WEBVTT 00:00:01.360 --> 00:00:07.059 All right. Good morning. It is Friday, January 00:00:07.059 --> 00:00:16.399 23rd, 2026. We're here in the Sachs office Avenue 00:00:16.399 --> 00:00:22.100 digital on a motion to an interim for an interim 00:00:22.100 --> 00:00:24.859 order with respect to a consulting agreement 00:00:24.859 --> 00:00:31.300 with the GA group. So if you want to speak, please 00:00:31.300 --> 00:00:33.979 hit five star. There were a lot of people on 00:00:33.979 --> 00:00:35.640 the line and it was just too much background 00:00:35.640 --> 00:00:38.380 noise. And also, to the extent you want to make 00:00:38.380 --> 00:00:40.479 an appearance, please make sure to go to my web 00:00:40.479 --> 00:00:43.700 page and note your appearance there. That's how 00:00:43.700 --> 00:00:46.560 we keep track of appearances. So Mr. Reardon. 00:00:48.899 --> 00:00:50.899 Good morning, Your Honor. Michael Reardon on 00:00:50.899 --> 00:00:54.399 behalf of the SO5 Digital Letters. Also joining 00:00:54.399 --> 00:00:58.979 me today virtually are Andrew Heed. CRO of the 00:00:58.979 --> 00:01:02.060 SO5 digital debtors and committee Jay Schilling, 00:01:02.460 --> 00:01:05.659 president of GA Retail Solutions LLC, the proposed 00:01:05.659 --> 00:01:08.040 liquidation consultant. All right. Does anyone 00:01:08.040 --> 00:01:11.359 else wish to make an appearance? Good morning, 00:01:11.500 --> 00:01:14.879 Mr. Hede and Mr. Schilling. Why don't you both 00:01:14.879 --> 00:01:18.379 hit five star one time on your phone and I'll 00:01:18.379 --> 00:01:26.170 unmute you. Hello. Good morning. I would like 00:01:26.170 --> 00:01:28.829 to make an appearance. My name is Beatrice Montaniga. 00:01:29.609 --> 00:01:45.689 Okay. All right. Thank you. You're welcome. All 00:01:45.689 --> 00:01:53.269 right. Mr Schilling, are you for the Are you 00:01:53.269 --> 00:01:58.870 from the 617 area code? Yes, Your Honor. Good 00:01:58.870 --> 00:02:28.639 morning. All right, Mr. Reardon, go ahead. Thank 00:02:28.639 --> 00:02:30.879 you, Your Honor. I just wanted to reiterate our 00:02:30.879 --> 00:02:33.060 thanks for giving us our time this morning on 00:02:33.060 --> 00:02:35.840 this emergency motion. I know you have a fairly 00:02:35.840 --> 00:02:38.120 busy day lined up, so I'll be quick about it. 00:02:38.719 --> 00:02:41.400 We filed last night an amended witness and exhibit 00:02:41.400 --> 00:02:46.020 list at ECF 419. Yes. Go ahead. And you just 00:02:46.020 --> 00:02:49.460 asked, we have four exhibits of Mr. Heade's declaration 00:02:49.460 --> 00:02:53.000 in support of first days, a copy of the consulting 00:02:53.000 --> 00:02:56.360 grievance at exhibit two. Mr. Heade's declaration 00:02:56.360 --> 00:02:59.340 support of the liquidator motion at ECF 400, 00:03:00.000 --> 00:03:03.560 and Mr. Schilling's declaration support of the 00:03:03.560 --> 00:03:05.879 liquidation motion as well. At this point, we 00:03:05.879 --> 00:03:07.439 would ask that that be entered into evidence. 00:03:08.500 --> 00:03:11.900 All right. So let's take them one at a time. 00:03:12.199 --> 00:03:18.259 I think with respect to Mr. Heade's declaration 00:03:18.259 --> 00:03:33.520 with respect to the Hold on a second. All right, 00:03:33.560 --> 00:03:36.280 with respect to Mr. Headey's declaration with 00:03:36.280 --> 00:03:38.199 respect to the first days, that's already been 00:03:38.199 --> 00:03:41.659 admitted, so I'll admit it again for purposes 00:03:41.659 --> 00:03:45.960 of this hearing. With respect to the consulting 00:03:45.960 --> 00:03:50.479 agreement, which is 419 -2, anyone object to 00:03:50.479 --> 00:03:52.539 the admission of the consulting agreement at 00:03:52.539 --> 00:03:56.580 4 -0. 419 -2. All right, that will be admitted. 00:03:57.039 --> 00:04:00.340 With respect to Mr. Headey's declaration in support 00:04:00.340 --> 00:04:04.180 of this motion at 419 -3, does anyone object 00:04:04.180 --> 00:04:07.460 to the admission of Mr. Headey's declaration 00:04:07.460 --> 00:04:12.819 at 419 -3 as his direct testimony in connection 00:04:12.819 --> 00:04:18.120 with this motion? Okay, that will be admitted 00:04:18.120 --> 00:04:21.459 as his direct testimony subject to cross -examination. 00:04:21.949 --> 00:04:26.370 and as it relates to Mr. Schilling's declaration 00:04:26.370 --> 00:04:30.750 at 419 -4. Does anyone object to the admission 00:04:30.750 --> 00:04:34.709 of Mr. Schilling's declaration at 419 -4 as his 00:04:34.709 --> 00:04:40.069 direct testimony in connection with this motion? 00:04:41.370 --> 00:04:43.610 Having heard no objection, that will be admitted 00:04:43.610 --> 00:04:47.290 as his direct testimony subject to cross -examination. 00:04:47.529 --> 00:04:50.500 All right, Mr. Reardon, you can proceed. Thank 00:04:50.500 --> 00:04:53.860 you, Your Honor. We last time I checked this 00:04:53.860 --> 00:04:56.860 morning, no objections have been filed. We did 00:04:56.860 --> 00:04:59.459 have a vendor reach out yesterday, and we have 00:04:59.459 --> 00:05:01.620 agreed to make a statement on the record relating 00:05:01.620 --> 00:05:04.879 to consignments, bailments, or other inventory 00:05:04.879 --> 00:05:06.879 subject to similar arrangements, essentially 00:05:06.879 --> 00:05:09.319 inventory where the vendor may assert that it 00:05:09.319 --> 00:05:12.240 does not constitute property of the estate. Our 00:05:12.240 --> 00:05:15.180 statement is, this order, the proposed interim 00:05:15.180 --> 00:05:17.259 order is without prejudice to any party's rights 00:05:17.259 --> 00:05:20.240 with respect to such inventory. and that includes 00:05:20.240 --> 00:05:22.540 any rights of the SO5 digital debtors to sell 00:05:22.540 --> 00:05:25.439 such inventory. Essentially, this order is not 00:05:25.439 --> 00:05:28.519 intended to diminish any vendors' rights in any 00:05:28.519 --> 00:05:31.379 such inventory, and likewise, the SO5 digital 00:05:31.379 --> 00:05:33.560 debtors' rights in such inventory. Understood, 00:05:33.579 --> 00:05:40.680 yes. That has been a common theme. Yes. I probably 00:05:40.680 --> 00:05:42.519 would have made a similar statement even if someone 00:05:42.519 --> 00:05:45.540 hadn't reached out. We're not aware of any other 00:05:45.540 --> 00:05:48.550 informal objections or comments, but... I do 00:05:48.550 --> 00:05:50.290 want to note that we were affected by the outlook 00:05:50.290 --> 00:05:52.170 disruption that happened last night that apparently 00:05:52.170 --> 00:05:53.870 affected a lot of people across the country. 00:05:54.769 --> 00:05:57.589 So my apologies to anybody who did try to reach 00:05:57.589 --> 00:06:00.470 out and we didn't respond. I did try to review 00:06:00.470 --> 00:06:02.410 my inbox this morning and didn't see anything 00:06:02.410 --> 00:06:05.509 further though. All right. Okay. I won't spend 00:06:05.509 --> 00:06:08.290 too much time reiterating Mr. Martin's comments 00:06:08.290 --> 00:06:10.490 from yesterday's cash collateral hearing about 00:06:10.490 --> 00:06:13.389 the path to where we've reached this point and 00:06:13.389 --> 00:06:16.939 our foreseeable path forward. But as explained 00:06:16.939 --> 00:06:18.660 in the first state declaration, at the outset 00:06:18.660 --> 00:06:21.560 of the case, the SO5 digital debtor is intended 00:06:21.560 --> 00:06:23.980 to conduct an orderly sale process to maximize 00:06:23.980 --> 00:06:26.939 value for stakeholders. And that's based on preliminary 00:06:26.939 --> 00:06:29.319 market feedback and the operational structure 00:06:29.319 --> 00:06:32.199 of the business. We believe that an inventory 00:06:32.199 --> 00:06:34.800 monetization strategy like this liquidation sale 00:06:34.800 --> 00:06:37.680 is most likely to optimize recoveries in the 00:06:37.680 --> 00:06:41.240 case. And I do want to specify here for people 00:06:41.240 --> 00:06:43.589 who are listening in. This order pertains to 00:06:43.589 --> 00:06:46.290 the SO5 digital debtors and only the SO5 digital 00:06:46.290 --> 00:06:48.949 debtors. It does not affect the SACS Office brick 00:06:48.949 --> 00:06:53.370 and work stores. Yeah, and as noted in the motion, 00:06:53.430 --> 00:06:56.389 we've also received expressions of interest in 00:06:56.389 --> 00:06:59.290 potential alternative transactions. And those 00:06:59.290 --> 00:07:01.370 appear to have enough substance to them to merit 00:07:01.370 --> 00:07:03.589 pursuing a bid procedures process in parallel 00:07:03.589 --> 00:07:07.569 with this liquidation sale. But continuing to 00:07:07.569 --> 00:07:09.730 pursue this inventory liquidation unless and 00:07:09.730 --> 00:07:12.500 until when a position where an alternate transaction 00:07:12.500 --> 00:07:15.060 emerges that justifies halting it in the exercise 00:07:15.060 --> 00:07:19.319 of business judgment. And another consideration, 00:07:19.379 --> 00:07:22.240 pursuing this course of liquidation, there are 00:07:22.240 --> 00:07:24.139 several milestones in the interim cash collateral 00:07:24.139 --> 00:07:26.360 orders that require us to move forward with a 00:07:26.360 --> 00:07:29.740 liquidation as a condition to authorization to 00:07:29.740 --> 00:07:34.459 use cash collateral. And loss of access to that 00:07:34.459 --> 00:07:36.560 cash collateral would have devastating consequences 00:07:36.560 --> 00:07:39.350 for our restructuring efforts. We've been in 00:07:39.350 --> 00:07:43.129 regular contact with our term loan lender agent, 00:07:43.329 --> 00:07:45.790 Paladine, about these matters, and it has approved 00:07:45.790 --> 00:07:48.209 the motion, proposed liquidation sale procedures. 00:07:49.350 --> 00:07:51.569 So, as a result, we're asking the court to, on 00:07:51.569 --> 00:07:54.129 an interim basis, authorize the SO5 digital bettors 00:07:54.129 --> 00:07:56.990 to enter into the performance consulting agreements, 00:07:57.329 --> 00:07:59.449 attest to the first form of interim order as 00:07:59.449 --> 00:08:02.310 exhibit one, and grant -related relief as set 00:08:02.310 --> 00:08:04.930 out in the interim order. And in the interest 00:08:04.930 --> 00:08:07.670 of time, Your Honor, I will ask if you have any 00:08:07.670 --> 00:08:09.769 questions or if you'd like me to go proceed on 00:08:09.769 --> 00:08:11.670 merits. Otherwise, we would ask that the court 00:08:11.670 --> 00:08:15.230 enter the interim order. I don't have any particular 00:08:15.230 --> 00:08:19.029 questions. I'm familiar with Great America's 00:08:19.029 --> 00:08:24.350 consulting agreements. So this is not something 00:08:24.350 --> 00:08:29.350 that I haven't seen before. So in terms of the 00:08:29.350 --> 00:08:33.309 final hearing, what are you looking for? Will 00:08:33.309 --> 00:08:36.309 you be looking something in the range of 21 days? 00:08:37.750 --> 00:08:41.970 All right. Now you're asking me to do math now. 00:08:42.669 --> 00:08:45.929 Oh, my apologies, Your Honor. I did mean to put 00:08:45.929 --> 00:08:48.789 right down a date for you. But I did not get 00:08:48.789 --> 00:08:53.429 to that. So the 21 days from today is the 13th, 00:08:53.429 --> 00:08:57.350 which is when basically it's an all -SACS day. 00:08:57.389 --> 00:09:00.149 Should we just put it there on the 13th or do 00:09:00.149 --> 00:09:03.419 you want to have this separate from that? I think 00:09:03.419 --> 00:09:04.960 that makes a lot of sense, Your Honor. All right. 00:09:04.960 --> 00:09:07.659 Just tell them to put you guys first on the agenda. 00:09:09.159 --> 00:09:13.820 Thank you, Your Honor. We will. All right. All 00:09:13.820 --> 00:09:15.679 right. Okay. Does anyone else wish to be heard 00:09:15.679 --> 00:09:22.080 with respect to the consulting agreement? All 00:09:22.080 --> 00:09:25.860 right. I've reviewed the motion, the proposed 00:09:25.860 --> 00:09:29.139 form of order. I understand that the Sachs digital 00:09:29.139 --> 00:09:35.220 debtors are different. than the other SACS entities, 00:09:35.620 --> 00:09:37.899 and that they're pursuing a different strategy 00:09:37.899 --> 00:09:40.899 than the other SACS entities. As I indicated, 00:09:42.340 --> 00:09:47.139 during my time in practice, I've reviewed, I 00:09:47.139 --> 00:09:50.080 wouldn't say a lot, but I've reviewed several 00:09:50.080 --> 00:09:52.779 consulting agreements from Great America and 00:09:52.779 --> 00:09:55.259 others, and I think this is a standard form. 00:09:56.160 --> 00:09:59.720 agreement that has been negotiated. So I'm going 00:09:59.720 --> 00:10:02.259 to go ahead and approve the consulting agreement 00:10:02.259 --> 00:10:05.059 on an interim basis and we will set a hearing 00:10:05.059 --> 00:10:14.980 for February 13th at 9 a .m. and the objection 00:10:14.980 --> 00:10:24.159 deadline will be February the 6th. All right, 00:10:24.159 --> 00:12:21.340 so let me just do that. All right. That order 00:12:21.340 --> 00:12:23.340 has been signed and sent to docketing. It should 00:12:23.340 --> 00:12:26.759 be entered shortly so you all can get started. 00:12:28.200 --> 00:12:29.700 All right. Thank you very much, Your Honor. All 00:12:29.700 --> 00:12:31.519 right. Anything further we can do this morning? 00:12:33.360 --> 00:12:35.639 Nothing for us. All right. Thank you. We'll be 00:12:35.639 --> 00:12:39.679 in recess till the 9 o 'clock hearing. Thank 00:12:39.679 --> 00:12:40.799 you. Thank you, Your Honor.