Good afternoon, this is judge Lopez today is
March 31st. I'm gonna call the 1 p .m. Case first
day hearings in 26 904 28 today is a virtual
Hearing there's no one in the courtroom. I just
asked if you are on the line and wish to make
an appearance Please hit five star, and I will
unmute your line. I would also ask that you please
Make an appearance electronically just jump on
the Southern District of Texas What page you'll
find a link to my home page and a place to make
electronic? Appearances, and they'll find a link
in this case, so I'm gonna unmute a few lines
here two one two number David Feldman from Clifford
chance On behalf of the proposed debtors, I'm
joined here today by my colleague, Matti Nicolini.
I'll be making some introductory remarks and
Matti will be handling the balance of the first
day motions. Okay, good. Good afternoon. Here's
another 212 number. Good afternoon, Your Honor.
Christian Jensen, Sullivan and Cromwell, representing
Banco Santander and Deda Capital Investments,
the agent and lender under the debtor's secure
facility. Good afternoon. A 202 number. Good
afternoon, Your Honor. Jason Ruff with the U
.S. Treasury. Good afternoon, Mr. Ruff. And a
917 number. Good afternoon, Your Honor. My name
is Jamie Donat. I am the independent director
at the Alton on holding companies. Good afternoon.
Does anyone else wish to make an appearance?
Just give me one moment. Okay, who should I turn
this over to? As we note in the papers, a first
-land affiliate, but we believe this is a separate
and distinct and should be a fairly streamlined
and hopefully simple case. The three entities
that have filed are called Liberty 1BV, Liberty
2BV, and Altanon Motion Holding BV. We have with
us today, as noted on the appearances, Jamie
Donath, who is an independent – the independent
director. of each of these three entities. When
I finish my opening remarks, I will seek to offer
Mr. Donat's declaration into evidence and his
direct testimony in support of the first day
motions, and we'll offer him up for cross -examination
to the extent anyone has any questions. I will
note that as of this moment, And not surprising,
I think, once we get into the substance of what
we're requesting here, we have not – we have
been in detailed discussions, as would be typical,
with the U .S. trustee and appreciate the U .S.
trustee's efforts in navigating through our first
-day motions, but we have received no third -party
formal or informal objection to any of our first
-day motions. We're also joined on the line –
by Gary Polkowitz of Teneo, who is the proposed
financial advisor to the debtors, as well as
the representative of Kroll, which is the proposed
claims agent for the debtors. I want to thank
the court for accommodating us for this first
day hearing, and again, thank the U .S. trustee
for their help and cooperation in getting through
the first -day motions. fairly quickly, fairly
after that basis. Just to give you a little background
here, these – the three entities that have filed
for bankruptcy today are holding companies of
a business line of first brands called Altanon.
Altanon is a successor entity to a business that
was called LumaLeds. LumaLeds was an aftermarket
producer of headlamps for vehicles around the
world with manufacturing facilities in multiple
jurisdictions around the world and had – was
a big – had a big market share in this particular
industry. It was a business that – so in addition
to the three holding companies, there are 20
-some -odd operating subsidiaries that – operate
around the world. Those entities are not before
your honor and will not be before your honor
in this bankruptcy proceeding. Several of those
entities have already commenced insolvency proceedings
in their local jurisdictions, with likely more
to come. I'll get back to that in a moment, just
from a corporate governance standpoint. But all
of those operating subsidiaries that you see
on the chart, which is attached to Mr. Junot's
first day at the David Thursday declaration.
They – those are the operating subsidiaries that
we're talking about. So the Eltonon business
was acquired from LumaLeds in 2024. The business
was acquired for a purchase price of $238 million.
At that time, at the time it was acquired, it
had EBITDA of 60 -some -odd million in 2022 and
I think 48 million in 2023. It was until fairly
recently an operating business, as I said, with
manufacturing and sales facilities around the
world. As of today, Virtually all of those operations
have ceased, and we are – Mr. Donath was appointed
as independent director for these entities. The
initial appointment was for the two Liberty entities
in November of 2025, and then subsequently in
early 2026 he was added as the sole independent
director. of the holdings entity. The ultimate
holdings entity is the direct 100 percent shareholder
of all of those operating subsidiaries that I
have mentioned. The debtors do not have any employees
or operations. It's a fairly simple capital structure.
There is, as Mr. Jensen noted, a secured lending
facility. I'll get into what that means. at the
holding company. The principal amount of that
facility was used as acquisition financing to
acquire the Luma -led business in the first instance.
The debt sits at the holding companies but has
been guaranteed by many of the operating subsidiaries.
Some of those guarantees are secured, some are
not secured. The assets I think one point that's
important to note – the assets currently of the
holding companies at this point is really limited
to the equity value in the subsidiaries, of which
at this point it looks like it's unclear if there
will be any equity value in any of the subsidiaries.
I think that will depend on how each of those
operating subsidiaries is wound down and whether
there is and can be any equity value remaining.
There is some cash on hand which will be principally
used to fund this case. And most notably, there
are what we believe to be a series of litigation
claims arising out of the notion that this was
a fully operating business when acquired and
less than two years later. It is an intolerant
business of the intolerant operating companies,
where we believe that significant portions of
the value of this enterprise have ultimately
been transferred out to other parts of First
Brands and other places. So we believe that there
are viable litigation claims here that the holdings
– the holding entities have. for the benefit
of the creditors of those entities and would
like to preserve the value of those claims for
the benefit of those creditors. We had been –
we have been in discussions. One thing that's
important to note is – and the reason we don't
have a cash collateral emotion before you, Your
Honor, today is that while the lenders do have
security interests in certain assets, They do
not have security interest in the cash on hand
at the data, so there is no – we've been working
with them and coordinating with them as to our
cash spend, given the limited amount of cash
that's available, but there is no – this is not
their cash collateral, nor are we seeking – therefore,
we don't need to seek use of cash collateral.
So we have been in discussions with the lenders
about the best course of action here, discussing
the notion of the creation of a litigation trust
for the benefit of creditors to pursue these
causes of action at some point in the future.
I think it's important to note, and as you can
see from our cash balance on hand, we do not
intend or expect to litigate any of these claims
before your honor. during this bankruptcy proceeding.
This proceeding will all be about, in the very
near future, we intend to file a planned disclosure
statement and a litigation trust document that
we will be negotiating with our major creditors
that would preserve the value of all these claims
for subsequent prosecution by the beneficiaries
of that trust. The – it probably – Just spend
a moment on – a little bit on the lending facility
and then some of our other creditors and the
reason that we are in this proceeding at this
time. So Mr. Jensen represents the agent and
one of the lenders in the facility. As I said,
initially, this facility was put in place as
acquisition financing. But during a time period
when the debtors were looking to determine whether
there were viable sales of the various lines
of business, including the Eltonon business,
as we understand it, and some of this pre -proceeded
– certainly preceded Flipper Chancellor involvement,
but also some of it preceded Mr. Donat's involvement
as well. But there was a process that was teed
up. through the first -brand debtors professionals
to seek to sell the various businesses. And while
the Eltonon business was cash strapped, there
was various accommodations and extensions of
credit and forbearances entered into by the lenders.
As part of that process, the DIP lenders, in
the main case, funded through a first -brand
affiliate. a portion of funds that were made
available to the Altanon entities. Without getting
into all the detail, I think it's set forth in
our first affidavit, and probably Mr. Jensen
can speak more to the details better than I can.
But the end result was that this first brand
affiliated entity effectively – which is – reflects
the advances of The DIP lenders that are first
-brand affiliated entity holds currently approximately
75 percent of the existing lending facility,
and the DEVA Santander entity owns the remaining
25 percent. And again, Mr. Jensen, if I've said
anything incorrect, you can clarify or correct.
The – in addition to that facility, there are
certain trade creditor and service providers
at the holding company. Substantially all of
those service providers and contract counterparties
were for the benefit of our operating companies.
Under – in the past several weeks, as cash was
dwindling and operations at the – at our OPCOs
was winding down, we started to receive significant
demands. on various contracts by various – or
contract counterproviders, service providers.
In addition to – and one of perhaps the most
significant claimants at the hotel is LumaLeds
itself. They were – given how recent this transaction
was, LumaLeds was still providing transition
services to Oman. They were asserting significant
amounts due. And as part of an ongoing discussion
with them on very short notice. They took action
in the Netherlands to freeze one of our significant
bank accounts. And once we became aware of that,
we – while we were in the process of preparing
for this Chapter 11, we expedited our timeline
to file, and we found ourselves in bankruptcy
as of the end of last week. As I noted before,
we have not yet – and hope and expectation have
been that perhaps we would have even more streamlined
the case and would have filed the plan disclosure
statement and litigation trust vehicle in advance.
But unfortunately, we weren't able to do that.
We wanted to get this case in, take advantage
– get the advantage of the global automatic stay,
prevent further actions like this from occurring
all over the world. any of our assets or cash
that's sitting at various accounts, but we will
– we intend in the coming weeks, as I said, to
file a plan of organization disclosure statement
and litigation trust agreement with the cooperation
of the lender group. I think maybe I would pause
there. I probably forgot something, but I think
that you get the gist of what we have here. There's
obviously more detail in the first day declaration,
but I'm happy to answer any questions that Your
Honor may have before I move for admission of
the zone ask declaration into evidence. I have
no questions. Let me just see if anyone wishes
to. Make any brief opening remark before we launch
into the evidence a purchase of a sub -participation
in the existing debt that was held by Debit Capital,
the end result of which there is a 75 -25 split
between the inter -company lender, KTRI, and
Debit Capital, the whole super -senior incremental
facility that was provided in late fall, as well
as the original acquisition debt that was remaining.
I'll just speak very briefly, Your Honor, at
the outset before we get into the motions that
my clients are supportive of the relief requested
today and the broader goal of this Chapter 11
proceeding to provide a forum to preserve these
litigation claims which are likely the most significant
asset remaining for these businesses and the
source of any recovery for creditors. Thank you.
Anyone else? Yeah, just briefly, Judge, and Jason
Ruff, the U .S. trustee, as was alluded to earlier,
we did get a chance to review all the motions
that the betters filed today and were able to
work through our comments. So you probably won't
be hearing much from me. And I need to confirm
that, you know, from my perspective, I think
we're all set as far and don't have any opposition
to any of the relief that's being sought today.
So. Unless Your Honor has any questions, I'll
remain quiet probably for the rest of the hearing.
Okay. Thank you very much, Mr. Reffman. Anyone
else? Let me just check. Okay. Let's get into
the evidence. Well, actually, Your Honor, one
more point. As I was sitting here waiting, I
realized I forgot to mention, and this is just,
I guess, an FYI. The one motion that we had discussed
with Mr. Ruff. And I had mentioned to you that
at this point, a handful of the operating subsidiaries
have commenced insolvency proceedings around
the world. In order to commence those insolvency
proceedings, it requires the sign -off of the
100 percent shareholder, which is this open -on
-motion holding entity. We had initially prepared
a motion which would have – I said – I would
have characterize essentially a comfort order
that we have the authority in the ordinary course
of business to enter into, to sign off on those
filings on a go -forward basis. Mr. Roth had
an objection to that relief, didn't think it
was necessary, he can speak for himself. I think
we agree, frankly, that this is ordinary course.
to be able to sign off as a 100 percent shareholder
of ordinary course corporate governance action
of the holding company. I know – I mentioned
it for two reasons. One, that that's still an
issue that's ongoing where – while the decision
to file, whether to file or not to file, are
being made by the operating companies, their
boards, and their advisors. They do require,
as a technical matter, a sign -off from the shareholder,
and we intend to continue to provide those sign
-offs. But to the extent there is an issue at
any point, we may well come back to your honor
on an expedited basis to seek authority to the
extent we think we need it. We don't think we
need it, but I want to just flag that for you
as a placeholder. Understood. Thank you for the
update. So at this point, I'd like to move into
evidence Mr. Donath's declaration in place of
his direct testimony. The declaration goes through
some of the background information, as I just
described, but also provides the evidentiary
support for each of the first emotions that my
colleague Madeline Nicolini will take the court
to. And again, Mr. Donath is available for cross
-examination, if anyone. Any questions on any
part of the declaration the objection to the
admission of the doughnut declaration for purposes
of today's hearing? Okay, it's admitted and Okay,
your honor. I'm gonna shift my feet otherwise
you know see the podium to my colleague Madeline
McElheny We're sitting in the conference room,
and she'll take it from here. Thank you all righty.
Thank you, and let me steal something there.
I just Council once you make an appearance. I'm
gonna I'm going to move your agenda around just
a little bit. Just go ahead and state your name
for the record. Good afternoon, Your Honor. Madeleine
Nicolini. It's with the chance of both counsels
as better. OK, good afternoon. I wanted to just
get comfortable with where we were and to, before
I signed, join admin, that I kind of understood
the relationship and everything. I get the declaration
into evidence. So I'm comfortable with where
we are. sign While we're talking join admin I'm
going to designate this as a complex chapter
11 case, and I'm going to approve the ex parte
application for for corals, so I'm going to Take
care of one two and three on your agenda while
we're while we're talking here I'm comfortable
with with where we are and then I know what kind
of that they need to be separate and so I'll
let you pick whichever one you want After that
one, but I'll take care of one two and three
now Thank you, your honor appreciate it. I appreciate
the fact that you have just under joint admin
with joint administration motion We do just want
to clarify on the record that the betters are
not seeking to jointly administer these chapter
11 cases With the larger first branch chapter
11 cases which are being jointly ministers before
the court as well given the significant interest
in the first -place group cases and the number
of parties involved, we just wanted to clear
that point to avoid any confusion and confirm
that these cases are proceeding separately. So
we just wanted to take that on the record quickly,
and thank you for answering those orders. All
right. So the first now item on the agenda is
agenda item number four, which is the debtor's
request. for authority to file a consolidated
creditor matrix motion and consolidated list
of the debtor's 30 largest creditors, as well
as to collect personal information of individuals
identified in the debtor's filing, as well as
to seek approval of the form and manner – a form
and manner of notice of no -sign creditors of
the commencement of these Chapter 11 cases. The
authority to file a consolidated creditor matrix
and consolidated list of the 30 largest unsecured
creditors – complicated by the complex case procedures,
alleviate the debtors of the administrative burden
of compiling separate creditor lists for each
of the debtors, limit the associated costs where
the debtors have limited cash on hand, and reduce
the possibility of duplicative services. Accordingly,
the debtors request authority to file a consolidated
creditor matrix and consolidated lists of 30
largest creditors for all of the debtors here.
further request the permission to retract potentially
identi – personally identifiable information
of individuals included in the betters' filings.
This relief is particularly important here where
the betters operate in the European Union and
other countries where applicable law imposes
significant constraints on the disclosure of
information relating to identified individuals
and potentially significant fines for violation
of those authorities. Finally, the betters seek
approval of the form and matter. of the notice
of commencement through Friday to creditors,
which is attached as a divot A to the motion.
Unless, Your Honor, there's any questions, we
respectfully request that the order filed at
docket number 6 -1 be entered. Motion granted.
Thank you. And so the next item on the agenda
is item number 5, which the betters request for
entry of an order enforcing the automatic state
protections under the Bankruptcy Code, which
is filed as Act at Number 7. The debtors are
based in the Netherlands. Accordingly, many of
their creditors and other parties' interests
are located in the Netherlands and other jurisdictions
outside of the United States. While the debtors
do believe that many of their creditors and other
parties' interests are subject to the automatic
stay, many do not have U .S. operations, and
we anticipate that not all parties in interest
will be familiar with the global reach and the
self -executing nature of the automatic stay.
Through this motion and proposed orders, the
debtors are not seeking to bridge or enlarge
or otherwise modify the rights of any parties
with respect to the automatic stay. As is typical
in cases involving foreign debtors and foreign
creditors and counterparties, we are seeking
entry of an order simply confirming and reinforcing
the protections of the automatic stay, particularly
here where the debtors' creditors have already
taken actions against the debtors' property outside
of the United States. After an order of the bankruptcy
court reinforcing the protections of the automatic
stay, debtors are concerned that parties may
attempt to take improper action against the debtors
and or the property of their state. Therefore,
we're seeking entry of an order. to ensure that
all parties in interest are aware of these provisions
of the U .S. Bank of the Code, and the debtors
believe that the motions as drafted appropriately
lay out these key provisions. We did share the
motion and the proposed order with the United
States Trustee, who did not have any objections
to the motion or the relief requested here. So
accordingly, we respectfully request the order
filed with Docket Number 7 -1 be entered. Does
anyone wish to be heard in connection with this
motion? Okay, the motion is granted. I think
it makes perfect sense in a case like this to
Grant such relief requested on and it's really
just restating the code And the provisions there,
so it makes perfect sense to me. I'll grant the
motion Thank you, your honor So the next time
maybe on the agenda is item number six which
is the betters motion for entry of an order authorizing
the betters a Pre -petition obligations to certain
critical service providers which is filed as
Docket Number 8. By this motion, the debtors
are seeking permission to pay certain prepedition
amounts owed by the debtors to critical service
providers in an amount not to exceed $15 ,000.
Debtors Liberty One and Liberty Two engage the
services of a Netherlands -based corporate and
financial service provider that performs certain
financial reporting services for those debtor
entities, as well as a Netherlands -based tax
law firm that provides corporate tax filing support.
These providers are critical to ensuring that
it's remained in good standing and in compliance
with the applicable statutory, regulatory, and
governance requirements under Dutch law. And
absent the engagement of these professionals,
there is a risk debtors could fall out of compliance
with applicable legal and regulatory requirements.
This would result in special penalties to the
debtors and claims against the estate, which
would not be in the interest of their stakeholders,
particularly where the precondition amounts be
paid is very limited. As I say at the outset
of this hearing, the debtors and their advisors
are failing new situations, and we're continuing
to get our arms around the information. We've
limited the relief that we've requested today
to what we felt was absolutely necessary at the
time of filing based on the information that
we had and what was strictly needed for the debtors
to get through the first 21 days or so of these
cases. We're continuing to review our books and
records as well as to engage in communications
with our contract counterparties. Based on that,
there is the possibility that we may identify
additional providers outside of these two that
are specifically identified in the motion. And
we may seek court authority to make certain preposition
payments on account of those critical providers.
We expect that those amounts be similarly very
limited, but we just want to flag that for the
court as well. And so unless your Honor has any
questions, we respectfully request that the order
filed as Docket Number 8 .1 – 8 -1 be answered
here. I wish to be heard in connection with this
motion Okay, the motion's granted Thank you your
honor So the next item on the agenda is item
number seven which is the better is motion for
an order or extending the time to file schedules
of assets and liabilities as same as the financial
affairs as well as waiving the requirement or
on the alternative extending the time to file
will 2020 reports As described in the motion,
since the independent director has been appointed
late last year and early this year with respect
to both entities, we've endeavored to understand
the assets and liabilities of the debtors as
well as the operations of the debtors – of the
non -debtors subsidiaries. While the debtors
are holding companies with no employees and no
operations, the ability to access the information
necessary to file – to compile the statements
about the liabilities and the statements of financial
affairs has been somewhat complicated by the
actions of prior management and the current status
of sort of the Otonom business, including limited
people remaining within the operations that are
familiar with legacy systems and historical transactions.
While Penao, whose best advisor, financial advisor,
has worked constructively with remaining personnel
at the businesses, as well as Alvarez and Macel,
who is a financial advisor in the larger First
Branch Chapter 11 cases, given the amount of
work in compiling and completing schedules and
statements, as well as the competing demands
on the debtor's limited number of people in the
Old Sinan business, the debtors may not be able
to complete the schedules and statements properly
and accurately within the required timeframe.
Accordingly, the debtors are requesting an extension
of the deadline by which the debtors will file
the schedules of assets, liabilities, and statements
of financial affairs through and including May
10th, 2026, which is 45 days to the petition
date. without prejudice of the ability to request
further extension. The U .S. trustee has reviewed
the motion prior to the filing and did not have
any objections before he had requested extension
of the time to file with schedules and statements.
Through the motion, the debtors are also seeking
a waiver of the requirement to bankruptcy rule
of 2015 .3. And while the U .S. trustee did not
have an objection to the extension of the deadline
to file the statements and schedules, He did
have an objection to the requested waiver to
file – the requested waiver of the requirement
to file the report set forth in Rule 215 .3.
And with full respect to the position of the
United States trustee, the debtors do submit
that the posture here is somewhat unique and
a waiver is justified under the circumstances.
As we said at the outset, the debtors are – the
debtors are affiliates of the debtors in the
larger first branch groups, but we are not seeking
the happiest cases jointly administered. And
because the debtors are affiliates of the debtors
in the larger first branch group, as part of
the periodic report regarding value, operations,
and profitability of entities in which the debtors
have stapled a substantial controlling interest,
which is filed as document number 1389 in the
larger first branch case. In order to comply
with the requirements of Rule 2015 .3, the debtors
in the first branch through Chapter 11 cases
did include in that periodic report each of the
debtors, as well as each of the 20 non -debtor
operating companies that Old Sun Motion holding
is the parent company of. Thus, any 2015 report
that is filed in these Chapter 11 cases would
contain substantially identical information.
to the disclosures that were already made in
the larger First Branch Group's filing would
be of limited utility to parties and interests
and would result in unnecessary duplication of
effort and expense. Further, the best source
of information for the 2015 reports in these
Chapter 11 cases would have been the First Branch
Group's entities, given the further dissipation
of personnel from the Oman business, the limited
available records, and that many of the entities
that would be included in these reports are in
local R or writing in solvency proceedings or
preparing to be in proceedings themselves. And
so it's unlikely that the debtors here would
be able to provide more accurate or comprehensive
information beyond what has already been provided.
And while the debtors submit that a waiver is
justified under these unique circumstances, the
debtors do understand the importance of notifying
parties in interest of the disclosures that have
been made in the larger first grant through Chapter
11 cases. And thus, to provide that notice, the
debtors were supposed to publish on the website
maintained by Coral, our claims and noticing
agent, a link to the periodic report that was
filed in the larger chapter – excuse me – larger
force branch, Chapter 11 case, and as well file
a notice on the docket providing parties an interest
with a link to that filing, as well as the information
necessary to access it. Based on these circumstances,
the debtors submit that granting the requested
waiver Coupled with the notice through coal appropriately
balances the objectives of rules 2015 with the
practical realities of these cases and serves
the interests of betters of states and their
predators. In the alternative, if Your Honour's
not prepared to grant a waiver, we would request
the same extension of the deadline to file through
May 10th, 2026. Okay. Does anyone wish to be
heard in connection with this case, with this
matter? Your Honor, just briefly, I actually
thought we had resolved this. What the Council
just went over there as far as an alternative,
I was actually perfectly fine with. I think given
the facts and circumstances here, I think what
was expressed to me is that it would be very
difficult for them to, this team, to be able
to perform the work necessary to independently
verify what had already been done in the first
branch matters. And there's very limited resources
in this state. So given the very specific facts
and circumstances of these cases, I thought what
better, what council proposed was satisfactory
and probably provided the same amount of information.
Otherwise, I think they would have been left
with the choice of just listing it and then maybe
noting it in the global notes anyway that. They're
relying on someone else's work. So I think what
council's proposing to do as far as just making
the information easily accessible to predators
and other parties and interests in this case
actually makes sense. Yeah, I thought that made
a lot of sense, too. And I do like putting it
on the website, just linking it. So if someone
wanted to see it, that just made a lot of sense
to me. And I mr. Ruff is probably right. This
is this may be the only case in which I preside
over during my tenure here in which I'll grant
a waiver on the first day, but this one just
makes a lot of sense and understanding It's just
a really really unique fact set I think I'm going
to grant the relief Requested here in the motion
just ask that you put kind of whatever reports
are They are in the first branch case just kind
of a link them up so that someone wanted to see
them they could see them here Thank you honor
will do that so one question for you can is the
Order that you'd be asking me to sign Does do
I need to sign something different or can can
we can I just sign the proposed order and and?
I'm more than high I don't need to order you
to put it on the website But as long as it it
doesn't conflict with anything that we're doing
now. I think I'm fine signing the order So the
order provides for a waiver it does not explicitly
go into the sort of proposed noticing through
poll We're happy to upload or provide form of
order before we prefer or otherwise Yeah, let's
just let's just like it's on the record. I'll
sign the order we all know what I'm we all know
what I'm doing we can just Just get it as long
as that that link is there that I'm I'm considering
it's satisfied Okay, thank you And so the next
and final item on the agenda is number eight
Which is the betters motion for continued use
of the betters cash management system, which
is filed as document pretend Through this motion,
the debtors are requesting authority to continue
their existing cash management system in the
ordinary court, including maintaining existing
bank accounts, engaging the services of non -debtor
affiliates in the ordinary court, paying certain
precision obligations, and an extension of time
to comply with Section 345B of the Bankruptcy
Code. Before the commencement of these cases,
the debtors operated as part of a cash pooling
system where monies were swept up from to ultron
motion holding and pay down to the ultron – the
non -debtor subsidiaries that make up the ultron
business to fund the operating cost of those
entities. But the debtor's understanding is that
the cash flowing system has largely been shut
down at the beginning of this year. Today, in
the ordinary course of business, the debtors
utilize an integrated cash management system
that enables the debtor to monitor the collection
and dispersion of flows as appropriate and maintain
control of the administration of their bank accounts.
As set forth in the motion, the debtors maintain
22 bank accounts across five banks. The majority
of the debtor's cash is held in the debtor's
primary operating account and has been used to
make vendor disbursements as well as advance
funds to other operating entities. Fifteen of
the debtor's accounts are currently located at
non -authorized depositories. We discussed this
with the United States Trustee and understand
that the Office of the United States Trustee
does not object to a 45 -day extension for the
debtors to come into compliance with the requirements
of Section 345B of the Bankruptcy Code without
prejudice to seek further extension. Through
this motion, the debtors are also seeking permission
to, in their discretion, continue a relationship
with a non -debtor affiliate called GOC Automated
Malaysia, which provides certain back office
and finance support to the debtors at a cost
of about $5 ,000 per month. The debtors submit
that maintaining such service and relationships
is critical for the debtors' transition to the
Chapter 11 cases and to preserving these safe
assets for the benefit of its creditors, as this
back office service provides much of the finance
support that goes into preparing – sort of reporting
and as well as facilitating the payments necessary
for the debtors to continue their operations.
The debtors are also seeking authority to establish
professional fee escrow accounts and related
professional fee procedures. The debtors have
designated one of their bank accounts at J .C.
Morgan Chase as a segregated account to hold
budgeted professional expenses in these Chapter
11 cases, as well as fees the fires to be paid
to the clerk of the port and the United States
trustee. Through this motion, the debtors are
seeking authorization to fund that account on
a weekly basis each Friday pursuant to the budget,
which is attached as exhibit D to the tax manager's
motion, which is also included as exhibit number
6 on a witness and exhibit list. The budget in
this case is very thin and cash is very limited.
As disclosed in the cash management motion, the
debtors only have about $3 .4 million of cash
on hand, and as of today, a portion of that fits
in a blocked account. And the budget for these
debtor professionals is therefore very modest.
While the professional -free escrow account is
not intended to be function as a cap, unallowed
professional fees or expenses, it is meant to
provide professionals in these cases with a limited
and reasonable protection under the circumstances.
We've shared the cash management motion and proposed
order with the United States trustee, but the
minor comments to the proposed order that we've
implemented in the versions filed on the docket
at 10 .1 and 10 .2. We further provided the –
all the United States trustee with some information
reflected in respect to the bettered bank account.
And so unless your honor has any questions, we
respectfully submit that the court enter the
interim cash management order filed at docket
number 10 .10 -1. Everything makes sense to me.
I'm going to grant interim approval of the cash
management Motion this is just to allow the debtor
to ease into the chapter 11 process and I think
what we need to When do you want to come back
for a final hearing? So we think that the week
of April 27th subject to your honor of availability
would work for a secondary hearing Let me ask
are you planning on filing anything else that
week to kind of go in or The reason I'm asking
is it's gonna have to be a virtual only hearing
I'm gonna be out of town. I can get you in But
I We can just do it Let's see You think we could
do And obviously if there's no objection to any
of this on a final basis, why don't we do this
if there's no object just follow cno, but Why
don't we do April 27th at? 3 p .m.. Central and
Then we'll do the objection deadline Why don't
we just give folks as much time as possible give
them April 22nd? And then if there's no objections
just file a cno We'll take care of that Thank
you your honor hold on a second me fill this
in so I don't forget It is going to be a virtual
only hearing I'm gonna put April 22nd at 4 p
.m. Central. That's the objection deadline. Okay.
That is going to be signed and it'll hit the
docket today. Is there anything else we need
to take care of today? nothing further from us
today. Thank you again for your honour and your
chambers for accommodating us. Alright folks,
thank you very much. Have a good afternoon. Thank
you. Thank you.