American court hearing recordings and interviews - 23andMe - Audio of June 4 2025 Bankruptcy Court Hearing, case 2025-40976 before the US Bankruptcy Court

Episode Date: June 9, 2025

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calendar. 23 and me, holding co. At all. Appearances in the courtroom, please. Good afternoon, Your Honor. I'm Mr. Nathan Wallet. Good afternoon, Your Honor. Chris Hopkins of Paul Weiss, is co-counsel to the debtors.

I'm here today with my colleagues, Mr. William Clareman, Mr. Jeffrey Rector, Ms. Grace Hutz, and we're also joined by Mr. Andrew Swift from the way. Very good. Good. afternoon, Your Honor, David Unsef of Lawfare of Brian K. Blighton Paysner, on behalf of TTAM Research Institute,

Ann Wigiski, ABC 2.0 LLC, the Ann Wigiske Revitable Trust, and the Ann Wigiske Foundation. With me today are several lawyers from the Skadnardt's firm and the Quinn Immanuel firm, and I will introduce who will be speaking first on behalf of the parties we represent Mr. Sushiel to the Lion. Good afternoon. Good afternoon, Your Honor. Thank you, Amy Lainehouse from Wachtel, Lipton, Rosen, and Katz. We represent Regeneron Pharmaceuticals.

I'm here in the courtroom with Benjamin Scrooby from Landriff GPM, as well as my colleagues, Michael Ben, and Michael Castle. I might need to refresh on some of these names as you come up to speak. A lot of new people in the last two days. Good afternoon, Your Honor, one of the new people. Spencer Desai, I entered yesterday as local counsel for the ad hoc equity group. I would like to introduce Mr. Robert Stark from Mr. Andy McCarty.

party of Brown Rudnick their pro hoc motions were filed yesterday in our pending very good thank you afternoon your honor Joshua Watts for North with North Rose Fulbright for Jambu capital good afternoon your honor Nicholas Zoludiki and Miranda Swift of Stinson LLP co-counsel for the official committee of unsecured cardities good afternoon your honor Jason Adams Kelly Dryan Warren counsel for the official committee of unsecured creditors working in the courtroom today as just yesterday is Megan O'clock. Very good, thank you.

Good afternoon, Your Honor. Allison Espec, Assistant, Missouri Attorney General, representing the city of Missouri. Good afternoon. Good afternoon, Your Honor. Neil Richards, Washington Law School here in my capacity as the CPO. I'm joined on WebEx by my counsel, Ali Jasani and Kirkner.

Good to meet you in person. Thank you. Thank you for coming in. Good afternoon, Your Honor. Joe Schlaughtsauer with the U.S. trustee. Appearances on the WebEx. Good afternoon, Your Honor. Kevin Barnes, Class A.

Sherholder. Good afternoon. Good afternoon, Your Honor. Charles DeCosito, Clayson, Sheldon. Ms. DeS. Good afternoon, Your Honor. Abigail Ryan, with the National Association of Attorney's General, representing 23 of the states in the United States that we call the NAG State.

Very good. Your Honor. Good afternoon, Your Honor. This is Ballila Jordan with the Minnesota Attorney General's Office. representing the people of Minnesota. Good afternoon, Your Honor. Can you hear me okay? I can. I'm looking for your picture on the screen, but I can hear you. Okay, thank you. I'm not sure why it's not popping up.

Apologies for that. Lelah Milligan appearing along with my colleague, Walmart, Desai, with the Texas Attorney General's office, appearing on behalf of the state of Texas. Good afternoon. and Leonard on behalf of the state of Oregon. Good afternoon. Go ahead. Kate Snothers on behalf of the state of Alaska.

And Heather Crackett on behalf of the state of Indiana. Mr. Crackett. Anyone else on the WebEx? Good afternoon. Go ahead. Yes, here. Hi. NJ. Chang, Posse, shareholder.

Okay. Okay. I think that's everyone. Mr. Risky. I think, Your Honor, if I'm risky for the record, if acceptable to the court, may I invite Mr.

to get the court an update as to some of things going on before we get into the agenda today? Certainly. Mr. Hopkins? Thank you, Your Honor, again, for the record, Chris Hopkins of Paul Weiss as co-counsel to the debtors. So, Your Honor, I don't think I have much of a preamble in terms of an update. I think we can, if it's all right with Your Honor, I think we're prepared to basically get right in today's agenda, which was filed at docket number 627. and the first item on the agenda is our motion to expedite the hearings on the final proposed bidding procedures.

Did Your Honor enter an order on that today? I don't think I entered an order on a ceiling motion, but not the motion to expedite. So I was considering whether we should have our status conference first, but I could be persuaded. there may be some benefit to having a status conference without, with the veil of ignorance about who is going to be the, what position the bidders are going to be in when we get to the sale hearing and that sort of thing. But if you feel strongly about getting to the merits of the final bidding procedures motion, you might convince it.

Well, given your Honor's invitation, I'll take you up on that. All right. Why don't we go to the status conference, then? Or take me up on the opportunity, take the opportunity to convince me. Okay, okay. I do think, Your Honor, based on... Okay, that's fine. Obviously, the other parties should, you know, speak for themselves.

I think that the motion on the final proposal procedures, Your Honor's ruling on that is really going to have a significant influence on the events from here until the sale hearing. And so from the debtor's perspective, before we get into what's going to be sealed, what's not going to be sealed, what discovery is required, what briefing schedule is required. Respectfully, I think that getting to the outcome of our motion and getting a ruling from your honor on how he sees what should happen next is going to be the most efficient way to run it today. Obviously, we'll defer to your honor in the views of the other parties, but I think that depending on how your honor rules and what the rules of the road are from here to June 17th are going to be, it's kind of that back. into what, you know, discovery and briefing schedule and all that looks like from now and what we're doing. All right.

Anybody feel strongly about doing it the other way? All right. You win, Mr. Hopkins. Motion to expedite. I'll take it, Your Honor. So we filed the motion to expedite at docket number 575. Just a few quick points. I mean, obviously, we're all here today.

I think this process, whatever Your Honor rules, the process needs certain. as to how this is going to play out from now until the sale hearing. We want to, we wanted to get these procedures approved now so that the court knows, the parties know, the bidders knows, the AGs know, Professor Richards as the CPO, you know, kind of understands what's coming, what's next, when we're going to get answers to certain key questions that have great relevance to what issues, if any, are going to be litigated at the sale hearing. And so that's why we asked the court to indulge us and hear the procedures motion on an emergency.

motion on an emergency basis. Okay. Anyone want to be heard on the motion to expedite? In the courtroom first. On the WebEx, bring your opposition, I'll grant the motion to expedite. And let's proceed to the merits of the final procedures motion. Is that the best terminology for it?

I think so, Your Honor. And thank you. And so before I get into, you know, what are the procedures? I think it's important to provide the court some context to help frame the issue. and kind of how we got here today. I mean, to be clear, the debtor's position is this should not, I mean, again, obviously deferring to your honor,

this should not be an evidentiary hearing about what happened at the auction. This should be about what happens next. But I think it will help the court and parties in interest as they assess why we're proposing what we're proposing to just give our perspective and our color on the key events that let us fit today. And I'll try to be very brief. The thought's all right with your honor.

Yes, please. So the debtors ran the auction from May 14th to May 16th. Over the course of three days, a lot of competitive bidding. Unfortunately for our stakeholders, it resulted in a great outcome. It's a $256 million successful bid from Regeneron and a $156 million backup bid from T-TAM. T-TAM, as is apparent from their papers, takes issue with how that auction was conducted

and believes they can continue to bid and our continuing to bid. We have a different perspective, given that it gets a lot of air time, and I think it colors how we landed on the final proposal procedures, just very briefly. The auction opened with seven or so qualified bidders. By the second day, it was apparent that it was really a two-horse race between Regeneron and T-Cham. and bidding progressed from about, you know, 52 million up to the 150 million threshold by the end of the day on Thursday. At that time, Regeneron requested an adjournment to the following day. The debtor's conferred. We granted that adjournment.

TTIM wanted the auction to continue. We've been there for two days. They wanted to keep going. In our business judgment, with the consultation parties, we made the decision to grant the adjournment request. But we told parties there would be no further adjourned. Mr. Richards has a lot of work to do. There's a lot of work that needs to be done ahead of the sale hearing, and we needed to bring some finality to the process.

On the second day of the auction, and on the third day, the debtors heard from Regeneron that we thought we were running the auction unfairly against them. That we were giving too much credit to the financial wherewithal of T-TAM, as an insider or an entity controlled by an insider of the debtor, and that they didn't feel like it was a fair process. We were able to convince them that it was, but they did raise that their concerns were serious enough

that absent setting the floor on the backup bid, they didn't want to continue bidding on the second day of the off. T-TAM eventually agreed to that, and we proceeded through the second day on that basis. Step into the third day, We had determined that, based on the financial wherewithal from TTIAM, that there was a certain amount they could bid up to. Luckily for the debtors, the bidding breached that threshold

and passed that threshold when Regeneron submitted its bid, its current successful bid of $256.56. TTIM requested more time to provide evidence of financial wherewithal for the debtors. And at that point, Your Honor, we faced a choice. We had a decision to grant the adjournment and risk Regeneron following through on their statements that, given their perceived unfairness in the process, they would no longer continue bidding. If we did that, we granted an adjournment and TTAM showed up the next day, we would, one, potentially face litigation from Regeneron that the auction was unfair.

they're not found to their $256 million bid, and everything that follows from that. And that assumes that T-TAM provided evidence of financial wherewithal and actually, in fact, submitted a higher bid, which would have been approximately, based on the rules of the auction at the time, about $261 million. The other option was to follow through on what we said on Thursday, conclude the auction with Regeneron at $256 million,

and T-TAM is the backup bidder at $256 million. And that's the decision that the special committee made. And, you know, I think the question here is, you know, what if we had allowed T-TAM to keep bidding? And it didn't plan it. They didn't provide the financial wherewithal. They couldn't close. You know, what was the alternative the debtors were facing

at the time they made that decision at the auction? We had Regeneron saying it's unfair because you're preferring an insider. We had T-TAM saying it's unfair because you won't give us more time. And really what we faced was if we granted the adjournment, Regeneron walks. Maybe T-T-T-TAM wins the auction at 261. Regeneron litigates that process. They litigate whether they're $256 million bid is in fact binding

based on how, whether or not we complied with the bidding procedures. And if T-TAM had not been able to close that transaction, and Regeneron was the backup bidder, we would have incinerated $100 million of value for our stakeholders. And so it was a very difficult decision, but that decision of putting the $256 million bid from Regeneron at risk was not a decision that the Special Committee was prepared to make at that time. And so we concluded the auction. And I say that, I say all that not because I want to put in evidence.

or, you know, ask your honor to rule on whether any of that was appropriate. I just think it's important that court understands as you evaluate the procedures. We ran an auction where both sides said it was unfair in certain ways. We delivered a good outcome, and now the question is, how do we preserve that outcome and continue to maximize value for our stakeholders? And so, after the auction, as I said, T-Camp objects, and we acknowledge the objection, they continued to bid, and they submitted a revised proposal at a substantially higher purchase price than the regenerant bid as it exists today. Because all of it's under seal, I'm not going to go into specific numbers.

And by May 22nd, they had provided new forms of credit support, new forms of financial wherewithal that were not available at the auction but have convinced us that their bid is a fully financed bid as a as a, as a, as a, as a, as a, stands today. And the debtors under the supervision of the special committee are evaluating that way. We're engaged in discussions with both bidders and we're being very deliberate and very careful because we have today a very good outcome for our stakeholders and we want to be very thoughtful about not doing anything that jeopardizes that outcome while continuing to maximize that. Regeneron believes that the auction was validly conducted based on the terms of Your Honor's bidding procedures, T-TAM is prohibited from continuing to submit bids to the debtors.

And they also believe that if the debtors were to take certain actions to reopen competitive bidding without their consent, that they will argue that they have a basis to terminate their aphiol, that we will have violated covenants and they're no longer bound by the successful bid coming out of the auction. T-TAM's view is that they can did, one, because the auction was invalidly run and concluded, and two, that we have a fiduciary out under the regenerative deal. And so kind of distilling all that into plain language for the court, the auction resulted in a great outcome. We need to protect that outcome.

We also have to maximize that. T-TAM wants to pay us more money, income by May 21st they had convinced us that they had the financing to pay us that money. Regeneron thinks they can't give us more money. And if we try to get it through a competitive bidding process, that they have the ability to terminate their APA, which would obviously be value destructive for the estate. So where does that leave us as the debtor?

We have a successful bid from Regeneron. TTIM has submitted a revised proposal at a higher purchase price. In order to maximize value for the estate, we have to keep competitive tension in the process. T-TAM wants to either reopen the auction, or they want to modify the procedures to have a blind best and final, where both bidders submit best and final at the same times,

neither one sees the other one's bid, we open them at the same time and we make our decision. Regeneron's position is that if T-TAM gets what it wants, they're gonna stand on their litigation rights, and they're not going to participate in their product. Regeneron, given their views of the auction, wants it to be done. They want to be respected as a successful bidder,

and they want your honor to rule that because of what my bidding procedures say, T-TAM can't bid at all. Neither of those things gives us the competitive tension we need for maximum staff. So what did we do? We developed the final proposal procedure because those procedures are the only scenario based on our discussions with Regeneron and their counsels here,

and they can obviously, can and will speak for themselves. But those final proposal procedures are the only mechanism available to the debtors today that will set up a framework in which both bidders will bid. And we believe that that is value maximizing, and that that is the best thing for our stakeholders, given where we are. Protect the bird in the hands while creating a dynamic that's going to force the two remaining bidders, not forced, because they don't have to submit a proposal if they don't want to,

is going to set up a framework where both bidders should believe that the other is going to participate and that they need to put their, for T-TAM, that they need to put their best foot forward, pay what the company is worth, show us that that purchase price and their ability to fund the business on a going concern is there, and then Regeneron will get the last look

to try to beat that bid by at least $5 million. And I'll walk through the procedures in more detail But I think, you know, in summary of all of that, there's four things that we believe we've achieved today that anything other than what's in our motion puts in jeopardy. We've protected the current successful bid at $256 million. We've given both bidders the chance to submit a best and final proposal to the debtors and create more value for our statefully. And while we believe it to be true, I understand T-T-T-T-T,

may disagree with this proposition, we believe that the proposals, the procedures provide a significant benefit because it allows them to submit a bid to the debtors after the auction, notwithstanding the arguments Regeneron is prepared to make about what the outcome should be under the bidding procedure. It brings finality to the process ahead of the sale hearing. Obviously, it's not tenable for the court, for us parties and interest to have a potential inversion of this. the bids, you know, the evening of June 16. At some point, we need finality to know what issues need to be litigated at the sale hearing to make sure the timeline doesn't slip. And fourth, we believe that if Your Honor grants these procedures, it should moot a lot of the potential discovery and litigation that will occur between now and then. And just to make the point, we know that Your Honor. is ready, willing, and able to rule on any issues

that are put in front of them. Our point is, to be clear, we don't want a ruling on the issue of whether T-TAM can continue to bid because whatever that answer is will destroy competitive action. Because if Regeneron feels like they can continue to bid and the auction is reopened,

they pulled us at their position as we will not participate. And so, and if you rule T-TAM can't fit, It's not a horrible outcome for the debtors. We think it's phenomenal that our stateholders are looking at a $256 million bid from the generon, but it means we're not going to get anything hot. And so that was a lot, but I thought it was important to frame why we did what we did for the court. We, if we were, if we, and I think we say this in our paper, if we were designing a process on a blank slate where both bidders would participate on whatever terms we proposed, it would be a lot different.

And I think T-TAM notes in their papers that what we originally proposed was a straight best of profit. But without Regeneron's participation, that's not going to be valuable. They know that. They've seen Regeneron's response. It means they don't have to put their best foot forward because Regeneron isn't going to participate in the litigation. And so all of that's a long way to say. Our business judgment is we need competitive tension, and this is the only way we see today preserve that in the process to the benefit of our state court. That's a helpful overview.

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Plus, enjoy fast and free shipping with delivery in time for the holidays. Save up to 80% off during Wayfair's Black Friday sale. at wayfair.com. Wayfair, every style, every home. Let me suggest a few items that have struck me as I've gone through the papers that I would appreciate if you and your team and the objecting parties and the supporting parties and anyone else would address. I don't mean to suggest these are the only things I care about, but time is tight and

to the extent you can help me sort some of these things out, not off the top of your head necessarily, but throughout the course of the hearing, I think that would be helpful. So first, and you alluded to this, to what extent are the facts really disputed here? In other words, the parties disagree about what should have happened or why things happened. I disagree about what should happen next. Does there really dispute about what has happened so far? Second, Mr. Vecito and the ad hoc committee have taken aim at the prohibition on joint bids. But TTAM has not.

And so I'm a little – so I'm wondering if this is a live issue, is anyone contemplating submitting a bid that is or might be contrary to the prohibition on joint bids? And so is this something that we need to work through today or have the parties figured it out already? Third, the objectors talk about what they call the bid-chilling effect of the proposed procedures. And I'm not an investment banker, but my preliminary read of the situation is that there are two outcomes that some or all the parties might consider inefficient. One would be that TTAM submits a winning bid, and Regeneron doesn't top it, and the outcome is that TTM has bid more than it might have had to bid in a competitive step-by-step auction, and that's inefficient in the sense that they are overspending, as they might view it. I'm not sure anyone except TTAM would be unhappy about that result, but it is arguably inefficient in an economic sense. And second, Regeneron could submit a final bid that's lower than what they might bid in a last and final sealed bid process because they only need to come up with $5 million more than.

So I'd like to hear from the debtors and other parties about how they evaluate these potential inefficient outcomes and whether there are others that I'm overlooked. along the lines of bid-chilling, a breakup fee, as we all know, can-chill bids. But I don't see anything in the motion that says that the debtors are going to deduct $10 million from the nominal value of TTAM's bid for purposes of comparing it to regenerates, which would be, if that were occurring, it's a straightforward disadvantage to TTAM for comparison purposes. I don't see that in the procedures, and is that part of the analysis or are the debtors and the consultation parties simply ignoring that for purposes of giving the level playing field to the two parties? Fifth, the Eighth Circuit said in the Food Barn case that the reasonable expectation of bidders should be a guidepost in a dispute about a disputed auction and a, late bid and so with that in mind and I saw this in the Regeneron response as I was typing my own notes about the same subject this morning what should I make up section 7.19 B and C of the TTAM APA which contemplates that if TTAM is the

successful bidder and the debtors exercise their fiduciary out and entertain an alternative transaction with somebody else TTIAM would have the opportunity to match the alternative bid. And conversely, what should I make of the absence of a similar provision in the Regeneron APA, at least as far as I can see? Six, TTIM points to the motion, paragraph 27I, Romanette 2, which seems to require Regeneron's consent or a second court order authorizing the debtors to exercise the fiduciary out, and they argue that the general

is not, in fact, on board with the proposed final procedures that regenerate is still going to have a second bite at the apple. Is that right? What's the point of the second order or consent? Regeneron's response lessen my concern about that somewhat, but I'd appreciate hearing more about that. And then seven, what I think is the most intriguing argument from TTAM based on, what I understand so far is the idea that it's agreed to increase its deposit to something north of $250 million if the debtors will only revert to a previous proposal for last and final bids or just exercise the duchery out and take their bid. And I think that's what you're referring to in your papers as a synthetic backup bid, putting the pieces together here.

I think the thrust of the argument that TTIM is making is that that sort of all-in, shoving the chips on the table would remove the downside risk that Regeneron could walk here. So it wouldn't be necessary to give them a breakup fee or a last look or other considerations. And what I don't know and I'd like to hear more about is, is that accurate or are there other conditions, contingencies, et cetera, that make that proposal something less than full insurance against that downside, if that makes sense. It does really. Okay.

That's a lot to throw at you. and the other parties who I know are prepared to, it's great fun when you come to court and you know what you want to say and then all of a sudden, you know, you've got a post-it notes. I can see the post-it notes all over the place. So if it would be helpful, if it would be helpful to take a short break for both you and other parties to reorganize your thoughts, I'm happy to do that.

This is not intended to be a test of your improvisational skill. Well, thank you. I appreciate that, Your Honor. I'm prepared to go. So if that's fine. And we can take, we'll probably need to take one or more recesses at some point anyway. But so go ahead. That'd be great.

Okay. Before I start, I had one question about what I think was your number 3B. Sure. Did I hear you correctly that you said what happens if regeneron participates in this process and submits a lower bid than the T-TAM bid? No. So the 3B was regeneron. TTAM by $5 million, but in the hypothetical alternative where you had sealed bids,

Regeneron would have bid even more because they wouldn't know what TTIM was bidding. And that's the potential inefficiency from a pure economic perspective. Okay. It sounds like Your Honor has read through the procedures. I was going to walk you through them. It sounds like I should just focus on your question. Well, I mean, I have read the procedures. You should, it'd be great if you focus on my questions,

but anything else you want to cover certainly is fine. I mean, your points of emphasis are important as well as mine. Understood. So if it's all right with your honor, can I go straight to number two and circle back? Yes, of course. Yes. Okay. So on the issue of the joint bids, you know, what is our position on that?

Our position is, from a process perspective, and arguably from a value maximization perspective, it's just too late in the way. And for the joint bid construct to be raised by T-TAM, I think kind of evidence is this fact. You know, there are 13Ds in the public record that speak to T-TAM or its affiliates having spoken through hundreds of financing parties

leading up to the petition date. We facilitated discussions with joint bidders by the T-TAM parties throughout the pre-petition process, leading up to the auction. That was a benefit, for lack of a better word, that was really afforded to very few parties other than certain qualified bidders

that showed up at the auction with qualified bids that could be pieced together and potentially compete with the whole co-bids that we received from T. Tam or Generon and other parties. A joint bid at this time, and I think, I suspect you'll hear from Professor Richards today on how complex and how much scope there is to his work as it is, and you'll hear from the AGs who are evaluating these transactions,

that introducing a brand-new counterparty at this stage when parties have had this much time, that must be run through the gamut of the CPO, that must be run through the gamut of the AGs, because how are they going to receive the data, what are they going to do with it? What's their cybersecurity protocols? How do they, if at all, want to change our privacy policies

on a go-forward basis? It just doesn't work. If T-TAM wants to negotiate with potential financing sources and show up at the best and final deadline with an executed financing commitment from a third party, who's just a financial investor, Godspeak. But to say now at this point that we're going to bring in a co-bitter who may need to make material changes to APAs that have been on file since May 20th. They need to then, you know, run through the whole process with the CPO. this is frankly not tenable, and we would submit, you know, the bidding procedures speak to reasonable opportunity. I think T-TAM and its affiliates, even who they are, have had more than a reasonable opportunity to line up financing to help them with their bid if that's what they want to do.

And just to circle back to the importance of competitive pension in the process, Regeneron will not participate in competitive bidding if joint bid for a lot. Sure. And this one is really more of a question for Mr. Karpalani, because T-TAM did not object to this provision. as I read their objection. But others did. So that's why I'm trying to get a read on. Is this something that I even need to be concerned about? And Mr. Crippelan, he can address it, you know, when he grabs the lectern here. But the clarification on what is and what is not a joint bid for that purpose is helpful. Understood. Thank you, Your Honor. On bid trilling, 3A, I think I'm going to kind of take this together a little bit with the fiduciary out in T.T.

So if T.T.M. had won. The way their fiduciary out works, which sounds like Your Honor has read, we would have a no shop. We wouldn't be able to talk to anybody unless someone proactively comes to us. We then have to disclose in terms of that bid for them. They have a certain amount of business days to evaluate it. We have to give them notice a certain amount of business days before we would enter into any binding documentation with the third party, and they have the right to match. That fiduciary out is actually more beneficial to TTIAM than what Regeneron is insisting on in these procedures because their fiduciary outs says if they match, we have to take them. It's not an option. So that's kind of what

they expected to have had they wanted to offer. Are they over? Are they over? overspending, I mean, potentially. I think two things to that. One, if they wanted to avoid the issue, and I'm trying to be delicate here, because I really don't want this hearing to come about what happened at the auction. If the financial wherewithal had been there

to bid higher at the auction, they would have been allowed to bid higher at the auction and not have had to back-solve into any kind of procedures into an argument where now the competitive bidder is taking the position that they're prohibited from bidding, and we, the debtors, have no path to get to competitive bidding because Regenoron won't participate, given their views on the bill. Is it possible they overspend?

I think so. The debtor's theoretically possible, but the debtor's position would be they should put what they think is a fair value on the business in which they're willing to transact and that they can finance it, and if it's the winning bid, it's the winning bid. What happens, you know, does that potentially permit Regeneron to underbid? Again, I would circle back to the point that it's possible that the Regeneron would have paid more, had TTIP paid more, but we know that the alternative, sitting here today facing the debtors,

is do you want the current TTIM bid and the litigation from the GENERON about whether that's even a valid bid you can take? And even if you prevail in that litigation, the value you're creating for your stakeholders is capped. Or do you want a situation where T-TAM is going to put its best foot forward, or GENERON to the extent they want a bid, has to at least exceed it by $5 million, and we've hopefully created even more value for our stakeholders than where T-TAM's current revised bid sits today. On whether the breakup fee is a deduct to the bid, that is one where I'd like to confer. just to make sure all of the parties are aligned.

I don't want to, the debtors have a view, but I don't want to speak out of school and just make sure that the consultation parties are okay and verify what Regeneron's understanding of the bid is. Sure, sure. On your question about the Eighth Circuit precedent, on the reasonable expectation of finality, I think in how the fiduciary outs potentially compare with one another,

The debtors obviously have the view that we ran the auction appropriately and in accordance with Your Honor's fiduciary. The debtors also know that we have a fiduciary out in the Regeneron APA that says what it says. We have a termination right if we believe that proceeding with the Regeneran APA is inconsistent with our fiduciary duties. And there is a covenant that says the debtors may continue to take steps to maximize the value of their estates, including, I'm paraphrasing the language you're on, or pursuing alternative. that's the fiduciary out we negotiated with Regeneron's position is that fiduciary out well I shouldn't put words in there I think what they will say is that fiduciary out applies to the debtors nothing in that fiduciary out excuses TTIAM's

compliance with the bidding fiducian and that is the issue they would litigate if we pivoted to take to terminate their APA and take the T-TAM bid. They will tell you, and I think it's very clear from their papers, they participated in auction that had certain terms. Those terms included language that says qualified bidders will not submit bids after the auction, and the debtors will not consider those. We don't necessarily agree with Regenerals about whether or not the debtors can take that T-TAM bid under that fiduciary out.

But we don't want to have to litigate that issue if we don't have to. We don't want to put the 256 at risk because that's a great outcome for our stakeholders. And because they've consented to these procedures, we don't have to. And I think the flip side of that is, you know, TTIM is now here making the arguments they're making. What were their reasonable expectations or what did they negotiate for under their APA if they were the winning bidder? And it's actually a better construct than what regenerates in the system. The one thing I left out from my description of their fiduciary out previously I just realized is that if we exercised the fiduciary out, we also would have to pay them a $5 million

effectively liquidation fee. And that fee was set and negotiated at a time when the TTIAM bid was approximately $50 million. So that's a 10% liquidated damages tax on our fiduciary out under their APA, which they insisted on in our negotiations with them leading up into the auction and at least as far as I'm aware have not agreed to remove from their APA today. Now Regeneron did not negotiate for the same fiduciary out. That's true but they relied on the bidding procedures and they have their view of the world and there's a litigation if you go down that road as well.

So I think our point is Regeneron has its view of the bidding procedures and that T-TAM's I think if you look at T-TAM's APA and what they thought was fair to impose on the debtors had they wanted the auction We'll then look no further than what's in our final proposal Procedure where Regeneron believes that they valid they wanted the auction and so do we we don't dispute in the debtor's position is we ran a valid auction Where Regeneron won So for T-TAM to say that what what Regeneron is getting under these procedures is not is unreasonable on its face when they negotiate for something that is better in their own APA, strikes us as, you know, a little inconsistent,

for lack of a better word. And then I think the last point, Your Honor, if I didn't miss anything, although I know I owe you an answer on the breakup beat EDA, and we'll talk about the scooted back. The synthetic backup bid increase in the deposit. I think Your Honor is well aware. The CPO is hard at work on his process preparing a report. The AGs are assessing the terms of the proposed transactions,

as are other regulators, both foreign and domestic. They will have a view, we assume, or maybe not. Either way, it will be valuable information to the debtors as to whether there are relative merits from a consumer privacy, a consumer privacy law perspective, or other regulatory perspective that they will raise at the sale objection on June 10. And that information and the potential objections we receive are going to impact the ability to get either of these transactions approved at the sale hearing.

And the 250 million plus deposit, it provides security in a world where the facts are we've gotten the T-T-T-T. proposal approved and then they breach. It doesn't, but if we're facing litigation from regeneron and we are, or we lose the regeneron bid in favor of the key tam bid, the objection deadline passes, and the regulators or the CPO's view, and this is purely hypothetical, Your Honor, I don't think this is going to happen, is that you absolutely should not approve a transaction with key TAM and your honor agrees, then we're left nowhere.

And so I'm not standing in front of you telling you that that's not a constructive proposal. And we don't appreciate what T-TAM is trying to do to enhance the fit. But it is not a perfect solve. And further, it doesn't do anything to preserve the competitive tension that we believe is so important to maximize the value at the end of the day

for the stakeholders relative to what the final proposal procedures provide. Yeah, that's helpful. Any other? I mean... So, yeah, so we sat on the table for the moment the extent of disputed facts, and then you were going to check on the breakup fee. Yeah, on the extent of the disputed facts, I mean, part of me wants to confer with the litigators.

Part of me wants to hear from some of the other parties as to their responses to your questions, because I think that will inform my answer to you. That's fair. At a minimum, I think there's a dispute about whether the debtor is validly terminated the auction based on T.TAM's financial wearer with all. I don't think that's a secret based on the papers. But in terms of the other bid ask and what discovery may be needed

or what would be litigated at the sale hearing, if it's okay with Your Honor, I'd like to reserve my answer until we've kind of gone around the horn and heard from the other party. Sure. That makes sense. Okay. Any other questions for me?

That's all I have at the moment, obviously, as things develop. Okay. I may think of more. The only other thing I would add before, I would sit down just a couple points on the proposed form of order. The version we filed says that on the 13th, which is the day that we would announce the winner. Right now, the language just says we will file a notice of who the winning bidder.

We think for the benefit of disclosure, the core parties in interest, we should obviously disclose who the winning bidder is, but we should disclose the term of the, we should disclose the term, the terms of the non-winning bid as well. And this gets, so I realize I didn't give you an answer to your question about the regeneron consent versus the court order on the fiduciary out. The deal we cut is that the bidders will bid when they bid and we will make a decision that we make, but these procedures do not remove

or impact either bidder's right at the sale hearing to question that business judgment and to argue to your honor that their bid is in fact higher, highest investment. And so the order on our ability to exercise our fiduciary out is really relevant in a world where Regeneron wants to contest that our selection of T-TAM as the winning bidder is a sound exercise of our business judgment, and the T-TAM bid is in fact the highest invest. if they don't want to bid or they don't contest whether it's highest and best, then they can just give us off.

Okay. And I'll hear from Regeneron directly on this, but if I approve the procedures in this motion, regeneron is not walking away tomorrow. Big news. Weid Bear's Black Friday sale is here. Right now, score up to 80% off everything home. These are our best deals of the year.

Shop Wayfair's Black Friday sale. Now at Wayfair. They may not bid anymore. They may contest whether TTIM has the highest and best bid, but they're not terminating APA walking away. That's right. And I think that's another reason why it's drafted that way, because they have agreed as part of this, which goes to the objective of trying to protect the value we have today, that until then, the successful bid remains in effect. enforceable by the day. And really, I think the consent is just in a world where they've said T-TAM bid more than

you're willing to pay or the bidding increment is high enough that we're not going to, we're not going to litigate whether your business judge is right. And then finally, and this is, we had this discussion yesterday with the U.S. trustee, and I believe the U.S. trustee touched base with my co-counsel, Mr. Riskey this morning. I just want to be clear for the court and parties in interest. We do not expect any material changes to terms of the APAs in connection with the bids. It should really be about economics, closing certainty. You know, the provisions that we would think are going to be very important to Professor Richards as the CPO,

to the AGs around what's the framework around customer data and the privacy covenants. and I wouldn't expect any of those to change. In the tail risk case that it does, we would take the position that parties' ability to object to any such changes between the objection deadline and the sale hearing would be fully preserved. Okay, makes sense. Okay.

All right. So, absent any other questions for me, I will see the podium for them. Okay. Why don't we hear from the committee next, and then I'll hear from the bidders, and then figure out where to go from there? Thank you very much, Your Honor.

Thank you, Mr. Thompson. Good afternoon, Your Honor, again for the record. Jason Adams, Kelly, Dryan, Warren, counsel for the committee. I'm not sure it's going to be helpful if I necessarily address all of your questions. That's okay. You're on the same team as the debtors, I think. Well, I think I'm in the middle of three different points, and I'm somewhere in the middle of all three of them.

Okay. We agree with the debtors in a lot of ways in terms of the request that really the benefit of the question, which is we want a value maximizing transaction. What they have put on the table is a path to more value. And I can tell you unequivocally that this committee wants more value. Right? There's been certain allegations made. We don't need to get into them today that the committee is satisfied because we have a 256

and that's more than enough for the unsecured creditors. And so we have no interest in that. Your Honor, as you, well, no, the bar date has not passed. We're not even close to it yet. We're not close to the governmental bar date. There are substantial litigation claims out there that have alleged billions of dollars of damages. Value maximization is critical and it is our sole focus.

So any process that we can institute today, whether it's the process that the debtors have proposed, it's a modified process that all of the parties here can agree to, or it's something that Your Honor imposes, we're for it. The one caveat, we've made this clear to every party who's reached out to us, including especially the debtors, is what we can't risk is losing

value through the go forward process. We are at 256 right now. We have a backup bid at 156. We don't want to lose $100 million of value. We don't want to lose $256 million of value. So what's critically important for the committee is whatever is approved today, whether it be the current procedures or something that's modified,

that both of these bidders are there as a backup bidder at the end of the day, for all of the reasons that council just talked about. There are many contingencies with respect to this sale. Quite frankly, this is not your typical 363 bankruptcy sale where we're talking about some stores, some tangible assets. We are dealing with significantly larger issues in this Chapter 11 bankruptcy. We have the state AGs who are analyzing the transaction.

We have Professor Richards, who is taking a look at this and is going to prepare his report for this court's consideration. this is not just simply, you know, balls and strikes and we figure it out. There's going to be potential issues that are going to need to be resolved. And having two bidders who can close this transaction is critically important to maintaining and enhancing value. And so wherever Your Honor ultimately decides, again, hopefully there's going to be a lot of other people who are going to get up here and then maybe we can all have a conversation

and maybe we can all figure it out. It worked yesterday. It did work yesterday. This is maybe more complex, more parties involved. You all are not referring to one another as my friend like they did. Should I read something into that? Listen, Your Honor, I used to work for a Canadian law firm, and so the mind. It's nice.

It's a different way of practicing. Yes, it is. And I would refer to many of the people here who I've worked with before as my friends. It's good to hear. But hopefully that's an option, that after people get their positions out there, answer some of the questions that you've asked, maybe there's a conversation that can be had amongst multiple people. parties to get to something that consensual for everybody.

But if we can't, and if Your Honor has to ultimately make a decision, again, our position is let's have a process that will put new bidders in these bidders with new bids in place. Your Honor did raise questions about the chilling effect. We're in an imperfect situation right now. I think that there is that possibility of chilling effects in terms of, well, If T-TAM has to put their best in final board here, how do they know what number, and is it only $5 million for regenerative? We agree. Is there a chance that we're leaving potential value on the table?

Absolutely. It's true. But we're putting a situation in place where we can get substantially more than $256 million. And that is a substantial victory for these estates and for all of the state's board. But we have to maintain the back-up orders. We cannot lose them given the significant uncertainty with respect to the sale approval and what's going to happen over the coming. So that is our position.

We hope that we can play arbiter between the parties today going forward, however it's going to work, because we do want both of these parties getting it. And we think it's important to do so. And obviously if Regeneron will agree to modifications, if TTAM will agree to modifications, the debtors will agree to modifications, Consent is the best way to do this because what we also don't want is a contested sale hearing on these issues. We may have other issues that we need to deal with, that's fine, but on whether an option was run correctly, how this process has run.

We should resolve that today, and we should be prepared at the sale hearing to deal with approval of the underlying sale. I cannot speak to the disputed facts, and I won't go through all of the issues. I would also reserve judgment because I do want to hear what all of the other party. have to say we were certainly not involved as a consultation party in every conversation that happened during three days of an auction between the debtors and the various bidders so I can't speak to all of those but I do think that the dispute of facts are fairly limited and so whether that's the purposes of today and getting to a resolution or ultimately for sale objections down

the road I do believe that the universe of disputed facts should be fairly minimal should require certainly going to require some discovery if we're going down that vote but not substantial discovery. We've maintained in our papers and I know this is getting the second issue that we'll get to later today on the scheduling, but the importance of keeping the schedule, we do find that extremely important here. This company loses money every single day. The assets potentially deteriorate and so we'd like to get a resolution here today that will keep us on the timetable on the track that we're on again I know I'm venturing into the secondary issues for today but that that's the committee's

position I'm certainly happy to answer any questions your honor may have certainly was your responses to the extent that there are other arguments raised today but that's that's the committee's position for purposes of this moment okay thank you I didn't have anything in particular at the moment thank you honor go ahead let's hear from regenerate good afternoon your honor for the record, Emil Kleinhouse, Wachtell, Lippon, and Katz, I represent the Genneron. A very smart litigator once told me that if the judge opens a hearing with questions, you should answer the questions instead of following your script.

You can do both, but if you get to the questions at some point that way. I am going to go through the questions to try and answer them directly. I may have additional points as well, but I'm going to use your questions as a guide. I also, it's also clear your honor has read the papers. I know my friend, Mr. Cropolano, will address the question if I'd like to address them to. Okay, very good. Let me start with, I'm just going to go start with number one. Are the facts disputed?

We do not believe the facts are disputed on at least one or more extremely important points. And this important point really goes to the heart of regenerons. position relating to this motion and the auction which is that this auction was complete on about four weeks ago and it is really fundamentally unfair and contrary to basic principles of finality and the sanctity of auctions to essentially declare a do-over but the particular undisputed set of facts or at least facts we believe are undisputed, is that at least on the face of the bid procedures

as they existed at the auction and they exist today, TTAM and to some extent the debtors, and I'll get to that separately, have repeatedly violated the bid procedures. The bid procedures are utterly clear that parties such as TTTAM could not submit bids after the auction or seek to reopen the auction.

Paragraph 15 says, each bid must acknowledge that it has complied and will continue to comply in all respects with these bidding procedures, including after the conclusion of any auction, not to submit a bid or seek to reopen the auction. The bidding procedures are also clear. This is in section K, the auction section. The debtors shall not consider any.

bids or over bids submitted after the conclusion of the auction if any and any such overbid shall be deemed untimely and shall under no circumstances constitute a qualified bid and to state what may be obvious the court order approving the bidding procedures required compliance with those terms in paragraph four the order says the bidding procedures shall govern the submission receipt and analysis of all bids relating to the proposed sale of the company assets. Any party desiring to bid for all, substantially all, or a portion of the company assets, shall comply with the bidding procedures and this order.

Now, the submissions before the court, we believe, without any more evidence, I don't think witnesses are needed, and this is true of TTIM's own submission, readily support a finding that the provisions I referenced have been violated. There is no dispute that, starting on the very day after the auction, May 17th, T-TEM has submitted multiple new bids and has been agitating to reopen the process, directly violating the requirement, quote, not to submit a bid or seek to reopen the auction, close quote. In the objection that was filed yesterday, T-T-TM makes a number of arguments.

They argue that the debtor made misjudgments during the auction process and that the debtors may be able to change the auction procedures or at least were able to before the auction closed. Whether they're right or not, and we don't think that they are, neither of those arguments has any bearing at all on whether TTIAM violated the auction rules that were in place at the auction and are still in place today. And as for the debtors, the debtors under the bidding procedures were supposed to not consider any bids or overbid submitted after the conclusion of the auction. And not only have they actively evaluated the TTIP bid, but they've made clear that they want to introduce a new bidding framework that allows for additional bids.

And while the debtors point to their fiduciary out, that argument respectfully, goes too far. First of all, the debtors have not actually exercised any fiduciary out. What they've really done is stop adhering to the rules so that they can determine whether they should exercise a fiduciary out. And a fiduciary out can't be a free-floating license

just to not regard the bid procedures instead of coming back to court. And moreover, and I know we said this in our paper, so I'll be brief. Whatever rights the debtors have based on a fiduciary out, regeneron, of course, has the rights it has under the contract to terminate based on what the debtors do. And among the various provisions that we've cited in the APA, one that's relevant is 10.01

F1, which says that Regeneron can terminate if it is not the successful bidder or backup bidder at the auction, and those are defined terms. Now if the auction were reopened without Regeneron's consent, that is precisely the situation Regeneron would find itself in. Instead of being the successful bidder, as it was at the conclusion of the auction, it would not have that status because the auction would be reopened and ongoing. And notwithstanding an argument that was made in T.T.M's brief, it makes no sense whatsoever to say that weeks after the auction ended,

at which under the bid procedures Regeneron was declared the successful bidder in TTIM, the backup bidder, that if there is, is some new auction, somehow regeneron can be forced to be the backed up bidder after spending weeks and having a team of 60 people and having all kinds of investment and having been the successful bidder. There's no basis whatsoever in bid procedures to transform the successful bidder into the backup bidder and impose an obligation on regeneron having won the auction the first time around. So I got a little bit off beyond the original question,

but just to come back to the original question, we do believe that there are not materially disputed facts as to the conduct of parties since the auction ended and the violative nature of that conduct vis-à-vis to bid procedures. And I'll come back to why that matters, I think, Your Honor, I'm sure can predict what I'll say, but I'll come back to why that matters

in the context of the expectations of parties and the food barred question that, Your Honor, rate. So that's question one. The next question, Your Honor, asked joint bids, and I'll be very brief if I agree with the debtors' counsel, to mention food barn, which will probably get some mentions today. It could not be further from the reasonable expectations of any party, let alone regenerant, that not only would there be a process for the PTAM bidders who have raised these issues

to raise another bid, but that parties who just chose to sit out the auction to come back now and bid afresh, that just seems totally unfair. And as Your Honor pointed out, I don't think PTAM has even suggested that. because, again, it would just be a complete, complete departure from the settled expectations of the parties based on this now multi-month extremely expensive process that, Your Honor, approved. So certainly, Regeneron does not consent to joint bids. Question three, Your Honor, the bid-shilling effect and what Your Honor called potential inefficiencies. And I think Your Honor pointed out two potential inefficiencies.

One would be, it's possible, TTIAM will bid too much to try to win. And I guess the inefficiency would be that the estate and its stakeholders would then do too well. Yeah, only an economist would call it inefficient. I want to be clear. And T-T-T-T-M would call it inefficient. I understood. Everybody else in the room would be happy. I get that.

I understood. I took some law and economics in law school a long time back, so I think I understand that the meaning. on or met of the economic context. But getting away from economics to party's duties and obligations, I think the debtor's duty is to maximize value. If there's an economic and efficiency that

leads to additional value, that's, I'm not sure the court should focus much on that. But I think more to the point, in this particular context where we have the entire auction, the debtors, based on business judgment, which we have heard nothing to suggest was somehow irrational or outside the scope of appropriate business judgment, they made the decision. The auction is done, regeneron one.

And T-TEM afterwards came knocking on the door and say, we want to keep bidding. And rather than coming to court, they just decided to violate the bid procedures over and over again. I don't think that's a particular inefficiency that your honor should focus on much. I mean, as to the second point that it's possible that if Regeneron decides to bid more,

it could have been more if it didn't have the so-called matching right. I come back on that to what's already happened here in terms of we went through the entire auction process. Regeneron bid, I don't know how many rounds, but many rounds to get up to $256 million, some $200 million higher than when the auction started. The idea that this procedure that's been worked out shouldn't be approved because regeneron might not,

there could be some inefficiency of regeneron not being retrated even more than it's being retraded so far. I don't think that's a particularly compelling point either. The breakup fee and the potential chilling effect, first of all, our understanding is that it gets paid out of the proceeds if T-TAM, if this process is approved and T-TAM wins. Whatever those proceeds are, we get to $10 million.

As for whether it has a chilling effect, Regeneron is now being asked to be, I guess, the way we've termed it is an involuntary stalking horse. Where you have a voluntary stalking horse, courts around the country have you 3% or so break up fees as justified for good economic and policy reasons despite the potential chilling effect because they keep the stocking horse invested and committed,

committed while the auction goes forward. What's happening here is Regeneron, who won the auction and thought we had the winning bid, such that we weren't a stocking horse at all, have been told by the debtors, we think you're committed, we want you to stay committed. Not only that, all the expenses, and there's a huge team of people at Regenron working on integration, working on data privacy issues, all those expenses, you should just keep on encouraging current them as you would have if you were the winning bidder, but you may not be the winning bidder after all.

That's why it's an involuntary stalking horse. So if there's ever a clear, a case for a break fee that's clear, it's this one. Regeneron's been put into a position where, despite all of its expectations over these weeks, since it won the auction, it's now being required if these procedures are approved to serve as a stalking horse when that was never its intent. And it's only fair, and it's perfectly justified that all the expenses that are being incurred on the assumption, the understanding that Regeneron would be the winning bidder, that there's something to mitigate those expenses.

It turns out that those expectations are dashed. Question five, and I think there's a couple of parts of the question five. One was relating to the matching right, and I agree with the debtors' counsel, fact that the TTM APA has a matching right. I mean, what that reflects is that this is not something new and extremely bespoke or anything like that. And we also said in a circuit case that approved a matching right. This is something that, where you have someone

who wins an auction or is it in or ahead, we won the auction, but this also gets approved for people who are ahead. It's part of the protections that can be granted. And the fact that it's in T. T. Tam's contract or something similar as T. Tem's contract is certainly irrelevant point. As to the Eighth Circuit's case law on finality, Your Honor mentioned the Food Barn case.

That's, of course, the leading case. And we did address it in our brief. I mean, the money quote in that case Big news. Wayfair's Black Friday sale is here. Right now, get up to 80% off everything you need for the season ahead. Save on kitchen and dining, bedroom furniture and mattresses, seasonal decor, and way more. All at Wayfair. These are Wayfair's best deals of the year. From seasonal finds to favorites you'll use all year long. Plus, enjoy fast and free shipping with delivery in time for the holidays. Save up to 80% off during Wayfair's Black Friday sale. Now at Wayfair.com.

Way fair, every style, every home. ...is that important notions of finality and regularity and judicial auctions are appeased if the court acts consistently with the rules by which the particular sale is conducted and in compliance with the bidder's reasonable expectations. Two parts of that. Consistently with the rules by which the particular sale is conducted. That has not happened. We have the auction, the bid procedure said in words of one syllable,

if you don't win the auction, you can't bid anymore. The debtors agreed we're not going to consider additional bids after the auction. Those were the finality principles that induced Regeneron to bid, because Regeneron would not have bid in this auction against the consummate insider, the former CEO who's bid over and over and again for this company, had anybody told Regeneron, if you bid up and up and up at this auction, And fervent bidding, that's, I think, the words in food barn. Fervent bidding.

If you engage in fervent bidding, when the fervent bidding is done, the former CEO and board member, notwithstanding, the clearest possible rules that are not allowed to bid anymore, can just keep bidding. And then two weeks later, we're all going to be in court talking about what's the exactly right process under which that person's ability to continue bidding should be respected. And I have the committee saying, maybe we'll broker something.

The auction was over. The rules were clear, and the T-TAM parties did what they did. That's consistently with the rules by which the particular sale is conducted. And in compliance with the bidder's reasonable expectations, it's the flip side. Reasonable expectations are set by the rules. So if you have rules that say the auction is done when it's done, you don't expect those rules just to be violated without, kind of with impunity and without any judicial intervention,

which is what's happened here. And the food barred facts are interesting because what happened there is the court actually did eventually let in the bidder, but the court did it because there was a lack of applicable rules and guidelines in that auction. It was more loosey-goosey. People just, I think, came to court and stated their bids. Yeah, let me comment on many of the Eighth Circuit authorities seem to involve the judge taking over and conducting the auction in the courtroom,

we're not going to be doing that. Yeah. Exactly, Your Honor. So that's what happened in Food Bar, and the court said, look, if people are just showing up in court and raising their hands with paddles or whatever it is and somebody doesn't

raise their paddle on time, really? They can't raise their hand after the judge started ruling and say, hold on, actually, I changed my mind. That is the opposite of this case. This is a mega case with a standard set of

bid procedures, not a lack of applicable rules and guidelines. And then the other thing that was Food Bar noted was that the late bidder, quote, obeyed what it perceived to be the rules of the sale. I'm sounding like a broken record, but that did not happen here. The late bidder here took the opposite approach. They just kept bidding, even though the rules said they couldn't. So I think Food Barn is highly probative in this situation as to, what the right next steps are.

On the question of does Regeneron consent to the process, and specifically is Regeneron gonna walk away tomorrow if the court approves what the debtors have proposed? The answer is no, we're not walking away tomorrow. I mean, what happened here is, you've heard all of my points as to why Regeneron feels like it's been wronged here, and that's a deeply held view that finality

principles have not been respected here. But instead of letting this devolve into some major litigation, we negotiated with the debtors, and the compromise that resulted is reflected in those procedures. So no walking away tomorrow. We do reserve our right as debtors council suggested to argue later that debtors have not exercised their fiduciary duty in terms of the highest and best bid, but we can also agree right away they did, in which case, the backup bid that we've agreed to goes down to $151 million. You're talking about bids that haven't been received and evaluated yet in that. Bids by T-TAM.

Yes, okay. Future bids by T-TM that we don't know what those are. Okay. Well, and my main question, this is mainly drawn by something that T-TM was arguing with, is, you know, the debtors are offering your client some incentives, and I just wanted to make sure that your client has accepted. accepted those incentives as the price for remaining in the process.

We have, and if I haven't made this clear already, to the extent the incentives and the package is not approved, which is up to your honor, our client's position is the court should enforce, exercise as inherent authority to enforce its rules and respect the finality auction. But we're willing to compromise on the particular incentives, as Your Honor called them, but the agreement that was made subject to the reservation of rights I noted,

which is if there are bids from T-TAM, if their last and final bid, we don't believe the debtors as fiduciaries could accept as the higher bid. We could object to that, but the debtors no doubt will have the bases that they have to go forward and would contest that objection.

So that's my answer to six. I think number seven was primarily directed at the debtors. I think the debtors have explained why the synthetic protection or the deposit and the debtor's view is not a good enough reason to jettison the process that we had. See if I have anything else that I need to cover now, Your Honor. The case I mentioned earlier is Inri Winzco. That's the case on the rights. Right, Your Honor, reserving the rights speak further.

I've tried to address your seven questions and welcome any additional questions. I appreciate it. Thank you. T-T-TAM, Mr. Kripplani. Good afternoon, Your Honor. Sushil Kirpilani of Quinn-Emmanuel, on behalf of T-TAM Research Institute, California nonprofit, as well as Anne Wajiski

and the Ann Wigiski Foundation. First, it's pleasure to meet you. I've never been in your courtroom before. Welcome to St. Louis before. Welcome to St. Louis. My niece just graduated from Washu, and I finally made it down. Hopefully I'll get to see her later.

Very good. Rewanah, let me try to address your questions as well. I've got an overarching theme of my own, just to keep in the back of your mind, which is bad behavior seems to be rewarded by the debtors, and my client hasn't done anything to commit any bad behavior, and so we wound up being on the short end of the stick at the end of this competitive bidding process. I learned today sitting a few feet from here that behind the scenes,

Regeneron was disparaging my client, telling the debtors that they're favoring an insider and trying to twist the debtor into knots about how they're going to sue over a flawed auction process unless they hurry up and shut down this auction. I wasn't aware of that kind of pressure. I've been involved in lots of auctions in my career. I've never before heard of a bidder trying to pressure the debtor

to hurry up and conclude it. That's really not appropriate. And so if that happened, I think, that would be pretty serious for the court to consider. Where my friend, Mr. Kleinhouse, started, I feel in trying to answer your honor's questions about whether the facts are disputed, he went far beyond saying yes or no

and gave instead a one-sided rendition of the facts. I kind of assumed the answer. The purpose of today's hearing, as my friends from Paul Weiss said, is not to determine. whether or not the auction was properly concluded. That's the subject of a dispute, factual dispute and a legal dispute, which Your Honor is going to have to be right. But all of the arguments or responses to Your Honor's questions from Mr.

Kleinhouse assumes that their position is correct that the auction was concluded. And in light of that, look at the bid procedures, and in light of that, look at how T-TAM is violating a court order. So I don't think that's properly responsive to Your Honor's questions. it's argument, but I'm going to try not to do likewise, but I just wanted to table set with that. To what extent are the facts really disputed? I mean, I could all my numbering right.

The post notes. I see you've got the post notes. That's certainly fine. Kind of old school. But to what extent are the facts really disputed? We actually spoke with Mr. Hopkins and Mr. Claremont from Paul Weiss before the hearing to say, I've got demonstratives that talk about the 14 and a half hour adjournment that Mr. Kleinhouse's client was afforded in order to go get authority to bid more

compared with the 30 minute of adjournment that my client was given before the auction shut down. And I can show you it looks really nice. But I said we're not going to go through a disputed evidentiary hearing about what really happened and what should come away from that. I thought the focus of today, which is why we tried to modulate our position a little bit in our final papers yesterday, is, I'm glad we are where we are. The debtors have done a good job of exercising there, if I do share you duties, by coming to Your Honor,

by saying we've got an interesting situation here, and it's a good one, because we've got competitive tension and people are willing to continue bidding, and the results so far are better than anyone expected. Now, we need help from Your Honor to set the proper process, and here's our proposal. That's how I read the debtor's motion, and I applaud it. And what we have said in our papers is it's not a great process what they've put forward.

And the only excuse that we have heard from anybody about why this process is the only process is because Regeneron is otherwise going to do bad things. I don't mean bad in the sense they don't have the right. I just meant behaving in a way that's not value maximizing is behaving in a way that's designed to chill bidding. Well, you know, they have the right to do that. economic behavior is something that, you know, folks study. But I'm saying very clearly that doesn't make the process one that Your Honor should approve. We think there are multiple other processes that Your Honor can approve,

and we put two of them. One of them comes from the debtors that independently formulated one in our papers. But coming back to the questions, is it something I said? All right, we have a tornado warning. We're going to have to call recess. Please stay away from the windows. We have experience around here with tornadoes recently, not to be trifled with. I'm going to resume.

All right. We're off the record. We're off the record, yep. Thank you. Your Honor, we are back on the record. Thank you. All right, a little excitement there. For those new tornado warnings, we often find that not much actually happens, but about three weeks ago, one came through and damaged about 5,000 houses.

and we took out 3,000 trees in one park alone or something. So we take them seriously. Yeah, for sure. You should. Your Honor, and thanks for being cautious with everyone. As a native New Yorker, I never thought I'd get to say. There's no place like home, but, you know, it seems like the good time for that. Yes, yes, fair enough.

But thank you for the time. Okay. I think we were just, I was trying to address Your Honor's questions, and as I started with discussing whether the facts are really in dispute or not, and whether I felt that Regeneron was taking the liberty of giving their version of the facts and saying, let's assume those are all correct. Then the auction had concluded, and therefore now everything that my client has been doing has been violating a court order. None of that is anything but argument. Obviously, I think the whole purpose that the debtors filed this motion was to try to inform the court that we're in an inflection point

where the souffle is not done. We need, Your Honor, to enter some process. And I think that's the right thing to do as a fiduciary. And as I said before the break, I applaud that effort. The only problem is the proposal that they, you know, obviously you heard Mr. Kleinhouse say that there, supportive of it, they're supportive of it because they negotiated it with the debtor, what the new bidding procedures would be. That's why they're one-sided. They're not one-sided

by accident. They're one-sided with a last look for regeneron. They're one-sided with a $10 million dollar break-up fever for regeneron. There is absolutely no level playing field or symmetry in the proposal. And so, of course, it's easier for them to say they accept it. At one point on the Eighth Circuit Food Barn decision, just very briefly, in Food Barn, the court permitted a bidder to come back and bid because the record showed that they weren't just laying in the weeds, biting their time, I think is the phrase from the decision, and then coming after the auction closed. Your Honor has copies of the transcript, and on the third page, you'll see exactly how the auction

ended from the transcript. And my colleagues at Skadden made it very clear on the record that they want to continue bidding on behalf of the T-TAM parties, so there could be no, and they're going to object to the auction being abruptly terminated, so there certainly could be no reasonable expectation

on the part of Regeneron that the auction was concluded, which makes their narrative all the more puzzling. But then beyond that, you know, the Wachtel-Liptin firm, as we know, all of us of this generation, grew up, you know, admiring that firm and their expertise in MNA and in particular distressed

M&A. In 2013, the firm published a lengthy primer on distressed M&A. And in it, they explain the food barn decision and generally note that late offers may be allowed prior to the entry of a sale order. It's the sale order that creates the finality. It's not the auction because things do happen and bidders are always always. at risk that things may change until Your Honor or another judge hits the gavel. And that is commonplace in Chapter 11.

This auction was not commonplace. Let me answer Your Honor's questions, but on the question of disputed facts, we agreed with Paul Weiss that whatever disputes we have with the facts, we don't need to air them today. The goal today is to get some assistance from the court on what's the right process going forward. And we hope, Your Honor, and I know Your Honor, because you read the paper so carefully, is going to give some insights and some guidance in that regard. Second question that Your Honor asked was about the joint bidding gambit and whether T-TAM really felt that it was necessary to have that.

The answer is, of course, no. Our latest proposal, which Your Honor knows about, which is materially higher than regenerons, which is backed by a good faith deposit, greater than $250 million doesn't require any third-party money that we don't already have committed. So it would have been nice to have for the future

if maximizing value was the only goal, but that brings me back to the case law. What the case law actually says, and Mr. Klanos did a very nice job of quoting one half of it, is it's a balance. Finality must be balanced against the goal of every bankruptcy, which is to maximize value.

And we agree with that. We agree that. We don't think you can only look at one part of it. And Your Honor is hearing where we are right now as the inflection point because there's more money on the table that the debtor should not be compelled to leave behind and what's the best process going for it. I want to come back to your third question on bid chilling at the end, but I'm going to talk about the bid chilling.

You just quickly want to run through the others. The reasonable expectations of the parties issue. Your Honor asked about Section 7.1. and I think C of my client's asset purchase agreement, the matching right and liquidated damages was referenced by Mr. Hopkins. Let me make this very simple. We enter into those agreements as part of a negotiation to have whatever ability we have. There's no reasonable expectation that those provisions are binding until Your Honor enters an order that approves that transaction. So it's like any, when Your Honor is some private practice and a client calls to say, I have it.

with the debtor, am I protected? The answer is no, not until the court approves it. You don't have any protection. So it's worth whatever it's worth. To make it even simpler, my client is willing to walk from this $5 million liquidated damages provision under its current value maximizing bid or any future bids. There shouldn't be these types of breakup fees

or liquidated damages. Not at this stage of the competitive process. That was very early when the bidding was in very small increments and very small dollars. And we were being used as a stocking horse at that time. We all know that it's all subject to court approval. We talked about whether Regeneron would be agreeing to the procedures that they negotiated. Of course, they did that.

They didn't negotiate it with us. And that brings me to your number three, which is the bid showing. You know, I started my presentation by talking about, you know, The bad behavior gets rewarded, or it seems to be getting rewarded. It's not rewarded until Your Honor says so. They've all assumed that T-TAM is going to be a willing participant in this one-sided, lopsided, last look for them, 10 million for them, nothing for T-TAM process. That's a big assumption to make, Your Honor.

my client hasn't been asked for its consent to this procedure. That in itself demonstrates the asymmetry. But if what my friend, Mr. Adams, for the creditors committee, said is the real goal to increase competitive tension, don't they need to know for sure that what they have proposed works for both sides? Otherwise, we can have a situation where they've set up this great procedure, and even the current value-maximizing bid is no longer on the table, because my client's not interested in participating in that.

Well, why wouldn't your client participate? Why wouldn't we? Why wouldn't you? Because the process that they're asking to be approved gives Regeneron a last look and a breakup fee if they choose to do nothing. If all they do is literally nothing, and we are going to participate and just put in our existing offer today,

stockholders, including my client, loses $10 million from a breakup fee. It's an asymmetrical unfair process. Why should we participate in an unfair process? We should be participating in a proper auction. And if there is a proper auction, like I said, there's no liquidated damages that we're requiring. Our bid is the current highest. They can go, we can go, and we can keep going around until it's resolved for the highest.

And we're putting our money where our mouth is because we're protecting the estate's downside, which was your sixth question or your sixth point, by putting into escrow more than $250 million in the event that we breach and don't close on the transaction. Okay, but help me out here. Let's assume for the sake of this discussion that I approve the revised procedures. Your client's choices are participate and maybe get the company, although maybe $10 million comes out of that and goes to regenerant instead of to unsecured to shareholders. or not participate, in which case either Regeneron gets it at 256

or you're litigating something and trying to prevent that. Is that the fundamental choice? I think that's the fundamental choice. Okay, and why choose option B? I think to choose option B would simply be, if the goal here is they're saying we have to create competitive tension and what we're seeing is that the party that behaves by threatening that they won't participate is the one that,

gets things, you're actually creating an economic incentive for my client to say, I'm going to do what they're doing. It looks like, you know, we're trying to be constructive in trying to accept the proposal of each side submitting sealed bids, but nobody gets a leg up over the other. And if instead, by offering to agree to that, we get, no, we're actually going to do something that is unfair to you and fair to the other side. But everyone's just assuming that that's a process that we're going to willingly participate in. And I think if the goal of these procedures are to create competitive tension,

that's a very big assumption to be making. If the procedure should be set up in a way that maximizes competitive tension, that's what Mr. Hopkins said, but my friend Mr. Adams said, how is it that that's maximizing competitive tension when they've never gotten the consent from all bidders to participate in that process? They're just assuming it. I agree with you that they are assuming. I'm struggling to figure out why that's a bad assumption for them to make.

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Her ball, her ball and go home. And where does that leave you? Not with anything particularly good. it seems to me. But I understand you're not willing to commit to participate, and I can't make you, and I wouldn't expect you to commit to participate. But the debtors and the consultation parties

are assuming that your client will, and I'm not sure that's an unreasonable assumption for them to make. They have to exercise some kind of business judgment here. But isn't, Your Honor, the question, what is the assumption they're making on both sides. It seems to me what they're doing is they're assuming that Regeneron won't participate, despite announcing to the world

that they're the winning bidder of this really important company, which would suit their big pharma platform very well, that they're not going to participate anymore. And we haven't really heard that. What we heard was the debtor's special committee apparently struggling over, I guess, that 30-minute period, to decide what should we do in this difficult scenario where my client asks for a reasonable adjournment to continue providing the diligence information that was being requested that was needed.

And what they're saying is because of that risk that regeneron is going to walk, we're going to have to come up with one-sided procedures that favor regenerate. But when Your Honor asked Mr. Klein, house a few minutes ago, whether his client's going to walk, what I heard, maybe I didn't hear the whole story, what I heard is they're not walking tomorrow, and if the court doesn't enter the order that they negotiated with the debtor, then we're going to hear more from them in objecting to a sale hearing that the bid procedures were not followed. I thought he said something different than that. I thought he said if I do approve the procedures,

they're not walking tomorrow. They are on board with them. Sure, he definitely said that. He said that, okay. But I thought the additional thing we can ask him, you know, what his client's position is, but I thought the additional thing he said was that they're actually not walking. What they're doing is they're going to be objecting that the bid procedures order should be strictly enforced, that in fact the auction did close because in their mind had closed, and that it was properly closed because in their mind it was properly closed,

as opposed to what we believe, which is the bid procedures order, insured bidders that they would have a reasonable opportunity to bid, and what's reasonable depends on the circumstances. That's what he's going to argue if I don't approve the motion. What he's reserving if I do approve the motion is two more bids come in, which none of us have seen yet. Well, you may have an idea what your client would do, but I don't know. There are two bids, and the debtor is going to have to choose between them,

and Regeneron is reserving the right to object to the decision. business judgment involved in the choice between those two. That's what I understood Regeneron to be reserving if I approve the motion. But the point I'm asking is if you don't approve the motion. If I don't approve the motion... Then I thought what he said is he's still not walking. And what's happening is he's going to object at the sale hearing that why did the debtors pick a higher offer that my client would have put in?

That's what I thought I heard. I think that's a pretty important fact. if the court is being told that the debtors believe that Regeneron will walk and on that basis we have to do this one-sided proposal I'm not sure Your Honor's been convinced yet

but that's not the point. The point is it's a pretty big important fact if actually Regeneron's not walking and what they're doing is reserving their rights to argue that the bid procedures order must be enforced the way they read them the auction must be considered closed the way they think it was

and that they have a binding agreement that can be enforced against my client coming in with a higher offer. I do think he was arguing that. I think their argument, if I don't approve this, is they ought to get it at two things. Correct. And so then, Your Honor, we'll have, at the sale hearing, you already know what our current bid is versus their bid.

I don't see the estate losing in any of that scenarios. I don't understand what the downside risk then is that we need to have, you know, this one-sided proposal with a last look for them, which is unfair to any bidder, it's not that we wouldn't want to pay as much as we want. That's not the issue. The debtor should be trying to get as much as they want from us. It's an unfair process which prejudices us

from wanting to even participate in that type of process. That's my concern. That's what I'm trying to express is the concern to answer Your Honor's questions about, does it chill bidding? It chills bidding because at some point this process is so loaded in favor of the other party, why should we do that?

Why not just object to the sale? Just like they would be objecting to the sale. And we'll put forward our money. Your Honor, they'll put forward their money, and we'll go back to the Eighth Circuits. Overall, overarching edict for all of us, which is the whole goal of an auction and a bankruptcy sale is to maximize value.

And everyone will have their money with their price. Well, I'll be interested to hear the response the debtors in the committee to that scenario. Please continue. Yeah, I think the synthetic backup bid, yeah, number six. The synthetic backup bid, Your Honor, asked about that. We haven't really heard what it is that creates a continuing risk if, as we know, and as Your Honor knows, and as we heard the debtor's state at the outset,

they're now satisfied about the financial wherewithal to support that bid. it is materially higher than the bid they have today. So given that that's the state of the world today, and my client's willing to put up more than $250 million in a good faith deposit, we didn't talk about tail closing risk or conditions, but the reality is, and we can go through this if it's in dispute, I don't think it's in dispute, our conditions to closing are less strict, less problematic than regenerants

because we don't have Hart-Scott-Rodino issues. There's no condition that there needs to be antitrust approvals. And, again, I don't think this is in dispute, but it's not stipulated either, but we can talk about it. We're prepared to close very quickly. It wasn't us that put in an outside date of September in the APAs. That request came from the debtors. We were contemplating closing earlier this summer.

So whatever conditions or concerns, there may be with the bird in the hand. Now there's two birds in the hand. One of them happens to be bigger, and it's our clients. But the big bird in the hand could be accepted. There's a good faith deposit that's on the table. This requires a dance partner here in the debtors. And there is no downside risk.

So I'm just a little confused. So what I heard from the debtors is that, although they don't know, because the privacy investigation is ongoing, your client may present a different privacy profile than regeneron. And so having effectively two bids from your client rather than one bid from your client and one bid from Regeneron may present additional privacy risks. A privacy-related risk, closing risk, you know what I mean.

All I will say to that, Your Honor, is Regeneron has the same privacy-mbudsman, consumer privacy-unbudsman process that our client has. Everybody's been working around the clock. I'm not sure if it's 60 or 50, a professional is helping our side. But in any event, everyone's working to try to answer

the consumer privacy on Budzman's questions. I think we're probably both in the same process. We're going to know before the sale hearing what the consumer privacy on Budzman's conclusions are. It's not lost to anyone that my client is the existing owner of the company and would be the future owner of the company. Also, my client's going to acquire this through a nonprofit. it. We're not big pharma. I would think the privacy concerns for us should be more streamlined and simpler,

especially because my client's been down that road for years since creating this company. But now I'm advocating. Just in terms of objectively responding to your question, there's no difference between the tail risk of the consumer privacy on Budzman signing off on Regeneron as a buyer than there is for the consumer privacy ombudsman signing off on my clients, my clients as the buyer. So if the whole goal is, well, we'd just like to have both of you in the process until that deadline passes, that's currently the status quo. We're not insisting that the debtors turn away the regenerant existing bid. They have our bid.

We're just opposing this new bid procedure. They have our bid. It's higher. They have our offer to put in a good faith deposit. That's there. And Your Honor is going to hear the sale hearing in 12 days or 11 days. It's June 17. 17.

17. Yeah, 17. So all we're talking about is we're in the seventh inning of this ball game, and suddenly the debtor says, okay, we're going to adopt new bidding procedures, and it's going to favor one of the last bidders, you know, the two highest bidders. and it's going to really favor them. Because not only will they get a breakup fee mid-swing, but they're also going to get the last look.

I've just never seen this in my entire career, and I've talked to lots of people in preparation for today, and I would like to ask this witness, if you ever gets up there, have we ever seen a situation like this where a breakup fee is going to be given to a bidder in the face of an already existing, higher bid from someone else. That's literally what the debtors are asking the court to approve.

And so we do oppose it. And I was just trying to address your honest questions about bid chilling and things of that nature. It is a balance. It can't just be all one-sided. Oh, your side has behaved well, so therefore we're going to impose these harsh conditions on you. This side is threatening to sue us, so therefore we're going to give them something. I don't think that should be condoned. Understood.

That's helpful. All right, anyone else in the courtroom wish to be heard at this preliminary stage, recognizing we haven't introduced any evidence yet. Mr. Schlossauer? Joe Schlazauer on behalf of the U.S. trustee, Your Honor. I'm going to confine my comments mainly to some of the interests and the principles that I think should guide whatever solution we come up with. I'm not necessarily going to take a specific position on factual issues or take particular positions on how any reopening, reopening, a bidding should be conducted.

But what I will say is that the U.S. trustee has a strong interest in a prompt and value maximizing sale, as other people have mentioned. We support that as well. I would say that our main concerns lie not necessarily with how bidding may be reopened, but with the timeline of that process. of that process because as you know the CPO's report is due seven days prior to the sale hearing and under some of the processes that we're discussing now the winning bid and the final APA would not come in until after the report is due which is creating a lot of timing constraint up leading up to the sale hearing. We have been reassured somewhat by the debtors who have said they don't intend to change the material terms of the APAs,

and we still have the same two bidders that we had prior to today. Whatever we do today, it's the same two bidders essentially if we don't open it up to any third partners or joint deals. But provided that material terms, especially those regarding privacy, don't change, then I'll let Mr. Richard speak for himself, but it's possible. possible he could get his job done in that time. I can't speak for him, of course. But what I will say is whatever we decide on today and the court approves, I think that there are five goals

or interests that should be served by that process. And the first one is that competition should be preserved without favoring any particular bidder. Second, that a backer, that a backer backup bid to protect the estate is preferred. Third, that the CPO and stakeholders, including the state's, other regulatory agencies, have a meaningful opportunity to evaluate any final terms of a sale, especially privacy protections.

Fourth, that litigation risks be minimized, particularly determination of an APA or the risk of an appeal, which leads me to the fifth goal that I think that we should aim for, and that's maintaining momentum toward a sale. Any of these, you know, any of the side litigation over what happened with the bidding threatens to delay that and cost the estate money. So those would be my comments, and I'm speaking more in terms of interesting goals and particular positions. And I hope that the short window, the short period of time we had away from the court, gave the parties some time to hopefully make progress toward resolution.

All right, thank you. Go ahead. Great. Just quickly, really very much in line with what the U.S. just stated, but with regards to the timeline understanding that they are the same two bidders that were there previously however our focus had been on the winning bid up to this point in terms of our review and the timeline was quite tight even with that focus being on the primary bidder and so I do think that keeping the same objection date of the tenth is is going to be it's going to place a hardship on the states in order to provide their objections meaningfully and potentially have to provide additional objections once the final terms and the final bid is approved

if we follow the schedule. It specifically says in there to keep the June 10th date. So we would ask that that we move forward with respect to a new bidding procedure. Again, as the trustee said, we obviously don't have a strong view. a strong view on what happened with regards to the auction process or what the new procedures will look like going forward. But do you think that it is required that there's time for us to review and evaluate any new bid and, you know, new sale agreement that may come out of that process. All right. Thank you, Your Honor.

Did you start? Robert Stark from Brown-Rud, make on behalf of the Ad Hoc Committee. We didn't get that pro-hawk, D.A. in time. You're fine. Thank you. And I'm going to be very, very brief. I actually did come here from New York with a really long speech, but I tossed it.

And you know, every now and then you sit in the gallery and you get to listen to my argument. And you're like fascinated by it. And what the preconceived notions of coming in, at least mine, and where it is going now is kind of an interesting moment that we're having here. And maybe it's just a movie. Maybe your honor is sharing some of this with me.

Because what I'm observing is sort of an interesting situation with a company didn't have any cash flow. It's like a technology company that was still in development. So we don't have earnings to be able to ascertain its value. Stuck in this bidding war, so our extrinsic or even internalized concepts of valuation are going to be driven entirely by two bidders who clearly are still in the middle of bidding.

This auction's not over. That's like patently obvious from sitting back there in the gallery. And what is going on? what I'm a burdening, are the two bidders are warring over procedures to kind of advantage, not advantage, what have you in the next town. And all of it is untethered to any of our jurisprudence. I've been doing this for a lot.

I've spoken to a lot of people. Never before have I seen, let alone heard of, bid procedures and stalking horse bids in the middle of the auction. Now, I grant you there are rules, and they were put in an order, and that's important, but I was always taught the old saw being, the auction's never over until Your Honor strikes the gavel on the table. And that may be that at some point the rules become subordinated to somebody who comes in with a wheelbarrow full of cash on top of the last bid because that's what it means in court to have the judge determining,

as opposed to the debtor through business judgment, what is the highest invest utilization of the asset for all stakeholders? So our jurisprudence kind of doesn't answer the question. Our law doesn't answer the question. What do you do when you have two bidders in the middle of a bidding contest? And, like, in all seriousness, in all candor, they did a great job. And they're stuck. Because both sides really, really well-advised

are threatening litigation either way, threatening to pull either way. and what are we supposed to do? I don't agree with my friend who represents the Predators Committee in one part. Everything else I agreed, I thought I could have adopted everything he said. I don't believe that the very small amount of claims is going to be this astronomical number.

I think the unsecured claims in this case are going to be small in the end and had a lot of this values for shareholders, and that's for a different way, and I appreciate it. But I'm sitting here watching it, fascinated by the arguments on both sides. Because what does a judge do? We're in the middle of an auction. So what does the judge normally do?

Let's hear the evidence. So I actually rose only to preserve my point later on after I hear the evidence and hear the colloquy further. Hear both sides commit what they are and are not going to do. Because it's really kind of interesting. They've all said we might walk away or we might bid even if they are. no one's willing to actually provide data by which we're supposed to deal with this issue. I'm fascinated by it.

I'm going to sit there with a top point because I want to hear what the witness has to say because I don't know. All I know is that we want to get the most value possible and us doing game theory here about what somebody might do in the next round of bidding is something that we in law are not really not good at doing, generally speaking, and that certainly isn't what the

requirements are for your honor to rule on emotions such as this as strange and abrant as it may do i'm if your honor has any questions i didn't really say anything i wanted to preserve my rights saying like this is hard and let's hear what they have to say and let me come back sure appreciate mr dark thank you all right anyone else in the courtroom before we get to the evidence in around the web ex yes yes johnner can you hear me just this is Yes. Thank you. And I will know again, along with my colleague,

I know Desai, the Texas of the money general office appearing on behalf of the state of Texas. I want to address a couple of things that I think have been glossed over by the parties represented this so far. And I do understand the respect to financial aspect of what is happening and the dispute regarding how the option occurred. We were not included in the option and actually told we could not even work in.

So, pursuant to the bidding procedures order. So I don't have any ability to opine on that part of this. But what I want to do is look at the wording and the actual words that are in the motion and the order that were filed by the debtor. One is the debtors are not changing the bill. I'm sorry, the sale objection deadline for parties from June 10, which is Tuesday. T-Tam, I'm going to have this colloquially called him. has until June 11 to 5 p.m. just in the third bird.

The general has until June 12 at 5 p.m. to the third bird. And notice will be filed at 11.59 p.m. to basically midnight, Friday night. And the hearing on the cell motion is Tuesday morning at 9 a.m. So effectively, so let me say that in the terms of the motion and the order, the revised procedure does not allow any objections by any party to the revised You've finally broken loose from work, three friends, one tea time, and then the text. Honey, there's water in the basement.

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unless we're only objecting to the debtors' business judgment doing the highest bid, which we don't know because the entire process is confidential. So the debtors are going to file a notice with one of these bidders, with an OTA that they are saying in their pleading that can be changed, everything can be changed to modified amended in the asset person's agreement except for the definition of acquired assets.

That doesn't lend any comfort to the state regulators or should to the consumers because they can change the treatment of those defined acquired assets in any way, shape, or form they want, with no check and no ability of any kind of, party to object to revised terms. This is important for due process constitutional law issues, right? But the other issue that we have is that the second bidder in this case,

CTAM is led by the former CEO and a current board member of the debtors. And there are potentially possibilities that both of these parties, but especially if someone who may be liable, and I'm not saying that they are, it may be liable under Chapter 5, clauses of adoption, to be able to change the APA completely and wipe away any liability that she has or any other director or officer that's involved without any notice, without any due process,

or the ability of anyone to object, and it is fundamentally inappropriate as the debtors are asking. Now, the way this is impostered, I do agree with the SACC and the gentleman on behalf of the committee It's not seem to be bound or based on anything. There was a final bidding procedures order entered on March 28th at this case after a first day hearing, which is unusual, that a final bidding procedures order is entered as a motion, but it was.

The debtors have complied with it as far as she was allowed to participate, what the confidentiality rules are. But what's being asked now is either to reopen the option, which is not allowed in the bidding procedure's order, or potentially to pay a breakup fee, which is specifically disallowed in the final bidding procedures order, or they're sending to get the court to approve a settlement with Regener on to pay $10 million shorter trouble, which is a section of bankruptcy rule 1919 motion.

One of these would have been procedurally appropriate. understanding the time crunch that the debtors have created, frankly, in this case, and the competitional, I forgot the word, computational discomfort that the parties are dealing. It's a debtor-created issue because they have told everyone on, I think, May 19th, who the winning bidder was,

which was the general. The parties, including the states, have been reviewing the asset purchase agreement and the asset purchase agreement of TAN. And I can only speak on that the sale of Texas, we have significant concerns with more than just the definition of required assets in these asset purchase agreements.

And we plan to, and we'll be adjusting to both asset purchase agreements because at this point, it's unclear who is going to be the final bidder in this matter. I would add, regarding the ticket fee, this is posted in a form. footnote to this motion without any basis under law or five in any notice other than in the

footnote that they intend to pay the general and the same million and council said it's coming out of teetowns precincts but that is not how the order it reads the order says the debtors are paying the general needs and their state funds and so the debtor seeking to pay estate funds to a a third party under terms that it's just police saying in order they're not allowed. I would note that we learned, I can only see so myself, that Ms. Woodson, and I sincerely apologize, Ms. Lewitsky, is still on the board yesterday. We had understand some pleadings and information that she had stepped down and she was no longer involved in the business.

But understanding that she's currently on the board of directors, she's currently potentially a shareholder to this, puts her in every definition that I can think of as an insider. So this is now an insider proposed transaction that needs additional scrutiny, and I would posit if T-Tamp ends up in the mix in the situation, we will want discovery as to the information related to her control of this company and what led it into bankruptcy in the first place.

So we're talking about at least two class action health seats involving people who've got at the breach while she was at the home. So we have significant concerns with both of these. Another issue is that we have is that the debtors have expressed no willingness, no interest in compliance state law regarding this sale, And neither of the APA or sell transaction that's proposed had any modicum of compliance with that we're referring they have to comply with to be able to sell what they're trying to sell. In Texas, and this is an issue that is really some cell hearing, so I don't get into it,

other than saying Texans have a right, a property interest in this information that they're trying to sell and require consent as do many other states. None of that isn't any of these documents. there's been no indication of any intent to comply with state law. And so there are great concerns about these APA. And now the better is asking is, everyone saw your objections to what we have now on June 10th, allow us to draft amendments to the APA that may draft around these objections,

and then no one has a chance to object to that. It's patently unfair. It's patently against due process that we all have. And not only the state, this to level set, this is genetic data, as the court knows. This is saliva sample. These are genetic results. This is medical records. These are pharmaceutical records that are trying to be sold.

And these consumers need the ability to review the terms of a sale of their property, their information. And this rushed process is insufficient. The importance of the materials in this case and the due process right has to outweigh We just dropped the audio on this million. You hear, I'm sorry, can you hear me now? Yep. I'm so sorry. I'm so sorry.

I'm not sure where you lost me. Just a couple of words ago. Not much. I'm sorry. The point in this case is we understand that are business different. That are a lot of business different. This motion seems to be cut full clothed out of what the debtor wants to do. What is not being considered at all or is objectively being shant over

is the ability of other parties to review, analyze, decide if they want to respond or how to respond, or seek the several out that could be potentially, and probably likely will be, are very modified. I thought purchase agreement on an extremely limited crime period. We're talking Friday night at midnight in a hearing on Tuesday. It is the deep process right has to outweigh the debtors with his judgment in this situation. I would add that we are talking about significant sale numbers. I have not heard of a reason that this has to be rushed in this way.

And we are dealing with such sensitive, important, data, sensitive, absolutely precedential legal issues before this court that need to be brief and thoroughly bedded that the current deadline, setting aside that I'm not sure how the CBO is legitimately going to get his work done was having to analyze an additional APA clips, potentially two more, by the deadline of his report. we certainly will not have sufficient time to review and determine how to proceed in basically that could be 72 hours, right? So our argument at this point, what we would like to see is if the court is so inclined to entertain this request by the debtors and allow additional bids to come in, this needs to be extended out so that the parties have the ability to support. the bid that is submitted, the asset purchase agreements are both, due any necessary discovery depending on what the circumstances are, and then lodge an informed objection if appropriate

before this court, so that this court has, and allow the CPO to submit their findings and their opinion to the court as he is under a fiduciary obligation to work, and allow the parties that due process right and allow this court the ability to evaluate all of these issues at a properly timed sale hearing. We are not absolutely against the sale. We are not putting our vote on one or the other. We want the process to be transparent and our due process rights and the consumer. More important than mine, more importantly state in tech is the consumer due process rights

cannot be trampled as they are being proposed to be transatlant. at this time. And I would note that it has happened previously in these hearings where a pleadings filed, the order is filed, and we're told with the hearing that it's not, that it's not going to be modified. We have to go by whether it's in the documents. And right now, the deadline, the provision, do not say only thing that this changing is cost and everyone has until the hearing on the 7th at 17th at 90 answer, it's right. It says quite the opposite. And even extending the bed like the 9-A.A.A.R. 17, because they did this court the time to sufficiently review what needs

to be happening. The APA's, the procedure, we believe that it's not in compliance with state law. We don't think it's been compliance with things. It's certainly not in compliance with Constitution, and this is not in compliance with their own final order of bidding procedures. So if the court is so inclined again to deny we will work with the Regener on bid as filed, however it proceeds forward. If it is the court grants additional time to make bids or even as proposed by the gutters, we asked for at least a significant amount of time so that we can have time to review more than what's being requested right now by far,

but we would also like we want time for discovering another process. With that, I'll stand down and thank you for your time. Thank you, Ms. Milgan. Anyone on the WebEx further preliminary comments before we hear the evidence? Yes, Your Honor. If I may be heard, this is Abigail Ryan with National and the Senate. Association of Attorneys General representing 23 states in the United States. Keep it short.

I agree with the state of Texas, and I agree with the U.S. Tusties concerns here. This case is moving extremely fast, and I think we need to take a moment to step back and ask Ms. Milligan said, think about what we're selling. We're selling the blueprint of people's body. This hasn't been sold out of bankruptcy before. There's some serious, legitimate concerns here. Like the state of Texas, the 23 states I represent have serious and numerous issues with the asset purchase agreement.

And we do plan to file an objection before the deadline. Having said that, the things are going to change midstream now, and we don't have an extended deadline to object further. I have a huge issue with that. We were not part of the bidding process of the auction. We have no idea what happened there. So what I do know is we're here today as the state to protect our citizens and make sure we kind of put the breaks on what's happening here and make sure we have due process. Make sure the consumer privacy on those men has the time needed to review these things and make sure that the states have the time needed to review these things involve proper objections to protect one state laws and two to protect our citizens. and this is going to be a precedent-setting case and it shouldn't go by in the blink of an eye.

We need to stop and take time and let everyone be heard. And with that, Your Honor, thank you for listening to me. Thank you, Ms. Ryan. Your Honor, just a quick statement. He's asked that the third party obviously is a moot issue, but I would just say as a small shareholder to ensure that the estate has maximum value, I would look to see that there is a multi-level bidding process in place, and I favor some level of a multi-level bidding process in your considerations.

Thank you. Thanks, sir. All right, Ms. Hopkins, would you like to rebut present evidence or both? Thank you, Your Honor, Chris Hopkins of Paul Weiss for the debtors. Just a very brief, a few remarks. I owe your answer some, or I owe your honor answers to two of your remaining questions. But I think it makes most sense to talk the process, because obviously it's very important to the state and the U.S.

Trustee's Office as well. I think it's important to level set a little bit. So the bidding procedures that got approved at the first day hearing have always contemplated that the sale hearing would contemplate the approval of the successful bid and the backup bid. We posted a sale order to the claims agent website. So that should have, the fact that there are two bids being put up for the sale hearing has been known basically since the bidding procedures were approved. Who has between T-TAM and Regeneron is going to be one or the other is admittedly up in the air.

But the fact that the sale hearing and the sale order approve a successful bid and a backup bid have been known since the outset of the case. we filed our notice of successful bidder and backup bidder that included the Regeneron APA and the TTIM APA on May 19. To the extent the states are seeking discovery in connection to the sale hearing, they should do that. But they should do it next. So that we're not at a point later on before the hearing where we're arguing about whether it should be delayed because they haven't commenced discovery. On the timing point, we obviously think the issues of consumer privacy are paramount important in this case. We've conducted ourselves with that at the top of our minds and dayway.

The APAs with both bidders are heavily negotiated around the privacy and the customer data provisions of those APAs. They are carefully constructed with the full knowledge that the states have positions on what their state laws do or do not permit. And obviously, it's not going to surprise Your Honor to say that those forms of APAs, we believe, pass must are under those state's laws. We know or suspect that it will be litigated

in connection with the sale hearing, but we're confident that either APA, as currently structured, will be approved. I say all that, and I think I said it at the outset of the hearing, and we can try to propose some clarifying language, but I want to be clear on behalf of the debtor. I don't expect either bidder to change those provisions. I don't expect either bidder to make any material modifications to the heavily negotiated

APAs we have with them, maybe around purchase price, maybe around closing certainty, but nothing that should affect the issues that would be of concern for the CPO or to the state AGs around customer data and practices. If they do, it is not our position that if you didn't predict in the future that that modification would happen, that you can't then object to sale here. Of course they could. And frankly, the debtors would assess any modifications to those provisions as a deduct to the bid for this very reason.

Because if you materially modify your APA at your best and final deadline, and now Professor Richards has to redo his assessment or the AGs feel like it's changed the landscape on what objections they may have, that's going to be value, that's going to be a deduct to the value of the bid because you're creating a process issue for us. And... Can I just summarize where I think you are on this point? Sure. Nobody is obligated to object to something by June 10th

if it's impossible to object to it by June 10th because it hasn't happened yet. Of course, sure. Of course. And time is not only important because the longer this goes on, you know, customers start to question the process. Time is not our friend in bankruptcy,

and there's a cost. I believe the current estimated run rate for these cases, you know, factoring in restructuring costs in excess $10 million a month. So when people talk about a one-week delay or a two-week delay, people should just understand that that's taking money out of Mr. Adams and Mr. Stark's pockets, and we believe we've set up a fair process. I think if you look at 363 sale timelines holistically across large Chapter 11 cases, the amount of time between the conclusion of the auction and the sale hearing in this case is pretty substantial,

relative to precedence. Oftentimes it's a number of dates between the time the auction concludes and the time the sale hearing occurs. And so we will do everything we can, consistent with our obligations as the debtors, give everybody notice to make sure that to the extent they want discovery,

we're timely complying with reasonable discovery requests ahead of the sale hearing. That's our burden as to debtors. But I don't think the process that we're proposing is truly a sea change in how to be. how anything was going to proceed at the sale hearing because we were always going to be approving APAs from two different fit of them since the procedures were set up at the outset of the case. Can I ask, tell me about the current, under your proposed schedule, Professor Richards' report would be due on the 10th,

and then the bids would be the 11 to 12, 11 to 12. Is his report, is there a reason you want his report before you get those reports? Bids. Of course, Your Honor. You know, we've been working closely with Professor Richards and his team as the CPO for the last couple weeks. He's obviously a noted expert in the field of consumer privacy. He's going to evaluate the transactions. And if you're the special committee, you want to understand his opinion on the two transactions, the relative merits, if any, between the two bids. Maybe they're both the same. Maybe they're vastly different. That'll be for Professor Richards to decide. But that is an important data point that if you're sitting there as a special committee saying, I need to pick a winner and I need to pick a backup, and which one is more likely to get approved, or to the extent that the AGs or the CPO is recommending that there be conditions put on the bid, you know, are the bidders more likely to accept one, you know, they're imposing one set of things on one bidder and another set of things on another?

Is that going to blow up the deal? Would it give rise to a termination right? There is a significant value to the debtor in making the correct decision about the highest invest bid from the perspective of what's best for our stakeholders and gives us the most value and the most likelihood of success at the sale hearing and ensuring that Your Honor approved the bid we choose as the success of the bidder. And so we're not doing that to jam anybody. We're doing it to make the best decision as fiduciaries of the estate. And Your Honor is 100% correct if there's a change in the money. facts after June 10th, of course we're not going to argue that someone can't object on that basis, based on new information.

But again, frankly, we would encourage the bidders and not expect them to. I would not modify the very carefully constructed privacy provisions that are relevant to the issue the states and the CPO are focused on with their APA. Ms. Milligan raised some issues about Ms. Wajitsky's. about Ms. Wajitsky's role in this case that I think it's just important to address head on. I think we said at the outset of the case. Prior to the petition date, Ms. Wajitsky consensually,

vis-à-vis the company, resigned as CEO, and the only position she held ever since, as of the petition date, has been as a board member of the company. All of the decision-making authority of the board related to the chapter 11, process, the sale process, investigation of potential estate claims and causes of action has been delegated to a four-member independent special committee of the board.

Ms. Wajitsky does not participate in those meetings, she has no say in those meetings, she has not participated from a governance perspective in any aspect of the Chapter 11 process. And to give Ms. Milligan some comfort and all of our stakeholders some comfort, the reason that acquired assets provision exists in the order, is because at the auction, at the direction of the special committee, we negotiated out of the acquired asset perimeter of the TTIPA, any estate claims and causes of action, against insiders of the company, including Ann Wichickie,

which is something that I frankly have never seen happen before, where you have an insider bidding in a 360-3 sale. And so we have kind of headed off the issue of, Ms. Wajicki's a shareholder, Ms. Wichickie is a board member. What if she's buying potential claims against herself, she is not. They remain with the estate. Yes, and that's public, and that is, you can go and look at her APA, and that's why that provision is in here.

Your Honor, I also owe you an answer on the break fee. So there is, the way it works, there is not a deduct to the T-T, T-TAM bid for the purposes of what Regeneron would have to submit for it to constitute a valid overbid under our procedures. So to just use illustrative numbers. If T-TAM were at 100, for Regeneron to submit an overbid, it would need to be at 105. They don't get to say I can bid at 95 because there's technically a $10 million deduct different bid. When we assess the bids, in my hypothetical where T-T-T-T-T-T-T-M is at 100 and Regeneron's at 105, A factor, not the only factor, because there will likely be many, but the special committee will need you to consider, is that the Regeneron bid at 105 is 105 million of proceeds to be a state.

If we were to take the T-TAM bid at 100, notwithstanding Regeneron's overbid, that's 90 million of proceeds to be a state. But there isn't a world where Regeneron can underbid T-TAM on a dollar-for-dollar basis and still win because of the free. Under our procedures, they would not be allowed. In the scenario, I gave you where T-TAM is at 100. Regeneron can't say, I bid 100, but that's technically higher because if you accept my bid, you don't have to pay a rate. All right. And so there was already a $5 million adjustment built in based on what happened at the auction. And that's going to be considered as, that's why Regeneron has to bid $5 million higher in the first place.

Yes, and that's clarified in the order as well. So this is separate from how the procedures work, but if you were to just compare a T-TAM bit of 100 and a regeneron bid of 100 because of how the account, it has to do with a certain assumption of post-petition AP, that T-TAM is agreeing to regeneron. It was easier for regeneron to just pay more than to incorporate a bunch of payables into its systems, is my understanding. But a T-T-TAM bid of 100

and a regeneron bid of 100. T-T-T-T-AM bid is actually worth 105. Because they're assuming about $5 million of P-P that Regeneron would not. The flip side of that is that a regeneron bid of 105 and a T-T-T-T-T-T-M bid of 100. are effectively the same value to the estate. Because Regeneron is 105 of cash.

T-TAM is 100 of cash plus 5 million of assumed liabilities that we would otherwise have to pay. All right. So just so I'm following, if I approve the procedures, and let's keep using these same numbers, even though they're below the current bidding threshold, T-TAM comes in with its final best bid and it's 100. Regeneron can bid 105.

When you're comparing, you're going to deduct five from regeneron because of the assumption of liabilities, but then you're going to deduct 10 from TETAM because of the breakup fee. I think the way we've set it up in our procedures, and my colleagues at Wachtell can jump up and tell me if they disagree. We are taking the rules that existed at the auction

and imposing them on this best and final profit. So T-TAMs at 100, in order for Regeneron to satisfy both the $5 million bid increment and to make their bid apples to apples because of the difference in how AP is treated, they actually have to bid one-tenth. Oh, it's a $5 million increment. I confused you with my own hypothetical.

I apologize. I gave you a... So nominally, their bid has to be $10 million. All right. And so in that scenario, the $10 million theoretical deduction from T-TAM is not, isn't going to matter, I don't think. I think that's practically correct, Your Honor. In any realistic scenario, I think, if Regeneron is overbid at $10 million,

unless there's some other fact that causes the special committee to determine that, notwithstanding, it's $10 million purchase price higher than the T-TAM bid, If Regeneron is declared the highest invest, no break fee is ever payable, and there's no $10 million credit against their purpose. All right. I appreciate that clarification. And then on the material facts issue, I mean, just to state it simply, now that we've gone around and heard from all the parties, I think our simple statement on that is we don't believe there's any dispute on any material fact that bear on the issues we're asking for. Yeah, my notes here. And then finally, Your Honor, I just want to address the comments about, I just want to address the comments from T-TAM's counsel about T-TAM walking away.

I just want the court and everybody to be clear how these procedures are constructed because it suggests that there may be something. We're proceeding forward today on the basis that T-TAM has presented a fully financed binding offer to the debtors for consideration of 305. These procedures assume that bid, because they're objecting to the sale, and part of their objection is that you should exercise your judiciary out, terminate their agreement now, and take my deal, is that that bid is on the table. So the procedures we propose take that position as a predicate. they can't under these procedures pull that proposal because that's the genesis of why we're here. I think it's in clause B of the orders. There's a proviso that says if T-TAM does not submit, Your Honor, I apologize to T-TAM. I just disclose the term of the bid.

Do we need to issue a release or something? issue or release. Maybe we can do that for a short statement and discuss what would be appropriate. Okay. I'm not sure either. Why don't we take a short recess and you all going to talk about what might be the next step

and then we'll 10 minutes? We'll reconvene about 10 minutes until the hour. Your Honor, we are back on the record. Thank you. Please be seated, everyone. All right, what news, Mr. Hopkins? Thank you, Your Honor. For the record, Christopher Hopkins of Paul Wise,

co-counsel to the debtors. So first of all, I apologize again to the court for the slip, and I thank the court and your staff for bearing with us while we figured it up, charted out the path forward here. Of course. With the parties, we sincerely appreciate it. I am pleased to report that I think we have the consensual path forward on the whole process as among the debtors,

T-TAM, Regeneron, and the consultation parties. If it's all right with your honor, what I'd like to do is read these points into the record. I'd ask each of the bidders to confirm their agreement, make any clarifications, and then we're going to work with the parties to get an agreed form of order submitted for the court's consideration as soon as possible. Okay. Okay. So we will proceed with a modified best and final process that will involve both bidders. It will both start and conclude on the later of June 12th or the second business day after the later of two conditions being satisfied.

Okay. As long as the parties are paying attention now. I can't write that down that quickly, but go ahead. The sale objection deadline and the CPO report have occurred. So, and this is, you know, the principle we talked about earlier in the day that both the bidders and the debtors want to be going into this process and making decisions with the benefit of the sale objection deadline having passed and the benefit of Professor Richards having filed his report.

The way the best and final process will work, and I'm going to use the number now since I let me. the cat out of the bag, which again I apologize for. But the starting bid at this day of the process will be T-TAM's bid at 305. If Regeneron chooses to participate, Regeneron must first overbid at at least $315 million. As long as Regeneron bids at least $315,000. million, T-TAM will receive a two-hour period to come back with a best and final proposal that would be provided to the debtors, the consultation parties, and regenerate.

If T-TAM chooses to submit that best and final proposal, Regeneron then gets two hours to submit their own best and final proposal, which again would be submitted to the debtors, the consultation parties in T-T-TAN. the debtors must then file the notice announcing who's the winning bidder and disclosing the material terms of the losing bid on the same day, so on June 12, or whatever that later date happens, based on the sale objection deadline in the CPA. While this process unfolds, the parties have agreed that there'll be no discovery

and there will be no litigation about the conduct of the auction. Both parties' ability to contest the debtor's decision as to which of the bids is the highest and best coming out of this process are preserved. The backup bids, so whoever ends up losing, notwithstanding where they bid in this process, the backup bids will be $146 million if it's TETAM, 151 million if it's Gennarone, which is consistent with both our procedures and how we concluded the auction. we're now proposing to give each bidder if they lose a $10 million breakup fee. So there'll be parity between the three.

In this scenario where Regeneron does not choose to bid, T-TAM's bid will be the 305 or, I mean, I don't know why they would, but if they chose to bid higher anyway, they'd be free to do so. But whatever bid they do submit, if they submit a higher one, would be their bid. For the purposes of the sale hearing, Regeneron's bid would be the 256. What does that mean for the purposes of the sale?

So I'll let Regeneron, you know, speak for themselves, but I think what they are saying is if they choose not to participate in the best and final process, for the purposes of the sale hearing and the potential litigation that they may want to bring, challenging our decision as to whether the BTM bid is, highest invest. The comparison will be between whatever that winning

TETAM bid is and the Regeneron bid at T.56. Okay. And all parties rights... The theory being that if you were to reject the 305, you would then be talking 256 with regretting. Correct. Again, I don't know why you do that, but yeah. To give some, I think the flip side, to give, you know, just so your honor is prepared, I think the flip side would be if because the sale of rejection deadline has passed and the CPO report has been filed, there's information in the public domain that where they think, based on what's out there, Regeneron's argument to say, T-TAM's a higher purchase price, given the execution risk on getting it approved, you should have taken it.

I see. Yeah. In all parties' rights are reserved with respect to any arguments either bidder wants to make around that type of process, there'll be no other bidders. consistent with the procedures we filed no fiduciary out. So whoever we announce is the winner coming out of this process, that's the bid we're going to seek approval of at the sale hearing, and no bids can come in. With that, Your Honor, unless you have any questions,

I'll let Your Honor choose the order, but I think it makes sense to hear from the bidders, and then to the extent, obviously, anybody else the consultation parties want to weigh in. Sure, let's hear from the bidders and then, yeah. We may have a question. Sure, go ahead. I apologize, Your Honor. I just wanted to be clear. When we say the Regeneron bid is at 256 if they choose not to participate,

obviously we could choose in our business judgment to take the 256, notwithstanding TETAM may be at a higher purchase. Right. That's consistent. It's an actionable bid for all purposes. Yeah, okay. Okay, understood. All right, which bidder wants to speak? to this first. Go ahead. Fine House, Wachtel, Lipidors, and the Cats,

for the record, on behalf of Regeneron. I mean, first just a brief statement on behalf of my client. We continue to believe the right approach here, legally and otherwise, would be for the debtors just to respect the auction as it ended on May 16th. I think I've stated that position clearly today for the record, and I stated again because it is a firmly held position of our client, and that's what they believe they bargained for,

and that's what they believe the way they should have ended on May 16th and today. That said, we have continued to negotiate with the debtors first in advance of the hearing today on the proposed final procedures and then on the revisions to the proposed final procedures, and our client is prepared to go forward based on that revised basis with the following clarification. The $256 million is a valid bid. The debtors can choose it or not if it's not raised. And as the discovery, our understanding of the deal is that there will be no discovery period by BATAM or reciprocally during this period between now.

On the contrary, but we have a perspective in general view. Sure, okay. Thank you, Your Honor. Grip Lani. We really appreciate how much time you gave us to talk through and come up with whatever creative solutions we could. My pleasure. And I'm happy to report. I think it's a good day for the estate, and I'm glad that my clients could be a constructive part of it.

You know, for the record, since Mr. Kleinhouse couldn't help himself, we also believe that the bidding procedures, you know, should be enforced. And by that, I mean that all bidders were willing to bid should be given a reasonable opportunity to do so. We think what we have done by compromising today is to accomplish that. We certainly don't like the last look, but it's part of this overall package. The only thing that I would say, I agree with Mr. Klein has about the no discovery, I'll put down a marker that if Regeneron does want to try to object to the sale and the debtor's judgment to take my client's superior offer over theirs, and they want to come and object to that, don't think they'll have some.

because that goes to the merits of the bid, not bidding procedures, but we don't have to decide that today. We can deal with that another time. On my list of things we talk about in the status conference, if somebody's challenging somebody else's bid, I'm going to want to see something about standing. Right. Well, I mean, for us, at least, we do own stock in this company, but it's different. But we don't have to litigate that now. I'm just putting down the market.

And then lastly, I think the one detail that I didn't hear, and apologies, Mr. Hopkins gave me three opportunities to read his notes, but I forgot it, which is the overbid, he said that the first overbid must be $10 million higher than whatever T-TAMs, the $305 million, not whatever, but $3.5 million bid going into the final day would be, but the second bid, if there is a second bid, would also have to be $10 million higher. right? The overbid from Regeneron, if we go up afterwards. Regeneron's best and final bid, you're referring to? Yeah, that their last look has to be 10 million higher, not $1 higher.

Locktell Lippon Rose and Katz on behalf of Regeneron. Yes, Mr. Shehiel's right. Mr. Pranis right, to the... I'm Michael and Benz, if your first name. Just like it is in the existing order that you're on, review just like the papers that we presented on our best and final last look bid we will effectively be 10 million higher than whatever they're at which includes a 5 million cash bump as well as to cover the 5 million and post-petition

liabilities of their soon okay appreciate the clarification thank you all right committee or other consultation parties want to weigh in your honor Jason Adams Kelly Dry and Warren on behalf the committee the hour is late I think there's more wood chop here I'm going going to be very brief pieces broken out took some time but we're appreciative of the efforts of all the parties and it's accomplished the goals that we set out from the beginning of this hearing when I first rose so your honor we're at support of this thank you thank you thank you all right any of the parties in the courtroom wish to be heard briefly on the

mr. Stark would have loved to see how your honor would have rolled on all of this very pleased with the outcome and I thank you for the parties for achieving thank you anyone on the webics wish to be heard briefly Yes, Your Honor. Can you hear me? This is Levin Milligan. Yes. Thank you, Your Honor. Again, Levin Mulligan with the Texas, Henry General Zavis, appearing on behalf of Texas with that way.

I, while I'm grateful that the parties have stuck it out to try to work something out, I do continue the objection to maintain the cell of the sub-rejection deadline on June 10th with the subsequent asset purchase agreements and arrangements to be disclosed on June 12 or 13th, however that works out. It's, it, uh, the concern is that the state of Texas has significant concerns with the asset purchase agreement as they are presented currently that are beyond just things that literally say privacy. So we, we do reserve those objections and would ask that if the court, um, agrees with

this proposal, would any subsequent order clearly lay out that the terms of the ATA other than the price do not change so that we do not have to come through redlines on less than a 48-hour objection notice period and that's just fair to all the priorities in addition to the state regulators and that's where it has been presented with the court today. I'm not sure if that would be controversial about as people are preparing objections or responses or working on agreements. having that AP, and one of those APOs

is concerned. Um, second that we would ask just that the court confirmed and the parties confirmed that any limitation on discovery that has been an appeal with the agreement only affects PPM and the general and as far as the auction is concerned

than the other parties aren't limited in discovery during the end of between I guess for whatever spending current between now and the hearing date of the 17th. Okay. Let's start with a second one, Mr. Hopkins. You said earlier that if parties want discovery, they should be serving it now,

other than the two bidders, is that position still stand? That's right, Your Honor. We don't want people to sit on their rights until June 10th and then serve us with discovery that's going to be impossible to comply within time to sale hearing. So we're happy to work with the states. We have a good dialogue with most of VAG's in NAG.

So if there's information they want, and we're asking everybody to stick to our timeline, we should start those discussions there. Okay. That's helpful. On the objection deadline is Milligan. I'm going to overrule your objection based on the discussions we've had and with a little clarification here. The debtors and the bidders and a number of other parties, it seems, I think it's important for purposes of comparing and valuing the bids to understand what the objections are as to the debtors. as to the bids as they stand today. And I think that's a valid point.

As we discussed earlier in the hearing, if the APA changes or something else changes about the transaction, something in the broader world changes that no one knows about on June 10th, that doesn't preclude someone from lobbying in a supplemental objection. And I'll ask, and I think you'll do this anyway, but I'll ask the debtors when they identify the successful, we have a new term for it, the winning bidder, whatever it is, and the backup bidder to file red lines of the APAs,

so that if there's anything has changed since what was filed last time, it's immediately apparent to anyone who might want to take the work with that. But I think maintaining the objection deadline under the circumstances and the value that it'll add to the big comparison process is a valid point. That's fine with the debtor, John. Your Honor, just to be, I'm sorry, just to be clear, if there are significant or substantial is a really subjective, But assuming that we are able to see the red lines along with the notice filed on June

the 12th when it's filed, we would ask for, I want to be clear that if there is an objection, it can be filed any time following that disclosure through the day of the hearing, the morning of the hearing, because I know the hearing is at 9 a.m. So we want to give the party's time to address that, of course, that we'll still talking about a very short period of four days or less. Any issue with that, Mr. Hothans? You're not anticipating. From the debtor's perspective,

I think this is a low probability issue, Your Honor. I think we would treat it the same way we're treating each of the bidders' objections regarding highest and best, any time up to it, including the sale fee. Okay. All right. I think that makes sense. The other request, I'm sorry. I certainly did not mean it about here.

The other request is that the debtor's file of draft proposed for. along with the notice on the 12th because they want to confirm that the order does not include any terms that are otherwise rejection or change any issue in value. It may be published already, isn't it? It is, Your Honor. We, pursuant to the local practice, we uploaded a draft sale order to the claims agent website. I believe it was last Wednesday. So that's already available for parties.

For Ms. Milligan, I can ask someone on my team to say, under the room in the AG. In email, so you have it. Thank you. Thank you. If it changes, we would just ask that we'll be filed promptly and we'll be able to access on the court's website.

Thank you so much. Okay. Very good. Ms. Ryan? Your Honor. Yeah, so if I may be heard, I will keep this brief. Again, I understand the court has been there right and I appreciate your courtes.

We're willing to work with the debtor to get some discovery in and out. However, last week we asked for a protective order because many states should not receive discovery without having a protective order in place due to open records laws. And we haven't received one yet. So just while we're on the record, if you guys can send us a draft protective order that we can look at, we'd be happy to work with you to get that in place and then start the discovery process.

That's fine, Your Honor. We'll expedite that. There is a protective order, at least as among some parties already, because we've been sharing information with the creditors committee and other parties. So that should be easy to get them to draft. Okay. Sounds like a plan. Thank you.

Thank you. No, Your Honor. Thank you very much. Okay. Anyone else on the WebEx wish to be heard on this resolution? All right. Well, very good. It sounds like a fine outcome.

It's very much a cliche, but I think everyone will probably be happier with what you've negotiated than you would with what I would have come up with. sitting here right now, I'm still not sure what that would have been. So it's easy for me to say. But I think this is very productive, and I'm glad to give, I'm glad we're able to give the parties all the time they needed to work us out. As Mr. Stark said from the perspective of an equity holder, again, I don't know whether equity is in the money here or not,

and that'll be resolved later, but it seems like very positive development in terms of value. overall for the state. So I'm very happy the parties have reached this resolution and we'll look for an order. Tomorrow is my last day in town, so if you can get that order to us relatively quickly, we'll get that taken care of. Understood, Your Honor. Be pleased to approve it. Thank you very much. All right. Just two other quick points.

One on your Honor's comment about the status conference. We've conferred with both parties briefly here. Just to be clear, I think part of today's agreement is that the preliminary, I don't want to speak for TPAM, but I believe the preliminary objection is going to be withdrawn. Obviously, the parties will discuss whatever Your Honor wants to discuss today, but I think until we kind of either have a discovery dispute with the states or somebody else, or we see the sale objection deadline, subject to anything Your Honor wants to discuss, I'm not sure that other than the existing briefing schedule, at least the debtors and the bidders are asking the court for any kind of interim deadline for relief between now and in the deadlines that we've set up under our framework. Let me look at my notes quickly. I don't want to prolong the evening unnecessarily here.

We talked about standing. If one bidder is challenging, the other is a winning bidder. I'd appreciate some law in standing in the context. I don't think we need an order or anything. But keep that in mind if you want to make that challenge. We talked about the CPO's report and the timing of that. We talked yesterday about supplemental disclosures from professionals about the bidders and I assume that's in the works. We have a few pro se objections to the sale, and this is probably on your list, but it's kind of standard practice.

But if you or one of your king would reach out to the pro se objectors, figure out if they're still maintaining their objection, if it can be resolved easily. We just file a report, say, the Friday before the hearing. I think that would be very helpful. We all know where those stand. Absolutely. Um, confidential information is a sale hearing. We don't need to talk about who the other bidders are who are no longer in play. We don't need to disclose their name.

It seems to me we can have a sale hearing without getting into confidential information unless something unusual happens. If we need procedures around that, if you reach out to Mr. Spidele and alert him so we can start getting a lot about how we think of that. Of course, sir. And it's not directly related to the sale hearing, but we do have a motion for appointment of an equity committee. We've got to get that scheduled, I think. we have a suggestion about timing for that. I'll want to Mr. Stark for all. So I believe that was filed today or late last night.

We have a good relationship with Mr. Stark. We respect him. Obviously, he should have the opportunity to come up and speak to it, but I think we could, I'm confident we can find a mutually agree with the schedule. Okay. All right, Mr. Stark. Admirations. We'll be figured out.

Okay, very good. Very good, that's fine. The one thing I do want to mention, I can last. Sure, yeah, go ahead. I can't imagine we're a little bit later process and we're not officially. Yeah, what are you'd assume we'd be allowed to sign onto the confidentiality order and participate. And sort of the information of flow of the other something have. I can't imagine there's an issue with that by any kind of the same.

Yeah, what are the, and we have separate conversations going on, so. So, um, Right, why don't want to confer with them? I just don't want to, look, I'm just cognizant of Mr. Hopkins' point about this is moving very, very quickly. Right. And we're going to have a hearing very, excuse to us, and I want to be efficient. I'm saying catch up with everybody else to be as fast as they can around me, and I can't see it.

I'd rather know that. Okay. Yeah, I'm, I'm happy to try and resolve it if I need to. I will have a period of time while I will not be able to hold the hearing even telephonic between now and the sale. I think the professional service should be able to figure this one out. Understood. Understood. All right.

Thank you, Mr. Stark. Just to state on the record, as I've been requested of us, with respect to the preliminary objection that the T-TAM parties filed to the announcement of the successful bidder, and we filed that preliminary objection in order to reopen the bidding process. Obviously, we've just spent the last number of hours negotiating on how to reopen the bidding process. So I think it would be just most efficient, and I ran this by Mr. Hopkins, I think it's fine. If in whatever proposed order that will be circulated and then submitted to the court, it would just state that this resolves the preliminary objection as opposed to us filing a notice of withdrawal. I think that's easier.

Does that work for the other parties? Okay, that works? All right, and you have a motion to seal also. That's the last piece of housekeeping that's on. my list. We would like that to be granted, Your Honor. It contains personally sensitive information about our clients' financial wherewithal issue, the exhibits. Right. Because depleting itself that we filed two steps. The preliminary objection had various confidential information in it. That motion to seal was granted and the redacted version of the

right file. Right. Second phase, this new objection that we filed yesterday. The pleading itself was fully unredacted because we were careful to avoid referencing things that, you know, would be confidential. But the exhibits, several of the exhibits, were redacted because it contained confidential information about our clients. And we would like that, since it is part of the court record, could be granted as opposed to the time of time. Okay. Is there any objection? Okay, so I'll grant the motion to seal as to the as to the objection. And then there's some trial exhibits or hearing exhibits as well.

I guess it's moot as to those. I think that's moot because we didn't move to happen. Right. Okay. All right. Thank you. Thank you. Any other questions from your honor?

I do have one update for you that I don't want you to head off on your vacation without knowing because it could happen while you're on vacation, Your Honor, and I don't want you to read about it. Lots of things could happen, right. Sure, go ahead. So we just want the court to be aware that there are at least two congressional committees who have asked representative of the debtors to appear before those committees and potentially testify about this map.

We're still in discussions with those committees about exactly when. I can't tell your honor I know exactly what the scope will be. The debtor's view is that it would be better generally for a whole host of reasons for that testimony to occur after the sale hearing. We're not sure if that is going to happen or not. It could happen the week of June 10th or it could happen, we hope, after the sale hearing. We just wanted to make sure the court was aware that that was happening. So you didn't read about it in the press or see it on C-SPAN.

That's how you're going to spend your big week. It's tempting. It's tempting. But we're not asking for any relief. This is literally just while we're on the record, we want to make sure the court is aware. Okay, that's helpful. Appreciate it.

Thank you. With that, Your Honor, I mean, other than again, thank you to the court and your staff for bearing with us into the late evening. We appreciate it, and we'll work to get you a proposed form of orders. Okay. And Professor Richards, I think, wanted to be heard on something.

Go ahead, Mr. Crippelani. Can I just go first, because it's related to what the debtors were just discussing. You know, I don't have first. ten knowledge of all of the details, but when I heard Mr. Hopkins mentioned that, you know, the debtors have been requested to appear to provide testimony before Congress,

my client has as well. And so, you know, we are working with the relevant authorities about whether that can be moved or wait until this process is over, but, you know, if she is required to appear, you know, we may do that, and I don't want anyone to think that we're doing it for some purpose other than complying with requests. that we have to.

So I don't want to sit silently and not mention that to the report. Sure. Okay. We'd much rather just focus on getting through the cell process. Understood. Thank you. Yes, sir. Thank you.

Not to inject more chaos into the proceedings, but I did want to talk about the timing of the CPO report. Sure. We've heard a lot today about the importance of privacy. We've heard a lot about how hard we're working. We've heard a lot about Regeneron having 50 to 60 people working to return things to us. As I see it, the, The CPO process has three phases.

There's the examination phase, the investigation phase, the U-Sharges where there's deliberation and there's memorialization. And I think particularly given developments this week, it will be difficult for us to deliver a great report on a week from yesterday. And I don't have my bankruptcy counsel with me. Did I hear that under the bidding proposals, the deadline is the 10th or two days after my report? report files? Is that right?

Chris Hopkins always was there. That's correct. So I didn't want to miss the chance since you're going on a trip to object. But I do think if this is the appropriate time, I might want to discuss the possibility of more time for the CPO report, given the multiple bidders, the complexity, the number of privacy statutes that are implicated here in order to do the work. And we only received, we met with Regeneron on Friday,

and we met with T-TAM on Monday, and we received submissions from written submissions in response to our questions that we'd given over a week ago today. And I'm certainly not accusing either of the death or the bidders of non-cooperation. It's just, as I think we are all too aware, this late hour on a Wednesday, this is a case that has become more complex by the day.

And I didn't want to, particularly since Your Honor is leaving on a trip, I didn't want to miss the opportunity if we need to file something for, we've had discussions with the debtor about more resources given the increased complexity of this, but also for more time. Because it's my manifest goal that the report that I and my team deliver is full and comprehensive, hopefully concise, but helpful to the court in navigating some of the very complex privacy questions that are issue in this case that the state. state AGs have referred to and that is worthy of the complexity and seriousness of this litigation. Sure. Do you have a different time frame in mind? I didn't off the top of my head, but I didn't know that we're going so quickly from the bid procedure to the status conference. The other piece, and this was in my letter to the court, I also have to go on a plane tomorrow. we're burying my mother and father on Friday in D.C. Thank you.

And so the, and this is a, the debtor's been aware of this since the first day that I was appointed, it would make it tricky to deliver something on the freeze with the added complexity. I'm hesitant to say an open court a proposal, but if you would like me to, I'd be happy to say those words. I'll respect your hesitation at the moment. That might be. I'm mindful that I'm a relatively small piece of a much larger transaction, but I also want to discharge my obligation to you to deliver the best possible report in a timely and concise fashion. So I can think of at least a couple ways to potentially proceed,

and I think it makes sense for you and your team to discuss it with the debtors, the committee, the bidders. One would be to seek a relatively modest delay in the delivery of the report, and I know nobody's excited about that. because it pushes other things off. Another would be to submit a preliminary report by the 10th. And I don't know if this is doable, but the debtors and the committee and the consultation parties are looking for certain aspects of the report

more than others to help them think about one bid versus the other bid. And I don't know how easy it is to pinpoint which those items are as opposed to the rest of the things that might be. report. But perhaps you can explore with the parties whether that might be doable. It's not much time. I agree with you there. With the more fulsome complete report to follow a little bit further down the road. Sorry. To follow a little bit further down the road. Again, I don't, I don't know what's possible. I don't know what's reasonable. Things are moving quickly. things need to move pretty quickly. Everybody understands that. But this is complex.

And so I would suggest that you and your team talk to the debtors and the other parties and see what's doable and what's workable rather than trying to put specifics around it right now. I think given the lateness of the hour and the fact that while I am represented by Abel Council, I'm currently unrepresented, except by myself. And we have a, I have to say that the debtor, and both the bidding parties have been cooperative, and we have good relationships, and I would be happy to consult with my counsel

and to have the appropriate discussions, perhaps tomorrow, with parties, and hopefully we can work something. Sounds like a plan. All right. Thank you very much. Anyone have anything further on 23 Me? Your Honor, Susielle Kerpalani from Quinn. I'm just reacting to the consumer privacy on Buggman.

I think we should talk about it offline, and that's fine. But I'm no expert in this. But it sounds to me like if there are any either preliminary or otherwise concerns, some of those things might be things that bidders could address. It's not binary. Like, oh, therefore, your bid's not good, and the debtor is going to have two days to make a decision without any kind of discussion on how to rectify

potential concerns. I don't know anything about that area of the world, the area of the law, but if the CPO says, oh, bitter A's or B's practices would violate the three states here, certainly I would think the debtors would want some time to work with that bidder to resolve, to see if they could resolve those three states so that there's a maximum chance that the bidder would be considered just as good as the other bidder. I'm just trying to think about this whole two business base. Yeah, well, and I'll see you and raise you. I think there are at least two opportunities for that discussion to occur.

One is perhaps before the bids are submitted based on the bids as they exist now, before the bids are submitted next week. And the second is after the high bid is selected and before the hearing. I think the ombudsman can serve a valuable role interfacing with the attorneys general, the other regulatory authorities, the Congress, I don't know, maybe, and trying to figure out are the obstacles that appear at first in the Ombudsman Report, can they be solved? Is it something that the bidders can solve without materially changing the deal?

Right. Something that we should talk about as part of that. Right, right. I think that would be very helpful. Thank you. All right. Anything further? All right. Thank you, everyone for sticking it out. We will be adjourned.