Good afternoon, Your Honor. It's nice to see
you again. It's been a while. Bill Hazel Klein
of Sullivan Nimroff Brown Hill on behalf of the
debtor Glenwood Cavern Holdings. And I'd like
to introduce my co -counsel, Mike Panko of Brownstein,
Hyatt, Farber, and Shrek, and the company CRO,
Paul Menescalo of Macco Group Restructuring.
Macero restructuring group, excuse me. Your Honor,
I'm going to make a few open remarks. Mr. Pankow
will go forward through it in much more detail.
But as you probably saw from the pleadings, we're
here because of a very tragic accident on, oh,
I should step back. Glenwood operates and owns
and operates the amusement park in Glenwood,
Colorado. Tragic accident resulted in the loss
of a young girl's life The plaintiffs got a huge
judgment against Glenwood that they they just
can't pay and Over the last let's see we got
involved in this case in early December, maybe
late November and We have been ready to file
on several occasions. In the meantime, Mr. Panko
and Mr. Maniscalio have been in discussions with
the plaintiff's council about possible settlement.
We received numerous standstill agreements to
stop execution. Eventually, we ended up filing
on Monday. And part of the reason I bring that
up is to express my heartfelt thanks to the U
.S. Trustee's office for the on -again, off -again,
on -again, and off -again. They've been very,
very cooperative and have made this process a
lot easier than it could have been. And I'd also
like to thank the court. We've made numerous
calls to the court about a possible bankruptcy
filing and so they've been very cooperative as
well. Your Honor, I just want to mention service
of all the first, the pitch station, the first
day pleadings. Epic restructuring is our claims
and noticing agent. I have a certificate of service
here attesting to the service of everything.
I don't know if your honor would like to see
a copy. And they assured me it's all been served
according to the court's rules. Very good. And
with that, I will turn the podium over to Mr.
Panto. Thank you. Good afternoon, Your Honor,
and thank you. It's a privilege to be in this
court. I also would like to second Mr. Hazel
things expression of gratitude to the United
States trustee They were extraordinarily responsive
and extraordinarily patient, you know through
through the fits and starts of this and have
been a pleasure to work with Appreciate them
So I think we're here by consent We may have
one issue, you know a couple of issues floating
language and and I don't want to get out in front
of anybody on that but I think we're I think
we're proceeding by consent. So I'll just give
a quick overview. I think the court has probably
heard a little bit and probably has read the
papers. The debtor before the court is Glenwood
Cavern Holdings, LLC. It owns and operates an
amusement park in the town of Glenwood Springs,
Colorado, which is on the western slope on the
other side of the Rocky Mountains from Denver.
If you're driving from Vale to Aspen, you'll
drive through Glenwood Springs. It's a town of
10 ,000 people. It is the only mountain top amusement
park in the USA. One access is the park via gondola.
The park started 25 years ago as tours of caves
located in the mountains and started adding rides
about 20 years ago. Currently, the park offers
cave tours, six rides, and other attractions.
For some order of magnitude, the park attracts
attendance plus or minus of about 200 ,000 patrons
a year. Revenue is about 16 million plus or minus,
and the assets are unique. It's up on top of
a mountain, side of a mountain, the roller coasters
up on, excuse me, with a mountain view. I have
personally never been there, but I have seen
pictures of this unusual. The park's employment
varies seasonally. During the summer months,
it employs about 250 people. It's not what you
would call a destination park like a Six Flags
or a Disney. But it is an important attraction
in a small town that does generate in significant
or does depend, excuse me, in significant part
on tourism. The corporate structure is fairly
simple. This is an operational entity despite
the name Holdings in it. And it is 100 % owned
by another entity called GCAP Holdco LLC. That
in turn is owned by, in part by some private
equity investors and 17 % interest retained by
the founder of the park. I'll just mention one
outside director because I think it gives a point
of comparison for the park. His name is Jeff
Clark. He doesn't have a financial investment
in the park, as I recall. He happens to run the
amusement park on the Santa Monica Pier in Los
Angeles. So it just adds a little color to that.
The debt structure here is very simple. There's
a secured lender, Community Banks of Colorado,
outstanding balance of just under $13 million,
series of loans secured by a deed of trust, which
is the Colorado equivalent of a mortgage. The
maturity start in 2029. There's a small amount
of trade debt, and as Mr. Hazelty mentioned,
the largest debt and the reason we're here today
is a large judgment resulting from this tragic
accident. Let me ask you a question because I'm
curious. The bank has a mortgage. The park owns
the park, but it doesn't own the mountain, does
it? How does that work? Oh, it owns real estate
that happens to be located on the mount. Okay,
so it does have the real estate that the park
is owned on it own. I mean the park is on it
owns, right? Got it. Right. So. The reason we're
here ultimately is this tragic accident and you
know the consequences from that. In September
2021, a little girl died on one of the. parks
rides and it would be presumptuous of me to speak
of the effect on her family. I'll just have to
touch briefly on the parks response. The park
shut down that ride for two years, redesigned
it, has reviewed, revamped safety processes,
engaged gold standard outside training. individuals
and they have trained their supervisors who then
audit and monitor. And it is a very rigorous
training and auditing program. In addition, one
of the other rides that had been manufactured
by the same manufacturer, they just shut it down
permanently. And from these lessons that have
been learned, the park has thought it important
to reach out to the rest of the industry and
has reached out engaged in trade groups and made
presentations to other amusement parks on what
can go wrong how to prevent it from going wrong
and hopefully somewhere that will help someone.
On a parallel path there's wrongful Beth litigation
you know that that proceeded through the Colorado
State Courts trial in September of this year
a verdict came back order of magnitude $100 million.
So here we must obviously deal with the financial
impacts. The underlying CGL insurance policy
was only $5 million. And that actually includes
a primary and a first level excess. So obviously
the judgment far exceeds the assurance available.
After the judgment was entered, The company retained
Mr. Maniscalco as chief restructuring officer
and counsel and the plaintiff at one point started
to execute on the judgment. But then the conversation
started. We reached out and tried to work this
out over the last several weeks. In the process,
we provided comprehensive financial information
to the plaintiff available to answer questions
as we could. there was back and forth and in
that there was a series of standstill agreements.
The last one expired on Monday, which is why
we ended up filing on Monday. Moving forward
in this Chapter 11 case, Your Honor, I should
point out this is not a prepack. Our planning
and efforts and the efforts of the company and
the board have been focused primarily on finding
a solution out of court. that would preserve
the park and would be mutually satisfactory to
the plaintiff. So the debtor will need to take
a little bit of time to use the automatic stay,
a breathing spell here, and determine the best
exit strategy, which may be a going concern sale.
On a parallel path, the stay court litigation
technically will now be stayed. I would anticipate
probably filing a motion to modify the stay to
permit appellate proceedings to... go on in that
case. I haven't discussed that with Plaintiffs'
Council yet, but that's probably something, you
know, we'll propose. And, you know, we could
have a plan with a sale, potentially with a claims
reserve, you know, to sort that out. Now we continue,
and we may also continue to negotiate with the
plaintiffs, now of course in a slightly different
context than we were outside of court. The immediate
needs of this debtor, I think, are fairly straightforward.
It does not need dip financing. Instead of revolving
the lending here generally, because there's a
lot of seasonality in the cash, the company would
just hold a large cash balance from the high
months, and then it would decline over time into
low months. So at the end of summer, cash is
high, starts to decline. The trough bottoms out
probably April, May, depending on the weather
and everything, other things affecting Colorado,
and then starts to build back up again. So right
now, we're sitting on approximately $3 million
cash. And for the next few months, there will
be a cash deficit with seasonality and cost of
administration. So while I mentioned we do not
need a dip financing, we do need cash collateral.
And in that regard, we are proceeding by consent.
We'll also need to ask the court for permission
to make the payroll cycle happen to end Sunday
night just before our petition. And if the court
permits it, we will fund payroll tomorrow and
issue checks on Friday. And then we have other
matters such as insurance to address. So we can
jump into the specific motions if you'd like,
Your Honor. And we have shared these with the
bank and with the United States trustee and have
received their comments. And before I jump into
specific moments, I would offer into evidence
the declaration of Paul Maniscalco, which sits
at docket number 10. Yes, let me ask, are there
any objections to Mr. Maniscalco's? I'll get
it. Maniscalco? his declaration coming into evidence.
Thank you. So we can start just with perhaps
docket number three, the retention to obtain
or the application to retain EPIC as claims of
noticing agent pursuant to 28 USC section 156
C. We received informal comments to the form
of order from the United States trustee and We
have a red line, I think, Mr. Hazeltine. It has
been circulated among and perhaps we should hand
one to the court. If you don't mind. The only
change there is, as I recall, is a change to
the preamble of the order. I see the change,
it's appropriate in this jurisdiction, and I
will approve it. Thank you. Next, at docket number
four, what I refer to as the matrix redaction
motion requesting to redact personally identifiable
information from the creditor matrix. And there
were comments to that order as well. They are
of a similar nature as I recall. wish to be heard
with respect to the redaction motion. I hear
no one. I reviewed it prior to the hearing. I
see the changes that have been made at the request
of the Office of the United States Trustee. The
changes are appropriate and I will approve it
as revised. Thank you. Next, and I can just follow
the DACA numbers for now, the motion regarding
or proposed motion at DACA number five regarding
insurance. And in this respect, Your Honor, the
debtor maintains the normal and appropriate assurance
that the court might expect to see. For property
insurance, there are two twists. One is. That
there's a premium financing so that there's a
monthly payment shared for efficiency among various
entities. Number one, and number two, there's
a brokerage fee that is associated with that.
That is part of the premium payment. We would
request permission to continue with payments
of insurance pursuant to that program. And of
course, any other insurance that we need. with
respect to the insurance motion. I hear no one.
This is part of the shared services arrangement,
correct or no? Broadly speaking. This insurance
program, and I've seen it, for instance, where
multi -family or things are under common management.
Companies otherwise unrelated that happen to
be owned, you know, have common ownership of
the private equity fund, pitch their insurance
together in order to save costs. So we get a
lower overall quote, and then the allocation
to this debtor comes from the carrier. It's part
of their quote. Okay, so this allocation is not
an internal allocation. It's from the carrier
based on whatever the carrier base is premium
on. Precisely. Okay. That was the only question
that I had. Are there any changes to this form
of order? Yes. There were some corrections in
the figures. And there is a provision inserted,
I believe, at the request of the United States
trustee that the debtor will provide prior notice
to the US trustee of changes. okay is there a
red line So I see the cap has been changed and
reduced on the interim basis. Okay. Did you all
get a final hearing date from Ms. Johnson? Yes,
March 11th at 2 o 'clock. Okay. So that can be
inserted in your forms of order. Okay. Okay.
I've reviewed this. I see the changes made at
the request of the Office of the United States
Trustee. The debtor obviously needs to continue
with its insurance in place. And I will approve
this on an interim basis as necessary to avoid
immediate and irreparable harm. Next, I would
proceed to docket number six of the motion regarding
utilities. Utilities, yes. And in that respect,
Your Honor, the debtor has been current in paying
its utilities as generally it has been in paying
trade debt as a rule. What we are proposing in
the utilities motion is a deposit in the amount
of two weeks. And as I mentioned, they've been
current on the bills. There had been some back
and forth about where to place the deposit. And
the US trustee had requested that the deposit
be made at a bank that had signed the UDA, which
our current bank and our current lender has not.
And that's an issue for cash management, which
we're coming to. And I think the resolution here,
which we've come to shortly before the hearing,
is that It's only about $12 ,000 of utility deposits.
The direction of where that's deposited is subject
to the cash management resolution. So for now,
they will be deposited at our existing bank,
Community Bank of Colorado, subject to further
proceedings. Next on my list your honor at docket
seven is the cash management motion And Generally
speaking your honor the the debtor operates with
four accounts There's its general operating account
Where most of the activity is? Into that operating
account the debtor receives its revenues credit
card remittances, and it also pays expenses Then
there's a separate payroll account. That payroll
account is administered by a third party, Paycom
served, and with the crump and Paycom issues
checks out of the payroll account to employees.
Then there are two money market accounts, a money
market account and then a reserve money market
account. Those are kept separate because of the
size of the balance. So that the size, if somebody
hacked into the operating account, for instance,
they wouldn't get all the money. So that money,
there's about $2 .4 million in that account right
now. And what we're asking, Your Honor, is to
continue with those existing bank accounts. There
are reasons for that that we would urge the court.
We understand the US Trustee's position because
we need to ask a waiver, Section 345. The resolution
for today is that the U .S. Trustee has asked
that we insert language into the court order
that says we'll have 30 days to comply with Section
345, absent further of the court or agreement
with the United States Trustee. Now I think there
might be one or two open language issues on the
order, or are we finished on that exact order?
My good friend Mr. Waxman sent me comments to
this order, like at 225. And I had them print
it, but apparently the black line doesn't show
up. So I can hand your honor a copy of the black
line that we did. Well, let me see what we have.
Okay, well, if this is agreed upon language and
the U .S. trustee signs off on it, then I'm sure
it will be acceptable to me. We may want to make
sure that U .S. trustee receives. Your Honor,
Hannah McCollum for the U .S. trustee. I have
seen the language. I am not thrilled with this
resolution, but as we have all agreed amongst
ourselves, this is the first day hearing. This
is not a final order. It is fairly customary
to give debtors who are not in compliance a period
of time to do so. Mr. Waxman is discussing the
matter with his client in terms of whether that
bank is willing to sign a UDA 345 allows the
debtor although my my people have told me it's
not actually the debtor that gets the bond it
would be the bank that gets a bond but somebody
gets a bond and protects it because if you look
at the cash management motion It's between seven
and eight million dollars Total in these debtor
accounts. We're still not sure whether the money
market accounts are like risk -bearing accounts
that were, you know, money trades or anything
like that. And that's another problem under 345.
But I think it's very fair to let the debtors
have a breathing spell and see if we can get
that resolved. If not, we can come in front of
your honor and say, no, there's no grounds for
a 345 waiver or the debtor presents their case
and convinces your honor that there is grounds.
So. I certainly think there should not be, on
the first day, a disruption in the debtor's accounts,
which it needs to be able to use in order to
make payroll, for example, and then pay insurance,
et cetera. So I will approve a form of order
with revised language that has been circulated
and agreed between the debtor, the bank, and
the Office of the United States Trustee. And
we'll deal with what happens after today when
parties are able to discuss and see what the
options are and what the debtor proposes, what
it wants to do on a final basis. So I will sign
off on that as necessary to avoid immediate and
irreparable harm. We appreciate that, Your Honor.
Thank you, Your Honor. Next on my list is payroll
at . . . Permission to make the last payroll
cycle, which happened to end the day before the
petition was filed. It is obviously necessary
to keep employees maintain morale, maintain the
going concern. What we have requested is authority
to set forth in the proposed interim order on
a not to exceed basis of $211 ,000. The order,
I believe, also provides, and I could represent
that, the individuals cannot exceed the 507 caps.
We did add there was one comment, and I think
this may have been the only comment to this motion
from the United States trustee asking that the
order provide the debtors will not discontinue
or reduce any compensation to employees without
notice and an opportunity for hearing. We're
agreeable to that. We had no thought of doing
so anyway. If I may approach? You may. And paragraph
seven is the red line. Thank you. and all that.
So I don't think the debtors are going to do
this, but if they feel the need to reduce these
benefit programs or eliminate them, especially
because some of them have to do with subsidized
housing and that sort of stuff, to please let
the employees know sufficiently in advance that
everybody can come to court if there's a reason
to do so. So thank you. Thank you. We all learn
from other cases. Yes, I saw the... benefits
that we don't always see in cases. I was curious
about the property professionals lease that's
discussed at page 12 of the motion. The debtor
subleases a rental property to an employee. I
do have a recollection of this So I don't get
this wrong. I'll ask the CRO to join me at the
podium if that's okay, Mr. Maniscalco. Generally,
Your Honor, and I think labor, housing is very
difficult in that part of, you know, in that
region of Colorado, and housing for, you know,
employees compensated that level very hard. So
what the company has done on it, and a few, is
subsidize housing, you know, for a dozen or for
something at a time. And we want to be sure we're
answering your precise question. Staffing the
park is a challenge. So what you see depicted
here These are forms of subsidized housing, right?
So it's coming through as a benefit And there
are others for you know for other for multiple
employees I think this one is for one and I think
that is for one and depicted in in 39 These that's
the subsidized housing. Yeah, and then depicted
in item 40 there I see. And the debtor here is
paying the landlord $13 .50 a month, and then
it's subleasing that property to an employee
for whatever percentage of that or... Yes, Your
Honor. And taking it out of the paycheck. Got
it. Yes, Your Honor. Got it. Okay. Okay, thank
you. That was really the only question I had
with respect to the... Benefits that are being
provided. Is there a then a revised form of order
on the employee wages and benefits motion? Okay.
Does anyone wish to be heard with respect to
the employee wages motion? I hear no one. I reviewed
it. I've asked my question. I have no other questions.
Obviously, the employees need to be continued
to be paid what they have. So I will grant this
as necessary to avoid immediate and irreparable
harm and revised form. per the comments from
the Office of the United States, Trustee. Thank
you, Your Honor. can tell me what I need to look
at. Thank you. Your Honor, subject to everyone
making sure that they have their eyes on the
same language and are agreeable to it, I think
we're proceeding by consent here. Yes. We've
had a good working relationship with the bank,
both as lender and depository bank, which is
Part of this bill I left out in terms of cash
management and there has been back and forth
regarding a budget and what's needed to maintain
operations at the park. There's a budget attached
and part of the proposed cash collateral order.
Form of order that is is presented to your honor
authorizes expenditures in the ordinary course
of business I think you know this may be subject
to I should also note that this does have a challenge
period, that structure. And in this case, it
is 75 days. The US trustee did make some informal
comments, and I believe all of them were accommodated
in this. Again, subject to the question of whatever
the last second change was. And one of them relates
to the fact that the lender is not an approved
depository, so we have to address that again.
Another was regarding the priority of the replacement
lanes, just ensuring that that was completely
clear. Ensuring that the challenge period is
75 days. And then there was, in paragraph 10,
a provision regarding termination of use of past
collateral upon a default and the permitted scope
of hearing at that. And that has been changed.
Ms. McCollum knows my preference on that. Yes.
So on this one in particular, I want to be careful
and open the floor to other parties because I
think there was some language Okay, so replacement
lanes are not priming lanes. if there is some
senior lame and they're subject to challenge.
Those changes are acceptable to the debtor, Your
Honor, and just a little bit additional color.
Probably the only type of lien we would be talking
about here is accruing property tax, just in
the ordinary course. The company has paid its
trades as it goes forward. We're unaware of any
situation like a mechanics lien or anything like
that. So the language here, it has to be right,
but it is probably academic. 21 in paragraph
8F. I just think there was probably something
carried over. So I see this is the challenge
paragraph and I see the change in the challenge
period to 75 days, so that's great. And then
here there's a reference to if a trustee is appointed,
what happens to the challenge period? And it
says the trustee shall have until the later of
one, the expiration of the challenge period or
two, the 30th calendar day or the first business
day thereafter if the 20th calendar day is on
a Saturday. I assume those are supposed to be
the same and I don't know if it's 20 or 30 and
which y 'all landed on but. since you're going
to fix the order. Thank you. We can fix that.
The couple of changes that I had, Ms. McCollum
has taken care of. So I've reviewed this. I've
looked at the order. It seems to me a very straightforward
usage of, consensual usage of cash collateral.
with no determinations being made by the court
with respect to the collateral, including cash
collateral, and with replacement liens and a
super priority claim and no priming. So on those
terms and given the consensual use and the comments
of the United States trustee haven't been taken
and a budget being agreed upon. I will approve
on an interim basis the use of cash collateral
as set forth in the order and the budget. Thank
you. And that will be approved. We'll look for
a revised form of order which has the language,
the bank's new language and or submit them on
their COC? I guess I'd like to see the red line,
particularly of the cash collateral order. Cash
management? Yeah, and cash management. Okay,
so we'll submit those on their COC and upload
the rest. And I think you can upload the rest
because I've seen those and you're just going
to add the second day hearing date. Thank you,
Your Honor. And let us know, in particular, when
the cash collateral comes over. Shoot us an email,
because I know that's time sensitive, and you
need to get payroll paid. Thank you. Your Honor,
if you can just say on the record that it's a
order subject to the entry of the order, so there's
no concern if the order doesn't get it. The cash
collateral? Yes. If the bank likes that, that's
fine. It is so ordered. I just want to make sure
that we're not holding up anybody's paycheck.
I appreciate that. And I'm sure the gutter does.
We do indeed. And we appreciate the court's availability
and opportunity to present these motions. And
again, thanks to the other parties in interest.
Of course. If there are no other questions, I
think we're through. I have no questions. Anything
further for today? Ms. McCollum. I just wanted
to let you know that the committee solicitation
letters went out yesterday, and we are, you know,
it's the typical one -week return period. We
are also discussing the initial debtor interview
timing and the timing of the Section 341 meeting
with the debtors, and that seems to be proceeding
apace. And there are no issues, and I really
appreciate the debtors working with me as well.
So thank you. Very good. We're adjourned.