1 00:00:00,000 --> 00:00:07,000 45B, which was filed at docket number 770. 2 00:00:07,000 --> 00:00:15,920 And I saw that I've had an opportunity to review the debtor's, Mr. Renzi's, declaration 3 00:00:15,920 --> 00:00:22,720 support of the motion, as well as the opposition filed by the U.S. Trustee, I think, earlier 4 00:00:22,720 --> 00:00:25,240 this morning. 5 00:00:25,240 --> 00:00:27,240 And let me then turn to the debtor. 6 00:00:27,240 --> 00:00:33,640 And if you want to address the opposition or where we go from here. 7 00:00:33,640 --> 00:00:34,640 Thank you, Your Honor. 8 00:00:34,640 --> 00:00:38,760 So, Your Honor, we filed the declaration of Mr. Renzi in support of the motion at docket 9 00:00:38,760 --> 00:00:39,760 number 784. 10 00:00:39,760 --> 00:00:42,360 Mr. Renzi is on the line. 11 00:00:42,360 --> 00:00:47,320 So if Your Honor has any questions for him or anyone wants to cross him, he's available. 12 00:00:47,320 --> 00:00:50,960 But otherwise, we would offer his declaration as his direct testimony. 13 00:00:50,960 --> 00:00:53,240 All right. 14 00:00:53,240 --> 00:00:54,240 Any objection? 15 00:00:54,240 --> 00:00:56,040 Good afternoon, Mr. Renzi. 16 00:00:56,040 --> 00:00:57,880 I see you there. 17 00:00:57,880 --> 00:01:04,400 Any objection to the declaration coming in as direct testimony? 18 00:01:04,400 --> 00:01:05,840 In lieu of direct testimony. 19 00:01:05,840 --> 00:01:06,840 Thank you. 20 00:01:06,840 --> 00:01:07,840 All right. 21 00:01:07,840 --> 00:01:08,840 Continue on. 22 00:01:08,840 --> 00:01:09,840 Thank you, Your Honor. 23 00:01:09,840 --> 00:01:15,160 Your Honor, since the commencement of these cases, the debtor's three main banking partners, 24 00:01:15,160 --> 00:01:20,320 Silvergate Bank, Silicon Valley Bank, and Signature Bank have collapsed. 25 00:01:20,320 --> 00:01:26,120 The debtors had 38 of their 43 pre-petition bank accounts with those three banks. 26 00:01:26,120 --> 00:01:32,280 And the remaining five accounts were dormant accounts with Union Bank, BCB Bank, and FOMO 27 00:01:32,280 --> 00:01:37,200 Pay that the debtors closed shortly following the petition date at the request of the U.S. 28 00:01:37,200 --> 00:01:38,320 trustee. 29 00:01:38,320 --> 00:01:42,680 The debtors were able to navigate these bank failures and successfully protect the debtor's 30 00:01:42,680 --> 00:01:43,960 cash. 31 00:01:43,960 --> 00:01:47,320 And the debtors have worked closely with the U.S. trustee and the committee to find 32 00:01:47,320 --> 00:01:50,280 a safe depository for their funds. 33 00:01:50,280 --> 00:01:55,520 Over the past month, the debtors and the committee have collectively reached out to over 50 banks 34 00:01:55,520 --> 00:02:00,160 in an effort to open new accounts and authorize depositories for the district of New Jersey 35 00:02:00,160 --> 00:02:04,440 and to ensure compliance with section 345 of the Bankruptcy Code. 36 00:02:04,440 --> 00:02:08,200 The process to find new banking partners has been challenging. 37 00:02:08,200 --> 00:02:13,320 Many banks are refusing to offer services to crypto companies given the uncertain regulatory 38 00:02:13,320 --> 00:02:14,320 environment. 39 00:02:14,320 --> 00:02:19,240 While the debtors have been successful in establishing new accounts at Webster Bank, 40 00:02:19,240 --> 00:02:24,600 Western Alliance Bank, and PPAC Gladstone Bank, each of which is an authorized depository 41 00:02:24,600 --> 00:02:28,960 in the district of New Jersey, none of those banks to date have been able to secure surety 42 00:02:28,960 --> 00:02:35,520 bonds and or express the willingness to post securities to satisfy section 345B of the 43 00:02:35,520 --> 00:02:36,520 Bankruptcy Code. 44 00:02:36,520 --> 00:02:42,280 Your Honor, the U.S. trustee notified the debtors yesterday that First Citizens, which 45 00:02:42,280 --> 00:02:48,400 acquired SBB Bridge Bank, has recently signed an authorized depository agreement and has 46 00:02:48,400 --> 00:02:52,320 agreed to post collateral to protect funds in the district of New Jersey. 47 00:02:52,320 --> 00:02:57,800 However, the debtors have reached out to First Citizens multiple times and immediately following 48 00:02:57,800 --> 00:03:02,560 our call with the U.S. trustee yesterday, but have still not received a response and 49 00:03:02,560 --> 00:03:06,800 or confirmation from First Citizens that they are going to collateralize the debtors' funds 50 00:03:06,800 --> 00:03:08,400 in this case. 51 00:03:08,400 --> 00:03:12,840 While we are hopeful that First Citizens will be able to procure a surety bond and are post 52 00:03:12,840 --> 00:03:15,680 collateral, they have not done so to date. 53 00:03:15,680 --> 00:03:18,640 And the debtors need to protect their cash now. 54 00:03:18,640 --> 00:03:23,560 They need the flexibility of having multiple options to secure their cash given the risks 55 00:03:23,560 --> 00:03:27,880 associated with non-diversification at this time. 56 00:03:27,880 --> 00:03:31,280 Your Honor, the debtors take seriously the U.S. trustee's motion to compel the debtors 57 00:03:31,280 --> 00:03:37,000 to comply with section 345B, but the reality is we have not been able to do so given the 58 00:03:37,000 --> 00:03:39,440 turmoil in the banking system. 59 00:03:39,440 --> 00:03:43,960 So we're seeking flexibility after having carefully evaluated our options to safeguard 60 00:03:43,960 --> 00:03:46,440 funds in three different ways. 61 00:03:46,440 --> 00:03:52,960 One is an insured cash sweep program with Western Bank or another authorized depository 62 00:03:52,960 --> 00:03:56,200 for an amount up to $125 million. 63 00:03:56,200 --> 00:04:00,840 The second is through one or more money market funds that only invest in U.S. government 64 00:04:00,840 --> 00:04:07,360 obligations and or U.S. government obligations themselves in an amount up to $275 million, 65 00:04:07,360 --> 00:04:10,720 either with Webster Bank or another authorized depository. 66 00:04:10,720 --> 00:04:14,240 And the third is at First Citizens to the extent that they are able to post collateral 67 00:04:14,240 --> 00:04:18,560 and or secure a security bond as the U.S. trustee has alluded to. 68 00:04:18,560 --> 00:04:24,280 Your Honor, the debtors submit that cause exists to modify the 345B requirements. 69 00:04:24,280 --> 00:04:28,320 The money market funds that the debtors intend to invest in are highly rated money market 70 00:04:28,320 --> 00:04:33,940 funds which invest in U.S. treasury bills, notes and other obligations issued or guaranteed 71 00:04:33,940 --> 00:04:37,360 by the U.S. government, its agents or instrumentalities. 72 00:04:37,360 --> 00:04:42,840 And the ICS funds by function of inclusion in that program will be fully insured. 73 00:04:42,840 --> 00:04:47,480 They will be held across multiple banks in amounts covered by FDI insurance, thus posing 74 00:04:47,480 --> 00:04:51,840 no risk with respect to the debtors' funds. 75 00:04:51,840 --> 00:04:55,840 Your Honor, even if some of these banks that are in the ICS program are not authorized 76 00:04:55,840 --> 00:05:03,400 depositories, we believe that the structure of the program provides protection by virtue 77 00:05:03,400 --> 00:05:08,680 of the FDI insurance alone and that this obviates the need for any additional insurance or collateral 78 00:05:08,680 --> 00:05:10,200 to protect the debtors' funds. 79 00:05:10,200 --> 00:05:14,200 Your Honor, the debtors believe that these are safe options for holding the debtors' 80 00:05:14,200 --> 00:05:19,080 cash and in light of the potential harm to the debtors' estates, if a bank where they 81 00:05:19,080 --> 00:05:24,080 are holding funds above the FDIC limit fails, the debtors believe that the relief requested 82 00:05:24,080 --> 00:05:26,520 is reasonable and appropriate. 83 00:05:26,520 --> 00:05:30,560 The difficulty that the debtors have faced in finding a home for their funds in strict 84 00:05:30,560 --> 00:05:36,040 compliance with section 345B represents the exact circumstances under which the court 85 00:05:36,040 --> 00:05:39,840 has discretion to provide relief from that section. 86 00:05:39,840 --> 00:05:44,820 The debtors' primary goal is to safeguard all of our funds for the benefit of our clients. 87 00:05:44,820 --> 00:05:49,120 And we believe that we've narrowly tarot the relief to do that. 88 00:05:49,120 --> 00:05:52,560 And that cause exists to grant us limited relief from section 345B. 89 00:05:52,560 --> 00:05:55,760 So, Your Honor, I'm happy to answer any questions. 90 00:05:55,760 --> 00:06:02,560 Otherwise, I would let the U.S. trustee make their argument and ask for time for rebuttal. 91 00:06:02,560 --> 00:06:04,000 All right. 92 00:06:04,000 --> 00:06:13,020 Before I turn to Ms. Bielski, let me ask, we're talking about 125 million in the ICS. 93 00:06:13,020 --> 00:06:20,100 Is that in addition to the 275 or is that included as part of the 275 that was otherwise 94 00:06:20,100 --> 00:06:22,960 referenced as going into the money market funds? 95 00:06:22,960 --> 00:06:24,480 Yes, Your Honor. 96 00:06:24,480 --> 00:06:26,600 So, they overlap. 97 00:06:26,600 --> 00:06:30,320 And I don't think we have not made a determination as to any of these options, right? 98 00:06:30,320 --> 00:06:32,000 I think we're just seeking flexibility. 99 00:06:32,000 --> 00:06:35,040 But the 125 overlaps with the 275. 100 00:06:35,040 --> 00:06:41,280 I think we're just seeking full flexibility to the extent that we need it so that all 101 00:06:41,280 --> 00:06:43,040 the funds can be protected. 102 00:06:43,040 --> 00:06:49,400 So the debtors on hand, we're talking about trying to protect 275 million. 103 00:06:49,400 --> 00:06:51,200 That's correct, Your Honor. 104 00:06:51,200 --> 00:06:52,200 Correct. 105 00:06:52,200 --> 00:07:00,680 So either you can speak to it or Mr. Renzi. 106 00:07:00,680 --> 00:07:08,600 Is it possible in lieu of the money market funds simply to acquire the treasuries directly 107 00:07:08,600 --> 00:07:10,080 as a solution? 108 00:07:10,080 --> 00:07:11,960 Yes, Your Honor. 109 00:07:11,960 --> 00:07:15,040 It is possible, but it's a more complicated process. 110 00:07:15,040 --> 00:07:18,920 Mr. Renzi probably has more detail on what that would entail. 111 00:07:18,920 --> 00:07:22,840 We have spoken with our banking partners about that process. 112 00:07:22,840 --> 00:07:26,280 And I know that it is more complicated than just investing in the money market funds. 113 00:07:26,280 --> 00:07:27,280 But I do think it is feasible. 114 00:07:27,280 --> 00:07:30,280 Mr. Renzi, do you want to touch on it? 115 00:07:30,280 --> 00:07:31,280 Yes. 116 00:07:31,280 --> 00:07:34,280 Good afternoon, Your Honor. 117 00:07:34,280 --> 00:07:36,120 Christine is exactly right. 118 00:07:36,120 --> 00:07:38,080 Ms. Hukiki is exactly right. 119 00:07:38,080 --> 00:07:44,240 I think ultimately what we're trying to do here is we can go back to back against the 120 00:07:44,240 --> 00:07:54,720 treasury directly, but it is fairly cumbersome to do that, meaning that the systems where 121 00:07:54,720 --> 00:07:56,920 you do that are not easy to do. 122 00:07:56,920 --> 00:08:03,560 I think using it through a brokerage account or working with Webster Bank does help facilitate 123 00:08:03,560 --> 00:08:05,520 some of that. 124 00:08:05,520 --> 00:08:12,200 But ultimately, you have to invest in four to eight week securities. 125 00:08:12,200 --> 00:08:18,600 Our view is that if you're invested in a money market account with government securities, 126 00:08:18,600 --> 00:08:21,320 it's one day to clear. 127 00:08:21,320 --> 00:08:24,920 And so just having that flexibility is helpful. 128 00:08:24,920 --> 00:08:30,840 And ultimately, the systems, I don't know if you've gone straight up against the treasury's 129 00:08:30,840 --> 00:08:38,560 interface, it's not the smoothest interface to work with. 130 00:08:38,560 --> 00:08:45,400 So I think that with the assistance of Webster's brokerage account or others, we can go and 131 00:08:45,400 --> 00:08:53,600 buy money market funds that are backed by essentially the government and having those 132 00:08:53,600 --> 00:08:55,080 securities of the government. 133 00:08:55,080 --> 00:08:59,320 And then that provides one day transition if need be. 134 00:08:59,320 --> 00:09:05,960 And so having that flexibility, having that security of the government, and having that 135 00:09:05,960 --> 00:09:11,480 safeguard is really what we think really provides the best option. 136 00:09:11,480 --> 00:09:17,800 And the ICS is just another great option that has been used before. 137 00:09:17,800 --> 00:09:20,200 It seems very straightforward. 138 00:09:20,200 --> 00:09:23,200 And we've been in discussions with Webster about that also. 139 00:09:23,200 --> 00:09:28,360 So both of those solutions are easier than just going straight up against the treasury 140 00:09:28,360 --> 00:09:31,040 and provide the flexibility that I described. 141 00:09:31,040 --> 00:09:32,200 All right. 142 00:09:32,200 --> 00:09:33,200 Thank you. 143 00:09:33,200 --> 00:09:36,200 Ms. Bielski, do you wish to be heard on behalf of the U.S.T.? 144 00:09:36,200 --> 00:09:37,200 Yes, Your Honor. 145 00:09:37,200 --> 00:09:38,200 Thank you. 146 00:09:38,200 --> 00:09:39,880 Lauren Bielski with the Office of the United States Trustee. 147 00:09:39,880 --> 00:09:45,120 Your Honor, I'll just touch on the first issue that you raised with the debtor obtaining 148 00:09:45,120 --> 00:09:46,120 T-bills directly. 149 00:09:46,120 --> 00:09:48,240 We would have no objection to that. 150 00:09:48,240 --> 00:09:50,840 We think that's appropriate under the code. 151 00:09:50,840 --> 00:09:55,800 And I think that the debtor has enough sophisticated professionals that even if the process is 152 00:09:55,800 --> 00:09:58,080 cumbersome, they certainly do that. 153 00:09:58,080 --> 00:10:04,040 But turning to the objection that we filed this morning, Your Honor, and I appreciate 154 00:10:04,040 --> 00:10:06,600 that you read that in advance of the hearing. 155 00:10:06,600 --> 00:10:10,000 And I appreciate that Your Honor is aware of the concerns and the challenges that have 156 00:10:10,000 --> 00:10:15,200 arisen with regards to the banking issue, especially in this case and recently. 157 00:10:15,200 --> 00:10:20,320 And as Your Honor knows, Section 345 obligates the debtors to require from an entity which 158 00:10:20,320 --> 00:10:26,240 holds the state money that they're either invested and have a bond having the features 159 00:10:26,240 --> 00:10:32,600 identified in Section 345B as a certi bond or the deposits of securities consistent with 160 00:10:32,600 --> 00:10:34,320 31 U.S.C. 161 00:10:34,320 --> 00:10:38,960 Section 9303 unless the court orders otherwise. 162 00:10:38,960 --> 00:10:43,400 The debtor represents this court that the certi bonds are no longer available due to 163 00:10:43,400 --> 00:10:48,800 bank volatility and that each of the debtor's banks rejected any proposal to collateralize 164 00:10:48,800 --> 00:10:53,400 the debtor's funds and that this is caused to waive the Section 345 requirements. 165 00:10:53,400 --> 00:11:00,000 Section 345 places the obligation on the debtors to require protections for its money from 166 00:11:00,000 --> 00:11:02,960 the institutions that hold such money. 167 00:11:02,960 --> 00:11:08,480 And while Section 345 does not mention the U.S. Justice Office, the office in its supervisory 168 00:11:08,480 --> 00:11:10,880 role under 28 U.S.C. 169 00:11:10,880 --> 00:11:15,960 Section 586 assists with the protection of debtor's funds by its entry into the uniform 170 00:11:15,960 --> 00:11:17,400 depository agreements. 171 00:11:17,400 --> 00:11:24,080 The U.D.A.s obligate depositories to maintain collateral for bankruptcy funds on deposit 172 00:11:24,080 --> 00:11:32,400 in an amount no less than 115% of the debtor deposits that exceed the FDIC insurance limits. 173 00:11:32,400 --> 00:11:37,400 The funds at issue in this motion referred to by the debtors as the remaining funds are 174 00:11:37,400 --> 00:11:40,880 the funds that were held by Silicon Valley Bridge Bank which was then acquired by First 175 00:11:40,880 --> 00:11:43,760 Citizens Bank where the funds remain. 176 00:11:43,760 --> 00:11:49,080 At the time of acquisition, First Citizens Bank was not a party to a U.D.A. but our office 177 00:11:49,080 --> 00:11:55,000 has been working with them and as of April 25th, First Citizens Bank executed a U.D.A. 178 00:11:55,000 --> 00:11:59,680 That means they have agreed to protect debtor's funds as required under the U.D.A. and the 179 00:11:59,680 --> 00:12:04,560 next step to open an account with the Federal Reserve Bank is underway. 180 00:12:04,560 --> 00:12:08,600 Based on past experience, this can be done in 48 hours and then the collateral can be 181 00:12:08,600 --> 00:12:09,600 pledged. 182 00:12:09,600 --> 00:12:16,040 As counsel indicated and relayed this information to them yesterday, the debtors still are seeking 183 00:12:16,040 --> 00:12:19,280 the waiver from the court today. 184 00:12:19,280 --> 00:12:23,920 Counsel also mentioned that Webster Bank is an approved depository having signed a U.D.A. 185 00:12:23,920 --> 00:12:29,000 but if Webster Bank is unwilling to either obtain sturdy bonds or collateralize, then 186 00:12:29,000 --> 00:12:33,800 they would be noncompliant under the U.D.A. 187 00:12:33,800 --> 00:12:38,440 The U.S. trustee has concerns regarding the proposed alternatives, the insured cash fee 188 00:12:38,440 --> 00:12:42,840 program and the money market fund and does not believe they are acceptable because they 189 00:12:42,840 --> 00:12:47,600 do not allow for the necessary monitoring, oversight, reporting and ability to safeguard 190 00:12:47,600 --> 00:12:48,600 the funds. 191 00:12:48,600 --> 00:12:54,480 So while we believe the court to deny the motion because cause has not been established 192 00:12:54,480 --> 00:12:59,040 and because the ICS program and money market fund are unacceptable alternatives, at the 193 00:12:59,040 --> 00:13:03,480 very least in light of the progress that has been made with First Citizens Bank, relief 194 00:13:03,480 --> 00:13:07,360 under this motion should be delayed for just a very short window, Your Honor, to give First 195 00:13:07,360 --> 00:13:10,160 Citizens an opportunity to pledge the necessary collateral. 196 00:13:10,160 --> 00:13:12,160 Thank you, Your Honor. 197 00:13:12,160 --> 00:13:13,160 All right. 198 00:13:13,160 --> 00:13:14,160 Thank you. 199 00:13:14,160 --> 00:13:15,160 Ms. O'Keeke, any response? 200 00:13:15,160 --> 00:13:16,160 Yes, Your Honor. 201 00:13:16,160 --> 00:13:17,160 Thank you. 202 00:13:17,160 --> 00:13:22,520 Your Honor, again, we have reached out to First Citizens. 203 00:13:22,520 --> 00:13:24,560 We've contacted them several times. 204 00:13:24,560 --> 00:13:29,160 They have been nonresponsive, at least to the company in terms of collateralization 205 00:13:29,160 --> 00:13:30,160 or surety bonds. 206 00:13:30,160 --> 00:13:33,840 And again, we remain hopeful that that happens. 207 00:13:33,840 --> 00:13:39,160 But that being said, just taking SVB, they were also an authorized depository for the 208 00:13:39,160 --> 00:13:44,080 District of New Jersey at the time that they went under and they had not pledged any collateral. 209 00:13:44,080 --> 00:13:48,480 So I don't know sitting here today that we know for sure whether First Citizens is going 210 00:13:48,480 --> 00:13:51,920 to be able to satisfy their obligations under the UDA. 211 00:13:51,920 --> 00:13:58,320 As we've said, the three new bank accounts that we've opened, none of those banks have 212 00:13:58,320 --> 00:14:00,720 been able to secure surety bonds. 213 00:14:00,720 --> 00:14:07,040 And so while I don't question Ms. Bilsky's statements, we just don't know sitting here 214 00:14:07,040 --> 00:14:10,040 today whether they're going to be successful or not. 215 00:14:10,040 --> 00:14:14,480 And the debtors currently have funds sitting that are not protected. 216 00:14:14,480 --> 00:14:19,400 We believe what we propose provides more protection than what we currently have. 217 00:14:19,400 --> 00:14:24,080 And we believe we've established cause to utilize these mechanisms. 218 00:14:24,080 --> 00:14:29,160 We would, of course, work with the UCC and the US trustee before actually moving funds 219 00:14:29,160 --> 00:14:35,840 to identify any Martin Market funds or the ICS banks that we were going to use. 220 00:14:35,840 --> 00:14:39,800 But we're requesting flexibility given the financial turmoil right now. 221 00:14:39,800 --> 00:14:46,200 I think having all our funds in one bank, even if First Citizens is able to collateralize, 222 00:14:46,200 --> 00:14:48,960 is probably not the best option just given everything going on. 223 00:14:48,960 --> 00:14:52,520 And so we would respectfully request approval of the motion. 224 00:14:52,520 --> 00:15:04,280 Your Honor, if I may, or Ms. Sokigye, if I may, I'll just note that in terms of bank 225 00:15:04,280 --> 00:15:10,360 accounts, we do not have an account for international entities at FCD. 226 00:15:10,360 --> 00:15:15,200 So that's another issue that we would have. 227 00:15:15,200 --> 00:15:21,280 So I know it's technical, but it's something that we don't have a solution for international 228 00:15:21,280 --> 00:15:24,680 banks, and we're responsible for those entities also. 229 00:15:24,680 --> 00:15:26,080 So let me clarify then. 230 00:15:26,080 --> 00:15:36,160 You're saying that if First Citizens Bank was collateralized and signed the VA, but 231 00:15:36,160 --> 00:15:41,040 if the arrangements with the Federal Reserve have been made and they're collateralized, 232 00:15:41,040 --> 00:15:46,960 you still cannot keep international funds there? 233 00:15:46,960 --> 00:15:53,920 Your Honor, we do not have a bank account set up at FCD for the international entity. 234 00:15:53,920 --> 00:16:02,440 So we would have to go through the KYC process to do that, and then have them agree to post-collateral 235 00:16:02,440 --> 00:16:06,200 or a surety bond for that to work. 236 00:16:06,200 --> 00:16:10,480 And I think that's just additional time that we're concerned about. 237 00:16:10,480 --> 00:16:18,040 We have international accounts open at Webster Bank, and we would be able to effectuate that 238 00:16:18,040 --> 00:16:19,040 much more quickly. 239 00:16:19,040 --> 00:16:26,040 And it just heightens the point that Ms. Sokigye had just stated. 240 00:16:26,040 --> 00:16:28,960 I just wanted to make sure you were also aware of that too. 241 00:16:28,960 --> 00:16:29,960 Thank you. 242 00:16:29,960 --> 00:16:32,400 Your Honor, and one point just to add on that. 243 00:16:32,400 --> 00:16:40,240 You may recall that in kind of all this turmoil, the debtors transferred money out of signature 244 00:16:40,240 --> 00:16:46,480 to a Haynes-Boone account, and that is international money, which we are not able to move anywhere 245 00:16:46,480 --> 00:16:51,560 right now because we don't have an international bank account other than at Webster, and Webster 246 00:16:51,560 --> 00:16:55,760 has not been able to collateralize or secure a surety bond. 247 00:16:55,760 --> 00:17:03,560 And so there is an urgent need for this relief, as I think we've laid out for you. 248 00:17:03,560 --> 00:17:08,040 Can those funds be transferred into the proposed money market funds? 249 00:17:08,040 --> 00:17:10,440 Yes, Your Honor. 250 00:17:10,440 --> 00:17:12,000 All right. 251 00:17:12,000 --> 00:17:13,440 Thank you. 252 00:17:13,440 --> 00:17:14,440 Ms. Blosky. 253 00:17:14,440 --> 00:17:15,680 Thank you, Your Honor. 254 00:17:15,680 --> 00:17:20,000 This is the first we're hearing about any concerns with regards to international funds 255 00:17:20,000 --> 00:17:24,560 held in a national account or the issues that Mr. Benji just raised. 256 00:17:24,560 --> 00:17:27,840 So we have not had a chance to review that. 257 00:17:27,840 --> 00:17:33,800 But I would say too that the ability to get the T-bonds, the T-bills is still there. 258 00:17:33,800 --> 00:17:38,320 And again, we've been told by First Citizens Bank that they're moving toward, well, we're 259 00:17:38,320 --> 00:17:42,920 working with them to get the account open with the Federal Reserve Bank and that they're 260 00:17:42,920 --> 00:17:44,880 prepared to collateralize. 261 00:17:44,880 --> 00:17:49,840 And at the very least, if we can allow a few days for that process to happen and the debtor 262 00:17:49,840 --> 00:17:54,880 could also start working on obtaining the T-bills directly, I think that would be certainly 263 00:17:54,880 --> 00:17:58,400 an acceptable solution for the very short term. 264 00:17:58,400 --> 00:18:00,240 All right. 265 00:18:00,240 --> 00:18:01,240 Thank you, Mr. Renzi. 266 00:18:01,240 --> 00:18:03,600 You want to, you had your hand raised again? 267 00:18:03,600 --> 00:18:04,600 Yes. 268 00:18:04,600 --> 00:18:12,280 I mean, we've sent a few emails in regards to some of the details here to the U.S. Trustee. 269 00:18:12,280 --> 00:18:14,480 I actually did it myself directly. 270 00:18:14,480 --> 00:18:20,960 And I think ultimately my concern is just I want to make sure that we're doing everything 271 00:18:20,960 --> 00:18:25,240 possible to do this as quickly as possible to protect these funds. 272 00:18:25,240 --> 00:18:33,240 And my concern is just given the nature of the industry that as Ms. O'Keej went through, 273 00:18:33,240 --> 00:18:37,640 we went through a number of banks to get to where we are. 274 00:18:37,640 --> 00:18:43,480 And it was cumbersome to open up new accounts, as you can imagine. 275 00:18:43,480 --> 00:18:50,520 And at the end of the day, I just want to deliver results for the company and for our 276 00:18:50,520 --> 00:18:52,920 system altogether. 277 00:18:52,920 --> 00:18:58,840 And to do that quickly is important so that we can protect these assets. 278 00:18:58,840 --> 00:19:00,960 So that's all I would add, Your Honor. 279 00:19:00,960 --> 00:19:01,960 All right. 280 00:19:01,960 --> 00:19:05,080 Mr. Wilrod? 281 00:19:05,080 --> 00:19:06,080 Thank you, Your Honor. 282 00:19:06,080 --> 00:19:09,760 Before I begin, I believe this is my first appearance before Your Honor. 283 00:19:09,760 --> 00:19:14,560 And our counsel, Genova Burns, will be filing a ProHoc VJ application shortly. 284 00:19:14,560 --> 00:19:17,880 I'd just ask that I be permitted to speak pending that. 285 00:19:17,880 --> 00:19:20,360 Welcome to New Jersey remotely. 286 00:19:20,360 --> 00:19:22,360 Thank you very much. 287 00:19:22,360 --> 00:19:25,000 I think we're in general agreement. 288 00:19:25,000 --> 00:19:28,760 The committee is in general agreement with the debtors and the United States Trustee 289 00:19:28,760 --> 00:19:32,160 as to the importance of safeguarding these funds. 290 00:19:32,160 --> 00:19:36,840 I don't think it's been stated, but this is not an operating company and this is a large 291 00:19:36,840 --> 00:19:43,520 volume of cash that is expected to be a very significant source of distribution to creditors. 292 00:19:43,520 --> 00:19:49,360 If shorty or collateralization is not available, then it is available, excuse me, then our 293 00:19:49,360 --> 00:19:52,920 preference would be to keep the money where it is. 294 00:19:52,920 --> 00:19:59,760 But our citizens is not here today to say that that's a possibility. 295 00:19:59,760 --> 00:20:04,040 And it sounds like there's more digging to be done on that front. 296 00:20:04,040 --> 00:20:09,600 We and our representatives have spoken with the debtors over the last few days about the 297 00:20:09,600 --> 00:20:11,920 options on the table. 298 00:20:11,920 --> 00:20:16,120 Based on our discussions about the ICS and money market accounts, we were able to get 299 00:20:16,120 --> 00:20:18,320 comfortable with those options. 300 00:20:18,320 --> 00:20:24,360 I don't, I suspect we could also get comfortable with purchasing treasury bills directly as 301 00:20:24,360 --> 00:20:25,360 well. 302 00:20:25,360 --> 00:20:31,520 But glad to hear on the record the commitment of the debtors to continue discussing these 303 00:20:31,520 --> 00:20:34,960 options before any money does move. 304 00:20:34,960 --> 00:20:39,040 And that's our primary request at this point. 305 00:20:39,040 --> 00:20:44,680 We don't object to the debtors having some optionality, particularly at this moment, 306 00:20:44,680 --> 00:20:50,120 based on facts that seems to be in flux, and we look forward to participating in discussions 307 00:20:50,120 --> 00:20:53,360 as things seem to be developing. 308 00:20:53,360 --> 00:20:54,360 That's all I have, Your Honor. 309 00:20:54,360 --> 00:20:55,360 Thank you. 310 00:20:55,360 --> 00:20:56,360 All right. 311 00:20:56,360 --> 00:20:57,360 Thank you. 312 00:20:57,360 --> 00:20:58,360 Thank you all. 313 00:20:58,360 --> 00:21:07,240 I think it's important to adhere as closely as possible with the statutory requirements 314 00:21:07,240 --> 00:21:10,480 set forth in the code in section 345. 315 00:21:10,480 --> 00:21:15,200 But I recognize that flexibility is needed in this situation, and most importantly, it's 316 00:21:15,200 --> 00:21:20,880 a task of all of us, the debtor, the committee, the UST, and the court, to do what it can 317 00:21:20,880 --> 00:21:26,960 to preserve the funds for the benefit of creditors. 318 00:21:26,960 --> 00:21:36,260 I'm going to give my ruling, but ask that parties think it can be tweaked, not to hesitate 319 00:21:36,260 --> 00:21:39,020 to raise their hand. 320 00:21:39,020 --> 00:21:46,760 I'm going to direct the debtor to use the debtor's best efforts and good faith to transfer 321 00:21:46,760 --> 00:21:54,040 the funds to First Citizens Bank once they have confirmed collateralization. 322 00:21:54,040 --> 00:21:57,400 And that has to be done no later than Monday, close of business Monday. 323 00:21:57,400 --> 00:22:03,280 In other words, it gives two full days on top of the time that's already been undertaken 324 00:22:03,280 --> 00:22:06,000 to get that done. 325 00:22:06,000 --> 00:22:14,000 If not, if for whatever reasons they cannot confirm collateralization, I'm going to authorize 326 00:22:14,000 --> 00:22:18,800 that all the money be transferred into the money market funds. 327 00:22:18,800 --> 00:22:23,680 I'm not comfortable with the ICS sweep. 328 00:22:23,680 --> 00:22:32,960 I agree and concur with the US trustee concerns regarding the essentially the accounting for 329 00:22:32,960 --> 00:22:37,280 it and the monitoring of all of the accounts. 330 00:22:37,280 --> 00:22:40,560 And there's no reason not to just move all of the funds into the money market accounts. 331 00:22:40,560 --> 00:22:41,560 They are accessible. 332 00:22:41,560 --> 00:22:49,400 Now, if the debtor wants to substitute for either of those alternatives, purchasing the 333 00:22:49,400 --> 00:22:55,040 treasuries directly, I don't think anyone can complain about that option. 334 00:22:55,040 --> 00:23:02,640 But I understand the obstacles and the burdens and the time commitment in doing so. 335 00:23:02,640 --> 00:23:08,840 But either way, I don't want to be in a position where this goes past close of business Monday 336 00:23:08,840 --> 00:23:16,240 without us taking the steps to protect the funds. 337 00:23:16,240 --> 00:23:23,600 But I'm open to suggestions if anybody wants to tweak that pathway. 338 00:23:23,600 --> 00:23:28,360 And you can consider it and discuss it. 339 00:23:28,360 --> 00:23:33,600 If you need, I'm available tomorrow as well on a quick phone call if something has to 340 00:23:33,600 --> 00:23:39,600 be tweaked in order to satisfy everyone's concerns and expectations. 341 00:23:39,600 --> 00:23:43,200 Your proposal works for the debtors. 342 00:23:43,200 --> 00:23:45,680 I think it makes sense. 343 00:23:45,680 --> 00:23:53,400 And as we said, we're happy to continue working with the US trustee and the UCC on these issues. 344 00:23:53,400 --> 00:23:54,400 Anyone else? 345 00:23:54,400 --> 00:23:59,480 I appreciate your honor's ruling as well, and we would also like the opportunity to 346 00:23:59,480 --> 00:24:06,320 talk with people in my office about any particular tweaking, as your honor mentioned, if we could 347 00:24:06,320 --> 00:24:09,320 bring that to the debtors council attention first. 348 00:24:09,320 --> 00:24:12,760 And then if there are any issues, if we could bring that to your honor as well, we would 349 00:24:12,760 --> 00:24:13,760 appreciate that. 350 00:24:13,760 --> 00:24:24,880 And everybody knows where to find me.