WEBVTT

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Good afternoon, this is Josh Lopez today is November

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5th I'm gonna call the first day hearings in

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25 906 for to Clip a trafico I will take Appearances

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virtually this is a virtual hearing. There's

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no one in the courtroom everyone is on the line

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Wish everyone a good day Please hit five star

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and I will unmute your line I would also ask

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if you just jump on the Southern District of

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Texas web page You'll find a place to make an

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electronic appearance. Just go to my home page

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You'll find a place for complex cases and where

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to make electronic appearances I'm just going

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to go in the order in which I see them is a 3

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1 2 number Good morning your honor Chad who snick

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with Kirkland and Ellis appearing on behalf of

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the Cleopatra debtors Okay, good afternoon. Here's

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a 9 1 7 number Good afternoon, your honor Scott

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Greenberg kitchen dining structure on behalf

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of the ad hoc first thing group and proposed

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it blenders. Good afternoon a 3 1 2 number Good

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afternoon, your honor Jack lose of Kirkman and

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Alice on behalf of the Dutters you a 7 1 3 number

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Good afternoon, your honor. John Higgins and

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Shane Johnson from Porter and Hedges appearing

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as co -counsel for the debtors with the Carpenter

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team. Okay. Good afternoon. A 646 number? Good

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afternoon, your honor. Bob Britton and Paul Weiss

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on behalf of the FPP parties. Good afternoon,

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Mr. Britton. And a 202 number. Let's see. Mr.

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Jimenez, that must be you. Good afternoon your

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honor Andrew Jimenez for the United States 15.

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Good to see you. Mr. Jimenez 3 1 2 number Good

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afternoon your honor Sean scouted mayor Brown

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on behalf of co -foss finance gmbh one of the

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factors Good afternoon Anyone else wish to make

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an appearance, please hit five star and I will

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unmute your line One more check. Okay, who should

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I turn this over to? And we dumped a fair amount

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of paper on you late last night. So thank you

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for that. I also want to thank Mr. Jimenez and

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his office for working with us. I believe we

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are, for the most part, resolved on issues. We

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may have one or two issues here and there to

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work through, with your honor. But I think with

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the office of the state's trustees' help, we've

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been able to streamline those issues. Your Honor,

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I also, and lastly, want to thank – or not last,

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but I want to thank the parties in interest around

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the room. Your Honor, this has been a huge push

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to get to where we are today. And without them,

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we wouldn't have been able to reach the agreement

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that's going to facilitate. But I think we'll

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be a very smooth process overall. And last and

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very important to this effort was the debtors'

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management team. Your Honor, and – As most management

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teams do in these Chapter 11 cases, they need

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to do two jobs. One is running the business and

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keeping the trains running on time. The two is

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dealing with all the people around this room

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and getting ready for a lengthy Chapter 11 process

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to the extent we're unable to reach a deal. Unfortunately,

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we were able to pull it together, but the management

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team here did a fantastic job of working with

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us and getting everybody in the right spot. Your

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Honor, the second piece that I want to chat about

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is the notice of the first day hearing. So we

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filed an affidavit of service at docket number

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7 -9. It is an affidavit of Ms. Leticia Sanchez

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of Stratto. I noticed, Your Honor, before the

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hearing and entered the order authorizing Stratto

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to service the debtor's notice and claims agent

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as well as the joint administration motion. Ms.

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Sanchez and the Stretto firm took care of serving

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the notice of the first day hearing via electronic

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mail on as many parties as we possibly could,

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overnight delivery on others where we didn't

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have email addresses. That includes, in terms

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of email service, it includes the lenders who

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are party to the RSA, the agent lenders, the

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indenture trustees who are applicable. cash management

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banks, the attorneys general for the various

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states around the union that we do business in,

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as well as the internal revenue service, utility

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providers, and ultimately the insurance folks

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as well. And last but not least, the factors

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that we've already heard from today. With that

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notice, Your Honor, we believe notice of the

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first day hearing and the emergency relief we're

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requesting today. is appropriate. Your Honor,

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unless you have any questions, I'd like to publish

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a short presentation. Okay. I think I've given

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the presenter role. It was a Kirkland presenter.

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There's someone who says they can't hear me.

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I just would remind folks to please dial in as

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well. I was going to do the presentation myself.

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I don't... There's... There was someone... You

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want to give it to you? Sure. I have it ready,

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so... Uh, sure. Oh, it's sharing the whole thing.

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Sorry, thank you. There we go. I think you can

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see the presentation now. Your Honor, we're here

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today for the first day hearing in the cases

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for Cleopatra, Finkel, Sorrow, and 24 of his

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debtors updated. Your Honor, I'm gonna refer

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to them as clock here throughout the presentation,

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which is the common business for the debtors.

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Your Honor, as a result of the hard work and

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efforts of the folks around the room can please

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to present a fully consensual prepackaged Chapter

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11 case that eliminates 1 .3 billion euro of

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debt, provides a full recovery to general and

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secure trade creditors, and positions the company

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to emerge from Chapter 11 as quickly as possible.

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Your Honor, as I already indicated and as you're

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probably well aware, Your Honor, this is a packaging

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company. And we are one of the largest manufacturers

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of packaging materials around the globe. And,

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Your Honor, if I lay out here on the slide the

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different areas that we participate in in terms

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of how we break down our business between pharma,

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nutraceutical, medical devices, consumer packaging,

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et cetera. Now your honor my last attempt at

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courtroom humor was in response to judge Perez's

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invitation to get my ear pierced And you know

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my answer to that question was met with clear

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derision from a variety of publications That

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shall go unnamed, but I got even more derision

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from here at Kirkland So I'm resisting the urge

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your honor to make a joke about the nature of

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a packaging case in a prepackaged case. In fact,

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the associates at Kirkland who are working on

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this case threw it up on a wheel of chance, and

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the wheel said, no, Chad, don't make that joke.

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So I'm not going to make that joke today. Instead,

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I'm going to tell you that as with Mr. Sussberg,

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I think I have significant experience with the

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types of products that Klockner uses and I frankly

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think everybody on this phone call does. Whether

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it's the occasionally allergy pill or cold medication

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that you're popping out of the child -proof blisters,

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the daily use of credit cards, purchasing fresh

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meat and seafood that are wrapped in packaging

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produced by Klockner. I suspect we've all had

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a daily interaction with these types of products.

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But not to be outdone by Mr. Susberg, I did do

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something about a month ago. I went and had surgery

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just so I could say on this presentation that

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I was familiar with why they store the scalpels

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in sterilized packaging and trays along the lines

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of what clock their manufacturers. But joking

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aside, Your Honor, I think What makes Klockner

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unique is its investment in research and development.

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And we invest over 15 million euro every year

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on research and development to continue to be

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a leading provider of sustainable specialized

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packaging. That includes, for example, Your Honor,

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some of our more recent packages like Tray to

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Tray and KP Elite. which use recyclable materials,

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produce the packaging, and minimize the amount

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of packaging necessary, which is an attractive

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trait to our customers who are attempting to

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reduce costs and reduce the overall packaging

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volume. KP Infinity is another more recent example

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of the research and development that our R &D

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group has done. KP Infinity is a product that

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is recyclable. in that it also retains heat.

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And so you're familiar by food service providers

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packaging your meal in one of these. What makes

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it super unique is it's a multi -use type material

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moving away from the polyurethane or expanded

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polyurethane, which is being rejected by regulatory

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regimes around the world. It's that type of innovation

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that has made Klockner what it is. It was founded

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in 1965 and it grew into the United States and

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Canada in the 70s and ultimately is celebrating

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its 60th anniversary this year in 2025. Over

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that time, it has grown, Your Honor, to employ

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approximately 5 ,000 employees around the world,

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27 manufacturing plants in 16 countries. Each

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year, Your Honor, we produce approximately 500

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,000 tons of high -performance film and packaging

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solutions. Your Honor, the debtor's efforts are

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led by the management team that you see here

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on your screen. I want to highlight two of the

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management team who are on the call today. First,

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the debtor's declarant, Mr. Mark Rotella. He

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is the first day declarant. I can see him on

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my screen, hopefully you can see on his. Second

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is Ms. Shanae Mitchell. She is the general counsel

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for the debtors and has worked closely with us

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as we have prepared for today's cases. Your Honor,

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the debtors are managed by a board of managers.

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You see them here. I want to call special attention

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to two of those boards of managers. Moe Mangy

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and Gary Beggeman, they have served as the debtor's

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special committee throughout these restructurings.

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The debtor does have other additional independent

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directors on board that assisted along the way,

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but the special committee was comprised of Mr.

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Mangy and Mr. Beggeman. Your Honor, the capital

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structure here, while complex with many entities,

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ultimately is really pretty simple. We have approximately

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2 .3 billion euro of funded debt that's broken

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down, as you can see on the chart here. All of

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the shaded boxes on the screen are the 25 debtors

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that have convinced these Chapter 11 cases. The

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starred entities, Your Honor, are those that

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are party to the factoring arrangements that

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you'll hear about later in the hearing. We have

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about 1 .8 billion dollars of first lien secured

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debt. We have another 134 million dollars of

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first lien bridge loan debt. And then we have

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some local debt in country. Each of these tranches

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of secured debt are first lien debt secured by

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different collateral. That's an important thing

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to highlight. And then lastly is the second lien

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notes, which approximately 317 million euro.

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Those notes are secured by the same collateral

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as the 1L debt that's highlighted here. Our 1Ls

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are represented by an ad hoc group that has retained

00:14:30.360 --> 00:14:32.580
Gibson Dunn and Mr. Greenberg, who you see on

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the phone, as their counsel. They've also retained

00:14:36.139 --> 00:14:40.570
Houlihan Loki. as their investment banker. The

00:14:40.570 --> 00:14:43.669
second debt – the second lien debt highlighted

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here in the pink boxes is represented – one of

00:14:48.129 --> 00:14:51.009
the large holders of that second lien debt is

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Castle Knight. They hold, I believe, approximately

00:14:53.289 --> 00:14:57.629
80 million – or $90 million of that debt. They

00:14:57.629 --> 00:15:01.350
are represented by Mr. James Savin at Aitken

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Gump. And last but not least, our Strategic Value

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Partners, or SVP, that is the debtor, they own

00:15:11.139 --> 00:15:14.940
substantially all of the equity – not all, but

00:15:14.940 --> 00:15:17.919
substantially all of the equity in the debtors.

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They also hold significant chunk of the 1L debt.

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It's approximately 100 million – I'm sorry, approximately

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50 million. And then they hold approximately

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100 million of the second lien debt alongside

00:15:32.080 --> 00:15:38.980
of CASEL. And here's just a summary of that.

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Your Honor, I've already talked about Kirkland.

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Of course, Mr. Higgins at Porter Hedges. You'll

00:15:45.440 --> 00:15:49.159
hear in our declaration in support of the DIP

00:15:49.159 --> 00:15:53.360
facility the declaration from Mr. Brent Herlihy

00:15:53.360 --> 00:15:58.139
and then our financial advisors at Alvarez and

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Marcell, Mr. John Hickman. And finally, we've

00:16:02.049 --> 00:16:04.750
already talked about Stretto. I'll summarize

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that as well. Your Honor, the debtors refinanced

00:16:09.570 --> 00:16:14.309
substantially all their debt in early 2021 because

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they had debt coming due in 2022. At that time,

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they were riding a bit of the high coming out

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of COVID because a lot of the customers around

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the world increased. their purchasing of the

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goods in order to create back inventory should

00:16:34.830 --> 00:16:39.190
things go sideways during COVID. The lenders

00:16:39.190 --> 00:16:42.929
underwrote those numbers and ultimately believed

00:16:42.929 --> 00:16:45.889
that the company's business would grow into the

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capital structure over time. Unfortunately, the

00:16:50.870 --> 00:16:54.279
industry faced headwinds. There was a drop in

00:16:54.279 --> 00:16:57.600
demand that was caused as the customers realized

00:16:57.600 --> 00:17:01.220
that inventory was too much relative to demand,

00:17:01.539 --> 00:17:04.559
and therefore demand dropped. Meanwhile, the

00:17:04.559 --> 00:17:07.059
prices of raw materials that go into the production

00:17:07.059 --> 00:17:10.039
of the packaging materials increased significantly.

00:17:11.220 --> 00:17:14.180
Those industry headwinds obviously had a very

00:17:14.180 --> 00:17:17.539
negative effect on liquidity, and beginning in

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mid -2023, There was a strain on the debtor's

00:17:21.950 --> 00:17:23.809
business, and there was a series of attempts

00:17:23.809 --> 00:17:26.289
to get additional liquidity, some of which you

00:17:26.289 --> 00:17:30.869
see in the first lien debt. But ultimately, it

00:17:30.869 --> 00:17:34.910
became clear as we headed into the end of 2024

00:17:34.910 --> 00:17:38.069
through April 2025, as the debtors were attempting

00:17:38.069 --> 00:17:41.890
to try and refinance their first lien debt, there

00:17:41.890 --> 00:17:45.089
was a maturity coming up in the early part of

00:17:45.089 --> 00:17:48.710
2026. it became clear that we were going to be

00:17:48.710 --> 00:17:52.549
unable to refinance that debt. So in February

00:17:52.549 --> 00:17:56.250
2025, we obtained some additional financing that

00:17:56.250 --> 00:17:59.210
I just mentioned. And we used that financing

00:17:59.210 --> 00:18:03.190
to negotiate with our first lien lenders on a

00:18:03.190 --> 00:18:06.130
potential amendment -extend transaction. And

00:18:06.130 --> 00:18:08.809
that really took place during the kind of the

00:18:08.809 --> 00:18:13.329
second half of 2025 as we headed into the summer.

00:18:14.250 --> 00:18:18.210
But in early August 2025, Your Honor, it became

00:18:18.210 --> 00:18:21.329
clear that an amendment extend was not going

00:18:21.329 --> 00:18:25.309
to happen. It's at this point, Your Honor, that

00:18:25.309 --> 00:18:28.869
we face a critical moment with waning liquidity,

00:18:30.890 --> 00:18:33.170
contrasting with the debtor's obligations to

00:18:33.170 --> 00:18:36.630
comply with law in all of the jurisdictions around

00:18:36.630 --> 00:18:38.950
the world, including in Germany, where we know

00:18:38.950 --> 00:18:41.529
the financial operational restrictions are quite

00:18:41.529 --> 00:18:47.089
strict. We had faced a conundrum. We could file

00:18:47.089 --> 00:18:50.150
a freefall Chapter 11 case, which would have

00:18:50.150 --> 00:18:53.390
likely been an unmitigated disaster because the

00:18:53.390 --> 00:18:56.789
company was not prepared for a freefall Chapter

00:18:56.789 --> 00:19:01.410
11. Or we could work with our stakeholders to

00:19:01.410 --> 00:19:04.549
try and find another solution. And it's here

00:19:04.549 --> 00:19:07.150
where the ad hoc group of personally lenders

00:19:07.150 --> 00:19:10.920
stepped up in a major way. Your Honor, in about

00:19:10.920 --> 00:19:14.599
the end of August, we reached resolution on a

00:19:14.599 --> 00:19:18.400
forbearance agreement and a bridge financing

00:19:18.400 --> 00:19:21.779
agreement, which was in effect in advance on

00:19:21.779 --> 00:19:24.980
what would be dip financing. They provided us

00:19:24.980 --> 00:19:28.920
with 135 million euro additional liquidity that

00:19:28.920 --> 00:19:32.640
allowed us to satisfy the liquidity, minimum

00:19:32.640 --> 00:19:35.259
liquidity standards that we needed to maintain

00:19:35.259 --> 00:19:37.980
to continue operating the business. and to give

00:19:37.980 --> 00:19:41.700
us sufficient time to actually negotiate with

00:19:41.700 --> 00:19:44.119
all of the stakeholders what was going to happen

00:19:44.119 --> 00:19:47.359
here today. And it's as a result of those efforts

00:19:47.359 --> 00:19:50.220
– and I'd be remiss not to mention the efforts

00:19:50.220 --> 00:19:53.420
of the factors who also played along with us

00:19:53.420 --> 00:19:56.359
as we were navigating these liquidity issues

00:19:56.359 --> 00:20:00.799
– that we were able to reach agreement on the

00:20:00.799 --> 00:20:03.700
terms of the prepackaged case that we filed last

00:20:03.700 --> 00:20:06.500
– that we launched last night for solicitation.

00:20:06.799 --> 00:20:12.140
and filed today. Your Honor, with that, I'm going

00:20:12.140 --> 00:20:15.759
to turn the podium over to my partner, Mr. Jack

00:20:15.759 --> 00:20:18.740
Lewis, to walk through what the deal looks like

00:20:18.740 --> 00:20:22.000
and what the timeline that we're proposing for

00:20:22.000 --> 00:20:27.779
these Chapter 11 cases. Okay. Thank you. Can

00:20:27.779 --> 00:20:29.920
Your Honor hear me okay? Just fine. Good afternoon.

00:20:31.440 --> 00:20:34.099
Good afternoon, your honor. Looking ahead in

00:20:34.099 --> 00:20:36.220
our presentation, we have a couple more slides

00:20:36.220 --> 00:20:40.440
that just set the table as it relates to the

00:20:40.440 --> 00:20:42.339
overall restructuring transaction that we've

00:20:42.339 --> 00:20:45.640
negotiated, as well as the financing that's tied

00:20:45.640 --> 00:20:49.339
to that transaction. And finally, what we view

00:20:49.339 --> 00:20:52.799
as the path ahead in these Chapter 11 cases,

00:20:52.960 --> 00:20:55.640
subject to your honor's approval of our proposed

00:20:55.640 --> 00:20:59.220
scheduling motion. As it relates to the overall

00:20:59.220 --> 00:21:01.019
restructuring transaction, Your Honor, it's a

00:21:01.019 --> 00:21:04.500
relatively straightforward restructuring transaction

00:21:04.500 --> 00:21:08.519
at the end of the day. We executed – the company

00:21:08.519 --> 00:21:12.720
executed an RSA immediately preceding launch

00:21:12.720 --> 00:21:14.900
of their prepackaged cases and the filing of

00:21:14.900 --> 00:21:18.500
these Chapter 11 cases. That includes the debtors

00:21:18.500 --> 00:21:23.480
in these Chapter 11 cases, the first lien lenders

00:21:23.480 --> 00:21:27.130
– represented by Gibson Dunn and Houlihan, plus

00:21:27.130 --> 00:21:29.789
certain additional consenting first -ling lenders.

00:21:29.789 --> 00:21:32.670
It gets us in the neighborhood of 90 percent

00:21:32.670 --> 00:21:36.410
of all outstanding first -ling claims. Plus the

00:21:36.410 --> 00:21:40.430
Castle Knight funds and SVP, which as Mr. Husek

00:21:40.430 --> 00:21:43.410
highlighted, holds the significant majority of

00:21:43.410 --> 00:21:48.210
the 2L claims. Between Castle Knight, SVP, and

00:21:48.210 --> 00:21:50.970
certain cross holdings held by first -ling members

00:21:50.970 --> 00:21:54.059
that are funds that are part of the firstly ad

00:21:54.059 --> 00:21:57.720
hoc group, we have well in excess of two -thirds

00:21:57.720 --> 00:22:02.259
of all two -hour claims party to the RSA. The

00:22:02.259 --> 00:22:06.039
RSA contemplates a prepackaged Chapter 11 process.

00:22:06.839 --> 00:22:10.079
In accordance with the terms of the RSA, we launched

00:22:10.079 --> 00:22:13.740
solicitation of a prepackaged plan immediately

00:22:13.740 --> 00:22:17.119
before the filing. And we anticipate, as I'll

00:22:17.119 --> 00:22:20.380
come on to, that the solicitation process will

00:22:20.380 --> 00:22:24.839
continue through early December. In terms of

00:22:24.839 --> 00:22:27.839
treatment of claims in these Chapter 11 cases,

00:22:28.920 --> 00:22:31.259
the DIP claims, which I'll describe in a little

00:22:31.259 --> 00:22:34.460
more detail on the following slide, will convert

00:22:34.460 --> 00:22:37.680
in their entirety into a new exit facility. The

00:22:37.680 --> 00:22:40.299
company is not required to raise new financing

00:22:40.299 --> 00:22:45.160
to repay and cash the DIP claims at emergence.

00:22:46.440 --> 00:22:51.109
First lien claims. will receive a hundred percent

00:22:51.109 --> 00:22:56.230
of the new equity in reorganized Klockner. There

00:22:56.230 --> 00:22:59.250
are some structuring considerations in the RSA

00:22:59.250 --> 00:23:02.230
as it relates to what type of equity instrument

00:23:02.230 --> 00:23:06.430
certain funds can hold, but effectively the first

00:23:06.430 --> 00:23:09.109
lien lenders will own a hundred percent on a

00:23:09.109 --> 00:23:12.470
per capita basis of the equity in Klockner on

00:23:12.470 --> 00:23:16.160
the other side of the Chapter 11 process. The

00:23:16.160 --> 00:23:18.680
second lien lenders have negotiated a resolution

00:23:18.680 --> 00:23:20.619
with the first lien lenders in the company, under

00:23:20.619 --> 00:23:24.700
which the headline term is that those second

00:23:24.700 --> 00:23:29.200
lien lenders will receive $17 .5 million of incremental

00:23:29.200 --> 00:23:33.299
first lien loans under the first lien exit facility.

00:23:33.420 --> 00:23:37.500
So these will be peripasue with the first lien

00:23:37.500 --> 00:23:41.240
loans that the DIP is converting into. It will

00:23:41.240 --> 00:23:45.700
be an incremental 17 .5 million euro. And those

00:23:45.700 --> 00:23:47.740
loans will be distributed on a pro rata basis

00:23:47.740 --> 00:23:50.299
to all 2L holders. And as I said, we have an

00:23:50.299 --> 00:23:52.940
excess of two -thirds of those holders already

00:23:52.940 --> 00:23:56.380
supporting the plan. Under the terms of this

00:23:56.380 --> 00:23:59.980
plan, and in light of the fact that it is a prepackaged

00:23:59.980 --> 00:24:05.400
restructuring, holders of unsecured claims and

00:24:05.400 --> 00:24:07.460
holders of other claims that aren't the first

00:24:07.460 --> 00:24:11.579
lien claims or second lien claims will be unimpaired

00:24:11.579 --> 00:24:14.369
existing equity interests. predominantly held

00:24:14.369 --> 00:24:16.990
by the SVP funds will be canceled as part of

00:24:16.990 --> 00:24:20.990
this process. The plan also contains customary

00:24:20.990 --> 00:24:23.470
release, exculpation, and injunction provisions,

00:24:23.789 --> 00:24:25.970
which are for more detailed consideration when

00:24:25.970 --> 00:24:30.569
we get the confirmation. Flipping ahead a slide,

00:24:31.130 --> 00:24:32.970
a brief summary, and we'll get into a little

00:24:32.970 --> 00:24:36.470
more detail in connection with the financing

00:24:36.470 --> 00:24:39.730
motion, Your Honor. but to sort of set the table

00:24:39.730 --> 00:24:42.309
for your honor as to the overall structure of

00:24:42.309 --> 00:24:45.410
the DIP financing. The overall quantum of DIP

00:24:45.410 --> 00:24:51.390
financing is €984 million. That includes a $349

00:24:51.390 --> 00:24:57.009
million new money component and a $635 million

00:24:57.009 --> 00:25:00.089
roll -up of existing first lien obligations.

00:25:01.310 --> 00:25:04.089
As it relates to the new money portion of the

00:25:04.089 --> 00:25:08.170
DIP, $264 million of that will be available on

00:25:08.170 --> 00:25:12.829
the first day following Your Honor's entry of

00:25:12.829 --> 00:25:16.289
the interim order and finalization of the DIP

00:25:16.289 --> 00:25:19.250
credit agreement. At the final hearing, an incremental

00:25:19.250 --> 00:25:24.490
$85 million will be made available. As we've

00:25:24.490 --> 00:25:28.269
noted here, Your Honor, under the initial draw

00:25:28.269 --> 00:25:33.259
of the DIP, The pre -petition bridge financing,

00:25:34.160 --> 00:25:37.839
which with accrued fees equates to approximately

00:25:37.839 --> 00:25:41.940
134 million euro, will be fully refinanced in

00:25:41.940 --> 00:25:45.500
cash. There is a distinction and it is a distinction

00:25:45.500 --> 00:25:48.380
with the difference between the refinancing of

00:25:48.380 --> 00:25:51.660
the bridge facility and the roll -up of the existing

00:25:51.660 --> 00:25:56.099
first link claims. That will be a cash refinancing,

00:25:56.259 --> 00:25:59.400
the existing, the DIP lenders are advancing cash

00:25:59.400 --> 00:26:02.299
to refinance that loan. There is not one -to

00:26:02.299 --> 00:26:05.460
-one overlap between the DIP lenders given the

00:26:05.460 --> 00:26:07.619
growth in the group and the participants in the

00:26:07.619 --> 00:26:10.819
DIP facility as between the DIP and the bridge.

00:26:11.859 --> 00:26:14.819
And it was a negotiated part of both the bridge

00:26:14.819 --> 00:26:17.980
financing and the ultimate DIP financing that

00:26:17.980 --> 00:26:21.579
that financing would be refinanced in full as

00:26:21.579 --> 00:26:25.240
part of the bridge. That bridge was put in in

00:26:25.240 --> 00:26:28.720
late August with the specific intention of providing

00:26:28.720 --> 00:26:32.259
a runway for the debtors and their lenders to

00:26:32.259 --> 00:26:36.660
negotiate a consensual restructuring. Obviously,

00:26:36.779 --> 00:26:40.299
the initial goal was to negotiate a restructuring

00:26:40.299 --> 00:26:43.559
supported by the company and its personally lenders.

00:26:43.839 --> 00:26:45.900
Ultimately, we were able to achieve much more

00:26:45.900 --> 00:26:49.130
consensus than that, bringing on board the 2L

00:26:49.130 --> 00:26:56.369
lenders and SVP as equity sponsor. That bridge

00:26:56.369 --> 00:26:59.089
was always contemplated to be part of a broader

00:26:59.089 --> 00:27:02.049
facility that not only funded the negotiation

00:27:02.049 --> 00:27:05.990
period, but also the debtor's broader restructuring.

00:27:07.309 --> 00:27:10.910
And the sizing, even contemplated in late August,

00:27:11.029 --> 00:27:13.089
has always contemplated that there would be a

00:27:13.089 --> 00:27:17.609
larger facility sized to fund the liquidity need

00:27:17.609 --> 00:27:19.730
of the debtors during the implementation of the

00:27:19.730 --> 00:27:23.589
restructuring that was negotiated and fill the

00:27:23.589 --> 00:27:28.349
liquidity need that the debtors have to satisfy

00:27:28.349 --> 00:27:30.630
trade claims and other operational obligations.

00:27:32.329 --> 00:27:35.250
Under the interim draw, $130 million of cash

00:27:35.250 --> 00:27:37.450
stays on the debtor's balance sheet and will

00:27:37.450 --> 00:27:41.049
be available to satisfy operational need for

00:27:41.049 --> 00:27:43.150
the debtors over the first portion of the case.

00:27:43.440 --> 00:27:47.420
The remaining $85 million will enable the debtors

00:27:47.420 --> 00:27:50.700
to satisfy the balance of the operational obligations

00:27:50.700 --> 00:27:54.160
and capitalize the debtors sufficiently for emergence.

00:27:54.859 --> 00:27:56.940
The plan does not contemplate that the debtors

00:27:56.940 --> 00:27:59.859
will be required to raise additional capital

00:27:59.859 --> 00:28:04.980
to exit. Unless Your Honor has any questions

00:28:04.980 --> 00:28:09.019
on the div structure, I was going to touch briefly

00:28:09.019 --> 00:28:11.359
on timeline and then pause before we go into

00:28:11.359 --> 00:28:16.579
the agenda. Okay. Your Honor, we're here on the

00:28:16.579 --> 00:28:20.599
first day hearing, November 5th. We contemplate

00:28:20.599 --> 00:28:25.000
a full solicitation process in compliance with

00:28:25.000 --> 00:28:28.660
the bankruptcy rules and applicable non -bankruptcy

00:28:28.660 --> 00:28:33.799
law and have noticed a voting and opt -out and

00:28:33.799 --> 00:28:37.759
objection deadline of December 11th. And subject

00:28:37.759 --> 00:28:40.440
to Your Honor's availability, we would request

00:28:40.640 --> 00:28:45.220
a confirmation hearing on or about December 16th.

00:28:45.279 --> 00:28:49.220
The RSA contemplates a 45 -day milestone for

00:28:49.220 --> 00:28:53.700
the confirmation. December 16th is around about

00:28:53.700 --> 00:28:58.000
day 42. When we get there, Your Honor, we would

00:28:58.000 --> 00:29:00.559
also request – we're going to need a second -day

00:29:00.559 --> 00:29:04.220
hearing inside of that day, given the company's

00:29:04.220 --> 00:29:07.599
cash needs and the interim and final relief contemplated

00:29:07.599 --> 00:29:12.359
by the system. What dates did you Around what

00:29:12.359 --> 00:29:15.720
dates like around that December 3rd 4th area

00:29:15.720 --> 00:29:20.440
somewhere on there? somewhere around 25 days

00:29:20.440 --> 00:29:22.359
obviously we have Thanksgiving at the end of

00:29:22.359 --> 00:29:25.299
the month so I think that puts us in the first

00:29:25.299 --> 00:29:32.579
week of December your honor, okay Okay, okay

00:29:32.579 --> 00:29:37.000
Your honor ask any questions from your honor

00:29:37.000 --> 00:29:40.630
that concludes our initial presentation. We would

00:29:40.630 --> 00:29:43.150
pause there if any other parties in interest

00:29:43.150 --> 00:29:46.490
have opening statements to make. Otherwise, we

00:29:46.490 --> 00:29:48.569
would jump into the agenda starting with the

00:29:48.569 --> 00:30:08.880
scheduling motion. Your Honor, and I will be

00:30:08.880 --> 00:30:11.900
brief, Mr. Hussnick warned me to be very brief,

00:30:12.119 --> 00:30:15.259
or he threatened me with more jokes for the court.

00:30:17.299 --> 00:30:18.880
But in all seriousness, Your Honor, there's a

00:30:18.880 --> 00:30:20.839
lot of history here, and look, we're at a really

00:30:20.839 --> 00:30:22.759
good place, obviously, coming before Your Honor

00:30:22.759 --> 00:30:24.640
with a prepackaged case, so I'm not going to

00:30:24.640 --> 00:30:26.299
go all the way down memory lane, but I do want

00:30:26.299 --> 00:30:29.160
to just hit on a couple points. Your honor the

00:30:29.160 --> 00:30:31.720
members of our ad hoc group are part of a broader

00:30:31.720 --> 00:30:34.660
group That are the existing bridge lenders and

00:30:34.660 --> 00:30:37.380
the 1l creditors and obviously the proposed dip

00:30:37.380 --> 00:30:41.259
lenders in these pre -packaged cases We are also

00:30:41.259 --> 00:30:43.839
parties to the RSA which the Vedders have mentioned

00:30:43.839 --> 00:30:46.779
that supported I think the the numbers shook

00:30:46.779 --> 00:30:49.519
out right around 92 percent of the existing first

00:30:49.519 --> 00:30:52.880
-ling creditors And if it's ultimately approved

00:30:52.880 --> 00:30:55.339
the transaction contemplated by the RSA embodied

00:30:55.339 --> 00:30:58.930
in the plan results in a deleveraging of approximately

00:30:58.930 --> 00:31:02.029
$1 .3 billion of these debtors' balance sheet.

00:31:03.730 --> 00:31:06.049
Your Honor, just quickly, in terms of a little

00:31:06.049 --> 00:31:07.869
bit of background, because we've actually been

00:31:07.869 --> 00:31:11.069
involved in this case for quite some time, dating

00:31:11.069 --> 00:31:14.569
all the way back to April of 2024, when this

00:31:14.569 --> 00:31:18.250
ad hoc group first came together, the ad hoc

00:31:18.250 --> 00:31:20.150
group, I know we've thrown around a couple different

00:31:20.150 --> 00:31:22.089
numbers, but the ad hoc group is approximately

00:31:22.089 --> 00:31:25.690
82%. of the company is approximately $2 billion

00:31:25.690 --> 00:31:29.650
of first lien debt. We filed a 2019, that's at

00:31:29.650 --> 00:31:33.890
ECF statement 75 that has the detail. But it's

00:31:33.890 --> 00:31:37.109
a combination effectively of first lien term

00:31:37.109 --> 00:31:39.490
loans, US and Euro denominated given what the

00:31:39.490 --> 00:31:42.130
business is, first lien bonds, and I think the

00:31:42.130 --> 00:31:45.650
group owns actually about 46, 47 % of the RCF

00:31:45.650 --> 00:31:48.869
as well. I agree with Mr. Hussnick, it's not

00:31:48.869 --> 00:31:51.579
the world's most... complicated capital structure

00:31:51.579 --> 00:31:53.640
per se, but just given the global footprint of

00:31:53.640 --> 00:31:59.119
the company, it is challenging. And that issue

00:31:59.119 --> 00:32:01.299
came up in connection with the bridge facility

00:32:01.299 --> 00:32:03.720
we put in over the summer, which was referenced.

00:32:04.480 --> 00:32:07.680
Just by way of background, we've probably been

00:32:07.680 --> 00:32:09.779
in active discussions on again, off again with

00:32:09.779 --> 00:32:12.700
the company since the end of 24. The company

00:32:12.700 --> 00:32:16.480
did effectively an exchange offer in April of

00:32:16.480 --> 00:32:18.259
last year, where they converted some of the unsecured

00:32:18.259 --> 00:32:22.829
notes into 2Ls. After they finished that exchange

00:32:22.829 --> 00:32:24.650
offer in the spring, they really turned to our

00:32:24.650 --> 00:32:27.329
group, which was more 1L -oriented, because as

00:32:27.329 --> 00:32:29.470
you heard from the debtors, you had maturities

00:32:29.470 --> 00:32:32.309
approaching, and they were having some issues

00:32:32.309 --> 00:32:34.349
recognizing they probably couldn't tap the capital

00:32:34.349 --> 00:32:36.829
markets to refinance this out. They also had

00:32:36.829 --> 00:32:40.230
some issues with liquidity. I will say, without

00:32:40.230 --> 00:32:44.710
going too far down memory lane, we spent a significant

00:32:44.710 --> 00:32:48.329
portion of time in the spring of last year leading

00:32:48.329 --> 00:32:51.789
into the summer negotiating an A &E transaction,

00:32:52.109 --> 00:32:55.430
which is where this originally started. That

00:32:55.430 --> 00:32:59.190
transaction literally got to a point where all

00:32:59.190 --> 00:33:02.789
documentation was done. I think I actually had

00:33:02.789 --> 00:33:05.349
started to restrict other lenders in the syndicate

00:33:05.349 --> 00:33:08.190
to get support for the A &E before we launched.

00:33:09.190 --> 00:33:12.269
And unfortunately, at the end, for reasons obviously

00:33:12.269 --> 00:33:15.130
in their own business determination, the company

00:33:15.130 --> 00:33:17.329
and the sponsors decided not to move forward.

00:33:17.660 --> 00:33:20.680
with the A &E transaction. And that transaction,

00:33:21.460 --> 00:33:23.380
just to provide a little context of how we got

00:33:23.380 --> 00:33:26.859
to the bridge, since it's part of the refinancing

00:33:26.859 --> 00:33:30.900
today, that transaction was effectively $275

00:33:30.900 --> 00:33:33.240
million of fresh capital coming in to support

00:33:33.240 --> 00:33:36.180
the A &E. Some of that for balance sheet cash,

00:33:36.319 --> 00:33:39.160
some of that to pay down our lenders in connection

00:33:39.160 --> 00:33:43.559
with rolling their maturities. And that fell

00:33:43.559 --> 00:33:48.029
apart in late July. And then in mid -August,

00:33:48.109 --> 00:33:51.630
as Mr. Hysnick said, shortly after the A &E failed,

00:33:51.650 --> 00:33:53.589
which I think all of our folks were probably

00:33:53.589 --> 00:33:56.470
still licking their chops a little bit, having

00:33:56.470 --> 00:33:59.089
gotten to the finish line, we did get a call

00:33:59.089 --> 00:34:02.529
from the debtors' advisors letting us know that

00:34:02.529 --> 00:34:04.750
not only was the A &E dead and the equity injection

00:34:04.750 --> 00:34:07.789
dead, but they needed approximately $100 million

00:34:07.789 --> 00:34:11.469
of liquidity and relief on our first -line debt

00:34:11.469 --> 00:34:14.730
payments that were coming due that month. Obviously,

00:34:14.769 --> 00:34:17.639
that was a bit of a 180 for us. Given we were

00:34:17.639 --> 00:34:20.320
going from a par exchange in A &E and, you know,

00:34:20.380 --> 00:34:23.659
the sponsor staying in place to preparing to

00:34:23.659 --> 00:34:26.179
write a check to prevent the company from, as

00:34:26.179 --> 00:34:28.820
Mr. Husnik outlined and I agree with, what would

00:34:28.820 --> 00:34:32.719
have been a pretty catastrophic collapse into

00:34:32.719 --> 00:34:35.159
Chapter 11, particularly if you think about some

00:34:35.159 --> 00:34:37.480
of the foreign jurisdictions, Germany and the

00:34:37.480 --> 00:34:39.099
like, which would have been implicated and are

00:34:39.099 --> 00:34:42.519
obviously a lot less forgiving than our processes

00:34:42.519 --> 00:34:46.719
here in the U .S. So against that backdrop, Our

00:34:46.719 --> 00:34:49.480
lenders stepped up. They provided the incremental

00:34:49.480 --> 00:34:52.760
bridge. That was about 112 million euro at the

00:34:52.760 --> 00:34:54.260
time. Obviously, some fees have been created

00:34:54.260 --> 00:34:57.159
on that since. All I would say, and this just

00:34:57.159 --> 00:34:59.900
goes to the capital structure point, it was actually

00:34:59.900 --> 00:35:02.059
a pretty complicated bridge to put in place just

00:35:02.059 --> 00:35:05.059
because of where the assets are located and trying

00:35:05.059 --> 00:35:08.460
to take liens in foreign jurisdictions. It was

00:35:08.460 --> 00:35:10.539
a little bit of a hodgepodge of our Kirkland

00:35:10.539 --> 00:35:13.159
and Gibson finance lawyers to really get comfortable.

00:35:13.530 --> 00:35:15.730
that we came up with a collateral package that

00:35:15.730 --> 00:35:19.070
worked for the bridge. But I agree with the debtor's

00:35:19.070 --> 00:35:20.889
commentary, the thought process was always that

00:35:20.889 --> 00:35:23.150
we would get to this point in time where the

00:35:23.150 --> 00:35:25.190
bridge would be taken out by a dip facility.

00:35:26.449 --> 00:35:29.530
And just by way of background, that bridge was

00:35:29.530 --> 00:35:31.610
put in place, fantastic timing for all of us

00:35:31.610 --> 00:35:34.929
on the phone, it was late August. We put it in

00:35:34.929 --> 00:35:38.610
place, we batched, stopped it, and then Houlihan

00:35:38.610 --> 00:35:41.489
and company went out and did a post -closed syndication.

00:35:41.920 --> 00:35:44.480
And eventually we got, I think, about 84, 85

00:35:44.480 --> 00:35:48.059
percent of folks into that bridge over the summer.

00:35:49.280 --> 00:35:51.239
And just to fast forward, that's kind of Labor

00:35:51.239 --> 00:35:53.739
Day. From Labor Day to today or the last couple

00:35:53.739 --> 00:35:56.199
of weeks, we've effectively been spending a lot

00:35:56.199 --> 00:35:58.139
of time with the debtors. They redid their business

00:35:58.139 --> 00:36:00.440
plan. As you saw at the outset, they brought

00:36:00.440 --> 00:36:02.760
in independent directors who got deeply involved

00:36:02.760 --> 00:36:06.039
and came up to speed. And the goal was to get

00:36:06.039 --> 00:36:09.940
to a soft landing into bankruptcy and then The

00:36:09.940 --> 00:36:12.659
good news, obviously, is just in the last weekend,

00:36:13.280 --> 00:36:16.239
we were able to cut a deal with the second liens,

00:36:16.500 --> 00:36:19.280
mainly Castle Knight, represented by Aiken, with

00:36:19.280 --> 00:36:21.460
Mr. Britton's clients, SVP, and the sponsor,

00:36:21.539 --> 00:36:23.780
both in their sponsor capacity and lender capacity,

00:36:24.400 --> 00:36:27.460
where we, I think, since Friday to today, pivoted

00:36:27.460 --> 00:36:29.500
from what was going to be a prearranged in front

00:36:29.500 --> 00:36:32.840
of your honor to a prepack. So a good result.

00:36:32.940 --> 00:36:36.179
So just to say it, I mean, it's been a long road.

00:36:36.360 --> 00:36:39.690
It's gone from a consensual A &E to no deal,

00:36:39.989 --> 00:36:43.610
to a liquidity crisis, to a freefall, to a prearrange,

00:36:43.610 --> 00:36:46.889
to a pre -pack. I would say the back – the last

00:36:46.889 --> 00:36:49.250
ending has been very good. And I won't get into

00:36:49.250 --> 00:36:52.210
the depth. We'll hit that as Mr. Lewis hits it

00:36:52.210 --> 00:36:55.349
in the opening presentation. But I think from

00:36:55.349 --> 00:36:58.429
our perspective, it's been a long ride. We've

00:36:58.429 --> 00:37:01.170
gotten to a good place. I think our hope – probably

00:37:01.170 --> 00:37:02.769
our clients' hope is that they never have to

00:37:02.769 --> 00:37:04.489
talk to any of us again, make a focus on the

00:37:04.489 --> 00:37:06.889
business, and get this company in and out of

00:37:06.889 --> 00:37:09.460
bankruptcy as quickly as possible. So I appreciate

00:37:09.460 --> 00:37:12.400
the time, Your Honor, and with that, Mr. Luiz,

00:37:12.619 --> 00:37:14.199
I'm sorry to steal your thunder. I'll hand it

00:37:14.199 --> 00:37:17.960
back to you. Perfect. Thank you very much. Anyone

00:37:17.960 --> 00:37:29.340
else? Just check. Okay. Who do I turn it over

00:37:29.340 --> 00:37:34.190
to? All right. Jack Lewis again from Kirkland

00:37:34.190 --> 00:37:36.769
Alice on behalf of the debtors I will be taking

00:37:36.769 --> 00:37:39.809
us through the first two motions that are up

00:37:39.809 --> 00:37:43.849
on the agenda Before we jump into those your

00:37:43.849 --> 00:37:48.710
honor We'd like to move into the record the support

00:37:48.710 --> 00:37:54.570
for the first day motions and Get financing those

00:37:54.570 --> 00:37:57.889
are the declarations of mr. Mark Rotella the

00:37:57.889 --> 00:38:02.900
CFO of clockner docket number four And then,

00:38:03.079 --> 00:38:06.139
in support of the did financing and use of cash

00:38:06.139 --> 00:38:10.480
collateral, the declaration of Brent Herlihy

00:38:10.480 --> 00:38:15.039
of PJT at Dock Number 25, and declaration of

00:38:15.039 --> 00:38:18.219
Jonathan Hickman from A &M at Dock Number 26.

00:38:18.639 --> 00:38:22.139
All witnesses are available in the virtual courtroom

00:38:22.139 --> 00:38:26.320
for cross. Okay. They're admitted. Subject to

00:38:26.320 --> 00:38:31.599
cross. Thank you, Your Honor. Moving on to the

00:38:31.599 --> 00:38:36.340
first motion on the agenda, at docket number

00:38:36.340 --> 00:38:40.159
seven is the debtor scheduling motion. Your Honor,

00:38:40.300 --> 00:38:43.199
I hit the high points of scheduling. In the intro,

00:38:43.500 --> 00:38:47.019
we are seeking to advance these cases to confirmation

00:38:47.019 --> 00:38:50.300
by mid -December. Subject to Your Honor's availability,

00:38:50.420 --> 00:38:53.840
we have requested a hearing date of December

00:38:53.840 --> 00:38:58.559
16th. which we would expect to be a fairly streamlined

00:38:58.559 --> 00:39:02.639
confirmation hearing. We have noticed an objection

00:39:02.639 --> 00:39:07.460
deadline and voting deadline of December 11th.

00:39:08.400 --> 00:39:10.500
I wasn't planning to go into much more detail,

00:39:10.619 --> 00:39:12.300
Your Honor, unless Your Honor has any questions

00:39:12.300 --> 00:39:15.059
about the orders or forms of exhibit. It's all

00:39:15.059 --> 00:39:17.420
relatively standard, straightforward solicitation

00:39:17.420 --> 00:39:20.219
procedures, ballots, et cetera. We launched,

00:39:20.320 --> 00:39:23.539
as I said, immediately before the filing yesterday

00:39:23.539 --> 00:39:28.780
afternoon. Okay, let me just see if anyone wishes

00:39:28.780 --> 00:39:35.900
to be heard in connection with this motion Your

00:39:35.900 --> 00:39:38.079
honor and energy minutes for the u .s. Trustee

00:39:38.079 --> 00:39:42.280
no issues with this motion. I just want to Just

00:39:42.280 --> 00:39:45.360
expand a little bit for for the quarter for everyone

00:39:45.360 --> 00:39:50.280
Listening in that this this this this order also

00:39:50.280 --> 00:39:53.659
includes deals with the 341 meeting and schedules

00:39:54.639 --> 00:39:57.340
If the debtors are able to confirm a plan within

00:39:57.340 --> 00:40:00.739
62 days, then the 341 meeting will be waived

00:40:00.739 --> 00:40:03.139
and the filing of schedules. However, if the

00:40:03.139 --> 00:40:05.619
debtors do not meet that deadline of confirming

00:40:05.619 --> 00:40:09.980
by day 62, the U .S. Treasury will schedule a

00:40:09.980 --> 00:40:12.079
341 meeting and the debtors will be required

00:40:12.079 --> 00:40:15.139
to file schedules. That makes perfect sense to

00:40:15.139 --> 00:40:23.809
me. Thank you very much. Anyone else? Okay. Here

00:40:23.809 --> 00:40:26.969
what we have is just a scheduling motion. I've

00:40:26.969 --> 00:40:30.190
reviewed the proposed timeline. It's appropriate.

00:40:32.590 --> 00:40:37.090
It's already started. I'm going to give you a

00:40:37.090 --> 00:40:40.329
combined hearing date on December 16th at 1 p

00:40:40.329 --> 00:40:50.909
.m. And I will review the, again, everybody's

00:40:50.909 --> 00:40:53.789
rights are preserved in connection with Plan

00:40:53.789 --> 00:40:56.309
confirmation related issues. This is literally

00:40:56.309 --> 00:41:00.190
just a Scheduling motion, but I'm also approving

00:41:00.190 --> 00:41:03.789
the forms of notices so I do Note and everybody's

00:41:03.789 --> 00:41:06.409
rights are reserved with respect to have what

00:41:06.409 --> 00:41:09.269
I would call more substantive matters related

00:41:09.269 --> 00:41:13.590
to plan confirmation But the forms are appropriate

00:41:13.590 --> 00:41:17.590
I've had an opportunity to review those they're

00:41:17.590 --> 00:41:20.090
customary in our district and quite frankly around

00:41:20.090 --> 00:41:24.949
the country everybody's We're really just establishing

00:41:24.949 --> 00:41:28.429
dates the dates are satisfy the bankruptcy rules

00:41:28.429 --> 00:41:32.130
and provisions of the bankruptcy code So I will

00:41:32.130 --> 00:41:34.449
just looks like mr.. Luz I'm just going to fill

00:41:34.449 --> 00:41:38.090
in December 16th at 1 your objection deadline

00:41:38.090 --> 00:41:42.030
works And then we'll we'll take those up the

00:41:42.030 --> 00:41:44.349
forms of publication are obviously appropriate

00:41:44.349 --> 00:41:46.929
And again everybody's rights are are preserved,

00:41:46.949 --> 00:41:54.449
and I'll get that signed in on the docket Yep,

00:41:55.650 --> 00:41:58.030
I put it in the in the kind of the mini box to

00:41:58.030 --> 00:42:00.050
where it kind of just talked about December 16

00:42:00.050 --> 00:42:02.690
or just at any time Just I just added the at

00:42:02.690 --> 00:42:19.500
1 p .m. Prevailing central In the introduction,

00:42:19.639 --> 00:42:22.559
we went through the overall structure of the

00:42:22.559 --> 00:42:25.280
DIP, Your Honor, but just to hit on the numbers,

00:42:26.019 --> 00:42:30.400
what we're seeking relief for today is for $264

00:42:30.400 --> 00:42:35.820
million of refinancing. $134 million of that

00:42:35.820 --> 00:42:38.340
new financing will be used to refinance the bridge

00:42:38.340 --> 00:42:42.980
facility in full. In addition, we are seeking

00:42:42.980 --> 00:42:47.969
on an interim basis $480 million approvals roll

00:42:47.969 --> 00:42:52.449
up $480 million of existing first lien claims.

00:42:54.369 --> 00:42:58.369
With the remaining $85 million of new money and

00:42:58.369 --> 00:43:03.349
$155 million of roll -up being on the final order,

00:43:04.130 --> 00:43:09.630
those ratios of roll -up remain consistent from

00:43:09.630 --> 00:43:12.210
interim to final. It's just that the company

00:43:12.210 --> 00:43:16.110
is in more need of liquidity up front. Your Honor.

00:43:16.230 --> 00:43:20.269
Speaking to the overall liquidity need, the company

00:43:20.269 --> 00:43:23.630
was running very low on cash in late August,

00:43:24.130 --> 00:43:27.269
which is why we required a new bridge financing

00:43:27.269 --> 00:43:30.590
facility. That bridge financing facility was

00:43:30.590 --> 00:43:34.210
sized for basically a six -week negotiation process.

00:43:34.949 --> 00:43:38.849
And we would get to the terms of an RSA and launch

00:43:38.849 --> 00:43:41.550
implementation from there. We are now on week

00:43:41.550 --> 00:43:44.510
10. The company has been required for several

00:43:44.510 --> 00:43:49.739
weeks now to manage liquidity very closely and

00:43:49.739 --> 00:43:54.000
has had to bear the additional burden of the

00:43:54.000 --> 00:43:57.519
costs of the various professionals that are in

00:43:57.519 --> 00:44:00.860
the virtual courtroom today that it takes to

00:44:00.860 --> 00:44:04.980
get to a prepackaged plan. The company is in

00:44:04.980 --> 00:44:08.179
dire need of an additional liquidity infusion,

00:44:08.300 --> 00:44:11.480
the liquidity that's contemplated by the RSA

00:44:11.480 --> 00:44:14.579
to begin to normalize terms with its vendors.

00:44:14.920 --> 00:44:18.239
ensure that it's sort of hitting its operational

00:44:18.239 --> 00:44:22.099
targets as usual, which is what this facility

00:44:22.099 --> 00:44:25.880
is sized for and what the company is intending

00:44:25.880 --> 00:44:29.820
to do after the funding comes in the door. As

00:44:29.820 --> 00:44:32.059
we sit here today, the company has less than

00:44:32.059 --> 00:44:35.360
$50 million global cash, a portion of which is

00:44:35.360 --> 00:44:38.320
restricted in an aggregate amount. That's well

00:44:38.320 --> 00:44:41.460
below the company's normal minimum operating

00:44:41.460 --> 00:44:48.250
cash requirement. set forth in more detail and

00:44:48.250 --> 00:44:50.829
especially the declarations of Mr. Rotella and

00:44:50.829 --> 00:44:59.170
Mr. Hickman. An interim draw is sized to allow

00:44:59.170 --> 00:45:01.809
the debtors to sort of normalize terms over the

00:45:01.809 --> 00:45:06.710
interim period and in some ways catch up from

00:45:06.710 --> 00:45:08.690
the stretch that's occurred over the past several

00:45:08.690 --> 00:45:12.590
years. I touched on it before, Your Honor, the

00:45:12.590 --> 00:45:16.380
refi at the bridge. It just takes from the roll

00:45:16.380 --> 00:45:20.059
-up. That bridge facility was a very specific

00:45:20.059 --> 00:45:22.539
facility, as Mr. Greenberg mentioned, with very

00:45:22.539 --> 00:45:26.039
specific position collateral that differs from

00:45:26.039 --> 00:45:30.980
the broader collateral base of the 1L being refinanced.

00:45:31.460 --> 00:45:35.039
That sort of one -to -one basis lenders collateral

00:45:35.039 --> 00:45:37.940
being refinanced into the overall dip facility.

00:45:38.420 --> 00:45:40.699
Lenders really – or the debtors really think

00:45:40.699 --> 00:45:44.139
of this as one financing facility. Money that

00:45:44.139 --> 00:45:46.440
was extended in late August and the money that's

00:45:46.440 --> 00:45:49.559
being extended pursuant to the DIP facility.

00:45:50.079 --> 00:45:54.780
Size to accomplish one restructuring. And we're

00:45:54.780 --> 00:45:57.960
fortunate that the second phase of restructuring

00:45:57.960 --> 00:46:01.599
will be more truncated. Now that we've had an

00:46:01.599 --> 00:46:04.400
opportunity to negotiate the terms of the RSA.

00:46:06.860 --> 00:46:10.460
And so we submit that that is an appropriate

00:46:10.460 --> 00:46:14.829
use of funds. on an interim basis. And it's the

00:46:14.829 --> 00:46:16.710
protection that the lenders bargain for when

00:46:16.710 --> 00:46:20.429
they advance the funds initially. And the company

00:46:20.429 --> 00:46:24.389
believes that they're entitled to now, given

00:46:24.389 --> 00:46:26.630
the extraordinary results that the provision

00:46:26.630 --> 00:46:31.630
of the provision of the ultimately in these cases.

00:46:33.809 --> 00:46:38.250
The remaining roll -up is a typical roll -up

00:46:38.250 --> 00:46:42.489
of It's 1L obligations. The dip obligations will

00:46:42.489 --> 00:46:46.909
be against all of debtors, honor which substantially

00:46:46.909 --> 00:46:51.989
overlaps with the petition obligores. And the

00:46:51.989 --> 00:46:54.710
dip obligations, as your honor might expect,

00:46:56.489 --> 00:46:59.429
are all assets of the debtors subject to various

00:46:59.429 --> 00:47:02.809
sort of local law perfection requirements. That's

00:47:02.809 --> 00:47:05.630
just reference to the intro. The company has

00:47:05.630 --> 00:47:07.789
entities all over the world and so intend to

00:47:07.789 --> 00:47:13.510
comply with the various. The order otherwise

00:47:13.510 --> 00:47:16.510
contains a fairly standard suite of protections

00:47:16.510 --> 00:47:19.750
for the lenders with certain commissions being

00:47:19.750 --> 00:47:22.289
subject to the final order of your honor we have

00:47:22.289 --> 00:47:28.130
challenge period the challenge period runs 60

00:47:28.130 --> 00:47:32.269
days from the later I should say of 60 days from

00:47:32.269 --> 00:47:34.730
entry of the interim order or for a commitment

00:47:34.730 --> 00:47:38.530
appointment not of course the anticipating appointment

00:47:49.929 --> 00:47:57.309
Yeah, that is the one that takes out the marshaling

00:47:57.309 --> 00:47:59.909
the equitable it's the one with the Martian language,

00:47:59.909 --> 00:48:09.690
right? Preserving the right Preserving the right

00:48:09.690 --> 00:48:12.170
right right that nothing in the interim preserving

00:48:12.170 --> 00:48:13.789
the right in connection with the final to come

00:48:13.789 --> 00:48:17.550
in and still requested and Wiping them out. I

00:48:17.550 --> 00:48:19.969
did get a chance to see that makes sense to me.

00:48:20.670 --> 00:48:23.909
Yeah Language in there is there's some cleanup.

00:48:23.909 --> 00:48:27.949
I would call it language Related to our factoring

00:48:27.949 --> 00:48:30.250
arrangements. There's some very specifically

00:48:30.250 --> 00:48:33.130
negotiated language in here as it relates to

00:48:33.760 --> 00:48:36.400
about the collateral and relative priority of

00:48:36.400 --> 00:48:41.420
our factors and our dip lenders. And we appreciate

00:48:41.420 --> 00:48:43.619
both sides engaging in that. Oh, I did see that,

00:48:44.179 --> 00:48:48.320
yeah. Reaching a resolution. But that is a resolution

00:48:48.320 --> 00:48:50.619
that all parties are happy with, including the

00:48:50.619 --> 00:48:55.659
company. So just the last point, Your Honor,

00:48:55.900 --> 00:49:00.480
on season costs. As set forth in more detail

00:49:00.480 --> 00:49:03.130
in Mr. Hurley Heath's declaration, So it's an

00:49:03.130 --> 00:49:07.130
expensive, arm's length negotiation between the

00:49:07.130 --> 00:49:10.309
company and its lenders, led by the special committee

00:49:10.309 --> 00:49:13.769
of the board. Ultimately, we landed at a suite

00:49:13.769 --> 00:49:17.210
of fees that we believe is reasonable under those

00:49:17.210 --> 00:49:20.050
circumstances and when taken in context of the

00:49:20.050 --> 00:49:21.969
broader transaction, where ultimately it's the

00:49:21.969 --> 00:49:24.730
lenders who will be owning the company. We believe

00:49:24.730 --> 00:49:27.110
that the overall leverage levels as a result

00:49:27.110 --> 00:49:29.289
of the size of the dip financing are sustainable.

00:49:29.309 --> 00:49:33.340
That's more of an issue for six weeks from now,

00:49:33.360 --> 00:49:40.000
but the interest rate of ES plus three percent

00:49:40.000 --> 00:49:42.719
cash, two percent thick, five percent commitment

00:49:42.719 --> 00:49:45.099
fee, seven percent backstop fee, three and a

00:49:45.099 --> 00:49:48.320
half percent steer co -work fee, all specifically

00:49:48.320 --> 00:49:51.260
negotiated for this facility and supported by

00:49:51.260 --> 00:49:53.219
the vast majority of secured lenders in this

00:49:53.219 --> 00:49:57.480
case. And for the reason that for this declaration,

00:49:57.719 --> 00:49:59.719
we believe are reasonable under the circumstances.

00:50:01.230 --> 00:50:03.469
I'll pause there, Your Honor. I'm happy to answer

00:50:03.469 --> 00:50:05.710
any questions Your Honor has about the order.

00:50:06.110 --> 00:50:10.389
We've uploaded a full clean of the order that

00:50:10.389 --> 00:50:13.610
also attaches the dip credit agreement. We will

00:50:13.610 --> 00:50:16.570
have a bit of work to finalize and tick and tie

00:50:16.570 --> 00:50:21.590
the terms of the dip credit agreement, but in

00:50:21.590 --> 00:50:25.510
economic terms, match what has been disclosed

00:50:25.510 --> 00:50:28.889
in the papers. uh... it did as your honor might

00:50:28.889 --> 00:50:32.389
expect there's some complexities around collateral

00:50:32.389 --> 00:50:35.030
aligning competence and things of that nature

00:50:35.030 --> 00:50:38.849
uh... they're not a particular economic impact

00:50:38.849 --> 00:50:41.010
but we would expect to finalize that shortly

00:50:41.010 --> 00:50:44.789
after the hearing and get closed in so there's

00:50:44.789 --> 00:50:54.179
one at eighty one one at eighty two I know someone

00:50:54.179 --> 00:51:00.039
didn't filed Which one should I'm assuming 82

00:51:00.039 --> 00:51:03.280
is more recent than 80? Maybe just such a red

00:51:03.280 --> 00:51:06.840
line, but how does it what which one should I

00:51:06.840 --> 00:51:09.199
be looking at and which one attaches the credit

00:51:09.199 --> 00:51:14.179
agreement? So the document filed at number 82

00:51:14.179 --> 00:51:16.699
include the red line and clean of the order that

00:51:16.699 --> 00:51:19.159
was to ensure that your honor saw the changes

00:51:19.159 --> 00:51:24.059
that were made Single compiled order that includes

00:51:24.059 --> 00:51:27.239
the credit agreement, which is that docket number?

00:51:29.119 --> 00:51:32.159
Okay, let me just ask does anyone wish to be

00:51:32.159 --> 00:51:35.719
heard in connection with the financing motion

00:51:35.719 --> 00:51:43.000
I Appreciate the clarification mister Mr.. Cohen

00:51:43.000 --> 00:51:46.159
if you could hit five star I will unmute your

00:51:46.159 --> 00:51:51.500
line and there you are Go for it Yes, your honor

00:51:51.500 --> 00:51:53.360
you hear me. Yes, just fine. Good afternoon.

00:51:53.619 --> 00:51:56.280
Perfect Good afternoon, your honor Michael Cohen

00:51:56.280 --> 00:51:58.159
Gibson Dunn and Crutcher on behalf of the ad

00:51:58.159 --> 00:52:00.260
hoc group the first thing creditors and proposed

00:52:00.260 --> 00:52:03.940
dip lenders I believe mr. Luz covered the landscape

00:52:03.940 --> 00:52:07.380
pretty extensively on the dip We naturally support

00:52:07.380 --> 00:52:10.039
entry of the interim dip order, but I'd like

00:52:10.039 --> 00:52:13.019
to take a moment and echo How critical it is

00:52:13.019 --> 00:52:15.480
to the lenders to see this business continue

00:52:15.480 --> 00:52:18.800
to get stabilized? and find the right landing

00:52:18.800 --> 00:52:21.400
here and continue to flourish as we hopefully

00:52:21.400 --> 00:52:25.159
get through these cases, especially given the

00:52:25.159 --> 00:52:27.800
extensive footprint in Europe and in other countries

00:52:27.800 --> 00:52:31.380
where maintaining the relationships of vendors

00:52:31.380 --> 00:52:33.360
in those jurisdictions is absolutely critical.

00:52:33.800 --> 00:52:35.340
To that end, I'll just highlight that DIP will

00:52:35.340 --> 00:52:38.960
fund over 170 million of vendor payments pursuant

00:52:38.960 --> 00:52:42.699
to first day orders here, given that a vast majority

00:52:42.699 --> 00:52:45.480
of those vendors are in non -U .S. locations.

00:52:46.400 --> 00:52:50.099
as well, nearly 80 million of payroll over the

00:52:50.099 --> 00:52:53.539
budget period. These are the types of – this

00:52:53.539 --> 00:52:56.480
is the main focus for the lenders, just to get

00:52:56.480 --> 00:52:58.579
this business in the right place and move through

00:52:58.579 --> 00:53:02.840
these cases. And with that, those are my remarks.

00:53:02.880 --> 00:53:05.179
If you have any questions, Your Honor, on the

00:53:05.179 --> 00:53:09.500
order, I'm happy to take any of those. No. I

00:53:09.500 --> 00:53:11.840
did get a chance to review the changes while

00:53:11.840 --> 00:53:21.760
we were here. I just see the comments from That

00:53:21.760 --> 00:53:24.139
you tell me it would with respect to the marshaling.

00:53:24.179 --> 00:53:26.380
I think that makes perfect sense I did see kind

00:53:26.380 --> 00:53:28.440
of the preservation of rights language for the

00:53:28.440 --> 00:53:34.820
factors I think all that makes sense to me It's

00:53:34.820 --> 00:53:37.039
clear based upon the declarations that the debtor

00:53:37.039 --> 00:53:40.739
it needs money. It's clear that There's been

00:53:40.739 --> 00:53:44.440
a year of negotiation. It was a bridge loan and

00:53:44.440 --> 00:53:48.519
now you got another loan You know, first aid

00:53:48.519 --> 00:53:51.519
dips are always coming in different shapes and

00:53:51.519 --> 00:53:58.019
forms, but when you have a prepack that's proposed

00:53:58.019 --> 00:54:01.820
to un -impair the trade and on the first aid

00:54:01.820 --> 00:54:04.440
you're seeking authority and a lot of the money

00:54:04.440 --> 00:54:07.940
that is going to be used is to really take care

00:54:07.940 --> 00:54:10.340
of trade creditors in connection with motions,

00:54:10.500 --> 00:54:14.300
I think things get a lot easier on my end because

00:54:14.300 --> 00:54:17.119
it's really... One of the things you look out

00:54:17.119 --> 00:54:18.920
for in dip motions at the beginning is to make

00:54:18.920 --> 00:54:22.539
sure that there's some protection for unsecured

00:54:22.539 --> 00:54:26.519
creditors in this process and so especially in

00:54:26.519 --> 00:54:29.960
an international case if the goal is to take

00:54:29.960 --> 00:54:33.599
care of creditors around the world who may not

00:54:33.599 --> 00:54:39.179
have had access and to some information and then

00:54:39.179 --> 00:54:41.420
certainly due process went out but just I feel

00:54:41.420 --> 00:54:43.980
a lot more comfortable today doing what we're

00:54:43.980 --> 00:54:46.400
doing knowing that we're gonna that the company

00:54:46.400 --> 00:54:48.340
is intending on taking care of its trade, keeping

00:54:48.340 --> 00:54:50.199
the business going, that there's a business there

00:54:50.199 --> 00:54:54.320
and there's agreement here. So 364 is satisfied.

00:54:55.619 --> 00:54:58.480
The proposed financing, the terms of the financings

00:54:58.480 --> 00:55:01.039
are appropriate and reasonable under the circumstances.

00:55:01.440 --> 00:55:05.360
And I'm comfortable granting the relief requested.

00:55:05.599 --> 00:55:07.219
And I also note that there's large agreement

00:55:07.219 --> 00:55:11.639
from a really large creditor up here. And so

00:55:11.639 --> 00:55:17.269
I will get this. Signed and on the docket mr.

00:55:17.449 --> 00:55:19.130
Lewis. I need to give you a final hearing date

00:55:19.130 --> 00:55:24.809
on this and I thought December 3rd at 9 a .m.

00:55:24.809 --> 00:55:31.570
Is when I can do it To just make that one work

00:55:31.570 --> 00:55:35.130
I know there's a bullet in here that I've got

00:55:35.130 --> 00:55:38.750
to add for just a blank on the to identify the

00:55:38.750 --> 00:55:43.480
factoring motion itself It's like Somewhere in

00:55:43.480 --> 00:55:46.619
there and I'm just gonna I'll add that in as

00:55:46.619 --> 00:55:49.079
well. I think it's your footnote for the interim

00:55:49.079 --> 00:55:53.599
factoring order But maybe I just what I'm gonna

00:55:53.599 --> 00:55:58.900
do for to make my life a little easier is I'm

00:55:58.900 --> 00:56:01.159
just gonna delete the docket number reference

00:56:01.159 --> 00:56:04.340
if there's an interim order, it'll be clear what

00:56:04.340 --> 00:56:08.380
it is, but it'll just make me In other words,

00:56:08.380 --> 00:56:10.670
I'm gonna forget to go back and do this, and

00:56:10.670 --> 00:56:12.210
so this will make your life a little easier that

00:56:12.210 --> 00:56:15.409
we can get this done. So I'll get this signed

00:56:15.409 --> 00:56:20.010
and on the docket. Where do we go next? With

00:56:20.010 --> 00:56:24.349
that, Your Honor, I would hand it over to Mr.

00:56:24.650 --> 00:56:27.710
Gremley from the Kirkland team, and we'll take

00:56:27.710 --> 00:56:29.590
the next couple of agenda items. All righty.

00:56:29.590 --> 00:56:31.949
Mr. Gremley. I appreciate it. Mr. Gremley, if

00:56:31.949 --> 00:56:34.969
there's any thunder on the motion to seal, I'm

00:56:34.969 --> 00:56:38.630
going to sign that order. So no. No, no grand

00:56:38.630 --> 00:56:40.730
presentation on the motion to seal the factoring.

00:56:40.789 --> 00:56:44.130
I'll take care of that one, but I'll let you

00:56:44.130 --> 00:56:46.630
proceed how you wish mr. Grimley good afternoon.

00:56:46.789 --> 00:56:49.070
Oh, I need to unmute your line so you can speak

00:56:49.070 --> 00:56:54.250
good afternoon Good afternoon your honor Dave

00:56:54.250 --> 00:56:56.250
Bremling and Brooklyn Alice on behalf of the

00:56:56.250 --> 00:56:58.070
betters. Can you hear me? Okay? Just fine good

00:56:58.070 --> 00:57:01.760
afternoon Okay, well, I didn't prepare expensive

00:57:01.760 --> 00:57:03.699
marks on the ceiling motion, so that's great

00:57:03.699 --> 00:57:06.340
news, and I'll just jump right into the factoring

00:57:06.340 --> 00:57:10.159
motion itself at a docket number 27. Yeah. All

00:57:10.159 --> 00:57:16.400
righty. And, uh... See that? And he used to think

00:57:16.400 --> 00:57:18.079
it would have tried to make a joke on the ceiling

00:57:18.079 --> 00:57:20.260
and the factoring, and I'm just... We're just

00:57:20.260 --> 00:57:23.920
going to keep it moving. on these jokes, I guess.

00:57:24.460 --> 00:57:26.219
We'll keep it moving. Okay. I think some of the

00:57:26.219 --> 00:57:28.719
packaging probably has a sealing component to

00:57:28.719 --> 00:57:30.840
that. I knew it, I knew it. That's why I had

00:57:30.840 --> 00:57:33.679
to take that one off the docket. I signed that

00:57:33.679 --> 00:57:35.599
one and it'll get on the docket. Okay, where

00:57:35.599 --> 00:57:40.480
do we go next? So the facturing motion is at

00:57:40.480 --> 00:57:44.050
docket number 27. Yep. You've heard a little

00:57:44.050 --> 00:57:45.889
bit about the cooperation that we've received

00:57:45.889 --> 00:57:47.849
from the factors today. They're represented.

00:57:48.230 --> 00:57:50.670
There are two that we work primarily with, one

00:57:50.670 --> 00:57:53.429
named COFAS. They're represented by Mayor Brown.

00:57:53.590 --> 00:57:56.369
Another called Facto Fromps, I believe is how

00:57:56.369 --> 00:57:57.889
they pronounce their name. They're represented

00:57:57.889 --> 00:58:01.590
by Dentons. They worked with us on the dip motion

00:58:01.590 --> 00:58:03.230
and order, and they've also worked with us on

00:58:03.230 --> 00:58:05.190
the factoring motion and order, and we really,

00:58:05.190 --> 00:58:07.469
really appreciate their cooperation to this date.

00:58:08.409 --> 00:58:11.130
And in addition to the financing that Mr. Luzloff

00:58:11.130 --> 00:58:13.860
keyed through, The debtors will support their

00:58:13.860 --> 00:58:16.599
liquidity during these Chapter 11 cases by continuing

00:58:16.599 --> 00:58:20.380
their pre -petition factoring arrangements. Now,

00:58:20.860 --> 00:58:22.679
the factoring arrangements are a significant

00:58:22.679 --> 00:58:25.019
part of the debtor's liquidity. They take in

00:58:25.019 --> 00:58:27.500
on average more than $5 million a day through

00:58:27.500 --> 00:58:30.780
the sale of receivables. in the debtors' forecast

00:58:30.780 --> 00:58:33.360
that if they weren't able to continue the facility,

00:58:33.420 --> 00:58:37.179
they would need an incremental $280 million to

00:58:37.179 --> 00:58:40.199
fund the Chapter 11 cases. And simply put, Your

00:58:40.199 --> 00:58:42.659
Honor, the debtors sometimes have lengthy trade

00:58:42.659 --> 00:58:45.059
terms, and the factoring facilities allow them

00:58:45.059 --> 00:58:47.179
to bring them essentially down to zero, bringing

00:58:47.179 --> 00:58:49.840
cash in instantly and allowing them a liquidity

00:58:49.840 --> 00:58:53.539
pick -up. We think that they are ordinary course

00:58:53.539 --> 00:58:55.400
transactions. The others do them every day, and

00:58:55.400 --> 00:58:57.159
they've done them for years. But to the extent

00:58:57.159 --> 00:58:59.460
that Your Honor disagrees, we also believe that

00:58:59.460 --> 00:59:02.210
for the purpose of helping mitigate... the liquidity

00:59:02.210 --> 00:59:06.630
flow. They also represent a good use of the debtor's

00:59:06.630 --> 00:59:09.250
business judgment, and they should be approved

00:59:09.250 --> 00:59:13.230
for that reason. I understand that Mr. Jimenez

00:59:13.230 --> 00:59:16.250
has an issue with our requested release. He and

00:59:16.250 --> 00:59:19.170
I have been on the phone several times today.

00:59:19.230 --> 00:59:21.409
I'm sure he's tired of hearing me, but I do appreciate

00:59:21.409 --> 00:59:23.849
that he's willing to have a constructive dialogue

00:59:23.849 --> 00:59:27.010
on these points with me. But I do want to address

00:59:27.010 --> 00:59:30.170
the issue that he has, if that's okay with you.

00:59:32.809 --> 00:59:35.789
So Mr. Jimenez reached out to us and said that

00:59:35.789 --> 00:59:39.369
the main issue that he has is with an interim

00:59:39.369 --> 00:59:42.849
order, paragraph eight, we provide a conditional

00:59:42.849 --> 00:59:46.610
grant of super priority claims to the factors.

00:59:46.710 --> 00:59:48.329
And the reason that I say it's a conditional

00:59:48.329 --> 00:59:53.699
grant is because it only kicks in if the. sale

00:59:53.699 --> 00:59:55.719
of the receivables, which, Your Honor, we do

00:59:55.719 --> 00:59:58.400
believe is a true sale of the receivables, is

00:59:58.400 --> 01:00:02.519
recharacterized as a financing transaction or

01:00:02.519 --> 01:00:04.780
some other transaction. In that case, what we

01:00:04.780 --> 01:00:08.360
have requested is that the factors receive super

01:00:08.360 --> 01:00:11.639
priority claims to the extent of any amounts

01:00:11.639 --> 01:00:17.980
that they are owed. First, Your Honor, we did.

01:00:18.190 --> 01:00:20.929
push back on this provision being included, including

01:00:20.929 --> 01:00:23.550
after we learned that Mr. Jimenez was considering

01:00:23.550 --> 01:00:26.090
an objection, which we flagged for the factors

01:00:26.090 --> 01:00:28.389
through their counsel, and they insisted that

01:00:28.389 --> 01:00:33.650
it stays in, for the integral role that the factoring

01:00:33.650 --> 01:00:36.210
facility plays in the debtor's liquidity. Where

01:00:36.210 --> 01:00:42.489
is the paragraph? It's paragraph eight of the

01:00:42.489 --> 01:00:46.150
interim order. If you're looking at the PDF that

01:00:46.150 --> 01:00:49.989
we filed, I believe it's on page six. Oh, I see

01:00:49.989 --> 01:00:52.130
it. Yeah, yeah, yeah, yeah. No, that's not going

01:00:52.130 --> 01:00:54.769
to happen today. It's an interim order. Nothing's

01:00:54.769 --> 01:00:57.449
going to happen in the next 30 days. We're not

01:00:57.449 --> 01:01:00.070
going to... There will be no... This is a ship

01:01:00.070 --> 01:01:02.230
that will never reach its destination because

01:01:02.230 --> 01:01:04.889
there's no way in the world I'm considering recharacterization

01:01:04.889 --> 01:01:08.010
of anything in the next 30 days. So this is kind

01:01:08.010 --> 01:01:11.099
of an impossibility. You're more than welcome

01:01:11.099 --> 01:01:13.659
to ask for it in the final. Just keep it moving,

01:01:13.940 --> 01:01:17.239
folks. Let's just let the ship sail into the

01:01:17.239 --> 01:01:20.860
night. I don't see me granting this, but go ahead.

01:01:21.340 --> 01:01:25.579
You can try to convince me otherwise. I appreciate

01:01:25.579 --> 01:01:29.039
the opportunity, Your Honor. Frankly, it's not

01:01:29.039 --> 01:01:31.440
you recharacterizing the transaction that we're

01:01:31.440 --> 01:01:34.400
concerned about. It's the international nature

01:01:34.400 --> 01:01:37.230
of the debtor's business. These factors are based

01:01:37.230 --> 01:01:39.969
outside the U .S. But I'm not going to hold another

01:01:39.969 --> 01:01:42.829
hearing until December 4th, so what are we talking

01:01:42.829 --> 01:01:46.869
about? So what we're talking about is in the

01:01:46.869 --> 01:01:49.329
event that another court, perhaps one outside

01:01:49.329 --> 01:01:52.869
of the United States, that may not recognize

01:01:52.869 --> 01:01:55.809
Chapter 11, that may not feel itself within the

01:01:55.809 --> 01:01:58.670
purview of your own disorder. Come file an emergency

01:01:58.670 --> 01:02:00.690
motion and you'll get a hearing within 24 hours.

01:02:06.289 --> 01:02:09.050
I can't give you anything more than that. But

01:02:09.050 --> 01:02:11.690
if that's the concern, I can alleviate the concern

01:02:11.690 --> 01:02:14.050
within 24 hours. And there'll be notice as to

01:02:14.050 --> 01:02:15.750
what's going on. You've highlighted the concern.

01:02:15.809 --> 01:02:19.369
You can just file a two -pager. I need a hearing

01:02:19.369 --> 01:02:21.409
on this very issue. I'm getting international

01:02:21.409 --> 01:02:27.130
issues. Somebody comes in, you got it. But there's

01:02:27.130 --> 01:02:28.389
got to be a little bit more notice. I can't do

01:02:28.389 --> 01:02:35.570
it on 24 hours notice. You got to read the room,

01:02:35.750 --> 01:02:37.769
Mr. Gremlin. It gets worse from here. That's

01:02:37.769 --> 01:02:42.949
what I'm saying. I understood, Your Honor. I'll

01:02:42.949 --> 01:02:47.309
feed the podium on this point. You can come in

01:02:47.309 --> 01:02:51.010
within 24 hours if that's the concern. Just come

01:02:51.010 --> 01:02:53.610
in within 24 hours, but I cannot without more

01:02:53.610 --> 01:02:56.030
knowledge about what's going on and whether this

01:02:56.030 --> 01:02:59.150
is truly going to be an issue. This all looks

01:02:59.150 --> 01:03:02.139
like it's academic. But I get the protection

01:03:02.139 --> 01:03:04.059
that they're seeking I can just give it to you

01:03:04.059 --> 01:03:07.760
within 24 hours You can get a hearing on it in

01:03:07.760 --> 01:03:10.599
24 hours, and then we can talk about What's happening

01:03:10.599 --> 01:03:13.420
and what's going on and if the factors have provided

01:03:13.420 --> 01:03:16.800
this protection? And if they need it like the

01:03:16.800 --> 01:03:19.079
debtor can come I promise you you'll get a hearing

01:03:19.079 --> 01:03:23.219
real fast 24 48 hours at the most Okay, okay

01:03:23.219 --> 01:03:26.840
understood feedback and I'm hopeful that the

01:03:26.840 --> 01:03:28.639
factors will take comfort in your willingness

01:03:28.639 --> 01:03:30.920
to hear us quickly on this point in case we need

01:03:30.920 --> 01:03:33.980
to ask for that protection at that time You got

01:03:33.980 --> 01:03:35.960
it. Just upload a revised order and I'll get

01:03:35.960 --> 01:03:44.320
it on the docket Okay, I Didn't actually have

01:03:44.320 --> 01:03:49.619
anything else on my presentation If I do it,

01:03:49.900 --> 01:03:51.820
I'm going to mess something up. You know what

01:03:51.820 --> 01:03:53.440
I mean? If I do it, Mr. Gremlin, I'm going to

01:03:53.440 --> 01:03:56.079
mess something up. But you can put something

01:03:56.079 --> 01:03:58.260
in there saying to the extent of any issues,

01:03:58.719 --> 01:04:02.739
the court will conduct an emergency hearing within

01:04:02.739 --> 01:04:10.719
48 hours. Or within one to two business days,

01:04:10.820 --> 01:04:12.400
the court will conduct an emergency hearing.

01:04:12.780 --> 01:04:14.159
You can put it in there. They're going to have

01:04:14.159 --> 01:04:16.110
to guarantee. Then I'll give them the hearing

01:04:16.110 --> 01:04:18.710
within 24 to 48 hours to resolve it. But you

01:04:18.710 --> 01:04:21.989
can put the language in there. I've got no issues

01:04:21.989 --> 01:04:23.670
with it. But I think Mr. Jimenez is right on

01:04:23.670 --> 01:04:27.570
this one. Okay. Understood, Your Honor. All right.

01:04:27.690 --> 01:04:32.429
Where do we go next? Next up on the agenda is

01:04:32.429 --> 01:04:34.909
the debtor's cash management motion that's at

01:04:34.909 --> 01:04:38.789
docket number 29. Your Honor, this motion is

01:04:38.789 --> 01:04:40.789
a pretty standard cash management motion. We're

01:04:40.789 --> 01:04:44.010
just seeking the authority to continue operating

01:04:44.010 --> 01:04:47.329
the debtor's cash management system, to continue

01:04:47.329 --> 01:04:50.050
to move money between the debtors' accounts,

01:04:50.150 --> 01:04:52.750
to continue credit card programs, to pay bank

01:04:52.750 --> 01:04:56.289
fees. We are asking for a 60 -day extension of

01:04:56.289 --> 01:05:00.449
the 345B waiver. Just wanted to flag that for

01:05:00.449 --> 01:05:02.309
you, and otherwise it's a pretty down -the -middle

01:05:02.309 --> 01:05:04.789
cash management motion in order, and if nobody

01:05:04.789 --> 01:05:08.980
has any questions. I'd ask you to enter the interim

01:05:08.980 --> 01:05:38.940
order attached to the motion. pertains with the

01:05:38.940 --> 01:05:42.300
the factory in motion. Just shortly before we

01:05:42.300 --> 01:05:45.199
started the hearing, I spotted an issue here.

01:05:45.559 --> 01:05:47.219
It's something that we discussed before, but

01:05:47.219 --> 01:05:49.960
it's just that on paragraph number seven, it

01:05:49.960 --> 01:05:53.059
provides for the 60 days. I'm only authorized

01:05:53.059 --> 01:05:59.889
by my client to agree to 45 days. And my apologies

01:05:59.889 --> 01:06:02.829
to Dentor's Council for not bringing it earlier

01:06:02.829 --> 01:06:05.130
when we were having conversations. It's something

01:06:05.130 --> 01:06:08.110
that slipped. I tried to send them an email before.

01:06:08.269 --> 01:06:10.170
I did send them an email before that to start

01:06:10.170 --> 01:06:15.769
up the hearing, Your Honor. That's my only update

01:06:15.769 --> 01:06:18.650
that I'm requesting that instead of 60 be 45.

01:06:20.630 --> 01:06:23.150
Your Honor, we can do 45 days. What paragraph

01:06:23.150 --> 01:06:28.039
are we looking at? At 29, that's one, paragraph

01:06:28.039 --> 01:06:36.159
seven, your honor. Got it. And we're going to

01:06:36.159 --> 01:06:39.739
set the final hearing for the same December 3rd,

01:06:39.739 --> 01:06:47.219
right, date. So essentially, this will kind of,

01:06:48.099 --> 01:06:52.000
yeah, without prejudice to seek further extensions

01:06:52.000 --> 01:06:56.690
of the period. Where does it request the final

01:06:56.690 --> 01:07:07.610
hearings at the top? I am going to grant the

01:07:07.610 --> 01:07:12.349
cash management motion. This is just to preserve

01:07:12.349 --> 01:07:21.050
cash flow without disruption. I just need to

01:07:21.050 --> 01:07:34.760
set an objection deadline. I'm going to put November

01:07:34.760 --> 01:07:38.159
26 as the objection deadline, just kind of a

01:07:38.159 --> 01:07:40.500
week before. It is the day before Thanksgiving.

01:07:40.500 --> 01:07:48.079
It is cruel. But I hopefully, I used to have

01:07:48.079 --> 01:07:50.880
to draft stuff during Thanksgiving. And I'm trying

01:07:50.880 --> 01:07:53.460
to make sure that the objection gets filed. I'm

01:07:53.460 --> 01:07:59.500
going to put noon on December 26 so that some

01:07:59.500 --> 01:08:01.719
poor associate, or if anyone has an objection.

01:08:02.389 --> 01:08:04.489
I put the deadline at noon to make sure they

01:08:04.489 --> 01:08:18.390
can get out the office at a nice time. Okay.

01:08:21.510 --> 01:08:27.189
I have signed the cash management order. Mr.

01:08:27.250 --> 01:08:29.109
Luz, I'm not taking a no for an answer on the

01:08:29.109 --> 01:08:31.069
noon deadline for the objections. That's what

01:08:31.069 --> 01:08:36.250
you're coming in to. Tell me All right, where

01:08:36.250 --> 01:08:40.850
do we go next That's all for me your honor I'll

01:08:40.850 --> 01:08:43.449
turn the podium over to my colleague Mr. Gremlin.

01:08:43.489 --> 01:08:50.449
It's been a pleasure talking Thank You your honor

01:08:50.449 --> 01:08:56.270
Your honor if I could just jump in I don't know

01:08:56.270 --> 01:09:00.550
if mr. Scott was trying to get off mute If he

01:09:00.550 --> 01:09:03.329
can hit five star Unless I've unmuted your line

01:09:03.329 --> 01:09:12.470
already. Mr. Scott. Mr. Scott, can you hit five

01:09:12.470 --> 01:09:26.630
star one more time for me? Oh, I can hear you.

01:09:28.319 --> 01:09:30.840
Sorry, your honor, I was raising my hand during

01:09:30.840 --> 01:09:33.479
the factoring motion. I did want to understand,

01:09:33.960 --> 01:09:35.399
give you a little bit of the background of what

01:09:35.399 --> 01:09:37.779
we were trying to accomplish and then make sure

01:09:37.779 --> 01:09:40.699
that we understand what protection is available

01:09:40.699 --> 01:09:44.680
for the factoring party. I do think this is an

01:09:44.680 --> 01:09:48.520
unusual case and we did spend a lot of time negotiating

01:09:48.520 --> 01:09:52.100
the super priority claim here for what I think

01:09:52.100 --> 01:09:57.619
is a pretty nuanced situation. So. Apologies

01:09:57.619 --> 01:10:00.680
for taking us back in time. It's okay. No, no,

01:10:00.680 --> 01:10:05.600
it's completely fine. What's going on? So, you

01:10:05.600 --> 01:10:08.460
know, I did want to echo what Mr. Huznik said,

01:10:09.520 --> 01:10:12.560
and there have been robust negotiations around

01:10:12.560 --> 01:10:16.439
the factoring arrangement. But I think one of

01:10:16.439 --> 01:10:21.100
the nuances here, as you heard during both Mr.

01:10:21.100 --> 01:10:24.449
Huznik's remarks and Mr. Greenberg's is The fact

01:10:24.449 --> 01:10:27.029
that the transactions here take place in a host

01:10:27.029 --> 01:10:30.149
of different jurisdictions. So for our clients,

01:10:30.510 --> 01:10:33.529
we have Germany, UK, Spain and France, and I

01:10:33.529 --> 01:10:37.649
think for one of the other factors, Italy. And

01:10:37.649 --> 01:10:41.369
I did want to highlight that despite their multi

01:10:41.369 --> 01:10:43.810
jurisdictional nature, we do think these are

01:10:43.810 --> 01:10:46.250
very normal course and straightforward factoring

01:10:46.250 --> 01:10:50.069
transactions. But the one big concern that our

01:10:50.069 --> 01:10:53.880
clients have is that there are not going to be

01:10:53.880 --> 01:10:55.859
ancillary proceedings in other jurisdictions.

01:10:57.260 --> 01:10:59.380
If this were only a U .S. related proceeding,

01:11:00.319 --> 01:11:03.779
I told Mr. Gremling and I think I would agree

01:11:03.779 --> 01:11:06.840
with U .S. trustees that probably the protections

01:11:06.840 --> 01:11:11.319
that we are seeking right now are not likely

01:11:11.319 --> 01:11:14.819
to be implicated. But, and I agree that the most

01:11:14.819 --> 01:11:17.399
significant protection for the factors is we

01:11:17.399 --> 01:11:19.659
have recognition of the true sale nature of this.

01:11:19.680 --> 01:11:22.880
of the sales of receivables, the grant of a fallback

01:11:22.880 --> 01:11:28.380
lien. But what is the complexity here is that

01:11:28.380 --> 01:11:33.439
we have other jurisdictions where, at least as

01:11:33.439 --> 01:11:36.340
contemplated, it's not clear that local law would

01:11:36.340 --> 01:11:39.319
recognize this court's orders as binding on them.

01:11:39.859 --> 01:11:42.579
For example, under German law, to the extent

01:11:42.579 --> 01:11:44.840
that one of the participants in our arrangement

01:11:44.840 --> 01:11:47.380
has its coming or its center of main interest

01:11:47.380 --> 01:11:51.479
in Germany, It's quite possible and actually

01:11:51.479 --> 01:11:54.199
we think likely that a German court if there

01:11:54.199 --> 01:11:56.840
were subsequent and solvency proceedings there

01:11:56.840 --> 01:11:59.479
might not recognize either the end -of -order

01:11:59.479 --> 01:12:05.319
or the final factoring order so while the primary

01:12:05.319 --> 01:12:08.659
source of I would say coverage for our payments

01:12:08.659 --> 01:12:11.840
is there for our clients is the receivables themselves

01:12:11.840 --> 01:12:15.920
What we negotiated and the reason why we were

01:12:15.920 --> 01:12:19.880
seeking this super priority claim is there are

01:12:19.880 --> 01:12:23.079
scenarios where there could be local law insolvency

01:12:23.079 --> 01:12:26.340
proceedings. For instance, in the UK, where we

01:12:26.340 --> 01:12:29.479
deal with LINPAC, or in Germany, where we deal

01:12:29.479 --> 01:12:33.680
with KP Europe, where sales of receivables or

01:12:33.680 --> 01:12:36.600
means granted even by this court might subsequently

01:12:36.600 --> 01:12:39.579
be deemed to be void or voidable under local

01:12:39.579 --> 01:12:44.180
law. And at that point in time, my clients and

01:12:44.180 --> 01:12:47.670
Mr. Robert's client, Dr. Frantz, are taking the

01:12:47.670 --> 01:12:50.409
risk that at that point in time, they've effectively

01:12:50.409 --> 01:12:52.850
paid the purchase price of giving consideration

01:12:52.850 --> 01:12:56.350
to the debtors. And as you heard from Mr. Gremling

01:12:56.350 --> 01:12:59.010
and as you saw in the first day declaration,

01:12:59.210 --> 01:13:02.850
creates significant additional liquidity for

01:13:02.850 --> 01:13:06.569
the debtors. And yet we are left after the fact

01:13:06.569 --> 01:13:10.609
with a claim that that sale is void or voidable

01:13:10.609 --> 01:13:15.170
under local law. So I understand Your Honor's

01:13:15.170 --> 01:13:17.829
reaction that this does. You know it is an unusual

01:13:17.829 --> 01:13:21.090
case, but I do think you know we have seen other

01:13:21.090 --> 01:13:23.229
circumstances including You know the honesty

01:13:23.229 --> 01:13:26.409
case in front of your honor a case number 24.

01:13:26.609 --> 01:13:30.689
Yeah, I know or Mr.. Scott here's my concern.

01:13:30.869 --> 01:13:32.609
Here's my concern is that I'm doing it. I'm doing

01:13:32.609 --> 01:13:36.750
it on like 10 hours. I'm doing it on short notice

01:13:36.750 --> 01:13:46.000
What if you? That's the concern I just have a

01:13:46.000 --> 01:13:49.119
concern, Your Honor. And I don't know why it's

01:13:49.119 --> 01:13:51.699
going to happen in the next, what court is not

01:13:51.699 --> 01:13:54.439
going to recognize my order in 10 days or 15

01:13:54.439 --> 01:13:56.500
days. In other words, if what you're telling

01:13:56.500 --> 01:14:00.819
me is, in other words, if you and Mr. Houston

01:14:00.819 --> 01:14:02.920
are going to come together and say, Your Honor,

01:14:02.939 --> 01:14:06.819
can we pitch this portion of it, come back in

01:14:06.819 --> 01:14:11.279
10 days or so, I probably feel better about granting

01:14:11.279 --> 01:14:14.600
it, even if I just stuck it. But I just I'm not

01:14:14.600 --> 01:14:19.279
comfortable doing it today, but maybe a hearing

01:14:19.279 --> 01:14:23.340
on short notice You know if your if your clients

01:14:23.340 --> 01:14:25.420
are that uncomfortable with what it is and I

01:14:25.420 --> 01:14:29.640
got it. They're running a risk But I think but

01:14:29.640 --> 01:14:31.279
a little bit more notice I could probably get

01:14:31.279 --> 01:14:33.739
more comfortable, but maybe seven to ten days

01:14:33.739 --> 01:14:37.140
notice out I don't want to get too close to Thanksgiving

01:14:37.140 --> 01:14:40.930
holidays, but something where someone Who's not

01:14:40.930 --> 01:14:43.829
here today may have an issue with it, and I feel

01:14:43.829 --> 01:14:46.489
more comfortable if it went out So I'm happy

01:14:46.489 --> 01:14:48.510
to work that into an order if that's what y 'all

01:14:48.510 --> 01:14:49.909
want to do just something to give a little bit

01:14:49.909 --> 01:14:53.489
more notice but get the factoring order in and

01:14:53.489 --> 01:14:57.029
Then this piece can you know can tie in at a

01:14:57.029 --> 01:14:59.130
slightly later date with some additional notice

01:14:59.130 --> 01:15:01.390
that gets me more comfortable I understand the

01:15:01.390 --> 01:15:03.550
trustee's concern here on this one. I think he's

01:15:03.550 --> 01:15:05.930
right, but but I could get a little bit more

01:15:05.930 --> 01:15:10.569
comfortable Mr.. Jimenez Thank you honor if Mr.

01:15:10.770 --> 01:15:14.970
Scott is it's done then I'll make a sure remark

01:15:14.970 --> 01:15:18.069
Your honor all I was going to say is I will have

01:15:18.069 --> 01:15:20.390
to speak to our client I as I said I think the

01:15:20.390 --> 01:15:23.369
concern is that there could be commencement of

01:15:23.369 --> 01:15:26.949
claims or proceedings elsewhere and At that point

01:15:26.949 --> 01:15:28.630
in time. I think one of the things you heard

01:15:28.630 --> 01:15:32.350
is in Germany for instance There is a risk and

01:15:32.350 --> 01:15:34.529
the UK is another one where if there were a commencement

01:15:34.529 --> 01:15:39.930
of proceedings at that moment we could have risk

01:15:39.930 --> 01:15:43.630
over purchases of receivables. What I think is

01:15:43.630 --> 01:15:46.350
our client's position is it's going to be difficult

01:15:46.350 --> 01:15:51.050
to continue the purchase. So if I give you a

01:15:51.050 --> 01:15:53.930
hearing within 24 to 48 hours of you even getting

01:15:53.930 --> 01:15:56.130
a notice of a commencement, what's the risk?

01:15:56.229 --> 01:16:00.489
What's the concern? I think as long as it's clear

01:16:00.489 --> 01:16:04.090
that we can stop. Purchasing receivables, I'll

01:16:04.090 --> 01:16:06.789
have to speak to my client. That may work, Your

01:16:06.789 --> 01:16:08.829
Honor. I do think it creates concern over whether

01:16:08.829 --> 01:16:11.529
they'll be willing to continue to purchase in

01:16:11.529 --> 01:16:14.670
those jurisdictions without those protections.

01:16:14.750 --> 01:16:19.529
So we are relying on, it's not only the debtor's

01:16:19.529 --> 01:16:21.789
commencement. The concern actually is over a

01:16:21.789 --> 01:16:24.949
local creditor potentially commencing, for instance,

01:16:25.149 --> 01:16:28.729
a winding up proceeding in the UK or a creditor

01:16:28.729 --> 01:16:32.170
in Germany deciding, getting wind of this proceeding.

01:16:32.520 --> 01:16:35.439
and commencing proceedings in Germany. At that

01:16:35.439 --> 01:16:38.000
point in time, in both those jurisdictions, as

01:16:38.000 --> 01:16:39.819
I understand it, and I don't purport to be a

01:16:39.819 --> 01:16:43.260
UK or German lives, but we have spent many, many

01:16:43.260 --> 01:16:45.380
hours on the phone with Kirkland and Gibson -Dunn,

01:16:45.579 --> 01:16:47.500
including lawyers across jurisdictions on that,

01:16:47.859 --> 01:16:51.100
there is a risk that no matter what happens,

01:16:51.659 --> 01:16:55.079
a purchase after that is void or voidable, regardless

01:16:55.079 --> 01:16:58.140
of the good faith of... of our clients as a purchaser

01:16:58.140 --> 01:17:00.600
the consideration paid to the debtors that's

01:17:00.600 --> 01:17:02.859
what this is meant this is narrowly meant to

01:17:02.859 --> 01:17:07.260
cover that risk off and so again part of the

01:17:07.260 --> 01:17:09.220
reason i think the dip lenders were comfortable

01:17:09.220 --> 01:17:11.739
on this is this is not meant to open the door

01:17:11.739 --> 01:17:15.939
to a lot of claims we think in most scenarios

01:17:15.939 --> 01:17:18.279
we will be well covered it is meant to cover

01:17:18.279 --> 01:17:22.100
admittedly a corner case but my client is very

01:17:22.100 --> 01:17:25.500
concerned about taking part of these transactions

01:17:25.500 --> 01:17:29.060
given the multi -jurisdictional nature here.

01:17:29.260 --> 01:17:32.439
So I'll pause there, and yeah. Mr. Jimenez, let

01:17:32.439 --> 01:17:33.779
me hear from you, and then Mr. Houstonick, I'll

01:17:33.779 --> 01:17:37.119
turn to you. Thank you, Your Honor. Andrew Jimenez

01:17:37.119 --> 01:17:39.260
for the U .S. trustee. Your Honor, I just want

01:17:39.260 --> 01:17:43.100
to take a brief moment to explain why this paragraph

01:17:43.100 --> 01:17:47.819
8, it's just inconsistent with the order, and

01:17:47.819 --> 01:17:51.880
it's not justified under bankruptcy law. So Your

01:17:51.880 --> 01:17:59.260
Honor, the debtors are asking the court to authorize

01:17:59.260 --> 01:18:02.880
the debtors continued participation in the factoring

01:18:02.880 --> 01:18:08.420
programs. That is a legitimate request on the

01:18:08.420 --> 01:18:12.460
first day. And the proposed order, Your Honor,

01:18:12.720 --> 01:18:17.079
takes several steps to ensure this goal that

01:18:17.079 --> 01:18:19.380
I think are appropriate. For example, Your Honor,

01:18:19.529 --> 01:18:26.050
The internet order provides that the transfers

01:18:26.050 --> 01:18:30.210
of receivables constitute non -recourse sales

01:18:30.210 --> 01:18:33.050
under applicable non -bankercy law and are deemed

01:18:33.050 --> 01:18:36.069
through sales. Now, these are part of the simulations.

01:18:36.729 --> 01:18:41.670
The order also provides for better releases to

01:18:41.670 --> 01:18:44.569
each of the factors and their affiliates. The

01:18:44.569 --> 01:18:47.409
interim order also provides the binding effect

01:18:47.409 --> 01:18:50.850
of the stipulations of the admissions and releases

01:18:50.850 --> 01:18:52.850
contained in paragraphs two and three of the

01:18:52.850 --> 01:18:56.210
order, and also provide for a challenge period.

01:18:59.390 --> 01:19:02.270
The order provides that the interim order shall

01:19:02.270 --> 01:19:05.310
constitute, and I'm reading specifically from

01:19:05.310 --> 01:19:07.029
the order, this interim order shall constitute

01:19:07.029 --> 01:19:09.390
findings of facts and conclusions of law shall

01:19:09.390 --> 01:19:12.199
take effect. and be fully enforceable noon per

01:19:12.199 --> 01:19:15.159
cent to the petition date immediately upon entry

01:19:15.159 --> 01:19:18.479
thereof. These states, Your Honor, conform with

01:19:18.479 --> 01:19:22.439
bankruptcy law and are, in my view, legitimate

01:19:22.439 --> 01:19:26.979
concerns to us on a first -day basis. But, Your

01:19:26.979 --> 01:19:28.979
Honor, I don't think they can have it both ways.

01:19:29.539 --> 01:19:33.680
If this is a true transaction and this court

01:19:33.680 --> 01:19:37.500
is entering old order with stipulations to that

01:19:37.500 --> 01:19:40.590
effect, then this is what we have. We have a

01:19:40.590 --> 01:19:43.569
true sale transaction of receivables. To say

01:19:43.569 --> 01:19:46.069
that, and also, it provides for a challenge for

01:19:46.069 --> 01:19:50.369
you, Your Honor. If someone can later, if the

01:19:50.369 --> 01:19:55.369
effect of pursuing a challenge is that then the

01:19:55.369 --> 01:19:57.989
factors are going to have a super priority, then

01:19:57.989 --> 01:19:59.949
this is not a meaningful challenge, Your Honor,

01:20:00.210 --> 01:20:03.090
because the factors will end up in a better position

01:20:03.090 --> 01:20:06.920
than before. Now, to the concerns that a foreign

01:20:06.920 --> 01:20:10.659
jurisdiction might not recognize this court's

01:20:10.659 --> 01:20:12.880
order, well, Your Honor, if that is the case,

01:20:13.140 --> 01:20:15.220
it doesn't matter if it includes paragraph eight

01:20:15.220 --> 01:20:17.060
or not, because they're not recognizing this

01:20:17.060 --> 01:20:20.180
court's order. So I'm not following how that

01:20:20.180 --> 01:20:23.060
provides an additional protection. I think the

01:20:23.060 --> 01:20:26.560
protection is embedded and it's clear in the

01:20:26.560 --> 01:20:30.800
order by characterizing this transaction as true

01:20:30.800 --> 01:20:33.239
sales, Your Honor. I think that's where they

01:20:33.239 --> 01:20:38.319
get the protection. They want to continue post

01:20:38.319 --> 01:20:40.720
-petition with the same pre -petition practices,

01:20:40.840 --> 01:20:44.239
Your Honor, and that is okay. They should be

01:20:44.239 --> 01:20:46.500
allowed to do that, Your Honor, but there's simply

01:20:46.500 --> 01:20:49.680
no justification for this super priority inside

01:20:49.680 --> 01:20:52.279
of her faith, which, Your Honor, I think it also

01:20:52.279 --> 01:20:55.899
has the effect of nullifying any possibility

01:20:55.899 --> 01:20:58.220
of anyone making a challenge. They provide a

01:20:58.220 --> 01:21:01.399
challenge period, but this will render that challenge

01:21:01.399 --> 01:21:04.800
period In effect if your honor, so I think that

01:21:04.800 --> 01:21:08.119
the way to fix it. It's just to take out a photograph

01:21:08.119 --> 01:21:12.859
eight and and and And any reference to a super

01:21:12.859 --> 01:21:18.039
priority place mr. Houston Your honor may I respond

01:21:18.039 --> 01:21:20.579
to that briefly just because I do want to make

01:21:20.579 --> 01:21:23.760
sure that the order this is clear Again to the

01:21:23.760 --> 01:21:26.000
record Sean shot there. There's no intent to

01:21:26.000 --> 01:21:29.260
have this super priority claim cover pre -petition

01:21:29.260 --> 01:21:32.609
purchases that is The challenge period applies

01:21:32.609 --> 01:21:34.409
to that. The debtors have their stipulations,

01:21:34.449 --> 01:21:37.130
but we are not trying to cover that. What this

01:21:37.130 --> 01:21:39.710
is meant to cover is continuing the programs

01:21:39.710 --> 01:21:43.010
going forward. I agree. If we were only in the

01:21:43.010 --> 01:21:45.770
U .S., I would be very comfortable telling my

01:21:45.770 --> 01:21:48.750
client, you have a court order. It is the law

01:21:48.750 --> 01:21:52.149
of the land. It says these are true sales. You

01:21:52.149 --> 01:21:54.710
can rely on that. You can be comfortable that

01:21:54.710 --> 01:21:58.590
you have that as a binding order. The concern,

01:21:58.590 --> 01:22:01.149
again, that we are trying to address is going

01:22:01.149 --> 01:22:03.729
forward tomorrow, when we purchase, when my client

01:22:03.729 --> 01:22:07.609
purchases receivables in Germany, there is a

01:22:07.609 --> 01:22:11.109
scenario under which next week someone commences

01:22:11.109 --> 01:22:14.329
an insolvency proceeding in Germany. There is

01:22:14.329 --> 01:22:16.670
a whole host of laws that none of us are expert

01:22:16.670 --> 01:22:18.750
on, Your Honor, more so probably than the rest

01:22:18.750 --> 01:22:21.270
of us, but Germany has a very different regime

01:22:21.270 --> 01:22:24.989
for insolvency proceedings. And there is liability

01:22:24.989 --> 01:22:28.310
for engaging in transactions potentially with

01:22:28.310 --> 01:22:33.430
debtors in Germany that can result in transactions

01:22:33.430 --> 01:22:36.729
that you undertake being void or voidable, determined

01:22:36.729 --> 01:22:39.770
to be in bad faith. I used the UK example. This

01:22:39.770 --> 01:22:43.369
is only meant to cover the scenario under which,

01:22:43.829 --> 01:22:46.810
and I guess one option that we had thought about,

01:22:47.109 --> 01:22:49.609
can we have this subject of further notice. I

01:22:49.609 --> 01:22:52.399
view this as a little bit akin to a Lending in

01:22:52.399 --> 01:22:54.859
good faith during an interim period my client

01:22:54.859 --> 01:22:57.399
does not want to take risk over the next call

01:22:57.399 --> 01:23:02.300
it 10 days 14 days of And and in this case is

01:23:02.300 --> 01:23:04.920
purchasing but it is akin to granting or sending

01:23:04.920 --> 01:23:08.260
credit For this period of time if there is a

01:23:08.260 --> 01:23:13.500
risk that over that time not only Can that be

01:23:13.500 --> 01:23:15.640
voided or caught back, but then we're fighting

01:23:15.640 --> 01:23:19.579
to say this order This is not binding on you.

01:23:19.579 --> 01:23:22.840
I got it. I got it Yes, I understand. Okay, sorry,

01:23:22.939 --> 01:23:27.159
Your Honor. I will see the podium. Mr. Hustnick?

01:23:28.680 --> 01:23:31.880
Thank you, Your Honor. I think I'm a little confused

01:23:31.880 --> 01:23:37.260
because this is a form of financing, and in most

01:23:37.260 --> 01:23:39.739
cases... I got it, Mr. Hustnick. I'm just not

01:23:39.739 --> 01:23:42.140
granting releases on day one. What I'm saying

01:23:42.140 --> 01:23:43.920
is folks can wait four or five days and they

01:23:43.920 --> 01:23:48.079
can get a hearing on this. If there's a scenario,

01:23:48.119 --> 01:23:50.340
I can come back in 48 hours and give you one.

01:23:50.870 --> 01:23:53.569
And no one is like taking me up on any of these

01:23:53.569 --> 01:23:56.270
offers But I can assure you I can't grant releases

01:23:56.270 --> 01:23:59.029
on 10 days to a deal in which someone is telling

01:23:59.029 --> 01:24:02.270
me is intended to cover a Scenario that we don't

01:24:02.270 --> 01:24:04.189
that currently doesn't exist. I'm willing to

01:24:04.189 --> 01:24:07.090
do it on short notice I'm willing to do it you

01:24:07.090 --> 01:24:10.430
have 48 hours note hearing on it fast Just pick

01:24:10.430 --> 01:24:12.329
the one that makes the most sense and let's give

01:24:12.329 --> 01:24:14.949
people some notice Come back in a few days, and

01:24:14.949 --> 01:24:16.770
I'm going to feel a lot better about it. That's

01:24:16.770 --> 01:24:20.659
what I'm just telling folks and I get it If there's

01:24:20.659 --> 01:24:24.380
a real risk that somehow There's a concern about

01:24:24.380 --> 01:24:26.399
some insolvency proceeding that's going to start

01:24:26.399 --> 01:24:28.859
that I can't handle in 24 hours I don't see how

01:24:28.859 --> 01:24:32.779
that would exist But what I am saying is then

01:24:32.779 --> 01:24:35.220
we have then we have a real problem, and it's

01:24:35.220 --> 01:24:48.619
going to get a lot easier Mr.. Richard Mr. Houston

01:24:48.619 --> 01:24:50.760
there was a point where you cut off a little

01:24:50.760 --> 01:24:54.520
bit. I couldn't hear you Totally understand your

01:24:54.520 --> 01:24:59.560
honor on releases and get that point What I'm

01:24:59.560 --> 01:25:02.539
confused about is mr. Jimenez is objecting to

01:25:02.539 --> 01:25:05.260
this provision because of the super priority

01:25:05.260 --> 01:25:07.960
claim aspect and I just want to tease this out

01:25:07.960 --> 01:25:11.100
because Frankly, if I walk out away from your

01:25:11.100 --> 01:25:12.819
honor and the reason I'm doing this on the record

01:25:12.819 --> 01:25:16.319
is if I walk away from this hearing and the factors

01:25:16.319 --> 01:25:19.859
pull which I have no ability to stop them from

01:25:19.859 --> 01:25:22.079
doing that because this is a financial combination,

01:25:23.359 --> 01:25:26.340
then I have a gigantic liquidity hole overnight.

01:25:26.520 --> 01:25:29.079
And so I want to tease it out on the record so

01:25:29.079 --> 01:25:31.159
that Mr. Scott can go talk to his client and

01:25:31.159 --> 01:25:34.479
get them to say yes. I can tell you, I'm okay

01:25:34.479 --> 01:25:37.479
with it. This is a financing, and this is a financing

01:25:37.479 --> 01:25:42.039
deal, and so I get the 364 component to it, and

01:25:42.039 --> 01:25:44.850
I get it. I get it. This is going to continue,

01:25:44.890 --> 01:25:47.050
and this is only covering post -petition stuff.

01:25:47.630 --> 01:25:50.329
No one's granting releases on the pre -staff.

01:25:50.529 --> 01:25:53.109
This is just a post -petition component, and

01:25:53.109 --> 01:25:55.550
this is intended to cover, this is happening

01:25:55.550 --> 01:25:57.789
in multiple jurisdictions, to the extent that

01:25:57.789 --> 01:26:01.869
there's an issue, that there's comfort, that

01:26:01.869 --> 01:26:04.649
there's going to be coverage, or still that they're

01:26:04.649 --> 01:26:06.130
still going to get the benefit, the economic

01:26:06.130 --> 01:26:10.729
benefit of the deal, even if a court doesn't

01:26:10.729 --> 01:26:14.210
recognize My order there's still something in

01:26:14.210 --> 01:26:16.489
this order where this court where I can enforce

01:26:16.489 --> 01:26:19.689
something and give them the economic Benefit

01:26:19.689 --> 01:26:23.390
of the deal I get it right I got it I'm just

01:26:23.390 --> 01:26:25.489
saying let's just do it on a little bit of notice.

01:26:25.930 --> 01:26:29.729
This is what I am I am really focusing on and

01:26:29.729 --> 01:26:33.909
I'm telling you I'm I'm I get it I get it right

01:26:33.909 --> 01:26:36.989
because there are what you would Mr.. Scott's

01:26:36.989 --> 01:26:39.489
clients don't want is to go out there and then

01:26:39.840 --> 01:26:42.359
Kind of have in order where I'm not enforcing

01:26:42.359 --> 01:26:44.579
something and then another court isn't enforcing

01:26:44.579 --> 01:26:47.340
something either there's got to be something

01:26:47.340 --> 01:26:49.079
that where they can get the economic benefit

01:26:49.079 --> 01:26:51.800
of the deal which is the factoring and providing

01:26:51.800 --> 01:26:56.199
the liquidity I I Get it. I really do I just

01:26:56.199 --> 01:26:58.699
I feel a lot more comfortable if we didn't do

01:26:58.699 --> 01:27:02.000
it today if we did it on short notice I'd feel

01:27:02.000 --> 01:27:04.239
a lot more comfortable, but I understand the

01:27:04.239 --> 01:27:06.460
economics. I understand the deal. I just know

01:27:06.460 --> 01:27:08.420
we're holding a first -day hearing really fast

01:27:08.590 --> 01:27:10.770
I'd feel a lot more comfortable. I don't know

01:27:10.770 --> 01:27:12.890
what's today Wednesday if we did it Monday. I

01:27:12.890 --> 01:27:18.090
feel a lot better and it's That's that's what

01:27:18.090 --> 01:27:20.409
I'm saying because people would know and there'd

01:27:20.409 --> 01:27:22.529
be a notice and people could wake up and see

01:27:22.529 --> 01:27:24.489
the docket and see what was going on and see

01:27:24.489 --> 01:27:26.590
that we thought about this a little bit and came

01:27:26.590 --> 01:27:30.170
back on Monday and and And got this all done,

01:27:30.409 --> 01:27:33.189
but maybe and I suspect it could be I don't know

01:27:33.189 --> 01:27:34.770
depending on who shows up It could be a long

01:27:34.770 --> 01:27:37.609
hearing would be a really short hearing But I'm

01:27:37.609 --> 01:27:40.930
willing to give you one Or hearing on 24 48 hours

01:27:40.930 --> 01:27:43.289
notice you all tell me I'm just giving you optionality

01:27:43.289 --> 01:27:45.489
because I don't know I'm giving you options because

01:27:45.489 --> 01:27:49.369
I don't know what folks are gonna But their clients,

01:27:49.470 --> 01:27:54.029
but they're gonna feel comfortable doing No,

01:27:54.050 --> 01:27:56.430
thank you your honor Sean Scott again for the

01:27:56.430 --> 01:27:58.649
record I think obviously we'll have to confer

01:27:58.649 --> 01:28:00.590
with our client, and it's probably a discussion

01:28:00.590 --> 01:28:03.359
with the debtors as well in terms of you know,

01:28:03.439 --> 01:28:06.300
can there be a pause on purchases, at least in

01:28:06.300 --> 01:28:08.960
those jurisdictions, you know, during that time

01:28:08.960 --> 01:28:12.060
period? And I'm guessing Mr. Huznick is going

01:28:12.060 --> 01:28:14.260
to tell me no. I just, I know that's the difficult

01:28:14.260 --> 01:28:16.439
question that we're going to face, I will face

01:28:16.439 --> 01:28:19.659
for my client tomorrow is, you know, we, this

01:28:19.659 --> 01:28:22.119
was carefully constructed and crafted. This is

01:28:22.119 --> 01:28:24.600
meant to be, you know, you hear the terminology

01:28:24.600 --> 01:28:26.699
of corner case, but this was also a big part

01:28:26.699 --> 01:28:29.420
of the protection that the initial response is.

01:28:30.120 --> 01:28:32.619
bankruptcy, particularly U .S. bankruptcy, we

01:28:32.619 --> 01:28:34.979
should shut down the program, for lack of a better

01:28:34.979 --> 01:28:36.600
term, right? We shouldn't continue to purchase.

01:28:36.699 --> 01:28:39.100
They're not a client that has done this type

01:28:39.100 --> 01:28:41.979
of structure before in the U .S. I would say

01:28:41.979 --> 01:28:44.739
this is very novel, and again, I credit the team

01:28:44.739 --> 01:28:46.699
here, Kirkland, Gibson, Dunn. Everyone has worked

01:28:46.699 --> 01:28:49.300
incredibly hard to make this happen, just given

01:28:49.300 --> 01:28:52.979
the various jurisdictions. I just thought of

01:28:52.979 --> 01:28:54.500
something else, Mrs. Scott, and I think I feel

01:28:54.500 --> 01:28:57.039
more comfortable doing this, because I really,

01:28:57.220 --> 01:29:00.239
I think a lot of this is academic. But I got

01:29:00.239 --> 01:29:01.579
it, it's going to give your client some comfort.

01:29:01.600 --> 01:29:12.300
Let me run something by you. Sure. Yep. Well,

01:29:12.300 --> 01:29:21.640
I'm just thinking about this out loud. No, it's

01:29:21.640 --> 01:29:23.119
not going to. No, I was thinking about something.

01:29:26.260 --> 01:29:33.659
It's not going to work. Let's go back to this

01:29:33.659 --> 01:29:35.239
one. Let me why don't why don't we all think

01:29:35.239 --> 01:29:37.359
about this for the next couple days because essentially

01:29:37.359 --> 01:29:39.560
what we're talking about is an academic exercise

01:29:39.560 --> 01:29:43.560
and we're not really I Was it between now and

01:29:43.560 --> 01:29:46.279
monday so the tense of someone starting a proceeding

01:29:46.279 --> 01:29:49.319
where there's enforceability. It's just Really

01:29:49.319 --> 01:29:54.039
odd to me as a risk But if you want releases

01:29:54.039 --> 01:29:59.479
I think that's also real No, the releases are

01:29:59.479 --> 01:30:01.659
not an issue, Your Honor. I think that is subject

01:30:01.659 --> 01:30:03.640
to the challenge period. I'm happy to... But

01:30:03.640 --> 01:30:06.279
who's there to... In other words, who's there

01:30:06.279 --> 01:30:10.100
to challenge is the real question, right? But

01:30:10.100 --> 01:30:12.460
I think that's... Isn't that true with the dip

01:30:12.460 --> 01:30:15.199
lender? I mean, essentially, I guess the way

01:30:15.199 --> 01:30:17.819
I look at this, Your Honor, is everyone else

01:30:17.819 --> 01:30:20.520
rides through the one L's and the two L's are

01:30:20.520 --> 01:30:23.979
the ones that are essentially agreeing that they

01:30:23.979 --> 01:30:27.329
are equalizing, they are taking... some impairment

01:30:27.329 --> 01:30:30.149
I think because they recognize as I said this

01:30:30.149 --> 01:30:32.390
is a far cry from some other cases in front of

01:30:32.390 --> 01:30:34.909
your honor these are these are arrangements that

01:30:34.909 --> 01:30:37.930
I think people understand debtors have acted

01:30:37.930 --> 01:30:40.750
properly these are well documented this is a

01:30:40.750 --> 01:30:44.270
continuation of a program that is of immense

01:30:44.270 --> 01:30:47.670
value to all parties here including the trade

01:30:47.670 --> 01:30:50.029
that will run through unimpaired the one L's

01:30:50.029 --> 01:30:52.590
and the two L's so we've worked very hard to

01:30:52.590 --> 01:30:55.149
get to a construct that works for everyone on

01:30:55.149 --> 01:30:59.310
the release this I mean, again, someone can challenge

01:30:59.310 --> 01:31:01.090
them. We're not seeking that. I'm not worried

01:31:01.090 --> 01:31:03.949
about the leases. My big concern as I come back

01:31:03.949 --> 01:31:07.149
to is, is there a scenario under which, again,

01:31:07.369 --> 01:31:10.069
another jurisdiction outside the U .S., someone

01:31:10.069 --> 01:31:14.090
says the sales were void, voidable because, and

01:31:14.090 --> 01:31:15.810
I come back to the two, these are what my clients

01:31:15.810 --> 01:31:18.449
have raised, UK and Germany, it could be raised

01:31:18.449 --> 01:31:21.630
by local law creditors. Yes, they shouldn't do

01:31:21.630 --> 01:31:23.250
that, right? Trade is riding through unimpaired.

01:31:23.350 --> 01:31:24.930
There's no reason they shouldn't commence those

01:31:24.930 --> 01:31:27.439
proceedings. But on the flip side, I need to

01:31:27.439 --> 01:31:30.359
be able to tell them you're not taking incremental

01:31:30.359 --> 01:31:34.640
risk by purchasing when they, from their, again,

01:31:34.939 --> 01:31:37.180
I would call it perhaps a Eurocentric viewpoint,

01:31:37.380 --> 01:31:39.159
view that says we are taking those risks. We

01:31:39.159 --> 01:31:41.819
shouldn't be doing business with an insolvent

01:31:41.819 --> 01:31:45.579
entity. It's kind of the framework. Let me throw

01:31:45.579 --> 01:31:49.399
one out there to you. Let me see. I think I can

01:31:49.399 --> 01:32:01.919
get comfortable around this too. What if... Hold

01:32:01.919 --> 01:32:23.020
on What if you got interim approval today subject

01:32:23.020 --> 01:32:27.920
to a further hearing On the entire like we we

01:32:27.920 --> 01:32:29.779
in other words you get protection for the next

01:32:29.779 --> 01:32:31.800
seven days on this scenario Which I don't think

01:32:31.800 --> 01:32:35.720
is like what happened and in seven days You kind

01:32:35.720 --> 01:32:37.520
of get a further interim that'll take you to

01:32:37.520 --> 01:32:39.779
the final so at least you know you're covered

01:32:39.779 --> 01:32:42.520
for this period and then we show up in another

01:32:42.520 --> 01:32:45.380
Seven days, and then we we everybody's rights

01:32:45.380 --> 01:32:47.279
are preserved, but but at least you would know

01:32:47.279 --> 01:32:49.439
if something was going to Happen over the next

01:32:49.439 --> 01:32:53.119
few days you're covered, but then we could But

01:32:53.119 --> 01:32:55.119
it's limited through that period. But in other

01:32:55.119 --> 01:32:56.920
words, whatever you all were going to do in the

01:32:56.920 --> 01:32:58.819
ordinary course, you can continue to do. Everybody's

01:32:58.819 --> 01:33:06.260
covered. We show up on the 12th, maybe at 11

01:33:06.260 --> 01:33:10.380
AM. On the 12th, I've got to fly out. I've got

01:33:10.380 --> 01:33:20.479
to be somewhere on the 13th. What if we did that

01:33:20.479 --> 01:33:22.500
so you're covered during that one week period?

01:33:24.000 --> 01:33:26.220
Right and just whatever was there and then it's

01:33:26.220 --> 01:33:27.979
just another hearing I feel more comfortable

01:33:27.979 --> 01:33:30.220
that we had a further hearing and then it's good

01:33:30.220 --> 01:33:32.500
It's almost like a kind of an interim to another

01:33:32.500 --> 01:33:35.220
interim and that will cake us to the final and

01:33:35.220 --> 01:33:39.159
then if But I'd feel a lot more comfortable if

01:33:39.159 --> 01:33:43.060
we did that Your honor I certainly think that

01:33:43.060 --> 01:33:45.340
would be acceptable to my clients obviously I'd

01:33:45.340 --> 01:33:47.560
have to talk to them, but again you are solving

01:33:47.560 --> 01:33:50.659
for the concern that we have is just that gap

01:33:50.659 --> 01:33:54.699
period risk and so I agree this is I think we're

01:33:54.699 --> 01:33:57.960
all talking most likely as lawyers do about theoretical

01:33:57.960 --> 01:34:01.159
risk but I also you know with a client that is

01:34:01.159 --> 01:34:05.039
running 200 well purchasing 280 million of euros

01:34:05.039 --> 01:34:06.659
in receivables they need to know that there's

01:34:06.659 --> 01:34:08.739
not risk there. Why don't we do that I feel more

01:34:08.739 --> 01:34:10.479
comfortable doing that let's just kind of a kind

01:34:10.479 --> 01:34:13.260
of an interim to another interim to another interim

01:34:13.260 --> 01:34:16.100
and and apologies to Mr. Gremlin I tell him to

01:34:16.439 --> 01:34:21.000
Shut him down and But he was on it man. He was

01:34:21.000 --> 01:34:22.880
persistent. I got to give him he was on his game.

01:34:22.880 --> 01:34:29.300
I did a fantastic job for him. I am so Now I'm

01:34:29.300 --> 01:34:32.380
just thinking out loud I get the concern I get

01:34:32.380 --> 01:34:37.239
the concern, but I think that way We don't have

01:34:37.239 --> 01:34:39.300
to kind of come back on Monday. You've got the

01:34:39.300 --> 01:34:42.199
protection that you would need and it's probably

01:34:43.160 --> 01:34:44.979
academic protection, but but we'll then come

01:34:44.979 --> 01:34:46.359
back and we'll have a little bit more notice

01:34:46.359 --> 01:34:48.640
and everybody can get more comfortable. Mr. Richards,

01:34:48.720 --> 01:34:51.520
I don't know if I've unmuted your line and maybe

01:34:51.520 --> 01:35:04.979
you can hit five star. Mr. Richards? Bob Richards

01:35:04.979 --> 01:35:07.560
for Pacto France. You know, we're in the same

01:35:07.560 --> 01:35:11.310
boat as Colfax. In fact, we're a joint lender

01:35:11.310 --> 01:35:14.710
in one of the facilities. I was going to suggest

01:35:14.710 --> 01:35:17.789
the solution your honor came up with, and I think

01:35:17.789 --> 01:35:20.069
my clients in France, so I need to reach them

01:35:20.069 --> 01:35:21.590
in the morning. You are not taking credit. You're

01:35:21.590 --> 01:35:23.449
not taking credit, Mr. Richards. I'm not giving

01:35:23.449 --> 01:35:28.109
it. Okay, no, I just understood. But I think

01:35:28.109 --> 01:35:30.310
that's a much better approach that'll get my

01:35:30.310 --> 01:35:32.289
client more comfortable. Okay. Now, let's do

01:35:32.289 --> 01:35:34.090
that. Someone draft it up. I don't want to mess

01:35:34.090 --> 01:35:36.510
with the words, and then let Ms. Saldana know,

01:35:36.510 --> 01:35:40.439
and then we'll get it there. Let's turn to wage.

01:35:41.699 --> 01:35:43.800
Your honor, if I may, just to be sure we get

01:35:43.800 --> 01:35:47.479
the drafting correct, we are drafting the order

01:35:47.479 --> 01:35:50.500
as proposed on a solely interim basis with the

01:35:50.500 --> 01:35:56.079
next hearing at 11. Yeah, yeah, yeah. Interim

01:35:56.079 --> 01:35:58.560
hearing to the final date that we set previously.

01:35:58.819 --> 01:36:01.000
Yeah, yeah, that's the way it would. That's the

01:36:01.000 --> 01:36:03.340
way it would work. And then Mr. Luz, it'll be

01:36:03.340 --> 01:36:05.500
a virtual. No one needs to come in for that.

01:36:05.500 --> 01:36:09.060
Just another virtual hearing. We'll log in, we'll

01:36:09.060 --> 01:36:12.800
meet, and then we'll go from there. Understood,

01:36:12.899 --> 01:36:14.680
Your Honor. We appreciate that, and we will work

01:36:14.680 --> 01:36:19.840
to get a revised file shortly. Okay. Thank you.

01:36:20.920 --> 01:36:25.399
Okay. Sakuna. Good afternoon, or good evening,

01:36:25.520 --> 01:36:28.640
or good something, wherever we are. Good running

01:36:28.640 --> 01:36:32.119
between, I think. Can you hear me okay? Yes,

01:36:32.119 --> 01:36:35.729
just fine. Good afternoon. Great. Good afternoon,

01:36:35.750 --> 01:36:38.029
Your Honor. Olivia Cunha, Kirkland and Ellis,

01:36:38.289 --> 01:36:41.409
proposed counsel to the debtors. Up next is the

01:36:41.409 --> 01:36:44.630
debtors wages motion filed at docket number eight,

01:36:44.930 --> 01:36:47.909
agenda item number nine. This means this motion

01:36:47.909 --> 01:36:50.210
the debtors are seeking to pay in honor of pre

01:36:50.210 --> 01:36:53.149
-petition wages, salaries, benefits, and other

01:36:53.149 --> 01:36:56.489
compensation, including certain non insider severance

01:36:56.489 --> 01:37:00.670
payments to employees across the world. And they're

01:37:00.670 --> 01:37:02.649
seeking to continue their compensation and benefits

01:37:02.649 --> 01:37:05.039
program in the ordinary course on a position

01:37:05.039 --> 01:37:09.000
basis. As I know, Your Honor appreciates the

01:37:09.000 --> 01:37:11.819
company's approximately 3000 employees are the

01:37:11.819 --> 01:37:14.100
lifeblood of this company. And many of these

01:37:14.100 --> 01:37:16.520
employees would experience the significant hardship

01:37:16.520 --> 01:37:19.600
if their compensation and benefits were not paid.

01:37:20.659 --> 01:37:22.880
This proposed form of order doesn't incorporate

01:37:22.880 --> 01:37:25.899
comments from the US trustee and the defenders.

01:37:26.260 --> 01:37:28.159
And we do not believe there are any outstanding

01:37:28.159 --> 01:37:31.220
issues. So unless Your Honor has any additional

01:37:31.220 --> 01:37:34.140
questions. We request entry of the proposed order

01:37:34.140 --> 01:37:39.340
filed at docket number eight. Anyone wish to

01:37:39.340 --> 01:37:42.180
be heard here? Is anyone over the cap council?

01:37:45.020 --> 01:37:47.020
I'm sorry. Is anyone over that one more time?

01:37:47.159 --> 01:37:51.359
Is anyone over the cap the priority cap? So under

01:37:51.359 --> 01:37:55.880
the non insider severance program, there are

01:37:55.880 --> 01:37:59.699
nine payments contemplated. There is one that

01:37:59.699 --> 01:38:04.579
would potentially be over the cap. And I will

01:38:04.579 --> 01:38:08.500
add that in paragraph 3 of the proposed order,

01:38:09.199 --> 01:38:12.399
we did negotiate language with the DIP lenders

01:38:12.399 --> 01:38:16.100
and the United States trustee's office. So we

01:38:16.100 --> 01:38:18.399
contemplate, if there are going to be payments

01:38:18.399 --> 01:38:23.399
made over the test, that we provide notice with

01:38:23.399 --> 01:38:26.619
the court and then provide 14 days notice with

01:38:26.619 --> 01:38:28.960
the name of the employee being paid, the amounts,

01:38:29.060 --> 01:38:35.720
and the proposed date of payment. Okay, so you're

01:38:35.720 --> 01:38:39.300
gonna provide an okay good, so so the US trustee

01:38:39.300 --> 01:38:41.220
Gets notice any committee gets appointed in the

01:38:41.220 --> 01:38:43.840
court gets notice as well. Okay. I'm comfortable

01:38:43.840 --> 01:38:50.319
with it. Yeah, I am Thank you, I will prove again

01:38:50.319 --> 01:38:55.520
I'm gonna Know that there's been proper notice

01:38:55.520 --> 01:38:58.720
and service a relief request that is appropriate

01:38:58.720 --> 01:39:02.739
under the bankruptcy code I do know that this

01:39:02.739 --> 01:39:05.829
is going to take care of employees and make sure

01:39:05.829 --> 01:39:11.350
that It's sensitive issue for us around here,

01:39:11.529 --> 01:39:18.489
and so I appreciate those Making sure people

01:39:18.489 --> 01:39:21.869
get paid it's really important And incredibly

01:39:21.869 --> 01:39:24.369
important people can maintain their health benefits

01:39:24.369 --> 01:39:27.310
and have some assurance about that, so I'll grant

01:39:27.310 --> 01:39:36.260
the motion Thank you Up next is the debtors all

01:39:36.260 --> 01:39:39.720
trade motion filed at docket number nine, agenda

01:39:39.720 --> 01:39:43.180
item number 10. So pursuant to this motion, the

01:39:43.180 --> 01:39:46.100
debtors are seeking to continue paying all trade

01:39:46.100 --> 01:39:48.859
claims in the ordinary course of business, confirming

01:39:48.859 --> 01:39:51.560
the administrative expense priority of outstanding

01:39:51.560 --> 01:39:54.520
orders, and authorizing the debtors to satisfy

01:39:54.520 --> 01:39:58.029
the outstanding orders. So due to the consensual

01:39:58.029 --> 01:40:01.289
nature of this case and the substantial international

01:40:01.289 --> 01:40:04.130
footprint of the debtor's operation, all trade

01:40:04.130 --> 01:40:06.489
claims will be unimpaired, which is consistent

01:40:06.489 --> 01:40:09.989
with the RSA and the plan. And the relief we're

01:40:09.989 --> 01:40:12.470
seeking allows for uninterrupted operations of

01:40:12.470 --> 01:40:14.970
the debtor's business, both domestically and

01:40:14.970 --> 01:40:18.210
abroad. The proposed form of order does incorporate

01:40:18.210 --> 01:40:20.609
comments from the United States trustee's office

01:40:20.609 --> 01:40:23.250
and DIP lenders. And we don't believe that there

01:40:23.250 --> 01:40:26.800
are any outstanding issues. So unless anyone

01:40:26.800 --> 01:40:28.979
else has questions or your honor has any additional

01:40:28.979 --> 01:40:31.859
questions We'd respectfully request entry of

01:40:31.859 --> 01:40:34.960
the proposed form of order socket number nine

01:40:34.960 --> 01:40:43.840
For the court is consider of the you want to

01:40:43.840 --> 01:40:46.199
call the all trade motion and again, this is

01:40:46.199 --> 01:40:50.340
going to take care of Creditors in the ordinary

01:40:50.340 --> 01:40:57.920
course of business It's sound exercise of the

01:40:57.920 --> 01:41:00.220
debtor's business judgment. It has approval of

01:41:00.220 --> 01:41:04.239
its tip lender. I'm going to grant the relief

01:41:04.239 --> 01:41:09.000
requested. I'm going to, again, just change the

01:41:09.000 --> 01:41:13.680
objection deadline to 12 noon on November 26th,

01:41:13.680 --> 01:41:16.039
but I will set the final hearing day for December

01:41:16.039 --> 01:41:20.520
3rd at 1 p .m. and I'll sign that order and it'll

01:41:20.520 --> 01:41:25.489
get hit the docket shortly. Great. Thank you,

01:41:25.569 --> 01:41:28.670
Your Honor, and I will see the podium to Mr.

01:41:28.829 --> 01:41:30.670
Black to take us through the rest of the agenda.

01:41:31.109 --> 01:41:36.229
Thank you, Mr. Black. Can you hit five star,

01:41:36.329 --> 01:41:46.090
Mr. Black? There you are. Good afternoon. Good

01:41:46.090 --> 01:41:50.239
afternoon. For the balance of the motion. i believe

01:41:50.239 --> 01:41:52.880
that we have involved any outstanding issues

01:41:52.880 --> 01:41:55.060
or questions with the u .s. trustee and that

01:41:55.060 --> 01:41:57.460
there are no more objections on the docket so

01:41:57.460 --> 01:41:59.420
with your permission i'll try to go through them

01:41:59.420 --> 01:42:04.100
a little bit quickly let's find out all right

01:42:04.100 --> 01:42:07.060
i wanted to start with the utilities motion that

01:42:07.060 --> 01:42:09.939
we filed asking if we could continue receiving

01:42:09.939 --> 01:42:13.760
utility services related relief uh... we did

01:42:13.760 --> 01:42:16.619
discuss with the u .s. trustee incorporated comments

01:42:16.619 --> 01:42:21.380
we have received no other Unless your honor has

01:42:21.380 --> 01:42:23.979
any questions about the utilities motion, we

01:42:23.979 --> 01:42:27.140
would request you enter the order as filed. I

01:42:27.140 --> 01:42:30.239
got a chance to review the utilities motion,

01:42:30.539 --> 01:42:33.039
and it provides for adequate assurance within

01:42:33.039 --> 01:42:37.460
the meaning of the code. Also allows parties

01:42:37.460 --> 01:42:39.840
if they wish to believe, utilities if they believe

01:42:39.840 --> 01:42:41.399
that they're entitled to additional adequate

01:42:41.399 --> 01:42:43.640
assurance. There are procedures there. They're

01:42:43.640 --> 01:42:46.779
not locked in. They could negotiate or they could

01:42:46.779 --> 01:42:51.789
ask for More from the court and so there's a

01:42:51.789 --> 01:42:53.869
procedure here just to make sure especially in

01:42:53.869 --> 01:42:55.710
a business like this that the lights stay on

01:42:55.710 --> 01:42:57.989
which is incredibly important, so I'll grant

01:42:57.989 --> 01:43:02.770
the motion Thank you, your honor The next motion

01:43:02.770 --> 01:43:06.649
is the insurance motion at socket number 11 and

01:43:06.649 --> 01:43:09.470
this motion asks for release allowing us to maintain

01:43:09.470 --> 01:43:13.989
insurance and related programs Insurance is important

01:43:13.989 --> 01:43:16.329
for the debtors. It's required by the code and

01:43:16.329 --> 01:43:22.590
unless there's any objections we'd ask Does anyone

01:43:22.590 --> 01:43:25.350
wish to be heard in connection with the insurance

01:43:25.350 --> 01:43:34.869
motion? Certainly, insurance is incredibly important.

01:43:38.210 --> 01:43:40.770
It required my U .S. Trustee guideline as well

01:43:40.770 --> 01:43:48.039
to maintain adequate insurance. I will grant

01:43:48.039 --> 01:43:53.159
the motion. Thank you, Your Honor. The debtors

01:43:53.159 --> 01:43:57.220
maintain two types of customer programs, and

01:43:57.220 --> 01:44:00.079
at docket number 12, we filed a motion requesting

01:44:00.079 --> 01:44:04.079
relief to continue these programs. We have warranty

01:44:04.079 --> 01:44:08.159
programs and rebate programs that we offer. We

01:44:08.159 --> 01:44:10.880
don't believe that there are any cash dollar

01:44:10.880 --> 01:44:13.739
amounts outstanding, but if they come due, we

01:44:13.739 --> 01:44:40.970
want to honor them. Okay. Anyone wish to be heard

01:44:40.970 --> 01:44:45.260
with respect to the customer programs motion

01:44:45.260 --> 01:44:50.399
is this uh So you're just going to maintain the

01:44:50.399 --> 01:44:52.439
programs just to kind of keep the business going

01:44:52.439 --> 01:44:54.300
keep good Well, you're going to take care of

01:44:54.300 --> 01:44:56.340
trade creditors already, and you're going to

01:44:56.340 --> 01:44:59.159
keep customer programs going so that the customers

01:44:59.159 --> 01:45:03.380
stay happy and the lenders are okay with that

01:45:03.380 --> 01:45:06.760
and Consistent with the overall package of relief

01:45:06.760 --> 01:45:11.659
requested so I will had a chance to review this

01:45:11.659 --> 01:45:14.250
it's all publicly noted. It's going to benefit

01:45:14.250 --> 01:45:17.050
the estates. The debtors are exercising their

01:45:17.050 --> 01:45:19.210
business judgment here. I will grant the relief

01:45:19.210 --> 01:45:25.250
requested. Thank you, Your Honor. Moving to docket

01:45:25.250 --> 01:45:28.949
number 13, the taxes motion requests relief,

01:45:29.029 --> 01:45:31.810
allowing us to pay taxes and other related relief.

01:45:33.569 --> 01:45:37.369
This is a motion that we need. We need to pay

01:45:37.369 --> 01:45:41.569
taxes, even in bankruptcy. And we've talked with

01:45:41.569 --> 01:45:44.529
the U .S. Trustee. We've seen no other objections

01:45:44.529 --> 01:45:46.989
on the docket. And unless there are questions

01:45:46.989 --> 01:45:49.689
that Your Honor has that I can answer, ask that

01:45:49.689 --> 01:46:10.899
you enter the order of file. the ability to pay

01:46:10.899 --> 01:46:14.939
it and to take every care of that. There could

01:46:14.939 --> 01:46:18.500
be liability issues that arise. And I've actually

01:46:18.500 --> 01:46:21.859
seen a case in which the government has come

01:46:21.859 --> 01:46:28.619
back and asserted claims against someone because

01:46:28.619 --> 01:46:31.659
the tax returns were not timely filed on payroll

01:46:31.659 --> 01:46:35.220
taxes. And so these are real issues and they

01:46:35.220 --> 01:46:39.060
affect people individually. and dealing with

01:46:39.060 --> 01:46:41.000
foreign jurisdictions as well. There could be

01:46:41.000 --> 01:46:44.079
similar liabilities. So I'm going to take, I'll

01:46:44.079 --> 01:46:46.359
sign the order and authorize the payment of taxes.

01:46:46.359 --> 01:46:49.220
And I would know that it's consistent with the

01:46:49.220 --> 01:46:52.500
overall package of satisfying these types of

01:46:52.500 --> 01:46:54.600
claims as well in connection with the prepack.

01:46:54.760 --> 01:46:58.460
So I'll grant the motion. Thanks, Your Honor.

01:46:59.399 --> 01:47:03.619
The next motion is the, we call it the NLL motion

01:47:03.619 --> 01:47:06.880
filed at docket number 14. It allows the debtors

01:47:06.880 --> 01:47:10.619
to have the opportunity to preserve tax attributes.

01:47:12.000 --> 01:47:17.899
We have about $200 million worth of 163 -J carry

01:47:17.899 --> 01:47:20.939
forwards, and we'd like to preserve those and

01:47:20.939 --> 01:47:24.779
other NOLs and other positive tax attributes.

01:47:25.420 --> 01:47:29.119
We did the share this with the U .S. trustee

01:47:29.119 --> 01:47:31.399
and we don't believe that there are any outstanding

01:47:31.399 --> 01:47:33.739
comments or questions on this and unless your

01:47:33.739 --> 01:47:35.640
honor has any questions we'd request the order

01:47:35.640 --> 01:47:38.220
be granted as filed. I took a look at this obviously

01:47:38.220 --> 01:47:42.039
you want to preserve NOLs in connection with

01:47:42.039 --> 01:47:43.779
especially a case like this it's going to be

01:47:43.779 --> 01:47:47.880
incredibly important this is really just providing

01:47:47.880 --> 01:47:54.579
notice to parties and providing procedures. for

01:47:54.579 --> 01:47:59.859
them to kind of understand and to make sure that

01:47:59.859 --> 01:48:02.420
valuable tax attributes are preserved throughout

01:48:02.420 --> 01:48:05.020
the Chapter 11 cases. It's customary to approve

01:48:05.020 --> 01:48:09.159
this type of relief on a first -day basis because

01:48:09.159 --> 01:48:11.260
they're really important, especially in a case

01:48:11.260 --> 01:48:15.939
like this. So I'll sign the order in loud straddle

01:48:15.939 --> 01:48:19.340
to get to work and notifying folks about their

01:48:19.340 --> 01:48:28.079
rights. Thank you, Your Honor. The next motion

01:48:28.079 --> 01:48:31.600
is docket number 15, the creditor matrix. It

01:48:31.600 --> 01:48:34.260
is a procedural motion that allows us to file

01:48:34.260 --> 01:48:37.260
a consolidated creditor and some other reports

01:48:37.260 --> 01:48:40.079
of relief. We think it's important. It's gonna

01:48:40.079 --> 01:48:43.500
reduce the fee burn in the case to be able to

01:48:43.500 --> 01:48:46.859
administrate it and send notice on one consolidated

01:48:46.859 --> 01:48:50.939
creditor matrix. And unless your honor has any

01:48:50.939 --> 01:48:53.039
other questions, we don't believe there are outstanding

01:48:53.039 --> 01:48:55.279
objections or questions or comments from the

01:48:55.279 --> 01:48:58.539
U .S. trustee on this. Anyone wish to be heard

01:48:58.539 --> 01:49:00.720
in connection with the creditor matrix motion?

01:49:04.680 --> 01:49:11.539
Okay, the motion is granted. The last motion,

01:49:11.640 --> 01:49:14.880
your honor, is at docket number 17. You heard

01:49:14.880 --> 01:49:17.039
a little bit about the foreign complexities of

01:49:17.039 --> 01:49:20.720
the case. The automatic stay order is requesting

01:49:20.720 --> 01:49:24.079
basically that we can send notice of the bankruptcy

01:49:24.079 --> 01:49:26.880
code protections and provisions for the benefit

01:49:26.880 --> 01:49:29.579
of our foreign vendor -based customers, others

01:49:29.579 --> 01:49:31.960
who do not understand the bankruptcy code and

01:49:31.960 --> 01:49:35.520
what it means for us to be in chapter. We believe

01:49:35.520 --> 01:49:42.140
it's necessary, especially given our multinational

01:49:42.140 --> 01:49:45.260
business. And once your honor has any questions,

01:49:45.560 --> 01:49:50.489
we request your entry. I think it's important

01:49:50.489 --> 01:49:53.609
and I understand why you're doing this and the

01:49:53.609 --> 01:49:56.909
trick is you've Actually cited the code which

01:49:56.909 --> 01:49:58.590
is what's really important here and you're not

01:49:58.590 --> 01:50:01.970
trying to extend Interpretations of the code

01:50:01.970 --> 01:50:04.229
but more just informing people about what the

01:50:04.229 --> 01:50:07.890
code says so it's I'm comfortable with this type

01:50:07.890 --> 01:50:10.970
of relief and I understand that it's important

01:50:10.970 --> 01:50:16.189
so I'll grant the relief requested Thank you

01:50:16.729 --> 01:50:19.010
I think that brings us to the conclusion of our

01:50:19.010 --> 01:50:22.109
agenda today. Okay. Anything else we need to

01:50:22.109 --> 01:50:25.090
take care of today? You've got dates. Mr. Huesnicki

01:50:25.090 --> 01:50:27.989
will upload some orders and then get them to

01:50:27.989 --> 01:50:34.729
my folks, and we'll get them on file. I've –

01:50:34.729 --> 01:51:13.239
let me just give me one second. If it's not just

01:51:13.239 --> 01:51:15.460
to give everyone kind of a heads up I know that

01:51:15.460 --> 01:51:17.539
you're all going to get me a revised of that

01:51:17.539 --> 01:51:21.819
order if If you can get it tonight, and I can

01:51:21.819 --> 01:51:23.520
probably enter it tonight or first thing in the

01:51:23.520 --> 01:51:29.779
morning but at 9 a .m. I've got a Hearing that's

01:51:29.779 --> 01:51:31.859
probably going to be a while and so I probably

01:51:31.859 --> 01:51:35.539
couldn't get to it to like Lunch hour, so I just

01:51:35.539 --> 01:51:37.340
you get it tonight. I'll do it first thing in

01:51:37.340 --> 01:51:39.899
the morning if not it might be noon hour if not

01:51:39.930 --> 01:51:42.569
You're on your own whenever that hearing ends.

01:51:42.590 --> 01:51:46.569
So I will Just wanted to give you a heads up

01:51:46.569 --> 01:51:48.949
about that. So just from a timing so if my case

01:51:48.949 --> 01:51:52.909
manager You kind of know what it is, but if you

01:51:52.909 --> 01:51:57.090
can get it tonight, I can yeah I Guess you're

01:51:57.090 --> 01:51:59.010
just adding just kind of this further hearing

01:51:59.010 --> 01:52:01.250
concept in the order So maybe if you can get

01:52:01.250 --> 01:52:03.050
it to me tonight, I can I'll sign. I promise

01:52:03.050 --> 01:52:05.770
you before Either tonight or first thing in the

01:52:05.770 --> 01:52:09.510
morning Before I step out on the bench on on

01:52:09.510 --> 01:52:11.430
the other one and then we'll see where things

01:52:11.430 --> 01:52:14.930
go. I really appreciate everyone's time. I really

01:52:14.930 --> 01:52:19.750
want to thank Mr. Jimenez and Court staff as

01:52:19.750 --> 01:52:23.550
well for for all their efforts here And I think

01:52:23.550 --> 01:52:25.750
everyone who participated today. Thank you very

01:52:25.750 --> 01:52:28.329
much. Have a good day Thank you