WEBVTT 00:00:01.260 --> 00:00:04.740 Good morning. It's 930 a .m. on Friday, February 00:00:04.740 --> 00:00:12.660 20, 2026. We're here in case number 26 -90103, 00:00:12.800 --> 00:00:16.320 SACS Global, for second day hearings. Why don't 00:00:16.320 --> 00:00:18.920 we get appearances of counsel and then we can 00:00:18.920 --> 00:00:22.920 proceed. Good morning, Your Honor. Sepp or Sinclair 00:00:22.920 --> 00:00:25.440 will keep bar and calendar for the debtors. Good 00:00:25.440 --> 00:00:29.929 morning. Good morning, your honor. Jared Martin 00:00:29.929 --> 00:00:33.869 for the answer five digital letters. Good morning, 00:00:33.929 --> 00:00:35.929 your honor. Bob Britton, Paul Weiss on behalf 00:00:35.929 --> 00:00:37.630 of the DIP lenders. I'm joined in the room, your 00:00:37.630 --> 00:00:41.049 honor, by my partner Chris Hopkins. Good morning. 00:00:42.570 --> 00:00:45.250 Good morning, your honor. Lorenzo Maranusi, Morrison 00:00:45.250 --> 00:00:48.670 and Forster on behalf of the DIP lenders. I'm 00:00:48.670 --> 00:00:51.009 joined by my partner Ben Butterfield and others. 00:00:51.609 --> 00:00:55.689 Good morning. Good morning, your honor. Daniel 00:00:55.689 --> 00:00:58.469 Fiorello. uh... from otterberg pc i'm joined 00:00:58.469 --> 00:01:01.329 by my partner david kasselman and uh... my co 00:01:01.329 --> 00:01:04.989 -counsel from morton lewis uh... council for 00:01:04.989 --> 00:01:09.530 bank of america agent for the adl morning thank 00:01:09.530 --> 00:01:20.189 you for calling i'm going to activate the hand 00:01:20.189 --> 00:01:23.409 raising feature so please hit five star because 00:01:23.409 --> 00:01:30.479 there's just too much background noise Conference, 00:01:30.479 --> 00:01:39.900 muted. Good morning, Your Honor. Joseph Schiffer 00:01:39.900 --> 00:01:42.540 of Prior Cashman on behalf of David Ehrman, Kering, 00:01:42.700 --> 00:01:46.299 LVMH, Montclair, Richemont, and SMCP. Good morning. 00:01:52.560 --> 00:01:54.840 Good morning, Your Honor. Chris Carter of MLS 00:01:54.840 --> 00:01:57.780 and Bacchus on behalf of Caledon Commercial Finance 00:01:57.780 --> 00:02:00.540 as the pre -conditioning agent to the SO5 digital 00:02:00.540 --> 00:02:05.980 debtors. Good morning. Good morning, Your Honor. 00:02:06.099 --> 00:02:08.979 Ian Winters on behalf of Vendors, BH Multitom 00:02:08.979 --> 00:02:13.159 Corp, BH Multicolor Corp, Richline Group, Inc., 00:02:13.159 --> 00:02:16.199 United Unique Designs, Inc., Graph Diamonds, 00:02:16.280 --> 00:02:21.020 New York, Inc., 64 Facets, Inc., and MSeru USA 00:02:21.020 --> 00:02:25.300 Corp. Good morning. Good morning, Your Honor. 00:02:25.500 --> 00:02:27.500 Sid Scheinberg, along with my associate, Naomi 00:02:27.500 --> 00:02:31.300 Cheney, on behalf of Margaret McLean -Jeweler. 00:02:31.879 --> 00:02:36.219 Good morning. Good morning, Your Honor. Good 00:02:36.219 --> 00:02:38.460 morning, I think, Trustee. Good morning, Mr. 00:02:39.240 --> 00:02:42.699 Wynne. Good morning, Your Honor. John Higgins, 00:02:42.919 --> 00:02:45.500 Her Hedges, appearing with Shane Johnson and 00:02:45.500 --> 00:02:47.599 Nepal Weiss Group on behalf of the Ad Hoc Group 00:02:47.599 --> 00:02:53.500 of DIP lenders and secured note holders. All 00:02:53.500 --> 00:02:56.240 right. Good morning, Your Honor. Robert Lee Haynes, 00:02:56.319 --> 00:02:58.520 Kelly Dryen, Warren, on behalf of Landlords, 00:02:58.780 --> 00:03:01.360 Aventura Fashion Island, Grixmoor Parkshore, 00:03:01.780 --> 00:03:05.979 TGP Retail LLC, Regency Centers, Brookfield Office, 00:03:06.680 --> 00:03:09.240 and Turnberry. Thank you very much, Your Honor. 00:03:09.439 --> 00:03:13.120 Thank you. Good morning, Judge. Gary Vist for 00:03:13.120 --> 00:03:19.000 the Vendor 2 source. Good morning. Good morning, 00:03:19.060 --> 00:03:24.099 Your Honor. John. Go ahead. Good morning, Your 00:03:24.099 --> 00:03:26.439 Honor. John Dodd of Baker McKenzie on behalf 00:03:26.439 --> 00:03:29.919 of Balanchina USA, Balmain USA, and Prada USA. 00:03:30.840 --> 00:03:36.020 Good morning. Good morning, Your Honor. Greg 00:03:36.020 --> 00:03:38.740 Hess with Hunt and Andrews Group on behalf of 00:03:38.740 --> 00:03:43.180 Capital One. Good morning. Good morning. Amine 00:03:43.180 --> 00:03:45.360 Borty on behalf of Exxon and Capital Management 00:03:45.360 --> 00:03:50.539 from Stidley. All right. All right. Good morning, 00:03:50.539 --> 00:03:54.169 Your Honor. Go ahead. Bethany Simmons, Loeb & 00:03:54.169 --> 00:03:57.889 Loeb LLP on behalf of Donnie Ink, Roberto Coyne, 00:03:58.110 --> 00:04:02.330 Gigi USA, Dulce & Gabbana USA, and Dulce & Gabbana 00:04:02.330 --> 00:04:09.069 Beauty USA. Good morning, Your Honor. Leslie 00:04:09.069 --> 00:04:11.710 Heilman, Ballard Spar on behalf of Centennial 00:04:11.710 --> 00:04:15.090 Waterford Willow Bend LLC, Street Retail LLC, 00:04:15.469 --> 00:04:19.110 the Forbes Company, the Irvine Company LLC, and 00:04:19.110 --> 00:04:21.290 the May Search Company, all landlords of the 00:04:21.290 --> 00:04:25.279 debtors. All right. Thank you. All right. Anyone 00:04:25.279 --> 00:04:27.560 else wish to make an appearance that hasn't made 00:04:27.560 --> 00:04:40.019 one hit five -star, Mr. Sutherland? Good morning, 00:04:40.300 --> 00:04:46.060 Your Honor. Courtney Birnbaum on behalf of International 00:04:46.060 --> 00:04:49.579 Diamond Importers Inc. and Tasteberry Corp. vendors. 00:04:52.300 --> 00:04:55.180 Good morning, Your Honor. Lisa Norman from Andrews 00:04:55.180 --> 00:04:58.500 -Meyers on behalf of David Yermann Enterprises, 00:04:58.779 --> 00:05:04.139 Delta Galil Industries, GMBSA, Valley, Billiard, 00:05:04.759 --> 00:05:09.019 NM Chicago, Caring America, Louis Vuitton, Leclerc 00:05:09.019 --> 00:05:13.740 USA, Reichmont, North America, SMCP, Yermann 00:05:13.740 --> 00:05:16.699 Retail North America, and Zimmerman Ware Party. 00:05:17.740 --> 00:05:21.060 Also on the line, Joe Schiffer from Prior Cashman. 00:05:21.290 --> 00:05:25.930 We're at our local council. Good morning. Good 00:05:25.930 --> 00:05:30.009 morning, Your Honor. Leslie Dirkhoff, Marth Hockenhamer, 00:05:30.050 --> 00:05:33.389 on behalf of Valentin and Kalich Jewelry Manufacturing, 00:05:33.389 --> 00:05:37.750 LLTV. Thank you. Good morning. Good morning, 00:05:37.790 --> 00:05:41.170 Your Honor. David Kozlowski with Morrison Cohen, 00:05:41.529 --> 00:05:45.750 representing S Rothschild and Company Inc. Comark 00:05:45.750 --> 00:05:51.480 LLC, MMJ Apparel, Major Major LLC, Santomi, North 00:05:51.480 --> 00:05:55.240 America, Camilla, Australia, Party Limited, and 00:05:55.240 --> 00:06:01.459 Camilla Corporation. Good morning, Your Honor. 00:06:01.920 --> 00:06:05.040 Jason Angelo of Reed Smith, representing Citibank 00:06:05.040 --> 00:06:07.920 in its capacity as a trustee and collateral agent. 00:06:08.819 --> 00:06:11.779 Good morning. Good morning, Your Honor. Jason 00:06:11.779 --> 00:06:13.920 Keele of Silk, Cummins, and Gross on behalf of 00:06:13.920 --> 00:06:25.100 Skipporami USA, Inc. and Deva, Inc. Mr. Sutherland 00:06:25.100 --> 00:06:28.480 Yes, your honor Mike Sutherland Carrington Coleman 00:06:28.480 --> 00:06:38.180 per AJD platinum and vivid blue All right Does 00:06:38.180 --> 00:06:44.000 anyone else wish to make an appearance hit five 00:06:44.000 --> 00:06:53.230 star one time? Good morning, your honor. Can 00:06:53.230 --> 00:06:56.829 you hear me? Yes. Jerry Lee Miller for the Austin 00:06:56.829 --> 00:07:03.490 LLP for Simon Property Group. Good morning. All 00:07:03.490 --> 00:07:07.470 right, Ms. Sinclair. Yes, your honor. Are you 00:07:07.470 --> 00:07:10.329 able to hear me? I can hear you fine. Great. 00:07:10.470 --> 00:07:12.230 Good morning, your honor. Again, Zepport, Sinclair, 00:07:12.389 --> 00:07:14.529 Wilkie, Barr, and Gallagher for the global debtor. 00:07:14.949 --> 00:07:17.170 We have a relatively short agenda today, if your 00:07:17.170 --> 00:07:19.170 honor has granted most of our second day relief 00:07:19.170 --> 00:07:21.209 ahead of today's hearing, which we're very appreciative 00:07:21.209 --> 00:07:23.879 of. And if it pleases the court, we know that 00:07:23.879 --> 00:07:26.480 the SACS offset digital debtors do have something 00:07:26.480 --> 00:07:28.540 on the agenda, but we'd like to go slightly out 00:07:28.540 --> 00:07:30.660 of order and start with the global debtors matter, 00:07:31.259 --> 00:07:33.319 because the only matter that we'll be going forward 00:07:33.319 --> 00:07:36.680 today is our final ZIP order. And before I move 00:07:36.680 --> 00:07:38.540 into the presentation on the ZIP, I'd like to 00:07:38.540 --> 00:07:41.480 give the court a brief status update. So as you 00:07:41.480 --> 00:07:43.779 know, we've been in Chapter 11 for a little over 00:07:43.779 --> 00:07:46.480 a month. The company has spent that time working 00:07:46.480 --> 00:07:48.980 around the clock to rebuild its relationships 00:07:48.980 --> 00:07:51.430 with vendors. and those efforts have been very 00:07:51.430 --> 00:07:54.629 fruitful. As of today, we have more than 100 00:07:54.629 --> 00:07:57.509 brands that have either executed or are coming 00:07:57.509 --> 00:07:59.790 close to executing trade agreements with the 00:07:59.790 --> 00:08:02.310 company. Our brand partners needless to say, 00:08:02.329 --> 00:08:04.209 Your Honor, are at the heart of our business 00:08:04.209 --> 00:08:06.529 and we're generating great momentum with them. 00:08:07.629 --> 00:08:09.550 The debtors have also been using this time to 00:08:09.550 --> 00:08:12.329 refocus on their core commitment to luxury retail. 00:08:12.870 --> 00:08:14.689 As Your Honor knows, the company has started 00:08:14.689 --> 00:08:17.689 closures of around 60 sacks off this brick and 00:08:17.689 --> 00:08:20.339 mortar location. Those closures are proceeding 00:08:20.339 --> 00:08:22.980 ahead of schedule and proceeds of the sales have 00:08:22.980 --> 00:08:25.740 been better than expected. The company has also 00:08:25.740 --> 00:08:28.540 commenced nine full -line store closures and 00:08:28.540 --> 00:08:30.980 has recognized significant cost savings already 00:08:30.980 --> 00:08:34.120 through contract rejection. Overall, Your Honor, 00:08:34.240 --> 00:08:36.299 it's a positive report. The company has been 00:08:36.299 --> 00:08:38.539 outperforming the DIP budget in terms of top 00:08:38.539 --> 00:08:41.019 line revenue and merchandise receipts and we've 00:08:41.019 --> 00:08:43.080 also been working actively with our lenders. 00:08:52.840 --> 00:08:55.360 We did admit the declarations of Mr. Baird of 00:08:55.360 --> 00:08:58.620 PJT and Mr. Weinstein of BRG at the first date 00:08:58.620 --> 00:09:01.340 hearing in support of the dip motion. We do not 00:09:01.340 --> 00:09:03.580 intend to admit any new evidence today, but both 00:09:03.580 --> 00:09:06.480 witnesses are here in the physical conference 00:09:06.480 --> 00:09:08.220 room with me and in the virtual courtroom with 00:09:08.220 --> 00:09:12.279 us today. As I alluded to, Carl? Yeah, just to 00:09:12.279 --> 00:09:16.039 make sure, does anyone object to using the testimony 00:09:16.039 --> 00:09:20.279 from the first dip hearing that went on for about 00:09:20.279 --> 00:09:23.940 seven and a half hours as testimony in connection 00:09:23.940 --> 00:09:27.899 with the second day hearing. All right. Hearing 00:09:27.899 --> 00:09:31.720 no objections, we'll use that testimony, obviously 00:09:31.720 --> 00:09:34.360 subject to cross -examination to the extent necessary. 00:09:36.100 --> 00:09:39.139 Thank you, Your Honor. As I alluded to earlier, 00:09:39.179 --> 00:09:41.139 we are pleased to come before you today with 00:09:41.139 --> 00:09:44.139 a largely consensual proposed final DIP order. 00:09:44.620 --> 00:09:47.340 We have come a very long way since the first 00:09:47.340 --> 00:09:50.000 day hearing. Notably, we've reached a resolution 00:09:50.000 --> 00:09:52.659 with the Official Committee of Unsecured Creditors 00:09:53.890 --> 00:09:56.730 largest brand partners. We've reached an agreement 00:09:56.730 --> 00:10:00.190 with Exonic regarding the dip. Amazon is no longer 00:10:00.190 --> 00:10:02.850 pursuing an objection to the dip. And we've resolved 00:10:02.850 --> 00:10:05.669 almost all of the formal objections and informal 00:10:05.669 --> 00:10:08.330 comments that we've received to date. We believe 00:10:08.330 --> 00:10:10.629 that the revised form of order we filed last 00:10:10.629 --> 00:10:13.870 night at docket number 890 should either resolve 00:10:13.870 --> 00:10:16.370 all of the remaining limited objections on the 00:10:16.370 --> 00:10:19.110 docket or otherwise that those objections should 00:10:19.110 --> 00:10:21.409 now be overruled in light of the resolution that 00:10:21.409 --> 00:10:23.289 we've reached with the committee and which is 00:10:23.289 --> 00:10:25.620 supported by our our largest brands. And in fact, 00:10:25.720 --> 00:10:27.360 Your Honor, we've seen that some of the limited 00:10:27.360 --> 00:10:29.779 objections have been withdrawn prior to the hearing. 00:10:30.080 --> 00:10:32.059 We understand that others of them are resolved. 00:10:32.720 --> 00:10:35.159 But again, if any of them aren't, we would now 00:10:35.159 --> 00:10:38.519 request that they be overruled. Your Honor, to 00:10:38.519 --> 00:10:40.480 please the court, I'd like to walk through some 00:10:40.480 --> 00:10:42.840 of the material elements of our resolution with 00:10:42.840 --> 00:10:45.440 the committee, because I think that summary of 00:10:45.440 --> 00:10:48.379 that deal is also going to serve to address... 00:10:56.399 --> 00:11:28.360 Here is the marshal. And so I'll spend a little 00:11:28.360 --> 00:11:30.980 more time here just to explain those to the court. 00:11:32.120 --> 00:11:34.600 In summary, the resolution that we reached, which 00:11:34.600 --> 00:11:37.740 is embodied in paragraphs 27 and 28 of the final 00:11:37.740 --> 00:11:40.779 zip order, is intended to protect the vendors 00:11:40.779 --> 00:11:43.779 that provide goods to the company on either a 00:11:43.779 --> 00:11:46.879 consignment basis or a concession basis. Again, 00:11:46.960 --> 00:11:49.600 this resolution is supported by the company's 00:11:49.600 --> 00:11:52.539 largest brand partners, who also provide goods 00:11:52.539 --> 00:11:55.320 in the post -petition period. The new language 00:11:55.320 --> 00:11:58.570 is our brand partners. a lien on those proceeds 00:11:58.570 --> 00:12:01.529 of those goods that is senior to the DIP obligation 00:12:01.529 --> 00:12:04.509 other than the ABL obligation and is senior to 00:12:04.509 --> 00:12:06.929 the pre -petition obligation, again, other than 00:12:06.929 --> 00:12:10.850 the ABL obligation. In a similar vein, the debtor's 00:12:10.850 --> 00:12:14.269 506C surcharge rights are not being waived with 00:12:14.269 --> 00:12:16.909 respect to post -petition merchandise and those 00:12:16.909 --> 00:12:18.929 vendors and the committee would have the ability 00:12:18.929 --> 00:12:22.409 to seek standing to a surcharge if we ended up 00:12:22.409 --> 00:12:30.940 in a remote scenario. The new language reserves 00:12:30.940 --> 00:12:33.720 everybody's rights if there is a dispute in the 00:12:33.720 --> 00:13:03.379 future over the pre - or post -petition, the 00:13:03.379 --> 00:13:06.580 proposed final DIP order clarifies that the consignor 00:13:06.580 --> 00:13:09.960 had a senior lien in those goods. The order also 00:13:09.960 --> 00:13:13.059 recognizes that the vendors have valid and perfected 00:13:13.059 --> 00:13:15.419 liens to goods in the company's possession during 00:13:15.419 --> 00:13:18.320 the Chapter 11 cases, regardless of whether they 00:13:18.320 --> 00:13:21.200 took any formal steps to perfect those liens. 00:13:21.759 --> 00:13:32.409 The final DIP order... any sales proceeds on 00:13:32.409 --> 00:13:34.590 prepetition amounts that those can be paid in 00:13:34.590 --> 00:13:37.950 the ordinary course of business to the concession 00:13:37.950 --> 00:13:41.389 and the consignment. So there's no, it's not 00:13:41.389 --> 00:13:43.629 treated as prepetition debt so they can just 00:13:43.629 --> 00:13:45.389 be sold in the ordinary course of business. I 00:13:45.389 --> 00:13:47.669 thought I understood that that was also in there, 00:13:47.669 --> 00:13:51.389 correct? I think they can be paid for a concession 00:13:51.389 --> 00:14:00.100 and consignment under different vehicles. does 00:14:00.100 --> 00:14:03.240 not otherwise impact the vendor's existing contracts 00:14:03.240 --> 00:14:05.240 with the debtors. I want to make that point on 00:14:05.240 --> 00:14:07.720 the record because the vast majority of these 00:14:07.720 --> 00:14:10.360 concession and consignment vendors do have contracts 00:14:10.360 --> 00:14:12.820 with the debtors. So those will continue to govern 00:14:12.820 --> 00:14:15.419 the relationship absent the new post -petition 00:14:15.419 --> 00:14:17.399 agreement or an amendment to an agreement being 00:14:17.399 --> 00:14:20.639 negotiated. And finally, nothing in the DIP order 00:14:20.639 --> 00:17:37.940 impacts any vendor's the overall... Thank you. 00:17:38.119 --> 00:17:40.079 I had no questions. Let me hear first from the 00:17:40.079 --> 00:17:43.740 committee and then I'll hear from anyone else. 00:17:49.059 --> 00:17:52.519 Hold on a second, Mr. Butterfield. Hold on. All 00:17:52.519 --> 00:17:56.900 right. Did I unmute you? I think so. Good morning, 00:17:56.980 --> 00:17:58.400 Your Honor. Can you hear me? I can hear you fine. 00:17:58.500 --> 00:18:01.559 Go ahead, Mr. Butterfield. Great. Ben Butterfield, 00:18:01.619 --> 00:18:04.559 Morrison and Forster propose counsel to the committee. 00:18:05.000 --> 00:18:06.859 Your honor, I don't know if you've had a chance 00:18:06.859 --> 00:18:08.980 to review the statement we filed last night, 00:18:09.000 --> 00:18:13.339 but I did. You did? Okay, great. So look, as 00:18:13.339 --> 00:18:15.779 Ms. Sinclair explained, the committee's resolved 00:18:15.779 --> 00:18:18.839 its concerns with the DIP financing. And in our 00:18:18.839 --> 00:18:21.359 filing, we tried to explain the benefits of this 00:18:21.359 --> 00:18:23.380 for the company's vendors and unsecured creditors 00:18:23.380 --> 00:18:26.400 and landlords and really everyone. And look, 00:18:27.420 --> 00:18:30.480 DIPs are hard fought, right? This was no exception. 00:18:30.819 --> 00:18:33.670 Very hard fought. Came down to the wire. But 00:18:33.670 --> 00:18:37.089 I think from the committee's perspective, we've 00:18:37.089 --> 00:18:40.809 absolutely gotten to the right place. This facility 00:18:40.809 --> 00:18:43.470 provides a billion dollars, over a billion dollars 00:18:43.470 --> 00:18:46.789 in new liquidity to the company. Nearly $600 00:18:46.789 --> 00:18:50.210 million of that is slated to go out to clean 00:18:50.210 --> 00:18:53.309 up pre -petition claims owed to vendors. We've 00:18:53.309 --> 00:18:55.890 taken a very close look at the budget, which 00:18:55.890 --> 00:18:57.950 we understand will be agreed in the next few 00:18:57.950 --> 00:19:00.630 days. And the company is getting the cash it 00:19:00.630 --> 00:19:04.240 needs. That was really our primary focus and 00:19:04.240 --> 00:19:07.299 concern. We want the company to be on solid footing 00:19:07.299 --> 00:19:11.160 going forward, and this facility does that. It's 00:19:11.160 --> 00:19:13.440 also going a long way, this facility, to restore 00:19:13.440 --> 00:19:16.500 your relationships with vendors, between facts 00:19:16.500 --> 00:19:18.980 and incentives. Really, it's partners. Like I 00:19:18.980 --> 00:19:21.920 said, there's almost $600 million available to 00:19:21.920 --> 00:19:24.279 pay pre -finition claims to critical vendors, 00:19:24.819 --> 00:19:26.579 to concession vendors, to consignment vendors. 00:19:26.779 --> 00:19:29.160 And that's absolutely what this company needs 00:19:29.160 --> 00:19:32.079 to do to bring everyone back on sides. And from 00:19:32.079 --> 00:19:33.720 what we're hearing, the company is doing it. 00:19:33.740 --> 00:19:36.220 So we're very, very proud of that. Of the 600, 00:19:36.519 --> 00:19:38.599 we understand that 330, it's been represented 00:19:38.599 --> 00:19:41.579 to us, that 330 million of that will be going 00:19:41.579 --> 00:19:43.640 out the door in the next two weeks. And we understand 00:19:43.640 --> 00:19:45.680 that there's a statement that betters will lead 00:19:45.680 --> 00:19:47.960 into the record to that effect at some point 00:19:47.960 --> 00:19:52.839 during this hearing. Another focus of the committee 00:19:52.839 --> 00:19:56.329 was making sure that vendors... And really, everyone 00:19:56.329 --> 00:19:59.069 who does business with this company on a go -forward 00:19:59.069 --> 00:20:02.130 basis is protected. And I think we've achieved 00:20:02.130 --> 00:20:05.289 that. Like Ms. Sinclair said, we preserved the 00:20:05.289 --> 00:20:07.589 company's surcharge rights, not just for good 00:20:07.589 --> 00:20:09.630 delivered during bankruptcy, but also for sub 00:20:09.630 --> 00:20:12.190 rent. And while we're talking about sub rent, 00:20:12.829 --> 00:20:14.410 this company's landlords are very important. 00:20:14.750 --> 00:20:18.369 These are premium locations. And they've been 00:20:18.369 --> 00:20:20.970 very patient with the company. And the committee's 00:20:20.970 --> 00:20:22.630 position is that they should not be waiting until 00:20:22.630 --> 00:20:24.869 the end of the case to have sub rent paid. And 00:20:24.869 --> 00:20:27.089 we're very pleased that the companies agreed 00:20:27.089 --> 00:20:29.630 to pay sub rent within 10 business days. It's 00:20:29.630 --> 00:20:31.230 the right thing to do, and it was a very important 00:20:31.230 --> 00:20:36.509 point for the committee. Back to vendors. As 00:20:36.509 --> 00:20:40.730 everyone knows, this business doesn't exist without 00:20:40.730 --> 00:20:45.450 its vendor community. And there was a concern 00:20:45.450 --> 00:20:49.019 from concessionary consignment vendors. are we 00:20:49.019 --> 00:20:50.940 acknowledging our rights, the dip priming our 00:20:50.940 --> 00:20:53.539 interests? And so we made it very, very clear 00:20:53.539 --> 00:20:58.039 that this dip does not prime the rights of concession 00:20:58.039 --> 00:21:00.160 vendors or consignment vendors, and that applies 00:21:00.160 --> 00:21:02.579 both for goods delivered pre -bankruptcy and 00:21:02.579 --> 00:21:05.440 post -bankruptcy. The company and the dip lenders 00:21:05.440 --> 00:21:08.759 have agreed that regardless of when goods are 00:21:08.759 --> 00:21:10.799 delivered, the rights of each vendor to their 00:21:10.799 --> 00:21:13.680 goods are sacrosanct. They have priority and 00:21:13.680 --> 00:21:16.119 they're not primed. Now once goods are sold, 00:21:16.299 --> 00:21:18.460 The vendors' right to payment from the company 00:21:18.460 --> 00:21:21.180 for concession and consignment goods will sit 00:21:21.180 --> 00:21:23.480 ahead of the DIP term loan and ahead of a billion 00:21:23.480 --> 00:21:25.500 dollars in new money. And from our perspective, 00:21:25.680 --> 00:21:29.579 look, no case is perfect, but this is really 00:21:29.579 --> 00:21:31.339 the gold standard for protecting these vendors 00:21:31.339 --> 00:21:33.440 sitting ahead of the DIP term loan. We're very 00:21:33.440 --> 00:21:35.319 pleased that the DIP lenders agree to that. We 00:21:35.319 --> 00:21:37.220 think it was the right thing to do. And I can 00:21:37.220 --> 00:21:39.180 tell you from the committee's perspective, we 00:21:39.180 --> 00:21:41.299 think vendors should feel very comfortable doing 00:21:41.299 --> 00:21:44.299 business with this company going forward. We've 00:21:44.299 --> 00:21:47.160 also negotiated, we haven't had a lot of conversations, 00:21:47.200 --> 00:21:49.720 not just with the committee, but also with the 00:21:49.720 --> 00:21:51.480 broader vendor community. We've been hosting 00:21:51.480 --> 00:21:53.900 calls where we've talked to vendors and heard 00:21:53.900 --> 00:21:56.299 their concerns and tried to explain what the 00:21:56.299 --> 00:21:58.779 facility does and what it doesn't do, and see 00:21:58.779 --> 00:22:01.759 where the pressure points are. As a result of 00:22:01.759 --> 00:22:04.359 those conversations, we've negotiated for an 00:22:04.359 --> 00:22:06.200 extended challenge period for confession and 00:22:06.200 --> 00:22:07.960 confinement vendors across the board, not just 00:22:07.960 --> 00:22:10.140 the committee, and also a reservation of set 00:22:10.140 --> 00:22:11.640 -off rights, which is another thing I believe 00:22:11.640 --> 00:22:13.960 that... companies council will lead into the 00:22:13.960 --> 00:22:15.940 record at some point during this hearing. So 00:22:15.940 --> 00:22:17.920 those were asked from the broader vendor community 00:22:17.920 --> 00:22:20.119 and we are very happy that we were able to deliver 00:22:20.119 --> 00:22:24.940 them. So look, is this a perfect dip facility? 00:22:25.480 --> 00:22:28.640 No, no facility is. But I think we set the bar 00:22:28.640 --> 00:22:31.900 really high, especially for vendors and for landlords 00:22:31.900 --> 00:22:34.039 in a retail case. And we're happy with what we've 00:22:34.039 --> 00:22:36.299 achieved and we're supportive of entry of the 00:22:36.299 --> 00:22:39.160 dip order. Thank you. All right, who else wishes 00:22:39.160 --> 00:22:48.099 to be heard? Anyone hit five star if you wish 00:22:48.099 --> 00:23:00.059 to be heard? All right. Are there any remaining 00:23:00.059 --> 00:23:09.799 objections? All right. Can you hear me? Yes, 00:23:09.799 --> 00:23:14.460 I can. Oh, I'm sorry. Good morning. Justice Schiffer 00:23:14.460 --> 00:23:16.619 again, prior Cashman on behalf of David Gurman, 00:23:16.799 --> 00:23:19.640 Kerry, LVMH, Montclair, Leishmont, and SMCP, 00:23:19.940 --> 00:23:22.299 and their various affiliated brands. As your 00:23:22.299 --> 00:23:24.279 honor may recall, at the first day hearing, we 00:23:24.279 --> 00:23:26.000 had identified that there were significant issues 00:23:26.000 --> 00:23:28.500 in the interim order as it relates to concession 00:23:28.500 --> 00:23:30.779 and consignment vendors. Since then, we've been 00:23:30.779 --> 00:23:32.519 working with the debtors, the dip lenders, the 00:23:32.519 --> 00:23:34.779 committee, and counsel for dozens of other vendors 00:23:34.779 --> 00:23:37.319 to bridge the gap into the final order that's 00:23:37.319 --> 00:23:39.740 before your honor. We follow the reservation 00:23:39.740 --> 00:23:42.559 of rights at document number 856. indicating 00:23:42.559 --> 00:23:44.519 that we're still working on reaching a deal for 00:23:44.519 --> 00:23:46.859 the form of the final order. And Your Honor, 00:23:46.880 --> 00:23:48.500 with the modifications that have been presented 00:23:48.500 --> 00:23:51.579 to you, we are fully supportive of the financing. 00:23:52.420 --> 00:23:54.339 Your Honor, my clients are some of the debtor's 00:23:54.339 --> 00:23:56.740 largest vendors and most iconic fashion brands, 00:23:56.920 --> 00:23:58.339 and they want to continue doing business with 00:23:58.339 --> 00:24:00.259 the debtors and see them all the way through 00:24:00.259 --> 00:24:02.880 to a successful reorganization. And Your Honor, 00:24:02.940 --> 00:24:04.740 I really want to thank committee council, particularly 00:24:04.740 --> 00:24:07.440 Mr. Butterfield and Mr. Mantle, for taking up 00:24:07.440 --> 00:24:11.069 the vendor issues at the committee level. after 00:24:11.069 --> 00:24:12.789 it was formed and bringing us to where we are 00:24:12.789 --> 00:24:15.349 today in terms of the final order. And I'd like 00:24:15.349 --> 00:24:17.890 to thank counsel for the other vendors. I think 00:24:17.890 --> 00:24:20.609 we worked very constructively together, as well 00:24:20.609 --> 00:24:23.170 as the folks at Wilkie and Spiegel and the folks 00:24:23.170 --> 00:24:25.549 at Paul Weiss, Mr. Brigham and Mr. Hopkins. Your 00:24:25.549 --> 00:24:27.289 Honor, we think this is as good of a deal as 00:24:27.289 --> 00:24:29.269 the parties can reach. And while not everyone 00:24:29.269 --> 00:24:31.369 is getting everything they're looking for, we 00:24:31.369 --> 00:24:33.430 take that as a sign that it's a good deal. And 00:24:33.430 --> 00:24:34.990 we look forward to partnering with the company 00:24:34.990 --> 00:24:37.269 to bring these cases to a successful conclusion. 00:24:37.549 --> 00:24:39.380 Thank you, Your Honor. All right, thank you. 00:24:39.799 --> 00:24:55.819 Anyone else wish to be heard? Five star. Your 00:24:55.819 --> 00:24:57.579 Honor, Mike Southerland, can you hear me? I can 00:24:57.579 --> 00:25:01.759 hear you, sir. Oh, first of all, I want to really 00:25:01.759 --> 00:25:04.539 appreciate Mr Schiffer and Mr Butterfield for 00:25:04.539 --> 00:25:06.779 dialing us into the discussion. I think it's 00:25:06.779 --> 00:25:12.000 very just productive. Our objection was, as Mr. 00:25:12.160 --> 00:25:15.059 Schiffer said, because the interim order left 00:25:15.059 --> 00:25:18.440 a lot of issues open. I think this version covers 00:25:18.440 --> 00:25:22.940 most of those. One housekeeping thing, Your Honor, 00:25:23.000 --> 00:25:26.539 I think our objection also somehow got linked 00:25:26.539 --> 00:25:31.119 to the digital debtors cash collateral motion, 00:25:31.500 --> 00:25:36.839 and I think that was in error. I don't want to 00:25:36.839 --> 00:25:39.740 de -link from this one, but I think if you can 00:25:39.740 --> 00:25:42.440 de -link this from that one, that would be appropriate. 00:25:43.859 --> 00:25:46.579 The only comment I would have on the final order, 00:25:46.759 --> 00:25:49.779 and I think it's one that Your Honor could do 00:25:49.779 --> 00:25:54.200 without damage to the bargain, at the end of 00:25:54.200 --> 00:26:02.140 paragraph 18f, where the deadline has been extended, 00:26:03.340 --> 00:26:06.380 And let me say, my client hopes that it will 00:26:06.380 --> 00:26:10.759 be a critical vendor with a trade agreement and 00:26:10.759 --> 00:26:13.180 that we'll not have to get involved in anything 00:26:13.180 --> 00:26:17.380 like a challenge of any sort. They just want 00:26:17.380 --> 00:26:19.880 to get back to business. But in the event that 00:26:19.880 --> 00:26:24.259 a vendor, a consignor does have to resort to 00:26:24.259 --> 00:26:26.039 that, Your Honor, and I can see that arising 00:26:26.039 --> 00:26:28.960 either if they're not selected as a critical 00:26:28.960 --> 00:26:33.019 vendor or they've chosen not to do business or 00:26:33.200 --> 00:26:35.859 Maybe they have a trade agreement and the payments 00:26:35.859 --> 00:26:39.779 have started, but there is a world where good 00:26:39.779 --> 00:26:43.019 plans go awry. I think if the court reserved 00:26:43.019 --> 00:26:48.140 to itself the right to re -extend that deadline 00:26:48.140 --> 00:26:52.720 for cause, I think that would create some more 00:26:52.720 --> 00:26:56.359 comfort in the consignor community. And I'll 00:26:56.359 --> 00:27:00.220 leave that to your honor. All right. Thank you. 00:27:03.380 --> 00:27:05.880 Your honor, Ian Winters from Claystatt Winters, 00:27:06.019 --> 00:27:09.799 Durello Shudders, and Stevens. We filed a reservation 00:27:09.799 --> 00:27:12.619 of rights on behalf of the clients that we represent 00:27:12.619 --> 00:27:16.259 and mentioned in our appearance. We're pleased 00:27:16.259 --> 00:27:19.740 to report that we're happy to withdraw our reservation 00:27:19.740 --> 00:27:23.039 of rights and limited objection. We're pleased 00:27:23.039 --> 00:27:25.460 with the efforts of all the parties that have 00:27:25.460 --> 00:27:27.779 taken part in the negotiations over the last 00:27:27.779 --> 00:27:30.599 several weeks. to come up with comprehensive 00:27:30.599 --> 00:27:35.140 language that protects concessionaires and consignors 00:27:35.140 --> 00:27:38.599 to the fullest extent possible under the circumstances. 00:27:39.160 --> 00:27:43.359 This wasn't an easy negotiation, but we are pleased 00:27:43.359 --> 00:27:45.839 with where things have ended at the end of the 00:27:45.839 --> 00:27:51.579 day. We echo the comments mentioned earlier about 00:27:51.579 --> 00:27:54.400 the efforts of the committee and committee council, 00:27:54.559 --> 00:27:57.440 Mr. Butterfield in particular, and are extremely 00:27:57.440 --> 00:28:00.440 appreciative of those efforts. We fully support 00:28:00.440 --> 00:28:03.339 entry of the dip order. All right, thank you. 00:28:03.819 --> 00:28:05.859 All right, Mr. Gravante, do you wish to be heard? 00:28:08.160 --> 00:28:11.279 Yes, thank you, Your Honor. John Gravante, I 00:28:11.279 --> 00:28:14.640 represent certain consignment and concession 00:28:14.640 --> 00:28:17.740 vendors whose claims are primarily for pre -petition 00:28:17.740 --> 00:28:23.319 sale proceeds. Your Honor, like the vendor said, 00:28:23.380 --> 00:28:26.220 we are not here to block the financing. We have 00:28:26.220 --> 00:28:29.539 a limited objection. We understand that the vendor 00:28:29.539 --> 00:28:32.140 stays acquitted to operate, but the state order 00:28:32.140 --> 00:28:34.440 as drafted does not preserve our clients secured 00:28:34.440 --> 00:28:36.819 collateral in the proceeds of the sale of their 00:28:36.819 --> 00:28:40.200 pre -petition sale or merchandise. It preserves 00:28:40.200 --> 00:28:42.980 language, and there's a difference. For our clients 00:28:42.980 --> 00:28:45.500 alone, the pre -petition proceeds at issue exceed 00:28:45.500 --> 00:28:48.880 over $10 million. And the problem is not the 00:28:48.880 --> 00:28:51.099 priority language. The problem is preservation. 00:28:51.359 --> 00:28:53.400 And if you look at the debtor's reply, which 00:28:53.400 --> 00:28:56.220 they filed last night, nearly all the protections 00:28:56.220 --> 00:28:58.680 they describe for consignment vendors and concession 00:28:58.680 --> 00:29:02.180 vendors relate to post -petition consignment 00:29:02.180 --> 00:29:04.619 agreements, post -petition concession merchandise, 00:29:04.900 --> 00:29:07.660 post -petition priority fees, and post -petition 00:29:07.660 --> 00:29:10.180 payments. This is forward -looking. Our objection 00:29:10.180 --> 00:29:13.400 is backward -looking. And it concerns pre -petition 00:29:13.400 --> 00:29:15.380 merchandise that has already been sold and the 00:29:15.380 --> 00:29:17.839 proceeds of those sales. And so when you strip 00:29:17.839 --> 00:29:21.640 away the post -petition protections, the only 00:29:21.640 --> 00:29:24.079 protection for the pre -petition consignors and 00:29:24.079 --> 00:29:27.039 concession vendors is nothing primes your lien, 00:29:27.480 --> 00:29:30.079 all your rights are reserved. But that's not 00:29:30.079 --> 00:29:33.380 adequate protection, particularly here, where 00:29:33.380 --> 00:29:36.039 our clients' rights are attached to identifiable 00:29:36.039 --> 00:29:39.029 merchandise and identifiable proceeds. Those 00:29:39.029 --> 00:29:41.470 proceeds were required to be preserved. They 00:29:41.470 --> 00:29:43.609 were required to be segregated and sent aside. 00:29:43.769 --> 00:29:46.529 They were not. Instead, they were commingled 00:29:46.529 --> 00:29:49.170 at operating counts and likely have been used 00:29:49.170 --> 00:29:52.849 in operations. So once these proceeds have been 00:29:52.849 --> 00:29:56.170 commingled and or spent, my client's secure position 00:29:56.170 --> 00:29:58.890 becomes practically unenforceable. And I better 00:29:58.890 --> 00:30:01.670 say, well, we're reserving all your rights. But 00:30:01.670 --> 00:30:03.789 reserving rights if they're failing to preserve 00:30:03.789 --> 00:30:06.730 the collateral at issue, it makes those rights 00:30:06.730 --> 00:30:09.440 a livery. So you can't mean to reserve a right 00:30:09.440 --> 00:30:12.880 and property that's not been preserved. And so 00:30:12.880 --> 00:30:16.000 this is basically what we consider as a constructive 00:30:16.000 --> 00:30:18.539 stripping of our rights. Now, the debtor said, 00:30:18.680 --> 00:30:21.500 well, we didn't prime you. You're still ahead 00:30:21.500 --> 00:30:25.640 of the debt lenders and your proceeds. But priming 00:30:25.640 --> 00:30:28.559 is the issue. Because if proceeds have been aborted 00:30:28.559 --> 00:30:32.240 with a general operating cash with no segregation 00:30:32.240 --> 00:30:34.759 and no accounting, that's our secure interest. 00:30:35.180 --> 00:30:38.019 It's impossible to enforce now. in any practical 00:30:38.019 --> 00:30:41.640 way. So basically they're saying, we've domingled 00:30:41.640 --> 00:30:44.859 the proceeds, we may have used the cash, we can't 00:30:44.859 --> 00:30:47.519 identify your proceeds, but don't worry, your 00:30:47.519 --> 00:30:50.359 lien still exists and your rights are reserved. 00:30:51.359 --> 00:30:54.440 Exists on what? What property? What segregated 00:30:54.440 --> 00:30:57.019 proceeds? So a reservation of rights doesn't 00:30:57.019 --> 00:31:00.039 create collateral. Your clients did everything 00:31:00.039 --> 00:31:01.740 right, they protected their security interests, 00:31:02.220 --> 00:31:05.619 they had true consignment relationships. The 00:31:05.619 --> 00:31:07.140 only thing they couldn't control was the debtor's 00:31:07.140 --> 00:31:09.359 own internal handling of their proceeds. And 00:31:09.359 --> 00:31:11.259 because they failed to segregate and instead 00:31:11.259 --> 00:31:14.099 commended those proceeds, our rights are basically 00:31:14.099 --> 00:31:16.640 gone. So when they say you still have your rights, 00:31:16.700 --> 00:31:19.660 your right to reserve, but there's nothing identifiable 00:31:19.660 --> 00:31:25.319 left to attach them to. So Your Honor, it's pretty 00:31:25.319 --> 00:31:27.880 straightforward. I would also say there's another 00:31:27.880 --> 00:31:30.119 issue you should be aware of, and that's this 00:31:30.119 --> 00:31:33.720 supply chain consequences of what's been going 00:31:33.720 --> 00:31:37.259 on. Our vendors are hesitant. We've heard from 00:31:37.259 --> 00:31:39.420 others that other vendors are hesitant to engage 00:31:39.420 --> 00:31:42.059 with the vendors because of this uncertainty 00:31:42.059 --> 00:31:44.259 and these issues with the pre -petition collateral. 00:31:45.039 --> 00:31:46.519 And I just want to raise the issue with the courts 00:31:46.519 --> 00:31:51.420 that this is going to maybe run into operational 00:31:51.420 --> 00:31:52.660 problems because it's not going to be able to 00:31:52.660 --> 00:31:55.519 get enough vendors to participate in post -petition 00:31:55.519 --> 00:31:58.599 business. So we're not asking you again. We're 00:31:58.599 --> 00:32:00.980 not asking you to deny the dip. We're asking 00:32:00.980 --> 00:32:03.960 for one thing. We want a meaningful carve -out. 00:32:04.039 --> 00:32:06.980 for our pre -petition consignment and concession 00:32:06.980 --> 00:32:10.000 proceeds. And we want that money, our money to 00:32:10.000 --> 00:32:13.339 be set aside and for it to be carved out from 00:32:13.339 --> 00:32:15.660 users collateral in any way by the dip order. 00:32:17.039 --> 00:32:19.720 Thank you, Your Honor. All right, thank you. 00:32:21.299 --> 00:32:23.059 All right, does anyone else wish to be heard? 00:32:24.940 --> 00:32:27.039 Your Honor, Amane Borty from Sidley Austin on 00:32:27.039 --> 00:32:30.299 behalf of Exxonix. Yes, ma 'am. Thank you, Your 00:32:30.299 --> 00:32:33.539 Honor. I would like to echo other parties and 00:32:33.539 --> 00:32:37.500 give our thanks to the debtors and to the DIP 00:32:37.500 --> 00:32:41.039 lenders for hard -fought negotiations over Exxonix's 00:32:41.039 --> 00:32:45.200 position. We did reach agreement on a stipulation 00:32:45.200 --> 00:32:47.960 that reserves issues for another day. We're hopeful 00:32:47.960 --> 00:32:50.640 that we can resolve those issues without coming 00:32:50.640 --> 00:32:53.660 back to your honor, but we believe that the stipulation 00:32:53.660 --> 00:32:57.000 does preserve those issues in a way that is meaningful 00:32:57.000 --> 00:32:59.759 for Exxonix and also helpful for the debtors 00:32:59.759 --> 00:33:02.920 and the DIP lenders for today. We just have one 00:33:02.920 --> 00:33:05.259 very small point which we did raise with the 00:33:05.259 --> 00:33:07.779 debtors just before the hearing but weren't able 00:33:07.779 --> 00:33:10.519 to connect with them, understandably so. In reviewing 00:33:10.519 --> 00:33:14.240 the order overnight, we noticed that the notice 00:33:14.240 --> 00:33:16.660 provision with respect to changes on the order 00:33:16.660 --> 00:33:19.440 has been limited and we would like to be included 00:33:19.440 --> 00:33:21.599 in the list of parties that would receive notice 00:33:21.599 --> 00:33:24.839 for those changes. Thank you, Your Honor. All 00:33:24.839 --> 00:33:30.039 right. Anyone else wish to be heard? Your honor, 00:33:30.200 --> 00:33:31.960 this is Robert Lee Hing, Kelly Dry and Warren. 00:33:32.000 --> 00:33:33.779 Can you hear me? Yes, I can hear you, Mr. Lee 00:33:33.779 --> 00:33:36.799 Hing. Thank you, your honor. Very briefly, on 00:33:36.799 --> 00:33:40.099 behalf of numerous landlords, we absolutely agree 00:33:40.099 --> 00:33:42.279 with the comments from committee council and 00:33:42.279 --> 00:33:44.119 are deeply appreciative of the efforts of Wilkie 00:33:44.119 --> 00:33:46.440 Barr, Lenders Council across the board. This 00:33:46.440 --> 00:33:48.859 is the benchmark. This is the right result with 00:33:48.859 --> 00:33:51.660 respect to stub rent and are hopeful that it 00:33:51.660 --> 00:33:53.819 is something that will be carried forward into 00:33:53.819 --> 00:33:57.380 numerous cases going forward. Again, thanks to 00:33:57.380 --> 00:33:59.059 everyone involved for the hard work you got us 00:33:59.059 --> 00:34:02.759 in this place. All right. There are several other 00:34:02.759 --> 00:34:06.440 people who have raised their hands, but if you 00:34:06.440 --> 00:34:11.699 want to speak, just hit five star if you're not 00:34:11.699 --> 00:34:19.300 unmuted. Good morning, Your Honor. Go ahead. 00:34:26.960 --> 00:34:29.659 Good morning, Your Honor, Leslie Heilman. Yes, 00:34:29.659 --> 00:34:32.079 Ms. Farr. On behalf of a number of landlords 00:34:32.079 --> 00:34:36.139 as well, I echo Mr. Lee Heen's comments on the 00:34:36.139 --> 00:34:39.420 record and will not duplicate, but I would like 00:34:39.420 --> 00:34:42.260 to say I appreciate the efforts of debtors council, 00:34:42.699 --> 00:34:44.760 lenders council, and communities council in reaching 00:34:44.760 --> 00:34:49.719 the result of the final dip order. Just for clarity, 00:34:50.139 --> 00:34:52.820 you know, we advised them yesterday that we were... 00:34:52.840 --> 00:34:55.239 signed off on the form of final dip order, but 00:34:55.239 --> 00:35:00.179 in case it was not clear, we do believe that 00:35:00.179 --> 00:35:03.719 our objection filed at Docket 703 is resolved 00:35:03.719 --> 00:35:06.199 as a result of the form of final order that's 00:35:06.199 --> 00:35:07.900 been submitted to Your Honor. All right, thank 00:35:07.900 --> 00:35:13.940 you. All right. Thank you. Mr. Scheinberg. Oh, 00:35:13.940 --> 00:35:16.179 good morning, Your Honor, again. Real briefly, 00:35:16.840 --> 00:35:20.940 on behalf of Margo McKinney, we would like some... 00:35:20.940 --> 00:35:24.699 some sort of a more formal procedure as to how 00:35:24.699 --> 00:35:27.139 to be determined to be a critical vendor. It 00:35:27.139 --> 00:35:31.179 seems like that's kind of a certain counsel and 00:35:31.179 --> 00:35:35.119 it's like call your buyer, call this person, 00:35:35.119 --> 00:35:39.599 but there's no simple procedure on how to go 00:35:39.599 --> 00:35:41.539 about that so we can determine if we're going 00:35:41.539 --> 00:35:43.900 to be able to continue doing business and if 00:35:43.900 --> 00:35:46.260 we're going to be able to receive payments for 00:35:46.260 --> 00:35:48.539 the free petition sales, which in my case is 00:35:48.539 --> 00:35:51.539 fairly substantial for a small company. And that's 00:35:51.539 --> 00:35:53.880 the only way to ask for some sort of clarification 00:35:53.880 --> 00:35:57.420 as to how that procedure works as opposed to 00:35:57.420 --> 00:36:02.320 this mystery, yes. Thank you. All right. Anyone 00:36:02.320 --> 00:36:07.719 else wish to be heard? Good morning, Your Honor. 00:36:07.820 --> 00:36:09.739 Bob Britton, Paul Weiss, I'll be off the dip 00:36:09.739 --> 00:36:12.619 line. Just very briefly, Your Honor. First, I'd 00:36:12.619 --> 00:36:14.860 like to just echo Ms. Sinclair's comments and 00:36:14.860 --> 00:36:18.480 affirm them. Over the last month, we've come 00:36:18.639 --> 00:36:21.539 very, very far, not only with the debtors, but 00:36:21.539 --> 00:36:24.400 with all parties of interest who reached out 00:36:24.400 --> 00:36:28.400 and had comments on the diploma. I want to take 00:36:28.400 --> 00:36:32.280 a moment to thank the debtors, the UCC, and all 00:36:32.280 --> 00:36:34.500 of its members, individual vendors who reached 00:36:34.500 --> 00:36:37.639 out, and landlords, as well as Ethonic for working 00:36:37.639 --> 00:36:41.320 with us and fighting with us, but ultimately 00:36:41.320 --> 00:36:43.340 getting to the right place over the course of 00:36:43.340 --> 00:36:47.320 the last month. And briefly, Your Honor, and 00:36:47.320 --> 00:36:49.179 I'm sure Ms. Sinclair will address that, but 00:36:49.179 --> 00:36:52.219 since I look at the floor, just briefly in response 00:36:52.219 --> 00:36:55.440 to Mr. Gravanti's comments, Mr. Gravanti told 00:36:55.440 --> 00:36:59.500 you, Your Honor, that he's got a pre -petition 00:36:59.500 --> 00:37:03.820 claim, a pre -petition claim, which he asserts 00:37:03.820 --> 00:37:07.019 he has a lien in or an ownership interest in 00:37:07.019 --> 00:37:09.619 or ought to have a lien in or an ownership interest 00:37:09.619 --> 00:37:12.760 in. But with respect, Your Honor, I think Mr. 00:37:12.780 --> 00:37:14.760 Gravanti went on to repeat his own argument. 00:37:15.039 --> 00:37:18.000 And he told you that all those funds were commingled, 00:37:18.360 --> 00:37:21.619 that a secured interest was unenforceable, and 00:37:21.619 --> 00:37:26.420 that his liens have gone away. And that's sort 00:37:26.420 --> 00:37:28.960 of the whole point, Your Honor. What we've done 00:37:28.960 --> 00:37:31.800 in the debt is we've preserved his rights to 00:37:31.800 --> 00:37:34.139 assert whatever legal interests or rights he 00:37:34.139 --> 00:37:39.219 may have down the road. But it's not clear, based 00:37:39.219 --> 00:37:41.159 on his own statements, that he has anything. 00:37:41.449 --> 00:37:44.130 to adequately protect the day, therefore, the 00:37:44.130 --> 00:37:45.969 reservation of rights ought to be more than sufficient. 00:37:46.610 --> 00:37:48.989 With that, Your Honor, I thank you for your time, 00:37:49.289 --> 00:37:52.730 and I'll see the podium. All right, does anyone 00:37:52.730 --> 00:37:54.630 else wish to be heard before I go back to Ms. 00:37:54.750 --> 00:38:06.590 Sinclair? All right, Ms. Sinclair. Thank you, 00:38:06.590 --> 00:38:09.030 Your Honor. I'll address these in no particular 00:38:09.030 --> 00:38:11.480 order, but I'll start where Mr. of Britain ended 00:38:11.480 --> 00:38:14.659 with the statements of Mr. Gravanti. Respectfully, 00:38:14.679 --> 00:38:17.719 Your Honor, we aren't hearing any sort of uncertainty 00:38:17.719 --> 00:38:20.500 about operational issues from vendors in the 00:38:20.500 --> 00:38:22.780 vein that Mr. Gravanti is mentioning. We're getting 00:38:22.780 --> 00:38:25.099 plenty of inventory. As I understand, we're actually 00:38:25.099 --> 00:38:27.400 well ahead of where we expected to be for the 00:38:27.400 --> 00:38:30.099 first quarter of 2026 following the month of 00:38:30.099 --> 00:38:32.739 January alone. So I just want to make it clear 00:38:32.739 --> 00:38:35.219 on the record that we're not experiencing the 00:38:35.219 --> 00:38:38.119 types of problems that he's mentioning. On his 00:38:38.119 --> 00:38:40.840 point. about liens on proceeds. Mr. Britton took 00:38:40.840 --> 00:38:43.940 the words out of my mouth. His right to assert 00:38:43.940 --> 00:38:46.960 any preposition claim is fully preserved. But 00:38:46.960 --> 00:38:49.539 we agree with Mr. Britton that it's not necessarily 00:38:49.539 --> 00:38:51.440 true that he has the type of claim he thinks 00:38:51.440 --> 00:38:54.500 he has today. But again, the point is his right 00:38:54.500 --> 00:38:57.179 to assert that at any time in the case is fully 00:38:57.179 --> 00:38:59.519 preserved. Our brands know how we operate. There 00:38:59.519 --> 00:39:01.420 are sophisticated parties who are aware of the 00:39:01.420 --> 00:39:05.199 reasons they were entering into. To respond to 00:39:05.199 --> 00:39:08.880 Margo McKinney's counsel, A vendor process, obviously, 00:39:09.039 --> 00:39:11.659 is in the debtor's discretion. It's set forth 00:39:11.659 --> 00:39:13.739 in the terms of the interim and final orders 00:39:13.739 --> 00:39:16.239 governing the critical vendor process. So we're 00:39:16.239 --> 00:39:19.239 happy to engage with Ms. McKinney on the terms 00:39:19.239 --> 00:39:22.380 of our arrangements with her. But there is no 00:39:22.380 --> 00:39:24.440 particular process that we'll be implementing 00:39:24.440 --> 00:39:26.340 other than what's set forth in the orders that 00:39:26.340 --> 00:39:30.000 have been entered by this court. With respect 00:39:30.000 --> 00:39:34.119 to Ms. Borty's request on notice in the exonic 00:39:34.119 --> 00:40:13.969 stipulation, we're fine with... Does anyone else 00:40:13.969 --> 00:40:16.289 wish to be heard? Someone keeps raising their 00:40:16.289 --> 00:40:19.909 hand, but if you hit five star, if you want to 00:40:19.909 --> 00:40:39.670 speak. All right, go ahead. We can't hear you. 00:40:45.960 --> 00:41:16.500 Get closer to the phone 4 -0 -1, we was formally. 00:41:18.860 --> 00:41:21.840 Your Honor, I'm review with objection to the 00:41:21.840 --> 00:41:24.559 current proceedings. We have and assume regress 00:41:24.559 --> 00:41:29.059 of forensic audit of data ex -global which has 00:41:29.059 --> 00:41:33.500 uncovered systematic spread of acid stripping, 00:41:33.760 --> 00:41:39.949 including inventory forgery of 412 million plus 00:41:39.949 --> 00:41:43.050 ghost talks and discrepancies with the Salesforce 00:41:43.050 --> 00:41:48.309 ledger and physical reality. For the record, 00:41:48.489 --> 00:41:51.969 Your Honour, we have already engaged with the 00:41:51.969 --> 00:41:56.829 United States FTC and the UK Insolvency Regulant 00:41:56.829 --> 00:42:00.730 Patents and the data councils have been silenced 00:42:00.730 --> 00:42:09.440 and we contacted before the filing of... 13th 00:42:09.440 --> 00:42:20.420 January, we contact the email on 7th January 00:42:20.420 --> 00:42:24.019 and the board but they don't reply and they give 00:42:24.019 --> 00:42:26.960 the speech and notice from Mark Spencer, Wilke 00:42:26.960 --> 00:42:30.739 Parr and Gallagher. And I wish to direct the 00:42:30.739 --> 00:42:34.960 force to my evidence that I provided to the assistant 00:42:34.960 --> 00:42:59.679 US trustee. We are here on the dip financing 00:42:59.679 --> 00:43:02.360 motion, so to the extent that you want to file 00:43:02.360 --> 00:43:10.280 something. But we're focused here on the dip 00:43:10.280 --> 00:43:24.880 motion. Thank you. I'm going to mute your line 00:43:24.880 --> 00:43:26.699 because I'm getting a lot of background noise. 00:43:31.800 --> 00:43:33.900 All right, does anyone else wish to be heard 00:43:33.900 --> 00:43:47.699 on the dip? Hit five star one time All right, 00:43:47.920 --> 00:43:51.619 thank you First of all, I really appreciate all 00:43:51.619 --> 00:43:55.300 the party's hard work on this. It seems it that 00:43:55.300 --> 00:44:00.260 You know, we've got a solution that resolves 00:44:00.260 --> 00:44:05.960 99 97 percent of the issues as it relates to 00:44:05.960 --> 00:44:13.889 the issue regarding the comments raised by Mr. 00:44:14.110 --> 00:44:18.090 Gravante. Obviously, I'm not, there's nothing 00:44:18.090 --> 00:44:20.969 in front of me to make a decision, you know, 00:44:21.110 --> 00:44:25.809 tracing assets is something that people can do, 00:44:25.809 --> 00:44:29.889 you know, under the appropriate pleadings, and 00:44:29.889 --> 00:44:32.150 you have all kinds of tests to be able to do 00:44:32.150 --> 00:44:37.949 that. I think that Me ordering a carve out or 00:44:37.949 --> 00:44:39.909 anything like that is really beyond the scope 00:44:39.909 --> 00:44:44.070 of what I can do I think that with the preservation 00:44:44.070 --> 00:44:48.690 of rights Whatever the status was on on the date 00:44:48.690 --> 00:44:52.230 of the petition is preserved and and to the extent 00:44:52.230 --> 00:44:56.349 that that you know to the extent funds were commingled 00:44:56.349 --> 00:45:03.119 after the Petition date You know, that has different 00:45:03.119 --> 00:45:06.599 consequences than before the petition date. So 00:45:06.599 --> 00:45:10.260 I'm going to overrule that objection. And with 00:45:10.260 --> 00:45:13.320 respect to the other matters, really weren't 00:45:13.320 --> 00:45:16.820 objections. They were comments. And I always 00:45:16.820 --> 00:45:21.500 reserve the right to address deadlines if motions 00:45:21.500 --> 00:45:24.019 are appropriately filed before any deadline comes 00:45:24.019 --> 00:45:28.659 to pass. So with that, again, I appreciate everyone's 00:45:28.659 --> 00:45:31.860 efforts. And I will enter the order. I don't 00:45:31.860 --> 00:45:34.400 know if the order that is in front of me needs 00:45:34.400 --> 00:45:36.420 to be tweaked, but otherwise I'm prepared to 00:45:36.420 --> 00:46:30.809 enter that order. All right, that order has been 00:46:30.809 --> 00:46:34.250 signed and sent to docketing. Thank you very 00:46:34.250 --> 00:46:38.329 much, Your Honor. We'll cede the podium to Cal 00:46:38.329 --> 00:46:40.289 Folk for SACS Office Digital to address their 00:46:40.289 --> 00:46:48.710 matter. Mr. Martin? Oh, hold on. Let me unmute 00:46:48.710 --> 00:46:54.150 you. Yep. All right. Good morning, Your Honor. 00:46:54.269 --> 00:46:56.090 Jared Martin from Bradley -Aaron -Bolt Cummings 00:46:56.090 --> 00:47:01.079 on behalf of the SO5 digital debtors. We're here 00:47:01.079 --> 00:47:05.000 this morning on approval of final use of cash 00:47:05.000 --> 00:47:07.780 collateral. The debtors have been working hard 00:47:07.780 --> 00:47:10.380 to negotiate those terms over the last month 00:47:10.380 --> 00:47:15.579 with the global debtors, their vendors and certain 00:47:15.579 --> 00:47:18.719 vendors and consignment counterparties. We believe 00:47:18.719 --> 00:47:21.159 we have reached a resolution of all outstanding 00:47:21.159 --> 00:47:26.860 issues. Earlier today we uploaded a proposed 00:47:26.860 --> 00:47:34.139 order which is at 903. 903, thank you. And an 00:47:34.139 --> 00:47:37.219 amended witness and exhibit list at 902. The 00:47:37.219 --> 00:47:40.219 witness and exhibit list consists of the first 00:47:40.219 --> 00:47:42.300 aid declaration of Andrew Heade at exhibit four, 00:47:42.360 --> 00:47:44.260 which the court has already entered, and then 00:47:44.260 --> 00:47:47.820 an approved final cash collateral budget at exhibit 00:47:47.820 --> 00:47:51.519 number seven. Your Honor, I'm happy to walk through 00:47:51.519 --> 00:47:55.260 the key terms to the final cash collateral order 00:47:55.260 --> 00:47:59.690 and answer any questions along the way. I understood 00:47:59.690 --> 00:48:04.090 that kind of the key changes were both in how 00:48:04.090 --> 00:48:07.230 you treat the administrative expense claims, 00:48:07.449 --> 00:48:11.010 if you will, as between the global debtors and 00:48:11.010 --> 00:48:14.369 the digital debtors. That's number one. And then 00:48:14.369 --> 00:48:17.250 number two, the process with respect to both 00:48:17.250 --> 00:48:20.230 consignment and concession is kind of now identical 00:48:20.230 --> 00:48:25.000 for both. But that was a different order. identical 00:48:25.000 --> 00:48:30.239 programs. Those I thought were the main changes. 00:48:30.639 --> 00:48:36.960 Was there anything else of significance? The 00:48:36.960 --> 00:48:40.239 other primary change relates to the proceeds 00:48:40.239 --> 00:48:42.599 of the interchange settlement. The court is aware 00:48:42.599 --> 00:48:45.940 that there's been a 90 -19 motion filed and there's 00:48:45.940 --> 00:48:49.019 just a process and procedure that relates to 00:48:49.019 --> 00:48:51.340 those funds that allows a party to come before 00:48:51.340 --> 00:48:53.519 this court on an emergency basis. to determine 00:48:53.519 --> 00:48:56.619 the application of those funds and moves up the 00:48:56.619 --> 00:48:59.659 challenge deadline to kind of coincide with that 00:48:59.659 --> 00:49:03.519 timeline. And that can be found in paragraph 00:49:03.519 --> 00:49:06.599 32. But for the importance of doubt, that doesn't 00:49:06.599 --> 00:49:10.920 impact the debtor's abilities to use net consignment 00:49:10.920 --> 00:49:13.440 proceeds sort of in the ordinary course. The 00:49:13.440 --> 00:49:17.760 language in paragraph 32 references unencumbered 00:49:17.760 --> 00:49:19.840 collateral, but that doesn't hinder our ability 00:49:19.840 --> 00:49:24.659 to use. net after payment of consignment funds 00:49:24.659 --> 00:49:28.000 to consignment counterparties. All right. Does 00:49:28.000 --> 00:49:32.260 anyone wish to be heard with respect to the digital 00:49:32.260 --> 00:49:37.800 debtors cash final cash collateral order? You're 00:49:37.800 --> 00:49:39.760 under Ben Butterfield, Morrison and Forster for 00:49:39.760 --> 00:49:44.159 the committee. Go ahead, Mr. Butterfield. Thank 00:49:44.159 --> 00:49:47.280 you, Your Honor. Look, I'll just say we appreciate 00:49:47.280 --> 00:49:49.940 everyone's efforts on this. It wasn't just because 00:49:49.940 --> 00:49:52.219 it was a little bit smaller than the billion 00:49:52.219 --> 00:49:54.360 dollar did doesn't mean it wasn't less complicated. 00:49:55.340 --> 00:49:56.760 There were a number of concerns with the order. 00:49:57.039 --> 00:49:59.000 They've now been resolved and we support entry 00:49:59.000 --> 00:50:01.559 of the order. All right. Thank you. Anyone else 00:50:01.559 --> 00:50:05.079 wish to be heard? Yes, Your Honor. Ian Winters, 00:50:05.260 --> 00:50:07.420 Clay Stat Winters, Jereller, Sutherland Stevens. 00:50:07.599 --> 00:50:10.159 We filed a limited objection and reservation 00:50:10.159 --> 00:50:13.380 of rights on behalf of BH Multi -Color Com Corp, 00:50:13.559 --> 00:50:16.280 BH Multi -Color Corp, Richline Group Inc., and 00:50:16.280 --> 00:50:19.360 Unique Designs Inc. Pleased to report to the 00:50:19.360 --> 00:50:21.780 court, as we did with respect to the global debtors 00:50:21.780 --> 00:50:24.840 matter, that our issues have been resolved through 00:50:24.840 --> 00:50:27.599 the revised proposed form of final cash collateral 00:50:27.599 --> 00:50:30.179 order. We're fully supportive of that order. 00:50:30.519 --> 00:50:33.440 And we thank Mr. Butterfield, Mr. Carter, Mr. 00:50:33.659 --> 00:50:38.500 Bailey, and Mr. Martin for their hard work and 00:50:38.500 --> 00:50:40.920 honest negotiations in getting us to this point. 00:50:41.659 --> 00:50:44.639 All right. Thank you. All right. Anyone else? 00:50:48.219 --> 00:50:50.719 All right. So I had an opportunity to review 00:50:50.719 --> 00:50:56.019 the form of order that was filed at Docket 903, 00:50:56.119 --> 00:50:58.960 the red line of that order that was filed at 00:50:58.960 --> 00:51:03.179 Docket 903. And I think this is proper exercise 00:51:03.179 --> 00:51:06.300 of the debtor's business judgment. And I'm pleased 00:51:06.300 --> 00:51:10.280 that it's largely, if not entirely, consensual. 00:51:10.679 --> 00:51:14.519 So I will go ahead and approve the final use 00:51:14.519 --> 00:51:17.639 of cash collateral. So just give me a minute. 00:51:43.440 --> 00:51:45.760 All right. That has been signed and sent to docketing. 00:51:46.679 --> 00:51:48.579 All right. Is there anything further we can do 00:51:48.579 --> 00:51:51.739 today? Nothing further from the digital letters, 00:51:51.900 --> 00:51:55.940 Your Honor. Thank you. Ms. Sinclair? Oh, Your 00:51:55.940 --> 00:51:58.300 Honor, thank you. All right. All right. Thank 00:51:58.300 --> 00:52:01.280 you. All right. We'll be in recess to my 11 o 00:52:01.280 --> 00:52:02.300 'clock hearing. Thank you all.