All right, good afternoon. It is one o 'clock
on Friday, January 30, 2026. We're here in case
number 26 -90103, Sachs Global, on an emergency
motion. Can everyone please mute their lines?
There's a lot of people on the line. I'd like
to avoid going to the hand raising feature. All
right, make sure to go to my webpage and note
your appearance because that's the way we keep
track of formal appearances in this case. So
why don't we get appearances and then we can
proceed. Good afternoon, Your Honor. This is
Betsy Feldman from Wilkie Farr and Gallagher
on behalf of the Global Center. Can you hear
me all right? I can hear you fine, yes. Thank
you. Good afternoon, Your Honor. Michael Bearden
on behalf of the SO5 digital debtors, and hopefully
joining me soon will be my colleague Jared Martin.
He is, unfortunately, signed up for another hearing,
but should be free as we could. All right. Good
afternoon, Your Honor. Jerry Lee Miller appearing
on behalf of Simon Property Group from Pacific
Austin. All right. Thank you. Good afternoon,
Your Honor. It's Timothy Schilling on behalf
of GA Group. Chris Schilling. Good afternoon,
Your Honor. Chris Hopkins with Paul Weitzbrook
and Jordan Harrison on behalf of the Ad Hoc Group
of Obholders. Good afternoon. Good afternoon,
Your Honor. Maggie Vesper of Ballard's Bar LLC
on behalf of certain landlords, including Street
Retail LLC and Fashion Outlets of Chicago LLC.
Good afternoon, Your Honor. Jennifer, Valley
of Talia Dry and Warren on behalf of certain
landlords including GDP retail, Brixmore, and
Regency Center. Thank you. Good afternoon, Your
Honor. Great guests on behalf of the capital,
Warren. All right, let me just go around. Mr.
Scott? Brendan Scott from Clay State Winters
to other southern and Stevens on behalf of PH
Multi -Color Corp, PH Multi -Com Corp. All right.
Miss Ryan. This is Abigail rushing Ryan with
the National Association of the Tunisian. All
right. Good afternoon, Your Honor. For the record,
Daniel Fiorello from Ottawa, D .C., Council for
Bank of America, an agent for the FADL defenders.
All right, Mr. Ward. Good afternoon, Your Honor.
Nathaniel Ward will be firing Gallagher on behalf
of the global debtors. All right. Does anyone
else? Mr. Castleman, do you wish to make an appearance?
I can't hear you. You might be muted. Nope, you're
still muted, hold on. All right, try now. All
right, I'm going to activate the hand raising
feature because we have a lot of people on and
we have 150 people on, it's very loud. So just
hit five star one time and I'll let you back
in. All right, Ms. Feldman, are you a 646 number?
All right, so let's see. 212 number. That's Ryan.
212. All right, hold on. I mean, Feldman. The
number ending in 8633. All right. There's a...
A 646 number, a line that I just opened up? All
right, and then a 908 area code number? Yes,
Your Honor, Joseph Hill, I just wanted to note
my appearance for the record on behalf of Office
Capirelli, SAS, and DEVA Inc., which is spelled
D -E -V -A. Okay, all right. Thank you. Ms. Feldman,
are you taking the lead? Yes, Your Honor. Thank
you. We are here today on an emergency motion
that we filed yesterday concerning the global
debtor's store closing procedures. I'm joined
today by my colleagues Jennifer Hardy and Nathaniel
Ward. The global debtor's chief restructuring
officer Mark Weinstein is also on the line, as
is Tim Schilling from the consultant, GA Retail
Solutions LLC. We wanted to thank Your Honor
for giving us time on this emergency motion today.
This morning we filed a witness and exhibit list
with four exhibits at docket number 530. First,
the declaration of Mr. Mark Weinstein in support
of these first days at docket number 530 -1.
Second, a copy of the consulting agreement at
docket number 530 -2. Third, a copy of the sort
closing procedures at docket 530 -3. And finally,
the declaration of Mr. Weinstein in support of
this emergency motion. We would ask at this time
that each be admitted into evidence. All right.
Let's start with the last one first, which is
Mr. Weinstein's declaration as it relates to
this particular motion. Does anyone object to
the admission of Mr. Weinstein's declaration
found at Docket 530 -4 as his direct testimony
in connection with this motion subject to cross
-examination? All right, hearing no objection,
that will be admitted. Does anyone object to
the admission of exhibits 530 -2, which is the
closing, it is consulting agreement, and 530
-3, which is the store closing procedures, admission
of those exhibits into evidence? All right, hearing
no objection, they will be admitted. Obviously,
to the extent any, oh, wait a second, somebody
just, I just. Open the line for someone. I apologize,
Your Honor. This is Jerry Lee Miller. I had raised
my hand earlier to make my appearance, but that
got made. Okay. All right. All right. Hearing
no objection to admission of exhibit 530 -2 or
530 -3, those will be admitted. As it relates
to 530 -1, that's the general background. petition
which had been admitted just for purposes of
the background. I'm going to take judicial notice
of that. I don't think that pertains directly
to this motion. It's more of a background. So
the exhibits are admitted. Thank you, Your Honor.
As Your Honor may recall from our first day hearing
a few weeks ago and certain motions that we filed
in these cases to date, the debtors operate the
SACS office brand, which offers discounted luxury
goods to customers. The Zaxal Fifth Brand has
two selling channels, 74 brick and mortar stores
that are operated by the global debtors and an
e -commerce site that is operated by the SO5
digital debtors. The global debtors have also
been winding down operations at the Neiman Markets
last call source as well. Unfortunately, all
three channels have suffered in performance of
late. And last week, Your Honor heard a motion
by the SO5 digital debtors for authority to wind
down the e -commerce site. Today, we're before
you seeking authority for similar relief with
respect to the stores. The global debtor's strategy
with respect to the stores is to resize the store
footprint down to 12 and to use those stores
as a liquidation channel to sell excess inventory.
In furtherance of this strategy, by this motion,
the global debtors seek authority to enter into
and perform under a consulting agreement with
GA Retail Solutions LLC, a copy of which is attached
as Exhibit 1 to the proposed interim order. In
addition, we're seeking authority to conduct
store closing sales pursuant to certain proposed
procedures that are attached as Exhibit 2 to
the proposed interim order. Also, we're seeking
authority to pay bonuses for non -insider employees
of the closing stores and to approve modifications
to certain new customer programs. With respect
to that last point, I'd like to point out that
the SO5 digital debtors have joined in our motion
with respect to the customer program modifications.
The purpose of that, Your Honor, was to coordinate
so that we would ensure that release is as clear
and consistent as possible for SACS Office customers,
whether they're shopping in -store or online.
Since we filed the motion yesterday, we had a
number of parties reach out to us to discuss
specific aspects of the release we are seeking.
including the attorney for the US trustees, certain
landlords of the closing stores, and other interested
parties. However, there has been one objection
that was filed to the motion this afternoon,
I believe by Simon Property. Before I go too
much further, I wanted to make a few statements
on the record in response to points that have
been raised over the past 36 hours. Judge, you
may hear from a lot of vendors about issues that
were raised at the first day hearing. But nothing
in this sale closing procedures motion, which
true to its name is procedural, affects what
the court heard as to the vendors on the first
day. And any remaining issues from the first
day that aren't yet resolved, and again, we really
do hope to resolve them all before any final
order is entered, that those will be resolved
at the hearing on the 13th. But this hearing
is not the forum. to address those issues unless
they are specific to the relief that's requested
here. Consistent with what was said at last week's
hearing for the SO5 digital debtors, we care
very deeply about the debtor's brands and relationships.
And this order is not intended to diminish any
vendor's rights in inventory or otherwise, and
likewise, the global debtor's rights. Next. The
global debtors will not expand the relief sought
in the motion to stores beyond those that are
listed on the exhibit to the consulting agreement
without seeking further relief from this court
on notice and a hearing. Next, with respect to
any side letters that are entered into under
the proposed interim order, Great American and
the global debtors will work in good faith on
the terms of such side letters. If a landlord
had a breach of contract, claim arising from
the closing of the stores and any sales that
are conducted under these procedures and has
failed to enter into a side letter, those rights
are preserved and can be dealt with in the assumption
and rejection process later on in this case.
Finally, following this hearing, we will file
a revised proposed form of interim order reflecting
some changes that we have agreed to make with
certain parties of interest. In the interest
of time, I'll ask if Your Honor has a preference
on how we proceed. I'm happy to answer any questions
that you might have or proceed on the merits,
or otherwise we would ask that the court enter
the proposed interim order. All right. So I have
one or two questions, and then I'm going to let
the other parties speak. And then the other overriding
concern is I saw from the docket sheet that the
organizational meeting for the unsecured creditors
had been yesterday I believe and so to I don't
know if the unsecured creditors committee had
appointed counsel yet but I would I would I would
love for them to be able to see to see this before
I consider entry of the order, but we'll talk
about that at the end. The only question that
I had was, so you filed a motion at docket number
32 to reject certain leases. Are these 74 leases
included in that motion? No, Your Honor, they
are distinct. Okay, so there is currently no
motion to reject Any of the leases that are covered
by this motion? That's correct, Your Honor. Okay.
All right. That actually simplifies things for
me. All right. Let me hear from anyone else who
would like to be heard. Your Honor, can you hear
me? Yes. Perfect. Jerry Lee Miller from Sibley
Austin here on behalf of Simon Property Group.
Your Honor, we did file an objection at Docket
533 immediately before this hearing. My client
does not in principle oppose the debtors conducting
the store closing sales. We understand that's
within their discretion. What we would like,
Your Honor, is simply time. Time that's guaranteed
to us by its due process clause and the bankruptcy
code. Just for Your Honor's context, this motion
was filed at 1 .30 p .m. yesterday. We immediately
reached out to Great American with our form of
side letter agreement. Simon is obviously a very
large landlord. They've got a form of agreement
that they negotiated with. standard terms and
conditions that they reach out to parties who
are in similar circumstances and turn to an agreement
with. We did hear back from Great American this
morning around 10 a .m., but the feedback was
simply that it was too close to the hearing and
we weren't going to be able to reach a resolution
in time. And so, Your Honor, we simply asked
for that time to reach a resolution. We understand
that the debtors filed this on an emergency basis,
but frankly, Your Honor, they've been in bankruptcy
for two and a half weeks. So to the extent that
there was something to be negotiated, they could
have been working with the landlords for the
past two and a half weeks, so that this could
have been filed on an agreed upon basis. Unfortunately,
that's not what happened. We just learned about
it when it got filed yesterday at 1 .30 p .m.
And so we should not now be forced into an arrangement
on one day's notice simply based on the promise
that they'll work with us in the future. And
going to that promise, Your Honor, While I very
much appreciate their willingness to work with
us in the future, and I'm confident in the signing
group's ability to consensually resolve these,
for context they have resolved approximately
90 % of these that they've done, the entry of
the interim order today would change the playing
field, Your Honor. So when that interim order
gets entered, the store closing sales could immediately
commence, and we understand that they would immediately
commence, which constitutes post -petition breaches
of our leases and which causes signing property
group damages. All we're asking for is for these
side letters to be negotiated in advance. And
so, Your Honor, we'd ask for simply more time
before this interim order is entered or that
the sign -in lease is be carved out of the interim
order, subject to the earlier of a consensual
entry into a side letter, which we think could
happen very quickly or the final order. All right.
Anyone else? Can you hear me? Yes, I can, Ms.
Ryan. Thank you honor and for the record, this
is Abigail Ryan with the National Association
of Attorneys General. We just learned about this
filing this morning and I have been coordinating
with some agencies offices, but I'm sure the
majority of them have not seen this order. Since
it does impose liquidating sales laws and dispute
resolution processes, I really like to be able
to touch base and make sure that know about that.
I do know a couple of things have been raised.
I believe we can absolutely find language that
will address these issues in even more time.
The first issue is the dispute resolution process,
as I read it, does not carve out police and regulatory
laws to be enforced for human health and safety.
And generally, when this language is used, I'm
very familiar with it. It's been almost every
day in a business case. you do have a carve out.
And so that's the first issue. The second issue
is you feel that consumers need to be able to
return materially non -conforming goods if they
get something like that at a sale. Third, it
needs to address augmented goods as well. And
so if other goods are brought in, they're not
as... the facts of Avenue or the debtors or what
have you, they need to be clearly labeled so
customers know they're buying an augmented good
that is not part of the debtor's supply. And
finally, since this is going to be very quick
and these closing bills are going to go into
motion soon, we would like to have the customers
notice through the debtor's website and social
media apps because we believe that reaches more
consumers more quickly. I believe the order said
they would accept gift cards for the first 15
days of the sale. I don't have an issue with
that, but I do have one question as to whether
other stores that aren't closing, will they continue
to accept the gift cards? And so if you have
questions for me, I'm more than happy to answer
them. Otherwise, I wanted my objection on the
record, but I think we can probably find language
that'll fix these issues. Yeah. I think those
are all issues that need to be addressed. I'm
not sure that if they're if they're if they have
to be in the interim order, we're going to set
a prompt hearing on the final. So I suspect and
Miss Feldman if we can we can set it at the time
of the final hearings on the 13th or we could
do it at a different date if if it's more appropriate.
But the 13th is all sacks so we can certainly
find a time to do it that day. So that's only
two weeks from today. So I think that that can
be addressed at that time. Okay. Anyone else
wish to be heard? Good afternoon. Your Honor,
I'm Maggie Vesper of Valerie's Bar LLP on behalf
of Street Retail LLC and Fashion Outlets of Chicago
LLC. I rise today to echo the concerns raised
by Simon Properties. Prior to the day's hearing,
in an effort to resolve our concerns, we previewed
these issues with the debtors. And although we
need some progress, we were not able to fully
resolve all of our concerns. Our central issue
is having signage and advertising in place at
our clients' locations prior to the entry of
a final order or the execution of a side letter.
Many of the purported sale guidelines violate
numerous provisions of our clients' leases, and
there's no basis to invalidate or otherwise ignore
these lease terms. Accordingly, we object to
the commencement or continuation of sale with
our clients to locations under the proposed guidelines
unless and until there's a side letter or the
court makes a determination at a final hearing
on the sale guidelines. Our clients are willing
to work with the debtors on the process for these
sales as we have done in so many other retail
bankruptcies. And we would request that the be
conditioned on the entry of the ladder of the
entry of the side letter between the parties
or the entry of a final order. We also have two
specific line items that we spoke with Ms. Feldman
about, but I'm not sure we're incorporated in
the proposed order. And I'm happy to address
those now or wait for a time or I would prefer.
I mean, I don't know what they are. I don't know
whether they've been addressed. If I can respond
to that. One piece, Your Honor. We'll continue
to work with Ms. Bestford to address those two
final line items. All right. Who else wishes
to be heard? Your Honor, my editor? Yes. Brendan
Scott on behalf of Richland Group, Inc. and Unique
Designs, Inc. I just wish to raise, Your Honor,
a point of clarification. In the consulting agreement,
the definition of merchandise appears to carve
out all memo and consignment for us, but there
is... something of a qualifier in there that
says, as identified by merchant. I think that
means that the debtors are just going to send
a list of all consignment and memo goods. I want
to be certain that they're not reserving the
right to pick and choose which goods they think
are on, were received on consignment and memo,
that to the extent they're going to pick and
choose, that the party should have some consent
rights with respect to that. So I'm hoping the
debtor can clarify with that, Ian, truly all
goods received on memo and consignment are carved
out. And they're not reserved to send right there
to pick and choose. Is that correct, Ms. Feldman?
That's correct, Your Honor. Yeah, that's the
way I understood it and that's the way... This
is almost identical to... The numbers are different,
obviously, but this is almost identical to the
one that we signed last week with respect to
the digital debtors and that... point was raised
and addressed at that time. Anyone else wish
to be heard? The motion filed with the debtors,
which includes the closing of five last coal
stores, impacts the ongoing relationship between
Capital One and the debtors. After receiving
the motion, we reached out to counsel for the
debtor, as well as the business folks at the
meeting, and we raised a number of concerns with
the process of the sales and the impact that
it would have upon the ongoing customer program.
I'm happy to report that we have reached an agreement
as to many of the issues that were raised, and
the debtors council has represented that there
will be language added to the order to address
those issues. At this point, from the statement
of Ms. Goldman earlier on, apparently the revised
form of order has not yet been uploaded or filed,
so we have not seen it to make sure that it's
in there. So we reserve the right with regards
to those particular pieces. Having said that,
there is one open issue that we have continuing
discussions about, and that relates to a feature
of the program agreement in which customers who
do not have their card on their persons can have
people at the store without their account number.
We believe that there are some issues that are
raised with it. We have not been able to resolve
that issue, so we're reserving the right to possibly
object to that particular provision before a
final hearing, while we're going to continue
to work with others to try to resolve it outside.
With that, hopefully we can get it resolved.
Thank you, Your Honor. All right. Thank you.
All right. Who else wishes to be heard? If I
may quickly, Your Honor. Yes, sir. Thank you.
Once again, for the record, Michael Reardon on
behalf of the SO5 Digital Debtors. As we've still
been noted at the top, we have joined this motion
or reparties to this motion solely with respect
to the provisions relating to customer programs.
We've been working with the global side to make
sure we're coordinating the timing and implementation
of these changes, you know, at least on the SACS,
on the off -fifth .com side in connection with
our liquidation sale, and on the SACS global
side. proposed store closings in order to limit
customer confusion. We are at a point where we
have, I think, these changes queued up and ready
to go. And we're anticipating implementing them
either today or tomorrow. So as we're discussing
timing, we think it's important in terms of keeping
our liquidation sale moving forward to at least
have authorization on the customer program aspect
of this order. Thank you, Your Honor. Thank you.
Yes. Thank you, Your Honor. For the record, Jennifer
Avelli of Kelly Dry. Again, on behalf of the
GDP retail at Brooksmore and Regency Centers,
we echo the comments of Ms. Miller and Ms. Vesper.
We did reach out to Wilkie before the hearing.
And a lot of these issues, frankly, we were usually
able to resolve prior to an interim hearing.
But because of the expedited nature, we were
not able to in this situation. I hope that the
revised order will address a lot of our concerns.
I have seen some of Ms. Vester's comments to
it. I did just want to raise a few points. One
being that we agree that until a side letter
is signed because of expedited nature, we would
ask that no store clothing sale signage is installed
in our clients' locations. Two, we would like
to be notified when the store clothing sales
are going to conclude at those locations. That's
typically something we can address in a side
letter, but it is important for our clients can
dress the windows to avoid the appearance of
a dark store. And then ultimately, the sale termination
date in the motion appears to be April 30th,
but the parties have the right to extend that.
And we would like to be given notice to the extent
that the sale termination date is extended, just
so that we're aware of what's going to be happening
in our spaces. I think that's all I have for
now. But again, I do just echo the comments of
Ms. Miller and Ms. Vassper. All right, anyone
else wish to be heard? All right, go ahead. Did
you hit five star? Okay, there you go. Good afternoon,
your honor. Good afternoon. Good afternoon, your
honor. Audrey Horscher with Quark Hill TLC representing
Scottsdale Promenade. We also echo the concerns
of the other landlords today. Primarily, our
concern is expedited nature. Typically, we would
enter into five minutes. Our system will end
this conference in five minutes. To extend this
call for one hour, please enter the moderator
pin now. Your conference has been extended for
60 minutes. We hope that we're going to be able
to amicably resolve these before signage and
marketing commences at our location. All right.
All right. Ms. Feldman. Your honor, if there's
no one else who wishes to be heard, I'd like
to respond to a few of these points. Sure. Thank
you, your honor. With respect to the landlord
councils who have raised similar issues, I'll
just reiterate what I stated earlier in my introduction.
It's very important to us that our sale not be
conditioned on an individual landlord's consent.
And for that reason, we would respect to any
side letters that the parties will likely enter
into. As I noted earlier, we will definitely
continue to work in good faith with the landlord's
council to reach an agreement on those side letters.
However, the exigency of these store closings
is very palpable for these global debtors. With
respect to the timeline of these cases, the store
closing sales really do need to commence right
now. They're slated to proceed for approximately
12 weeks in these cases. And if we expand the
timeline beyond those 12 weeks, We will not only
incur unnecessary rent charges beyond that time,
but also we will incur additional case costs
throughout these cases, which will really burden
the debtors. For that reason, we cannot let the
commencement of the store closing slip past the
date that's projected in our motion. And for
that reason, we would respectfully request the
landlord's council's objection with respect to
the side letters needing to be entered before
any store closings can commence with their stores
be overruled. When do you anticipate putting
the signage up? Your Honor, I believe that is
happening on Saturday, but I will defer to Mr.
Schilling if anything has changed. Hearing nothing,
however, I think that's fine. No, no, no. He's
trying to get on. Hit five star one time, Mr.
Schilling. No, just hit it five star one time
All right, there you go Okay, thank you your
honor. Yes, miss Delvin is correct. The plan
is right now to start to sell tomorrow morning
All right, anyone else wish to be heard Sorry,
my apologies. Your Honor, if I may briefly respond,
we're not looking to condition anything on our
consent, Your Honor. We simply want due process.
This could have been negotiated over the last
two weeks. They could have worked with their
landlords. This is what would have been done
in the ordinary course and what is done in 90
% of these cases. And it just simply was not
here. We should not now be punished for that
lack of their reaching out and their working
with the landlords. We're standing by. We're
ready to negotiate the side letter agreement.
We're confident we'll get one done. But we don't
want to be punished and deprived of due process
by an exigency of their own making. Your Honor,
to the question you asked earlier, I understand
that the committee is hiring counsel today. I
also anticipate, as Your Honor does, that the
committee's counsel will likely want to weigh
in on this. And so at the very least, Your Honor,
we would ask for till Monday. delayed ruling
until Monday to allow all the parties to work
together and try to negotiate something. All
right. Does anyone else wish to be heard? Your
Honor, just briefly. Yes. Your Honor, I agree
with what Ms. Miller said. I also just wanted
to note our client, JVP Retail, is a committee
member and they are currently in the process
of selecting counsel. The committee has asked
that they do have. I know your honor noted it.
I just wanted to reiterate the committee has
asked that they have the opportunity to weigh
in on this motion. All right, anyone else wish
to be heard? Hit five star one time. Thank you,
your honor. Can you hear me? I can hear you.
Yes. Yes. Good afternoon, your honor. Justin
Burnbrock of Sheppard Mullen on behalf of Chanel
as well as Akris and Ralph Mullen. The council
from Brookfield just reported what I was sent
here directly from the committee call, which
is ongoing on another line to ask your honor.
Chanel is co -chair of the committee. We are
presently deliberating council selection and
anticipate announcing that very, very soon. And
so if there could be a very, very brief delay
until such time as council has had an opportunity
to weigh in on this after the committee's twice,
it'd be greatly, greatly appreciated. All right.
Anything further? All right. So I view this as
a relatively routine motion. I think it's perfectly
within the debtors business judgment to do this
I I want to be sensitive to the committee and
the the landlords so what I'm going to do is
you know subject to an agreeable form of order
by Monday I will wait until Monday at 5 to consider
the order if there isn't agreement then we will
have a continued status conference on this with
respect to the order Tuesday at 1230 at noon.
And then the final hearing on this will be very
quickly on February 13. But as I indicated, I'm
inclined to, you know, I really View this more
as a timing. I mean, I'm going to approve the
order I think we just need to go through allow
the committee to look at it And and allow there
to be discussions over the weekend During this
now as it relates to the custom program aspect
of it, which is really very limited I'm going
to go ahead and orally approve that so that there
isn't any especially since the digital debtors
have already started their process. So that's
my ruling, but I really would like to have the
weekend and all day Monday for people to look
at this, and then I won't consider it. And unfortunately,
Monday and Tuesday of next week, and probably
Wednesday, I'm in a contested confirmation hearing.
So Monday, Tuesday at noon, or at 1230, let's,
Tuesday at 1230, it'll be the only time that
I'm gonna have to actually look at this. So it's
a brief delay, but I think under the circumstances,
it's appropriate. Thank you very much, Your Honor.
All right. All right, any other thing that we
can do today? Oh, wait a second, somebody else
raised their hand. All right, somebody from the
516 area code. Your honor, this is Dan Fiorello
from Otterberg. I had raised my hand, but your
ruling had addressed a question I was going to
ask, so you can disregard the hand raise. Okay.
All right, anyone else wish to be heard? Hopefully
I'll get an order with everybody to anybody's
satisfaction and I'll sign it 501 on Monday.
Thank you. All right. Thank you. All right. We'll
be in recess to 3 o 'clock 2 o 'clock