Good morning, please be seated.
May it please the court, Your Honor, Michael Nestor, Young Conway, Stargant, and Taylor,
on behalf of the debtors. Your Honor, I want to, first of all, I want to thank your honor
and chambers, and I think a lot of people who are not here in the court, thank you as
well for communicating relative to the hearing today. As I'm sure you know, hearings have
a way of making things resolve if they're going to resolve, and that's what happened
late Friday and also last night. So we thank your honor and your honor's chambers.
Your honor, we did submit orders, but I don't know if your honor had any questions about
the orders that we submitted under certification of counsel. We have the dip, bid procedures,
OCP, and then the supplemental wages motion.
Okay, supplemental wages and OCP have been approved, but perhaps not uploaded yet.
I saw the revised bid procedures order and final dip. Do you need to make any presentations
with respect to them?
Not unless, again, it was fully consensual with every party in the courtroom.
Okay.
I'm hesitant.
Well, let me just say yes for the final dip. I had the opportunity to review that, and
I appreciate the changes that were made to the order. They were clear to me in the red
line. Was there anything that was made to the dip credit agreement substantively? Because
that's a document that I don't necessarily appreciate. So if changes were made that made
material changes, I guess I would like to know what those changes were.
Thank you, Your Honor. If it pleases the court, I'd like to see the podium. There was
a Clodonus who is living it a lot closer than I.
Okay. That would be fine. Thank you.
Good morning.
Good morning, Your Honor. George Clodonus from Watham and Watkins on behalf of Virgin
Orbit and the Better Affiliates. There were a couple, I would say, notable substantive
changes, especially ones that came up on the first day.
Okay.
So as far as the fees go, I remember there was a little bit of a back and forth on the
18% roll up or 18% interest on the roll up. The dip lenders have agreed to go down to
12%, which was the pre-petition secured note, pre-default rate. So pre-petition, it was
16%, 12 plus 4, the dip lenders have agreed to bring it down to 12%.
Okay. Thank you.
The initial roll up fee, which was 3%, was subject to the final order. There wasn't a
change in that other than it's subject to the final order, which we had agreed to, but
we made a few changes in the actual credit agreement. There was a concept in the credit
agreement about mandatory prepayments in the event of excess cash, and the number was 2
million. With discussions amongst the debtors, the dip lender, and the UCC, it was increased
to 2.5 million.
Okay. So once it hits the 2.5, then the sweeps begin?
Correct.
Okay. So the 3% fee on the rolled up amount is still present? It was not removed?
I believe that's right.
I thought I saw a red line with respect to the fee, so that's why I'm asking. I just
couldn't follow the changes in the dip credit agreement.
Yeah, it was removed, that's right.
It was removed, okay.
And then a couple of the events of default were increased in terms of the thresholds,
including the ERISA event liability went from 10,000 to 50,000. Judgments against any credit
party were increased from 10,000 to 50,000. Same for foreclosure amounts. And the debtors
now have an opportunity to cure any material adverse events. It went from three business
days to seven business days.
Okay.
Also, there was a provision that if any suits related to pre-petition notes were brought
by the debtors, that would be an event of default that was also removed.
Okay.
All right. Well, thank you very much. I appreciate that explanation. Does anyone else wish to
be heard in connection with entry of the final dip order?
Good morning, Your Honor.
Good morning, Mr. Cleary.
May it please the court, play Cleary of Potter, Anderson and Caroon. I'm appearing on behalf
of the Official Committee of Unsecured Creditors and joined by my colleague, Caitlin Morales,
and also from the Hogan Levels firm, Edward McNeely and Katherine Lin. ProHocs have been
approved for them and Edward will be addressing the court this morning.
Okay. Thank you very much.
Okay.
Good morning, Your Honor. Edward McNeely from Hogan Levels on behalf of the committee. We're
glad we're having this hearing on a fully consensual basis. We were able to work through
most issues quickly and cooperatively with the debtors' professionals last week and Your
Honor had already entered most of the second day orders and other orders under certification
of council and we're grateful to our committee members too who were very diligent and responsive
and helped move that process along.
As Mr. Clodonnes has already outlined, there have been a number of changes to the dip. It
was a hard-fought negotiation and we believe that those changes and some others, including
some modifications to the challenge provision, certain waivers of marshalling, limitation
of credit bid rights, that materially improved the terms of the financing from the perspective
of unsecured creditors. And we're now looking forward to working with the debtors to achieve
a value-maximizing sale process. I want very briefly to address the reply that was filed
by the debtors, which we found a little surprising given that we'd already reached a settlement.
We're very glad we're here consensually today, but we do stand behind that objection. We
have an active committee that takes its duties very seriously. We believe our objection
raised important issues and the committee intends to investigate it appropriately in
accordance with its duties under the Bankruptcy Code. Thank you very much, Your Honor.
Thank you very much.
Good morning, Your Honor. Brian Resnick of Davis-Pulkin-Wardwell on behalf of the DIP
lender. I also wanted to thank Your Honor and thank the debtors and the committee for
working together with us on the DIP. I do believe that this is a fair and appropriate
DIP facility under the circumstances. Not to litigate these issues, obviously, for another
day, but we were equally surprised by the committee's objection and a lot of the statements
therein, and I understand that they have a job to do. But we wholeheartedly disagree
with many of the characterizations of the process, and if and when there's a time for
it will be before Your Honor on those issues.
Okay. Thank you. All right. Anyone else? Okay. Well, I did have the opportunity to
review the most recent final order. Thank you for answering my questions. And I have
no issues entering the revised form of order as agreed to by all the parties, and I appreciate
them working very hard to reach a consensus today. Obviously, the relief is necessary
and warranted, and given the agreements by the parties, it's appropriate. So I will go
ahead and enter that order after the conclusion of today's hearing. So I think that leaves
us with the BIP procedures order, which I had ample time to review. I currently have
no questions, but I'll ask if anyone wishes to be heard in connection with that relief.
No? Okay. I do think there's a missing time in that order. It needs to be revised, I guess,
and uploaded for the sale hearing. It's scheduled for May 24th. We have an omnibus hearing already
scheduled for 2 p.m. So if you could just have someone change the dates and reupload
the order, that would be great. You don't need to file a certification at council for
that. Okay. Great. Thank you, Eleanor. All right. Thank you very much. I will go ahead
and enter that order. I think it's appropriate, and I appreciate all the parties reaching
consensus on the terms of the BIP procedures and the timeline for the sale. Look forward
to seeing you all at the sale hearing, if not before then, on a stalking horse. Well,
I hope that there's not a hearing on the stalking horse, so that would mean that it would be
contested. But regardless, that's my job. So anyway, I hope it's a value-maximizing
process, and I look forward to seeing you all at the sale hearing on a good bid. All
right. With that, we'll consider this hearing adjourned, unless there's anything else we
should discuss. Okay. Thank you all very much.