1 00:02:30,000 --> 00:02:32,000 Yeah, you're right. 2 00:02:32,000 --> 00:02:34,000 Have you got your own? 3 00:02:34,000 --> 00:02:35,000 I have a plan. 4 00:02:35,000 --> 00:02:37,500 Yeah. 5 00:02:37,500 --> 00:02:39,000 It's supposed to be yesterday. 6 00:02:39,000 --> 00:02:45,000 And we're trying really hard to get it in there. 7 00:02:45,000 --> 00:02:46,000 No luck. 8 00:02:46,000 --> 00:02:47,000 No luck. 9 00:02:47,000 --> 00:02:49,000 It's full. 10 00:02:49,000 --> 00:03:01,000 Yeah. 11 00:03:19,000 --> 00:03:42,000 Yeah. 12 00:03:42,000 --> 00:03:55,000 Yeah. 13 00:03:55,000 --> 00:04:23,000 Yeah. 14 00:04:23,000 --> 00:04:50,000 Yeah. 15 00:04:50,000 --> 00:05:15,000 Yeah. 16 00:05:15,000 --> 00:05:22,000 Yeah. 17 00:05:45,000 --> 00:05:48,000 Yeah. 18 00:06:15,000 --> 00:06:18,000 Yeah. 19 00:06:45,000 --> 00:07:10,000 Yeah. 20 00:07:10,000 --> 00:07:29,000 Yeah. 21 00:07:40,000 --> 00:08:05,000 Yeah. 22 00:08:05,000 --> 00:08:33,000 Yeah. 23 00:08:33,000 --> 00:08:55,000 Yeah. 24 00:08:55,000 --> 00:09:17,000 Yeah. 25 00:09:17,000 --> 00:09:32,000 Yeah. 26 00:09:32,000 --> 00:09:54,000 Yeah. 27 00:09:54,000 --> 00:10:09,000 Yeah. 28 00:10:09,000 --> 00:10:24,000 Yeah. 29 00:10:24,000 --> 00:10:49,000 Yeah. 30 00:10:49,000 --> 00:10:50,000 All right. 31 00:10:50,000 --> 00:10:51,000 Good morning, everyone. 32 00:10:51,000 --> 00:10:52,000 Thank you. 33 00:10:52,000 --> 00:10:55,000 I'm Mark. 34 00:10:55,000 --> 00:10:59,000 I'm from Landisrath and Cobb on behalf of FTX Trading Limited and its 35 00:10:59,000 --> 00:11:01,000 affiliated debtors. 36 00:11:01,000 --> 00:11:04,000 Your honor, we're here today with two agendas. 37 00:11:04,000 --> 00:11:08,000 I don't know if the Latin for that is agendum, but we're here with two agendas. 38 00:11:08,000 --> 00:11:12,000 One in the FTX Trading Limited case and one in the FTX Digital Markets case. 39 00:11:12,000 --> 00:11:16,000 Nothing is contested, your honor. 40 00:11:16,000 --> 00:11:19,000 On either agenda. 41 00:11:19,000 --> 00:11:21,000 two-fifth of a 42 00:11:19,000 --> 00:11:22,160 We have a 43 00:11:21,000 --> 00:11:23,000 FTP 44 00:11:23,000 --> 00:11:27,000 FTX Trading agenda and we've spoken with counsel to the joint 45 00:11:27,000 --> 00:11:28,000 prohibition of liquidators. 46 00:11:28,000 --> 00:11:32,000 We thought we would go forward with the FTX Trading Chapter 11 agenda first. 47 00:11:32,000 --> 00:11:35,000 We filed a second amended agenda last night, 48 00:11:35,000 --> 00:11:39,000 noting that the committee had filed certifications of 49 00:11:39,000 --> 00:11:43,000 certificates of counsel with respect to the professional 50 00:11:43,000 --> 00:11:49,000 attorney. I note that I think as we were standing here this morning, your 51 00:11:49,000 --> 00:11:51,000 honor, has signed the orders. 52 00:11:51,000 --> 00:11:52,000 Yes. 53 00:11:52,000 --> 00:11:53,000 They've done it. 54 00:11:53,000 --> 00:11:54,000 For FTI and Jeffries. 55 00:11:54,000 --> 00:11:58,000 So they really made, unless your honor has questions, we'd just like anything on the 56 00:11:58,000 --> 00:11:59,000 agenda. 57 00:11:59,000 --> 00:12:03,000 We believe we can move right to item number six, which is the court's ruling with 58 00:12:03,000 --> 00:12:07,000 respect to the United States trustees motion to appoint an examiner. 59 00:12:07,000 --> 00:12:08,000 Okay. 60 00:12:08,000 --> 00:12:18,000 So we can go ahead. 61 00:12:18,000 --> 00:12:19,000 All right. 62 00:12:19,000 --> 00:12:22,000 So this is the ruling on the motion to appoint an examiner. 63 00:12:22,000 --> 00:12:26,000 The United States trustee moved for the appointment of an examiner in these 64 00:12:26,000 --> 00:12:32,000 cases pursuant to section 1104 C1 and C2 of the bankruptcy code. 65 00:12:32,000 --> 00:12:37,000 Section 1104 provides that if a Chapter 11 trustee is not appointed in a case, 66 00:12:37,000 --> 00:12:41,000 that at any time prior to confirmation of a plan, quote, 67 00:12:41,000 --> 00:12:44,000 on request of a party in interest or the United States trustee, 68 00:12:44,000 --> 00:12:46,000 and after notice in a hearing, 69 00:12:46,000 --> 00:12:49,000 the court shall appoint an examiner to conduct such an investigation of the 70 00:12:49,000 --> 00:12:53,000 debtor as is appropriate, including an investigation of allegations of fraud, 71 00:12:53,000 --> 00:12:57,000 dishonesty, incompetence, misconduct, mismanagement, 72 00:12:57,000 --> 00:13:00,000 or irregularity in the management of the debtor, 73 00:13:00,000 --> 00:13:05,000 if one, such appointment is in the interest of the creditors and any equity 74 00:13:05,000 --> 00:13:09,000 security holders and interests and other interests of the estate, 75 00:13:09,000 --> 00:13:12,000 or two, the debtor's fixed liquidated unsecured debts, 76 00:13:12,000 --> 00:13:14,000 other than debts for goods, services, 77 00:13:14,000 --> 00:13:19,000 or taxes or owing to an insider exceed $5 million. 78 00:13:19,000 --> 00:13:23,000 The trustee joined by several state regulatory authorities argues that 79 00:13:23,000 --> 00:13:26,000 because there are allegations of massive fraud alleged against the debtors, 80 00:13:26,000 --> 00:13:27,000 pre-petition management, 81 00:13:27,000 --> 00:13:32,000 the appointment of an examiner in is in the best interest of the creditors, 82 00:13:32,000 --> 00:13:36,000 creditors, and other interest holders under 1104C1. 83 00:13:36,000 --> 00:13:42,000 The trustee also argues that even if I conclude the requirements of 1104C1 have 84 00:13:42,000 --> 00:13:43,000 not been met, 85 00:13:43,000 --> 00:13:48,000 I am required to appoint an examiner under 1104C2 because three of the 86 00:13:48,000 --> 00:13:51,000 debtors meet the debt threshold, 87 00:13:51,000 --> 00:13:54,000 or the debtors do not, for the purposes of this motion, 88 00:13:54,000 --> 00:13:59,000 contest the debt limit with regard to the remaining debtors. 89 00:13:59,000 --> 00:14:02,000 The debtors, the committee of general unsecured creditors, 90 00:14:02,000 --> 00:14:05,000 and the joint provisional liquidators of FTX Digital Markets Limited, 91 00:14:05,000 --> 00:14:09,000 appointed in the provisional liquidation proceeding pending in the Bahamas, 92 00:14:09,000 --> 00:14:11,000 object to the appointment of an examiner, 93 00:14:11,000 --> 00:14:15,000 arguing that given the investigations being conducted by the debtors and the 94 00:14:15,000 --> 00:14:18,000 committee as well as various federal law enforcement and regulatory agencies, 95 00:14:18,000 --> 00:14:21,000 there is no need to appoint an examiner to conduct yet another costly 96 00:14:21,000 --> 00:14:25,000 investigation that would slow the progress of these cases. 97 00:14:25,000 --> 00:14:30,000 Moreover, the objectors argue that contrary to the trustee's position, 98 00:14:30,000 --> 00:14:33,000 appointment of an examiner is not mandatory under 1104C2, 99 00:14:33,000 --> 00:14:37,000 even if the debt threshold is met. 100 00:14:37,000 --> 00:14:41,000 For the reasons I will explain, I agree with the objectors and will deny the 101 00:14:41,000 --> 00:14:44,000 motion to appoint an examiner. 102 00:14:44,000 --> 00:14:50,000 These cases have been described as unique, unusual, highly complex, 103 00:14:50,000 --> 00:14:53,000 and unprecedented, and just a few of the adjectives applied to them, 104 00:14:53,000 --> 00:14:56,000 and they have certainly lived up to that billing. 105 00:14:56,000 --> 00:15:01,000 A multi-billion dollar company built over the course of just a few years, 106 00:15:01,000 --> 00:15:04,000 a spectacular crash with billions worth of assets missing, 107 00:15:04,000 --> 00:15:10,000 allegations of gross mismanagement and massive fraud leading to criminal 108 00:15:10,000 --> 00:15:14,000 indictments and investigations by numerous federal agencies. 109 00:15:14,000 --> 00:15:18,000 Behind that backdrop sit the creditors and the customers of the debtors, 110 00:15:18,000 --> 00:15:21,000 individuals and entities that trusted the management of the company with their 111 00:15:21,000 --> 00:15:24,000 relatively new type of asset, cryptocurrency, 112 00:15:24,000 --> 00:15:28,000 as well as those who did business with the debtors on a day-to-day basis. 113 00:15:28,000 --> 00:15:33,000 This case is about making sure that those parties get back as much value as 114 00:15:33,000 --> 00:15:36,000 possible from the debtors' estates. 115 00:15:36,000 --> 00:15:39,000 That process began immediately prior to the filing of these cases with the 116 00:15:39,000 --> 00:15:43,000 appointment of Mr. Ray as the new CEO of the debtors. 117 00:15:43,000 --> 00:15:46,000 Although appointed by the previous CEO, Mr. Benjamin Fried, 118 00:15:46,000 --> 00:15:49,000 who is currently under federal indictment, 119 00:15:49,000 --> 00:15:52,000 there is no question that Mr. Ray is completely independent of prior 120 00:15:52,000 --> 00:15:55,000 management and the companies he was appointed to lead. 121 00:15:55,000 --> 00:15:58,000 Mr. Ray is the consummate professional, 122 00:15:58,000 --> 00:16:02,000 highly qualified with decades of experience in taking control of companies 123 00:16:02,000 --> 00:16:05,000 in dire financial condition. 124 00:16:05,000 --> 00:16:09,000 Mr. Ray in turn appointed four independent directors to three silos of 125 00:16:09,000 --> 00:16:12,000 debtor entities to assist him in determining what happened, 126 00:16:12,000 --> 00:16:15,000 how to sort out the financial condition of the debtors, 127 00:16:15,000 --> 00:16:19,000 and how to return as much value as possible to creditors and customers. 128 00:16:19,000 --> 00:16:23,000 Each of the four directors are also highly qualified professionals with no 129 00:16:23,000 --> 00:16:26,000 prior connection with the debtors or the debtors' prior management. 130 00:16:26,000 --> 00:16:29,000 Mr. Ray also ensured that all prior senior management of the debtors were 131 00:16:29,000 --> 00:16:33,000 removed, two of whom have been indicted and pled guilty to various crimes 132 00:16:33,000 --> 00:16:37,000 involving the management of the debtors. 133 00:16:37,000 --> 00:16:40,000 Although some prior officers of the debtors remain in place, 134 00:16:40,000 --> 00:16:43,000 there is no indication they were involved in any wrongdoing, 135 00:16:43,000 --> 00:16:47,000 and according to Mr. Ray, all have been stripped of any decision-making authority. 136 00:16:47,000 --> 00:16:51,000 Mr. Ray has also retained a group of highly qualified experts to assist the 137 00:16:51,000 --> 00:16:54,000 sorting through the debtors' poorly maintained records. 138 00:16:54,000 --> 00:16:57,000 In many instances, records don't exist at all because the record-keeping was 139 00:16:57,000 --> 00:16:59,000 neglected by prior management. 140 00:16:59,000 --> 00:17:02,000 Mr. Ray testified that those experts, among other things, 141 00:17:02,000 --> 00:17:05,000 are accessing the debtors' extremely vulnerable electronic information 142 00:17:05,000 --> 00:17:09,000 containing cryptoassets that have already suffered hacking incidents both 143 00:17:09,000 --> 00:17:13,000 during and post-petition before controls could be restored. 144 00:17:13,000 --> 00:17:16,000 Those hacks resulted in the possible loss of hundreds of millions, 145 00:17:16,000 --> 00:17:19,000 if not billions, of dollars worth of cryptoassets. 146 00:17:19,000 --> 00:17:22,000 He further testified that he has been informed by those experts that giving 147 00:17:22,000 --> 00:17:25,000 additional persons access to the data creates the risk of further inadvertent 148 00:17:25,000 --> 00:17:30,000 disclosure or hacking of information that could lead to additional losses. 149 00:17:30,000 --> 00:17:34,000 Indeed, even committee counsel indicated that while they are working closely 150 00:17:34,000 --> 00:17:37,000 with the debtors in conducting investigations into what happened, 151 00:17:37,000 --> 00:17:43,000 the committee is not requesting direct access to the debtors' data due to those risks. 152 00:17:43,000 --> 00:17:47,000 There's no question that an examiner or a Chapter 11 trustee, for that matter, 153 00:17:47,000 --> 00:17:51,000 appointed pursuant to Section 1104, would have the same attributes as Mr. Ray 154 00:17:51,000 --> 00:17:53,000 and the independent directors. 155 00:17:53,000 --> 00:17:57,000 That person would be independent with no connection to the debtors or the 156 00:17:57,000 --> 00:17:59,000 debtors' prior management. 157 00:17:59,000 --> 00:18:03,000 That person would need to be qualified and would need to be as qualified and as 158 00:18:03,000 --> 00:18:07,000 experienced as Mr. Ray, and that person would retain qualified and experienced 159 00:18:07,000 --> 00:18:10,000 professionals to assist with the investigation. 160 00:18:10,000 --> 00:18:13,000 There's no question that if an examiner was appointed here, the cost of the 161 00:18:13,000 --> 00:18:17,000 examination, given the scope suggested by the trustee at the hearing, 162 00:18:17,000 --> 00:18:22,000 would be in the tens of millions of dollars and would likely exceed $100 million. 163 00:18:22,000 --> 00:18:25,000 Contrary to the suggestion of the trustee, the debtors in the committee could not 164 00:18:25,000 --> 00:18:30,000 merely sit idly by while the months-long investigation unfolded, leading to 165 00:18:30,000 --> 00:18:35,000 exponential costs to the estate, which would have to be borne by the creditors. 166 00:18:35,000 --> 00:18:38,000 While the debtors may ultimately have billions of dollars' worth of assets to 167 00:18:38,000 --> 00:18:41,000 distribute, creditors will likely not come close to recovering the full amount of 168 00:18:41,000 --> 00:18:44,000 their losses, and it may take some time to recover anything as the debtors in the 169 00:18:44,000 --> 00:18:49,000 committee work to claw back as much of the assets as possible. 170 00:18:49,000 --> 00:18:53,000 Given the facts and circumstances of this highly unique case, I have no doubt that 171 00:18:53,000 --> 00:18:57,000 the appointment of an examiner would not be in the best interest of the creditors. 172 00:18:57,000 --> 00:19:01,000 There are already multiple investigations underway by incredibly competent and 173 00:19:01,000 --> 00:19:04,000 independent parties. Requiring creditors to bear the burden of yet another 174 00:19:04,000 --> 00:19:09,000 investigation does not comport with the requirements of Section 1104C1 or the 175 00:19:09,000 --> 00:19:13,000 general scheme of the bankruptcy code, that is, to maximize recovery to creditors. 176 00:19:13,000 --> 00:19:17,000 It is important to keep in mind that while we talk about the cost of an 177 00:19:17,000 --> 00:19:20,000 investigation being borne by the debtors, we are actually talking about the cost 178 00:19:20,000 --> 00:19:25,000 being borne by the creditors. Every dollar spent in these cases on 179 00:19:25,000 --> 00:19:30,000 administrative expenses is a dollar less to the creditors. Therefore, I will deny 180 00:19:30,000 --> 00:19:35,000 the request to appoint an examiner under 1104C1. 181 00:19:35,000 --> 00:19:39,000 I should have brought some water with me. 182 00:19:39,000 --> 00:19:44,000 The trustee argues, however, that even if I conclude that the appointment of an 183 00:19:44,000 --> 00:19:48,000 examiner is not in the best interest of the creditors, I am still obligated to 184 00:19:48,000 --> 00:19:54,000 appoint one as mandated by Section 1104C2 because the debtors met the burden, met 185 00:19:54,000 --> 00:19:57,000 the debt threshold, or at least did not contest that they do for purposes of this 186 00:19:57,000 --> 00:20:01,000 motion. Even the trustee concedes, however, that a bankruptcy court has some 187 00:20:01,000 --> 00:20:07,000 discretion in determining whether or not an examiner must be appointed under 1104C2. 188 00:20:07,000 --> 00:20:11,000 For example, for a motion to appoint an examiner as being used by a creditor to 189 00:20:11,000 --> 00:20:15,000 obtain an advantage in plan negotiations. In other words, the trustee agrees there 190 00:20:15,000 --> 00:20:21,000 are times when the appointment of an examiner would not be appropriate under 1104C2. 191 00:20:21,000 --> 00:20:25,000 To be sure, there is a split of authority over whether 1104C2 leaves any discretion 192 00:20:25,000 --> 00:20:30,000 on the appointment of an examiner. Courts that hold there is no discretion 193 00:20:30,000 --> 00:20:34,000 concentrate on the language in 1104 that states, quote, the court shall appoint an 194 00:20:34,000 --> 00:20:38,000 examiner with emphasis on shall, if the debtor meets the debt requirements of 195 00:20:38,000 --> 00:20:43,000 Section C2. Those courts either ignore the additional language of 1104 that 196 00:20:43,000 --> 00:20:47,000 states, quote, to conduct such an investigation of the debtors as is 197 00:20:47,000 --> 00:20:51,000 appropriate, close quote, or conclude that the language only means the court can 198 00:20:51,000 --> 00:20:55,000 direct the scope and nature of an examination after an examiner is 199 00:20:55,000 --> 00:21:04,000 appointed. For example, see In re revco, 898F2nd, 498 at 501, Sixth Circuit, 1990. 200 00:21:04,000 --> 00:21:10,000 Court held appointment is mandatory, but, quote, the bankruptcy court retains broad 201 00:21:10,000 --> 00:21:14,000 discretion to direct the examiner's investigation, including its nature, 202 00:21:14,000 --> 00:21:18,000 extent, and duration, close quote. The Sixth Circuit is the only circuit court of 203 00:21:18,000 --> 00:21:22,000 appeals to consider the issue. Other courts have concluded that the as 204 00:21:22,000 --> 00:21:26,000 appropriate language in 1104C permits a bankruptcy court to deny the 205 00:21:26,000 --> 00:21:30,000 appointment of an examiner in limited circumstances, even if the debtor meets 206 00:21:30,000 --> 00:21:37,000 the debt requirements of C2. In, and examples are In re residential capital, 207 00:21:37,000 --> 00:21:45,000 LLC, 474, Bankruptcy Reporter 112, 117, Bankruptcy SDNY, 2012, In re Dewey and 208 00:21:45,000 --> 00:21:54,000 LeMouffe, 478, BR, 627, 629, Bankruptcy SDNY, 2012, In re shelter resources, 209 00:21:54,000 --> 00:22:00,000 35, BR, 304, thank you very much, 304, 305, Bankruptcy Northern District of 210 00:22:00,000 --> 00:22:11,000 Ohio, 1983, In re Gilman services, 46, BR, 322, 327, Bankruptcy, 211 00:22:11,000 --> 00:22:16,000 District of Massachusetts, 1985, In re Erickson retirement communities, LLC, 212 00:22:16,000 --> 00:22:23,000 425, BR, 309, at 312, Bankruptcy Northern District of Texas, 2010, In re GHR 213 00:22:23,000 --> 00:22:31,000 companies, Inc, 43, BR, 165, 170, Bankruptcy, District of Massachusetts, 1984, 214 00:22:31,000 --> 00:22:35,000 Indeed every bankruptcy judge in this district to consider the issue has 215 00:22:35,000 --> 00:22:43,000 concluded that there is discretion. See In re SA Telecom, Inc, case number 97-2395- 216 00:22:43,000 --> 00:22:52,000 2401, Judge Walsh, March 27th, 1998, hearing transcript at 82, In re 217 00:22:52,000 --> 00:22:58,000 expansion, 426, BR, 114, 128, Bankruptcy, District of Delaware, 2010, Judge 218 00:22:58,000 --> 00:23:04,000 Shannon, decision, In re Vistion Corporation, number 09-11786, Judge 219 00:23:04,000 --> 00:23:10,000 Sanchi, decision, from May 12, 2010, hearing transcript at 170, In re 220 00:23:10,000 --> 00:23:16,000 Washington Mutual, Inc, case number 0812229, Judge Walrath, decision, 221 00:23:16,000 --> 00:23:21,000 Bankruptcy, District of Delaware, May 5, 2010, hearing transcript at 97, and 222 00:23:21,000 --> 00:23:28,000 two of my own prior cases, In re Cred, Inc, case number 20-12836, Bankruptcy, 223 00:23:28,000 --> 00:23:35,000 District of Delaware, December 12, 2020, hearing transcript at 95, In re 224 00:23:35,000 --> 00:23:43,000 Mollenkrat, PLC, case number 20-12522, November 22, 2021, hearing transcript 225 00:23:43,000 --> 00:23:50,000 38-46. As Judge Glenn posited the question in 226 00:23:50,000 --> 00:23:54,000 residential capital, quote, If the as is appropriate language provides such 227 00:23:54,000 --> 00:23:58,000 discretion with respect to the nature, extent, and duration of the 228 00:23:58,000 --> 00:24:01,000 investigation, then why doesn't the same language provide discretion to just 229 00:24:01,000 --> 00:24:05,000 say no to an examiner investigation where it may not be justified on the 230 00:24:05,000 --> 00:24:11,000 particular facts and circumstances of the case? 474, BR, 118. As the 231 00:24:11,000 --> 00:24:15,000 trustee pointed out during argument, ultimately Judge Glenn did appoint an 232 00:24:15,000 --> 00:24:18,000 examiner in residential capital because, one, no plan had been confirmed, two, 233 00:24:18,000 --> 00:24:22,000 no trustee had been appointed, three, the debtor had fixed debt succeeding 234 00:24:22,000 --> 00:24:26,000 five million, and four, an investigation was appropriate and an investigation 235 00:24:26,000 --> 00:24:29,000 by the committee had just begun. The first three elements of this analysis 236 00:24:29,000 --> 00:24:33,000 are certainly present here, but while one could argue the fourth is also met 237 00:24:33,000 --> 00:24:36,000 because the debtors and the committee are in the early stages of their 238 00:24:36,000 --> 00:24:40,000 investigations, the facts present here are fundamentally different than in 239 00:24:40,000 --> 00:24:47,000 residential capital. 240 00:24:47,000 --> 00:24:50,000 First, Judge Glenn recognized in residential capital that, quote, Other 241 00:24:50,000 --> 00:24:53,000 than the committee, there is currently no independent party with the ability 242 00:24:53,000 --> 00:24:57,000 and authority to fully investigate and analyze the transactions that issue. 243 00:24:57,000 --> 00:25:01,000 Judge Glenn emphasized the no independent party in that statement. By 244 00:25:01,000 --> 00:25:04,000 contrast, in this case, all the senior managers of the company accused of 245 00:25:04,000 --> 00:25:08,000 wrongdoing had been removed and replaced by extremely competent independent 246 00:25:08,000 --> 00:25:11,000 professionals led by Mr. Ray with the ability and authority to investigate all 247 00:25:11,000 --> 00:25:16,000 claims that might ultimately benefit the creditors in these cases. Moreover, 248 00:25:16,000 --> 00:25:21,000 as indicated before, all remaining employees and officers of the debtors, 249 00:25:21,000 --> 00:25:26,000 all remaining employees and officers of the debtors that have not been accused 250 00:25:26,000 --> 00:25:31,000 of wrongdoing have been, do not possess any decision-making authority. Mr. Ray 251 00:25:31,000 --> 00:25:34,000 has also retained professionals that are fully capable of conducting a 252 00:25:34,000 --> 00:25:38,000 thorough investigation. 253 00:25:38,000 --> 00:25:42,000 Second, as Judge Glenn recognized, an examiner investigation might not be 254 00:25:42,000 --> 00:25:45,000 appropriate when, among other things, the debtor's senior management has been 255 00:25:45,000 --> 00:25:51,000 indicted. 474 PR at 118, footnote 6. Here, of course, senior management has been 256 00:25:51,000 --> 00:25:55,000 indicted. Two have pled guilty and three and a third is scheduled for trial in 257 00:25:55,000 --> 00:25:59,000 October. Finally, the issues to be investigated in residential capital 258 00:25:59,000 --> 00:26:03,000 involved a, quote, complex constellation of pre- and post-bankruptcy transactions 259 00:26:03,000 --> 00:26:07,000 involving billions of dollars in transfers and financing among interested 260 00:26:07,000 --> 00:26:13,000 parties. The debt 115, note 3, emphasis on interested parties. In residential 261 00:26:13,000 --> 00:26:17,000 capital, the allegations were that transfers between the debtors and certain 262 00:26:17,000 --> 00:26:22,000 secured creditors benefited the secured creditors to the detriment of unsecured 263 00:26:22,000 --> 00:26:26,000 creditors. Here, there are no secured creditors. There are only unsecured 264 00:26:26,000 --> 00:26:31,000 creditors. Finally, the issues to be investigated in residential capital, no, 265 00:26:31,000 --> 00:26:35,000 excuse me. Moreover, while the transfers at issue in residential capital were 266 00:26:35,000 --> 00:26:40,000 clearly complex commercial transactions, there was no indication that accessing 267 00:26:40,000 --> 00:26:43,000 the debtor's financial information would create a risk of further harm to the 268 00:26:43,000 --> 00:26:47,000 debtors or their creditors. By contrast, the uncontroverted testimony during the 269 00:26:47,000 --> 00:26:51,000 hearing in this matter established that given the debtor's business and the 270 00:26:51,000 --> 00:26:55,000 vulnerability of the debtor's financial data, permitting additional parties' 271 00:26:55,000 --> 00:26:58,000 access to the financial information would create an increased risk of further 272 00:26:58,000 --> 00:27:03,000 loss through inadvertent disclosures or hacking. Therefore, I conclude that under 273 00:27:03,000 --> 00:27:06,000 the facts and circumstances of these cases, appointment of an examiner is not 274 00:27:06,000 --> 00:27:11,000 needed pursuant to 1104C2, and appointing one would impose an unnecessary burden 275 00:27:11,000 --> 00:27:15,000 on the debtors and ultimately the creditors for whose benefit these cases 276 00:27:15,000 --> 00:27:19,000 are being pursued. Contrary to the trustee's position, this is not inconsistent 277 00:27:19,000 --> 00:27:23,000 with the language of the statute or the legislative history. Congress did not 278 00:27:23,000 --> 00:27:26,000 explain in the language of the statute itself what it meant by the as-is 279 00:27:26,000 --> 00:27:30,000 appropriate limitation. As I previously mentioned, many courts have concluded 280 00:27:30,000 --> 00:27:34,000 that it means a bankruptcy court must always appoint an examiner if the debt 281 00:27:34,000 --> 00:27:37,000 limit has been met but can limit the nature, extent, and duration of any 282 00:27:37,000 --> 00:27:41,000 examination. Others have concluded that if the bankruptcy court can limit the 283 00:27:41,000 --> 00:27:44,000 scope and duration, it must also mean that the court can conclude that no 284 00:27:44,000 --> 00:27:49,000 examination is needed at all under specific facts and circumstances. 285 00:27:49,000 --> 00:27:52,000 Clearly, there is more than one logical conclusion as to the meaning of Section 286 00:27:52,000 --> 00:27:58,000 1104C. The legislative history of 1104C, which at the time of its enactment was 287 00:27:58,000 --> 00:28:02,000 1104B, concluded that, quote, the standards for the appointment of an 288 00:28:02,000 --> 00:28:06,000 examiner are the same as those for the appointment of a trustee. The protection 289 00:28:06,000 --> 00:28:11,000 must be needed and the cost and expense must not be disproportionately high. 290 00:28:11,000 --> 00:28:20,000 H.R. Rep. No. 95-595, 95th Congress, 1st Section, 402, 1977. Thus, the 291 00:28:20,000 --> 00:28:24,000 legislative history supports the conclusion that an examiner shall be 292 00:28:24,000 --> 00:28:28,000 appointed, quote, as appropriate under the particular circumstances of the case, 293 00:28:28,000 --> 00:28:32,000 quote, the protection must be needed. That legislative intent is met in cases 294 00:28:32,000 --> 00:28:36,000 where, even though the debt limit of 1104C2 is met, the evidence establishes 295 00:28:36,000 --> 00:28:41,000 an examiner is not needed under the facts and circumstances of a particular case. 296 00:28:41,000 --> 00:28:44,000 Therefore, I will sustain the objections and deny the motion to appoint an 297 00:28:44,000 --> 00:28:49,000 examiner. The parties should meet and confer and submit a form of order under 298 00:28:49,000 --> 00:29:04,000 certification of counsel. Any questions? Next up. 299 00:29:04,000 --> 00:29:09,000 Thank you, Your Honor. I just wanted to go back very briefly to the Second 300 00:29:09,000 --> 00:29:14,000 Amendment agenda. There's an Item 5 that was the Committee's motion for 301 00:29:14,000 --> 00:29:21,000 permission to file a response to the United States Trustee's objection. I 302 00:29:21,000 --> 00:29:25,000 believe that matter is mooted out and the Committee is not pressing it, but I 303 00:29:25,000 --> 00:29:29,000 didn't, for housekeeping purposes, want to just let that hang out on the agenda. 304 00:29:29,000 --> 00:29:32,000 So you can probably hear from the Committee on that. 305 00:29:32,000 --> 00:29:37,000 Does seem moot. 306 00:29:37,000 --> 00:29:41,000 Your Honor, Matthew from the Conaway. I believe it's just the motion for 307 00:29:41,000 --> 00:29:45,000 permission to file the reply, Your Honor. It's simply procedural. I believe the 308 00:29:45,000 --> 00:29:48,000 U.S. Trustee had an objection to it, so House could be able to approve the 309 00:29:48,000 --> 00:29:50,000 form of order if it's acceptable. 310 00:29:50,000 --> 00:29:52,000 All right. We'll go ahead and just enter the order. 311 00:29:52,000 --> 00:29:55,000 Thank you. I just wanted to make sure that that loose end is tied up, and with 312 00:29:55,000 --> 00:29:59,000 that, we can pass the podium over to counsel to the Joint Provisional 313 00:29:59,000 --> 00:30:06,000 Liquidators. 314 00:30:06,000 --> 00:30:09,000 Good morning, Your Honor. Chris Shore from White and Case on behalf of the 315 00:30:09,000 --> 00:30:15,000 Joint Provisional Liquidators in the Chapter 15 case now. We're here today 316 00:30:15,000 --> 00:30:19,000 seeking recognition of the pending Bahamian liquidation as a foreign main 317 00:30:19,000 --> 00:30:26,000 proceeding and granting related relief. Tending in the courtroom today are Brian 318 00:30:26,000 --> 00:30:33,000 Sims and Peter Greaves, two of the JPLs. The third, Kevin Cambridge, unfortunately 319 00:30:33,000 --> 00:30:38,000 was unavailable to come today because he's ill with COVID. As for today's 320 00:30:38,000 --> 00:30:41,000 agenda, we're happy to report that there are no pending objections to our 321 00:30:41,000 --> 00:30:45,000 request for recognition. So if it's okay with the Court, I'd like to proceed as 322 00:30:45,000 --> 00:30:50,000 follows. First, I'd like to move in the evidence into the record and request 323 00:30:50,000 --> 00:30:53,000 that the Court enter the proposed form of order, which we filed on Monday at 324 00:30:53,000 --> 00:30:59,000 Docket 125. Then I'd like to give the Court a 15-minute status update, not in 325 00:30:59,000 --> 00:31:03,000 the way of evidence, but just to give Your Honor a sense of what the JPLs have 326 00:31:03,000 --> 00:31:09,000 been doing and give you kind of a six-month look forward so you know what's 327 00:31:09,000 --> 00:31:13,000 going to be happening in the case. And the good news is I don't perceive that 328 00:31:13,000 --> 00:31:18,000 we're going to be doing a lot in the 15 over that time, but maybe at the end we 329 00:31:18,000 --> 00:31:23,000 can set a further status conference just to let you know what's happening in that 330 00:31:23,000 --> 00:31:29,000 proceeding. And of course, at any time if Your Honor has questions, I'm happy to 331 00:31:29,000 --> 00:31:34,000 answer them or have others assist in the answer. As for the evidence, the 332 00:31:34,000 --> 00:31:39,000 verified petition is filed at Docket Number 1 of the Chapter 15. We have three 333 00:31:39,000 --> 00:31:42,000 declarations that we'd like to submit into evidence in support of the 334 00:31:42,000 --> 00:31:46,000 application. Those are the two declarations of Mr. Sims and the 335 00:31:46,000 --> 00:31:51,000 declaration of Sophia Roll Cap in support of the petition at Dockets 2, 5, 336 00:31:51,000 --> 00:31:56,000 and 8. Mr. Sims is here should you have any questions for him. Ms. Roll Cap had 337 00:31:56,000 --> 00:32:01,000 to be in the Bahamas yesterday at the recognition of the debtors Chapter 11 338 00:32:01,000 --> 00:32:05,000 cases in the Bahamian proceedings, but she is available via Zoom should the 339 00:32:05,000 --> 00:32:11,000 Court have any questions about the intricacies of Bahamian liquidation law. 340 00:32:11,000 --> 00:32:17,000 But I'd like to offer their declarations into evidence as Exhibits 1 to 4 on the 341 00:32:17,000 --> 00:32:21,000 exhibit list we distributed to the parties in interest in the Court, and also 342 00:32:21,000 --> 00:32:26,000 move into evidence Exhibit 5, which is an order from the Supreme Court of the 343 00:32:26,000 --> 00:32:38,000 Bahamas regarding the JPL's ability to commence the Chapter 15 action. 344 00:32:38,000 --> 00:32:43,000 Okay, anyone have an objection to the introduction of the evidence? 345 00:32:43,000 --> 00:32:47,000 Your Honor, Jim Bromley from Salt and Cromwell on behalf of the Chapter 11 346 00:32:47,000 --> 00:32:51,000 debtors, we do not have an objection to the admission of the evidence with 347 00:32:51,000 --> 00:32:57,000 respect to the recognition proceeding, but there are certain aspects of the 348 00:32:57,000 --> 00:33:03,000 declarations which we believe go beyond the four corners of the Chapter 15 349 00:33:03,000 --> 00:33:07,000 recognition. So as long as it's limited just to Chapter 15 recognition, just to 350 00:33:07,000 --> 00:33:10,000 this hearing, and just to this relief, we have no objection. 351 00:33:10,000 --> 00:33:11,000 All right, fine. 352 00:33:11,000 --> 00:33:17,000 No objection. Okay. Somebody to the limitation, Mr. Bromley. 353 00:33:17,000 --> 00:33:20,000 As for the motion itself, as part of the cooperation agreement that we 354 00:33:20,000 --> 00:33:24,000 entered into with the debtors, we agreed to support their application for 355 00:33:24,000 --> 00:33:30,000 recognition in the Bahamas. They agreed to support our application here, and we 356 00:33:30,000 --> 00:33:35,000 took their comments on the order. We then reached agreement on language with the 357 00:33:35,000 --> 00:33:42,000 DOJ, the U.S. Trustee, and the Committee. So as I said, the form of order which 358 00:33:42,000 --> 00:33:47,000 has been agreed to by the parties is at Docket 125. I do want to note that there 359 00:33:47,000 --> 00:33:52,000 have been a number of informal letters submitted by Mr. Leslie Stewart, the 360 00:33:52,000 --> 00:33:59,000 Hamean citizen. Specifically, he sent a letter that was docketed in the Chapter 361 00:33:59,000 --> 00:34:04,000 11 cases at Docket 357 and some others. We don't believe any of them constitute 362 00:34:04,000 --> 00:34:11,000 an objection to recognition, but wanted to raise this to your Honor's attention. 363 00:34:11,000 --> 00:34:15,000 I did see those letters, and I directed that they be put on the docket just 364 00:34:15,000 --> 00:34:18,000 because they wanted everyone to be able to see what kind of things that I'm 365 00:34:18,000 --> 00:34:21,000 receiving from folks here. 366 00:34:21,000 --> 00:34:25,000 Yes, Your Honor. So unless the Court has any questions, we respectfully request 367 00:34:25,000 --> 00:34:30,000 that the Court enter the amended proposed order, and we move to the status update. 368 00:34:30,000 --> 00:34:36,000 Anybody wish to be heard on the recognition? Satisfied, then. Relief is 369 00:34:36,000 --> 00:34:39,000 appropriate. I will enter the order. 370 00:34:39,000 --> 00:34:45,000 So just wanted to give your Honor a sense of where the JPL is abandoned, and as 371 00:34:45,000 --> 00:34:51,000 I said, give a kind of six-month look forward so you know what's going on. And 372 00:34:51,000 --> 00:34:56,000 I'll focus on, if you think of the debtor's presentation and the silos, FTX 373 00:34:56,000 --> 00:35:01,000 Digital is a subsidiary within the FTX International platform, that 374 00:35:01,000 --> 00:35:05,000 international silo. Now, the first day presentation may have left the Court 375 00:35:05,000 --> 00:35:10,000 with the impression that the FTX Digital estate played an undersized role in the 376 00:35:10,000 --> 00:35:14,000 saga, and I do want to address that, because it is actually, from our 377 00:35:14,000 --> 00:35:18,000 perspective, a big piece of the puzzle that's going to need to get resolved. At 378 00:35:18,000 --> 00:35:24,000 the time of the collapse, Digital employed 84 persons, including 38 who were 379 00:35:24,000 --> 00:35:30,000 transferred over from other FTX debtor entities, including a board and key 380 00:35:30,000 --> 00:35:36,000 management personnel. That company was the headquarters in Nassau, Bahamas. It's 381 00:35:36,000 --> 00:35:42,000 one of 52 properties that the JPLs have identified in the Bahamas, all held in 382 00:35:42,000 --> 00:35:47,000 the name of Chapter 11 debtor, in this case FTX Property Holdings. Amongst those 383 00:35:47,000 --> 00:35:52,000 properties was the DELEX Office Suite, residential complexes and 384 00:35:52,000 --> 00:35:59,000 accommodations for the employees, and a six-acre FTX campus in New Providence, 385 00:35:59,000 --> 00:36:04,000 Bahamas. All of these properties, we seem to think, are worth north of $250 386 00:36:04,000 --> 00:36:11,000 million. They were financed by FTX Digital and are on FTX's Digital's 387 00:36:11,000 --> 00:36:16,000 balance sheet as intercompany receivables. As part of the cooperation 388 00:36:16,000 --> 00:36:21,000 agreement, we've agreed with the debtors that the JPLs will take the lead on 389 00:36:21,000 --> 00:36:28,000 liquidating that real estate in the Bahamas. So there is a big real estate 390 00:36:28,000 --> 00:36:37,000 piece in FTX Digital. There was a motion to dismiss that entity, wasn't there? 391 00:36:37,000 --> 00:36:41,000 I thought it was the Turkish proceeding that did get dismissed. I thought I 392 00:36:41,000 --> 00:36:45,000 remembered seeing another one for one of the Bahamian entities. Yes, Your Honor, 393 00:36:45,000 --> 00:36:51,000 the properties in the Bahamas are actually owned in fee by a U.S. debtor, 394 00:36:51,000 --> 00:36:55,000 and the joint provisional liquidators did file a motion to dismiss that 395 00:36:55,000 --> 00:37:03,000 individual proceeding. That's been resolved. That one has been resolved as 396 00:37:03,000 --> 00:37:07,000 part of the cooperation agreement. We're going to go ahead and market and sell 397 00:37:07,000 --> 00:37:10,000 those assets, and then we're going to have a discussion about where those 398 00:37:10,000 --> 00:37:14,000 assets go at a later date. But... So I need to put something on the docket 399 00:37:14,000 --> 00:37:22,000 to close that out, close that motion out. Okay, we can address that. So of the 400 00:37:22,000 --> 00:37:27,000 84 employees who were living in the Bahamas at the time, there are 16 401 00:37:27,000 --> 00:37:34,000 employees who remain working on a variety of forensic matters and 402 00:37:34,000 --> 00:37:40,000 assisting with ongoing investigations. But moving back in time, as Mr. Bromley 403 00:37:40,000 --> 00:37:45,000 said at that first day hearing, the FTX International platform was primarily a 404 00:37:45,000 --> 00:37:52,000 digital assets trading and exchange platform for not U.S. citizens. To that 405 00:37:52,000 --> 00:38:00,000 end, FTX was created, FTX Digital was created in July 2021 for maintaining, 406 00:38:00,000 --> 00:38:04,000 for the purpose of migrating the business. Remember Mr. Bromley said that 407 00:38:04,000 --> 00:38:09,000 the entity was moving around the country and then offshore. It was all going to 408 00:38:09,000 --> 00:38:14,000 be moving to the Bahamas where this giant real estate conglomeration was and the 409 00:38:14,000 --> 00:38:20,000 headquarters. And that was going to allow FTX Group to take advantage of the 410 00:38:20,000 --> 00:38:25,000 Bahamas' favorable regulatory environment and the newly created DARE Act, which 411 00:38:25,000 --> 00:38:30,000 you've kind of heard about. The question that's going to come up in this case is 412 00:38:30,000 --> 00:38:36,000 what was the status of that movement between the time that digital was created 413 00:38:36,000 --> 00:38:44,000 and FTX and digital filed their respective proceedings? And I'm going to 414 00:38:44,000 --> 00:38:51,000 come back to that migration concept in a bit. But I did want to give your honor a 415 00:38:51,000 --> 00:38:56,000 sense before I get there of how the Bahamian proceeding is going to go along. 416 00:38:56,000 --> 00:39:01,000 The Bahamian proceedings are either voluntary or court supervised. Ours is 417 00:39:01,000 --> 00:39:08,000 court supervised. To that end Mr. Sims, Mr. Greaves, and Mr. Cambridge were 418 00:39:08,000 --> 00:39:16,000 appointed as joint provisional liquidators. The Supreme Court of the 419 00:39:16,000 --> 00:39:20,000 Bahamas has exclusive jurisdiction, right? Your honor has exclusive jurisdiction 420 00:39:20,000 --> 00:39:24,000 over assets worldwide of the debtors. The Supreme Court of the Bahamas is the one 421 00:39:24,000 --> 00:39:28,000 that has exclusive jurisdiction over insolvency proceedings and has broad 422 00:39:28,000 --> 00:39:36,000 authority to make winding up orders for all types of companies. When a company 423 00:39:36,000 --> 00:39:41,000 is being wound up compulsively by the court, the court issues an order which 424 00:39:41,000 --> 00:39:47,000 describes the steps that the liquidators must take to liquidate the company and 425 00:39:47,000 --> 00:39:53,000 the liquidator then as the JPLs here have been filing periodic status updates 426 00:39:53,000 --> 00:40:00,000 with the Bahamian court as to how they're doing on the order laying out their 427 00:40:00,000 --> 00:40:05,000 duties. Once appointed, liquidators generally gather assets, distribute 428 00:40:05,000 --> 00:40:11,000 companies' assets to the creditors on a peri-pesu basis. They have broad 429 00:40:11,000 --> 00:40:17,000 authority to bring and defend lawsuits, file claims, engage in business on behalf 430 00:40:17,000 --> 00:40:22,000 of the debtors. So it's best really to think about the JPLs as Chapter 11 431 00:40:22,000 --> 00:40:29,000 debtors. There are some distinctions, but normally the process runs that way. So 432 00:40:29,000 --> 00:40:34,000 to that end, over the past few months, let's talk about what they've been doing 433 00:40:34,000 --> 00:40:40,000 and then I'll come to what needs to get done. Beginning right from appointment, 434 00:40:40,000 --> 00:40:50,000 the JPLs took steps to identify and gain custody of cash. They've identified 435 00:40:50,000 --> 00:40:55,000 approximately $143 million of cash held by Silvergate and Moonstone, which your 436 00:40:55,000 --> 00:41:00,000 honor may have heard about. We filed requests for provisional relief with 437 00:41:00,000 --> 00:41:04,000 respect to those funds and then as the court knows, the U.S. Department of 438 00:41:04,000 --> 00:41:08,000 Justice seized the funds, but the JPLs are in active discussion with the DOJ 439 00:41:08,000 --> 00:41:13,000 with respect to the release of the funds and hope to have a consensual resolution 440 00:41:13,000 --> 00:41:21,000 on that. The JPLs also established cash management controls to ensure proper 441 00:41:21,000 --> 00:41:26,000 stewardship and security over the estate funds, much like the debtors have been 442 00:41:26,000 --> 00:41:30,000 doing, and the controls include rolling cash flow forecasts, payment approval 443 00:41:30,000 --> 00:41:34,000 controls, anti-money laundering, treasury controls, and all the things that you 444 00:41:34,000 --> 00:41:42,000 would expect a U.S. Chapter 11 trustee to do. There have been significant efforts 445 00:41:42,000 --> 00:41:47,000 and it's part of their requirements to communicate with customers and creditors. 446 00:41:47,000 --> 00:41:53,000 The JPLs launched a general informational website and creditor portal website. 447 00:41:53,000 --> 00:41:58,000 They've also sent letters out to approximately $2.4 million of potential 448 00:41:58,000 --> 00:42:05,000 customers inviting them to register their contact information in order to receive 449 00:42:05,000 --> 00:42:11,000 updates of what's going on. They've also been, much like the U.S. debtors, been in 450 00:42:11,000 --> 00:42:18,000 active communication with regulators in the Bahamas and in the U.S. and 451 00:42:18,000 --> 00:42:25,000 participating in investigations as well. We have been active in the Chapter 11 452 00:42:25,000 --> 00:42:32,000 case. To get to it, we believe we're a very large creditor in these cases. But, you 453 00:42:32,000 --> 00:42:39,000 know, the main goal which we reached early on in the case was the cooperation 454 00:42:39,000 --> 00:42:46,000 agreement which this court has approved and the Bahamian court has approved and 455 00:42:46,000 --> 00:42:53,000 it just gives us a framework from which we're going to try to figure out how the 456 00:42:53,000 --> 00:42:57,000 two proceedings are going to be done. This is where we are just to get a sense of 457 00:42:57,000 --> 00:43:02,000 the current financial picture, not evidence, but just to give your honor a 458 00:43:02,000 --> 00:43:07,000 sense of the size of what we're talking about. As I said, there's about $220 million 459 00:43:07,000 --> 00:43:18,000 in cash, $143 million subject to the DOJ seizure order. There's the $276 million 460 00:43:18,000 --> 00:43:24,000 receivable relating to the property. But so far, the JPLs have traced two major 461 00:43:24,000 --> 00:43:32,000 sources of outflows from their accounts in the lead-up to the case. $5.6 billion 462 00:43:32,000 --> 00:43:38,000 was transferred from FTX digital custodial accounts to a U.S. debtor at FTX 463 00:43:38,000 --> 00:43:44,000 trading. And $2.1 billion was transferred from FTX digital custodial accounts to 464 00:43:44,000 --> 00:43:50,000 Alameda, another Chapter 11 debtor. So to get the proper sense of the size here, 465 00:43:50,000 --> 00:43:58,000 we're talking about $7.7 billion of cash outflows from the Bahamian estate to the 466 00:43:58,000 --> 00:44:05,000 U.S. debtors. And then we have other tangible assets of about $3 million, 467 00:44:05,000 --> 00:44:11,000 mostly relating to office furniture equipment and the fleet of cars that the 468 00:44:11,000 --> 00:44:18,000 employees had in the Bahamas. So that's where we stand right now. Over the next 469 00:44:18,000 --> 00:44:23,000 six months, we've got to deal with the customer migration issue, obviously 470 00:44:23,000 --> 00:44:33,000 determining whether customers were customers of U.S. debtors or digital is 471 00:44:33,000 --> 00:44:39,000 going to be critical to any distribution scheme. We've got to address the issue of 472 00:44:39,000 --> 00:44:45,000 customer trust claims, as has happened in many other crypto cases. There are 473 00:44:45,000 --> 00:44:51,000 unresolved legal and factual issues as to the nature of the customer's deposits, 474 00:44:51,000 --> 00:44:55,000 whether they're held in trust, whether they're general unsecured claims, and 475 00:44:55,000 --> 00:44:59,000 we're going to need to work through that. We've got open trade contracts that 476 00:44:59,000 --> 00:45:05,000 we're going to need to address and see if there can't be a way to restructure the 477 00:45:05,000 --> 00:45:10,000 platform. And then as the debtors are doing here, there's a ton of work being 478 00:45:10,000 --> 00:45:16,000 done into antecedent transactions, not just in a company, but also with respect 479 00:45:16,000 --> 00:45:21,000 to third parties to determine whether those third parties or any of the persons 480 00:45:21,000 --> 00:45:29,000 associated with the transactions need to bring money back into the estate. So as 481 00:45:29,000 --> 00:45:34,000 I said, there's a lot of work that needs to be done. I'm not sure how much of it 482 00:45:34,000 --> 00:45:38,000 is going to need the involvement of the court, but we may be back seeking 483 00:45:38,000 --> 00:45:44,000 additional relief from the court to be able to get all that stuff done. And 484 00:45:44,000 --> 00:45:50,000 unless Your Honor has any questions, I just think we'd probably best to set a 485 00:45:50,000 --> 00:45:57,000 status conference sometime in the May-June timeframe and come back and kind 486 00:45:57,000 --> 00:46:02,000 of tell you where we are on those issues and then give you a look forward again 487 00:46:02,000 --> 00:46:06,000 just so you're not wondering what's happening with your Chapter 15 case. 488 00:46:06,000 --> 00:46:22,000 Okay. I appreciate the update, Mr. Schor. Let's see, we'll find a...why don't we 489 00:46:22,000 --> 00:46:37,000 set a status conference for May 17th at 10 a.m. All right. Thank you very much, 490 00:46:37,000 --> 00:46:47,000 Your Honor. Thank you. Appreciate it. Mr. Spalding? Your Honor, I just would like 491 00:46:47,000 --> 00:46:51,000 to mention a couple things from our perspective. One is we did have a hearing 492 00:46:51,000 --> 00:46:57,000 yesterday in the Bahamas, and the Supreme Court of the Bahamas has agreed to 493 00:46:57,000 --> 00:47:01,000 enter an order that will be consistent with the order that Your Honor will 494 00:47:01,000 --> 00:47:06,000 enter here to allow the two proceedings, sets of proceedings, to be recognized. 495 00:47:06,000 --> 00:47:11,000 The U.S. proceedings being recognized in the Bahamas, the Bahamian proceedings 496 00:47:11,000 --> 00:47:15,000 being recognized here in the United States. I don't know if you're just not 497 00:47:15,000 --> 00:47:20,000 speaking into the microphones or for... I'm sorry. I'm a little rough today. 498 00:47:20,000 --> 00:47:25,000 Yeah, I know the feeling. Which I could say was because I was out drinking last 499 00:47:25,000 --> 00:47:31,000 night, but it wasn't. I wasn't either way. Your Honor, just wanted to point out 500 00:47:31,000 --> 00:47:36,000 there was a hearing yesterday in the Bahamas. The Supreme Court of the Bahamas 501 00:47:36,000 --> 00:47:41,000 has agreed to enter an order to recognize the Chapter 11 proceedings in the 502 00:47:41,000 --> 00:47:50,000 Bahamas so that there will be a coincident recognition in both jurisdictions. 503 00:47:50,000 --> 00:47:54,000 So we'll have a recognition here, a recognition in the Bahamas. And the 504 00:47:54,000 --> 00:47:59,000 cooperation agreement had required that both orders be entered, so they're 505 00:47:59,000 --> 00:48:04,000 mutually dependent on each other. The other thing I'd like to say, Your Honor, I 506 00:48:04,000 --> 00:48:09,000 hadn't been aware that Mr. Schor was going to make any comments about issues, 507 00:48:09,000 --> 00:48:15,000 and one of the things that are coming up. And I do think that it's important that 508 00:48:15,000 --> 00:48:20,000 the Chapter 11 debtors also make a statement here. Many of the points that 509 00:48:20,000 --> 00:48:27,000 Mr. Schor mentioned in terms of things like assets that were in digital market 510 00:48:27,000 --> 00:48:32,000 accounts or the migration of customers and the things of that sort, those are all 511 00:48:32,000 --> 00:48:38,000 open issues. The cooperation agreement is a starting point, but the issues as to 512 00:48:38,000 --> 00:48:44,000 whether assets belong in the Bahamian estate or in the U.S. estate are open 513 00:48:44,000 --> 00:48:48,000 issues. And so the statements that Mr. Schor has made in that regard are 514 00:48:48,000 --> 00:48:53,000 statements that the U.S. debtors reserve all their rights on and frankly disagree 515 00:48:53,000 --> 00:48:55,000 with many of them. 516 00:48:55,000 --> 00:48:56,000 I understand. 517 00:48:56,000 --> 00:48:57,000 Thank you, Your Honor. 518 00:48:57,000 --> 00:49:04,000 Thank you. Anything else? Where do we stand on the examiner? You knew what I 519 00:49:04,000 --> 00:49:09,000 was going to ask, Michel. 520 00:49:09,000 --> 00:49:12,000 Thank you, Your Honor. For the record, Adam Landis from Landis, Bethany, and 521 00:49:12,000 --> 00:49:16,000 Kauffman on behalf of the Chapter 11 debtors. Yes, I saw that question coming, 522 00:49:16,000 --> 00:49:22,000 and I can represent to the Court that the parties have been discussing this 523 00:49:22,000 --> 00:49:27,000 periodically, sometimes more frequently than others, but there are discussions 524 00:49:27,000 --> 00:49:32,000 going back and forth. We've identified a couple of potential fee examiners, and 525 00:49:32,000 --> 00:49:35,000 we're trying to come to ground to have an agreement on this rather than 526 00:49:35,000 --> 00:49:39,000 submit it to the Court for the Court's determination. So we're still working on 527 00:49:39,000 --> 00:49:43,000 that. We hope to have it done soon, and we do appreciate that the Court is not 528 00:49:43,000 --> 00:49:47,000 going to approve any fee applications unless and until a fee examiner is 529 00:49:47,000 --> 00:49:50,000 appointed and has an opportunity to review those applications. 530 00:49:50,000 --> 00:49:57,000 Okay. Thank you. All right. Anything else? It will turn out to be a lot shorter 531 00:49:57,000 --> 00:50:01,000 hearing than I had anticipated. I appreciate everyone's cooperation. I 532 00:50:01,000 --> 00:50:05,000 appreciate the updates, and we are adjourned. Thank you. Thank you, Your Honor.