319 --> 00:33:19.130
consider. only the balance of the harm. They

00:33:19.130 --> 00:33:21.190
don't deny exclusivity has ended. They don't

00:33:21.190 --> 00:33:23.769
deny that this motion is inconsistent with the

00:33:23.769 --> 00:33:26.529
congressional mandated scheme of Chapter 11.

00:33:27.029 --> 00:33:30.009
They don't deny that the motion would be contrary

00:33:30.009 --> 00:33:32.710
to Chapter 11's purpose. They concede there are

00:33:32.710 --> 00:33:35.470
no cases in their favor. They fail to find any

00:33:35.470 --> 00:33:38.089
precedent that supports their request. And they

00:33:38.089 --> 00:33:39.789
don't even make any attempt to distinguish the

00:33:39.789 --> 00:33:42.809
cases we cited in our response. They nevertheless

00:33:42.809 --> 00:33:46.940
say, this case your honor this is the one why

00:33:46.940 --> 00:33:49.319
do they say that because they say they're incurring

00:33:49.319 --> 00:33:52.700
costs now and they're going to be paid later

00:33:52.700 --> 00:33:55.720
that's no different than any other vendor in

00:33:55.720 --> 00:33:58.680
this case and that's no different than many other

00:33:58.680 --> 00:34:02.039
vendors in cases that were already cited in enron

00:34:02.039 --> 00:34:05.230
for example which was cited the pardon moving

00:34:05.230 --> 00:34:08.210
to compel assumption or rejection contended that

00:34:08.210 --> 00:34:10.710
it would incur millions of dollars to expand

00:34:10.710 --> 00:34:13.670
the gas pipeline that it might not ever get repaid,

00:34:13.949 --> 00:34:16.969
and that that sum might not be necessary if there

00:34:16.969 --> 00:34:19.190
was an assumption or rejection more quickly.

00:34:19.610 --> 00:34:21.809
The court did not find that compelling. It said

00:34:21.809 --> 00:34:24.829
the debtor is entitled to run its bankruptcy.

00:34:25.570 --> 00:34:28.690
In the Mayor Pollack Steel Corp case, which we

00:34:28.690 --> 00:34:31.389
cited, the party seeking early assumption or

00:34:31.389 --> 00:34:34.230
rejected A rejection noted that it had to process

00:34:34.230 --> 00:34:37.050
and ship scrap metal at costs before it ever

00:34:37.050 --> 00:34:39.570
got paid. And the court denied the motion there,

00:34:40.050 --> 00:34:45.489
too. And it spoke very tellingly. It said a creditor

00:34:45.489 --> 00:34:48.570
would be paid less than the full amount owed

00:34:48.570 --> 00:34:51.070
to it was no reason to accelerate a decision.

00:34:51.690 --> 00:34:54.440
It's no answer, said the court, to argue. as

00:34:54.440 --> 00:34:56.920
the movements did there, that it is a creditor,

00:34:57.159 --> 00:34:59.039
among many others, which will probably be paid

00:34:59.039 --> 00:35:01.119
less than the full amount owed to it under the

00:35:01.119 --> 00:35:03.739
terms of any reorganizational plan of the debtor.

00:35:04.260 --> 00:35:07.420
In other words, the idea that a vendor might

00:35:07.420 --> 00:35:10.559
come out of pocket and might not get fully repaid

00:35:10.559 --> 00:35:13.679
is not enough. And if anything, Your Honor, for

00:35:13.679 --> 00:35:16.139
the reasons I said already, movements are less

00:35:16.139 --> 00:35:19.340
sympathetic than most others here. The exposure

00:35:19.340 --> 00:35:22.480
they complain about the costs that they have

00:35:22.480 --> 00:35:24.800
to come out of pocket. That's something they

00:35:24.800 --> 00:35:27.079
knew about when they entered into this agreement.

00:35:27.460 --> 00:35:30.420
And what did they bargain for? A $4 million letter

00:35:30.420 --> 00:35:34.400
of credit, and they got it. One last point that

00:35:34.400 --> 00:35:38.440
I think bears mentioning on this. PCP and Morningstar

00:35:38.440 --> 00:35:40.860
said in their reply papers that the court should

00:35:40.860 --> 00:35:44.000
evaluate the present facts. That's at page five

00:35:44.000 --> 00:35:47.780
of their reply. The present facts are that they

00:35:47.780 --> 00:35:51.559
have the letter of credit. There is a final dip

00:35:51.559 --> 00:35:55.400
to fund the PAC season. A sale process is underway.

00:35:56.079 --> 00:35:58.300
There is a stocking horse bidder for a going

00:35:58.300 --> 00:36:01.440
concern sale, and there are no allegations of

00:36:01.440 --> 00:36:05.880
non -payment. Those are the present facts. Their

00:36:05.880 --> 00:36:09.420
argument, by contrast, focuses on hypotheticals.

00:36:09.599 --> 00:36:12.679
What happens if, what happens if the contract

00:36:12.679 --> 00:36:15.619
is rejected, or if the sale cannot go forward,

00:36:15.880 --> 00:36:19.039
or if a wind down entity doesn't purchase their

00:36:19.039 --> 00:36:21.320
tomatoes. Those are not present facts. Those

00:36:21.320 --> 00:36:24.659
are future speculations. So bottom line here,

00:36:24.699 --> 00:36:26.739
Your Honor, the movement's primary relief should

00:36:26.739 --> 00:36:30.219
be denied as unwarranted or best premature. The

00:36:30.219 --> 00:36:32.619
debtors are entitled to their statutory mandated

00:36:32.619 --> 00:36:35.780
time to assume or reject, and the facts and circumstances

00:36:35.780 --> 00:36:39.440
here are not unique, let alone so amazingly unique.

00:36:39.690 --> 00:36:41.769
that it should be the first case in the history

00:36:41.769 --> 00:36:44.329
of the bankruptcy code where a motion to compel

00:36:44.329 --> 00:36:46.690
assumption or reject it should be granted so

00:36:46.690 --> 00:36:49.909
soon in the case. I'll turn briefly to some of

00:36:49.909 --> 00:36:52.510
the other points if that's okay. Let me just

00:36:52.510 --> 00:36:55.230
ask a quick question then I have a question which

00:36:55.230 --> 00:37:02.929
you may be about to address. The debtor's anticipated

00:37:02.929 --> 00:37:07.230
sale, the timing of it. Remind me the sale date.

00:37:08.399 --> 00:37:15.820
The sale hearing is November 18th. I'm going

00:37:15.820 --> 00:37:20.199
to ask you to address the issue of the integration

00:37:20.199 --> 00:37:23.380
and whether or not, if the court denies the motion

00:37:23.380 --> 00:37:28.639
this morning, whether we need an evidentiary

00:37:28.639 --> 00:37:32.260
hearing on that issue. In other words, would

00:37:32.260 --> 00:37:36.199
any buyer need to know what they're going to

00:37:36.139 --> 00:37:41.239
Either assume or reject and whether the leases

00:37:41.239 --> 00:37:46.179
both leases both Agreements need to be treated

00:37:46.179 --> 00:37:49.659
as as one in that process will facilitate the

00:37:49.659 --> 00:37:53.599
sale Okay, first of all, I got a note just while

00:37:53.599 --> 00:37:55.480
you were talking that I got the date wrong It's

00:37:55.480 --> 00:37:58.119
November 20th and not November 18. So let me

00:37:58.119 --> 00:38:02.389
fix that As to integration, we would come to

00:38:02.389 --> 00:38:04.929
that, or we'll come to it now, I guess. We don't

00:38:04.929 --> 00:38:06.630
think you need to decide on that today, and I

00:38:06.630 --> 00:38:09.329
think Mr. Zuber acknowledges that that does not

00:38:09.329 --> 00:38:13.389
need to be decided today. We agree that if we

00:38:13.389 --> 00:38:19.409
move to reject the lease and don't simultaneously

00:38:19.409 --> 00:38:21.849
move to reject the supply agreement, that that

00:38:21.849 --> 00:38:24.409
would be an appropriate time to consider that

00:38:24.409 --> 00:38:27.409
issue. I'm not yet sure that we need an evidentiary

00:38:27.409 --> 00:38:29.429
hearing on it. I suppose that should be something

00:38:29.429 --> 00:38:32.989
that the parties discuss, not negotiate in the

00:38:32.989 --> 00:38:35.329
middle of the court hearings. But do we need

00:38:35.329 --> 00:38:37.630
a hearing before the sale hearing, before I have

00:38:37.630 --> 00:38:41.050
to determine whether I am approving of a sale

00:38:41.050 --> 00:38:44.789
or approving of assumption of potential agreements

00:38:44.789 --> 00:38:48.590
as part of the sale? I think the answer to that

00:38:48.590 --> 00:38:52.880
is no. but I do because I don't think that that's

00:38:52.880 --> 00:38:57.500
necessarily the sale is dispositive of this issue

00:38:57.500 --> 00:39:01.360
or that the sale turns on this issue. I do however

00:39:01.360 --> 00:39:03.559
think that this may come up earlier than that

00:39:03.559 --> 00:39:07.039
as Mr. Zuber correctly notes. We're planning

00:39:07.039 --> 00:39:11.360
to finish using the facility on September 28th.

00:39:11.389 --> 00:39:15.670
or thereabouts. And after that, I do think that

00:39:15.670 --> 00:39:17.449
it would be appropriate time for a conversation

00:39:17.449 --> 00:39:20.110
between us and Mr. Zuber. And if we agree that

00:39:20.110 --> 00:39:22.690
we need to have an evidentiary hearing, we should

00:39:22.690 --> 00:39:26.369
get one scheduled on that, particularly if, and

00:39:26.369 --> 00:39:28.489
this is the conditionality that I'd like to preserve,

00:39:28.789 --> 00:39:31.349
particularly if we would like to move forward

00:39:31.349 --> 00:39:37.489
with rejection of one contract, the lease in

00:39:37.489 --> 00:39:40.769
particular. and not yet be in a position to decide

00:39:40.769 --> 00:39:44.489
or not want to reject the product supply agreement.

00:39:44.989 --> 00:39:47.329
So what I would think on that one, although I

00:39:47.329 --> 00:39:50.590
would have liked to have not done this on the

00:39:50.590 --> 00:39:54.110
fly in the courtroom, is that we should get together

00:39:54.110 --> 00:39:57.809
with Mr. Zuber. We should discuss that issue

00:39:57.809 --> 00:40:02.230
and have a status conference at some point, presumably

00:40:02.230 --> 00:40:05.590
right after September 28th, and come to your

00:40:05.590 --> 00:40:08.559
honor with a plan and an approach on that. Fair

00:40:08.559 --> 00:40:12.420
enough. Continue. Okay. Sure. Thank you. Okay.

00:40:12.480 --> 00:40:18.659
Let me turn quickly to, and in that regard, Judge,

00:40:18.699 --> 00:40:21.960
I would note that we're not conceding that this

00:40:21.960 --> 00:40:25.400
is a true lease yet. That's an issue we're reserving

00:40:25.400 --> 00:40:28.440
rights on. We'll come to that as well at a later

00:40:28.440 --> 00:40:30.539
time, I think, Phil, not something that needs

00:40:30.539 --> 00:40:33.139
to be decided today. There's a couple of forms

00:40:33.139 --> 00:40:35.699
of alternative relief that were asked for in

00:40:35.699 --> 00:40:37.559
the papers and a couple of different forms of

00:40:37.559 --> 00:40:39.320
alternative relief that were asked for today.

00:40:39.900 --> 00:40:41.820
On stay relief, I don't intend to spend very

00:40:41.820 --> 00:40:44.360
long on that. Stay relief in our view is just

00:40:44.360 --> 00:40:46.300
an end run around the breathing space provided

00:40:46.300 --> 00:40:49.679
by 365. The court should reject it for the same

00:40:49.679 --> 00:40:51.480
reason, that it should reject shortening debtors'

00:40:51.699 --> 00:40:55.139
time to assume or reject. I think there was a

00:40:55.139 --> 00:40:59.960
suggestion of allowing some future termination

00:40:59.960 --> 00:41:03.400
notice to be issued now. This again to me, I'm

00:41:03.400 --> 00:41:05.079
not quite sure I follow that new argument that

00:41:05.079 --> 00:41:07.619
was presented today, but it doesn't seem to me

00:41:07.619 --> 00:41:10.920
like a today issue, it's new. It would be detrimental

00:41:10.920 --> 00:41:13.079
to the value of the contract if there was some

00:41:13.079 --> 00:41:15.719
looming termination notice out there. And so

00:41:15.719 --> 00:41:17.260
we don't think that that should be permitted

00:41:17.260 --> 00:41:19.039
and we do think that that would be contrary to

00:41:19.039 --> 00:41:21.840
the state. We don't think it's justified either,

00:41:21.840 --> 00:41:23.840
as we pointed out in our papers. We don't think

00:41:23.840 --> 00:41:27.420
we've done anything warranting termination. It's

00:41:27.420 --> 00:41:29.500
true that the letter of credit was not issued

00:41:29.500 --> 00:41:31.420
pre -petition, but there was not a notice of

00:41:31.420 --> 00:41:33.420
termination and there was not a notice to cure

00:41:33.420 --> 00:41:38.440
in accordance with the contract. And now the

00:41:38.440 --> 00:41:40.300
letter of credit has been issued. And as I said,

00:41:40.300 --> 00:41:42.679
it is fully compliant with the requirements of

00:41:42.679 --> 00:41:47.480
3 .1 of the product agreement. Let me turn to

00:41:47.480 --> 00:41:50.429
adequate protection briefly. We don't think the

00:41:50.429 --> 00:41:52.030
movements are entitled to any sort of adequate

00:41:52.030 --> 00:41:55.130
protection here. No cases were cited where a

00:41:55.130 --> 00:41:58.469
court granted adequate protection in the form

00:41:58.469 --> 00:42:01.489
of liens to an individual with an executory contract.

00:42:02.590 --> 00:42:06.210
More important than that failure, however, is

00:42:06.210 --> 00:42:10.250
that we believe movements are adequately protected.

00:42:10.670 --> 00:42:12.610
The letter of credit, which I don't need to mention

00:42:12.610 --> 00:42:15.489
again, the facility, the budget, the stocking

00:42:15.489 --> 00:42:18.349
horse for a going concern sale. post -petition

00:42:18.349 --> 00:42:20.829
obligations to continue to pay rent and pay for

00:42:20.829 --> 00:42:25.429
goods, the rights under 503, 365D3, among others.

00:42:25.829 --> 00:42:28.150
All of those are forms of adequate protection

00:42:28.150 --> 00:42:31.929
that already exist, and we don't think there's

00:42:31.929 --> 00:42:35.690
further adequate protection that anybody should

00:42:35.690 --> 00:42:38.610
be entitled to here. There was a suggestion of

00:42:38.610 --> 00:42:41.750
escrowing money. That's a new argument again

00:42:41.750 --> 00:42:46.570
today. That's not how our ABL dip works. That

00:42:46.570 --> 00:42:49.550
would not work. no other vendors are escrowing

00:42:49.550 --> 00:42:53.010
money or money being escrowed for them, that

00:42:53.010 --> 00:42:56.710
would bring down our ability to borrow and fund

00:42:56.710 --> 00:42:59.010
things. So we don't think that that kind of suggestion

00:42:59.010 --> 00:43:05.230
made offhand in court works. And so for that

00:43:05.230 --> 00:43:08.190
reason, we think that that should be denied as

00:43:08.190 --> 00:43:12.789
well. On reply, movements conflate the UCC concept

00:43:12.789 --> 00:43:16.050
of adequate assurance of performance with adequate

00:43:16.050 --> 00:43:18.789
protection. They didn't cite the UCC in their

00:43:18.789 --> 00:43:21.130
moving papers. We don't think it was fair to

00:43:21.130 --> 00:43:24.570
do so on reply, but it doesn't seem to us in

00:43:24.570 --> 00:43:27.530
none of the cases they've cited support the idea

00:43:27.530 --> 00:43:30.739
that the adequate assurance is a future performance

00:43:30.739 --> 00:43:33.820
argument under the UCC, gives you an end run

00:43:33.820 --> 00:43:36.119
around the bankruptcy code, the automatic stay,

00:43:36.579 --> 00:43:38.940
or any provisions like that. That would strip

00:43:38.940 --> 00:43:41.000
away many of the protections provided in the

00:43:41.000 --> 00:43:44.099
bankruptcy code, and debtors, particularly debtors

00:43:44.099 --> 00:43:46.820
who sell goods, would be bombarded with requests

00:43:46.820 --> 00:43:50.119
from vendors to provide assurances. Nothing in

00:43:50.119 --> 00:43:54.780
the cases, as I said, supports that. And the

00:43:54.780 --> 00:43:56.820
court, for example, in Carlisle, which they cite,

00:43:56.900 --> 00:44:00.070
actually goes against them. It said, first of

00:44:00.070 --> 00:44:02.369
all, that was not even a purchase of goods case.

00:44:02.690 --> 00:44:05.889
And the court there said that within the bankruptcy,

00:44:06.230 --> 00:44:08.949
the idea of adequate assurances will fall considerably

00:44:08.949 --> 00:44:11.070
short of an absolute guarantee of performance.

00:44:11.369 --> 00:44:13.369
And what they're requesting here is a guarantee

00:44:13.369 --> 00:44:15.570
of full performance. And we don't think they're

00:44:15.570 --> 00:44:19.110
entitled to that here. Other comments, they claim

00:44:19.110 --> 00:44:21.469
we repudiated the contract. We think this is

00:44:21.469 --> 00:44:24.690
specious. Everybody's here fighting because everybody

00:44:24.690 --> 00:44:28.219
knows that the contract was not repudiated. They've

00:44:28.219 --> 00:44:30.860
threatened not to perform. They think that that

00:44:30.860 --> 00:44:33.400
would violate the stay. They complain about lack

00:44:33.400 --> 00:44:35.500
of communication. I think the documents and next

00:44:35.500 --> 00:44:37.119
to the papers show that there has been ample

00:44:37.119 --> 00:44:40.179
communication. They ask for a license to sell

00:44:40.179 --> 00:44:42.880
branded products. Again, this is a subject that

00:44:42.880 --> 00:44:47.519
can be tackled in December or February or March.

00:44:47.840 --> 00:44:49.840
This is not something that we need to worry about

00:44:49.840 --> 00:44:56.880
today. And all of these arguments, in our view,

00:44:57.119 --> 00:44:59.320
are one of two things. They're trying to negotiate

00:44:59.320 --> 00:45:01.880
with the court, or they're trying to throw things

00:45:01.880 --> 00:45:05.420
at a wall to see what sticks. And speaking of

00:45:05.420 --> 00:45:07.239
throwing things at the wall, for the first time

00:45:07.239 --> 00:45:10.199
on Friday afternoon, we were told that there

00:45:10.199 --> 00:45:13.219
is now a suggestion that the court should treat

00:45:13.219 --> 00:45:17.880
this motion as one for relief under 365D3. This

00:45:17.880 --> 00:45:20.340
is a brand new motion. They admit it in their

00:45:20.340 --> 00:45:23.429
papers. They admit it here today. It's not before

00:45:23.429 --> 00:45:26.570
you. If it will be presented to you, it should

00:45:26.570 --> 00:45:30.150
be presented to you in the right way, and we

00:45:30.150 --> 00:45:32.050
will respond to it. We do not agree that that

00:45:32.050 --> 00:45:34.130
should be taken up today. New arguments raised

00:45:34.130 --> 00:45:37.710
on the first time on reply are waived. But I

00:45:37.710 --> 00:45:40.369
do want to preview a few things because I want

00:45:40.369 --> 00:45:43.710
to put the court's mind at ease. We do not think

00:45:43.710 --> 00:45:46.130
the health and safety arguments are meritorious

00:45:46.130 --> 00:45:50.039
at all. We think they're just wrong. We did provide

00:45:50.039 --> 00:45:52.260
bacteria and aluminum results. They were next

00:45:52.260 --> 00:45:55.300
to our papers. That's Exhibit D, I think. It's

00:45:55.300 --> 00:45:59.380
pages 72 to 86 of our DOC at 369, the Golding

00:45:59.380 --> 00:46:02.340
Declaration. Showed bacteria is fine. Showed

00:46:02.340 --> 00:46:05.800
aluminum is fine. We're continuing to do testing

00:46:05.800 --> 00:46:08.599
on other things. That's true. And as the results

00:46:08.599 --> 00:46:12.480
come in, we will deal with them. We don't think,

00:46:12.539 --> 00:46:14.579
we don't understand at all why they think there's

00:46:14.579 --> 00:46:17.460
30 ,000 gallons of wastewater spilling out onto

00:46:17.460 --> 00:46:20.400
agricultural lands. We dispute that. That's a

00:46:20.400 --> 00:46:22.280
disagreement, a factual disagreement among the

00:46:22.280 --> 00:46:25.260
parties. We don't think that this is right. There's

00:46:25.260 --> 00:46:27.599
no wastewater because there's no tomato processing

00:46:27.599 --> 00:46:30.559
going on at this plant. So the idea that there's

00:46:30.559 --> 00:46:33.199
some flushing of water onto agricultural lands,

00:46:33.559 --> 00:46:36.079
we think that this is just wrong. We even provided

00:46:36.079 --> 00:46:37.860
photographs, Your Honor, at the end of our, I

00:46:37.860 --> 00:46:41.099
think it's page 86, of the same golden declaration

00:46:41.099 --> 00:46:44.280
that shows this agricultural land in a bone -dry

00:46:44.280 --> 00:46:47.019
condition. We think that this is just wrong.

00:46:47.840 --> 00:46:50.300
And look, Your Honor, even if there are some

00:46:50.300 --> 00:46:53.079
issues at Hanford, and let's keep in mind Hanford

00:46:53.079 --> 00:46:56.400
was purchased, as is there is a release in the

00:46:56.400 --> 00:46:59.519
agreement related to hazardous materials on site.

00:47:01.170 --> 00:47:04.090
They themselves acknowledge that it is an obsolete,

00:47:04.110 --> 00:47:07.250
inefficient plan, so there could very well be

00:47:07.250 --> 00:47:10.570
some issues at Hanford. I don't want to say that

00:47:10.570 --> 00:47:14.550
that might not exist. But everybody is going

00:47:14.550 --> 00:47:16.809
to do what they need to do. We will perform,

00:47:16.829 --> 00:47:18.949
we've said this over and over and over again,

00:47:19.010 --> 00:47:22.489
we will perform in accordance with our 365D3

00:47:22.489 --> 00:47:25.409
obligations while reserving all rights. We reserve

00:47:25.409 --> 00:47:27.150
all rights as to whether it's a true lease. We

00:47:27.150 --> 00:47:28.809
reserve all rights as to whether they're pre

00:47:28.809 --> 00:47:31.269
-petition defaults or post -petition defaults.

00:47:31.630 --> 00:47:33.869
We reserve the rights as to whether they're defaults

00:47:33.869 --> 00:47:36.670
at all. But we don't think that's an issue for

00:47:36.670 --> 00:47:40.469
today, and we don't think the situation is nearly

00:47:40.469 --> 00:47:42.369
as dire as they seem to say. They actually have

00:47:42.369 --> 00:47:44.510
the right under the lease to go on the property

00:47:44.510 --> 00:47:46.710
and perform work themselves. They've not tried

00:47:46.710 --> 00:47:48.989
to exercise that right, because I think they

00:47:48.989 --> 00:47:50.909
know that these problems are not what they say

00:47:50.909 --> 00:47:58.429
they are. I'll turn now to one point made in

00:47:58.429 --> 00:48:01.570
reply, which is the Alcala Farms Water Treatment

00:48:01.570 --> 00:48:04.429
Service Agreement. This is the ag lands that

00:48:04.429 --> 00:48:07.309
water is supposedly flowing out onto, but we

00:48:07.309 --> 00:48:10.989
dispute. And there was a contract, it was rejected,

00:48:11.170 --> 00:48:15.289
a contract for treatment services by the Alcala

00:48:15.289 --> 00:48:19.800
Farms folks. And they're contending that by rejecting

00:48:19.800 --> 00:48:22.920
that contract, that leaves us exposed to environmental

00:48:22.920 --> 00:48:25.619
concerns. We think this is both incorrect and

00:48:25.619 --> 00:48:28.980
somewhat ironic, actually. It's incorrect because

00:48:28.980 --> 00:48:32.099
Alcala was treating water wastewater, of which

00:48:32.099 --> 00:48:34.099
there's not. There's no tomato packing. There's

00:48:34.099 --> 00:48:36.420
no wastewater, a point they kind of continue

00:48:36.420 --> 00:48:40.579
to miss or gloss over or dispute. We have a separate

00:48:40.579 --> 00:48:43.119
third -party service provider that tests the

00:48:43.119 --> 00:48:46.059
water and that provides other regulatory and

00:48:46.059 --> 00:48:49.179
compliance services. Those are the folks whose

00:48:49.179 --> 00:48:52.320
names appear on all of the exhibits to Mr. Golding's

00:48:52.320 --> 00:48:56.260
declaration. Their comments about the Alcala

00:48:56.260 --> 00:48:58.340
Farms water services contract are also a little

00:48:58.340 --> 00:49:02.199
ironic. When the debtor was selling Hanford to

00:49:02.199 --> 00:49:04.719
Morningstar Kings, we offered them, do you want

00:49:04.719 --> 00:49:08.360
to assume this contract? We knew we didn't need

00:49:08.360 --> 00:49:09.860
it because we weren't going to be processing

00:49:09.860 --> 00:49:14.000
tomato there. And they said, you know what, no,

00:49:14.079 --> 00:49:15.679
we don't need to assume that contract. So they

00:49:15.679 --> 00:49:18.579
turned it down. Then when we filed the case and

00:49:18.579 --> 00:49:20.340
we filed this rejection motion because we knew

00:49:20.340 --> 00:49:24.960
there's no wastewater on this property, we called

00:49:24.960 --> 00:49:27.539
them again and we said, hey, we've got this up

00:49:27.539 --> 00:49:29.599
for rejection, particularly after they made this

00:49:29.599 --> 00:49:32.000
motion. Do you want us to pull this rejection

00:49:32.000 --> 00:49:34.219
motion? Do you want to assume this contract?

00:49:34.539 --> 00:49:38.579
And they again said no. They didn't object to

00:49:38.579 --> 00:49:40.239
the rejection. They didn't see this cause of

00:49:40.239 --> 00:49:42.119
some sort of environmental concern. They didn't

00:49:42.119 --> 00:49:46.940
see a thing. So to now come here and comment

00:49:46.940 --> 00:49:50.820
about this seems a little bit disingenuous on

00:49:50.820 --> 00:49:53.940
their part. And the last irony with respect to

00:49:53.940 --> 00:49:58.900
this is that the Al -Qaeda service contract shows

00:49:58.900 --> 00:50:02.760
precisely why we don't want the court to accelerate

00:50:02.760 --> 00:50:07.769
assumption or rejection. single individual facility,

00:50:07.929 --> 00:50:11.550
the Hanford facility. The debtors, in that case,

00:50:11.869 --> 00:50:14.369
this pre -petition, went to their buyers, Morningstar

00:50:14.369 --> 00:50:17.590
Kings, and said, do you want to assume or reject

00:50:17.590 --> 00:50:19.690
this contract? We didn't predetermine that for

00:50:19.690 --> 00:50:22.250
them. We asked them, what do they think? And

00:50:22.250 --> 00:50:25.150
they said, no, we don't want this. And we honor

00:50:25.150 --> 00:50:29.510
that as the seller. Now multiply that by whatever

00:50:29.510 --> 00:50:32.650
-fold, ten -fold. That's what we've got going

00:50:32.650 --> 00:50:35.389
in the sale process today before your honor.

00:50:35.480 --> 00:50:38.019
We've got an entire business. We're going out

00:50:38.019 --> 00:50:40.239
to the market. We are running a going concern

00:50:40.239 --> 00:50:44.360
sale process. We want to be able to speak to

00:50:44.360 --> 00:50:46.760
our buyers or make decisions that are in the

00:50:46.760 --> 00:50:49.519
best interests of the estate as a whole. And

00:50:49.519 --> 00:50:52.019
we don't think that it's right, just like it

00:50:52.019 --> 00:50:54.920
wasn't right for Alcala for us to make decisions

00:50:54.920 --> 00:50:57.679
for our buyer. We don't think, particularly as

00:50:57.679 --> 00:50:59.619
to the product supply agreement, that it should

00:50:59.619 --> 00:51:03.139
be right for us to make decisions for the buyer.

00:51:03.400 --> 00:51:08.519
of the eventual tornado business. I spoke a little

00:51:08.519 --> 00:51:13.199
bit about integration. I think that's all I've

00:51:13.199 --> 00:51:14.599
got, your honor, unless you have questions for

00:51:14.599 --> 00:51:17.699
me. I don't. Thank you very much. Thank you.

00:51:17.900 --> 00:51:20.239
Let me hear from the committee council. Thank

00:51:20.239 --> 00:51:23.780
you. Hi. Good morning. Miranda Russell, Morrison

00:51:23.780 --> 00:51:26.139
and Forrester, proposed council for the official

00:51:26.139 --> 00:51:28.900
committee of unsecured creditors. Your Honor,

00:51:29.059 --> 00:51:30.800
the committee filed a joiner to the debtor's

00:51:30.800 --> 00:51:34.119
objection at docket number 370. As stated therein,

00:51:34.320 --> 00:51:36.920
the move -in's request is premature. The committee

00:51:36.920 --> 00:51:38.860
is concerned that granting the request of relief

00:51:38.860 --> 00:51:41.659
at this time would be prejudicial to other unsecured

00:51:41.659 --> 00:51:44.199
creditors and potentially not in the best interest

00:51:44.199 --> 00:51:47.460
of the debtor's estates. The debtor's sale process

00:51:47.460 --> 00:51:50.199
has just begun, and assuming any contracts now

00:51:50.199 --> 00:51:53.420
outside of that sale process could risk locking

00:51:53.420 --> 00:51:55.440
in administrative expense claims that may not

00:51:55.440 --> 00:51:58.280
be justified. The move -in's right to assert

00:51:58.280 --> 00:52:00.460
administrative claims later in these cases is

00:52:00.460 --> 00:52:03.320
fully reserved. The Committee agrees with the

00:52:03.320 --> 00:52:05.199
debtors that the assumption or rejection process

00:52:05.199 --> 00:52:07.699
should be done holistically, rather than filing

00:52:07.699 --> 00:52:09.780
a state with an administrative expense at this

00:52:09.780 --> 00:52:12.019
stage in the process that could also potentially

00:52:12.019 --> 00:52:14.420
deter potential bidders, given the five -year

00:52:14.420 --> 00:52:17.639
term of the contract at issue. The Committee's

00:52:17.639 --> 00:52:19.380
diligence with respect to the move -in's contracts

00:52:19.380 --> 00:52:22.139
remains ongoing, as well as the Committee's diligence

00:52:22.139 --> 00:52:24.880
in connection with the larger sale process. For

00:52:24.880 --> 00:52:26.900
example, the committee is continuing to review

00:52:26.900 --> 00:52:30.159
the proposed form of stocking horse APA. The

00:52:30.159 --> 00:52:32.400
movement's reply raised concerns that the debtor's

00:52:32.400 --> 00:52:35.619
estates may be administratively insolvent. To

00:52:35.619 --> 00:52:38.199
be clear, the committee is committed to ensuring

00:52:38.199 --> 00:52:39.980
that following any restructuring transaction

00:52:39.980 --> 00:52:42.639
in these cases, whether through a sale or otherwise,

00:52:43.360 --> 00:52:45.340
first, that the go -forward Del Monte business

00:52:45.340 --> 00:52:47.500
will be well -positioned to satisfy unsecured

00:52:47.500 --> 00:52:50.300
claims, and second, that vendors and contract

00:52:50.300 --> 00:52:52.199
counterparties were continuing to work with the

00:52:52.199 --> 00:52:54.570
debtors during these cases are not left holding

00:52:54.570 --> 00:52:57.550
the bag. To that end, the committee wants to

00:52:57.550 --> 00:52:59.269
reserve the debtor's optionality and granting

00:52:59.269 --> 00:53:01.829
the motion today cuts against that goal. The

00:53:01.829 --> 00:53:03.590
committee respectfully asks that the court deny

00:53:03.590 --> 00:53:05.730
the movement's motion without prejudice. Thank

00:53:05.730 --> 00:53:10.610
you. All right. Thank you, counsel. Anyone else

00:53:10.610 --> 00:53:14.750
wish to be heard on this matter before I come

00:53:14.750 --> 00:53:17.289
back to move and see if they wish to respond?

00:53:20.610 --> 00:53:26.579
All right. Let's turn back. Mr. Zuber? Yes, Your

00:53:26.579 --> 00:53:28.860
Honor. I just had a couple of brief response

00:53:28.860 --> 00:53:32.519
points. You know, I would point out, and as we

00:53:32.519 --> 00:53:35.800
noted in our papers, you know, the supply agreement

00:53:35.800 --> 00:53:38.440
provides that either party can terminate that

00:53:38.440 --> 00:53:41.349
agreement with or without cause. So... You know,

00:53:41.929 --> 00:53:44.670
as I think is black letter law, debtors in Chapter

00:53:44.670 --> 00:53:47.130
11 don't get greater rights in bankruptcy than

00:53:47.130 --> 00:53:50.090
they have outside of bankruptcy. So we respectfully

00:53:50.090 --> 00:53:53.909
submit that Your Honor should not continue a

00:53:53.909 --> 00:53:57.449
stay when it's just an exercise of a contractual

00:53:57.449 --> 00:54:01.780
right that is, you know. they have a right without

00:54:01.780 --> 00:54:04.119
cause. This is not, you know, a determination

00:54:04.119 --> 00:54:07.260
of a 362B about whether a cause has been established

00:54:07.260 --> 00:54:10.860
under B1. This is just an exercise of a contractual

00:54:10.860 --> 00:54:12.679
right, and that right should not be expanded

00:54:12.679 --> 00:54:15.159
or be made greater for the debtor's benefit just

00:54:15.159 --> 00:54:17.579
because they're a bankruptcy. With respect to

00:54:17.579 --> 00:54:19.820
the integration issue, I already suggested to

00:54:19.820 --> 00:54:21.559
Your Honor that we believe it's appropriate to

00:54:21.559 --> 00:54:23.360
have an evidentiary hearing sufficiently ahead

00:54:23.360 --> 00:54:27.440
of that October 31 deadline. It doesn't sound

00:54:27.440 --> 00:54:30.300
like Council is pushing back on that too much

00:54:30.300 --> 00:54:32.619
except their suggestion that we just wait until

00:54:32.619 --> 00:54:35.380
September 28th. See whether the debtors file

00:54:35.380 --> 00:54:37.880
Notice of rejection that we can have a status

00:54:37.880 --> 00:54:39.559
conference, you know, that's just going to delay

00:54:39.559 --> 00:54:41.059
things to the point where we're going to be up

00:54:41.059 --> 00:54:43.960
against a deadline You know having a status conference

00:54:43.960 --> 00:54:47.199
the beginning of October for an evidentiary hearing

00:54:47.199 --> 00:54:49.690
that we would respectfully submit we need a decision

00:54:49.690 --> 00:54:52.150
on before October 31st doesn't really give us

00:54:52.150 --> 00:54:55.449
enough time so we would ask that your honor consider

00:54:55.449 --> 00:54:59.090
scheduling an evidentiary hearing sometime before

00:54:59.090 --> 00:55:02.110
that especially since the debtors intend it would

00:55:02.110 --> 00:55:04.730
appear to reject that lease there they say they're

00:55:04.730 --> 00:55:06.800
going to be out of the facility that would seem

00:55:06.800 --> 00:55:08.980
axiomatic, that they would seek to reject that

00:55:08.980 --> 00:55:12.139
lease effective as of the 28th. And we would

00:55:12.139 --> 00:55:13.900
ask the court to schedule an evidentiary hearing

00:55:13.900 --> 00:55:16.820
prior to that. We'll certainly engage in ongoing

00:55:16.820 --> 00:55:19.219
discussions with counsel. We've had a lot of

00:55:19.219 --> 00:55:21.420
discussions about a lot of things. We will continue

00:55:21.420 --> 00:55:23.260
to do that and to discuss these things in good

00:55:23.260 --> 00:55:25.980
faith. But we would, again, implore the court

00:55:25.980 --> 00:55:28.440
to schedule an evidentiary hearing to give us

00:55:28.440 --> 00:55:31.780
an opportunity. prior october thirty -first to

00:55:31.780 --> 00:55:33.780
have a decision on that issue and i think your

00:55:33.780 --> 00:55:36.119
honor your honor was correct when uh... u .s.

00:55:36.219 --> 00:55:38.039
debtors council you know when the buyer want

00:55:38.039 --> 00:55:40.400
to know whether they need to assume or direct

00:55:40.400 --> 00:55:42.400
the assumption assignment of both of these contracts

00:55:42.400 --> 00:55:44.239
before they go through the sale i think that's

00:55:44.239 --> 00:55:46.880
a very very important and good point you know

00:55:46.880 --> 00:55:49.659
if if we're right and buyers know they have to

00:55:49.659 --> 00:55:51.780
assume all the reject all they should know that

00:55:51.780 --> 00:55:54.019
if we're wrong and your honor would allow them

00:55:54.019 --> 00:55:57.219
to sever So be it but you know fire should know

00:55:57.219 --> 00:55:58.920
that as well. So again, we would really just

00:55:58.920 --> 00:56:02.949
be pushing respectfully to have a decision on

00:56:02.949 --> 00:56:05.210
that integration issue by way of an evidentiary

00:56:05.210 --> 00:56:08.449
hearing sufficiently ahead of the October 31st

00:56:08.449 --> 00:56:11.250
deadline. Two other very quick points on the

00:56:11.250 --> 00:56:14.429
365D3 issue. I recognize that the caption of

00:56:14.429 --> 00:56:16.889
our motion didn't talk about compliance with

00:56:16.889 --> 00:56:20.429
D3, but everybody recognizes that a debtor must

00:56:20.429 --> 00:56:23.530
comply with D3, and we would submit that it's

00:56:23.530 --> 00:56:25.550
really before the court on a de facto basis.

00:56:26.589 --> 00:56:30.469
final point, and Mr. Young may want to address

00:56:30.469 --> 00:56:33.809
this as well, but you know... Mr. Hammond had

00:56:33.809 --> 00:56:35.929
said that, you know, the relief requested is

00:56:35.929 --> 00:56:38.309
inconsistent with the statutory scheme. I would

00:56:38.309 --> 00:56:41.190
suggest that that is not true. As Mr. Young pointed

00:56:41.190 --> 00:56:44.829
out, 365 DE2, while it does provide a timeline

00:56:44.829 --> 00:56:47.309
for assumption or rejection of non -residential

00:56:47.309 --> 00:56:49.530
real property leases, it also says, but the court

00:56:49.530 --> 00:56:52.269
can shorten that time. And that's why we're here.

00:56:52.530 --> 00:56:55.369
If there was never a circumstance, as debtors

00:56:55.369 --> 00:56:57.329
suggest, never in the history of the bankruptcy

00:56:57.329 --> 00:57:00.650
world, where a court has compelled a debtor to

00:57:00.650 --> 00:57:03.699
assume, to make a decision prior to the statutory

00:57:03.699 --> 00:57:07.280
deadline, then the language of 365D2 will be

00:57:07.280 --> 00:57:09.239
superfluous. There will be no point for it. And

00:57:09.239 --> 00:57:11.239
we suggest again that this is the appropriate

00:57:11.239 --> 00:57:14.519
case to shorten that time frame. All right. Thank

00:57:14.519 --> 00:57:17.320
you, Mr. Zuber. Mr. Hammerman, before I get back

00:57:17.320 --> 00:57:20.179
to you, Mr. Young, do you want to add anything?

00:57:20.179 --> 00:57:24.059
Yes, Your Honor. I will be brief on the supply

00:57:24.059 --> 00:57:31.699
agreement itself. My friends on the other side

00:57:31.719 --> 00:57:36.219
continue to argue that the court should defer

00:57:36.219 --> 00:57:39.659
the decision for the parties to see how the sub

00:57:39.659 --> 00:57:42.940
-process plays out. And they argue that to do

00:57:42.940 --> 00:57:47.639
it sooner would somehow be valid of the congressional

00:57:47.639 --> 00:57:52.719
intent behind the bankruptcy in general. That

00:57:52.719 --> 00:57:57.980
argument, frankly, seeks to create an exception

00:57:57.980 --> 00:58:03.019
to 365D2. that does not exist in a bankruptcy

00:58:03.019 --> 00:58:05.440
code. There is no exception that the court should

00:58:05.440 --> 00:58:08.860
not provide for an orderly assumption rejection

00:58:08.860 --> 00:58:12.780
during a pendency of a sale process. If Congress

00:58:12.780 --> 00:58:16.659
wanted that to be a consideration, it would have

00:58:16.659 --> 00:58:20.119
put the language in the code. And why, and I

00:58:20.119 --> 00:58:23.679
continue to stress, why is timing important here?

00:58:24.340 --> 00:58:26.980
Your Honor, timing is important because between

00:58:26.980 --> 00:58:32.050
now and October, there are chances to mitigate

00:58:32.050 --> 00:58:36.170
potential damages. If decision is delayed post

00:58:36.170 --> 00:58:41.889
-October, substantially all of our 2025 pack

00:58:41.889 --> 00:58:44.889
season expenses, that includes buying product,

00:58:45.110 --> 00:58:49.630
packing, labeling, testing, etc., all that cost

00:58:49.630 --> 00:58:53.570
would have been incurred by October. So this

00:58:53.570 --> 00:58:56.929
is not a case where indecision can be delayed.

00:58:58.380 --> 00:59:03.360
Debtors Council states that, well, we may do

00:59:03.360 --> 00:59:05.960
something with the products in connection with

00:59:05.960 --> 00:59:09.099
the sale if buyer may want it. And they say,

00:59:09.119 --> 00:59:11.420
well, there is value to that, so we should not

00:59:11.420 --> 00:59:14.780
reject it. So flipping the tables, if the debtors

00:59:14.780 --> 00:59:17.820
believe there is value in that business, in the

00:59:17.820 --> 00:59:20.719
tomato business, it should be an easy decision

00:59:20.719 --> 00:59:25.619
for them to have that contract assumed now, or

00:59:25.619 --> 00:59:28.769
at the very least, confirm that the movements

00:59:28.769 --> 00:59:32.170
will have an administrative claim for all the

00:59:32.170 --> 00:59:35.909
products produced for them, pursuant to the schedules

00:59:35.909 --> 00:59:38.349
that the debtors have provided to the movements

00:59:38.349 --> 00:59:43.630
in April for this year. So, in essence, the movements,

00:59:44.190 --> 00:59:46.570
or rather the debtors, the committee and the

00:59:46.570 --> 00:59:51.010
lenders, seek to place the entire burden of this

00:59:51.010 --> 00:59:54.530
production on the movements and for the debtors

00:59:54.530 --> 00:59:58.789
to likely reap the entire benefit if the contract

00:59:58.789 --> 01:00:02.070
is assumed. In essence, the debtors do not want

01:00:02.070 --> 01:00:06.329
to have any skin in this game whatsoever. And

01:00:06.329 --> 01:00:11.269
that's not the purpose of section 365 B2, that

01:00:11.269 --> 01:00:14.429
section, and the courts that analyze that section.

01:00:15.510 --> 01:00:19.469
Talk about the balancing of harms. That is the

01:00:19.469 --> 01:00:22.780
main factors that the courts consider. The debtor's

01:00:22.780 --> 01:00:27.940
proposal does not take any harm away from the

01:00:27.940 --> 01:00:30.480
movements and in fact the debtors argue that

01:00:30.480 --> 01:00:34.159
the movements and only the movements should bear

01:00:34.159 --> 01:00:36.980
the possibility of the harm which we view is

01:00:36.980 --> 01:00:40.539
significant. For that reason, Your Honor, we

01:00:40.539 --> 01:00:43.119
request that our motion be granted. Thank you.

01:00:43.480 --> 01:00:46.300
Thank you, Mr. Young. Mr. Hammerman, last thoughts.

01:00:47.000 --> 01:00:50.250
Yes, thank you, Judge. The right to terminate

01:00:50.250 --> 01:00:53.309
in the supply agreement, we cited cases on this.

01:00:53.429 --> 01:00:57.590
It's paragraph 47 of our objection. That does

01:00:57.590 --> 01:01:02.329
not trump the automatic stay. That's well established

01:01:02.329 --> 01:01:06.809
in law. Mr. Zuber also brought up the concept

01:01:06.809 --> 01:01:11.489
of scheduling. The rejection motion, if one is

01:01:11.489 --> 01:01:13.530
made, is the one that should determine the schedule.

01:01:13.929 --> 01:01:17.130
That's when this issue should be heard. And so

01:01:17.130 --> 01:01:19.309
we think it's premature at this time to be setting

01:01:19.309 --> 01:01:21.969
evidentiary hearings. If we make a rejection

01:01:21.969 --> 01:01:24.010
motion, that's when the court should schedule

01:01:24.010 --> 01:01:27.989
an evidentiary hearing. I think we can work that

01:01:27.989 --> 01:01:29.829
out with Mr. Zuber. I don't think that's something

01:01:29.829 --> 01:01:34.510
the court needs to wade into today. I do think

01:01:34.510 --> 01:01:38.159
that the status conference idea gives Mr. Zuber

01:01:38.159 --> 01:01:39.900
an opportunity to come back to the court and

01:01:39.900 --> 01:01:42.760
argue for a different schedule than the one that

01:01:42.760 --> 01:01:45.820
perhaps we speak with him about. So whether the

01:01:45.820 --> 01:01:47.739
status conference is exactly when we suggested

01:01:47.739 --> 01:01:50.719
it or otherwise, I think it's premature at this

01:01:50.719 --> 01:01:53.340
time to set a schedule, but I do expect that

01:01:53.340 --> 01:01:56.039
we will be able to reach accommodation with Mr.

01:01:56.139 --> 01:02:00.179
Zuber on that point. Talked about being consistent

01:02:00.179 --> 01:02:04.139
with the statutory scheme, the idea that 365D2

01:02:04.139 --> 01:02:07.119
has a has the ability to make a motion, it sure

01:02:07.119 --> 01:02:10.119
does. And they've made it here, and the cases

01:02:10.119 --> 01:02:13.679
that interpret that provision suggest that if

01:02:13.679 --> 01:02:16.619
you're going against the grain of the 365D2 motion

01:02:16.619 --> 01:02:19.619
is going against the grain of giving the debt

01:02:19.619 --> 01:02:22.380
or the time that's afforded under the code, that

01:02:22.380 --> 01:02:24.360
that is somewhat inconsistent with the statutory

01:02:24.360 --> 01:02:25.960
scheme and there should be a good reason for

01:02:25.960 --> 01:02:27.739
it here. And here we have a dispute as to whether

01:02:27.739 --> 01:02:31.280
that is a good reason or not. Timing is important

01:02:31.280 --> 01:02:34.539
for us to respond to Mr. Young. We have a sale

01:02:34.539 --> 01:02:40.699
process going on here. We want that sale process

01:02:40.699 --> 01:02:44.280
to succeed. We believe that the timing is very

01:02:44.280 --> 01:02:46.119
important for us as well. We don't want things

01:02:46.119 --> 01:02:48.659
to upset the apple cart. I don't mean to use

01:02:48.659 --> 01:02:52.500
puns. Upset the apple cart in this case with

01:02:52.500 --> 01:02:55.039
our sale process. And we want things to go as

01:02:55.039 --> 01:03:00.139
well as possible on that sale process. Mr. Young's

01:03:00.139 --> 01:03:02.699
clients entered into a contract. That contract

01:03:02.699 --> 01:03:06.219
gave them a degree of security, which they have.

01:03:07.119 --> 01:03:10.579
It gave them the exact predicament that they're

01:03:10.579 --> 01:03:13.579
describing here. It gave that to them all along,

01:03:13.880 --> 01:03:17.500
every year, every time, every season. That's

01:03:17.500 --> 01:03:21.389
something they bargained for and agreed to. We

01:03:21.389 --> 01:03:24.289
don't think that that is a particularly sympathetic

01:03:24.289 --> 01:03:26.150
argument or that the court should be particularly

01:03:26.150 --> 01:03:28.469
troubled by it, and certainly not to put the

01:03:28.469 --> 01:03:33.610
interests of one creditor over all others. The

01:03:33.610 --> 01:03:36.510
movements have their rights, with respect to

01:03:36.510 --> 01:03:38.110
an administrative claim, the movements have whatever

01:03:38.110 --> 01:03:40.849
rights they have under 503. Nobody is telling

01:03:40.849 --> 01:03:43.510
them they can't make a 503 motion. That's not

01:03:43.510 --> 01:03:46.510
the motion they made again. We don't think that

01:03:46.510 --> 01:03:49.639
their products here qualify for that. We think

01:03:49.639 --> 01:03:51.460
they have the security they were entitled to,

01:03:51.619 --> 01:03:55.719
but they do have 503 as a future avenue. If anything

01:03:55.719 --> 01:03:59.699
turns out to not be assumed or not be picked

01:03:59.699 --> 01:04:02.780
up or the parade of horribles occurs, they have

01:04:02.780 --> 01:04:04.619
those rights. They don't need that today. It

01:04:04.619 --> 01:04:08.099
is not a today issue. I think that's all I have

01:04:08.099 --> 01:04:11.480
here. All right. Thank you, counsel. Well argued

01:04:11.480 --> 01:04:19.610
on all sides. Let me gather my thoughts. This

01:04:19.610 --> 01:04:24.809
matter comes before the court on the motion filed

01:04:24.809 --> 01:04:27.309
by Code Movement Specific Coast Producers and

01:04:27.309 --> 01:04:32.429
Morningstar Packing Company and Morningstar Kings

01:04:32.429 --> 01:04:40.230
LLC seeking relief under Section 365D2 to accelerate

01:04:40.230 --> 01:04:47.980
or compel the debtor into seeking either the

01:04:47.980 --> 01:04:52.139
assumption of rejection of the two agreements

01:04:52.139 --> 01:04:55.860
at issue, a product supply agreement as well

01:04:55.860 --> 01:05:02.900
as a real estate lease as part of a sale and

01:05:02.900 --> 01:05:07.300
lease back arrangement. This court has jurisdiction

01:05:07.300 --> 01:05:10.719
under 28 U .S .C. section 1334. This is a court

01:05:10.719 --> 01:05:20.940
of matter under 28 U .S .C. section 157B. In

01:05:20.940 --> 01:05:27.099
determining whether to impose a shortened or

01:05:27.099 --> 01:05:32.280
accelerated deadline upon a debtor with respect

01:05:32.280 --> 01:05:35.500
to assumption or rejection of an executory agreements,

01:05:36.579 --> 01:05:39.199
as been noted in the papers by all parties, courts

01:05:39.199 --> 01:05:42.659
consider a number of factors, including the nature

01:05:42.659 --> 01:05:45.480
of the interests, Most importantly, the balance

01:05:45.480 --> 01:05:51.239
of the harms to the parties, the purposes and

01:05:51.239 --> 01:05:57.059
good to be achieved by accelerating the date.

01:05:58.019 --> 01:06:04.460
The safeguards afforded the parties. The core

01:06:04.460 --> 01:06:07.179
also is to take into account congressional scheme

01:06:07.179 --> 01:06:13.500
and supporting the broad purposes of Chapter

01:06:13.500 --> 01:06:17.579
11, which is to promote successful rehabilitation

01:06:17.579 --> 01:06:22.219
of the debtors and to provide the debtor or debtors

01:06:22.219 --> 01:06:25.659
with a breathing spell and making determinations

01:06:25.659 --> 01:06:31.699
as to the viability and pecuniary benefits of

01:06:31.699 --> 01:06:35.179
assumption and rejection with the harms involved

01:06:35.179 --> 01:06:38.599
in respect to rejection. The court is taking

01:06:38.599 --> 01:06:41.739
into account the stage of the case. whether there's

01:06:41.739 --> 01:06:46.440
been a termination of exclusivity and also the

01:06:46.440 --> 01:06:49.360
general complexity of the case. Those factors

01:06:49.360 --> 01:06:52.440
were outlined in one of my colleagues' decisions

01:06:52.440 --> 01:06:56.360
in G1 Holdings. I know it was cited in Enron.

01:06:57.199 --> 01:07:01.639
Of those factors, the court focuses significantly

01:07:01.639 --> 01:07:06.559
upon the balancing of the harm and the safeguards

01:07:06.559 --> 01:07:13.969
afforded the litigants. The decision to assume

01:07:13.969 --> 01:07:18.050
or reject is one where courts normally defer

01:07:18.050 --> 01:07:23.030
to the business judgment of the debtor. The debtor

01:07:23.030 --> 01:07:26.690
is in the best position to gauge whether or not

01:07:26.690 --> 01:07:32.610
an agreement has value, whether that value outweighs

01:07:32.610 --> 01:07:39.420
any detrimental impact. that would come with

01:07:39.420 --> 01:07:45.639
rejection. And this deference to the business

01:07:45.639 --> 01:07:49.679
judgment of the debtor in making the substantive

01:07:49.679 --> 01:07:53.860
decision to assume or reject also applies to

01:07:53.860 --> 01:07:57.960
the debtor's determination as to timing. When

01:07:57.960 --> 01:08:01.760
is it in the best interest of the estate to make

01:08:01.760 --> 01:08:05.059
this decision? Here, the debtor is supported

01:08:05.059 --> 01:08:09.099
by the committee. seeking additional time after

01:08:09.099 --> 01:08:12.059
a proposed sale process in order to determine

01:08:12.059 --> 01:08:16.239
whether a five -year supply agreement would have

01:08:16.239 --> 01:08:22.779
value to a purchaser as opposed to a knee -jerk

01:08:22.779 --> 01:08:25.579
decision to assume the supply agreement which

01:08:25.579 --> 01:08:30.199
would expose the estate to significant administrative

01:08:30.199 --> 01:08:36.119
liabilities. You can tell from my comments I'm

01:08:36.119 --> 01:08:41.199
going to deny the motion under 365v2 because

01:08:41.199 --> 01:08:44.119
I believe the balance of our harms and the balancing

01:08:44.119 --> 01:08:48.220
of the interests weigh in favor of the estate

01:08:48.220 --> 01:08:51.800
at this juncture. And I do so because there are,

01:08:51.800 --> 01:08:54.439
and this is also one of the factors, significant

01:08:54.439 --> 01:08:57.600
safeguards that are in place in this situation.

01:08:57.819 --> 01:09:02.140
Number one, the $20 million potential outlay

01:09:03.079 --> 01:09:06.640
by the movements with respect to the product

01:09:06.640 --> 01:09:11.220
supply agreement is not likely to be their exposure.

01:09:11.960 --> 01:09:14.939
That outlay will be reduced by payments being

01:09:14.939 --> 01:09:19.340
made consistent with the DIP budget, by sales

01:09:19.340 --> 01:09:26.500
of inventory, and other elements which we're

01:09:26.500 --> 01:09:29.220
going to... to discuss which will reduce their

01:09:29.220 --> 01:09:31.800
costs. And it's important to note, and I agree

01:09:31.800 --> 01:09:35.319
with counsel for the debtor, that the initial

01:09:35.319 --> 01:09:39.979
outlay in this manner is part of the movement's

01:09:39.979 --> 01:09:43.880
business plan. They do it, and it is consistent

01:09:43.880 --> 01:09:46.180
with how these product supply agreements are

01:09:46.180 --> 01:09:49.300
done throughout the industry. Advancing funds

01:09:49.300 --> 01:09:53.899
is inherently risky, but it's part of the business

01:09:53.899 --> 01:09:56.060
plan that was agreed to as part of the arrangement.

01:09:56.359 --> 01:10:01.359
Also, the debtor's ability to not necessarily

01:10:01.359 --> 01:10:05.680
purchase the entire supply is part of the contractual

01:10:05.680 --> 01:10:09.920
arrangement agreed to by the parties. It is one

01:10:09.920 --> 01:10:13.720
of the risks built into this process, and it

01:10:13.720 --> 01:10:16.699
should come as no surprise. Now, when I mention

01:10:16.699 --> 01:10:21.100
safeguards, yes, there are safeguards. I don't

01:10:21.100 --> 01:10:24.909
think anybody disputes that over 60 % of the

01:10:24.909 --> 01:10:29.329
potential inventory to be produced could be resold.

01:10:29.869 --> 01:10:34.470
It is not of this debtor's brand. There's the

01:10:34.470 --> 01:10:37.729
ability to seek administrative claim for any

01:10:37.729 --> 01:10:41.189
unpaid costs associated with servicing the contract

01:10:41.189 --> 01:10:44.989
post -petition, consisting with Section 503B.

01:10:45.489 --> 01:10:48.109
There is a letter of credit that was put up.

01:10:48.170 --> 01:10:52.989
to secure certain potential risks. I think it's

01:10:52.989 --> 01:10:56.510
a four million dollar letter of credit. There

01:10:56.510 --> 01:11:01.430
is an ongoing sale process where this very agreement

01:11:01.430 --> 01:11:07.449
or agreements may indeed be assumed. And there

01:11:07.449 --> 01:11:10.970
is a generous DIP budget which will allow for

01:11:10.970 --> 01:11:13.840
continued ongoing payments. So there are these

01:11:13.840 --> 01:11:15.760
safeguards that are already in place that are

01:11:15.760 --> 01:11:19.220
frankly not available necessarily to all administrative

01:11:19.220 --> 01:11:24.779
claimants or contract parties. And because of

01:11:24.779 --> 01:11:28.800
this, this court is very leery of imposing upon

01:11:28.800 --> 01:11:32.380
the debtor a shortened time period inconsistent

01:11:32.380 --> 01:11:36.180
with the goals under Chapter 11 which support

01:11:36.180 --> 01:11:39.260
rehabilitation and which may impede the sale

01:11:39.260 --> 01:11:45.979
process. Indeed, potential purchasers need to

01:11:45.979 --> 01:11:49.859
have time to evaluate the benefits and the merits

01:11:49.859 --> 01:11:52.960
of the supply agreement, deciding whether or

01:11:52.960 --> 01:11:59.039
not that the agreement is important, is beneficial,

01:11:59.159 --> 01:12:02.920
is essential, and becomes part of any purchase

01:12:02.920 --> 01:12:05.840
bid. It would undercut the debtors' efforts to

01:12:05.840 --> 01:12:09.100
maximize the return to this estate if we were

01:12:09.100 --> 01:12:14.710
to accelerate the process at this point. The

01:12:14.710 --> 01:12:19.109
court is not considering the 365D3 issues at

01:12:19.109 --> 01:12:23.010
this juncture. I am never sanguine about directing

01:12:23.010 --> 01:12:26.170
parties to comply with the law. I think that's

01:12:26.170 --> 01:12:30.390
a given. The debtor has responsibilities under

01:12:30.390 --> 01:12:37.069
section 365D3 and in the event that there is

01:12:37.069 --> 01:12:43.100
a malfeasance or a failure to to live up to its

01:12:43.100 --> 01:12:45.600
obligations and responsibilities under the code

01:12:45.600 --> 01:12:51.260
or under non -bankruptcy law. This court is certainly

01:12:51.260 --> 01:12:55.000
willing to hear any matters on an expedited schedule

01:12:55.000 --> 01:12:59.739
if warranted. But the court certainly doesn't

01:12:59.739 --> 01:13:02.800
have a factual predicate to make any rule in

01:13:02.800 --> 01:13:06.609
number 365 -D3 of disjuncture. I'm going to deny

01:13:06.609 --> 01:13:10.050
the motion on the 365D2 without prejudice, of

01:13:10.050 --> 01:13:15.109
course. To renew the motion, indeed, you can

01:13:15.109 --> 01:13:17.409
contact, the Movements can contact Chambers at

01:13:17.409 --> 01:13:20.489
a later date after the sale process, after November

01:13:20.489 --> 01:13:24.449
20th, and seek to renew the motion without having

01:13:24.449 --> 01:13:29.350
to necessarily file a new motion and prepare.

01:13:29.449 --> 01:13:33.489
I don't want to add costs. There might have a

01:13:33.489 --> 01:13:36.050
need for supplemental declarations, of course.

01:13:37.270 --> 01:13:40.590
The issues may be further refined, but contacting

01:13:40.590 --> 01:13:43.770
chambers and the court will get the matter on

01:13:43.770 --> 01:13:46.090
its calendar as soon as possible. I did bring

01:13:46.090 --> 01:13:48.090
up the issue as far as an evidentiary hearing

01:13:48.090 --> 01:13:51.630
on the integration issue, because it indeed may

01:13:51.630 --> 01:13:55.489
be pertinent to any sale. And I'm going to leave

01:13:55.489 --> 01:14:01.090
it to the council who are all as... demonstrated,

01:14:01.130 --> 01:14:03.689
very professional, very courteous, very responsible,

01:14:04.189 --> 01:14:08.829
to meet and confer and develop a schedule, it's

01:14:08.829 --> 01:14:12.609
warranted. I'm going to tell you that I will,

01:14:14.710 --> 01:14:16.970
and this is for the court's ease, I need to carve

01:14:16.970 --> 01:14:19.050
out days or else they get used up with other

01:14:19.050 --> 01:14:22.810
matters. So I will carve out October 24th, it's

01:14:22.810 --> 01:14:26.310
a Friday, and you might want to work with that

01:14:26.310 --> 01:14:30.340
date as a hearing date. in advance of any sale.

01:14:31.279 --> 01:14:33.439
It's a suggestion at this point. The court will

01:14:33.439 --> 01:14:35.420
always accommodate any requests for a status

01:14:35.420 --> 01:14:40.539
conference, informal phone call or Zoom, and

01:14:40.539 --> 01:14:44.340
we can address it further and put in place any

01:14:44.340 --> 01:14:47.000
further scheduling that you all can agree upon.

01:14:48.260 --> 01:14:51.380
But at this juncture, I think all of the factors

01:14:51.380 --> 01:14:55.359
weigh in favor of denying the motion without

01:14:55.359 --> 01:14:59.550
prejudice. So for the reasons set forth, I'll

01:14:59.550 --> 01:15:03.430
deny the motion. I will ask debtor's counsel

01:15:03.430 --> 01:15:07.250
to submit a form of order consistent with the

01:15:07.250 --> 01:15:11.010
ruling. Are there any questions I can address

01:15:11.010 --> 01:15:14.289
for any counsel? Not for me. Thank you, Judge.

01:15:14.770 --> 01:15:17.210
Your Honor, just I think that Mr. Young initially

01:15:17.210 --> 01:15:19.350
mentioned several declarations. Will those be

01:15:19.350 --> 01:15:22.310
put into evidence for the purpose for which we've

01:15:22.310 --> 01:15:24.520
agreed that essentially not necessarily for the

01:15:24.520 --> 01:15:27.000
truth, but just to have them as part of the evidentiary

01:15:27.000 --> 01:15:31.500
record. Sure. Let's be clear. Can I have the

01:15:31.500 --> 01:15:33.340
declaration? Let's give them exhibit numbers.

01:15:33.479 --> 01:15:36.619
I don't believe there's any objection on all

01:15:36.619 --> 01:15:41.159
sides. That's correct. The original declaration

01:15:41.159 --> 01:15:46.180
of Mr. Sherwood was document number 175. There

01:15:46.180 --> 01:15:48.460
was a declaration on the debtor side. I don't

01:15:48.460 --> 01:15:50.800
have that number handy, but I believe that they

01:15:50.800 --> 01:15:54.500
submitted a declaration. in opposition, and the

01:15:54.500 --> 01:15:59.079
declaration of Matt Strong at Docket 174. And

01:15:59.079 --> 01:16:03.920
then the supplemental declaration of Mr. Sherwood

01:16:03.920 --> 01:16:12.079
was filed at? One moment, Your Honor. 179. 179?

01:16:12.659 --> 01:16:17.439
No. 379. Let me just confirm and have it here.

01:16:18.319 --> 01:16:22.000
That's the reply. 79 -1 is the supplemental.

01:16:22.090 --> 01:16:27.529
operation of Mr. James Sherald. I'm sorry, Judge.

01:16:27.829 --> 01:16:36.430
Mr. Goulding's declaration was 369. And I don't

01:16:36.430 --> 01:16:39.430
have the exact words of our kind of arrangement

01:16:39.430 --> 01:16:42.090
up in front of me that we negotiated, but I think

01:16:42.090 --> 01:16:45.770
the agreement and the co -counsel will step in

01:16:45.770 --> 01:16:47.069
if I don't have it right, is that these would

01:16:47.069 --> 01:16:53.640
be admitted without without preventing any party

01:16:53.640 --> 01:16:57.039
from cross -examining or without assuming that

01:16:57.039 --> 01:16:59.180
the parties assume the truth of the, of the matters.

01:16:59.260 --> 01:17:00.880
They're there for the court's consideration.

01:17:02.479 --> 01:17:03.920
In other words, in the future, if there's an

01:17:03.920 --> 01:17:05.699
evidentiary hearing, we can come back and cross

01:17:05.699 --> 01:17:07.659
-examine. We can dispute the truth of things.

01:17:07.979 --> 01:17:10.220
I know there's places where we can fit with one

01:17:10.220 --> 01:17:12.699
another. All right. Council, any concerns with

01:17:12.699 --> 01:17:15.619
that representation? That's correct. You're up.

01:17:16.100 --> 01:17:19.319
No concern. So the four declarations that have

01:17:19.319 --> 01:17:25.100
been cited will be admitted into evidence, two

01:17:25.100 --> 01:17:26.840
on behalf of the movements and two on behalf

01:17:26.840 --> 01:17:31.079
of the debtors. And we'll let the record rest

01:17:31.079 --> 01:17:36.979
at this juncture. Thank you for your time. Have

01:17:36.979 --> 01:17:38.579
a good day. Take care. Thank you, Judge.