1 00:00:00,000 --> 00:00:05,000 Good morning, please be seated. 2 00:00:05,000 --> 00:00:09,000 May it please the court, Your Honor, Michael Nestor, Young Conway, Stargant, and Taylor, 3 00:00:09,000 --> 00:00:14,000 on behalf of the debtors. Your Honor, I want to, first of all, I want to thank your honor 4 00:00:14,000 --> 00:00:18,000 and chambers, and I think a lot of people who are not here in the court, thank you as 5 00:00:18,000 --> 00:00:23,000 well for communicating relative to the hearing today. As I'm sure you know, hearings have 6 00:00:23,000 --> 00:00:28,000 a way of making things resolve if they're going to resolve, and that's what happened 7 00:00:28,000 --> 00:00:33,000 late Friday and also last night. So we thank your honor and your honor's chambers. 8 00:00:33,000 --> 00:00:37,000 Your honor, we did submit orders, but I don't know if your honor had any questions about 9 00:00:37,000 --> 00:00:42,000 the orders that we submitted under certification of counsel. We have the dip, bid procedures, 10 00:00:42,000 --> 00:00:46,000 OCP, and then the supplemental wages motion. 11 00:00:46,000 --> 00:00:53,000 Okay, supplemental wages and OCP have been approved, but perhaps not uploaded yet. 12 00:00:53,000 --> 00:00:58,000 I saw the revised bid procedures order and final dip. Do you need to make any presentations 13 00:00:58,000 --> 00:01:00,000 with respect to them? 14 00:01:00,000 --> 00:01:05,000 Not unless, again, it was fully consensual with every party in the courtroom. 15 00:01:05,000 --> 00:01:07,000 Okay. 16 00:01:07,000 --> 00:01:08,000 I'm hesitant. 17 00:01:08,000 --> 00:01:12,000 Well, let me just say yes for the final dip. I had the opportunity to review that, and 18 00:01:12,000 --> 00:01:15,000 I appreciate the changes that were made to the order. They were clear to me in the red 19 00:01:15,000 --> 00:01:19,000 line. Was there anything that was made to the dip credit agreement substantively? Because 20 00:01:19,000 --> 00:01:25,000 that's a document that I don't necessarily appreciate. So if changes were made that made 21 00:01:25,000 --> 00:01:28,000 material changes, I guess I would like to know what those changes were. 22 00:01:28,000 --> 00:01:31,000 Thank you, Your Honor. If it pleases the court, I'd like to see the podium. There was 23 00:01:31,000 --> 00:01:34,000 a Clodonus who is living it a lot closer than I. 24 00:01:34,000 --> 00:01:39,000 Okay. That would be fine. Thank you. 25 00:01:39,000 --> 00:01:40,000 Good morning. 26 00:01:40,000 --> 00:01:43,000 Good morning, Your Honor. George Clodonus from Watham and Watkins on behalf of Virgin 27 00:01:43,000 --> 00:01:48,000 Orbit and the Better Affiliates. There were a couple, I would say, notable substantive 28 00:01:48,000 --> 00:01:51,000 changes, especially ones that came up on the first day. 29 00:01:51,000 --> 00:01:52,000 Okay. 30 00:01:52,000 --> 00:01:57,000 So as far as the fees go, I remember there was a little bit of a back and forth on the 31 00:01:57,000 --> 00:02:06,000 18% roll up or 18% interest on the roll up. The dip lenders have agreed to go down to 32 00:02:06,000 --> 00:02:15,000 12%, which was the pre-petition secured note, pre-default rate. So pre-petition, it was 33 00:02:15,000 --> 00:02:19,000 16%, 12 plus 4, the dip lenders have agreed to bring it down to 12%. 34 00:02:19,000 --> 00:02:22,000 Okay. Thank you. 35 00:02:22,000 --> 00:02:31,000 The initial roll up fee, which was 3%, was subject to the final order. There wasn't a 36 00:02:31,000 --> 00:02:35,000 change in that other than it's subject to the final order, which we had agreed to, but 37 00:02:35,000 --> 00:02:42,000 we made a few changes in the actual credit agreement. There was a concept in the credit 38 00:02:42,000 --> 00:02:49,000 agreement about mandatory prepayments in the event of excess cash, and the number was 2 39 00:02:49,000 --> 00:02:54,000 million. With discussions amongst the debtors, the dip lender, and the UCC, it was increased 40 00:02:54,000 --> 00:02:56,000 to 2.5 million. 41 00:02:56,000 --> 00:03:01,000 Okay. So once it hits the 2.5, then the sweeps begin? 42 00:03:01,000 --> 00:03:02,000 Correct. 43 00:03:02,000 --> 00:03:09,000 Okay. So the 3% fee on the rolled up amount is still present? It was not removed? 44 00:03:09,000 --> 00:03:13,000 I believe that's right. 45 00:03:13,000 --> 00:03:17,000 I thought I saw a red line with respect to the fee, so that's why I'm asking. I just 46 00:03:17,000 --> 00:03:19,000 couldn't follow the changes in the dip credit agreement. 47 00:03:19,000 --> 00:03:21,000 Yeah, it was removed, that's right. 48 00:03:21,000 --> 00:03:28,000 It was removed, okay. 49 00:03:28,000 --> 00:03:32,000 And then a couple of the events of default were increased in terms of the thresholds, 50 00:03:32,000 --> 00:03:40,000 including the ERISA event liability went from 10,000 to 50,000. Judgments against any credit 51 00:03:40,000 --> 00:03:47,000 party were increased from 10,000 to 50,000. Same for foreclosure amounts. And the debtors 52 00:03:47,000 --> 00:03:51,000 now have an opportunity to cure any material adverse events. It went from three business 53 00:03:51,000 --> 00:03:53,000 days to seven business days. 54 00:03:53,000 --> 00:03:57,000 Okay. 55 00:03:57,000 --> 00:04:05,000 Also, there was a provision that if any suits related to pre-petition notes were brought 56 00:04:05,000 --> 00:04:09,000 by the debtors, that would be an event of default that was also removed. 57 00:04:09,000 --> 00:04:13,000 Okay. 58 00:04:13,000 --> 00:04:17,000 All right. Well, thank you very much. I appreciate that explanation. Does anyone else wish to 59 00:04:17,000 --> 00:04:25,000 be heard in connection with entry of the final dip order? 60 00:04:25,000 --> 00:04:27,000 Good morning, Your Honor. 61 00:04:27,000 --> 00:04:28,000 Good morning, Mr. Cleary. 62 00:04:28,000 --> 00:04:33,000 May it please the court, play Cleary of Potter, Anderson and Caroon. I'm appearing on behalf 63 00:04:33,000 --> 00:04:38,000 of the Official Committee of Unsecured Creditors and joined by my colleague, Caitlin Morales, 64 00:04:38,000 --> 00:04:45,000 and also from the Hogan Levels firm, Edward McNeely and Katherine Lin. ProHocs have been 65 00:04:45,000 --> 00:04:49,000 approved for them and Edward will be addressing the court this morning. 66 00:04:49,000 --> 00:04:54,000 Okay. Thank you very much. 67 00:04:54,000 --> 00:04:55,000 Okay. 68 00:04:55,000 --> 00:04:59,000 Good morning, Your Honor. Edward McNeely from Hogan Levels on behalf of the committee. We're 69 00:04:59,000 --> 00:05:04,000 glad we're having this hearing on a fully consensual basis. We were able to work through 70 00:05:04,000 --> 00:05:08,000 most issues quickly and cooperatively with the debtors' professionals last week and Your 71 00:05:08,000 --> 00:05:13,000 Honor had already entered most of the second day orders and other orders under certification 72 00:05:13,000 --> 00:05:18,000 of council and we're grateful to our committee members too who were very diligent and responsive 73 00:05:18,000 --> 00:05:21,000 and helped move that process along. 74 00:05:21,000 --> 00:05:25,000 As Mr. Clodonnes has already outlined, there have been a number of changes to the dip. It 75 00:05:25,000 --> 00:05:29,000 was a hard-fought negotiation and we believe that those changes and some others, including 76 00:05:29,000 --> 00:05:35,000 some modifications to the challenge provision, certain waivers of marshalling, limitation 77 00:05:35,000 --> 00:05:40,000 of credit bid rights, that materially improved the terms of the financing from the perspective 78 00:05:40,000 --> 00:05:45,000 of unsecured creditors. And we're now looking forward to working with the debtors to achieve 79 00:05:45,000 --> 00:05:51,000 a value-maximizing sale process. I want very briefly to address the reply that was filed 80 00:05:51,000 --> 00:05:56,000 by the debtors, which we found a little surprising given that we'd already reached a settlement. 81 00:05:56,000 --> 00:06:01,000 We're very glad we're here consensually today, but we do stand behind that objection. We 82 00:06:01,000 --> 00:06:06,000 have an active committee that takes its duties very seriously. We believe our objection 83 00:06:06,000 --> 00:06:10,000 raised important issues and the committee intends to investigate it appropriately in 84 00:06:10,000 --> 00:06:14,000 accordance with its duties under the Bankruptcy Code. Thank you very much, Your Honor. 85 00:06:14,000 --> 00:06:16,000 Thank you very much. 86 00:06:21,000 --> 00:06:25,000 Good morning, Your Honor. Brian Resnick of Davis-Pulkin-Wardwell on behalf of the DIP 87 00:06:25,000 --> 00:06:30,000 lender. I also wanted to thank Your Honor and thank the debtors and the committee for 88 00:06:30,000 --> 00:06:36,000 working together with us on the DIP. I do believe that this is a fair and appropriate 89 00:06:36,000 --> 00:06:42,000 DIP facility under the circumstances. Not to litigate these issues, obviously, for another 90 00:06:42,000 --> 00:06:49,000 day, but we were equally surprised by the committee's objection and a lot of the statements 91 00:06:49,000 --> 00:06:54,000 therein, and I understand that they have a job to do. But we wholeheartedly disagree 92 00:06:54,000 --> 00:07:01,000 with many of the characterizations of the process, and if and when there's a time for 93 00:07:01,000 --> 00:07:03,000 it will be before Your Honor on those issues. 94 00:07:03,000 --> 00:07:11,000 Okay. Thank you. All right. Anyone else? Okay. Well, I did have the opportunity to 95 00:07:11,000 --> 00:07:18,000 review the most recent final order. Thank you for answering my questions. And I have 96 00:07:18,000 --> 00:07:23,000 no issues entering the revised form of order as agreed to by all the parties, and I appreciate 97 00:07:23,000 --> 00:07:29,000 them working very hard to reach a consensus today. Obviously, the relief is necessary 98 00:07:29,000 --> 00:07:33,000 and warranted, and given the agreements by the parties, it's appropriate. So I will go 99 00:07:33,000 --> 00:07:37,000 ahead and enter that order after the conclusion of today's hearing. So I think that leaves 100 00:07:37,000 --> 00:07:42,000 us with the BIP procedures order, which I had ample time to review. I currently have 101 00:07:42,000 --> 00:07:48,000 no questions, but I'll ask if anyone wishes to be heard in connection with that relief. 102 00:07:48,000 --> 00:07:54,000 No? Okay. I do think there's a missing time in that order. It needs to be revised, I guess, 103 00:07:54,000 --> 00:08:02,000 and uploaded for the sale hearing. It's scheduled for May 24th. We have an omnibus hearing already 104 00:08:02,000 --> 00:08:07,000 scheduled for 2 p.m. So if you could just have someone change the dates and reupload 105 00:08:07,000 --> 00:08:10,000 the order, that would be great. You don't need to file a certification at council for 106 00:08:10,000 --> 00:08:15,000 that. Okay. Great. Thank you, Eleanor. All right. Thank you very much. I will go ahead 107 00:08:15,000 --> 00:08:18,000 and enter that order. I think it's appropriate, and I appreciate all the parties reaching 108 00:08:18,000 --> 00:08:23,000 consensus on the terms of the BIP procedures and the timeline for the sale. Look forward 109 00:08:23,000 --> 00:08:29,000 to seeing you all at the sale hearing, if not before then, on a stalking horse. Well, 110 00:08:29,000 --> 00:08:33,000 I hope that there's not a hearing on the stalking horse, so that would mean that it would be 111 00:08:33,000 --> 00:08:38,000 contested. But regardless, that's my job. So anyway, I hope it's a value-maximizing 112 00:08:38,000 --> 00:08:43,000 process, and I look forward to seeing you all at the sale hearing on a good bid. All 113 00:08:43,000 --> 00:08:47,000 right. With that, we'll consider this hearing adjourned, unless there's anything else we 114 00:08:47,000 --> 00:09:00,000 should discuss. Okay. Thank you all very much.