For the record, your honor, Alison Milky with
young Conway on behalf of the debtors with permission
of the court. This morning's hearing has been
for the sale of the debtors, the marine land
assets has been adjourned to Wednesday, November
12th at 10 a .m. And just as a administrative
matter, we didn't want to have confusing agendas.
So we'll file an additional agenda after the
status conference is over with the zoom information
and the other attendance information after the
status conference. We are here to provide Your
Honor with the status of the matter and an overview
of the events that have occurred since we last
appeared before you on October 27th. We heard
Your Honor's comments at the last hearing, and
it should be noted even though we had been responding
to various members of the coalition in advance
of that hearing, we did have the opportunity
to engage with Mr. Joyce, who was retained by
a company called Number One Apex Association
LLC, which was retained by the Rubles. That has
been extremely helpful, Your Honor. We were able
to connect with him on extensively over several
occasions. After the hearing, we provided Mr.
Joyce with a packet of information about the
cases, the history of the cell process and his
client's involvement, a form APA for Marineland
as a growing concerns, the bidding procedures,
and a specific list of items that we would need
to see as part of a bid package in order to identify
a bid as qualified. We explained to Mr. Joyce
that if the coalition wished to have additional
time to submit a bid for the marine land assets,
then the debtors would extend the bid deadline
for the coalition to October 31, 2025. On October
30th, Mr. Joyce reached out, explained that his
clients needed some additional time to submit
a bid package, and the debtors agreed to further
adjourn the bid deadline to November 3rd, 2025.
During that time, we did have extensive conversations
with Mr. Joyce. November 3rd came and went. We
did not receive a bid from Apex or other members
of the coalition at that time. We understood
from discussions with Mr. Joyce that APEX and
the members of the coalition had been working
with various individuals to try to submit a bid
and to get the paperwork and funding required
to submit a bid, but had met some significant
challenges. And it was unclear whether the coalition
could or would be able to get a bid together.
So we proceeded to submit our replies and a proposed
order. And then late on the evening of Thursday,
November 6th, last week, Apex submitted a bid
to the debtors for marine land as a going concern.
The bid package consisted of a markup of a form
APA that we had provided to Apex, a budget, and
copies of certain account statements to demonstrate
sufficient funds for the purchase price. The
debtors had additional questions about the bid
submission, including with respect to various
regulatory issues. And Council for the Debtors
and Mr. Joyce extensively discussed the terms
of the proposal and how it would work in practice.
Thereafter, on Friday and through the weekend,
the debtors, their advisors and council, the
lenders and their council met numerous times
and also discussed with council for the UCC to
assess the economics of the proposal. which included
an analysis of the net proceeds that the estates
would realize as a result of closing on either
transaction. After comparing the economics of
the proposal submitted by Delightful Development
and also from Apex, the debtors determined that
the Apex bid, which provided for 6 .5 million
in cash, assumption of all contracts, retention
of employees, and no contingencies, would allow
the debtors to realize significant cost savings
for various things, wind down costs, the savings
resulting from the legal fees associated with
documenting transfer agreements, et cetera. Given
that cost savings, the debtors, financial advisors
put together a comparison and determined that
the bids would result in essentially equivalent
value of both bids, with the Apex bid coming
ahead very slightly. With that development, we
spent the weekend finalizing an APA with APEX,
and it's now in a form that the debtors would
deem acceptable. It has been executed and submitted
to the debtors this morning, and the debtors
have deemed it a qualified bid. We should note
that the debtors are hesitant to disrupt the
sell process. We've extensively considered the
available alternatives. And we've determined
that the best possible path forward for maximizing
value and to ensure a thorough process is to
reopen the auction and proceed with additional
bidding. So that is how we would proceed, Your
Honor. We have contacted the participating bidders,
which includes the backup bidder as well, Hudson
Companies LLC, which submitted a bid for $7 .05
million. And it has indicated that it may participate.
Along with delightful development, its bid at
$7 .1 million and then the Apex Association bid
at $6 .5 million plus all of the other added
cost saving benefits. We have a transcriber available.
The debtors are prepared and ready to go forward.
All parties have received links for the auction,
which will be held by Zoom. In terms of auction
process, the bidding procedures will continue
to govern. The bid increments will remain the
same. to account for the additional value provided
to the estate. And again, because the bids are
almost neck and neck, that's a fairly simple
and straightforward process. So we expect it
to be a relatively straightforward auction. We
anticipate meeting with each bidder before the
auction commences to provide the overview of
how the value is breaking down so that all parties
are aware of. with the debtors and the bidders
to be able to close promptly, given liquidity
challenges. And both the bids are scheduled to
close currently during the first week of December.
That's an important point, and it's both a process
point and a substantive point. We raised it in
our replies, and I think that you'll hear from
Mr. Keenan, who's here on behalf of the lenders
today, that this process, it's important that
this process proceed efficiently and promptly.
The debtors will need cell proceeds in order
to continue to operate. It's not expected that
there will be additional debt funding. So we
need both this process and the Mexican asset
cell process to continue without delay so that
we can realize those cell proceeds and finalize
the cases. Once the best bid has been selected
after the auction today, we are prepared to come
before you on Wednesday for approval. That will
be an evidentiary hearing. assuming that Your
Honor can accommodate that. We anticipate that
with the additional process that has been provided,
the debtor's substantial engagement with all
parties and various conversations with parties
that the Wednesday hearing will hopefully be
more streamlined. In addition, as part of finalizing
APEX's bid and understanding and realizing the
value proposition that it presented, Apex, Felicia
Cook, the Rubels, and Mr. Kaswitz, I understand,
have all agreed to withdraw an objection to the
theater of the sea sail, which we also anticipate
to go forward on Wednesday as well. With that
in mind, I'll pause to answer any questions that
you may have. Firstly, note holders and DIP lenders,
namely, Prudential Insurance Company of America,
Prudential Legacy Insurance Company of New Jersey,
Cigna Health, and Life Insurance Company. Your
Honor, we haven't had occasion to come to the
podium too much yet in this case, and that's
because I think that from the lender's perspective,
things were proceeding as best as they could
under the circumstances. But the lenders are
becoming increasingly concerned about the financial
state of this case, and we just want to make
sure that we sort of sound the alarms early and
often so that none of the stakeholders are surprised
by any events that might transpire a few months
down the road. First off, Your Honor, in terms
of the item... The DIP lenders do support that.
I will say that they support that somewhat reluctantly,
and there's two reasons for that. The first is
that the reopening of the auction was premised,
I think, based on Keen Realty and Green Hill
treating this bidding group unfairly. I think
if Your Honor has taken the opportunity to read
the debtor's very detailed response and the bankers'
interactions with this group... fair mischaracterization,
and I would less like to take a moment to compliment
the work that Keen Realty and Green Hill are
doing in this case. This is a very difficult
case with an unusual collateral package, and
I think they're really doing a yeoman's job of
the work thus far. The second reason... The DIP
lenders put funded $107 million pre -petition,
I think almost six years ago at this point. And
there is second lien debt to the tune of about
$100 million as well. The pre -petition first
lien and second lien debt is over $220 million.
Just to rehash it very quickly, the interim dip
loan back in April was $8 million. An additional
$10 million was provided in June to bring it
up to $18 million. And then in September, just
a short while ago, the dip loan was upsized again
by $25 million. The amount of the dip loan now
stands at $43 million. That's in new money. funded
indebtedness was about a hundred million dollars
has already funded a 43 million dollar dip loan
personally i don't know that i've ever seen a
dip loan that high in terms of the percentage
of the pre -petition debt and they've done that
for several reasons right first and foremost
like any pre -petition lender they want to protect
their collateral they want to preserve going
concern value so that they can stabilize the
situation Previously, a lot of these parks are,
let's call it cash flow neutral. A lot of this
money is going to professional fees, and there's
a reason for that, and his name is Mr. Al Gore.
From the very beginning of the case, Mr. Al Gore
did everything he possibly could to thwart the
sale process and to thwart... On the outset of
the case, he committed numerous agreed -to -stay
violations to the point of actual armed takeovers
of the corporate headquarters, to the point of,
I think as the debtor reported at the last hearing,
an armed takeover of one of the parks in Mexico.
And in doing so, he also thwarted... This is
to say that the $43 million diploma, which is
where we're at right now, was not something that
was anticipated at the beginning of this case.
It's certainly not the fault of any of the debtors
professionals, the CRO, the... Here's that. so
that this estate can live to fight another day
and finish selling the parts of Mexico and Caribbean
in January and February. I am very concerned
about the ability of Apex to close. Just the
way this whole thing has transpired as the DIP
lenders, we have consultation rights. We've seen
all the packages that came in in various different
forms. I've seen the evidence of wherewithal.
It is not what you typically see in these situations.
I am very concerned about their ability to close.
close and I'll stop here in a moment but what
I just want to preview for you is what you might
hear on Wednesday which is that when it comes
to 363 sales as we all know the debtors must
use their sound exercise of their own business
judgment to determine which is the highest and
best offer highest is simple the bankers can
create a spreadsheet In this case, it's not just
a dollars for dollars comparison because there
is a cost to winding down the park and relocating
the animals in the event of a sale to Delightful,
the real estate developer. And that cost arguably
doesn't exist if you sell to the Apex Group,
right? But it's not just about highest, it's
highest and best. And in the circumstances of
this case, where we are at this point in time,
best also means certainty of closing and timing
of closing. Closing at the end of December is
going to be a disaster in this case. And so what
we need is a deal that is the highest but also
the best in terms of wherewithal ability to close
and all that. So we'll continue to monitor the
auction this afternoon. We'll continue to vet
the apex bid. But I just want to make sure that
this court understands that we have a lot of
concerns about the liquidity of the case. Good
morning, Your Honor. Mike Joyce for number one,
Apex Association. Your Honor, first to start,
I just wanted to confirm for the record that
after communication with the debtors, their professionals
and having a better understanding of the theater
of the C bid and also in further, or I'm sorry,
the theater of the C transaction, and also in
furtherance of the Apex bid, Your Honor, we have
agreed to withdraw any objection to that transaction.
And Your Honor, I just wanted to quickly respond
to the lender's comments. We would acknowledge,
Your Honor, the rubles, the principles of Apex,
They are not commercial parties who typically
engage in bank 363 sales, your honor. So we would
acknowledge that getting here today was somewhat
of a bumpy road. It was done with a lot of work
by the rubles and the individuals that are helping
them along with the debtors. And the rubles look
forward to this afternoon, your honor. have the
ability to close, and we hope we're in court
on Wednesday seeking approval on an asset sale
to Apex. processes it unfolded. As Mr. Joyce
indicated, his clients are not commercial players
in this field and so it obviously created some
challenges. But I will grant the debtor's request
to reopen the auction. which I understand is
taking place this afternoon by Zoom. All parties
are aware, including particularly the two, the
successful debtors choice of successful bidder
and backup bidder, and as well as the APEX bid.
And yes, I am available for an evidentiary hearing
on the 12th at 10. And at that time the debtors
will present to me what they have determined
in their business judgment to be the best and
highest bidder considering all of the economic
and other considerations that the debtor considers
and I will do my job. And then I do understand
that the sale of. The three dolphins. So like
a pre and Sandy will also go forward. On. Wednesday
and I understand that is unopposed at this point.
By the individuals noted yes. By the individuals
noted yes by the individuals noted. little fluid
okay okay very good anything else for today okay
thank you we're adjourned