WEBVTT

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Mr. Harris. Good morning, Your Honor. For the

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record, David Hirsch, McDermott, Will, and Schulte

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on behalf of the debtors and debtors in possession

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of these cases. First, Your Honor, thank you

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very much for scheduling this hearing so quickly.

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We really appreciate it. With me on Zoom today,

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Your Honor, is Mr. Mark Renzi. He's the debtors

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chief restructuring officer. He's also the signatory

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for the complaint that we filed, the verified

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complaint we filed initiating this adversary

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proceeding. And in the courtroom today, on my

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right, my colleagues Joe Evans and Dan Coltman,

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Mr. Evans will be doing the argument today. Your

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Honor, as you saw from the agenda, there's just

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one item on the agenda today, and that's the

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debtor's motion for a temporary restraining order

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and joining the continuation of certain litigation

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in Illinois. Yes. Or an alternative extending

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the automatic stay of the debtors, directors,

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and officers to prevent the litigation against

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those directors and officers. Your honor, unless

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you have any initial questions for me, I'm happy

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to turn the podium over to my colleague, Mr.

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Evans, to - Yeah, I'm happy to hear from the

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parties. All right. Okay, thank you. Thank you,

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your honor. Good morning, welcome. Good morning.

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Joseph Evans, McDermott Will, and Schulte. Your

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Honor, first we'd like to move into evidence,

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Adversary Proceeding Doctrine Number 1, which

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is the verified complaint, and Adversary Proceeding

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Doctrine 5, which is the declaration of David

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Hearst and associated exhibits. Okay, does anybody

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object to the admission of the verified complaint

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in Mr. Hearst's declaration purely for the purposes

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of today's hearing? Your Honor, this is Ronald

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Gillard. Mr. Gillard, good morning. I'm not sure

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if my co -counsel wishes to speak. It looks like

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they're having some technical issues right there.

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Yes. So just hold off a second. Let me introduce

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him. It's Thomas Patterson from the Patterson

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Law Firm from Chicago. His pro hoc has been admitted

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on a DIA. Yes. Yeah. I had the pleasure of granting

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that motion. OK. Thank you. Yeah. Why don't we

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give Mr. Patterson just a second to get a...

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My apologies, Your Honor. OK. No worries, Mr.

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Gellert. No worries. Happy opening day to celebrate.

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Okay, Mr. Patterson, can you hear us okay? Looks

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like the answer is no. Okay, in the spirit of

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the day that it is, Mr. Gellert, I may ask you

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to pinch hit. Yes. Good one. With respect to

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the admission of the complaint and, you know,

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obviously the fact that we haven't had the opportunity

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to look at sort of the things being asserted

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in there, I mean, they can be admitted for the

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purpose of, you know, this is what you say they

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are, but we can't agree that they are all purposeful,

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you know, all true and all those things without

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having the opportunity to really kind of vet

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them. So for the record, in terms of determining

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a TRO, yeah, sure. but not for the truth of the

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matter that if they're later said to be, oh,

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well, they're admitted and recognized. Understood.

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Understood. It's purely for the purposes of today's

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hearing. Yes. And certainly, your clients. I'm

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not trying to trip them up. I just don't want

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to. No. Your client's rights to contest the complaint

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and to ultimately test any of the contents of

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the declaration supporting documents is reserved.

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All right. Great. Thank you, Your Honor. OK.

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Thank you, Mr. Gellert. OK. Mr. Evans. Thank

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you, Your Honor. The debtors filed this adversary

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proceeding in motion for a TRO to enjoin the

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Illinois litigation against three of Blockville's

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directors and officers. The Illinois litigation

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was brought by two creditors alleging that Blockville's,

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the debtors, violated their terms and conditions

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by commingling assets and that Blockville's made

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misrepresentations concerning the safety of those

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assets. There are 11 counts, nine against the

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company and two against the three directors and

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officers. and they all seek essentially the same

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thing, which is the return of crypto that was

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provided by the plaintiffs in that case to block

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those. On March 20th, the Northern District of

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Illinois stayed the Illinois litigation as to

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the debtors. There are two remaining counts,

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count five, aiding and abetting fraud, and count

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10, which is a breach of fiduciary duty claims.

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In that order, Judge Kennelly stated that he

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was seeking further advice from the bankruptcy

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court regarding the extent of the automatic stay

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as it relates to the individual defendants. Accordingly,

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we file this adversary proceeding in this application.

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The state should be extended to the claims of

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the DNOs for four primary reasons. One... Let

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me ask you one question, though. Sure. The relief

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that you're seeking today is under Section 105

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and Rule 65. As I read the proposed order, you're

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not seeking any relief or any findings under

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Section 362 today. Am I misunderstanding the

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proposed form of order? The proposed form of

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order was in the alternative, I believe, Judge.

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So yes, but you're right. The primary relief

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we are seeking is under 105, which is a TRO until

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we have a final hearing on the extension of the

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automatic stay. And some of the things we're

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going to be arguing today, Judge, relate to 362,

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which goes to the likelihood of success on the

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merits, and that's why we're arguing about those

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things. Relevant, but yes, I believe we're seeking

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is under 105. Okay, fair enough. The state should

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be extended to the D's and O's for four reasons.

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One, the cases against the D's and O's are inextricably

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interwoven with the conduct of the debtors. Block

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those. Two, adjudicating the case against the

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D's and O's will necessarily decide issues that

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are critical to this bankruptcy proceeding. Three,

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there will be significant costs in defending

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the action against the D's and O's. And four,

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the fiduciary duty act claim, and specifically

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we contend, is an estate cause of action that

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should be stayed. First, our read of the complaint

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is that this is really a claim against block

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fills and not the directors and officers. In

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each of the allegations concerning representations

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that were made prior to plaintiffs deposit to

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block fills, the plaintiffs actually identify

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other block fills employees, not any of the defendants.

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That's complaint 20, 21, 22, 23, 25, and 30.

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In certain of those allegations, they identify

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generally either block fills representatives,

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employees other than the defendants, but never

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any of the D's and O's. And Plaintiff's primary

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allegation is that they were lied to before they

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made the deposit. On January 16th, they made

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this deposit. But none of the statements prior

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to January 16th relate to any of the defendants.

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And I raise this because it shows, we think,

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that this claim is really a claim against block

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bills and not any one of those directors and

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officers in their personal capacity. The second

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issue, coming one. The plaintiffs allege that

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Blockville's advised plaintiffs that they wouldn't

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be commingled. And when they say Blockville's,

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they just say Blockville's, the company. They

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refer to Blockville's representatives and what

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they told them. And then they say that Blockville's

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commingled the assets. They don't say that one

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of the individual directors and officers commingled

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the assets or made the decision to commingle

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the assets or even made the misrepresentation

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that the assets would not be commingled. Instead,

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they say the company did so. That's why we think

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it's a claim against the company and not the

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Desenos. The only allegation they have specifically

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to the Desenos is that after the fact, ex post,

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February 6th, February 9th, February 20th, there

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were town halls and other meetings where they

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said, hey, we're in a bad spot. We're pulling

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the gates down. We're not on our withdrawals.

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Sorry. Those are the allegations of the Desenos.

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And the actual counts, what they say is, Quote

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as former CEO and co -founder of defendant They

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must have approved the misappropriation of funds

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and failed to ensure the proper disclosure of

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financial conditions According to all these claims

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in reality are claims against Blockville's claims

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about the operations and conduct of Blockville's

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as a company as opposed to any one individual

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director officer In order to prosecute these

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claims in Illinois The court in Illinois will

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be tasked with answering critical factual questions

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that are important to this case. Like one, did

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Blockville commit fraud by its representatives

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making certain representations to the market?

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What did the Blockville's customer agreements

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actually mean? Did Blockville have a special

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or fiduciary relationship with any of its customers?

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Did Blockville commingle its assets? Were they

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allowed to do it? Were they not allowed to do

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it? To the extent they're commingled, can you

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trace them? Can you not trace them? These are

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all questions that are core to this proceeding,

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that if we have another proceeding in Illinois

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deciding the same thing, it runs a risk to, one,

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of conflicting rulings, but two, significant

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cost. Let's talk about cost for a second. We

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have three D's and O's, each with their separate

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counsel, each with identification rights under

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their corporate documents, each with incoming

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claims, as I suspect. against a very small DNO

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insurance policy. And if required to continue

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prosecuting or defending these claims, we'll

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continue to expend resources that otherwise could

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be spent on creditors here. Last. They assert

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a fiduciary duty claim, which in our view is

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an estate claim. They don't identify any unique

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facts that make them any different than any other

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customer. Quite the contrary. They say that they

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had the same contract that everybody else had

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and they weren't given their opportunity to edit

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it. They don't allege any special relationship

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between them and any particular director or officer.

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And so these are generalized derivative claims

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that are owned by the estate and not these two

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plaintiffs. Do I need to make any findings about

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that to rule on the motion today? No. No. To

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rule on the motion today, there are four factors.

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One is whether the movement has shown a reasonable

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probability of successful merits in this context

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is whether we have a shot every order to reorganize

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reorganizing In this case, we have a term sheet

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already on file to whether the movement will

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be irreparably injured by denial of the relief

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as We describe this cost. It's a risk of conflicting

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rulings as distraction three whether granting

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preliminary relief or result an even greater

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harm to the nonmoving party. This case has not

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been litigated for years. This is three weeks

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old. And these plaintiffs are part of the ad

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hoc committee. They're involved in the bankruptcy

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case. I suspect they'll be filing a claim. And

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they can adjudicate their claims here. Four,

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whether granting the preliminary relief will

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be in the public interest. We contend yes. That

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the types of costs and distraction and disruption

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that this case will cause if it's allowed to

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proceed against these. three directors and officers

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by these two plaintiffs will cause the type of

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farm that the automatic stay was intended to

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stop. So for those reasons, we think at a minimum

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the TRO should be granted today. Okay, thank

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you. Mr. Patterson, good morning. Can you hear

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me okay? Yes, I can now, Your Honor. There was

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about a five -minute delay when I could not hear

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you, but I can now, and thank you very much.

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Well, welcome. It's good to have you here. Thank

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you. Your Honor, we oppose the motion for a temporary

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restraining order. In my view, it reads more

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like a motion for a preliminary injunction. And

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what I propose we do today is have a briefing

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on their motion and let them piggyback on our

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previously filed motion to lift the stay and

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that we argue both motions on April 16th as previously

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set forth by the court, if that is convenient.

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to the court. The facts are, obviously, our client

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was in discussions with BlockFills in December

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of 2025, and he executed an agreement with them

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in January of 2026. They agreed to keep his bitcoins

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and cash in trust. That's according to Exhibit

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2, page 7 of our complaint. in paragraphs 30

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to 32, among other paragraphs in our complaint.

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On February 6th, 2026, he submitted a letter

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of rescission and demanded the return of his

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personal property. That's in paragraph 53 and

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exhibit 13 of our complaint. When he did not

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get the return of his property, he filed a complaint

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on March 6th, 2026. Thus far, there has been

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no challenge to the merits of the complaint that

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he filed. We obtained a temporary restraining

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order from Judge Kennelly in the Northern District

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of Illinois on March 6th, 2026, and they filed

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this bankruptcy petition on Sunday, March 8th,

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2026. We had a status before Judge Kennelly on

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March 20th, 2026, and he extended the TRO until

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April 3rd. We have a status before him on April

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1st. Now, my understanding is that Judge Kennelly

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has decided that on April 1st, he wants to hear

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what I'm doing with this. You're asking me to

00:14:36.460 --> 00:14:39.279
forego this stage of the proceedings and conduct

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an evidentiary hearing in a couple weeks. Why

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would I do that to Judge Kennelly when he's asking

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a question that he'd like me to answer? What

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I will tell Judge Kennelly is that you have the

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matter under briefing and we have a hearing scheduled

00:14:55.259 --> 00:14:58.840
for April 16th. Okay, I'll tell you right now.

00:15:00.200 --> 00:15:02.659
I'm not going to do that to Judge Kennelly. He's

00:15:02.659 --> 00:15:05.580
asked a question. He deserves an answer. and

00:15:05.580 --> 00:15:09.799
I'm going to provide a ruling today. What I do

00:15:09.799 --> 00:15:13.679
in that ruling is still open, but I think I would

00:15:13.679 --> 00:15:15.659
encourage you to direct your arguments towards

00:15:15.659 --> 00:15:21.500
the merits of the factors for a preliminary injunction

00:15:21.500 --> 00:15:27.620
under Section 105A. Okay. Obviously, it's a little

00:15:27.620 --> 00:15:30.539
disconcerting to have them leapfrog my own motion

00:15:30.539 --> 00:15:33.919
to lift the stay, which sets forth the arguments

00:15:33.919 --> 00:15:36.559
and the case law for lifting the stand, transferring

00:15:36.559 --> 00:15:39.759
the entire case to Judge Kennelly. But let's

00:15:39.759 --> 00:15:44.419
talk about what they allege in this TRO. They

00:15:44.419 --> 00:15:47.480
haven't, as I mentioned, they have not suggested

00:15:47.480 --> 00:15:50.679
anything to negate the merits of our complaint.

00:15:51.139 --> 00:15:53.799
That is, they don't challenge in any kind of

00:15:53.799 --> 00:15:56.559
evidentiary way the fact that this Bitcoin can

00:15:56.559 --> 00:16:01.490
be traced and is a rez. Just as much as a painting

00:16:01.490 --> 00:16:04.590
is a rez or a diamond ring is a rez This bitcoin

00:16:04.590 --> 00:16:07.909
was submitted to them in trust and it can be

00:16:07.909 --> 00:16:12.330
traced and we can recover it Our case is not

00:16:12.330 --> 00:16:16.470
in common with the other Creditors to my knowledge

00:16:16.470 --> 00:16:19.389
even though they have listed us in a group with

00:16:19.389 --> 00:16:22.269
those other creditors is I don't know any other

00:16:22.269 --> 00:16:25.570
creditor that had a submission of their bitcoin

00:16:25.570 --> 00:16:30.669
and cash on in January of 2026 I don't know any

00:16:30.669 --> 00:16:34.809
other claimant or creditor who issued a letter

00:16:34.809 --> 00:16:39.690
of rescission on February 6, 2026. And I don't

00:16:39.690 --> 00:16:45.370
know any other claimant or creditor who had their

00:16:45.370 --> 00:16:48.330
Bitcoin swept from a trust account within an

00:16:48.330 --> 00:16:53.830
hour after depositing it. So this is a constructive

00:16:53.830 --> 00:16:56.529
trust claim against the companies. And that's

00:16:56.529 --> 00:16:59.129
why I think it should be heard by Judge Kennelly.

00:17:00.240 --> 00:17:05.339
These are personal claims to Mr. Bertram and

00:17:05.339 --> 00:17:08.059
his company. They are not general claims. I know

00:17:08.059 --> 00:17:10.279
there's been some broad... The language that

00:17:10.279 --> 00:17:15.619
you include in Count 10 is classic derivative

00:17:15.619 --> 00:17:20.279
claim type language. You talk about the fiduciary

00:17:20.279 --> 00:17:24.319
duties that are owed to creditors such as your

00:17:24.319 --> 00:17:29.440
client. Yes. I've seen a lot of complaints, and

00:17:29.440 --> 00:17:31.480
this is classic derivative claim language. I

00:17:31.480 --> 00:17:35.380
think it's hard to understand how you're arguing

00:17:35.380 --> 00:17:39.599
that those are direct claims. I understand that

00:17:39.599 --> 00:17:43.140
we have that language in that count. But remember,

00:17:43.299 --> 00:17:45.920
no complaint is bad in substance if it notifies

00:17:45.920 --> 00:17:49.240
them of what we're arguing. And I think the fiduciary

00:17:49.240 --> 00:17:55.059
aspect of this case, they are 180 degrees to

00:17:55.059 --> 00:17:57.839
the wrong. I understand that there is a case

00:17:57.839 --> 00:18:01.119
from the Delaware Supreme Court that says that

00:18:01.119 --> 00:18:05.579
based on the zone of insolvency alone, a general

00:18:05.579 --> 00:18:09.900
creditor will not have a direct claim against

00:18:09.900 --> 00:18:12.319
the officers of the company. I understand that.

00:18:13.000 --> 00:18:16.640
But this is a trust case, a constructive trust

00:18:16.640 --> 00:18:21.200
case, just as if somebody submitted money to

00:18:21.200 --> 00:18:25.440
my client fund trust account. And then if I embezzled

00:18:25.440 --> 00:18:28.579
it or swept it into my general account, that

00:18:28.579 --> 00:18:32.079
individual client has a claim against me. It's

00:18:32.079 --> 00:18:35.599
not the claim of my firm against me. It's a claim

00:18:35.599 --> 00:18:37.900
of the individual against me for sweeping the

00:18:37.900 --> 00:18:40.779
money out of the trust account. And so we have

00:18:40.779 --> 00:18:44.599
an individual claim. Yes, we say that they should

00:18:44.599 --> 00:18:46.400
have known that they were insolvent. There's

00:18:46.400 --> 00:18:49.609
no question we're saying that. But the fiduciary

00:18:49.609 --> 00:18:52.490
duty claim is an individual claim based on their

00:18:52.490 --> 00:18:54.430
misappropriation of money that they were supposed

00:18:54.430 --> 00:18:59.890
to keep in trust. And therefore, we don't have

00:18:59.890 --> 00:19:02.990
the ruling of the Delaware Supreme Court is not

00:19:02.990 --> 00:19:06.470
on point in that respect. And as a matter of

00:19:06.470 --> 00:19:10.890
fact, even in their brief at page 18, they described

00:19:10.890 --> 00:19:14.549
two cases which support my point rather than

00:19:14.549 --> 00:19:17.799
their point. They say that if there's a claim

00:19:17.799 --> 00:19:20.359
that affects an individual rather than the mass

00:19:20.359 --> 00:19:24.180
of creditors, then there is a claim individual

00:19:24.180 --> 00:19:27.519
and it is not a derivative claim. And that's

00:19:27.519 --> 00:19:32.279
what we are alleging too in this situation. And

00:19:32.279 --> 00:19:34.440
I direct the court's attention. There's two cases

00:19:34.440 --> 00:19:38.410
that they cite. on page 18 of their brief or

00:19:38.410 --> 00:19:41.049
motion papers, where they say if somebody has

00:19:41.049 --> 00:19:43.170
an individual claim, it's not a general claim,

00:19:43.250 --> 00:19:45.910
it's not a derivative claim. And so that's the

00:19:45.910 --> 00:19:49.029
situation that we have here. The representations

00:19:49.029 --> 00:19:51.190
that we allege are representations that were

00:19:51.190 --> 00:19:53.930
personal to him. And it was his agreement. And

00:19:53.930 --> 00:19:56.970
I don't know if anybody else had a similar agreement

00:19:56.970 --> 00:20:00.650
with him. That hasn't been determined. I'm sorry,

00:20:00.869 --> 00:20:03.150
just so you understand, who's the him and the

00:20:03.150 --> 00:20:07.509
his? which individual you're referring to. Sorry,

00:20:07.710 --> 00:20:12.950
Judge. That's okay. Mr. Bertram, the representations

00:20:12.950 --> 00:20:16.210
were made to Mr. Bertram, and I don't know if

00:20:16.210 --> 00:20:18.890
the same or similar representations were made

00:20:18.890 --> 00:20:22.069
to others. We alleged that he had personal conversations

00:20:22.069 --> 00:20:26.089
with representatives of block fills, and that

00:20:26.089 --> 00:20:28.289
is part of our individual claims, and that's

00:20:28.289 --> 00:20:32.539
unique to him. So I it seems to me that we have

00:20:32.539 --> 00:20:36.819
a unique claim not a general claim As to the

00:20:36.819 --> 00:20:40.220
other creditors or claimants now with respect

00:20:40.220 --> 00:20:44.700
to the burden There is no burden that is going

00:20:44.700 --> 00:20:49.420
to take place in the next 16 days I'm not going

00:20:49.420 --> 00:20:52.579
to issue discovery in the next 16 days. I couldn't

00:20:52.579 --> 00:20:55.039
I'm not going to make a claim on for indemnity

00:20:55.039 --> 00:20:56.859
and nobody else is going to make a claim for

00:20:56.859 --> 00:20:59.740
indemnity It wouldn't be a claim for indemnity.

00:21:00.000 --> 00:21:04.400
How do you know what they're what the Dno defendants

00:21:04.400 --> 00:21:07.519
are going to do they they're gonna have to they've

00:21:07.519 --> 00:21:10.059
already incurred costs. I am assuming they're

00:21:10.059 --> 00:21:12.319
gonna have to be in front of Judge Kennelly next

00:21:12.319 --> 00:21:16.380
week. That sounds like a basement basis to write

00:21:16.380 --> 00:21:23.279
your advancement letter Well, I if they had done

00:21:23.279 --> 00:21:26.519
that it should have been included in their papers

00:21:27.259 --> 00:21:29.740
In other words, this is the dog that did not

00:21:29.740 --> 00:21:36.000
bark. In the absence of proof, I am saying that

00:21:36.000 --> 00:21:37.940
they haven't made an indemnity claim, and they

00:21:37.940 --> 00:21:40.380
haven't incurred any indemnity fees, and they

00:21:40.380 --> 00:21:42.940
haven't made a claim to the D &O carrier. But

00:21:42.940 --> 00:21:45.619
maybe more important, there won't be an indemnity

00:21:45.619 --> 00:21:49.640
claim if we get our res back. If we get our Bitcoin

00:21:49.640 --> 00:21:53.500
back, there's no insurance that'll be paid out.

00:21:53.759 --> 00:21:56.289
There's no indemnity that will be paid out. We

00:21:56.289 --> 00:22:00.170
want our Bitcoin. We want our REZ returned to

00:22:00.170 --> 00:22:05.089
us. As to cost, the status, the last status before

00:22:05.089 --> 00:22:09.329
Judge Kennelly was 15 minutes. And so the fact

00:22:09.329 --> 00:22:13.130
that we have a status on April 1 is not going

00:22:13.130 --> 00:22:19.390
to be a lengthy hearing. But I do want clarification

00:22:19.390 --> 00:22:25.250
on one thing. We say in our motion to lift the

00:22:25.250 --> 00:22:28.710
stay at footnote four that our understanding

00:22:28.710 --> 00:22:34.529
of the first day motions would not permit them

00:22:34.529 --> 00:22:38.890
block fills to access our Bitcoin or our cash.

00:22:39.869 --> 00:22:44.089
And my understanding is that none of the first

00:22:44.089 --> 00:22:46.990
day orders that were entered by your honor would

00:22:46.990 --> 00:22:50.400
allow them to do that. In which case then, as

00:22:50.400 --> 00:22:52.960
long as that's true, then there is no need for

00:22:52.960 --> 00:22:55.920
me to ask you for a TRO prohibiting that while

00:22:55.920 --> 00:22:58.579
we litigate these issues, or for asking Judge

00:22:58.579 --> 00:23:02.259
Cannelli to extend his TRO again while we litigate

00:23:02.259 --> 00:23:05.240
these issues. So I just mentioned that to avoid

00:23:05.240 --> 00:23:08.480
any potential confusion on that. The way I view

00:23:08.480 --> 00:23:11.160
these first -day orders, the cash collateral

00:23:11.160 --> 00:23:14.579
orders, it does not affect what Mr. Bertram deposited

00:23:14.579 --> 00:23:19.960
with the company. So if that's true, if that's

00:23:19.960 --> 00:23:23.579
true, then there's no harm to you If I were to

00:23:23.579 --> 00:23:26.099
or to your clients if I were to enter this order

00:23:26.099 --> 00:23:31.460
today Right. Well, there's no I started you just

00:23:31.460 --> 00:23:41.640
argued that understood I the harm is The harm

00:23:41.640 --> 00:23:45.519
exists not in the next 16 days I can see that

00:23:46.319 --> 00:23:49.559
Right the issue then is on the 16th when you

00:23:49.559 --> 00:23:52.359
consider our motion to lift the stay the entire

00:23:52.359 --> 00:23:55.420
stay What is the harm at that point? Is there

00:23:55.420 --> 00:23:58.259
harm to the creditors at that point or to the

00:23:58.259 --> 00:24:01.240
bankrupt estate at that point? And I'm willing

00:24:01.240 --> 00:24:03.579
to have that argument and I'm anticipating having

00:24:03.579 --> 00:24:06.740
that argument and that's what I think it should

00:24:06.740 --> 00:24:09.380
should that's how I think it should take place

00:24:09.380 --> 00:24:11.400
In other words, there's no emergency now, but

00:24:11.400 --> 00:24:13.700
that's going to take place before the 16th that

00:24:13.700 --> 00:24:17.359
negates the issue of the TRO It doesn't negate

00:24:17.359 --> 00:24:19.519
their preliminary injunction request. We should

00:24:19.519 --> 00:24:22.380
have a hearing on that. And I'm prepared to brief

00:24:22.380 --> 00:24:25.259
their motion because I've only had it overnight.

00:24:25.960 --> 00:24:29.960
And I could submit that by April 6th, which is

00:24:29.960 --> 00:24:31.920
the date when their response to our motion to

00:24:31.920 --> 00:24:36.539
lift the state is also due. So that's what I

00:24:36.539 --> 00:24:39.140
suggest. I don't think that the court should

00:24:39.140 --> 00:24:41.140
reverse the burden of proof and place it on me

00:24:41.140 --> 00:24:44.759
to demonstrate an absence of harm. At the TRO

00:24:44.759 --> 00:24:47.160
stage, the burden is on them to demonstrate that

00:24:47.160 --> 00:24:49.559
there's extraordinary harm or an emergency here

00:24:49.559 --> 00:24:51.940
and there is no emergency here. We set up our

00:24:51.940 --> 00:24:54.759
briefing in the ordinary course. And I don't

00:24:54.759 --> 00:24:57.420
think the court respectfully should reward gamesmanship

00:24:57.420 --> 00:24:59.619
just because they leapfrogged our motion to lift

00:24:59.619 --> 00:25:02.299
the state and got an earlier hearing date on

00:25:02.299 --> 00:25:04.799
that. I did not ask for an early hearing date.

00:25:05.099 --> 00:25:09.119
I wanted my opponents to have a time to argue

00:25:09.119 --> 00:25:11.339
the motion on the merits and then we'll argue

00:25:11.339 --> 00:25:15.329
it on the 16th. So in the meantime, there is

00:25:15.329 --> 00:25:17.769
no indemnity, there's no DNO insurance, there's

00:25:17.769 --> 00:25:19.369
no discovery that's going to be issued, there's

00:25:19.369 --> 00:25:22.190
no burden. And there won't be any burden ultimately

00:25:22.190 --> 00:25:26.470
on the estate if they return our property. It's

00:25:26.470 --> 00:25:30.630
our property. It is traceable. That's an issue

00:25:30.630 --> 00:25:35.769
to be decided, right? Yes, but on these papers...

00:25:35.769 --> 00:25:38.569
You may be right about that, but that's not an

00:25:38.569 --> 00:25:42.259
issue that I can decide today. Well, you can

00:25:42.259 --> 00:25:45.220
understand you could you could decide the likelihood

00:25:45.220 --> 00:25:49.579
based on Based on the contract that said that

00:25:49.579 --> 00:25:51.339
they were going to keep it in trust. That's all

00:25:51.339 --> 00:25:54.900
I'm saying in terms of for the next 16 days There

00:25:54.900 --> 00:25:57.920
is no likelihood of success on the merits or

00:25:57.920 --> 00:26:01.039
Any emergency that requires immediate action

00:26:01.039 --> 00:26:04.099
an immediate award that there's no there's no

00:26:04.099 --> 00:26:08.019
reason for that likelihood of success on the

00:26:08.019 --> 00:26:11.750
merits in the context of a of a bankruptcy case

00:26:11.750 --> 00:26:13.930
in a motion like this, we're looking at the likelihood

00:26:13.930 --> 00:26:21.430
that the reorganization will succeed. I think

00:26:21.430 --> 00:26:25.609
you're arguing a different issue, I think. Well,

00:26:25.750 --> 00:26:30.269
for example, if we succeed in compelling the

00:26:30.269 --> 00:26:33.829
return of our REZ, then the reorganization can

00:26:33.829 --> 00:26:36.630
proceed without us, without any difficulty. As

00:26:36.630 --> 00:26:38.650
a matter of fact, they'd probably be happy to

00:26:38.650 --> 00:26:46.000
see us go. So I I don't I don't see us in you

00:26:46.000 --> 00:26:48.859
know, if anything we would complicate by remaining

00:26:48.859 --> 00:26:51.579
in the bankruptcy We would complicate the reorganization

00:26:51.579 --> 00:26:53.740
because we're going to assert our individual

00:26:53.740 --> 00:26:57.140
claim that the res is ours and so it actually

00:26:57.140 --> 00:27:01.279
we have Suggested in our motion papers to lift

00:27:01.279 --> 00:27:06.079
the stay That duplicative litigation is avoided

00:27:06.079 --> 00:27:08.779
if you lift the stay and allow judge Cannelli

00:27:08.779 --> 00:27:11.630
to decide the case It's simpler, it's easier,

00:27:11.630 --> 00:27:14.470
and you avoid any kind of residue decoder or

00:27:14.470 --> 00:27:16.369
collateral estoppel effect or anything if you

00:27:16.369 --> 00:27:19.849
just let him decide the matter. And the term

00:27:19.849 --> 00:27:23.569
sheet that's been discussed among the creditors

00:27:23.569 --> 00:27:28.630
can either proceed or fail as the parties proceed.

00:27:29.269 --> 00:27:33.289
But I'm the tail wagging the dog on that. I'm

00:27:33.289 --> 00:27:37.549
not going to get into that. And it would be more

00:27:37.549 --> 00:27:40.779
confusing for me to do so. So, it is traceable.

00:27:40.940 --> 00:27:43.799
They haven't negated the fact that it's traceable.

00:27:44.140 --> 00:27:46.400
That's in paragraph 49 of our motion to lift

00:27:46.400 --> 00:27:51.400
the state and its others. And therefore, I ask

00:27:51.400 --> 00:27:54.480
that the court deny the TRO, but continue the

00:27:54.480 --> 00:27:58.519
preliminary injunction to April 16th and let

00:27:58.519 --> 00:28:00.400
them piggyback on the briefing schedule that

00:28:00.400 --> 00:28:03.200
we've already set. We will provide our brief

00:28:03.200 --> 00:28:06.700
on April 6th, which is faster than we'd normally

00:28:06.700 --> 00:28:10.460
be entitled to. in order to get this thing heard

00:28:10.460 --> 00:28:13.680
on a preliminary injunction basis. And that will

00:28:13.680 --> 00:28:16.599
allow the court plenty of time to decide what

00:28:16.599 --> 00:28:19.599
is better. What is better for the bankrupt estate?

00:28:19.799 --> 00:28:22.940
What is better for us? You can balance both those

00:28:22.940 --> 00:28:26.119
issues. And I think that provides for a more

00:28:26.119 --> 00:28:29.599
reasoned decision rather than rushing it on no

00:28:29.599 --> 00:28:33.759
briefing from us, just argument and letting them

00:28:33.759 --> 00:28:38.019
leapfrog our motion to lift the stay. Okay. So

00:28:38.019 --> 00:28:39.819
I suggest we keep the status quo. Thank you,

00:28:39.859 --> 00:28:42.619
Judge. Thank you, Mr. Patterson. Mr. Evans, any

00:28:42.619 --> 00:28:52.160
response? Joseph Evans, Big Double, and Schulte

00:28:52.160 --> 00:28:55.740
for the debtors. Just a brief response. I want

00:28:55.740 --> 00:28:57.779
to start with one of the last things that Mr.

00:28:57.940 --> 00:28:59.700
Patterson says, that he wants the judge in Illinois

00:28:59.700 --> 00:29:02.819
to determine whether it's his client's res or

00:29:02.819 --> 00:29:06.900
not. What he's asking for is the judge in Illinois

00:29:06.900 --> 00:29:09.900
to determine whether the assets provided by Blockville's

00:29:09.900 --> 00:29:11.279
customers or property of Blockville's estate.

00:29:11.299 --> 00:29:13.680
Now, it's a core issue. It's a core issue. I'm

00:29:13.680 --> 00:29:16.900
not buying into it. And with respect to the uniqueness

00:29:16.900 --> 00:29:20.779
of his client's claims as compared to other creditors,

00:29:20.960 --> 00:29:23.759
they put in paragraph 18 of their complaint that

00:29:23.759 --> 00:29:25.500
it's the same contract that everybody else signed.

00:29:25.539 --> 00:29:27.079
They weren't able to give an edit. They weren't

00:29:27.079 --> 00:29:29.099
able to make any negotiations. It was on their

00:29:29.099 --> 00:29:32.099
website. That was the contract. That's it. And

00:29:32.099 --> 00:29:37.529
so these aren't unique claims to them. And so

00:29:37.529 --> 00:29:41.450
your honor his motion is seeking relief from

00:29:41.450 --> 00:29:44.890
say to pursue block fills in Illinois. That's

00:29:44.890 --> 00:29:46.230
a different thing than what we're in front of

00:29:46.230 --> 00:29:49.130
today Here today. We're seeking a TRO for the

00:29:49.130 --> 00:29:50.990
claims against the three directors and officers

00:29:50.990 --> 00:29:54.890
and all of the Allegations that mr. Patterson

00:29:54.890 --> 00:29:57.049
cited about the misrepresentations and the promises

00:29:57.049 --> 00:29:58.789
and the lies and the things that they're saying

00:29:58.789 --> 00:30:01.710
what they were wronged by in their complaint

00:30:01.710 --> 00:30:04.180
those are all attributable to Either Blockville's

00:30:04.180 --> 00:30:06.359
representatives or people other than those three

00:30:06.359 --> 00:30:10.799
DMOs. Their gripe is with the company. And these

00:30:10.799 --> 00:30:15.519
are company claims that must be stated. I have

00:30:15.519 --> 00:30:18.920
nothing more to say. Okay. Okay. Thank you. I'm

00:30:18.920 --> 00:30:20.740
going to take a recess for probably about five,

00:30:20.779 --> 00:30:22.480
ten minutes. I'm sorry. Does anybody else wish

00:30:22.480 --> 00:30:26.740
to be heard? Your Honor. Yes, apologies, your

00:30:26.740 --> 00:30:28.960
honor. I have been, this is Jane Danlare from

00:30:28.960 --> 00:30:31.240
Cleary Gottlieb, Seaman Hamilton on behalf of

00:30:31.240 --> 00:30:33.900
the ad hoc group of Blockfield's customers. And

00:30:33.900 --> 00:30:38.599
I apologize, I have been trying to log on through

00:30:38.599 --> 00:30:41.920
Zoom, but just have been unable to do so. So

00:30:41.920 --> 00:30:44.779
I apologize for that. Just very briefly, your

00:30:44.779 --> 00:30:48.359
honor, I wanted to express our... support in

00:30:48.359 --> 00:30:51.940
favor of the TRO. We are concerned about the

00:30:51.940 --> 00:30:54.779
prejudice that may be caused to the estate claims

00:30:54.779 --> 00:31:00.599
and to the DNO policy that those are assets that

00:31:00.599 --> 00:31:03.180
should accrue to the benefit of all of the customers

00:31:03.180 --> 00:31:06.960
and creditors in this case. And I think in the

00:31:06.960 --> 00:31:09.960
words of Mr. Patterson on the analogy he used,

00:31:10.099 --> 00:31:13.220
the dog could bark tomorrow, right? They could...

00:31:13.200 --> 00:31:16.920
ask for an indemnity tomorrow, and so we do think

00:31:16.920 --> 00:31:20.880
it's important to preserve the status quo, and

00:31:20.880 --> 00:31:28.640
it, I think, as Your Honor articulated and suggested

00:31:28.640 --> 00:31:31.359
in your questioning, it's clear that there is

00:31:31.359 --> 00:31:35.799
not a prejudice to the movement here of extending

00:31:35.799 --> 00:31:46.839
that TRO. Thank you very much. Robert Weber of

00:31:46.839 --> 00:31:49.180
Chipman Brown, Cicero and Cole. We represent

00:31:49.180 --> 00:31:52.500
Joseph Perry, the interim CEO. I had not intended

00:31:52.500 --> 00:31:55.500
to speak this morning. I just want to make it

00:31:55.500 --> 00:31:59.059
clear that if the TRO is not granted today, there

00:31:59.059 --> 00:32:02.420
will be an indemnification and advancement request

00:32:02.420 --> 00:32:05.500
made immediately. And frankly, I'll be buying

00:32:05.500 --> 00:32:08.279
a plane ticket to Chicago for the hearing on

00:32:08.279 --> 00:32:10.220
April 1st because it's an in -person hearing,

00:32:10.359 --> 00:32:13.279
even if it will only take 15 minutes. Of that

00:32:13.279 --> 00:32:15.180
court's time, it'll take substantially more,

00:32:15.200 --> 00:32:17.960
and that will be an indemnifiable expense. Okay.

00:32:18.279 --> 00:32:19.180
Thank you, Mr. Weber. Thank you, Your Honor.

00:32:19.480 --> 00:32:24.500
Appreciate it. Mr. Samus, good morning. Your

00:32:24.500 --> 00:32:26.700
Honor, good morning. First, good to see you.

00:32:26.839 --> 00:32:29.140
I don't want to get lost. Happy opening day.

00:32:29.279 --> 00:32:30.880
I know that you made that remark at the beginning,

00:32:30.900 --> 00:32:32.440
but I'll just figure I'll just I'll carry it

00:32:32.440 --> 00:32:34.640
forward. Your honor, Chris Sammits from Ice Miller

00:32:34.640 --> 00:32:38.200
on behalf of Mr. Hammer. Your honor, all I wanted

00:32:38.200 --> 00:32:40.740
to do was eliminate any speculation. We have

00:32:40.740 --> 00:32:42.839
already put the carriers on notice. The debtors

00:32:42.839 --> 00:32:44.779
filed their bar date motion yesterday, and we're

00:32:44.779 --> 00:32:46.359
going to be submitting an indemnification claim

00:32:46.359 --> 00:32:48.500
that we're currently working on now. So we are

00:32:48.500 --> 00:32:50.559
incurring costs as this goes and significant

00:32:50.559 --> 00:32:52.619
costs. We've been on the phone with Mr. Hammer

00:32:52.619 --> 00:32:55.339
trying to establish the facts of the case so

00:32:55.339 --> 00:32:57.250
that we're able to adequately defend him in whatever

00:32:57.250 --> 00:32:59.569
realm we end up ultimately defending him in.

00:32:59.910 --> 00:33:01.869
But the point is, is that we are incurring costs

00:33:01.869 --> 00:33:04.150
and they are significant. Thank you very much.

00:33:04.990 --> 00:33:08.869
Anybody else? Okay, we'll be in a brief recess.

00:34:02.080 --> 00:34:05.339
I appreciate the arguments of the parties, but

00:34:05.339 --> 00:34:08.860
I'm prepared to rule. This is my ruling on the

00:34:08.860 --> 00:34:11.980
debtor's motion for a temporary restraining order.

00:34:12.460 --> 00:34:14.519
I file a docket number three in this adversary

00:34:14.519 --> 00:34:20.840
proceeding, which is number 26 -50224. I've reviewed

00:34:20.840 --> 00:34:24.699
the motion, the papers that were filed in connection

00:34:24.699 --> 00:34:27.719
with the motion, including the Hearst declaration

00:34:27.719 --> 00:34:30.409
and the attachments to it. and I've considered

00:34:30.409 --> 00:34:33.329
the arguments of counsel that I've heard today.

00:34:35.409 --> 00:34:37.909
I'm going to grant a temporary restraining order

00:34:37.909 --> 00:34:40.590
under Section 105 of the Bankruptcy Code and

00:34:40.590 --> 00:34:45.250
Federal Rule of Civil Procedure 65B, which is

00:34:45.250 --> 00:34:49.090
made applicable here by Bankruptcy Rule 7065.

00:34:50.769 --> 00:34:53.269
My ruling is going to be narrow this morning.

00:34:53.849 --> 00:34:57.610
It doesn't address and expressly reserves all

00:34:57.610 --> 00:34:59.590
questions regarding the scope of the automatic

00:34:59.590 --> 00:35:03.230
stay under Section 362, including whether the

00:35:03.230 --> 00:35:05.769
automatic stay already applies to any claims

00:35:05.769 --> 00:35:08.650
that have been asserted against the D's and O's

00:35:08.650 --> 00:35:14.550
in the Chicago litigation, and including whether

00:35:14.550 --> 00:35:17.389
any claims in that litigation are a property

00:35:17.389 --> 00:35:19.730
of the debtor's estates under Section 541 of

00:35:19.730 --> 00:35:23.250
the Bankruptcy Code. We'll address those questions

00:35:23.250 --> 00:35:24.989
at a preliminary injunction hearing, and we'll

00:35:24.989 --> 00:35:28.280
talk about scheduling on that. So today's ruling

00:35:28.280 --> 00:35:35.760
rests solely on section 105A. I'll make the following

00:35:35.760 --> 00:35:43.719
findings based upon the verified complaint which

00:35:43.719 --> 00:35:48.500
Mr. Renzi has verified under penalty of perjury.

00:35:49.840 --> 00:35:53.219
And on, again, the Hearst Declaration and the

00:35:53.219 --> 00:35:56.690
exhibits attached to it. These findings are purely

00:35:56.690 --> 00:35:58.829
for the purposes of this temporary restraining

00:35:58.829 --> 00:36:01.489
order. They are not findings of fact for any

00:36:01.489 --> 00:36:04.510
other purpose. And nothing in this ruling should

00:36:04.510 --> 00:36:07.090
give preclusive effect to any subsequent proceeding

00:36:07.090 --> 00:36:12.570
in this court or any other court. The debtors

00:36:12.570 --> 00:36:16.090
operate under the name block fills and they provided

00:36:16.090 --> 00:36:18.849
cryptocurrency trading infrastructure and technology

00:36:18.849 --> 00:36:21.610
to institutional and professional customers globally,

00:36:22.230 --> 00:36:24.650
including spot trading, over the counter derivatives.

00:36:25.019 --> 00:36:27.880
borrowing and lending, and cryptocurrency mining

00:36:27.880 --> 00:36:31.320
services. The debtors filed their petitions for

00:36:31.320 --> 00:36:34.719
relief under Chapter 11 on March 15, 2026, and

00:36:34.719 --> 00:36:38.380
these cases are being jointly administered before

00:36:38.380 --> 00:36:42.659
this court under case number 26 -10371, and the

00:36:42.659 --> 00:36:45.219
debtors are continuing to act as debtors in possession.

00:36:46.360 --> 00:36:50.079
The individual defendants. Nicholas Hammer is

00:36:50.079 --> 00:36:53.130
the debtor's former CEO and co -founder. Gordon

00:36:53.130 --> 00:36:55.530
Wallace is the debtor's president and co -founder.

00:36:56.530 --> 00:36:59.449
Joseph Patrick Perry is the debtor's interim

00:36:59.449 --> 00:37:04.309
CEO. And I'll call them collectively the DNOs.

00:37:04.929 --> 00:37:07.789
I make no finding at this time regarding the

00:37:07.789 --> 00:37:10.130
nature, scope, or validity of the claims asserted

00:37:10.130 --> 00:37:13.570
against the DNOs in the pre -petition litigation

00:37:13.570 --> 00:37:16.869
in Chicago. And nothing in this rule should be

00:37:16.869 --> 00:37:21.090
considered to constitute a determination of their

00:37:21.090 --> 00:37:25.909
individual lives. or the extent of their respective

00:37:25.909 --> 00:37:34.530
roles. On March 5th, 2026, 1548199 Alberta Limited

00:37:34.530 --> 00:37:38.909
and Robert J. Bertram filed their lawsuit in

00:37:38.909 --> 00:37:40.590
the United States District Court for the Northern

00:37:40.590 --> 00:37:44.610
District of Illinois where the case has been

00:37:44.610 --> 00:37:49.699
identified as case number 26 -CV -02451. And

00:37:49.699 --> 00:37:51.679
that lawsuit names his defendants, each of the

00:37:51.679 --> 00:37:54.920
debtors, and the three DNOs who I just identified.

00:37:56.179 --> 00:37:59.280
The claimants allege, among other things, that

00:37:59.280 --> 00:38:03.199
they deposited certain Bitcoin and U .S. dollars

00:38:03.199 --> 00:38:07.219
with block fills in January and that block fills

00:38:07.219 --> 00:38:09.619
is wrongfully retained and commingled the assets.

00:38:10.380 --> 00:38:13.059
The complaint in the pre -petition litigation

00:38:13.059 --> 00:38:16.340
asserts 11 counts. Nine of those counts are asserted

00:38:16.340 --> 00:38:19.610
solely against the debtors. Two counts that were

00:38:19.610 --> 00:38:23.389
in issue today, count five, which alleges aiding

00:38:23.389 --> 00:38:26.429
and abetting fraud, and count ten, which alleges

00:38:26.429 --> 00:38:29.809
breach of fiduciary duties, are asserted against

00:38:29.809 --> 00:38:33.150
these D's and O's. The pre -petition litigation

00:38:33.150 --> 00:38:36.090
has been automatically stated against the debtors

00:38:36.090 --> 00:38:40.829
by operation of section 362. Whether and to what

00:38:40.829 --> 00:38:44.159
extent any claim in that litigation against the

00:38:44.159 --> 00:38:46.820
D's and O's is separately stayed by Section 362

00:38:46.820 --> 00:38:50.940
as a question that I'll reserve for the preliminary

00:38:50.940 --> 00:38:57.880
injunction hearing. On March 5, 2026, the claimants

00:38:57.880 --> 00:39:00.500
moved for a temporary restraining order in the

00:39:00.500 --> 00:39:02.559
Illinois District Court seeking to enjoin block

00:39:02.559 --> 00:39:04.639
bills and the D's and O's from certain activities

00:39:04.639 --> 00:39:08.800
and to freeze assets that the claimants allege

00:39:08.800 --> 00:39:13.550
are their property. And on March 6th, 2026, the

00:39:13.550 --> 00:39:15.889
Illinois court did enter an ex parte temporary

00:39:15.889 --> 00:39:20.409
restraining order. On March 20th, the court held

00:39:20.409 --> 00:39:23.070
a telephonic status hearing and extended that

00:39:23.070 --> 00:39:26.449
order through April 3rd. And as I understand

00:39:26.449 --> 00:39:32.050
it, it was conditioned on receiving further advice

00:39:32.050 --> 00:39:35.449
from this court regarding the extent of the automatic

00:39:35.449 --> 00:39:38.519
stay as it relates to the D's and O's. and an

00:39:38.519 --> 00:39:40.420
in -person hearing in the Illinois District Court

00:39:40.420 --> 00:39:43.639
is scheduled for April 1, 2026, which is only

00:39:43.639 --> 00:39:47.420
six days from today. Clearly, as I understood

00:39:47.420 --> 00:39:50.019
the Court's minute entry, the Court is expecting

00:39:50.019 --> 00:39:54.760
my answer, and I'm giving him an answer. The

00:39:54.760 --> 00:39:57.699
indemnification obligations are provided for

00:39:57.699 --> 00:40:01.619
under the organizational documents of certain

00:40:01.619 --> 00:40:05.059
of the debtors, and those obligations run in

00:40:05.059 --> 00:40:10.309
favor of the D's and O's. Specifically, it appears

00:40:10.309 --> 00:40:14.030
that the bylaws of Realist Technology Group Holdings,

00:40:14.150 --> 00:40:16.469
Inc., which is a Delaware corporation, alligates

00:40:16.469 --> 00:40:19.949
the corporation to indemnify any person who is

00:40:19.949 --> 00:40:23.070
or was a director, officer, employee, or agent

00:40:23.070 --> 00:40:26.190
against expenses incurred in connection with

00:40:26.190 --> 00:40:29.050
any threatened pending or completed litigation.

00:40:30.570 --> 00:40:36.320
The articles of the association of other entities

00:40:36.320 --> 00:40:41.739
contained similar sort of language. And the court

00:40:41.739 --> 00:40:45.360
does find today that continuation of the pre

00:40:45.360 --> 00:40:47.760
-petition litigation against the Ds and Os would

00:40:47.760 --> 00:40:50.639
trigger or would create a substantial risk of

00:40:50.639 --> 00:40:54.059
triggering defense cost advancement and indemnification

00:40:54.059 --> 00:40:57.579
obligations under those provisions. Again, I'm

00:40:57.579 --> 00:40:59.480
making no finding at this time regarding the

00:40:59.480 --> 00:41:02.239
magnitude of those obligations or whether any

00:41:02.239 --> 00:41:08.289
particular obligation is enforceable. The verified

00:41:08.289 --> 00:41:11.050
complaint states that certain of the D's and

00:41:11.050 --> 00:41:13.150
O's are integral to the debtor's restructuring

00:41:13.150 --> 00:41:16.949
efforts. And specifically, the debtors have asserted

00:41:16.949 --> 00:41:19.949
that the continuation of the pre -petition litigation

00:41:19.949 --> 00:41:22.969
against those D's and O's would distract key

00:41:22.969 --> 00:41:26.070
personnel at a critical stage of these Chapter

00:41:26.070 --> 00:41:29.829
11 cases. And the court accepts that representation

00:41:29.829 --> 00:41:34.519
to be true for the purposes of the TRO. Since

00:41:34.519 --> 00:41:36.480
the petition date, the debtors have also been

00:41:36.480 --> 00:41:38.860
involved in negotiating a framework for an exit

00:41:38.860 --> 00:41:42.079
plan with an ad hoc group of customers that would

00:41:42.079 --> 00:41:46.699
provide for a debt -for -equity exchange transaction.

00:41:48.400 --> 00:41:50.420
I would note that the related term sheet has

00:41:50.420 --> 00:41:53.960
not been executed. It is binding, to my knowledge,

00:41:54.300 --> 00:41:57.280
and I make no finding at this time about the

00:41:57.280 --> 00:41:59.119
likelihood that the debtors will successfully

00:41:59.119 --> 00:42:02.519
conserve the plan. That question would be reserved

00:42:02.519 --> 00:42:05.199
for preliminary injunction hearing. But for the

00:42:05.199 --> 00:42:08.619
purposes of the TRO today, and for this purpose

00:42:08.619 --> 00:42:11.280
only, I find that there is no evidence before

00:42:11.280 --> 00:42:15.119
this court suggesting that the debtors restructuring

00:42:15.119 --> 00:42:23.440
is infeasible or is not likely to succeed. This

00:42:23.440 --> 00:42:27.380
is an emergency application. The debtors commenced

00:42:27.380 --> 00:42:29.280
this adversary proceeding yesterday on March

00:42:29.280 --> 00:42:33.260
25th. and the April 1 hearing date before Judge

00:42:33.260 --> 00:42:37.079
Kevney is only six days away and the TRO in that

00:42:37.079 --> 00:42:43.480
court expires on April 3rd. If I were to not

00:42:43.480 --> 00:42:47.280
act before April 1st, it appears to me that the

00:42:47.280 --> 00:42:49.019
claimants would seek to proceed against the D's

00:42:49.019 --> 00:42:50.780
and O's in the Illinois District Court while

00:42:50.780 --> 00:42:55.420
the core legal questions at issue here, including

00:42:55.420 --> 00:42:58.760
the extent of the automatic stay and whether

00:42:58.760 --> 00:43:02.860
those claims are inextricably interwoven with

00:43:02.860 --> 00:43:05.900
these bankruptcy cases would remain undecided.

00:43:07.480 --> 00:43:10.460
I would note that the debtors have served a copy

00:43:10.460 --> 00:43:14.599
of the motion on the claimants and they have

00:43:14.599 --> 00:43:20.980
appeared today. I clearly have jurisdiction over

00:43:20.980 --> 00:43:26.119
this proceeding under 28 USC sections 157 and

00:43:26.119 --> 00:43:29.730
1334. And this matter has been referred to me

00:43:29.730 --> 00:43:31.750
by the amended standing order of reference from

00:43:31.750 --> 00:43:36.389
the district court dated February 29, 2012. This

00:43:36.389 --> 00:43:42.030
is a court proceeding under 28 USC 157 B2 and

00:43:42.030 --> 00:43:46.170
venue is proper here under 28 USC 1408 and 1409.

00:43:48.010 --> 00:43:50.210
To move on to the legal standard under section

00:43:50.210 --> 00:43:54.679
105. It authorizes this court to issue any order

00:43:54.679 --> 00:43:57.400
of process or judgment that is necessary or appropriate

00:43:57.400 --> 00:44:01.840
to carry out the provisions of Title 11. And

00:44:01.840 --> 00:44:04.380
a request for injunctive relief under Section

00:44:04.380 --> 00:44:09.579
105 is evaluated under the traditional preliminary

00:44:09.579 --> 00:44:12.940
injunction standard adapted to the bankruptcy

00:44:12.940 --> 00:44:16.300
court as established in this circuit by numerous

00:44:16.300 --> 00:44:20.550
cases. That standard requires the court to consider

00:44:20.550 --> 00:44:23.389
four factors. First, to look at whether there's

00:44:23.389 --> 00:44:25.809
a reasonable probability of success on the merits

00:44:25.809 --> 00:44:28.170
of the request for a preliminary injunction.

00:44:28.929 --> 00:44:33.230
Whether the movement will suffer irreparable

00:44:33.230 --> 00:44:36.389
harm, absent relief being granted today. And

00:44:36.389 --> 00:44:38.389
third, whether granting the relief will result

00:44:38.389 --> 00:44:41.429
in a greater harm to the non -moving party. And

00:44:41.429 --> 00:44:43.570
fourth, whether granting relief serves the public

00:44:43.570 --> 00:44:48.269
interest. This is a balancing test, no single

00:44:48.269 --> 00:44:53.610
factor. determines the analysis. For the purposes

00:44:53.610 --> 00:44:55.969
of a TRO, the court applies the same framework

00:44:55.969 --> 00:45:00.409
on an expedited basis, given the requirements

00:45:00.409 --> 00:45:04.030
of Rule 65B, with particular attention to whether

00:45:04.030 --> 00:45:07.050
immediate and irreparable harm will result before

00:45:07.050 --> 00:45:15.119
the matter can fully be heard. Again, I'm applying

00:45:15.119 --> 00:45:18.039
Section 105 only. I'm not adjudicating the automatic

00:45:18.039 --> 00:45:22.619
stay issues. And I'm not determining whether

00:45:22.619 --> 00:45:27.820
the funds that issue are property of state under

00:45:27.820 --> 00:45:31.800
Section 541. That is for another day. This TRO

00:45:31.800 --> 00:45:34.460
is designed solely to preserve the status quo

00:45:34.460 --> 00:45:37.059
and prevent irreparable harm to these states

00:45:37.059 --> 00:45:42.150
pending a full hearing on those questions. As

00:45:42.150 --> 00:45:44.789
to the first factor, which is probability of

00:45:44.789 --> 00:45:48.070
success on the merits, I find that the debtors

00:45:48.070 --> 00:45:50.250
had demonstrated a reasonable probability of

00:45:50.250 --> 00:45:53.289
success on the merits of the request for a preliminary

00:45:53.289 --> 00:45:57.289
injunction. Again, my finding is deliberately

00:45:57.289 --> 00:46:01.429
limited at this stage, but a preliminary injunction

00:46:01.429 --> 00:46:04.650
under Section 105 is warranted where, among other

00:46:04.650 --> 00:46:07.150
things, claims against non -debt or co -defendants

00:46:07.150 --> 00:46:09.849
are so intertwined with claims against the debtors

00:46:09.849 --> 00:46:12.869
that permitting the litigation to proceed would

00:46:12.869 --> 00:46:16.429
effectively require litigations of issues central

00:46:16.429 --> 00:46:22.369
to this debtor's reorganization. Here the two

00:46:22.369 --> 00:46:24.710
counts against D's and O's in the pre -petition

00:46:24.710 --> 00:46:28.469
litigation share their entire factual predicate

00:46:28.469 --> 00:46:30.849
with the nine counts that are asserted solely

00:46:30.849 --> 00:46:42.980
against the debtors. Please make a note of the

00:46:42.980 --> 00:46:45.380
participant for participation in future hearings.

00:46:46.880 --> 00:46:51.179
Don't need to hear her coffee order. Count five

00:46:51.179 --> 00:46:54.320
again alleges aiding and abetting fraud cannot

00:46:54.320 --> 00:46:57.659
be adjudicated without a prior determination

00:46:57.659 --> 00:47:00.579
of whether Blockville's committed the underlying

00:47:00.579 --> 00:47:03.500
fraud and that's a question that is squarely

00:47:03.500 --> 00:47:07.099
at the center of the debtors chapter 11 cases

00:47:07.099 --> 00:47:11.139
and that will affect all of the debtors. customers

00:47:11.139 --> 00:47:15.320
and creditors, not only these two claimants who

00:47:15.320 --> 00:47:19.699
were before me today. Similarly, count two raises

00:47:19.699 --> 00:47:21.880
questions about the deans and those alleged fiduciary

00:47:21.880 --> 00:47:24.719
duties to creditors and the conduct of the debtor's

00:47:24.719 --> 00:47:27.280
business in the period before the petition date.

00:47:27.800 --> 00:47:29.820
Those are matters that likewise will be addressed

00:47:29.820 --> 00:47:33.599
in this court. So this court finds on the record

00:47:33.599 --> 00:47:35.719
here that the debtors have made a sufficient

00:47:35.719 --> 00:47:38.860
showing of a reasonable probability success.

00:47:39.150 --> 00:47:41.570
on their Section 105 preliminary injunction claim

00:47:41.570 --> 00:47:44.469
to warrant interim protection. I express no view

00:47:44.469 --> 00:47:46.130
at this time on the merits of the underlying

00:47:46.130 --> 00:47:50.150
claims or the defenses in the Chicago litigation.

00:47:52.030 --> 00:47:54.809
Next, a look at irreparable harm. And I find

00:47:54.809 --> 00:47:56.650
that the debtors have demonstrated that immediate

00:47:56.650 --> 00:47:58.610
and irreparable harm to these states will result

00:47:58.610 --> 00:48:05.250
absent a TRO. I found three bases for this finding.

00:48:05.690 --> 00:48:08.690
First, the debtors have contractual indemnification

00:48:08.690 --> 00:48:11.210
obligations to the D's and O's under their organizational

00:48:11.210 --> 00:48:15.010
documents. These obligations are not contingent

00:48:15.010 --> 00:48:18.570
on a finding of liability. Advancement of defense

00:48:18.570 --> 00:48:21.250
costs begins when the litigation is initiated.

00:48:22.090 --> 00:48:25.510
And if the Illinois hearing proceeds on April

00:48:25.510 --> 00:48:28.550
1st without relief from this court, indemnification

00:48:28.550 --> 00:48:30.989
obligations will begin accruing against the estates

00:48:30.989 --> 00:48:34.219
as an immediate and direct consequence. And that

00:48:34.219 --> 00:48:38.519
would constitute a state harm that can't be undone.

00:48:39.219 --> 00:48:41.940
Second, the continuation of the pre -petition

00:48:41.940 --> 00:48:45.019
litigation creates a concrete risk that factual

00:48:45.019 --> 00:48:46.960
findings and evidentiary rulings will be made

00:48:46.960 --> 00:48:49.539
in a proceeding to which the debtors are not

00:48:49.539 --> 00:48:53.840
parties because of the automatic stay, but from

00:48:53.840 --> 00:48:56.920
which those findings could nonetheless be used

00:48:56.920 --> 00:49:00.300
against the debtors through principles of estoppel.

00:49:00.750 --> 00:49:07.230
or other principles. And this has been found

00:49:07.230 --> 00:49:09.630
on numerous occasions in other cases to constitute

00:49:09.630 --> 00:49:14.409
the precise risk of irreparable harm that warrants

00:49:14.409 --> 00:49:17.210
extension of protection to non -dead or co -defendants.

00:49:19.329 --> 00:49:23.070
Third, the D's and O's who remain active in the

00:49:23.070 --> 00:49:26.429
debtor's restructuring will have to contend with

00:49:26.429 --> 00:49:28.750
the burden of defending complex litigation in

00:49:28.750 --> 00:49:31.679
the Illinois District Court. simultaneously with

00:49:31.679 --> 00:49:36.559
their obligations to this court and the debtors

00:49:36.559 --> 00:49:39.880
and the reorganization process. That's a drain

00:49:39.880 --> 00:49:43.880
on management time and attention and the resource

00:49:43.880 --> 00:49:46.739
demands of responding to discovery that would

00:49:46.739 --> 00:49:49.820
ultimately flow in both directions between the

00:49:49.820 --> 00:49:52.519
pre -petition litigation and these Chapter 11

00:49:52.519 --> 00:49:56.199
cases constitute irreparable harm to the debtor's

00:49:56.199 --> 00:50:01.739
estates. The balance of harms, which is another

00:50:01.739 --> 00:50:05.139
factor to consider, favors entry of a temporary

00:50:05.139 --> 00:50:09.000
restraining order. As the claimants argued here,

00:50:09.119 --> 00:50:11.340
nothing is going to happen in the next 16 days.

00:50:13.099 --> 00:50:14.920
The harm to the debtors of states from denial

00:50:14.920 --> 00:50:18.440
of relief, though, as I've described, is immediate,

00:50:18.579 --> 00:50:22.519
concrete, and at least one respect, being the

00:50:22.519 --> 00:50:26.119
accrual of advancement obligations, which is

00:50:26.119 --> 00:50:29.210
self -executing. should the Illinois proceedings

00:50:29.210 --> 00:50:33.150
continue. By contrast, the harm to the claimants

00:50:33.150 --> 00:50:38.969
from a short duration TRO is limited as I believe

00:50:38.969 --> 00:50:42.389
that the claimants have conceded. The pre -petition

00:50:42.389 --> 00:50:46.190
litigation is already stayed as to the debtors.

00:50:46.730 --> 00:50:48.769
The claimants' ability to prosecute their nine

00:50:48.769 --> 00:50:54.150
counts against the debtors is stayed regardless

00:50:54.150 --> 00:50:59.400
of what I do with the TRO. But the TRO will temporarily

00:50:59.400 --> 00:51:02.519
hold prosecution of the two D &O counts only,

00:51:02.699 --> 00:51:05.599
and only for the short period until this court

00:51:05.599 --> 00:51:09.420
conducts a preliminary injunction here. Any claims

00:51:09.420 --> 00:51:11.380
that claimants have are preserved and will be

00:51:11.380 --> 00:51:15.059
addressed in due course in these bankruptcy cases.

00:51:17.260 --> 00:51:20.980
So on that record, the balance of harms clearly

00:51:20.980 --> 00:51:25.960
favors the TRO. And finally, and to look at the

00:51:25.960 --> 00:51:29.340
public interest. And I find that a TRO serves

00:51:29.340 --> 00:51:32.179
the public interest here. Congress established

00:51:32.179 --> 00:51:35.900
the bankruptcy system to provide an orderly and

00:51:35.900 --> 00:51:38.059
centralized forum for the resolution of claims

00:51:38.059 --> 00:51:40.880
against a debtor and to provide the debtor with

00:51:40.880 --> 00:51:45.219
a breathing spell from creditor pressure sufficient

00:51:45.219 --> 00:51:50.260
to provide time to enable a reorganization. Granting

00:51:50.260 --> 00:51:55.070
a TRO to allow this court to adjudicate The fundamental

00:51:55.070 --> 00:51:58.349
questions of the scope of the stay ultimately

00:51:58.349 --> 00:52:01.530
and estate property rights before those questions

00:52:01.530 --> 00:52:04.110
are potentially rendered moot or prejudiced by

00:52:04.110 --> 00:52:07.309
proceedings in another forum serves the very

00:52:07.309 --> 00:52:10.630
purpose for which Congress enacted the Bankruptcy

00:52:10.630 --> 00:52:14.869
Code. I'm not going to allow piecemeal litigation

00:52:14.869 --> 00:52:18.309
in another court to generate preclusive findings

00:52:18.309 --> 00:52:21.349
on issues that are core to these bankruptcy cases.

00:52:21.719 --> 00:52:24.719
and that would undermine these cases and the

00:52:24.719 --> 00:52:28.820
potential reorganization. So I'm satisfied that

00:52:28.820 --> 00:52:31.340
the specific requirements of Federal Rule of

00:52:31.340 --> 00:52:36.199
Civil Procedure 65B are met. The verified adversary

00:52:36.199 --> 00:52:39.300
complaint is verified under penalty of perjury

00:52:39.300 --> 00:52:42.440
by Mr. Renzi. He stated that he's reviewed the

00:52:42.440 --> 00:52:44.300
allegations and that they are true to his knowledge.

00:52:44.820 --> 00:52:47.000
That constitutes a verified pleading sufficient.

00:52:47.469 --> 00:52:51.869
to support emergency relief under Rule 65B1A.

00:52:52.309 --> 00:52:54.369
I further find that the reasons for granting

00:52:54.369 --> 00:52:58.269
relief without awaiting a full adversarial hearing

00:52:58.269 --> 00:53:02.110
are set forth adequately in the papers as supplemented

00:53:02.110 --> 00:53:04.510
by the inventory record and the argument today.

00:53:05.690 --> 00:53:08.050
The Illinois in -person hearing is six days away.

00:53:08.969 --> 00:53:12.269
The existing TRO in Illinois expires in nine

00:53:12.269 --> 00:53:17.150
days and the time required to schedule and conduct

00:53:17.150 --> 00:53:20.750
a contested preliminary injunction hearing before

00:53:20.750 --> 00:53:23.349
this Court makes it impossible to provide the

00:53:23.349 --> 00:53:25.389
claimants with full advance notice and a response

00:53:25.389 --> 00:53:28.750
period before April 1, while still giving this

00:53:28.750 --> 00:53:33.449
Court's order any practical effect. These circumstances

00:53:33.449 --> 00:53:37.309
provide the basis required by Rule 65B1B for

00:53:37.309 --> 00:53:40.010
acting on shorter notice and ordinarily would

00:53:40.010 --> 00:53:44.710
be required. and I know that Council for the

00:53:44.710 --> 00:53:47.449
Claimants has appeared today and they have been

00:53:47.449 --> 00:53:49.670
heard and I've had the opportunity to consider

00:53:49.670 --> 00:53:55.989
their arguments. I'm going to waive the requirement

00:53:55.989 --> 00:54:03.789
of a bond under Rule 65C. These debtors are debtors

00:54:03.789 --> 00:54:07.210
in possession of Chapter 11 and requiring a bond

00:54:07.210 --> 00:54:11.119
would constitute a a drain on assets held for

00:54:11.119 --> 00:54:14.659
the benefit of all creditors without a corresponding

00:54:14.659 --> 00:54:20.539
benefit that I can see. Given that the harm to

00:54:20.539 --> 00:54:23.840
the claimants from the TRO is minimal and any

00:54:23.840 --> 00:54:26.320
claims they may have are fully preserved in the

00:54:26.320 --> 00:54:29.880
claims process and particularly given the claimants

00:54:29.880 --> 00:54:35.739
argument that the funds attributed to them are

00:54:35.739 --> 00:54:38.219
held in trust and are not estate assets anyway.

00:54:38.510 --> 00:54:40.829
That's an issue for another day, but it certainly

00:54:40.829 --> 00:54:43.969
supports a finding that a bond is not required

00:54:43.969 --> 00:54:48.070
So specifically my ruling is that I will enter

00:54:48.070 --> 00:54:50.570
a temporary restraining order under section 105

00:54:50.570 --> 00:54:56.449
and federal 60 civil procedure 65 B Pending a

00:54:56.449 --> 00:54:59.090
hearing and determination on the debtors requests

00:54:59.090 --> 00:55:03.750
for a preliminary injunction 154 8199 Alberta

00:55:03.750 --> 00:55:06.869
limited and Robert J Bertram are enjoying from

00:55:07.159 --> 00:55:09.320
Commencing continuing or otherwise prosecute

00:55:09.320 --> 00:55:11.960
any action or proceeding against Nicholas Hammer

00:55:11.960 --> 00:55:15.059
Gordon Wallace and Joseph Patrick Perry in connection

00:55:15.059 --> 00:55:17.099
with the claims asserted against him in that

00:55:17.099 --> 00:55:23.300
pre petition litigation. And any other litigation

00:55:23.300 --> 00:55:27.599
that they may seek to bring. And when I talk

00:55:27.599 --> 00:55:29.320
about the pre petition litigation, I'm again

00:55:29.320 --> 00:55:33.039
talking about case number 26 dash CV dash 02451.

00:55:33.630 --> 00:55:35.889
in the United States District Court for the Northern

00:55:35.889 --> 00:55:38.650
District of Illinois. The scope of this order

00:55:38.650 --> 00:55:43.469
is limited to the individual DNOs. I'm going

00:55:43.469 --> 00:55:45.750
to schedule a preliminary injunction hearing

00:55:45.750 --> 00:55:51.969
under Rule 65, assuming that the order gets entered

00:55:51.969 --> 00:55:54.550
today, which is what I'm going to do. I have

00:55:54.550 --> 00:55:59.969
to hold the hearing within 14 days. 14 days is

00:55:59.969 --> 00:56:05.460
April 9th. So I'd suggest we get our calendars

00:56:05.460 --> 00:56:11.780
out and decide on a date if you'd I'd ask the

00:56:11.780 --> 00:56:19.699
debtors that though if they wish to Consult with

00:56:19.699 --> 00:56:22.139
Council for the claimants offline on scheduling

00:56:22.139 --> 00:56:27.380
them might make sense, too but My issue frankly

00:56:27.380 --> 00:56:32.670
is that I have Extremely limited availability

00:56:32.670 --> 00:56:39.329
the week of April 6th. In a pinch, I could give

00:56:39.329 --> 00:56:44.630
you the afternoon of the 8th, but that's the

00:56:44.630 --> 00:56:48.610
only date that I'm in Delaware that week. Your

00:56:48.610 --> 00:56:50.650
Honor, with the party's agreement, can we do

00:56:50.650 --> 00:56:53.989
it on the 16th? I'm just wondering because I

00:56:53.989 --> 00:56:57.829
remember that Mr. Patterson said he had suggested

00:56:57.829 --> 00:57:00.860
the 16th as a And I'm wondering if the party's

00:57:00.860 --> 00:57:02.940
consent. Yeah, you've got your second day hearing

00:57:02.940 --> 00:57:13.019
on the 16th. It's scheduled for 2 .30. I could

00:57:13.019 --> 00:57:15.739
probably move it up a little earlier, but if

00:57:15.739 --> 00:57:17.519
you think that gives you enough time to accomplish

00:57:17.519 --> 00:57:20.960
everything, I know it's a few weeks out and a

00:57:20.960 --> 00:57:22.960
lot can change. But if you think that it gives

00:57:22.960 --> 00:57:25.880
enough time to handle everything, I'd certainly

00:57:25.880 --> 00:57:28.690
be up for that. I think we've already cleared

00:57:28.690 --> 00:57:31.650
that date with our management team, so to the

00:57:31.650 --> 00:57:35.090
extent that Mr. Patterson is agreeable to that,

00:57:35.289 --> 00:57:37.570
it seems to me that would make sense. Well, we'd

00:57:37.570 --> 00:57:39.929
also frankly be responsive to Mr. Patterson's

00:57:39.929 --> 00:57:44.710
concerns that these proceedings are leapfrogging

00:57:44.710 --> 00:57:47.110
the motion for the relief from the automatic

00:57:47.110 --> 00:57:49.929
stay, which as I understand, Mr. Gellert, Mr.

00:57:50.050 --> 00:57:53.079
Patterson, that's scheduled for April 16th. Yes,

00:57:53.179 --> 00:57:55.800
it is, Your Honor. So it also sounds like maybe

00:57:55.800 --> 00:57:59.539
the fairest path forward if the parties are amenable

00:57:59.539 --> 00:58:06.800
to the TRL lasting until the 16th, varying from

00:58:06.800 --> 00:58:09.519
what the rule requires. Well, certainly it's

00:58:09.519 --> 00:58:11.780
acceptable to the debtors. I'll have to let Mr.

00:58:11.980 --> 00:58:14.659
Patterson speak for himself. Is that acceptable,

00:58:14.659 --> 00:58:18.159
Mr. Patterson? Your Honor, my only concern is

00:58:18.159 --> 00:58:19.980
if we're going to have an evidentiary hearing

00:58:19.980 --> 00:58:23.570
that I assume If we take longer than the 16th,

00:58:23.570 --> 00:58:25.550
that you've got the 17th available too, and I

00:58:25.550 --> 00:58:27.570
don't want to be presumptuous as to what your

00:58:27.570 --> 00:58:30.789
schedule is. Yeah, sure. We'd make the time for

00:58:30.789 --> 00:58:33.289
you without having to come back to Delaware.

00:58:33.909 --> 00:58:37.730
Then I would certainly adhere to what I said,

00:58:38.030 --> 00:58:40.829
what I told the court earlier. I would request,

00:58:41.010 --> 00:58:44.829
if I can, that the status quo be maintained as

00:58:44.829 --> 00:58:47.289
to our Bitcoin and cash, that is that it will

00:58:47.289 --> 00:58:50.880
not be accessed or used. in the interim before

00:58:50.880 --> 00:58:52.739
we have this preliminary injunction hearing.

00:58:53.619 --> 00:58:57.440
I think that the cash collateral order don't

00:58:57.440 --> 00:58:59.980
authorize them to do it, but I believe in belt

00:58:59.980 --> 00:59:02.059
and suspenders in certain circumstances and I

00:59:02.059 --> 00:59:05.900
don't want to face something where somebody has

00:59:05.900 --> 00:59:10.019
done something that minimizes or eliminates my

00:59:10.019 --> 00:59:14.780
ability to trace the Bitcoin in cash. Mr. Hurst,

00:59:15.599 --> 00:59:17.480
any response to that or do you want to check

00:59:17.480 --> 00:59:21.360
with your colleagues before responding? Mean

00:59:21.360 --> 00:59:24.900
I what I think this is like a really big case

00:59:24.900 --> 00:59:37.400
issue, right? As long as the status quo is maintained

00:59:37.400 --> 00:59:42.559
your honor, that's all I'm asking At this point,

00:59:42.559 --> 00:59:46.920
yes So I'm not exactly sure what he says that's

00:59:46.920 --> 00:59:49.079
what he means, but we'll comply with the cash

00:59:49.079 --> 00:59:52.679
collateral order that's on I think that you may

00:59:52.679 --> 00:59:54.320
have a difference of opinion on what the cash

00:59:54.320 --> 00:59:56.139
collateral order requires or doesn't require,

00:59:56.760 --> 00:59:59.380
and whether it's his res or he has any kind of

00:59:59.380 --> 01:00:01.340
special interest that I'm not aware of, then

01:00:01.340 --> 01:00:03.159
he can come forward with that. But we'll comply

01:00:03.159 --> 01:00:06.039
with the current order that's on file. Okay.

01:00:06.059 --> 01:00:09.079
Mr. Geller? Your Honor, I stand because I don't

01:00:09.079 --> 01:00:11.320
think the cash collateral order really gets too

01:00:11.320 --> 01:00:13.960
far into this particular issue. So for them standing

01:00:13.960 --> 01:00:15.940
behind the cash collateral order doesn't really

01:00:15.940 --> 01:00:19.019
address Mr. Patterson's question. Your Honor,

01:00:19.199 --> 01:00:23.980
with respect to Mr. Patterson, he gave his interpretation

01:00:23.980 --> 01:00:26.119
of the cash file order and is asking for something

01:00:26.119 --> 01:00:27.840
outside of the scope of what this proceeding

01:00:27.840 --> 01:00:29.619
is about. So if he wants to make a motion about

01:00:29.619 --> 01:00:31.519
traceability of his assets, and he thinks he

01:00:31.519 --> 01:00:34.159
can do that, then maybe he should. But I don't

01:00:34.159 --> 01:00:35.840
think this is the right appropriate venue for

01:00:35.840 --> 01:00:38.840
that discussion. The question then I would have,

01:00:38.840 --> 01:00:41.059
Your Honor, is when can we be heard on our TRO?

01:00:41.840 --> 01:00:43.719
Well, you haven't filed it yet. I'm saying, you

01:00:43.719 --> 01:00:45.909
know, that's what we have. that's what we would

01:00:45.909 --> 01:00:47.769
have to do then, if they're not going to stand

01:00:47.769 --> 01:00:50.110
by the idea that they're not going to dissipate

01:00:50.110 --> 01:00:54.070
the race. I'm not going to make any findings

01:00:54.070 --> 01:00:56.110
of whether the race exists or not. Understood.

01:00:58.489 --> 01:01:02.389
What I will order is continuing compliance with

01:01:02.389 --> 01:01:05.369
all the debtor's obligations as a debtor in possession,

01:01:06.110 --> 01:01:09.070
including among other things compliance with

01:01:09.070 --> 01:01:14.630
any orders of this court. Okay. I've reviewed

01:01:14.630 --> 01:01:21.570
the form of order. And it does, unless you discerned

01:01:21.570 --> 01:01:25.190
any differences, I think it syncs up with the

01:01:25.190 --> 01:01:28.489
relief that I've ordered here on the record today.

01:01:28.789 --> 01:01:31.210
So I'd be prepared to enter that order if it's

01:01:31.210 --> 01:01:33.630
uploaded. Okay, Your Honor. So I will upload

01:01:33.630 --> 01:01:36.250
that order. I'll put in the April 16th hearing

01:01:36.250 --> 01:01:38.510
date. We have to figure out an objection deadline.

01:01:38.630 --> 01:01:41.369
I'd like to line that up with the objection deadline.

01:01:41.659 --> 01:01:44.280
for lift stay motion, which right now is the

01:01:44.280 --> 01:01:49.159
6th. It might make sense to move that deadline

01:01:49.159 --> 01:01:55.239
more to the 9th, so that our objection to the

01:01:55.239 --> 01:01:59.579
lift stay would be due on the 9th, and Mr. Patterson's

01:01:59.579 --> 01:02:03.239
objection to the briefing with respect to the

01:02:03.239 --> 01:02:05.519
preliminary injunction would also be due on the

01:02:05.519 --> 01:02:08.260
9th, let's say at 4 o 'clock. That would be my

01:02:08.260 --> 01:02:11.269
proposal. Well, I'm certainly okay with that,

01:02:11.389 --> 01:02:14.630
Mr. Patterson, Mr. Geller. I'm fine with that,

01:02:14.750 --> 01:02:19.389
Judge. Okay, thank you. So just for the purposes

01:02:19.389 --> 01:02:24.489
of clarity, the hearing on the 16th on the stay

01:02:24.489 --> 01:02:28.449
relief motion will be an evidentiary hearing.

01:02:32.130 --> 01:02:36.130
So we'll go forward with all those issues. on

01:02:36.130 --> 01:02:37.909
the same day, the preliminary injunction and

01:02:37.909 --> 01:02:40.710
the state relief motion. Okay. Now you had said

01:02:40.710 --> 01:02:42.869
that maybe you'd want to move it up from 230

01:02:42.869 --> 01:02:48.050
or should we just say 230 and we'll see? Why

01:02:48.050 --> 01:02:50.849
don't you see how it looks like things are shaking

01:02:50.849 --> 01:02:52.789
out for that hearing and if we need to move it

01:02:52.789 --> 01:02:55.070
up, you know, I may be able to move it up a half

01:02:55.070 --> 01:02:59.670
hour or even an hour, but why don't you check

01:02:59.670 --> 01:03:03.510
in with chambers maybe towards the beginning

01:03:03.510 --> 01:03:07.840
of the week of the 13th. If we can move it or

01:03:07.840 --> 01:03:11.539
we will and if you think, but if you think that

01:03:11.539 --> 01:03:13.039
would be enough time then we can keep it how

01:03:13.039 --> 01:03:14.880
it is. Is that all right? No, that makes sense,

01:03:14.980 --> 01:03:16.699
Your Honor. And so when I upload the order it

01:03:16.699 --> 01:03:20.739
will say April 16th at 2 .30 and then I'll check

01:03:20.739 --> 01:03:23.019
in with chambers and we'll see. Okay. Yes, please.

01:03:23.219 --> 01:03:25.800
Thank you. Okay. Is there anything else for me

01:03:25.800 --> 01:03:30.260
today? Nothing. Okay. I appreciate the party's

01:03:30.260 --> 01:03:34.300
thoughtful arguments on this and I'll look forward

01:03:34.300 --> 01:03:37.539
to seeing everybody back on the... The 16th.

01:03:37.679 --> 01:03:41.000
I think I'll see you sooner. Isn't there a second?

01:03:41.000 --> 01:03:45.460
Yes. Next week? 30th of the 31st. We have the

01:03:45.460 --> 01:03:47.800
cash collateral interim, second interim. Yes,

01:03:47.880 --> 01:03:49.860
cash collateral. Yes. So I'll look forward to

01:03:49.860 --> 01:03:52.280
seeing everybody on Tuesday then. Okay. Thank

01:03:52.280 --> 01:03:53.800
you. Thank you, Your Honor. We're adjourned.