WEBVTT 00:00:07.049 --> 00:00:13.330 Please be seated. Mr. Gricher. Good morning, 00:00:13.410 --> 00:00:17.410 Your Honor. Sean Gricher from Young Conaway for 00:00:17.410 --> 00:00:20.030 the debtors. Your Honor, it has been a little 00:00:20.030 --> 00:00:22.210 bit of time since we've been in front of you. 00:00:22.629 --> 00:00:24.390 And I thought that I might provide the court 00:00:24.390 --> 00:00:26.129 with a brief update, if Your Honor would like, 00:00:26.210 --> 00:00:29.730 before we get to the main event. So Your Honor, 00:00:30.850 --> 00:00:34.189 I'll start with operations in the United States. 00:00:47.210 --> 00:00:49.490 transfer was subject to a couple of things. One 00:00:49.490 --> 00:00:53.850 was the transfer of the animals from Seaquarium 00:00:53.850 --> 00:00:57.750 elsewhere and also final commission approval 00:00:57.750 --> 00:01:00.750 from Miami Dade commissioners who are the landlords. 00:01:02.869 --> 00:01:05.129 With respect to the animals, the animals have 00:01:05.129 --> 00:01:08.109 been transferred from Miami Seaquarium successfully 00:01:08.109 --> 00:01:12.730 and healthily. We're happy to have completed 00:01:12.730 --> 00:01:50.890 that process and we thank with those. Today, 00:01:51.109 --> 00:01:56.609 Your Honor, is hearing the request for approval 00:01:56.609 --> 00:01:59.209 of the final transfer of animals from the U .S. 00:01:59.290 --> 00:02:02.790 out of the Dolphin Connection Facility. Ms. Milkie 00:02:02.790 --> 00:02:05.930 will walk through that with Your Honor. And then, 00:02:06.109 --> 00:02:09.370 assuming that we are able to complete those transfers, 00:02:09.810 --> 00:02:11.750 in shorter order, we would be filing a motion 00:02:11.750 --> 00:02:16.150 to reject that license agreement. Overseas, we 00:02:16.150 --> 00:02:18.729 continue to make good progress on transactions 00:02:18.729 --> 00:02:21.909 in various other jurisdictions. In fact, we believe 00:02:21.909 --> 00:02:24.590 that Iran will be seeing documentation regarding 00:02:24.590 --> 00:02:28.150 transaction for sale of the company's Italian 00:02:28.150 --> 00:02:48.639 business in the coming days. and continued defiance 00:02:48.639 --> 00:02:51.580 of this court's orders. We have continued to 00:02:51.580 --> 00:02:54.699 successfully defend against those challenges 00:02:54.699 --> 00:02:59.879 in Mexico, but they are continuing to be a challenge. 00:03:01.199 --> 00:03:03.319 There are a number of significant operational 00:03:03.319 --> 00:03:05.620 and tax liability issues resulting from prior 00:03:05.620 --> 00:03:07.960 management's conduct of the business pre -petition 00:03:07.960 --> 00:03:10.180 that need to be navigated in connection with 00:03:10.180 --> 00:03:12.219 completing a transaction here. We think we do 00:03:12.219 --> 00:03:14.139 have a path now through those various issues 00:03:14.139 --> 00:03:16.539 and challenges. We're optimistic that we will 00:03:16.539 --> 00:03:18.460 be able to effectuate a transaction and are working 00:03:18.460 --> 00:03:22.919 hard to document that structure with counterparties 00:03:22.919 --> 00:03:55.460 in hopes that we can bring all of that. set the 00:03:55.460 --> 00:03:57.979 stage, and then we did get three responses, so 00:03:57.979 --> 00:04:00.740 I'll go through where those all stand and then 00:04:00.740 --> 00:04:04.719 make a few arguments if that works for you. This 00:04:04.719 --> 00:04:07.300 is the time set aside for consideration of the 00:04:07.300 --> 00:04:09.960 transfer of the eight bottlenose dolphins that 00:04:09.960 --> 00:04:12.319 currently reside at the debtors dolphin connection 00:04:12.319 --> 00:04:16.600 facility. That's located in the Keys in Florida. 00:04:17.660 --> 00:04:20.220 And we filed, the debtors filed a miscellaneous, 00:04:20.220 --> 00:04:22.660 a notice under the miscellaneous asset cell procedures 00:04:22.660 --> 00:04:25.870 in December. to approve that transfer to SeaWorld 00:04:25.870 --> 00:04:29.629 LLC. As I'm sure that you read from the debtors' 00:04:29.829 --> 00:04:32.529 reply in support of the transfer, the debtors 00:04:32.529 --> 00:04:35.610 leased their facility from the Hawke's Bay Resort 00:04:35.610 --> 00:04:38.529 and therefore do not own the real property associated 00:04:38.529 --> 00:04:42.310 with the facility. The term of the lease expires 00:04:42.310 --> 00:04:44.889 in approximately nine months, which was a factor 00:04:44.889 --> 00:04:47.170 that significantly affected the market value 00:04:47.170 --> 00:04:50.629 of the facility. The debtors and their advisors 00:04:50.629 --> 00:04:53.670 worked for months to secure an actionable bid 00:04:53.670 --> 00:04:56.250 for the Dolphin Connection Facility but were 00:04:56.250 --> 00:04:59.610 ultimately unsuccessful and in December decided 00:04:59.610 --> 00:05:02.069 that they should focus on finding a suitable 00:05:02.069 --> 00:05:05.069 home for the dolphins. After a significant effort, 00:05:05.189 --> 00:05:07.649 the debtors negotiated a transfer agreement with 00:05:07.649 --> 00:05:09.769 SeaWorld for the transfer of all of the dolphins 00:05:09.769 --> 00:05:14.449 together at the Dolphin Connection Facility and 00:05:14.449 --> 00:05:18.939 we did seek approval of that transfer. We received 00:05:18.939 --> 00:05:21.980 three responses to the requested relief. The 00:05:21.980 --> 00:05:24.939 first was an informal response from Dolphin Plus 00:05:24.939 --> 00:05:27.560 Bayside Incorporated, which was a bidder for 00:05:27.560 --> 00:05:30.660 the assets. Dolphin Plus and the debtors engaged 00:05:30.660 --> 00:05:33.279 in extensive discussions, but were ultimately 00:05:33.279 --> 00:05:35.439 unable to come to an agreement on an actionable 00:05:35.439 --> 00:05:38.660 proposal for the assets. Dolphin Plus has confirmed 00:05:38.660 --> 00:05:40.800 that it does not object to the requested relief. 00:05:42.060 --> 00:05:44.680 In addition, two individuals filed correspondence 00:05:44.680 --> 00:05:50.779 with the court. and also Kelly Fishback. Ms. 00:05:50.899 --> 00:05:53.019 Boyles is represented by Council, although she 00:05:53.019 --> 00:05:55.519 did file her correspondence in a pro se capacity. 00:05:56.139 --> 00:05:58.399 Her attorney confirmed last week that Ms. Boyles 00:05:58.399 --> 00:06:00.740 is not objecting to the requested relief and 00:06:00.740 --> 00:06:03.879 does not require a hearing today. And that leaves 00:06:03.879 --> 00:06:07.019 the correspondence filed by Ms. Fishback. I have 00:06:07.019 --> 00:06:10.220 been in contact with her who conveyed to me last 00:06:10.220 --> 00:06:12.819 night that she stands by her concern for the 00:06:12.819 --> 00:06:15.060 animals, but she does not intend to provide any 00:06:15.060 --> 00:06:19.160 further comments. She also wants to explicitly 00:06:19.160 --> 00:06:22.379 clarify, and I believe she's on, so if I'm mischaracterizing, 00:06:22.560 --> 00:06:25.199 I'm sure she will chime in, that she's not in 00:06:25.199 --> 00:06:27.800 any way impugning SeaWorld or its reputation 00:06:27.800 --> 00:06:33.439 or ability to care for the animals. In addition, 00:06:33.560 --> 00:06:35.180 Your Honor, throughout this process, the debtors 00:06:35.180 --> 00:06:37.899 have been in contact with the landlord for the 00:06:37.899 --> 00:06:41.259 property, Hawke's Cay Resort. Mr. Gold is here 00:06:41.259 --> 00:06:44.060 today. The landlord filed a statement in support 00:06:44.060 --> 00:06:46.199 of the requested relief, which is at docket number 00:06:46.199 --> 00:06:50.600 919. Finally, we confirmed with the UCC's counsel 00:06:50.600 --> 00:06:53.860 yesterday, Mr. Fransela is here today, that it 00:06:53.860 --> 00:06:55.779 also does not object to the transfer request 00:06:55.779 --> 00:06:59.120 and supports the debtor's requested relief. With 00:06:59.120 --> 00:07:01.120 that introduction, if it pleases the court, Your 00:07:01.120 --> 00:07:05.459 Honor, I will seek to admit the declarations 00:07:05.459 --> 00:07:08.550 in support of our requested relief today. We 00:07:08.550 --> 00:07:12.370 have two witnesses, Mr. Giles and Mr. Wagstaff. 00:07:13.209 --> 00:07:15.269 With the court's permission, Mr. Wagstaff is 00:07:15.269 --> 00:07:18.730 appearing via Zoom. The debtors have filed three 00:07:18.730 --> 00:07:21.990 corresponding declarations. The first is exhibit 00:07:21.990 --> 00:07:27.209 C to docket number 832. The second is docket 00:07:27.209 --> 00:07:31.970 number 893. And the third is docket number 894. 00:07:33.129 --> 00:07:35.629 Mr. Giles is with Green Hill and Company, which 00:07:35.629 --> 00:07:38.199 is the debtor's investment banker. Mr. Wagstaff 00:07:38.199 --> 00:07:41.639 is with Riveron and is the debtor's chief restructuring 00:07:41.639 --> 00:07:47.399 officer. I've actually forgotten two other documents. 00:07:47.699 --> 00:07:50.699 There's an affidavit of service illustrating 00:07:50.699 --> 00:07:53.759 the service of the notice itself and then the 00:07:53.759 --> 00:07:56.860 license agreement that governs the Hawks Kay 00:07:56.860 --> 00:08:00.220 facility is also included in the exhibit binder 00:08:00.220 --> 00:08:03.560 that we have included. My understanding is that 00:08:03.560 --> 00:08:05.560 there is no objection to the admission of these 00:08:05.560 --> 00:08:07.040 documents and we've asked that they be admitted. 00:08:08.810 --> 00:08:11.529 Let me just take them one by one. Is there any 00:08:11.529 --> 00:08:16.529 objection to the declaration, there's two declarations, 00:08:17.230 --> 00:08:24.610 of Mr. Wagstaff coming into evidence? I hear 00:08:24.610 --> 00:08:28.629 no one. Is there any objection to the declaration 00:08:28.629 --> 00:08:37.590 of Mr. Giles coming into evidence? objection 00:08:37.590 --> 00:08:41.409 to the license agreement between Keys Hotel Operator 00:08:41.409 --> 00:08:44.129 Inc. and Dolphin Connection coming into evidence. 00:08:46.370 --> 00:08:49.490 I hear no one. Is anyone going to want to cross 00:08:49.490 --> 00:08:56.549 examine either Mr. Wattstaff or Mr. Vass? I hear 00:08:56.549 --> 00:08:59.769 no one. Thank you, Your Honor. I'll keep my comments 00:08:59.769 --> 00:09:03.639 brief under the circumstances. Court has heard 00:09:03.639 --> 00:09:06.480 on prior occasions, the debtors began a sale 00:09:06.480 --> 00:09:09.000 and marketing process for all of their assets 00:09:09.000 --> 00:09:12.100 approximately seven months ago. As detailed in 00:09:12.100 --> 00:09:14.279 the Geisel's declaration, Greenhill went out 00:09:14.279 --> 00:09:17.580 to almost 300 parties and received outreach from 00:09:17.580 --> 00:09:21.519 additional interested parties. 21 parties executed 00:09:21.519 --> 00:09:24.019 confidentiality agreements and engaged in further 00:09:24.019 --> 00:09:27.259 diligence. Greenhill and the debtors responded 00:09:27.259 --> 00:09:30.120 to bidder inquiries, facilitated site visits, 00:09:30.600 --> 00:09:33.110 and communicated with the landlord in other parties 00:09:33.110 --> 00:09:36.169 all in an effort to identify a transaction structure 00:09:36.169 --> 00:09:38.409 and bid proposal that would yield value to the 00:09:38.409 --> 00:09:42.330 estates. Unfortunately, due to practical and 00:09:42.330 --> 00:09:44.710 legal constraints, including the limited remaining 00:09:44.710 --> 00:09:47.549 lease term, the bid proposals received by the 00:09:47.549 --> 00:09:50.889 original bid deadline were not actionable. The 00:09:50.889 --> 00:09:53.549 debtors extended the bid deadline to facilitate 00:09:53.549 --> 00:09:56.330 additional discussions, but ultimately the debtors 00:09:56.330 --> 00:09:59.330 were unable to negotiate bids on terms that would 00:09:59.330 --> 00:10:03.379 yield value to the estates. Facing the original 00:10:03.379 --> 00:10:06.620 365D4 deadline, the debtors determined that additional 00:10:06.620 --> 00:10:09.879 time was unlikely to create value and determined 00:10:09.879 --> 00:10:12.259 to wind down their dolphin connection facility. 00:10:12.980 --> 00:10:15.679 The debtors worked with the landlord to secure 00:10:15.679 --> 00:10:19.259 an extension of the 365D4 deadline to facilitate 00:10:19.259 --> 00:10:23.679 those transfers. The debtors had long been in 00:10:23.679 --> 00:10:26.120 discussions with various third -party recipients 00:10:26.120 --> 00:10:28.200 in connection with the transfer of the animals 00:10:28.200 --> 00:10:31.059 for the Seaquarium facility. and therefore had 00:10:31.059 --> 00:10:34.080 been engaging in advanced discussions with such 00:10:34.080 --> 00:10:35.799 third parties regarding the placement of the 00:10:35.799 --> 00:10:39.179 animals. After months of discussions, the debtors 00:10:39.179 --> 00:10:41.440 negotiated the agreement with SeaWorld for the 00:10:41.440 --> 00:10:43.320 transfer of the eight dolphins that reside at 00:10:43.320 --> 00:10:46.620 the facility and then filed the fifth transfer 00:10:46.620 --> 00:10:51.779 notice on December 22nd. I'll just note briefly, 00:10:51.799 --> 00:10:53.919 Your Honor, that by all accounts, including all 00:10:53.919 --> 00:10:56.039 of the people that reached out to us informally 00:10:56.039 --> 00:10:59.009 and formally, SeaWorld has been described as 00:10:59.009 --> 00:11:02.289 a highly reputable organization that is very 00:11:02.289 --> 00:11:04.769 capable of taking care of and transferring these 00:11:04.769 --> 00:11:07.669 animals. The debtors considered, among other 00:11:07.669 --> 00:11:10.169 things, the timing of the transfers, the suitability 00:11:10.169 --> 00:11:12.750 of the transferees that we were in discussions 00:11:12.750 --> 00:11:15.610 with, and animal welfare, among other factors. 00:11:17.330 --> 00:11:20.009 As I mentioned, we did hear from several parties 00:11:20.009 --> 00:11:23.220 after we filed the fifth notice. The debtors 00:11:23.220 --> 00:11:26.120 engaged in extensive discussions with those parties. 00:11:26.700 --> 00:11:28.659 We responded to certain additional diligence 00:11:28.659 --> 00:11:31.500 requests, and we ultimately further extended 00:11:31.500 --> 00:11:33.840 the bid deadline to provide parties with additional 00:11:33.840 --> 00:11:36.960 time to participate. Ultimately, however, such 00:11:36.960 --> 00:11:39.299 parties either declined to further participate, 00:11:39.500 --> 00:11:42.460 citing the short lease term, or were unable to 00:11:42.460 --> 00:11:44.980 participate at values that would cover the debtor's 00:11:44.980 --> 00:11:48.360 transaction and other costs. The debtors have 00:11:48.360 --> 00:11:50.659 negotiated with the landlord, as I mentioned, 00:11:50.679 --> 00:11:54.120 for an extension through of the 365D4 deadline 00:11:54.120 --> 00:11:57.659 through this Friday. I believe that the landlord, 00:11:57.799 --> 00:11:59.779 although we are in current discussions with the 00:11:59.779 --> 00:12:03.360 landlord, are willing to be cooperative about 00:12:03.360 --> 00:12:07.379 the debtor's transfer timeline insofar as a quarterly 00:12:07.379 --> 00:12:11.159 transfer to SeaWorld is concerned. Under the 00:12:11.159 --> 00:12:12.500 circumstances, we ask that your owner approve 00:12:12.500 --> 00:12:15.299 the transfer. As I mentioned, the debtors have 00:12:15.299 --> 00:12:17.399 run a comprehensive sale and marketing process. 00:12:17.679 --> 00:12:20.799 and that was significantly extended beyond the 00:12:20.799 --> 00:12:23.740 court approved deadlines. The debtors need to 00:12:23.740 --> 00:12:26.860 ensure a safe and timely transition of the animals 00:12:26.860 --> 00:12:30.460 to a responsible third party. And by all accounts, 00:12:30.700 --> 00:12:34.019 SeaWorld is a responsible third party. And the 00:12:34.019 --> 00:12:36.220 debtors are constrained by the limits of the 00:12:36.220 --> 00:12:39.100 lease terms applicable law and practical concerns 00:12:39.100 --> 00:12:42.710 related to their liquidity. In sum, the debtors 00:12:42.710 --> 00:12:44.870 have reasonably exercised their business judgment 00:12:44.870 --> 00:12:46.889 and determining that the transfer of the Dolphins 00:12:46.889 --> 00:12:48.690 to Sea World is in the best interests of the 00:12:48.690 --> 00:12:52.009 debtors or states and should be approved. We 00:12:52.009 --> 00:12:53.889 have submitted a form of order which we have 00:12:53.889 --> 00:12:56.230 uploaded, Your Honor. It is in the same form 00:12:56.230 --> 00:12:58.850 as the other sales that we have proposed, and 00:12:58.850 --> 00:13:01.009 so it's essentially the same order that you have 00:13:01.009 --> 00:13:02.970 previously entered, I think maybe seven times 00:13:02.970 --> 00:13:07.529 now. So we'd ask that that be entered. If Your 00:13:07.529 --> 00:13:28.159 Honor has any questions. Hawks Cave Resort. The 00:13:28.159 --> 00:13:30.580 legal entity name is Keys Hotel Operator LLC. 00:13:33.019 --> 00:13:35.679 Obviously based on the statement that we filed. 00:13:37.259 --> 00:13:39.519 Earlier this week, we wholeheartedly agree with 00:13:39.519 --> 00:13:42.159 the debtor. I actually disagree with one thing. 00:13:42.259 --> 00:13:45.139 Miss Melki said she referred to it as a comprehensive 00:13:45.139 --> 00:13:47.379 sale process. I think that understates it. It 00:13:47.379 --> 00:13:51.879 was an exhaustive sale process because the deadlines 00:13:51.879 --> 00:13:55.840 that were contemplated were extended or. In some 00:13:55.840 --> 00:14:00.379 cases, I'll say we're revived. We work with the 00:14:00.379 --> 00:14:03.120 debtors. My client itself had expressed some 00:14:03.120 --> 00:14:06.179 interest, but we had regulatory hurdles, so we 00:14:06.179 --> 00:14:08.940 weren't actionable. But there were a number of 00:14:08.940 --> 00:14:12.740 other parties, as is outlined in the debtors' 00:14:13.120 --> 00:14:18.919 papers, but nothing came to fruition. The simple 00:14:18.919 --> 00:14:21.960 fact is at this point, obviously we did not challenge 00:14:21.960 --> 00:14:23.899 the debtors' business judgment. We wholeheartedly 00:14:23.899 --> 00:14:26.440 support it. It's not only in the best interest 00:14:26.440 --> 00:14:28.539 of the estate to approve this transaction, it's 00:14:28.539 --> 00:14:30.519 in the best interest of the eight bottom -most 00:14:30.519 --> 00:14:54.919 dolphins that are presently at Hawke's Cay. to 00:14:54.919 --> 00:14:57.840 see if the sales process could keep rolling. 00:14:59.000 --> 00:15:03.080 And that was through 1231. And with that, with 00:15:03.080 --> 00:15:36.500 the sale process... felt the need to interject 00:15:36.500 --> 00:15:41.320 themselves at the last minute. We have had conversations 00:15:41.320 --> 00:15:44.340 with Council for Dolphins Plus as recently as 00:15:44.340 --> 00:16:59.360 yesterday. So I want to assure the court. No 00:16:59.360 --> 00:17:21.599 further questions, thank you. The Dolphin Connection 00:17:21.599 --> 00:17:27.900 Inc. seeks to transfer to SeaWorld LLC eight 00:17:27.900 --> 00:17:31.480 bottlenose dolphins as dolphins are currently 00:17:31.480 --> 00:17:34.819 at the Dolphin Connection Hawke's Cave Resort. 00:17:36.799 --> 00:17:42.519 I will approve that transfer of the eight bottlenose 00:17:42.519 --> 00:17:46.720 dolphins based on the evidence that was admitted. 00:17:47.039 --> 00:17:51.059 in the record today, which is uncontested that 00:17:51.059 --> 00:17:56.359 consists of the declaration of mr. Wagstaff and 00:17:56.359 --> 00:18:05.440 the declaration of mr. Geisel and They detail 00:18:05.440 --> 00:18:08.299 the marketing efforts the extensive marketing 00:18:08.299 --> 00:18:12.799 efforts that were undertaken with respect to 00:18:12.799 --> 00:18:18.079 this particular property in efforts to see if 00:18:18.079 --> 00:18:23.220 there was an actionable deal for the property 00:18:23.220 --> 00:18:30.859 itself and or a going concern. There are constraints 00:18:30.859 --> 00:18:38.539 on this particular property in both the 365D4 00:18:38.539 --> 00:18:42.500 period in which the landlord has already extended 00:18:42.500 --> 00:18:45.890 twice consensually. and the term of the lease 00:18:45.890 --> 00:18:52.150 itself, which, my recollection is, ends at the 00:18:52.150 --> 00:18:59.470 end of October. So that there would have to have 00:18:59.470 --> 00:19:02.670 been agreement and a deal with the landlord in 00:19:02.670 --> 00:19:07.990 order for anything to realize in terms of a going 00:19:07.990 --> 00:19:11.170 concern. That did not happen, notwithstanding 00:19:11.170 --> 00:19:15.039 the significant efforts and the participation 00:19:15.039 --> 00:19:20.839 of the landlord. So there really is quite frankly 00:19:20.839 --> 00:19:24.000 no option. The debtor has exercised its business 00:19:24.000 --> 00:19:29.140 judgment. The animals need to be to find a home 00:19:29.140 --> 00:19:33.460 somewhere else and they need to be safely transported 00:19:33.460 --> 00:19:37.599 to that home. My understanding is that the dolphins 00:19:37.599 --> 00:19:41.339 are being kept together in their current grouping 00:19:41.339 --> 00:19:51.589 and that SeaWorld is an appropriate transferee, 00:19:51.710 --> 00:19:59.109 new owner to facilitate the transfer and the 00:19:59.109 --> 00:20:03.910 welfare of the animals in the new place. So for 00:20:03.910 --> 00:20:08.230 all of those reasons I will approve this particular 00:20:12.429 --> 00:20:18.049 transfer. I do appreciate the comments that I 00:20:18.049 --> 00:20:24.230 receive in different forms from individuals who 00:20:24.230 --> 00:20:27.069 are concerned about the welfare of the animals, 00:20:27.309 --> 00:20:29.710 as is the court. But in these circumstances, 00:20:31.089 --> 00:20:35.009 this is the best, if not the only option, for 00:20:35.009 --> 00:20:37.990 the dolphins. And it's an appropriate one going 00:20:37.990 --> 00:20:42.430 to a reputable new owners. So for all those reasons, 00:20:42.670 --> 00:20:46.269 I will approve. This sale is requested and I 00:20:46.269 --> 00:20:48.829 will enter the form of order that I have entered 00:20:48.829 --> 00:20:52.750 in other circumstances. Thank you. I think that's 00:20:52.750 --> 00:20:56.289 it for today. Okay, thank you. Thank you. We're 00:20:56.289 --> 00:20:56.710 adjourned.