Thank you, counsel. Thank you. Number 13, Christopher
Bates. Motion dismissed is carried to 925 at
10. Number 14, Laura Polson. Is a motion to attend
the time to object to discharge is unopposed
and it will be granted. And number 15, Milagros
Caprio. Motion to dismiss has been withdrawn
by the trustee. All right. that takes us back,
I believe, just to block five. Unless there's
anyone else on the call on another matter. All
right, silence is good. Let me have appearances,
please, for the wind down debtor. Good morning,
Your Honor. Daniel Stoltz, Genova Burns, local
counsel to the wind down debtor. Good morning,
Your Honor. Kenneth Ouellette, Brown -Rutnick
Council to wind down debtor. I'm joined by my
partner, Tristan Axelrod. Welcome. Good morning.
And I would also note we have Matt Manning, who
is our replacement declarant for the motion as
Mr. Meshe was unavailable. We submitted a replacement
declaration last night that mirrored Mr. Meshe's
declaration. I did see that. Thank you. Good
morning, Mr. Manning. On behalf of the U .S.
Trustee. Thank you, Your Honor. Lauren Bielski
with the Office of the United States Trustee.
I'm really just observing today's hearing. All
right. I see the credit of counsel and his client.
Good morning. Mr. Malgley, do you want to enter
or appearance? Yes, Your Honor. Thank you very
much. Joe Magelhase on behalf of John Ventuberjian,
Jr. and the Eckerd Stevens. Thank you, Judge.
All right. Welcome, Mr. Ventuberjian. All right.
I have read the submissions and the objections.
It is clear that two of the objectors have fallen
by the wayside as a result of Third Circuit activity.
Mr. Wynn's case was dismissed on appeal to the
Circuit, by the Circuit, and Mr. Gero's... Mr.
Jarrell was withdrawn as objection and the circuit
also affirmed the district court with respect
to his pending appeal and we still have activity
obviously on Mr. Van Tubergen's matter just to
advise the parties I'm about probably when then
either today or tomorrow to docket an opinion
on the each issue but I will wait for that. leave
you all in anxious anticipation. But with respect
to the motion today, I have just a couple of
questions at the outset and then I'll let counsel
proceed. First, I guess, Mr. Arlette, do you
want to try to direct it to you or is Mr. Axelrod?
Yes, Your Honor. Uh, for the record, Kenneth
Olat of Brown Rutnick. Uh, yes, your honor. There
were a couple of customer objectors as in addition
to Mr. Van Tuberkin. Correct. I believe that
we have, I don't know that we got any of them
to resolve it, but to be clear, as we said in
our reply, Nothing about the allocation motion
affects the right of any customer to receive
their distribution. Anybody whose distribution
is in flight, it is imminently going to be sent
or they're still doing the required KYC process.
Nothing about this affects that and the distribution
methodology lists all of the reserves that are
being held for those customer claims. Really,
the only thing in there about those is just a
warning that the plan administrator has been
waiving certain timelines in the plan. Under
the plan, if you don't collect your distribution
within six months, you forfeit the distribution.
However, we have been willing to reissue a distribution
up until shortly before we close the estates.
And we wanted to warn people that that window
is closing. But the principal issue was the allocation
of the remaining value because when the plan
was drafted, I don't think anybody seriously
considered that we would be here today having
been able to pay all customer claims in full.
and so the plan was a little bit ambiguous on
exactly how do you implement the voluntary subordination
of FTX and certain regulators to all customer
claims in a case like this where they're subordinated
to creditors of another entity that has not been
substantively consolidated. And so we wanted,
because this is a significant amount of money,
we wanted to do this openly on notice to make
it very clear how and why we are allocating the
remaining value to BlockFi Lending and not BlockFi
Inc. because there are slight differences in
the subordinated claims of both entities. Happily,
there have been no objections on that point.
I believe Mr. Van Tubergen's objection made some
references to it, but I didn't understand that
to be objecting to the overall principle of the
surplus value being distributed to subordinate
creditors goes to the creditors of lending, not
ICC. And on that I would ask the court to enter
the declaration of Matthew Manning as the evidentiary
basis for that allocation. All right. We keep
getting on the chat and I'll ask Mr. Humphrey
to cease doing that. Mr. Humphrey's concerned
that he has not been paid on his crypto. I don't
know if Mr. Humphrey was on the line when he
indicated that this motion will not prevent anybody
who's waiting on a claim based on continued processing
issues. It will not prevent them from getting
paid, but it was your intent and you can reiterate
it that parties understand they have to complete
all the paperwork and the extensions and the
waivers of the time to do so will soon come to
an end at some point. so that it's not being
ended by this motion, but customers who are still
waiting for their distributions, who are entitled
to distributions, and that's the key, if they're
entitled to distributions, they have to do so
in compliance with the requirements to complete
all the necessary paperwork. Yes, Your Honor,
and for Mr. Humphrey, I will confirm again that
Nothing in this motion affects the right of customers
to receive their distribution. That said, Mr.
Humphrey had asked you to email me at k -a -u
-l -e -t at bravrednik .com. A number of the
people who've said they never got their distribution.
We've made several attempts to get them their
distribution that have failed. So I searched
my email. I don't believe I have an email from
Mr. and Mrs. Humphrey. so that I can't pull up
the details, but to the extent that they have
an entitlement to a distribution, we'll get that
done. Maybe you can have somebody put in the
chat your email address for Mr. Humphrey. And
as far as Mr. Manning's declaration, is there
any objection to it coming in as evidence? All
right, the court accepts Mr. Manning's declaration.
uh... has direct testimony in support of the
pending motion uh... withdrawal and question
uh... then we'll get to the heart of the issue
uh... my understanding and i'm from brown numbers
the dinner has the one and i have roughly a hundred
and seventy seven million dollars uh... it's
putting in reserve roughly thirty eight million
dollars for administration uh... so i have two
questions What happens under the plan with respect
to unclaimed funds? Where do they go? Are they
going to the subordinated creditors or are they
being reissued to... Well, everybody else has
gotten 100 cents, so I would assume subordinated
creditors. And also, to the extent the funds
that are being reserved, the 38 million, are
not used up. Where do the leftover funds go?
And how does this process work if this case is
closed? Thank you, Your Honor. So you are correct.
Unclaimed funds at this point would go to subordinated
creditors. Our view is that the same principles
of allocating surplus funds to lending mean that
any surplus, any unclaimed funds should be returned
to lending for distribution to subordinated creditors.
As to how any leftover funds in reserve would
be allocated, we're going to propose a solution
to still let funds be transferred to subordinated
creditors when we move for a final motion closing
the cases. But we haven't done that yet, and
we're going to finish putting all customer distributions
in flight before we move to close the estates.
All right, thank you. So I have a question actually
for Mr. Malgay's. I understand your client is
concerned about there being no set aside, no
reserve in the event you're successful on appeals.
The question I have is what amount should be
reserved? I know there's the issue and it was
brought up in the litigation over the The principle
upon which distributions have been made to date
is that the parties are limited to what's required
under 502, which is to fix the claim as of the
petition date and therefore the dollarization
of all claims has been fixed based on the values
as of the petition date. If I were, and I'm going
to listen to arguments or additional arguments,
but if I were to mandate a reserve for your client
in the event there's a successful appeal, what
about should there be? Judge, first I know as
a technical matter, everyone's frozen on my screen.
but I'm hearing audio so I take it you folks
can hear me speak right now. We can hear you
and nobody seems frozen on our end. Great that's
great. So Judge I mean the most direct answer
I could give you would be the delta of whatever
if anything and we pray you award something in
connection with the remanded ETH issue so it
would be the delta of the face facial amount
of the claim 10 million minus that. In our papers
Judge both in response to the estimation motion
and the most recent papers we filed, we asked
for whatever reserve the court would deem appropriate.
And we weren't trying to be cute with that. We
just know that the court never reached the issue
of damages during our first go around before
your honor. We argued for liability and then
we had some damages calculations as to the overall
claim. feature in our arguments, but the court
never reached that. And I understand the position
asked that the crypto should be valued as of
the petition date. We analyzing the proof of
claim, we attempted to argue that Mr. Brantubergen's
claim since those funds weren't kept in those
specific accounts, that it should not be subject
to that. But the court has not ruled on that
specific issue. I know it's ruled on the issue
at large as to other creditors. I don't know
if that binds my client on that issue in terms
of the date evaluation. I know my client feels
incredibly strongly that it should be present
day evaluation. But as I said, Judge, to me the
cleanest way... And it can easily be done given
the ample funds held by the BlockFi lending estate
would be to simply take the facial amount of
the claim on appeal, 10 million, to debit whatever,
if anything, the court awards in connection with
the missing ETH issue, and then have the reserve
be for that delta. All right. Let me turn back
and we can get to the heart of the objection,
I guess, because the court doesn't have an objection.
To the relief being sought under the motion in
any respect And as to all of the creditors I
want to focus in we're going to put aside mr.
Van Tubergen but given that the other appeals
seem to Absent the searcher area to the by the
Supreme Court seemed to be going nowhere And
I've expressed my concerns with the relative
positions during our mediations on Mr. Van Tubergen's
claims. And I indicate that I will be issuing
an opinion probably later today or tomorrow.
But Mr. Ouellette, let me go back to you. And
I ask you to address a concern that I have in
that I'm uncomfortable under the divestiture
rule. with a pending appeal. I certainly, and
that rule has allowed for additional bankruptcy
court when there's an appeal taken from a bankruptcy
court decision. It's a judge rule, a prudential
rule that says this court doesn't have jurisdiction,
shouldn't interfere and pair. a pending appeal
with further court orders but in a bankruptcy
context certainly further administration of the
case has been allowed to continue and other orders
have been entered that are collateral to the
issue that's subject to the appeal but it seems
to me in this case that if I were to estimated
zero and allow for the distributions to all other
creditors and basically move out the pending
appeal i'd be doing exactly what i shouldn't
be doing uh... uh... final resolution of the
appeal uh... uh... how can the relief comports
with those restrictions of course your honor
so let me just take a step back there is one
point that i agree with this man is on that there
is a component of his claim that has not been
resolved by your honor and we had hoped that
that would be resolved by now it isn't and so
we clearly need to keep a reserve for that and
so the issue is really what kind and I think
we say in our papers if your honor awards him
some amount of money on that we're going to pay
it and be done with that portion of his claim
the issue is what do we do about things on appeal
and there your honor I would be very specific
that we are not asking your honor to estimate
anything at zero. The plan does so automatically
and I would know Mr. Van Tubergen did not object
to the plan and that this has already been upheld
on appeal because Mr. Gero as you'll recall appealed
your order, your order overruling his and Mr.
Van Tubergen's objections to the distribution
notice about a year ago. Where, and you know,
I was surprised to realize this was a year ago,
your honor said, there's not a motion to stay
pending appeal before me. And there has, you
know, a year has passed and there is still not
a motion to stay pending appeal in front of your
honor. on the portion of Mr. Van der Breen's
claim that is estimated at zero by virtue of
the plan. And I think it's important to go back
and look at the plan because it's very clear
that any disputed claim that is subject to appeal
shall be deemed to be estimated at zero dollars.
And so nothing in the allocation motion asks
Your Honor to estimate Mr. Van Dubern's claim
at zero, because that's already happened. What
it asks is at the end, it says, unless ordered
otherwise by the bankruptcy court. And what our
motion submitted, Your Honor, was we've been
at this for a very long time. Your Honor reminded
everybody a year ago that You've got to do something
if you believe that assets should be held up
based on your appeal. And to go back to what
we argued a year ago, the plan does not give
a standard by which your honor should rule on
what that alternative estimation should be, but
that we submit that it should be essentially
a state pending appeal standard, because that
is what is being in effect sought. that the order
disallowing Mr. Van Tubergen's claim should be
stayed such that you know on appeal. So that
and you know the fact that Mr. Van Tubergen didn't
object as a result I think to the plan determines
this issue because it's a very reasonable provision
to put into a plan. It's for the benefit of all
creditors. to be able to proceed as quickly as
possible to getting funds put out. Somebody might
lose out because they are in Mr. Van Dooper's
shoes, but at the point of the plan, you don't
know who's going to be losing out on appeal rights.
It's very similar to arbitration. People agree
on arbitration all the time because you don't
know who's going to win, but you know you'd like
to spend less on lawyers, so why not do it in
a quick process? And this also comports with
the bankruptcy code because the bankruptcy code
is specific that estimation is mandatory. It's
not even option. It's mandatory. The court shall
estimate a claim where failure to do so would
unduly delay the reorganization. And so even
if the plan hadn't provided for this automatic
estimation, we submit that estimation here would
be not only appropriate but mandatory because
it will unduly delay the reorganization by holding
up the completion of these cases by what we're
probably looking at maybe two years at this point
of appeals. Mr. Van Tubergen filed for reconsideration
of your order. That was denied, so appeal on
the district court is filed for reconsideration
of the district court appeal. Then we go up to
the third circuit. We don't even have an appeal
in the third circuit yet. This is going to take
a very long time. And that's exactly what Congress
sought to prevent by passing 502C and making
it not merely optional, but mandatory to destination
in these circumstances. What I would submit is
appropriate, Your Honor, is that we will not
distribute the money on Mr. Van Tubergen's claim.
We will reserve money for Mr. Van Tubergen's
claim that is under submission, Your Honor. But
we submit that the plan is mandatory. Not only
are we entitled to hold no reserve for his claim
pending appeal But we're not supposed to and
that he needs to file a motion and I'd submit
that it would be the same standard for a stay
pending appeal To change that he's had a year
to do that. He hasn't done it when it comes if
you know, mr. Van Tubergen Doesn't get what he'd
like in your order that will come out Then we
can give him a Three to seven business days or
three to seven days To seek a stay pending appeal
before we distribute out those funds but at the
end of the day It's been a year and not only
did your honor say There's not a state pending
appeal in front of me, but that was reiterated
by the district court when the district court
specifically upheld keeping no reserve against
Mr. Jarrow's claim. Mr. Jarrow's claim that was
disallowed is basically the exact same kind of
claim as Mr. Van Toop's. There's no meaningful
difference why... it would be acceptable to reserve
zero on Mr. Gero's claim that's pending appeal
while not for Mr. Van Tubergen. Given that Your
Honor has said you hope to have an opinion by
Friday, it may be a moot point how much we should
be reserving if it's the one million, little
over a million dollars that we submit as the
only amount of his claim before you. versus the
eight million dollars that I believe he's put
in his papers. But that's how I would suggest
that we proceed on that particular issue. But
I submit Your Honor that the plan and the bankruptcy
code not only make it appropriate but mandatory
for Your Honor to permit the estate to finish
the liquidation. All right. Thank you, Mr. O
'Loughlin. Mr. Magulis. All right. Thank you,
Judge. So I believe that the unless otherwise
ordered language in the plan is the only way
that plan would have been confirmed because to
have estimated those claims finally at zero is
absurd given where the case was and given that
claims litigation was ongoing. I think that,
again, unless otherwise ordered by the court,
leaves all issues on the table and gives us a
freeway to do what we need to do. And as to other
potential law of the case, you know, I've looked
over the order overruling objections of George
Garrow and Mr. Van Tubergen in approving notice
of disputed claims reserve. I've read it over
several times. It's docket number 2389. Yes,
the objections were overruled. But essentially,
as I read it, It was to, um, it did not grant
us what we wanted at the time, but still allowed
us to live the fight of another day. I don't
believe it foreclosed anything and it's permitted
the proceedings we have today. Uh, and I think
the proceedings we have today and also the estimation
motion, they are proper avenues, the proper freeway
to address some of the relief that Mr. Van Trueber
gin. seeking. The argument regarding a stay,
I believe, is respectfully inaccurate and also
a red herring, because first of all, we did seek
a stay. We sought it by way of docket number
2142, which was our... We didn't call it a motion
for reconsideration because we didn't get into
the language just to judge, but that's what it
was. It was a motion for post -order relief.
And I'm looking at a table of contents on...
On page 22, we began our argument seeking a stay.
And so we did package that request within that
motion. Now in your orders, in your judges, in
the court's order sustaining the objection, the
court noted that it wasn't reaching the issue
because no notice of appeal had been filed. So
that's why the court didn't touch upon, I suppose,
the stay relief request. But that stay relief
request was then made to the District of New
Jersey. We filed a motion there, an individual
motion for a stay of relief. But then there,
the court didn't rule upon that before coming
down with its in -part affirmance, in -part remand,
and therefore it was muted there. So I think
Mr. Van Tubergen soundly twice requested a stay.
But to me, that's a red herring because upon
the remand... We all had a discussion about how
we could see the procedure unfolding. We discussed
the estimation motion, and now we have these
proceedings, which I believe flow from that prior
notice of disputed claims reserve. So I think
procedurally, Mr. Van Terbergen is on all fours
to request what's being requested. And I think
it's a common sense request, Your Honor. If I
may briefly, because our overall theme judge
is very much, as Mr. Ouellette said, we do believe
that they can perceive 99 % in the fashion that
they want. We're just saying that 1%, that's
Mr. Van Tubergen, the last man standing. As Your
Honor noted, he has appeal rights that we believe
would be, it would be unfair. among other things,
to cut off those appeal rights, they can easily
be accounted for given the assets held by blackfile
lending. I don't see why we're in such a rush
to give the money to the FTX estate. I understand.
Because I'm not trying to be outrageous. That's
one thing I want to be very careful about. I
want to make sound legal arguments and common
sense arguments that I think resonate well before
this court. And so we all know what FTS is in
the headlines for. We all know that it led to
a lot of cascading effects that we believe did
wind up hurting people like Mr. Van Tubergen.
We don't get into that here. To say that we have
to be in such a rush to fork over $177 million
to FTX while Mr. Van Tubergen is fighting for
his life effectively in the appellate process,
to me is absurd. And it's further absurd when
you have $37 million being held in reserve for
continued administration. With all respect to
Mr. Ouellette, he's done a great job for his
client in this case, obviously. How quickly do
we intend to burn through, not he, whomever,
you know, takes the reins here, how quickly do
we intend to burn through $37 million in admin?
Because if we're saying that Mr. Van Tubergen's
appellate claims are going to last two years,
well then certainly a portion of $37 million
can be put aside for whatever happens, whether
before the district court where stuff is still
pending or the circuit of appeals. So, I don't
see what the rush is to cut him off at Denise.
You can still go forward with the overwhelming
majority of the machinations that are necessary
to wind down the estates and still look after
Mr. Vanturigen's due process rights. And look,
I'd be remiss if I didn't mention the substantive
consolidation issue. I'm just going to say right
now, because again, I'm not trying to be outrageous.
I didn't read it as a distinction without a difference
in the papers because in paragraph 10 of the,
it was a little foggy in the motion itself. So
in docket number 2643, I know that the wind down
debtor is, the main motion before your honor
judge, I know that the wind down debtor spent
some time on this issue, the characterization.
issue in terms of, I suppose, the distribution
to BlockFi Inc. We weren't trying to get in the
weeds with that. We were just saying, Mr. Van
Tubergen is a proper creditor of BlockFi lending.
There's $177 million attributed to the estate.
However we get there, he should be taken care
of through some reserve. Given supplemental filings,
I do feel compelled, and we didn't object to
them being allowed in the record, Judge. We're
trying to move this along. I get it. But allow
me at this point to just quote paragraph 10 of
docket number 2660. It says, to address this
issue and fund customer distributions, the plan
administrator, upon the advice of its professionals,
including M3, directed the transfer of distributable
assets primarily held at BlockFi Lending, which
had a surplus followed in its customer distributions,
to BlockFi Inc., which had a deficit of distributable
assets available for customers. To me, that can't
be read as a characterization issue. That has
to be read as money going from one pot to another
pot. And therefore, when you look at, you know,
paragraph 9 of the same... declaration, it says,
this created a practical problem. In some, the
debtors were not substantively consolidated,
and each black fly entity possesses certain assets.
And it continues. Well, that's not a practical
problem. That's a legal problem. Because we know
that subsequent consolidation is a far cry from
procedural consolidation, i .e. joint administration.
And again, we're not trying to throw, you know,
a grenade here on this issue. Again, that just
supports the notion that the Block 5 lending
estate is the rich estate. And if we have $37
million for administration to go on after this,
then surely money can be put aside for Mr. Van
Tubergen. Because it's not as if we're saying
we're closing up shop and everything's done.
The sum and substance of the motion is that we're
going to somehow wind down these estates, but
there's going to be a life after. And for that
life after, we need to pack our car with $37
million. So to me, it's crazy to think that you
could load the car, so to speak, with $37 million,
drive away, close this estate, and then cut off
appellate rates. You still have a motion for
re -hearing pending. So that's my opinion, Judge.
All right. Thank you, counsel. Mr. Ouellet, anything
in response? Yes. So first, look, I still...
don't understand why Mr. Maglis is talking about
substantive consolidation. This is a issue to
implement a specific contractual agreement with
essentially with certain subordinated creditors
of block by lending who agreed to be subordinated
to all creditors. There's no dispute that there's
assets available at block by lending. In fact,
that's what the plan administrator is seeking
to confirm here. So, you know, I just frankly
don't understand why that is coming up. As to
the 38 million, that's not there for legal fees.
There's potential tax filings that, you know,
the estate is still open this year. There is
all sorts of movement in value of assets that
potentially makes you know, we have to keep a
reserve in case we owe the IRS money. There was
a settlement of the litigation that the state
had against D &O insurers. It was merged with
a settlement of a class action against certain
directors and officers where that proceeding
where the approval of that settlement was significantly
delayed in the securities class action and we
only recently got preliminary approval but it
leads to a problem that all of the information
that we will be getting rid of when we close
is information that the plaintiffs and defendants
might need should that settlement fall through
and it doesn't look like the settlement will
get final approval by the time we would like
to close. It's things like that that are driving
the need for reserves. But the point... Absolutely.
And I want to be very clear so that there's no
confusion. The absolute point is that we would
like to cut off Mr. Van Tubergen's appeal rights
because waiting two years does not comport with
the requirements of the plan or the bankruptcy
code. Mr. Van Tubergen has had his day in court
in this court. He's had his day in court in the
district court. And it is a... well understood
feature of bankruptcy that occasionally appeals
get mooted. It's the whole equitable mootness
doctrine where the most significant thing in
Chapter 11, the confirmation of a plan, can often
appeals be mooted by the plan going effective.
And so where appeals courts have upheld repeatedly,
that you can, in fact, lose your appeal rights
when the underlying issues get mooted if you
did not seek and obtain a stay -pending appeal.
It's how the bankruptcy code is supposed to work.
As for the stay -pending appeal that Mr. Van
Tubering requested and Mr. Magelies referred
to, that's from February of 2024 to a year and
a half ago. It was denied. It was denied before,
Your Honor, before we had the whole issue over
the previous reserve amount, to the extent that
Mr. Van Tubergen wanted to file a motion saying,
here's what reserve, you know, I want to overturn
the estimation of the disputed portions of my
claim at zero. It should have been filed sometime
between, I think it was, Your Honor said that
on September 6th of last year. today September
11th of this year over a year later and Instead
what we have is a Request for a reserve in an
amount to be determined by your honor And I don't
know what what the plan administrator is supposed
to do with that the plan says zero There's no
argument for what would be an appropriate reserve
because no motion was filed And so, Your Honor,
I would submit that the only appropriate reserve
is zero. And the actual relief sought in the
motion, again, was not to estimate the claim
at zero because that's already done. But to say
you've had enough time, the time to file new
motions seeking a new reserve is over. All right,
Mr. Magulies. I'll be very brief, Judge. I have
to take umbrage to that. We discussed the concept
of the line -down debtor estimation motion being
a vehicle to try to hash out some of these issues.
Now, I understand that motion has not been ruled
upon yet, but we saw let's going along on what
I view as procedural quibbles after we've shown
that yes, we did seek a stay, but that's not
even... I don't want to be discussing that because
we can get to the heart of issues that the court
is right now. But to suggest that there was not
some mechanism envisioned to address this, we
all hashed out that their estimation motion would
be that vehicle. And I appreciate them filing
this additional motion in part pursuant to the
prior notice of disputed claims reserve. But
I don't understand the point. These issues are
properly before the court. and the court has
sufficient discretion to award the relief requested.
Now, it might be mercurial in some sense, because
I understand, Judge, we did say, as the court
may deem appropriate, we have faith and confidence
in the court, and we're comfortable with that.
And on the record, I've said today what it could
be. But yeah, I don't want to stand up procedural
arguments. I don't know where we're going with
those. The support of equity, and we discussed...
the potential means of resolving these issues
in good faith. And we're here now. All right.
Thank you, counsel. Court's facing an issue here
where it's been asked to approve a pathway which
will, in effect, mood out future appeals. Now,
Mr. Magulies, on behalf of his client, Mr. Van
Tubergen, has argued and asked for this court
to exercise its equitable powers under Section
105. It is, in this court's view, not equitable
to have Mr. Van Tubergen's ability to pursue
his appellate rights rooted out at this juncture,
where the relief sought by the wind down debtor
could be accomplished almost completely and still
provide some avenue of relief for Mr. Van Tubergen.
By the same token, it is not equitable in this
court's view to have creditors, whether they're
subordinated or not, take on the costs. of having
Mr. Van Tubergen continue his efforts to tilt
that windmills, in this court's view, in the
appeals. Let me be clear and avoid any guessing,
guesswork by parties. Mr. Van Tubergen is not
recovering on a heath, in my opinion. All right,
it'll come out and it will... why and the legal
and factual basis for my denying the relief that
he has requested in finding that there is no
missing needs at all. But that doesn't end the
inquiry or the problem that we're facing. That
just makes it a larger number for which Mr. Ventubergen
will continue to his appellate efforts. to recover
because you won't have any funds in hand that
reduce the amount that is still seeking. I am
concerned that this court would be acting in
a manner that violates the divestiture rule courts
operate under in taking actions that impede and
impair the appellate process. So I am going to
grant all the relief requested in the motion
with the exception pursuant to the authority
I reserve myself in the language of the plan
provided for unless otherwise ordered to mandate
that there be a reserve. The wind out there is
already reserving thirty eight million dollars
or so. Several more millions of dollars in reserve
won't have an impact. You could still make the
wind down administrator can still make substantial
distributions to SEC and FTX and other authorities.
What I will require is that the amount set aside
for Mr. Van Tubergen's claim. It should. act
almost like a wasting insurance policy in that
any fees incurred by the wind down debtor in
contesting the appeals should not come from other
creditors. That's not equitable either. The rest
of the creditors shouldn't bear the costs of
Mr. Van Tubergen continuing to pursue his appellate
rights when he's had a fair opportunity at initial
appeals so that the wind down debtor estates
costs in defending these appeals will come out
of that set aside amount. The question becomes,
what is the proper amount that has to be set
aside? The $10 million request and the proof
of claim is of no greater validity necessarily
than the I actually had less validity than the
zero estimated amount that I've already fixed.
So to say put aside $10 million has no basis.
But no one has given me a sufficient factual
basis to decide how much is fair to set aside.
Yes. the court did assist in trying to mediate.
I have a sense of where the parties could have
gone in mediation, but that's not recovering
an appellate rights. But absent any true way
of fixing a claim set aside amount that is not
simply pulling a number out of thin air. That's
exactly what I'm going to do. is pull a number
out of Fiverre and ask that the wind down debtor
set aside $7 .5 million to cover any reversal
on appeal and allowance of claim Mr. Van Tubergen
can achieve through his appellate rights, but
also to cover any of the wind down debtor's costs.
in defending those appeals. I would urge the
parties to try again at reaching a sensible number
in settlement, but I'm issuing this ruling based
on the court's concern that there should be some
equitable treatment of both the wind down debtor
and Mr. Van Tubergen as he pursues his appellate
right. uh... without harming the subordinated
creditors further or anyone else and i think
this is the best the court can come up with uh...
so i'll respond to any concerns or inquiries
and this is that let me make sure this is clear
this is without prejudice to wind down better
coming back before me should things that should
events develop that require the court to reconsider
uh... maybe certain outcomes on the appeals.
And the same for Mr. Venturbigin. As long as
there's additional funds on hand, he can ask
me to reconsider the fixing of the amount. But
there has to be a reason. So with that, all the
other reliefs sought, and as outlined by Mr.
Manning and his declaration, can be accomplished.
And Mr. Oled, I'll let you submit a proposed
form of order. Thank you, Your Honor. All right.
Mr. Magley, is there anything else on your end?
Obviously, Judge, we're just on the edge of our
seat to read the ruling. I don't want to push
the court. Could you give us a preview, like
the trailer, Judge? I think I did. Your client
loses, unfortunately, from your perspective.
And it'll be out in a day. All right. Thank you.
Thank you.