Yeah, you're right.
Have you got your own?
I have a plan.
Yeah.
It's supposed to be yesterday.
And we're trying really hard to get it in there.
No luck.
It's full.
Yeah.
All right.
Good morning, everyone.
Thank you.
I'm Mark.
I'm from Landisrath and Cobb on behalf of FTX Trading Limited and its
affiliated debtors.
Your honor, we're here today with two agendas.
I don't know if the Latin for that is agendum, but we're here with two agendas.
One in the FTX Trading Limited case and one in the FTX Digital Markets case.
Nothing is contested, your honor.
On either agenda.
two-fifth of a
We have a
FTP
FTX Trading agenda and we've spoken with counsel to the joint
prohibition of liquidators.
We thought we would go forward with the FTX Trading Chapter 11 agenda first.
We filed a second amended agenda last night,
noting that the committee had filed certifications of
certificates of counsel with respect to the professional
attorney. I note that I think as we were standing here this morning, your
honor, has signed the orders.
Yes.
They've done it.
For FTI and Jeffries.
So they really made, unless your honor has questions, we'd just like anything on the
agenda.
We believe we can move right to item number six, which is the court's ruling with
respect to the United States trustees motion to appoint an examiner.
Okay.
So we can go ahead.
All right.
So this is the ruling on the motion to appoint an examiner.
The United States trustee moved for the appointment of an examiner in these
cases pursuant to section 1104 C1 and C2 of the bankruptcy code.
Section 1104 provides that if a Chapter 11 trustee is not appointed in a case,
that at any time prior to confirmation of a plan, quote,
on request of a party in interest or the United States trustee,
and after notice in a hearing,
the court shall appoint an examiner to conduct such an investigation of the
debtor as is appropriate, including an investigation of allegations of fraud,
dishonesty, incompetence, misconduct, mismanagement,
or irregularity in the management of the debtor,
if one, such appointment is in the interest of the creditors and any equity
security holders and interests and other interests of the estate,
or two, the debtor's fixed liquidated unsecured debts,
other than debts for goods, services,
or taxes or owing to an insider exceed $5 million.
The trustee joined by several state regulatory authorities argues that
because there are allegations of massive fraud alleged against the debtors,
pre-petition management,
the appointment of an examiner in is in the best interest of the creditors,
creditors, and other interest holders under 1104C1.
The trustee also argues that even if I conclude the requirements of 1104C1 have
not been met,
I am required to appoint an examiner under 1104C2 because three of the
debtors meet the debt threshold,
or the debtors do not, for the purposes of this motion,
contest the debt limit with regard to the remaining debtors.
The debtors, the committee of general unsecured creditors,
and the joint provisional liquidators of FTX Digital Markets Limited,
appointed in the provisional liquidation proceeding pending in the Bahamas,
object to the appointment of an examiner,
arguing that given the investigations being conducted by the debtors and the
committee as well as various federal law enforcement and regulatory agencies,
there is no need to appoint an examiner to conduct yet another costly
investigation that would slow the progress of these cases.
Moreover, the objectors argue that contrary to the trustee's position,
appointment of an examiner is not mandatory under 1104C2,
even if the debt threshold is met.
For the reasons I will explain, I agree with the objectors and will deny the
motion to appoint an examiner.
These cases have been described as unique, unusual, highly complex,
and unprecedented, and just a few of the adjectives applied to them,
and they have certainly lived up to that billing.
A multi-billion dollar company built over the course of just a few years,
a spectacular crash with billions worth of assets missing,
allegations of gross mismanagement and massive fraud leading to criminal
indictments and investigations by numerous federal agencies.
Behind that backdrop sit the creditors and the customers of the debtors,
individuals and entities that trusted the management of the company with their
relatively new type of asset, cryptocurrency,
as well as those who did business with the debtors on a day-to-day basis.
This case is about making sure that those parties get back as much value as
possible from the debtors' estates.
That process began immediately prior to the filing of these cases with the
appointment of Mr. Ray as the new CEO of the debtors.
Although appointed by the previous CEO, Mr. Benjamin Fried,
who is currently under federal indictment,
there is no question that Mr. Ray is completely independent of prior
management and the companies he was appointed to lead.
Mr. Ray is the consummate professional,
highly qualified with decades of experience in taking control of companies
in dire financial condition.
Mr. Ray in turn appointed four independent directors to three silos of
debtor entities to assist him in determining what happened,
how to sort out the financial condition of the debtors,
and how to return as much value as possible to creditors and customers.
Each of the four directors are also highly qualified professionals with no
prior connection with the debtors or the debtors' prior management.
Mr. Ray also ensured that all prior senior management of the debtors were
removed, two of whom have been indicted and pled guilty to various crimes
involving the management of the debtors.
Although some prior officers of the debtors remain in place,
there is no indication they were involved in any wrongdoing,
and according to Mr. Ray, all have been stripped of any decision-making authority.
Mr. Ray has also retained a group of highly qualified experts to assist the
sorting through the debtors' poorly maintained records.
In many instances, records don't exist at all because the record-keeping was
neglected by prior management.
Mr. Ray testified that those experts, among other things,
are accessing the debtors' extremely vulnerable electronic information
containing cryptoassets that have already suffered hacking incidents both
during and post-petition before controls could be restored.
Those hacks resulted in the possible loss of hundreds of millions,
if not billions, of dollars worth of cryptoassets.
He further testified that he has been informed by those experts that giving
additional persons access to the data creates the risk of further inadvertent
disclosure or hacking of information that could lead to additional losses.
Indeed, even committee counsel indicated that while they are working closely
with the debtors in conducting investigations into what happened,
the committee is not requesting direct access to the debtors' data due to those risks.
There's no question that an examiner or a Chapter 11 trustee, for that matter,
appointed pursuant to Section 1104, would have the same attributes as Mr. Ray
and the independent directors.
That person would be independent with no connection to the debtors or the
debtors' prior management.
That person would need to be qualified and would need to be as qualified and as
experienced as Mr. Ray, and that person would retain qualified and experienced
professionals to assist with the investigation.
There's no question that if an examiner was appointed here, the cost of the
examination, given the scope suggested by the trustee at the hearing,
would be in the tens of millions of dollars and would likely exceed $100 million.
Contrary to the suggestion of the trustee, the debtors in the committee could not
merely sit idly by while the months-long investigation unfolded, leading to
exponential costs to the estate, which would have to be borne by the creditors.
While the debtors may ultimately have billions of dollars' worth of assets to
distribute, creditors will likely not come close to recovering the full amount of
their losses, and it may take some time to recover anything as the debtors in the
committee work to claw back as much of the assets as possible.
Given the facts and circumstances of this highly unique case, I have no doubt that
the appointment of an examiner would not be in the best interest of the creditors.
There are already multiple investigations underway by incredibly competent and
independent parties. Requiring creditors to bear the burden of yet another
investigation does not comport with the requirements of Section 1104C1 or the
general scheme of the bankruptcy code, that is, to maximize recovery to creditors.
It is important to keep in mind that while we talk about the cost of an
investigation being borne by the debtors, we are actually talking about the cost
being borne by the creditors. Every dollar spent in these cases on
administrative expenses is a dollar less to the creditors. Therefore, I will deny
the request to appoint an examiner under 1104C1.
I should have brought some water with me.
The trustee argues, however, that even if I conclude that the appointment of an
examiner is not in the best interest of the creditors, I am still obligated to
appoint one as mandated by Section 1104C2 because the debtors met the burden, met
the debt threshold, or at least did not contest that they do for purposes of this
motion. Even the trustee concedes, however, that a bankruptcy court has some
discretion in determining whether or not an examiner must be appointed under 1104C2.
For example, for a motion to appoint an examiner as being used by a creditor to
obtain an advantage in plan negotiations. In other words, the trustee agrees there
are times when the appointment of an examiner would not be appropriate under 1104C2.
To be sure, there is a split of authority over whether 1104C2 leaves any discretion
on the appointment of an examiner. Courts that hold there is no discretion
concentrate on the language in 1104 that states, quote, the court shall appoint an
examiner with emphasis on shall, if the debtor meets the debt requirements of
Section C2. Those courts either ignore the additional language of 1104 that
states, quote, to conduct such an investigation of the debtors as is
appropriate, close quote, or conclude that the language only means the court can
direct the scope and nature of an examination after an examiner is
appointed. For example, see In re revco, 898F2nd, 498 at 501, Sixth Circuit, 1990.
Court held appointment is mandatory, but, quote, the bankruptcy court retains broad
discretion to direct the examiner's investigation, including its nature,
extent, and duration, close quote. The Sixth Circuit is the only circuit court of
appeals to consider the issue. Other courts have concluded that the as
appropriate language in 1104C permits a bankruptcy court to deny the
appointment of an examiner in limited circumstances, even if the debtor meets
the debt requirements of C2. In, and examples are In re residential capital,
LLC, 474, Bankruptcy Reporter 112, 117, Bankruptcy SDNY, 2012, In re Dewey and
LeMouffe, 478, BR, 627, 629, Bankruptcy SDNY, 2012, In re shelter resources,
35, BR, 304, thank you very much, 304, 305, Bankruptcy Northern District of
Ohio, 1983, In re Gilman services, 46, BR, 322, 327, Bankruptcy,
District of Massachusetts, 1985, In re Erickson retirement communities, LLC,
425, BR, 309, at 312, Bankruptcy Northern District of Texas, 2010, In re GHR
companies, Inc, 43, BR, 165, 170, Bankruptcy, District of Massachusetts, 1984,
Indeed every bankruptcy judge in this district to consider the issue has
concluded that there is discretion. See In re SA Telecom, Inc, case number 97-2395-
2401, Judge Walsh, March 27th, 1998, hearing transcript at 82, In re
expansion, 426, BR, 114, 128, Bankruptcy, District of Delaware, 2010, Judge
Shannon, decision, In re Vistion Corporation, number 09-11786, Judge
Sanchi, decision, from May 12, 2010, hearing transcript at 170, In re
Washington Mutual, Inc, case number 0812229, Judge Walrath, decision,
Bankruptcy, District of Delaware, May 5, 2010, hearing transcript at 97, and
two of my own prior cases, In re Cred, Inc, case number 20-12836, Bankruptcy,
District of Delaware, December 12, 2020, hearing transcript at 95, In re
Mollenkrat, PLC, case number 20-12522, November 22, 2021, hearing transcript
38-46. As Judge Glenn posited the question in
residential capital, quote, If the as is appropriate language provides such
discretion with respect to the nature, extent, and duration of the
investigation, then why doesn't the same language provide discretion to just
say no to an examiner investigation where it may not be justified on the
particular facts and circumstances of the case? 474, BR, 118. As the
trustee pointed out during argument, ultimately Judge Glenn did appoint an
examiner in residential capital because, one, no plan had been confirmed, two,
no trustee had been appointed, three, the debtor had fixed debt succeeding
five million, and four, an investigation was appropriate and an investigation
by the committee had just begun. The first three elements of this analysis
are certainly present here, but while one could argue the fourth is also met
because the debtors and the committee are in the early stages of their
investigations, the facts present here are fundamentally different than in
residential capital.
First, Judge Glenn recognized in residential capital that, quote, Other
than the committee, there is currently no independent party with the ability
and authority to fully investigate and analyze the transactions that issue.
Judge Glenn emphasized the no independent party in that statement. By
contrast, in this case, all the senior managers of the company accused of
wrongdoing had been removed and replaced by extremely competent independent
professionals led by Mr. Ray with the ability and authority to investigate all
claims that might ultimately benefit the creditors in these cases. Moreover,
as indicated before, all remaining employees and officers of the debtors,
all remaining employees and officers of the debtors that have not been accused
of wrongdoing have been, do not possess any decision-making authority. Mr. Ray
has also retained professionals that are fully capable of conducting a
thorough investigation.
Second, as Judge Glenn recognized, an examiner investigation might not be
appropriate when, among other things, the debtor's senior management has been
indicted. 474 PR at 118, footnote 6. Here, of course, senior management has been
indicted. Two have pled guilty and three and a third is scheduled for trial in
October. Finally, the issues to be investigated in residential capital
involved a, quote, complex constellation of pre- and post-bankruptcy transactions
involving billions of dollars in transfers and financing among interested
parties. The debt 115, note 3, emphasis on interested parties. In residential
capital, the allegations were that transfers between the debtors and certain
secured creditors benefited the secured creditors to the detriment of unsecured
creditors. Here, there are no secured creditors. There are only unsecured
creditors. Finally, the issues to be investigated in residential capital, no,
excuse me. Moreover, while the transfers at issue in residential capital were
clearly complex commercial transactions, there was no indication that accessing
the debtor's financial information would create a risk of further harm to the
debtors or their creditors. By contrast, the uncontroverted testimony during the
hearing in this matter established that given the debtor's business and the
vulnerability of the debtor's financial data, permitting additional parties'
access to the financial information would create an increased risk of further
loss through inadvertent disclosures or hacking. Therefore, I conclude that under
the facts and circumstances of these cases, appointment of an examiner is not
needed pursuant to 1104C2, and appointing one would impose an unnecessary burden
on the debtors and ultimately the creditors for whose benefit these cases
are being pursued. Contrary to the trustee's position, this is not inconsistent
with the language of the statute or the legislative history. Congress did not
explain in the language of the statute itself what it meant by the as-is
appropriate limitation. As I previously mentioned, many courts have concluded
that it means a bankruptcy court must always appoint an examiner if the debt
limit has been met but can limit the nature, extent, and duration of any
examination. Others have concluded that if the bankruptcy court can limit the
scope and duration, it must also mean that the court can conclude that no
examination is needed at all under specific facts and circumstances.
Clearly, there is more than one logical conclusion as to the meaning of Section
1104C. The legislative history of 1104C, which at the time of its enactment was
1104B, concluded that, quote, the standards for the appointment of an
examiner are the same as those for the appointment of a trustee. The protection
must be needed and the cost and expense must not be disproportionately high.
H.R. Rep. No. 95-595, 95th Congress, 1st Section, 402, 1977. Thus, the
legislative history supports the conclusion that an examiner shall be
appointed, quote, as appropriate under the particular circumstances of the case,
quote, the protection must be needed. That legislative intent is met in cases
where, even though the debt limit of 1104C2 is met, the evidence establishes
an examiner is not needed under the facts and circumstances of a particular case.
Therefore, I will sustain the objections and deny the motion to appoint an
examiner. The parties should meet and confer and submit a form of order under
certification of counsel. Any questions? Next up.
Thank you, Your Honor. I just wanted to go back very briefly to the Second
Amendment agenda. There's an Item 5 that was the Committee's motion for
permission to file a response to the United States Trustee's objection. I
believe that matter is mooted out and the Committee is not pressing it, but I
didn't, for housekeeping purposes, want to just let that hang out on the agenda.
So you can probably hear from the Committee on that.
Does seem moot.
Your Honor, Matthew from the Conaway. I believe it's just the motion for
permission to file the reply, Your Honor. It's simply procedural. I believe the
U.S. Trustee had an objection to it, so House could be able to approve the
form of order if it's acceptable.
All right. We'll go ahead and just enter the order.
Thank you. I just wanted to make sure that that loose end is tied up, and with
that, we can pass the podium over to counsel to the Joint Provisional
Liquidators.
Good morning, Your Honor. Chris Shore from White and Case on behalf of the
Joint Provisional Liquidators in the Chapter 15 case now. We're here today
seeking recognition of the pending Bahamian liquidation as a foreign main
proceeding and granting related relief. Tending in the courtroom today are Brian
Sims and Peter Greaves, two of the JPLs. The third, Kevin Cambridge, unfortunately
was unavailable to come today because he's ill with COVID. As for today's
agenda, we're happy to report that there are no pending objections to our
request for recognition. So if it's okay with the Court, I'd like to proceed as
follows. First, I'd like to move in the evidence into the record and request
that the Court enter the proposed form of order, which we filed on Monday at
Docket 125. Then I'd like to give the Court a 15-minute status update, not in
the way of evidence, but just to give Your Honor a sense of what the JPLs have
been doing and give you kind of a six-month look forward so you know what's
going to be happening in the case. And the good news is I don't perceive that
we're going to be doing a lot in the 15 over that time, but maybe at the end we
can set a further status conference just to let you know what's happening in that
proceeding. And of course, at any time if Your Honor has questions, I'm happy to
answer them or have others assist in the answer. As for the evidence, the
verified petition is filed at Docket Number 1 of the Chapter 15. We have three
declarations that we'd like to submit into evidence in support of the
application. Those are the two declarations of Mr. Sims and the
declaration of Sophia Roll Cap in support of the petition at Dockets 2, 5,
and 8. Mr. Sims is here should you have any questions for him. Ms. Roll Cap had
to be in the Bahamas yesterday at the recognition of the debtors Chapter 11
cases in the Bahamian proceedings, but she is available via Zoom should the
Court have any questions about the intricacies of Bahamian liquidation law.
But I'd like to offer their declarations into evidence as Exhibits 1 to 4 on the
exhibit list we distributed to the parties in interest in the Court, and also
move into evidence Exhibit 5, which is an order from the Supreme Court of the
Bahamas regarding the JPL's ability to commence the Chapter 15 action.
Okay, anyone have an objection to the introduction of the evidence?
Your Honor, Jim Bromley from Salt and Cromwell on behalf of the Chapter 11
debtors, we do not have an objection to the admission of the evidence with
respect to the recognition proceeding, but there are certain aspects of the
declarations which we believe go beyond the four corners of the Chapter 15
recognition. So as long as it's limited just to Chapter 15 recognition, just to
this hearing, and just to this relief, we have no objection.
All right, fine.
No objection. Okay. Somebody to the limitation, Mr. Bromley.
As for the motion itself, as part of the cooperation agreement that we
entered into with the debtors, we agreed to support their application for
recognition in the Bahamas. They agreed to support our application here, and we
took their comments on the order. We then reached agreement on language with the
DOJ, the U.S. Trustee, and the Committee. So as I said, the form of order which
has been agreed to by the parties is at Docket 125. I do want to note that there
have been a number of informal letters submitted by Mr. Leslie Stewart, the
Hamean citizen. Specifically, he sent a letter that was docketed in the Chapter
11 cases at Docket 357 and some others. We don't believe any of them constitute
an objection to recognition, but wanted to raise this to your Honor's attention.
I did see those letters, and I directed that they be put on the docket just
because they wanted everyone to be able to see what kind of things that I'm
receiving from folks here.
Yes, Your Honor. So unless the Court has any questions, we respectfully request
that the Court enter the amended proposed order, and we move to the status update.
Anybody wish to be heard on the recognition? Satisfied, then. Relief is
appropriate. I will enter the order.
So just wanted to give your Honor a sense of where the JPL is abandoned, and as
I said, give a kind of six-month look forward so you know what's going on. And
I'll focus on, if you think of the debtor's presentation and the silos, FTX
Digital is a subsidiary within the FTX International platform, that
international silo. Now, the first day presentation may have left the Court
with the impression that the FTX Digital estate played an undersized role in the
saga, and I do want to address that, because it is actually, from our
perspective, a big piece of the puzzle that's going to need to get resolved. At
the time of the collapse, Digital employed 84 persons, including 38 who were
transferred over from other FTX debtor entities, including a board and key
management personnel. That company was the headquarters in Nassau, Bahamas. It's
one of 52 properties that the JPLs have identified in the Bahamas, all held in
the name of Chapter 11 debtor, in this case FTX Property Holdings. Amongst those
properties was the DELEX Office Suite, residential complexes and
accommodations for the employees, and a six-acre FTX campus in New Providence,
Bahamas. All of these properties, we seem to think, are worth north of $250
million. They were financed by FTX Digital and are on FTX's Digital's
balance sheet as intercompany receivables. As part of the cooperation
agreement, we've agreed with the debtors that the JPLs will take the lead on
liquidating that real estate in the Bahamas. So there is a big real estate
piece in FTX Digital. There was a motion to dismiss that entity, wasn't there?
I thought it was the Turkish proceeding that did get dismissed. I thought I
remembered seeing another one for one of the Bahamian entities. Yes, Your Honor,
the properties in the Bahamas are actually owned in fee by a U.S. debtor,
and the joint provisional liquidators did file a motion to dismiss that
individual proceeding. That's been resolved. That one has been resolved as
part of the cooperation agreement. We're going to go ahead and market and sell
those assets, and then we're going to have a discussion about where those
assets go at a later date. But... So I need to put something on the docket
to close that out, close that motion out. Okay, we can address that. So of the
84 employees who were living in the Bahamas at the time, there are 16
employees who remain working on a variety of forensic matters and
assisting with ongoing investigations. But moving back in time, as Mr. Bromley
said at that first day hearing, the FTX International platform was primarily a
digital assets trading and exchange platform for not U.S. citizens. To that
end, FTX was created, FTX Digital was created in July 2021 for maintaining,
for the purpose of migrating the business. Remember Mr. Bromley said that
the entity was moving around the country and then offshore. It was all going to
be moving to the Bahamas where this giant real estate conglomeration was and the
headquarters. And that was going to allow FTX Group to take advantage of the
Bahamas' favorable regulatory environment and the newly created DARE Act, which
you've kind of heard about. The question that's going to come up in this case is
what was the status of that movement between the time that digital was created
and FTX and digital filed their respective proceedings? And I'm going to
come back to that migration concept in a bit. But I did want to give your honor a
sense before I get there of how the Bahamian proceeding is going to go along.
The Bahamian proceedings are either voluntary or court supervised. Ours is
court supervised. To that end Mr. Sims, Mr. Greaves, and Mr. Cambridge were
appointed as joint provisional liquidators. The Supreme Court of the
Bahamas has exclusive jurisdiction, right? Your honor has exclusive jurisdiction
over assets worldwide of the debtors. The Supreme Court of the Bahamas is the one
that has exclusive jurisdiction over insolvency proceedings and has broad
authority to make winding up orders for all types of companies. When a company
is being wound up compulsively by the court, the court issues an order which
describes the steps that the liquidators must take to liquidate the company and
the liquidator then as the JPLs here have been filing periodic status updates
with the Bahamian court as to how they're doing on the order laying out their
duties. Once appointed, liquidators generally gather assets, distribute
companies' assets to the creditors on a peri-pesu basis. They have broad
authority to bring and defend lawsuits, file claims, engage in business on behalf
of the debtors. So it's best really to think about the JPLs as Chapter 11
debtors. There are some distinctions, but normally the process runs that way. So
to that end, over the past few months, let's talk about what they've been doing
and then I'll come to what needs to get done. Beginning right from appointment,
the JPLs took steps to identify and gain custody of cash. They've identified
approximately $143 million of cash held by Silvergate and Moonstone, which your
honor may have heard about. We filed requests for provisional relief with
respect to those funds and then as the court knows, the U.S. Department of
Justice seized the funds, but the JPLs are in active discussion with the DOJ
with respect to the release of the funds and hope to have a consensual resolution
on that. The JPLs also established cash management controls to ensure proper
stewardship and security over the estate funds, much like the debtors have been
doing, and the controls include rolling cash flow forecasts, payment approval
controls, anti-money laundering, treasury controls, and all the things that you
would expect a U.S. Chapter 11 trustee to do. There have been significant efforts
and it's part of their requirements to communicate with customers and creditors.
The JPLs launched a general informational website and creditor portal website.
They've also sent letters out to approximately $2.4 million of potential
customers inviting them to register their contact information in order to receive
updates of what's going on. They've also been, much like the U.S. debtors, been in
active communication with regulators in the Bahamas and in the U.S. and
participating in investigations as well. We have been active in the Chapter 11
case. To get to it, we believe we're a very large creditor in these cases. But, you
know, the main goal which we reached early on in the case was the cooperation
agreement which this court has approved and the Bahamian court has approved and
it just gives us a framework from which we're going to try to figure out how the
two proceedings are going to be done. This is where we are just to get a sense of
the current financial picture, not evidence, but just to give your honor a
sense of the size of what we're talking about. As I said, there's about $220 million
in cash, $143 million subject to the DOJ seizure order. There's the $276 million
receivable relating to the property. But so far, the JPLs have traced two major
sources of outflows from their accounts in the lead-up to the case. $5.6 billion
was transferred from FTX digital custodial accounts to a U.S. debtor at FTX
trading. And $2.1 billion was transferred from FTX digital custodial accounts to
Alameda, another Chapter 11 debtor. So to get the proper sense of the size here,
we're talking about $7.7 billion of cash outflows from the Bahamian estate to the
U.S. debtors. And then we have other tangible assets of about $3 million,
mostly relating to office furniture equipment and the fleet of cars that the
employees had in the Bahamas. So that's where we stand right now. Over the next
six months, we've got to deal with the customer migration issue, obviously
determining whether customers were customers of U.S. debtors or digital is
going to be critical to any distribution scheme. We've got to address the issue of
customer trust claims, as has happened in many other crypto cases. There are
unresolved legal and factual issues as to the nature of the customer's deposits,
whether they're held in trust, whether they're general unsecured claims, and
we're going to need to work through that. We've got open trade contracts that
we're going to need to address and see if there can't be a way to restructure the
platform. And then as the debtors are doing here, there's a ton of work being
done into antecedent transactions, not just in a company, but also with respect
to third parties to determine whether those third parties or any of the persons
associated with the transactions need to bring money back into the estate. So as
I said, there's a lot of work that needs to be done. I'm not sure how much of it
is going to need the involvement of the court, but we may be back seeking
additional relief from the court to be able to get all that stuff done. And
unless Your Honor has any questions, I just think we'd probably best to set a
status conference sometime in the May-June timeframe and come back and kind
of tell you where we are on those issues and then give you a look forward again
just so you're not wondering what's happening with your Chapter 15 case.
Okay. I appreciate the update, Mr. Schor. Let's see, we'll find a...why don't we
set a status conference for May 17th at 10 a.m. All right. Thank you very much,
Your Honor. Thank you. Appreciate it. Mr. Spalding? Your Honor, I just would like
to mention a couple things from our perspective. One is we did have a hearing
yesterday in the Bahamas, and the Supreme Court of the Bahamas has agreed to
enter an order that will be consistent with the order that Your Honor will
enter here to allow the two proceedings, sets of proceedings, to be recognized.
The U.S. proceedings being recognized in the Bahamas, the Bahamian proceedings
being recognized here in the United States. I don't know if you're just not
speaking into the microphones or for... I'm sorry. I'm a little rough today.
Yeah, I know the feeling. Which I could say was because I was out drinking last
night, but it wasn't. I wasn't either way. Your Honor, just wanted to point out
there was a hearing yesterday in the Bahamas. The Supreme Court of the Bahamas
has agreed to enter an order to recognize the Chapter 11 proceedings in the
Bahamas so that there will be a coincident recognition in both jurisdictions.
So we'll have a recognition here, a recognition in the Bahamas. And the
cooperation agreement had required that both orders be entered, so they're
mutually dependent on each other. The other thing I'd like to say, Your Honor, I
hadn't been aware that Mr. Schor was going to make any comments about issues,
and one of the things that are coming up. And I do think that it's important that
the Chapter 11 debtors also make a statement here. Many of the points that
Mr. Schor mentioned in terms of things like assets that were in digital market
accounts or the migration of customers and the things of that sort, those are all
open issues. The cooperation agreement is a starting point, but the issues as to
whether assets belong in the Bahamian estate or in the U.S. estate are open
issues. And so the statements that Mr. Schor has made in that regard are
statements that the U.S. debtors reserve all their rights on and frankly disagree
with many of them.
I understand.
Thank you, Your Honor.
Thank you. Anything else? Where do we stand on the examiner? You knew what I
was going to ask, Michel.
Thank you, Your Honor. For the record, Adam Landis from Landis, Bethany, and
Kauffman on behalf of the Chapter 11 debtors. Yes, I saw that question coming,
and I can represent to the Court that the parties have been discussing this
periodically, sometimes more frequently than others, but there are discussions
going back and forth. We've identified a couple of potential fee examiners, and
we're trying to come to ground to have an agreement on this rather than
submit it to the Court for the Court's determination. So we're still working on
that. We hope to have it done soon, and we do appreciate that the Court is not
going to approve any fee applications unless and until a fee examiner is
appointed and has an opportunity to review those applications.
Okay. Thank you. All right. Anything else? It will turn out to be a lot shorter
hearing than I had anticipated. I appreciate everyone's cooperation. I
appreciate the updates, and we are adjourned. Thank you. Thank you, Your Honor.