American court hearing recordings and interviews - 23andMe - Audio of May 6 2025 Bankruptcy Court Hearing, case 2025-40976 before the US Bankruptcy Court

Episode Date: May 7, 2025

This is the official audio recording of the bankruptcy court hearing held in the 23andMe chapter 11 bankruptcy proceedings on May 6. 2025. The hearing audio is available on PACER and on the free case docket, as are other filings docketed in the 23andMe bankruptcy proceedings. https://restructuring.ra.kroll.com/23andMe/Home-DocketInfo

Let's call our 130 matter, please. 23 and me, holding co. Appearances in the courtroom first. Good afternoon, Your Honor. Tom Risky, Carmony McDonald, on behalf of the defendant. Good afternoon. Marina Swift from Stenson on behalf of the official committee of unscure creditors. Good afternoon, Your Honor.

Josh Watts, I'm here on the AMB. Hello? Good afternoon, Your Honor, Carol Ritchick, on behalf of the U.S. Trustee. No. Good afternoon, Your Honor, Joshua Jones to the United States of America. Yeah, Mr. Jones. Anyone else? All right, appearances on the WebEx, please.

Good afternoon, Your Honor. You've got Eric Wilson of Kelly Drive proposed counsel with the Creditors Committee and with me online with Megan McLaughlin. Good afternoon, do you vote? Good afternoon, and Heather Crockett on behalf of the state of Indiana. And I wish to enter an appearance at this time.

Good afternoon, with the National Association of Attorney General on behalf of the nine client state. Good afternoon, Your Honor. Michael Greta, of Alan Mack and Suck Campbell, Mallory, and Mattis on behalf of KR OCT LLP. The landlord. Okay.

Good afternoon. Your Honor. Kevin Barrow. I, thank you, Sherylouler. Good afternoon, Your Honor. Christopher Hopkins, Paul Weiss, co-counsel to the debtor. Hopkins. Good afternoon, Your Honor, Ghala Jordan with the Minnesota Attorney General's Office.

The general update before we get into the two matters on the calendar? I was going to ask the court, if it's a case. acceptable in the court before we get in the agenda. Perhaps Mr. Hopkins could give a brief update, and then I'm not sure if the court saw since it was maybe 40 minutes ago, but the U.S. trustee did file a notice of ombudsman, so talked with Ms. Ritchak, so she'd like to give a brief update on that.

Certainly, certainly. Okay, let's start with Mr. Hopkins. Thank you, Your Honor. Good afternoon, and again for the record, Christopher Hopkins of Paul Weiss, as co-counsel to the debtor. So, first of all, thank you to the, to the court for letting us participate remotely today. You know, we thought, given today's agenda, we'd save the estate some money and participate remotely, given Mr. Risky is going to be handling the items on today's agenda.

So just a few brief updates for the court. So first, you know, I've been update on the sale process, as I'm sure Your Honor, notice by the lack of us filing a notice on the docket. But we have not selected a stocking horse dinner at the day. times and we're planning to move straight into the auction following tomorrow's bid deadline. We continue to have robust interest in the sale process and our expectations that we're going to receive multiple competitive bids at tomorrow's deadline. Related to that with respect to the dip, given that we determined not to proceed with a

stocking horse bid, I'm pleased to report that we were able to work with, as our chip lender on the terms of an amendment to the dip to ensure that the debtors maintain access to the second $25 million tranche of funding available under that facility. So as Your Honor may recall, under the original dip facility, our ability to access that second $25 million tranche was, there was a milestone requirement that we had obtained approval of a stocking horse bid by May 7th that was either reasonably acceptable to the dip lender or effectively would generate sufficient proceeds

to repay the dip lender in full from a sale transaction that would close on or before June 30th. Under the terms of the amendment, that milestone, so it being tied to a hard date, has been removed, and the condition is now that we obtain access to the $25 million, either because we receive a binding bid tomorrow that satisfies those conditions or we announce a successful bidder at the auction that satisfies those conditions. And, you know, so with where we landed on the stocking horse and with that dip amendment,

you know, we're obviously well positioned to now move the sale process forward. As Mr. Risky mentioned, we saw that the CPO was appointed today. We think that's a great development. We've been preparing for the individual to come on scene, and we're going to move as quickly as we can to start engaging with Professor Richards to make sure that he's getting the information he needs and the access to the debtors to ensure that he can submit his report on time ahead of the June 17th sale hearing. And finally, Your Honor, one item coming out of last week's hearing that was going to be heard today,

just as a bit of housekeeping, was the scheduling issue on the briefing schedule for the class proof of claim issues with the cyber class action claimants and the pixel class action claimants. those negotiations are proceeding well. I think we have basically landed the plane with class counsel and we're in very productive discussions with pixel counsel. And so our proposal on that, and I'm not sure if they happen to be on the line today given where we are with them procedurally,

but what we respectfully asked the court for is some time, you know, either Thursday afternoon or on Friday or a quick virtual hearing to just run through, we expect to be able to reach an agreement, and so we would just want to present the proposed schedule to your honor and make sure that the court is comfortable with how we're planning to proceed. Sure, I think we can make that happen. Why don't, well, tell me if this makes sense as your discussions proceed

as you get a little closer to figure out when would be the best time to do that, then reach out to Mr. Spiedel and we'll get it set up for, it sounds like it would just be an announcement and double-checking that we don't have any conflicts with any dates. Sounds perfect, Your Honor. Thank you. And just, Mr. Rappans, just to be, this would be an on-the-record, WebEx hearing, or are you talking about a short phone call in chambers to discuss? I think if we reach consensus, Your Honor, to save the court's time,

you know, hopefully we could just file a notice, you know, of an agreed schedule with respect to each of the respective class council. If that works for the court, you know, we'll coordinate with the claimants. And if we do need the assistance of the court to get to a final resolution, you know, we can reach out to chambers to schedule that quick hearing. Either way, whatever the court prefers. Okay, so, yeah, if you've agreed on everything, yeah, I agree. We don't need to have a phone call or a, and you can just reach out to Mr. Spital and get that finalized and on file.

If we need to sort through some issues, then let's do that. So we'll do that by a WebEx hearing. We'll get that scheduled enough time. I'm going to speak with the record. Would you like me to preview that schedule with Your Honor informally before we file it just to make sure of satisfactory to the court? If you're just setting dates for one another to file things, I don't really need to. But for the hearing date, it would be important to make sure that I'm available, of course. That would be, we won't get pretty far with that.

But yes, I think that will work. So that sounds like a plan. All right, Ms. Ritchak? As Mr. Rischke mentioned, the U.S. trustee just filed a notice of appointment of Neil M. Richards of the Washington University School of Law as the CPO. In this case, as you might imagine, given all the publicity in this case, there were many, many individuals. very highly qualified individuals who expressed an interest in serving as a CPO in these cases. The U.S. trustee selected several of them to interview last week and ultimately chose Professor Richards. And also, by way of update, Your Honor, the U.S. trustee did conduct and conclude the 341 meeting last Friday.

So things are moving along. Okay, very good. Thank you very much. All right, any other updates or should we move to our agenda matters? We can move to the agenda, Your Honor. Okay. So I think you put the rejection motion first for a status conference. So what's the status?

Time risky for the record, Your Honor. I've got a call with Mr. Greger and Ms. Jones this morning to provide them an update. Unfortunately, this just has not moved as quickly as it should have. We have confirmed, you know, what's remaining in this location is not genetic material. And it was never stored there. But I confirmed that with the landlord. But there are still, despite that we've had two different removals and inspections, there were some chemicals related to an on-site chemist doctor pursuant to research that he would use.

So again, in accordance with the inspection issues, you need to again get in there. get in there hopefully today have that removed and that and then I'm fairly confident that mr. Gregory miss Jones and I will be able to resolve the issue we just can't until those those facts have been concluded so agreeable to the court if we could just push us another week for another status conference just are we school in that's May 20th I think it's two weeks we have two weeks yeah we have a hearing scheduled two weeks out we can if it needs to move faster than that we can certainly talk about that if I guess

it just if possible just to so we're not waiting too far into May if we could just set it for a status next week again my hope is that we'll make that go away and be able to present a stipulation at that time yeah I've got a 1 30 conflict next Tuesday but I could I could do something in the morning we'll make whatever work as long as it works for layman council right and they're in California so not too early morning. Morning. Yes, Mr. Gregor?

Yes, Mr. Greger. I was going to say, Your Honor, the morning would work for us as well. Should we think about the 11 central on the 13th? Sure. Does that work for you? Why don't we continue this to 11 o'clock on the 13th? And if you get it resolved, naturally reach out and we'll cancel that. If you're still where you are right now and need a further extension of time, let's not get 50 people on the WebEx.

Let's just continue it to the next Tuesday without having a hearing. And we'll simplify that. That sounds perfect. Thank you. Okay. Yes. Thank you, Your Honor. So the Foreign Representative motion.

Yes, Your Honor. As Your Honor is aware, there's various litigation pending in Canada with respect to data breach and other things and potential class actions and other. litigation as your honor knows as well the debtors have filed a adversary proceeding seeking to enforce or extend the stay with respect to certain of that litigation we have been in productive discussions with Canadian Council on how to resolve that kind of similar along the lines of this parallel track of the data breach class claims and things like that but not to put the cart before horse before the horse we do need to have the recognition happen in keeping

That's something they've asked us to do as well. So all we're seeking today is to have Matt Carvarda as representative of the debtor be appointed as the foreign representatives so that they can seek recognition in Canada of this proceeding. We haven't received any objections with respect to that. We have submitted a proposed order. So I'm happy to answer any questions about it, Your Honor. Sure. That's the limited relief we're seeking with respect to the benefit. Sure. Did you say the Canadian plaintiffs have asked you to have a case opened in Canada to implement the automatic?

Well, they've raised the issue that we haven't. Oh, they've pointed out that you haven't done it yet. Oh, okay. That, I get it. A little different. Right, right. Okay. All right.

Anyone wish to be heard on the foreign representative motion? Right, very good. It appears to be an order. As you say, there are no objections of record. No one seems to be objecting here today. So I'll grant the motion and I'll authorize Mr. Carvardo that Act as Foreign Representative under Section 1505. I've seen your proposed order. we'll get that turnaround and get that intercourse.

Perfect. May I ask, Your Honor. I know at previous hearings, Your Honor, has asked if certain orders require priority. Obviously, we just have one today. Your Honor is always great about entering them promptly. We'll do that. There is a proceeding tomorrow, so I was hoping, while I'm working at the courthouse today, I could go down and I've already talked with the clerk's office about obtaining a certified order

that we need to take to Canada tomorrow. Sure. Sure. That won't be a problem. We'll get that taken care for you. Thank you so much, Your Honor. All right. Any other requests for leave from the debtor or the committee?

All right. Very well. Thank you, everyone. We'll be adjourned. Thank you, Your Honor. 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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