American court hearing recordings and interviews - 2 - Saks Global Enterprises LLC continuation of first bankruptcy court hearing, 1/14/2026, 5:17 pm (second recording)

Episode Date: January 19, 2026

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All right, we're back on the record in case number 26-9013. So what I would suggest is that rather than have Mr. Harris cross-examine the witness at this point, why don't we go on to some of the other motions and so that you'll have time, Mr. DePumpeil, to address. address the questions, the arguments that were made in the motion. And that way, I think we'll have a better presentation because otherwise I think we would do the cross-examination and then, you know, take additional time.

And, you know, I read it quickly, so I really didn't have a chance to really study it. So I'd like to come back to that after we do, you know, we take another break and, we go through some of the motions i think that probably makes the most sense your honor we can certainly do that if it's convenient for the court we are also available and ready to respond now these are these are objections that we knew were coming so let's help with you we're happy to yeah i'm glad that's the case but i'd just like to

finish to be able to to read the objection a little bit more carefully than just you know a quick a quick peruse or through so why don't we go through the other ones and After it, we'll take it up right after the next break. Okay, thank you, Your Honor. Your Honor, this is Chris Harris. I think we just confirm that the witness is on the stand and so no one will be speaking to him in the interim on these topics. Well, I don't think you've been sworn yet. He hasn't been sworn yet.

Mr. Harris. So. Okay. So, uh, so why don't we, why don't we move on to some of the other items on the agenda and then, you know, we'll take a break. Mr. Hawkins, did you want to say something? Wait, did you hit five star? Mr. Hawkins? Your Honor?

Yes. There we are. Thank you so much. William Hawkins from Loeb and Lobe. We represent Dolce Gabana and Bichego. I am admitted to the southern and eastern districts of New York, bankruptcy courts, but not to your fine court. I do intend to do a pro hoc vizche. we just didn't have time today.

I hope you'll tolerate that for this brief presentation. Absolutely. Two things I hope to raise as an objection, but maybe could be helpful. Both of the clients that I just mentioned have consignment arrangements with the SACs companies, and it was not clear to us that consignment of goods and proceeds were clearly set forth as being some of the permitted prior liens, which I believe the dip facility in this case, I think, would be ADL, is not intending to touch. That was an objection or a request for a clarification. Then with regard to Don Chigabana, they have from Hoseco 2 an obligation for their indebtedness.

It's unsecured. Old Co2 appears to not have much debt and is falling in going into these cases. And so we would join with the concerns that were expressed by him and thought about putting a lot of debt on that entity. When right now we understand it can pay everything it owes. That's all, Your Honor. Thank you. Thank you. Right.

Anyone else wish to be heard? Your Honor. Yes. John McHobo, again, ultra-promil asking for Gorski Group. Gorski Group is also a consignment vendor, and we just got to agreement with the debtors and, I believe, the lenders as to language that they were going to put on the record on the consignment point. So I think this can wait because the consignment stuff came up.

It might make sense. I'll let the debtor speak to that. but um this might be good time for it that's fine that probably makes sense because that's probably somebody i did not uh mr hawkins i did not read the order to do anything with the consignments but if there's clarifying language on the record that would probably makes more sense i don't know your honor can you hear me yes this is set leberman from prior cashman may i be very briefly yes sir thank you sir Sure. Your Honor, as you may recall, we alongside our co-counsel, Andrews Myers, represent a number of vendors in these bankruptcy cases.

LVMH, Caring, Richmont, among their affiliated brands, along with David Yerman, SMCP, and Goyard. And we filed a reservation of rights today, which I believe is at docket number 130. and I'm only raising that right now, Your Honor, because this seems to dovetail well into Mr. Covery and Mr. Hawkins' remarks. And if I may be heard, I just wanted to raise two points for the record. Sure. The first is my clients have no issues with the debtors' financing. It appears there's a need for financing for the debtors to operate in Chapter 11 to pay claims of certain third-party vendors such as my clients. And to that end, we're supportive of our continued and long-standing relationship amongst

acts and my clients, and trust that that will continue both during and after the Chapter 11 cases. However, the second point I want to raise for the court, Your Honor, and while we're on the topic, I just want to be crystal clear on this, is that while the dip papers and related proposed order certainly allude to these issues, both my clients have various consignment and concession arrangements. and to be very clear on this, Your Honor, the debtors should be explicitly parted out for any special federal pledge, vis-a-be concession or consignment. We believe that that's certainly the intention that seems to be the language, but just to state the obvious for the court, Your Honor, the company can't pledge what's not there.

If there are goods or proceeds, which don't belong to the debtors, or my clients have superior rights with respect to those goods or proceeds, that those concessions and consigned goods should be carved out from any collateral that pledged. Like the other parties here, we've only had a few hours to really dive into this, and so we're still looking at it. But I just rise to not only reserve my client rights vis-a-vis concession and consignment, but also to make the point abundantly clear on the record and request that the dip order reflects that none of those goods,

again, concession, consignment, or the proceeds thereof will be pledged, part of the dip and my team is happy to work with the will key team on proposed language to be inserted on the dip order to that effect and with that reservation your honor I'm gonna let everyone get those here right you're on there anybody yes thank you your honor this Jason Peele Smith committee on behalf of that also Scott Raleigh as an up which is also a confinement vendor I did read Mr. Liegerman's reservation of life and I'm just looking to what he said and

I would like to actually that resolution of rights to respect to the confinement vendors' property interest and deserve rights on behalf of Steporelli in exactly the same way Mr. Reuteman did, and we also would be willing to work with that as counsel, the Cress of Language, for the dip order around that issue. Thank you. Right. Your Honor, if I may be here, please. Yes. And would people please mute their lines because we're still, although there's a lot less people. then are on the line, there's still a lot of background noise. So if you're not speaking your own line, please.

Right, go ahead, sir. Thank you, Your Honor. Christian Jensen, Sullivan and Cromwell, appearing on behalf of Zenia Group by the pending Prohawk, if I may be indulge to speak now. Yes. I'll just briefly join the comments made by Mr. Lieberman with respect to reservation of rights. My client and their, you know, its affiliated subsidiaries are party to similar concession agreements.

We fully agree that the dip cannot grant liens on inventory that the debtor does not own, but that, you know, for avoidance of doubt, any concession inventory should be fully carved out of any dip liens. Additionally, my clients are creditors at Holdcoe 2, and we join the comments made by Mr. Hawkins and others with respect to the dip financing at that entity. All right, thank you. Your Honor, may I have to hear? Yes. Brendan Scott placed a winner for other Southern Stevens on behalf of BH Multi-Com BH multi-color richline designs and youth designs also a group of consignment vendors

rather than duplicating the argument I'd just like to say that we do echo the sentiment of Mr. Lieberman and we join his reservation with respect to consignment because we have sent over some proposed language to the debtors early today and hadn't received a response We're happy to hear with the debtors closing on the record now. Thank you. Right. Anyone else wish to be heard? Yes, your.

Mr. Brunberg. Yes, Your Honor. Thank you, Mr. Belmont. Thank you, Your Honor. Yeah, for the record, Justin Bernberg, Shepard and Hampton, Council to Chanel, Akriss, and Ralph Lauren. We'll have notices of appearance and ProHax filed soon.

You're right. I, uh, I, uh, I join Mr. Lieberman's comments with respect to concession and consignment, as the others have mentioned, Chanel in particular, has a significant concession relationship with these debtors, a relationship that has been strained, as is evident by the top 30 list of unsecured creditors. But nevertheless, Chanel is very encouraged by the commitment by Mr. Britton's clients. Nice to see Mr. Britton. And Chanel stands by these debtors, Your Honor, and is prepared to support them through these Chapter 11 cases to the greatest extent that they can.

With effect to Acres, Akris also as a hold code two guarantee. Accress does not join the comments made by counsel to Dolce. And indeed, Akris and Roth Lauren and Chanel would like to see this different. group today. Thank you, Your Honor. Anyone else wish to be heard? Your Honor, can you hear me? It's Greg Galardi. Yes, Mr. Alardi. Go ahead. Your Honor, just very briefly representing Centric and Vince, I just wanted to again express our concerns about the DIC. We are creditors given credit support by the Hold Code 2 entity and we're reserving rights to potentially cross Mr. Weinstein

if we think it necessary. Thank you. Thank you. Right. If anyone else wishes to speak hit five star one time. Welcome in, Your Honor. Can you hear me? Yes, I can hear you, Ms. Heilman. Thank you, Your Honor.

Just for the record, Leslie Heilman from Bauer's Farr, on behalf of a number of the debtors landlords. I just rise because we do have, as is customary, we have reached out to the debtors and have worked on some resolution of our customary issues. to the DIP order or the interim DIP order, but one issue does remain open and at the appropriate time we would like to raise that objection on the record. And I would imagine that it would be more after Mr. Weinstein's testimony, but we do have one open issue and since parties have been stating on the record, their concerns with respect to the DIP, I just wanted to make sure that at the appropriate time we could be heard on the issue. All right. And what issue is that? The issue is with respect to the debtors, the dip lenders are seeking a waiver of the 506C, 552, and marshaling waivers on the first day of the case, Your Honor.

All right. All right. Anyone else wish to be heard? Your Honor, for me? Yes. Good afternoon or good evening you are. I'm Dan Fiorello from Ottawa, PC with me Dave Castleman. We're co-council to Bank of America, the administrative agent for the ABL bank group that provides the ABL revolving line of credit and proposed dip lender. Your Honor, I'll refer to the debtor's counsel to read on the record language that we agreed prior to the hearing with regard to the reservation of rights on the consignment and concession goods.

and we support the reservation of rights. Your Honor, today we're not trying to adjudicate the priorities of the consignment vendors or the concession vendors. We're merely looking to reserve rights for today's hearing as evidenced by the appearances by multiple counsel on the first day. We anticipate that between now and the final hearing, we'll have a lot of conversations and engaged with the company and the consignment and concession vendor council to reach,

acceptable language that will get folks comfortable. But, Your Honor, we are, in fact, a bankrupt over 10 banks providing significant liquidity and proposed liquidity in the Chapter 11, and we're merely looking to continue the same ABL revolving line of credit that the company has access to for years prior to the bankruptcy filing. And we're just trying to preserve the status quo for now, Your Honor, and to the extent of parties cannot reach a resolution on consensual language that would be reflected in the order submitted for final approval, then we would obviously everyone's rights, all reserved with respect to the final hearing on the matters concerning consignment and the concession meet priorities and interests.

Well, don't we hear from the debtor and then let's try to move on to some of the other matters, and then we'll come back to the dip. in short order. Good evening, Your Honor. Robin Stiegel, Milwaukee Far and Gallagher. You can hear me okay? I can hear you fine, yes. All right, thank you.

The vendors, whether they're wholesale, consignment, or concession, are obviously very important to the debtor's business. Ms. Sinclair went through that in her opening remarks. In anticipation of potential objections, at least on the interim order, we had included paragraph 27 and 28 of the DIP order. In paragraph 27, it talks to the consignment inventory and specifically reserves rights of consignors.

We did agree during, just before I got up, with one of the consignors that we would read on the record, that the parties write as to the priority of their liens, including purchase money, interest, security interest, in consigned goods as against if collateral are present. So that combined with 27 is intended to preserve the rights of consignment vendors. And as Mr. Fiorello said, we will work in the interim with all of the consignment vendors that reach out to us to try to come up with some consensual language to include in the final dip order. With respect to the concessionaires, we did include language in paragraph 28, 28, which we think should address their concerns.

We've heard them on the record. They'll have a chance to look at it, but if there are issues, we will work consensually with them going forward. All right. Thank you. Thank you. Good evening, Your Honor. Jessica Graber for the record.

Willkie Farn Gallagher, proposed co-counsel for the global debtor. Can you hear me okay? I can hear you fine. Yes. Thank you, Your Honor. I will be starting with agenda item number six, which is document number 13. This is the global debtor's motion for authority to continue. using their existing cash management system, including bank accounts and business form,

to honor certain related pre-petition obligations and to continue intercompanied transactions in accordance with their pre-petition practices. As noted by my colleague, the global debtors refers to all of the debtors, except for debtors that comprise the SACS office digital debtors. As Your Honor has heard, the SACS office digital debtors who maintain their own cash management system, will be seeking relief pursuant to their own separate cash management motion. As described in the motion, the global betters utilize and maintain a global cash management system that is comparable to centralized cash management systems used by other large retail companies.

The global system is actually comprised of two largely separate systems that interact in a centralized matter. Cash management systems, and the second is the Neiman market care. Although the entire system is comprised of almost 227 bank accounts across 11 banks throughout the global system. medicine system generally involves the flow of funds through various tax legacy and Neiman markets receipts and deposit specific purposes such as investment and tax funding accounts that receive and transfer funds receive under their legacy revolving credit facility as well. The global debtors with each other, non-global debtors built in more detail in the motion,

the cash plan decisions would be severely disrupted. To the detriment of the global debtors, their debtors are seeking authority to continue engaging in the intercompany transactions consistent with their pre-petition practices. as required under the main details and accurate records with respect to all intercompany transactions are requesting an additional 45-day extension of the requirements under Section 345B and the trustee guidelines with respect to their bank account so that they can work with the U.S. trustee to confirm compliance of the debtors, global debtors bank account. We do have a handful of revisions that we plan to result.

We plan to suggest effect. Well, just make sure to file a red line and I'll review the red line as well. Thank you. We'll do. Additionally, there were a few bank account numbers that were inadvertently excluded from the list of bank accounts that were forth in Exhibit 2, which we will fix as well. Previewed the requested release with the U.S. trustee's office, answered certain questions, and I understand that we are resolved on the questions they posed, and the U.S. trustee does not object to. Any questions, we respectfully request. Does anyone wish to be heard with respect to the cash management order?

Yes, go ahead. Your Honor. Ominey from Exxonik, absolutely no objection to cash management. other than we would like to reserve rights, which you'll hear in connection with our dip presentation, about debtor separateness. So as long as all of the first days are going to be without prejudice to our rights and arguments in that regard,

I won't raise my hand again until we get to the dip. Ms. Rekler? Thank you, Your Honor. Caroline Rekler, on behalf of Amazon. Your Honor, before the hearing, we had asked the debtor to include some language in the order that said that the debtor shall maintain a report setting forth all. the intercompany transactions involving SACS Fifth Avenue Holdco to LLC, SACS flagship real

property LLC, and or 12EE 49th Street LLC, and to provide us with a copy of that report on a weekly basis in addition to providing it to our creditors committee. And we just ask that the debtor include that language in the revised proposed form of order. All right. And we would join in that request. All right. Any objection? The debtors do not believe that there is any basis for Amazon and Exxonics be receiving those type of reporting, so we do object to that inclusion.

All right. So I think subject to a appropriate confidentiality agreement that it can only be used for purposes of monitoring the cash management, I think that so long as there is an appropriate confidentiality agreement that they can't use it other than for purposes of monitoring it and they can't disclose it except subject to further court order I don't think that's a you know bridge too far and but that that I'm gonna draw the line at that to the extent everyone else asked for it then we're gonna go back and and just give it to the creditors committee and they can inform creditors appropriately go ahead mr. your honor yes I'm sorry

Again, Dan Cerello from Otterburg, PC, Council for Bank of America as agents for the ABL lenders. Your Honor, some of the banks in the ADL bank group also provide cash management services. I just raised a concern regarding disclosing information relative to the cash management systems that some of these banks have with the debtors insofar as there may be confidential or proprietary information that may not be intended to disclose, but may be in violation of the bank's arrangements with the company. and so I don't want to have an agreement on the record that might put the company in jeopardy in violation of their arrangements with the bank. And I think all we're talking about is not so much the intercompanies, but the transfers between debtors. And, you know, it doesn't have to be – it doesn't have to show what bank or anything is just, you know,

debtor one to debtor two, debtor two to debtor three, and it's all with respect to eight, you know, the debtors that – Ms. Reckler has a concern about. I mean, that's all we're talking about. It's just a limited universe of those transactions. I don't believe, obviously, to the extent that there's an issue with that, I mean, this is not an issue with respect to the form of order. It's just something that can be worked out in the ordinary course. There's going to have to be a confidentiality of being entered into and everything.

Thank you, Your Honor. All right. Anyone else wish to be. Thank you. which to be heard on cash management. Mr. Wynne, are you... Your Honor, briefly, William, can you hear me, Your Honor? Yes.

Yes, sir. William Harkins again briefly. We just wanted to make sure that nothing that is brought forth in the cash manager in order compromises the ability to keep cash proceeds traceable and identifiable from the various confined goods, either money they may have now, especially because after the holiday season that will be a lot of sales

as well as going forward. That was great substance of that. Yes. So with respect to the cash management, I view that is strictly as a procedural order that continues to allow them to implement. You know, the bankruptcy code requires that you close all bank accounts and open up new bank accounts,

and this allows the debtor, you know, the cash. flows of the debtor to continue uninterrupted. I don't view this as a substantive consolidation or anything other than allowing the debtor to continue to operate in the ordinary course and now that they're in bankruptcy and I'm sure they did before is account for all of the receipts and all of the intercompany amounts. So I don't view this as in any way impacting the concerns that you have. But I'll let the debtor address that, but that's the way I read the order. Thank you, Your Honor. That's correct. All right. So let's, should we talk about the final

hearing? Sure, Your Honor. My understanding is February 13, yes, I'm sorry. February 13, I think that's what was discussed with Mr. Laws. Yes, I believe that's correct, Your Honor. Okay, so February 13 at 9 a.m. Central time, and that hearing will be, will be a virtual hearing as well. Thank you, Your Honor. All right, and so the objection deadline would be the Friday before, the February 6th. So if you could just work that into the proposed form of order that you, that you upload. We'll do, thank, Your Honor.

All right, so based on the, based on the testimony provided in Mr. Weinstein's declaration regarding the cash management system, I'm going to go ahead and approve the order, you know, subject to the resident, you know, subject to the comment I made with respect to the accounting for the inner company amounts. And with that, once the order is uploaded, I'll enter it and go forward. All right. So, so. So that order is granted subject to the presentation of the new form of order. All right, where do we go next? Thank you, Your Honor. Next up is agenda item number seven, which is the wages motion. This appears at docket number 10. Through the wages motion, the debtors are seeking authority to continue certain employee benefits in the ordinary court

and pay certain pre-petition claims owed to their workforce, both subject to the terms of the proposed order. The debtors currently employ almost 17,000 employees across the United States and abroad, all of whom are vital to the debtor's continued operations. The motion describes the debtor's employee obligations and programs in detail. This information is set forth and summarized in paragraph 18. A large portion of the cap accounts for health and welfare benefits, including medical and other benefit plans offered to employees, pay time off and outstanding leave obligations,

well as retirement benefits. A significant yet smaller portion of the amounts requested relate to pre-petition compensation obligation owed to the debtor's workforce, including temporary employees and commissioned employees. And the remaining portion of the amount requested relate to withholding obligations, including union deduction. Approximately 6,000 of the debtors' hourly-based employees

are eligible to earn commission, which makes up a large majority of those individuals' wages. The commission program is primarily available for certain employees in sales and sales support roles, and the amounts earned are paid as part of the employee's regular payroll disbursement. As part of the relief requested, the debtors are seeking authority to make pre-petition payments on account of their non-insider severance programs that constitute priority treatment under Section 507A of the Bankruptcy Code, as well as to honor post-petition non-insider severance obligations in the ordinary court solely as required by applicable law.

As indicated, the debtors are not seeking authorization to pay severance to any court-invort insider, as such term is defined under Section 101 of the Bankruptcy Code. In connection with those payments, the proposed order now includes reporting requirements, and this information will be provided on a monthly basis to be a U.S. trustee, any secured creditors committee appointed in these cases, as well as the dip lenders. prior to filing the motion, the debtors previewed the requested relief with the U.S. trustee's office and answered certain questions, and I also understand that we are resolved on the questions they posed and that the U.S. trustee does not object to the order.

Unless, Your Honor has any questions, we respectfully request that the court approved the wages motion and enters the order. Does anyone wish to be heard with respect to the wages motion? Your Honor, just how it went from the U.S.S.C.'s office. Yes. Um, um, council's correct. Um, we, we are resolved, but I just want to make this reservation, um, on the record. Um, I, I don't want to put a stop to, um, people's retirement plan at this time,

but, but there are certain supplemental executive's retirement plans within the wages motion. Um, we just don't reserve rights. Once we get more information, it is in violation, it's violated five or three C. Um, we want to just take a look at it and then preserve those rights. But in terms of the interim orders, um, we don't oppose, uh, a potential of the order today. All right. Thank you. All right. Anything further? All right. I've reviewed the, I've reviewed the motion and obviously the there's a lot of employees and the numbers are big, but obviously

keeping the employees is a key part of preserving value in this company. So I think this is proper exercise of the debtor's business judgment. I'm going to go ahead and approve the wages motion so you give me a minute all right that has been signed and sent to docketing thank you your honor is agenda item number eight which is the customer program motion disappeared at docket number 15 like many large retailers the debtors have historically implemented certain customer programs to promote customer satisfaction create goodwill for their businesses and enhance the value of their brand the debtors specific customer programs are described in

detail in the motion and include refund and exchange program gift card programs, credit cards, and loyalty and rewards programs, among others. The debtors are seeking authority to honor pre-petition obligations related to their customer programs, subject to the amount set forth in the motion, and to continue their customer programs in the ordinary course. Honoring these customer program obligations and continuing the program in the ordinary course is critical to preserving the ongoing value of the debtor's operations during these cases. Prior to filing the motion, the debtors previews the repressive relief with the U.S.

office. We incorporated requested language into the proposed form of order, which appears in paragraph four of the order, noting that in the event that the debtors choose to terminate any gift cards, they will provide sufficient notice to parties in interest, including by posting a notice on their website and at the store's locations. For the avoidance of doubt, the debtors seek to continue their gift card programs pursuant to the relief requested in the motion. With this inclusion, we understand that the U.S. trustee does not object to the order. Unless your honor has any questions, we respectfully request that the court approves the customer programs motion and enter the order. Mr. Hess, I think he filed a reservation of rights.

From behalf of Capital One, Capital One is a party to Neemans and Bergdorf-Goodman with regards to a private label credit agreement. As a general matter, Capital One is not object to. the continuation of the program, there's kind of a nuance that they have objections to. If that relates to what's described in our objection as the pre-force credit obligates that the program that provides their customers that purchase goods in excess of their credit lines, that Neiman's has the obligation to backstop those guarantee and agree to repurchase them, We've asked that be suspended for the time being so that there's no further increase than the recourse obligations of Neiman's and that we can wind down the existing outstanding

obligations. We have submitted to the debt of proposed language before the hearing, but there's a lot going on that we have not heard back from them, and so we're hoping that that's be inserted into the order. So subject to that limited objection, we stand by objection. Apologies, Your Honor. We did miss it, but we will review after the hearing and get back to Mr. Hess. All right.

All right. So, again, anyone else wish to be heard? So I've reviewed the customer program motion. Obviously, the employees and customers are our key participants in making this case of success. So I've reviewed the motion and form of order and I'm going to go ahead and approve the motion to the customer programs motion at docket number 15. So I'll wait for the revised form of order. Just make sure to contact Mr. Laws once that gets filed. Thank you, Your Honor. That is granted.

Thank you, Your Honor. The next item on the agenda is item number nine, which is the taxes motion, and this appears at docket number eight. By this motion, the debtors are requesting authority to pay taxes and fees that they owe to relevant state, local, or federal taxing authorities. And set forth in further detail in the motion, given the sheer size of the debtor's operations, the debtors are responsible for a variety of taxes and fees, including sales and use, income and franchise, license and regulatory property, and customs duties, among others.

As of the petition dates, the debtors estimate that they owe approximately $134 million in taxes and fees, which includes amounts incurred on behalf of audits. None of the taxes that the debtors are seeking authority to pay represent old unpaid taxes. Prior to filing the motion, the debtors previewed the requested relief with the U.S. Trustee's Office and incorporated requested language into the proposed form of order. This language appears in paragraph 13 and notes that the debtors will provide reporting to the U.S. trustee's office and on a professionalized only basis. counsel to the Diff lenders and any committee appointed in these Chapter 11 cases.

With this inclusion, we understand that the U.S. trustee does not object to the order, and unless your honor has any questions, we respectfully request that the court approve the taxes motion and enter the order. All right. Does anybody else wish to be heard on the taxes motion? All right. I'm going to go ahead and approve the taxes motion. I think that obviously most of the taxes are priority claims. and in effort to avoid penalties and potential, you know, implications for responsible persons, it's in the debtor's business judgment to go ahead and pay the taxes. So let me give me a minute here.

There has been signed and sent to Dockley. Thank you, Your Honor. Next up is agenda item number 10, which is the insurance motion, and this appears at docket number nine. Through this motion, the global debtors are seeking authority to maintain their insurance policies in the ordinary courts, pay any pre-petition amounts they're under, and honor the current surety bonds and letters of credit. As step forth in the motion, the debtors maintain 154 insurance policies administered by various carriers, which includes coverage for property damage, general liability, DNO liability, cybersecurity, and among other coverage.

The debtors are also partied of four premium financing agreements, all but one of these policies has been paid in full as of the petition date. The debtor's next payment under the cyber policy premium financing agreement is due at the end of this month. The debtors maintain 40 surety bonds in the approximate amount of $11.6 million, and these relate to utilities, customs, taxes, different security deposit, and liquor licenses. The global debtors also maintain various letters of credit for the benefit of the benefit of the budget. of third parties to support their obligations related to, among other things, workers' compensation, property leases, inventory, and transportation logistics. We believe that the maintenance of insurance coverage is not only essential to continued operation of the debtor's businesses and preservation of the debtors' states, but also required

under the trustees' operating guidelines. Prior to filing the motion, the debtors previews the requested release of the U.S. Trustee's Office, and we incorporated language into paragraph 7 of the proposed order. This language notes that the debtors will notify the U.S. trustee if they seek to renew, supplement or modify their insurance policies, security bonds, or letters of credit, and seek to obtain replacement coverage during the cases. I understand that we are resolved and that the U.S. trustee does not object to the order. Unless Your Honor has any questions, we respectfully request that the court approve the insurance motion and enter the order.

All right. Does anyone wish to be heard on the insurance motion? All right. Again, the insurance motion, obviously is required. Insurance is required by the U.S. trustee guidelines. In addition, it's a proper exercise of the debtor's business judgment. So I will go ahead and approve the order allowing you to proceed your insurance program. So give me a minute.

Okay, that order has been signed and sent to docketing. Thank you, Your Honor. I will now see the podium to my colleagues. Okay, just to make sure I want to, so with respect to, the cash management order you had we're going to upload a new order is that right yes that's correct okay I think that's the only one right yes right oh and the customer program okay got it all right thank you that's Wilkie Bar and Gallagher proposed council to what we've been referring to as the global debtors I'll pick

up right where miss Graver left off with agenda item number 11 is the global debtors critical vendors motion. It was filed a socket number 14. The global debtors are seeking authority to make payments to trade in 5039 claimants in an aggregate amount up to 126 million on an interim basis and approximately 337.4 million on a final basis. I do recognize, Your Honor, that on its face these numbers do err on the, as I'm sure you can have already today.

These relationships and these creditors are very, very important to the debtor's business, and it's a business whose success is directly influenced by, of course, their ability to stop to carry inventory. It is critical to this process and the go-forward operations more generally that the global debtors be able to restart those vendor payments and shipments to ensure that they can continue providing be diverse and uniquely curated inventory assortments to which their customers have become accustomed. We did engage with the U.S. Trustee's office prior to filing. I understand that we have addressed and resolved their concerns, largely by the inclusion of the standard reporting matrices obligations. I'm happy to address any point in particular, but unless the court has any questions would submit that the specific facts and circumstances of these cases do justify and support the release being sought and the motion be approved on an interrupt basis. All right. Anyone else wish to be heard?

the vendors are just as important in this case as the customers and the employees. And so I think this is a proper exercise of the debtor's business judgment. I'm going to go ahead and approve the order. Let me just give me a moment. That order has been signed and sent to docketing. Thank you, Your Honor. Moving to the next item on the agenda, the lien claimant's motion at agenda item number 12. This motion was about at docket number 16.

Similar to the critical vendors, the parties concentrated by the promotion are those parties that are necessary to maintain an uninterrupted flow of inventory and other goods to the debtors' networks and to their stores and customers. In addition to ceasing services, which would cause disruption and delay to the debtor's operations, these parties may be entitled to assert liens on the debtor's property as a result of non-payment. Accordingly, the debtors are seeking authority to pay up to approximately $114 million. Again, these payments are crucial to turning this to get back on, so to speak, so the debtors can redo, excuse me, ordinary course operations,

and inventory sourcing as they transition into these proceedings. Unless Your Honor has any questions for me, I would ask that the court entered this order. Right. Does anyone wish to be heard with respect to the lien claimant's order? Yeah, Your Honor, this is how one from the U.S. trustee's office. Can I be heard? Yes, sir. My only concern with this motion, I think I raised you with the debtors,

is that we're granting on a final basis of approximately 114 million on day one. I'm very concerned about that. It's a big case, and I understand it's a big number. But in terms of not having a committee, not having more eyes on the amount, the critical vendor motion is also a big number, but then you get trade agreements, you get a final, and there's procedures to actually look into the numbers. But once the order is entered $114 million of a state of acid,

it will be leaving. And I don't know that their needs for it, but my only concern is I don't have a committee in place yet. Please take a look at these numbers. And my suggestion was to bifurcate the process in the way that's what they need in the next, I don't know, three weeks until we get into a second day hearing, as opposed to having final approval of $114 million today less than 24 hours of notice.

We all say to that, Your Honor, is that a number of these claims subject to this motion do give rise to security claims that would be paid out later in these cases regardless. And we have incorporated the same matrix in scheduling reporting obligations, and of course we're happy to provide that to any committee that is appointed in these cases. All right. So I'm going to go ahead and grant the motion on a final basis, but obviously the debtor is going to pay these. They're not going to pay these all at once,

and to the extent that the committee wants to raise a question with respect to the timing of the payment or the necessity of the payment, I'll allow them to raise that at the second-day hearings. But I think these are different than critical vendors. Critical vendors, you have to negotiate a trade agreement, you have to do those kinds of things. To the extent these are lien claimers,

that can actually hold your, you know, disrupt your supply chain, I think that they are, I'm inclined to grant the relief. I don't think, in fact, that the debtor doesn't have sufficient cash in order to be able to pay these all on day one. They're authorized to do it, but they're authorized but not directed. So I think they will be paid in the ordinary course. I'm sure the debtors will act prudently in terms of how they're. going to handle this. So on that basis, I'm going to approve it. But again, to the extent the

committee sees this differently than the debtor, obviously they're going to have the opportunity to raise that issue. So on that basis, I'm going to go ahead and grant the order as drafted. Thank you, Your Honor. I'll allow my call in to take you to the remainder of the motion. Good afternoon, Your Honor, Zachary Charleston. For the record, Bohyparn Gallagher proposed counsel to the global debtors. Can you hear me okay? I can. We need to be addressing agenda number 13, which is docket number 12, the automatic stay motion.

The debtors operate as a global enterprise, and importantly, as reference and connection with the critical vendors here, the debtors have regular dealings with foreign customers, contract counterparties, he severely disrupted. It's likely that these foreign vendors are unfamiliar. This order seeks to notify parties of the stay. We believe the motion and the proposed and does not expand the protections under Section 362. No comments to the form of order. Unless the court has any questions, we'd respect to...

All right. Does anyone object to the entry of the comfort order? I've reviewed the proposed form of order. I think it does restate what the automatic state indicates, and to the extent that you have a global enterprise, I think it's important to make sure that all of the assets of the estate are protected, so I'm going to go ahead and enter the comfort order. That's been signed and sent to docketing.

Thank you, Your Honor. Next up, we have agenda item number 14, which is the utilities motion. By the utilities motion, the Debt Assurance of future utilities. Prohibiting utility companies from discontinuing, altering, or refusing service, companies provide servicement of the debtor's brick and mortar locations, distribution and fulfillment center. Contract with various services to debtors utilities invoices and payments. It would significantly disrupt this case and impact the debtor's ability to sell merchandise

and operate as they go forward from the debtors newly established utility deposit of the debtor's estimated monthly cost of free petition services. This is a similar size. We do have a few revisions we plan to make to the proposed utilities order. We received comments from the debtor's landlords. Any else wish to be heard on the utilities motion? reviewed the motion and the proposed form of order. I will approve the motion.

I think under 366, the way I read 366, you have to have, if somebody request additional adequate assurance within the first 30 days, you have to have a hearing. So what I'm going to do is, and this is not, I'm going to say, since the first case was filed on the 13th, 30 days would be January 12th. I mean, I'm sorry, February. So I have a hearing starting that day at 9. So I'm just going to schedule a 30 minute at 8.30 to the extent, just limited to to the extent anyone requests additional adequate assurance.

during between now and that date so that we could come in to do it I anticipate that it won't happen but I think 366 says we have to do it within 30 days and so I'm gonna go ahead and and just pencil that in to have it but otherwise I'll go ahead and grant the proposed form of order the proposed form of motion and then I'll wait I'll wait for your order Thank you, Your Honor. On the agenda, we have item number 15, the Schedules and Sofa's extension motion, which was filed at docket number four.

By this motion, the debtor seek entry of an order extending the debtor's deadline to file their schedules and statements in 2015.3 reports by 45 days to March 13, that being 59 days after the petition date. The global debtors submit that cause exists to extend the schedule and statement's deadline and the 2015.3 report's deadline, given the voluminous number of books, records, and documents that the debtors complex accounting systems across various legal entities located in numerous jurisdictions, this to modify the requirements of Local Rule 2015-3, to permit the global debtors to file their 2015.3 reports every six months rather than monthly as required under

the local rule. A monthly compilation of these materials for all non-subsidiary operations, Notably, the global debtors do not seek a full waiver of their obligations to file the 2015 reports. Rather, the global debtors seek permission to file the 2015. Instead of every month. There will be no harm to any parties in interest here, as they will still receive the necessary We would note, Your Honor, that the release requested by courts in this district in complex trust that you enter it.

Mr. Wade. How much for the U.S.S.S. No objection, Your Honor. I would not require them to file their... schedule in 14 days. I mean the extension makes sense for these letters. All right. All right.

So, again, I've reviewed the proposed form of order. I think in the case of this size, I think the requests are appropriate. So let me, Mr. Wynn would normally require you to do that within 14 days, but he's being nice today. Thank you, Mr. Watton. All right. That order has been signed. and sent the document. Thank you, Your Honor.

With that, I will see the podium to our colleagues at Haynes and Boone to continue at the agenda. David Scott, Agon-Boon proposed co-councounsel to the global debtors. The next item on the agenda is item 16. The creditor matrix or reduction motion filed the docket number seven. In this procedural motion, the debtors seek approval of three things. Using a single top 30 list and consolidated creditor list, the form and management, of notice of commencement of these cases and the redaction of personally identifiable information.

For the first, using a single top 30 list and consolidated creditors list is consistent with the complex procedures and customary practice in this district for large cases like these. For the second, the debtor submit that the form of notice attached to the proposed order is exhibit one. It complies with complex case procedures and is also customary for cases like these in this district. And then lastly, we seek authorization to redact personally identifiable information. As the court knows, privacy concerns are paramount in today's world. And the requested relief is narrowly tailored to balance the competing interest between transparency in these cases and privacy concerns of individuals that are brought to these cases involuntarily.

We incorporate comments received from the U.S. trustee in the proposed order, and I believe they're off on the proposed order so unless the court has any questions we request entry of the proposed order file the docket number 7-1 all right does anyone wish to be heard with respect to the redaction motion I've reviewed the motion and the proposed form of order and again I believe this is a proper exercise of the debtor's business judgment I think the concerns raised by mr. Trosh are genuine concerns especially with respect to the privacy issues and and At the administrative convenience, I think that's being done with no similar.

There's no harm to any of the creditors as a result of this. So, all right, I signed that order and send it to docketing. Thank you, Your Honor. The next item on the agenda is item number 17. The debtor's joint NOL and record date motion, which is filed the docket number 11. This is also a procedural motion, Your Honor, which the debtors seek approval of two things. procedures governing certain transfers of equity interest in the debtors and declarations of worthlessness for tax purposes with respect to equity in debtor sacks global holdings LLC

and then also a record date for potential sell-down procedures applicable to transfers of debt claims against the debtors. The purposes of these procedures in the record date is ensured that the debtors can adequately protect against the loss of their substantial tax attributes, which are property of the debtors' estates. Trading of equity interest in the debtors during these cases could cause an ownership change to occur that would adversely affect the debtor's ability to use their tax attributes. The procedures detailed in the motion set forth restrictions on the transfers of stock in the debtors and the declarations of worthlessness with respect to equity and debtors'

tax global holdings LLC. To avoid a transaction that would be irreversible for tax purposes and destroy the debtor's valuable tax attributes. The motion also seeks approval of a record date to put parties on notice that the debtors may need to seek a sell-down order for any debt claims acquired after the record date. We're not seeking a sell-down order today, Judge. We're only seeking to establish the record date. So that if the debtors have to seek a sell-down order, the debt claim holders are already aware of the record date.

for purposes of the sell down. Because certain changes to the debtor's equity structure and post-record date debt claims trading could threaten the debtor's valuable tax attributes, the debtors believed that this relief is in the best interest of their estate and all parties in interest. The proposed procedures are customary practice in large Chapter 11 cases that balance notice and latitude for trading stock and the debt claims while at the same time protecting valuable estate assets. We previewed the motion and proposed order with the U.S. trustee and did not receive any comments. So unless the court has any questions, we respectfully request entry of the proposed order, file the docket number 11-1.

All right. Does anyone wish to be heard on the NOL motion? All right. So, again, I reviewed the proposed form of order and the motion. The debtor has billions of dollars of tax attributes, and I think this is only prudent. for the debtor in exercise of its business judgment to protect those assets, which are, in fact, property of the estate. So I'm going to go ahead and approve the motion. Thank you, Your Honor. That concludes my portion, and I'll pass the virtual podium to the Bradley team.

All right, so that order has been signed and sent to docking. All right, Mr. Martin, tell him not to put you last. I say the best for last, Your Honor. Before I begin, a few housekeeping items, First, once we move to admit two exhibits. First of Exhibit 12, which is the declaration of Andrew D.J. Heed in support of S.O.5, digital letters, chapter 11 petitions, and first date pleadings. All right. Anyone object to the declaration of Mr. Heedy, and that is at docket number 12? No, I'm sorry, it's not. It's docket number 37. Back in number 37 in connection with the two matters for the what I call the digital debtors. All right, hearing none, I'll admit that as his direct testimony.

In the second exhibit, Your Honor, be the admission of Exhibit 14, which is our initial cash collateral budget. Does anyone object to the admission of the initial cash collateral budget? It's a three-week budget, right? Yes, Your Honor, but we'll be asking to come back in two weeks. Okay. All right. So it's a three-week budget. Does anyone object to the admission of the budget for the, what I would call, the digital debtors?

So that exhibit, which is attached to exhibit, number 14, is admitted. Thank you, Your Honor. Next, sir, I wanted to, go ahead. I just wanted to note for the record that, as the Wilkie team went through their first day motions, much of the release that was requested in those motions is joint relief as it relates to the S.O5 digital letters would be very unusual for a case of this size to only have two first day motions.

That's because we, for efficiency purposes, joined in much of the relief that was being requested by SACS global. The first motion I'd like to go through is the cash collateral motion. The S.O.5 digital letters need to the use of cash collateral to avoid irreparable harm. After the use of past collateral, they would not be able to continue on in their business in the only rate course. The debtors secured creditors are represented by Caledine Commercial Finance all three

as pre-petition agents, and more than real as their counsel. Governor, I'd like to go through some of the provisions of the order, and if the court has any questions as I go through it, I'd be happy to answer them. No, hold on. Let me. I have it. All right, why don't you go ahead? I had, I just want to make sure I understand paragraph number nine.

In paragraph number 17, you know, the amount for the challenge is 50,000. I don't know whether that's an appropriate amount. Obviously, that's going to be, and it's also 50,000 in the dip motion, which is probably not an appropriate amount. but I don't know whether this is it. Obviously, that's without prejudice to the committee coming in and asking. And then I don't, I really, the only question I had was really, I want to understand, make sure I understand paragraph nine, but other than that, I really didn't have any questions. All my other tabbies I answered myself.

I understood, Your Honor. I think just for the benefit of everyone, because some of these terms were, So negotiate. I would like to get that on the record if the court is okay with that. Absolutely. The primary item I wanted to note for everyone relates to the

cash collateral budget during interim period. The budget contemplates establishing an escrow $350,000 relating to amounts that may be paid to the fax global debtors as it relates to fees and expenses that they may be

covering that are for the benefit of the SO5 digital letters. As the court is aware through the first day declarations of Mr. Weinstein and Mr. Heady, the S. S.5 digital letters consolidated their operations with the global letters back in 2021. And since that time have been operating under a sharing agreement, that sharing agreement contemplated the certain expenses to be

reimbursed to the SACS global debtors. And now that we're in bankruptcy, the analysis now needs to change to whether those expenses are reasonable and necessary under 503B. And so what this led is it creates a framework or funds to be set aside so that if there is an administrative expense claim between the estate, that there's a mechanism to tee that off. And this is, I think, the first agreement relating to that.

and I'm sure we'll be revisiting that again in the next interim order and in the final order. So I just wanted to preview that for the courts. Where is that in the budget? It's the TSA payment at $175,000 per week. Right. Was there an updated budget because the budget I have? I know you filed a revised form of order. Is it attached to that?

If it's not your own, I'll make sure it is. I don't have it up in front of me right now. Okay. because the SAC's Global TSA payment is zero if there's no amount in the budget that I have. That must not have been updated, so we'll make sure that the updated budget gets attached to the final proposed order. That's been filed with the court. All right, thank you. All right, does anyone else wish to be heard with respect to the S.O.5 digital debtors?

So again, obviously, these debtors need to have cash collateral, access to cash collateral. I think the form of order is perfectly appropriate. I think it has the, with respect to both the events of default and the challenge period, I think it has the standard language with respect to those. So I'm going to go ahead and approve the cash collateral for the 50 digital debtors. I did get a revised form of order at docket number 77. And let me just see. And then you know, I believe there's another revised form of order at rocket 141.

That must have started. And then I see that the approved budget wasn't attached. So we will read that order with the budget. All right. So I'm going to go ahead and grant them. Yes. Yes. Yes.

So, Aaron, can I be heard. Brunton Scott has placed, I wonders, your other Southern Stevens, again, on behalf of VH, Multi-Comb, H, multi-color, richline designs, and unique designs. Yes. We, we, I'm speaking only because they have similar concerns that we raised with respect to the DIP motion regarding the preservation of consignment vendors, or consignment rights. Is there going to be similar language of reservation as similar to that in paragraph 27 of the DIP order included in the cash collateral order? We have to object for that. And the intent is to preserve our rights of consignment parties. Thanks.

I mean, to the extent, I think that resolves any objection you would have with respect to pre-petition consignment goods, goods delivered pre-petition, but we also propose some language related to post-fetition delivery of consignment goods that was designed really to try to prevent the interruption in the debtor supply chain. we have proposed language that would give consignment vendors comfort that goods delivered post-petition are not going to be challenged and there's going to be some certainty that those goods are not going to be viewed as property to estate and that otherwise consignment would have perfected consignment rights on those goods.

We don't want to be in a situation where we're delivering goods and then we get to a final hearing all to find that somebody wants to challenge our rights with respect to goods that were delivered post-petition. Pre-petition, I think, is a different story, whatever rights we have or the rights we have. You know, my clients are happy to and hoping to support these debtors in the post-petition period, but I think they're also looking for some comfort that, to the extent they do deliver goods, they're going to have protection,

and they're not going to have someone coming in and challenging their rights. So we had presented to some language to the debtor that would provide for essentially automatic perfection of consignment rights to the extent people were delivering goods on consignment and it was clear that they were delivering goods on consignment. We hadn't received a response from the debtors. I know this was governed a lot of falls, but I don't know how to deal with that at the moment.

Typically, you know, they seem like to step outside and try to talk through something in the hallway. But it's possible, Your Honor, we could just put this on hold for a few minutes and we could resend that language to debtor's counsel. So, I'm happy to review any proposed language. Yeah, and this is an interim. This is an interim order. I think your request is a reasonable request.

So they're going to have to upload another order anyway. So I'm going to go ahead and approve it. And then to the extent there's an issue with respect to the language, I'll take that up. And it would be, you know, it would be as of the, you know, when we go to the final hearing? And then when did you want a final hearing on this? You said two weeks?

Yes, Your Honor. You have anything available on around January 27. I'm going to say. Just on a second, let me see. I'm just communicating with Mr. Laws. Just give you a minute. Thank you. Could you go out to the 23rd?

Is that or is that too long? I defer to Mr. Carter as to whether the budget can be extended to the 23rd. Are you talking about February 23 or January 23? I'm talking about January 23rd. Okay. That's within our two-week period, and that works for the days. All right, so we're going to do January 23rd, and that will be a virtual setting. Thank you, Your Honor.

Before we go off the topic of cash clutter, I wanted to make sure I answered any questions that the court had regarding paragraph 9, which is the application of proceeds of prospectus of post-petition quota. No, no, I think I understood. kind of what's going on now. Okay, thank you. All right. All right, so I'll go ahead and grant the motion subject to the language that we're going to get with respect to making clear that with respect to consignment, those assets on a post-petition basis are not becoming part of the collateral base and that in the pre-petition, everybody's reserving their rights.

Thank you, Your Honor. And with that, I'll turn the podium over to Janet Bailey, relating to the SO5 digital debtors, cash management motion, which tracks generally with the cash management motion that the court already approved for the global debtors. All right. Go ahead, Mr. Bailey. Thank you.

Good evening, Your Honor, James Bailey, with Bradley Aaron Bolt Cummings, proposed counsel for the SO5 digital debtors. Your Honor, much like the global debtors, the digital debtors just need this straightforward relief to ensure continuity of operations to maintain control and transparency over cash and avoid disruption on the first day of these Chapter 11 cases. Your Honor, prior to the petition date, the S.O.5 digital debtors operated a cash management system using established bank accounts and ordinary course collection and disbursement procedures.

That system has been in place for a significant period of time. It's well understood by management and includes internal controls designed to safeguard state funds. There is a request to continue intercompany transactions in the cash management order. That would be in the discretion of the SO5 digital debtors, of course, with any payments being consistent with the cash collateral order in budget. We also requested certain waivers of the U.S. trustee operating guidelines and the timeline to comply with Section 345. Your R&Ds are customary, reasonable, and necessary relief to ensure a smooth transition. in these cases. We had previewed the order,

motion and order with the U.S. trustee, who I understand has no objections. Your Honor, I think this would go out to the February 13 second hearing date with the same objection deadline tracking the Global Debtors motion. Glad to answer any questions, Your Honor. All right. Does anyone wish to be heard

on the S.O.5 debtors cash management? Motion. I reviewed the motion of proposed form of order and again I think this is the proper exercise of the debtor's business judgment in allowing them to have the uninterrupted use of their cash as opposed to shutting everything down and starting all over again. So I'm going to go ahead and grant the motion. So give me a minute. All right, I've signed that and send it to docketing. Thank you very much, Your Honor. I believe that, I would see the opinion back to the Global Guarters Council. Thank you.

All right, why don't we come back and let's take a 10-minute break. Why don't we come back at 650 and we'll proceed with the dip at that time?