American court hearing recordings and interviews - 3 - Saks Global Enterprises LLC continuation of first bankruptcy court hearing, 1/14/2026, 6:49 pm (third recording)

Episode Date: January 19, 2026

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Yes, yes, that's what we're doing now. Let me just call the docket. So we're back on the record in case number 26-90103. Go ahead. And I think to housekeeping, after reviewing Amazon, I know I'm in redirect, I actually think after reviewing the time of each day. Yeah, thank you. I think that would be very helpful.

Just housekeeping matter. We saw an email from to the. court not seen any email to me oh here it is wait a second no I haven't seen any I haven't seen any issue I haven't gotten anything from yeah we filed a right yeah yeah you are I believe what council may referring to is we filed a motion to seal certain of our exhibits that I believe the debtors have a possible confidentiality concern over and we emailed debtors council to ask if they were asserting confidentiality over them.

So we followed the motion to seal on an abundance of caution, and maybe they don't have it, and we don't have to worry about the sealing. But I think that's what that our council is referring to. Okay. All right. Yes. Okay.

I haven't seen anything, so. I apologize. I apologize if I'm misunderstood. I've been reading a lot during here. The council for Amazon did submit an exhibit list, I think, for their proposals. exhibits, exhibits, specific issues.

But I do think it's worth noting, and you'll hear this as we get further in, that I think these issues are quite a big sign. But the reality is that there is no hold code to. There's no hold code to. We'd one other, actually, but we won other proposal, which was not actionable for. Wanted, an appropriate exhibit less. The reason, Your Honor, is... Your Honor, may I be heard?

Yes. First, I didn't realize we were arguing the motion. Just to be clear, Amazon proposal. the Hold Code 2 only dip, which you will hear about. So that statement was not accurate. In terms of the valuation, it's a little hard for me to respond until I hear how the debtors are going to try to justify imposing over $2 billion of liabilities on Hold Code 2. I assume they'll be doing so based on analyzing the benefit to hold code 2, which I think

absolutely will turn on the value of the flagship property. And so the appraisal that was done is, I imagine, will be highly relevant. If the debtors don't want to have it discussed in open court, we'll find another way to deal with it. Unless this testimony is different than I expect it, I will be using that valuation. So we can deal with it however the debtors like. But it is highly relevant to whether this dip will severely prejudice whole code two's. creditors, including just the interim dip itself. So the fact that it's sealed, that will continue to be sealed to the extent that we're going to talk about it,

then, you know, subject to any objection, we can deal with it at the time. And, you know, we can deal with it by not talking about the numbers. And, I mean, they did file them on the, on, on the, on the docket. So I do have it. So I'm sure we could figure out a way to do that without disclosing any proprietary or confidential information. All right. That works it. Thank you, Your Honor.

Just one final housekeeping and counsel for Amazon mentioned a proposal, which proposal, but discussions between Amazon and the debtors. Does discussion talk about those discussions? Again, Your Honor, just to be clear, is debtors counsel already referred to it? They referred to the letter we sent to them that included this proposal. So I'm not sure what NDA, the debtors council thinks he's referring to, but they already talked about the letter that contains that invitation to do a whole colonelian dip. Trying to cut off any way and that we're also going to be able to respond in full. I don't think it's anything more than that, Your Honor.

Okay. That was good. All right. Why don't you call Mr. Weinstein? Absolutely. Your Honor, the debtors call Mark Weinstein to the stand. All right, Mr. Weinstein. No. You need to move over? Okay. All right. There we have. That's it.

We're going to try to stay in the screen together, Your Honor, so you can see both of us. All right. All right. Mr. Weinstein, would you raise your right hand, please? You solemnly, sir, affirmed to tell the truth, the whole truth and nothing but the truth? Yes. All right. Speak up so we can hear you. Currently hold any positions with the debtors. Yes, I'm currently the chief of structuring officers for the debtors. And do I understand that you're testifying care in support of the debtor's debtor possession financing motion?

Is that correct? Yes. Yes, I was involved in some aspects of it. What was your role? So my role, myself and my team, were involved in sizing the amount of new capital that we believe was required to operate. through the Chapter 11 and exit on the other side. I was actively involved in diligence calls regarding the business on a regular basis, and then had one-off meetings regarding questions, follow-up things, things of that nature.

Of course, of your work with the debtors, did you form a belief as to whether the debtors need post-position financing? Yes. my belief was that it was critical and absolutely necessary if the debtors were going to continue to operate. Do you think that without the financing the debtors could operate in Chapter 11? No. Why not? We don't have enough liquidity. It's currently a $7 billion organization.

We buy billions of dollars of goods. We pay hundreds of million in rent. We have very significant payroll obligations. And given the recent performance of the business, which has been significantly below what anyone would want, you need a significant dip to pay for all the items I just identified as well as many more IT support, transportation, all those things. And to provide an opportunity for the operations to get back to the level where there's real value. you created. Enter into a liquid. When you say the end of the year,

which probably from mid-2020-5 through the end. Okay. So it actually, the debtors company at that time were facing liquidity issues actually in early 2025. And it was largely a result of the capital structure of the business, lack of liquidity as well as an inability to get new goods. We created a plan. at that time that identified A and need to raise more capital.

And then look at other operational opportunities, including establishing new terms of brands, accelerating synergies, things of that nature. And the whole idea was to address the liquidity issues going forward. Well, can you tell me what the did proceeds will be used for? The dip proceeds will be used to fund the operations of the business and to address the expenses associated with the Chapter 11. The Court for approving the motion to pay critical vendors.

Is that an aspect of the dip financing? It is an aspect, and no pun intended, it is a critical aspect. One of the biggest issues facing SACS Global was, and it's been stated already, on the record, was the inability to get goods. If you don't have goods, you have nothing to sell. Additionally, we have a borrowing base. We have an asset-based facility, and if you don't have inventory to support the asset-based facility, your liquidity is lower. So a lot of the focus of the critical trade motion is to ensure regular flow of goods, as well as what differentiates SACS global in many ways is access to exclusive goods, access to exclusive brands,

providing an environment that is conducive to the customer which we are trying to attract, and critical trade motion is very important to ensure the steady stream and to entice those brands to ship and support us. Do you think what happened if the company were not able to pay make payments under its vendor program to its vendors? I don't believe we would get the level of goods. We would perpetuate the issue we already had. Asking for all of the debt funding now?

No, on an interim basis, the first drama dip would be about $400 million. Why do you think interim funding is necessary? We have very, very, very low liquidity at the moment. We have expenses to pay some as imminent as tomorrow. And we need, it desperately need to. to get the flow of goods going. We have many of our biggest brand partners, and I think council for some of those brand partners,

identify this tonight. They're ready to ship to us, but they need to see, and we need to demonstrate an ability to pay. You mentioned, in your answer just now, some payments that are due tomorrow. Do you have any sense for tomorrow? For tomorrow, it's probably in the 30 to 35 million range,

and then there'll be more payments on Friday at it says. and the quicker we get, I mean, the quicker we get the funding in, A, it be risks, it does a couple things. A, we need to make the immediate payments. B, you're always at a risk of some functional issue any time you're going through a funding of this nature, and the quicker you get it, you de-risk it by ensuring you get the funding in faster. And lastly, you know, it's very, very well publicized. Actually, there were many articles in the springtime, which were actually incorrect, and certainly a lot of articles recently about the issues facing SACS and it is immensely important to be able to project to our brand partners and other very important partners, as well as our employees, that we have sufficient capital to operate. We have an outstanding team.

The people on the SACS global team are very highly skilled. and know how to provide the customer experience that our customers are looking for. So having this immediately will provide the confidence of our ability to go forward. You mentioned $30 and $35 million of payments tomorrow. Do you have any sense for what things those disbursements are going to pay? Sure. Some of it is to cover payroll. Some of it is to cover insurance payments.

Some of it is to cover – a bit trunk is to cover taxes. and then there are other associated, you know, important payments that, you know, many of which were approved earlier today. So payroll taxes, other payments approved today. There's insurance premiums as well. Insurance. What is your sense of what would happen if those things were not paid for if we didn't have the funding to do so? Oh, I forgot one important one before I answered.

We have customer refunds outstanding. So the first two, the, the, The second that you don't pay anybody, it's not a full payroll, but there's payroll out there. The second that one person doesn't get paid, it has a multiplicative effect to the organization, and people get really concerned that irrespective of everything. She's told them about a path forward, like, oh, my God, I didn't get paid this week. As for customer refunds, we actually had some bad publicity regarding customer refunds several months ago. And if there was any hint of not making good on legitimate customer refunds that are owed, once again,

that would likely be highly publicized and create issues for us with our customer base. And then the obvious issues with taxes and insurance. So that's issues that might arise tomorrow, but let's step back and look more in the short term a little more broadly. What would happen if the initial interim fund control is not approved? It would be hugely problematic. We have a budget that's predicated upon bringing in inventory as quickly as possible and reestablishing our credibility with our brands. I think our credibility has been damaged, understandably so, given what's transpired

between the company and the brands. But nevertheless, we have great brand partners and other important partners, whether they be transportation partners, marketing partners, and they're there to support us, but if we do not have the ability to pay them immediately to provide the services and the goods that we need to meet the budget that we put forth will be dead in the water. Do you think the company could survive without being from funding? No.

Could potentially. Based on current liquidity, maybe not past the end of the week. You know, right now we're being funded, frankly, through the good traces of our ABL, who has no, because we're in default, there's no obligation to fund us, but as they've been cooperating, seeing the dip out there and understanding that their significant dollars coming in, they've actually been supporting us, even though they have no obligation to at this point over the last several days.

I'd like to take a step back and talk about the dip process more generally. Recognizing Mr. Baird also provided a declaration. We'll talk about that more fully. But were you involved in the process of selecting the, dip facility? Ultimately, yes. And were any alternatives to the dip facility can do? There was one definitive

executable, although with a high level of risk of execution, but there was one other proposal out there. But given the risk of the actual ability to execute it and given the close proximity from an economic standpoint of this, the dip that we're trying to get approved today to the other one, it was a fairly easy decision to select the dip that was in front of us. You said there was one other potential proposals, just one other proposal.

That I'm aware of. I mean, there was, I know that while I was not active in the solicitation process, by the time I was getting more involved with the company, I was certainly aware of the efforts of the solicitation process and know that PJT, who's our investment banker, was talking to anyone and everyone that they have an interest

in providing any form of dip and frankly, you know, if there were opportunities to fund outside of a Chapter 11, but ultimately these were the two dip proposals that were actionable. And just because it's come up today, was that alternative dip proposed by Amazon? No.

There's been a lot of talk today about an entity called Hold Code 2. Are you familiar with that entity? Yes. Can you explain for the court just at a very high level how Hold Code 2 fits into the debtor's capital structure? Sure. So Whole Co 2 isn't entity, the two subsidiaries underneath it, one is called Flagship, which is where the flagship store, a Sack Store in Fifth Avenue, sits, and the other subsidiary is 12 East 49th Street,

which has a ground lease from flagship, and they have an operating lease with the SACS operating entity. I understand this because I think about this more in pictures, but is it correct that there's Hold Code 2, then there's two subsidiaries, one is the flagship the owner, the other is 12th, 49th Street? Is that generally accurate? That's correct. And you mentioned that there were leases involved in that structure.

Can you describe a little bit how the lease flow works? Sure. So the entity outside, I can't remember the exact name of it. Maybe sex holdings. I don't remember the exact name of the entity. But that has an operating lease to with 12 East 49th Street, where it pays rent 12th 49th Street and with that that's the only source of income to the best of my knowledge or revenue to 12 East 49th Street so again then subsequently pays rent to

flagship so just again to make sure I understand the flagship owner is in a ground lease with 12 East 49th Street 12th Street is an operating lease with a fax entity sex quo correct now we've been talking about the the Sachs can do those the flagship store. Can you tell me a little bit about what the flagship store is? The flagship store is a historic, very large retail building sitting in a very good location on 12 East 49th Street where Sachs maintains retail operations.

It has somewhat of a unique purpose in that it is really purpose, you know, it's utilized as a retail location, and, you know, would be, for any other purpose, you know, would, you would have to be massive reconfiguration for other purposes. Is there any debt on the flagship store? Yes, there's CMBS debt roughly of a billion 250. Well, that's call level up. So the entity that owns the flagship store is owned by Hold Code 2. I believe you testified. Is that right?

And are there any additional claims at Hold Code 2? There are. There's various vendor claims at Holco 2, somewhere in the decending of $180 million, I believe. Amazon has a claim at Hold Co2, about $475 million. then there is a pledge to the SBV notes of approximately $200 million. I know we're talking about the flagship store. You mentioned it was valuable as a SACS. Do you think it would be as valuable but we're not a SACS?

No, not at all. Objection, objection, Your Honor, objection, lack of foundation. This witness is not evaluation experts. He's not qualified to opine. They have evaluation, which they apparently don't want. people to see, but the witness here is not a real estate expert and has any basis to opine on the value of the flagship property. Your Honor, our witness is not opining on the value of the flagship properties.

He's simply opining on the use of the property and what its most highest and best use is. The question literally was, do you think the value of the property would be less if Sacks was an occupying? That is an issue for a real estate appraisal to a pine on. Right. Why don't you re-ask your question? I think the way you phrased it was not objectionable.

So Mr. Weinstein, my question was, would the Saks store be as valuable if we're not a Sax? I don't believe so. And why not? It would be my objection. If Sacks wasn't there, there would be no income to 12th, East 49th Street. He would liquidate the store. you would tear the value of the SAC's name, which I'm not sure is all the tier. But if there's no income, it becomes a dark store ultimately,

and it would be worth a lot less than as an operating entity. While not an operating valuation expert, there's typically higher value associated with properties that have active tenants that are paying rent than a property that is, dark and is not receiving a rent stream. Your Honor, I renew my objection and move to strike. This witness admits he's not a valuation expert. He's not a real estate expert.

You would need to bring in a real estate expert to appraise the properties on a dark versus lead basis to give that testimony. I'm going to overrule the objection. He's the CRO. He's just giving his basically business judgment view. of, you know, the business judgment of what they did. I'm not, I'm not taking it for whether it's value. And, again, the issue, as of this moment, the issue of valuation has not, is not really in front of me at this point. So I'm going to go ahead and allow the testimony.

Mr. Watson, do you think that without the dip? No, it can't because the dip will support. the operations of SACS Global, including the 12th East 40, the flagship store of 12b is 49. It will allow that store to be merchandise. It will allow store employees to be paid. It will have rent to be paid back to the 12th East 49 subsidiary. So the DIP will actually help support the operations

of that store concurrently allowing a flow of revenue into the hold code two subsidiars. And what do you think as a CRO would happen to the value of hold code two if the dip were denied? I'm just for the record. I'm repeating my objection to that. All right. Overrule. Go ahead. I mean, if the company, you know, without the dip and the company are forcing the liquidation,

I believe that the value of Whole Code 2 would be diminished. Do you think in that context, Holds Co 2 would be solvent? No. I'd like to go back and talk about the dip process again to the extent you know it. Did anyone offer to lend only on Hold Co2's assets? Not that I was aware of during the process of the dip solicitation where we were in numerous conversations, at least I was in several of them, where we have daily calls with Amazon,

and they're, well, they're advisors anyway, and I don't recall that coming up. I may have missed that meeting, but I don't recall that coming up. And I believe he testified that there were two executable proposals. One is the proposal accepted, another was from a third party, not Amazon. Did either of those proposals involved in offer to lend

only a whole code two assets? No. Did either of those proposals, proposals involve an offer to lend dip financing without a lien of Holt Kutu's assets? No. Was anyone offering an opportunity to obtain dip financing without a lien of Holt Kutu's assets? Not that I'm aware. Do you think Holt Kutu benefits from the dip financing loan?

Yes, for the reason I stated before. The dip financing will allow the store, the flagship store, to continue to operate. without that, you know, you would liquidate. The operating lease would not generate any revenue. So, yes, I do believe that Holco 2 benefits from the good financing. I believe as Sierra, you're an officer of Holcote 2, is that correct? Correct. And in your business judgment, as an officer of Holco 2, do you think it was in

Holt-2-2's interest to participate in the dip? I do. For the reasons that we just discussed, by creating value for the entire enterprise, you are creating value for a whole-2, and I believe in the debtor's business judgment, it was a prudent decision to move forward with this dip. And last question, and big picture just stepping back, what do you think would happen? happen in the short term if the debtors were not able to obtain the hit financing on an interim basis today.

I think I stated that earlier. There would be significant impairment to the business and likely liquidation. I have no further questions. I would like to reserve time for redirect if necessary. All right. Thank you. All right. Mr. Harris.

Thank you, Your Honor. Would it be possible to give my colleague Ms. Tiffany Austin presenter privileges? Yes. Thank you, Your Honor. Good evening, Mr. Weinston. I'm Chris Harris, late on behalf of Amazon. We haven't met before, and I apologize to this a little rough for doing this kind of on the fly. But I'd like to start by just making sure we're all in agreement on some terms for the different corporate identities or entities that we just talked about.

She's speaking I can't hear. Yeah, Mr. Mr. Wanted you hit Five Star again? Is that better, Your Honor? Yes, it's better. Can you hear me now?

I can hear you. For some reason, you're in the system as Sinsom Thatcher, so that's wrong. Oh. I'll take it as a compliment. Well, I am from Lankham-Walkins. If I didn't say that before, and we represent Amazon. I understand.

Okay. Thank you, Your Honor. So Mr. Weinstein, I just wanted to go through some of the names of the entities that we used before to hopefully make this examination a little clearer, but again, I apologize that this is a little rushed because I'm doing this on the fly. But this is from the organization charter the back of your first day declaration. Do you recognize this document? Yes.

Okay. And I've just zoomed in on the, can we zoom in on the part that deals with the hold code two entity? Okay. you. So you see there's four triangles here, and the middle one is called SACS Fifth Avenue, Holdco, 2, LLC. And that's the entity we've all been calling Holdco 2, right, sir? Correct. Okay. And beneath it, there's, it has two wholly unsubsidiaries. There's Sachs, Flagship, Real Property, LLC on the left, and then 12, East 493 LLC on the right, correct?

Yes. Okay. And if it's all right with you, I'm going to use the term flagship entity to refer to that left triangle, Flagship, Sachs, Flagship Real Property LLC. Is that okay, sir? Yes, it is. Okay. I think you explained that that entity, the flagship entity owns essentially the land and building

where the Sachs flagship store on Fifth Avenue is, right, sir? That's correct. Okay, and I'm going to call that the flagship property, all right? Yes. Okay, and then the right triangle, 12 East 493 LLC, that leases the flagship property from the flagship entity, right, sir? Correct. Okay, and I'm going to call that right box 12 East. Is that okay?

Yes. Okay, and then 12 East then sub-leases the flagship property to, uh, another Saxony called Saxon Company LLC, right? That is correct. Okay. Does Saxon Company LLC intend to assume at least? We will make that determination right now. The answer is yes, but there will be an ultimate decision made at a later point,

but right now the answer is yes. So if I understand your, if I understand your testimony, you're saying tentatively the answer is yes, but you'll ultimately decide it at a later point. Is that right? My point is there have been no definitive decisions as today what we're assuming or rejecting. We have some time that allows us the ability to make that decision. But as of today, I would say the answer is yes. Okay.

But no definitive decisions been made, right, sir? We haven't filed anything one way or the other today. Okay. And what is the term of that lease between Saxon company and 12 East? I don't recall the duration of the lease. Okay. Do you recall it about a 30-year and then a 20-year renewal, about a 50-year lease? Do you recall that, sir? Sounds right. Okay. And if the company prepared a business plan showing that Saxon company will have the ability to perform on that lease for the life of the lease? We haven't prepared a 50-year business plan.

Okay. Do you know what percentage likelihood it is that SACS and company is going to perform on the lease for the life of the lease? Well, that's partly contingent upon whether we get a dip, but having said that, you know, if we receive a dip financing that we are proposing today, then the obligations under that lease should be able to be met. Well, my question is for the life of the least, the next 40 or so years. I can't. You know that, son? I don't know the answer to that question.

Is this either, Holdko 2, the middle box, and 12-East 49th? Those are both debtors, right? Hold-co 2 and 12-East, yes. Okay, but the flagship entity, the left box, that's not a debtor, right? That is correct. Okay, and just one more term. that may come up. I'm going to refer to those three boxes combined as the flagship silo. Is that okay, sir?

Yeah, that's fine. Now that you've defined it, that's okay. Okay. And just to back up a bit, when did, you're employed by BRG, right, sir? That is correct. Okay. And when did BRG first get involved with SACs? late January of 2025 all right so about a year at this point approximately

okay and you were the interim CFO of SAC starting in February 25 right sir that's correct okay and you're currently the cheaper structuring officer of SAC's global enterprises LLC right sir that is correct Okay, and you have fiduciary duty to that entity, right? Yes.

Okay. Now, Holdco 2 is a member managed LLC, right, sir? Um, I believe so. Holdco 2. You know if you... That's right, sir, Holtco 2. Does you know if you've actually been appointed an officer of Holt Co 2? I believe I have.

Okay. Now, Holco 2 is a wholly unsubsidiary of the box above it, Sacks 5th Avenue Holdco LLC, right? Correct. Okay. And that box above it, you know, which maybe I'll call Holdco 1, that's the sole member of Holdco 2, right, sir? Yes. So before the bankruptcy, Holdco 1 was making all the decisions on behalf of Holdco 2, right, sir? I can't speak to that. I don't know what the, you know, I don't know what the governance was there. You don't know who is making decisions for Holco 2?

I can't speak specifically to before the check alone. Okay. How about today? Who's making decisions for Holdko 2? Well, I'm the chief restructuring officer, and there is a restructuring committee at the board that is making, is making decisions. So the people making decisions would be you and the restructuring committee of the board

of the top sex entity, is that right? I'm sorry, when you say the top sex entity, I'm not sure what you're referring to. Well, you just refer to a restructuring committee. The structuring committee of what entity? The restructuring committee is a committee of the board of Sachs Global. So the people making decisions for HACS Global are yourself, and then the members, they're a structuring committee of SACS Global. Is that right? Well, with the management team, yes.

Okay. Those are the same people making decisions on behalf of all of the debtors, right? Yes. Okay. So there's no one whose duties solely run to Hulco 2 that's making decisions on behalf of Holt 2, right? sir? No, but there's still fiduciary obligations there, and

decisions were made conscious of that. But just to be clear, there's no one who's only fiduciary duties is a whole code too, right, sir? Not that I'm aware. Okay. Now, you

in your declaration, you noted that two independent managers had been appointed to the board of managers of HBC, GPLC, Do you recall that, sir? Yes. Okay. And you noted that those independent managers were appointed at each subsidiary global debtor

that is not member managed. Do you recall that, sir? Yes. So those independent managers have fiduciary duties to each of the global debtors that are not member managed, right, sir? I'm sorry, can repeat the question? Yeah, those independent managers. There's two new independent managers.

They have fiduciary duties to each of the global debtors that are not member-managed, right, sir? I believe so. Okay. But Holdko 2 and those other two boxes, they are member-managed, right, sir? No, 12-Ease 49th Street is not member-managed. Your Day is not member-managed? Okay. That is correct.

Okay. Hold-Co-2 is member-managed, right? Yes. Okay. So those independent managers do not have a fiduciary duty to Whole Code 2, right? I'm sorry, I'm getting lost a little bit. Which independent managers? The two new independent managers, they were appointed to the board of managers of HBC GPLC.

Yes. Okay. So I want to talk then a little bit. So those, just to be clear, the record's clear. Those two independent managers do not have fiduciary duty to hold code two, right, sir? Your Honor, it's right in his declaration. He said that these people were appointed. He seemed to have that factually in his declaration.

He can speak to what the government is at these entities. You can speak to the government. Yeah. He could justify as to the facts. I think he has. I don't think there's any dispute on that. But then the next question was, then that means they don't have fiduciary duties. That does call for a legal conclusion, and I'm going to sustain the objection.

Okay, well, let me ask this, sir. Is anyone told those independent managers that they have a fiduciary duty to hold CO2? Yeah, so if you can answer the question without divulging any privilege information, you may. Otherwise, I'm going to sustain the objection. I'm sorry, if you repeat your question, please. Sure. Has anyone informed those independent managers whether they have a fiduciary duty to hold CO2? I don't know.

A few more questions on the bottom left entity, the flagship entity. I couldn't tell from the papers that were filed whether the flagship entity is becoming a guarantor or otherwise becoming obligated under the dip. What is the situation? I believe I would defer to Mr. Baird on that question who was more involved with the structure. Let me be sure I understand. You don't know whether the. flagship entity is becoming a guarantor or otherwise obligated under the dip?

I'm trying to remember at the moment. I apologize. You know if the flagship entity is providing a mortgage on the flagship property? There is a mortgage on the flagship property. That was a bad question. Do you know if under the dip the flagship entity is providing a mortgage on the flagship property to the dip lenders? I, again, I don't recall. Okay. Now, Hold Code 2 is the manager of the flagship entity, right, sir?

Correct. Okay. So it made all the decisions on behalf of the flagship entity, right? Yes. Okay. And so it has sole discretion, for instance, to decide whether to flagship entity will enter into a financing or providing. a mortgage, right, sir?

I believe so, yes. Okay. And there's no independent fiduciary at the flagship entity to decide whether the transactions are beneficial to the flagship entity, right, sir? Again, Your Honor. So, St. You can answer the question, but go, but. I don't believe there's independent person at Holger, too. Okay.

And then on the right box, 12 East, Am I right that Hocco 2 makes all the decisions on behalf of its wholly own subsidiary 12East? Yeah, rephrase your question. I think it justified that 12Ease was not member managed. Well, who's making the decisions for 12Ease, sir? Uh, 12East is manager managed. You said it is manager managed? Yes.

Okay. So who is making decisions for 12Ease? of East. The manager is HBC Garden City, I believe. Okay. And who's the actual person making those decisions? I forget. The person was recently installed.

Now, that's the person who is the independent manager there, right? I'm trying to understand the witness is testimony. But we phrase your question. Sure. You mentioned that some entity is making decisions on behalf of 12 East, and I'm trying to find out who that is. So can you tell us again who that is? The manager who is managing is HBC Garden City. Has the LLC agreement for 12Eath been amended recently? Yes.

Oh, when was that? I believe it went effective yesterday. I see. Copies of that been provided, any creditors or any other constituency? I believe so. Oh, who received those? I think the, I think Exonic received copies of it. I'm not sure if others may have, I don't know who else.

Okay. You're aware that my client, Amazon, has asked for all relevant agreements and does not receive them? I'm not aware of what's been asked for. Okay. We'll get to that in a minute, but I want to talk about advisors to the different debtor entities now. In the Chapter 11 cases, the debtors are all proposing to retain the same legal counsel, Wilkie, right, sir? That is incorrect, I believe, 12-Eas-12. 49th has separate counsel.

Who's that, sir? The Bradley firm. Okay. Does Holdcoe too have separate counsel? I'm not sure. Okay. Are the debtors all using the same financial advisor, BRG? Yes.

Dethers are all using the same bankers, PJT? Yes. so there's no advisors whose duties run only to holco two right sir not only to whole code two but certainly in consideration of whole code two okay um and just to be clear when was bradley retained by 12 east i by way i may have this i'm trying to remember i know i believe it would have been recently as well okay also in the last couple days you think

for the last few days? Yes. Okay. I want to talk about the cash needs of this flagship silo. Does a hold code two or a flagship silo cash flow budget exists? I have not seen a separate cash flow budget for that entity. Okay. And presumably if one existed as a CRO, you would have knowledge of it, right, sir?

Yes. Okay. Do you know, is anyone analyzed what expenses hold code two or this silo has over the next 30 days? Analyzed, no. I know that there are definitely payments due under the CNBS and other payments, but specifically analyzed that, no, looked at rent in the aggregate of which that's part. Okay. Well, let's talk about what you do know about then.

So first of, you mentioned just focusing on Holco 2 itself and not the subsidiary. Does Holco 2 itself have any expenses in the next 30 days? Holco 2, I do not believe, has any specific expenses in the next 30 days. How about annually? Does it have any expenses, Holt 2? I'm not sure. I mean, I imagine. I'm sorry.

Can you tell the court, can you tell the court any specific expenses you know that Wholeco 2 has, period? I can't speak to specific expenses of Holco 2. Okay. Now let's wrap it. Although it would, as a debtor, it would be responsible to the pro rata share of expenses of the case and other. but I don't know exactly what those are, but you would certainly allocate expenses of the entire case to Hulco 2 as well.

No attempt has been done to do that today, right, sir? Today, no. Okay. Now I want to wrap in the subsidiaries, which I think you were going to. And if I, if I, the two subsidiaries, I think you mentioned that there's a CNBS loan that had monthly payments to, right, sir? Correct. And that's about $4.6 million per month, right? It sounds about right.

You have any other monthly cash needs if we included the subsidiaries? There's, well, there are other expenses of the flagship that, you know, that need to be maintained. But I can't quantify for those for you at the moment. The only thing you can quantify is the $4.6 million monthly CNBS payment, right, sir? Yes. Okay. And then let's talk about the revenues that come in. We talked about how SACS operating LLC makes a lease payment to 12East, right, sir?

Correct. And that lease payment is $7.7 million, right, sir? Correct. And then 12East makes a payment on its lease to the flagship entity, which he uses to pay the CNBS loan, right, sir? Yes. And it's more than the amount of a CMBS loan, right, sir? It's more, but there are other expenses as well.

But you can't tell me what they are right now? Specifically now. Okay, and do you know those expenses are, in fact, also covered by Sachs and company under the triple net lease it has? Yes. Okay. So as long as Sacks and company pays on the operating, operating lease, that's going to more than cover all the cash needs of Holt Co2 and its subsidiaries, right, sir?

It should be equal to, yes. Okay. Now kind of focusing on the assets at Hulco 2, it obviously owns these two entities, right, sir? Yes. So it indirectly owns the flagship property, right? Yes. Okay. Does it also have any cash on hand?

I don't know what cash on hand is today. Okay. Not something you've looked at, I guess. I may have at one point, but I didn't, I didn't today. Okay. Now, you're aware there was an appraisal of the flagship property done in 2024 by JLL, right? I know there have been several appraisals done of the property. Okay.

Well, that specific appraisal was used in Sachs' SEC filings, right? I'm not sure what appraisal was used to the SEC filings. You're not aware that it was relied upon and cited in the offering memorandum? I wasn't with a company at the time. Okay. Have you seen the 2024 flagship property appraisal by JLL? I may have, I don't recall. I just know that in conversations with employees of the real estate side of the house,

there were multiple appraisals for multiple values. I just want to make sure you think there's been other appraisals of the flagship property since the 2024 JLL valuation. Is that right, sir? I don't know if they were before or after. I just know there's more than one. Okay. So in doing whatever work you were doing,

analyzing the benefits to Holco 2, you didn't focus on that appraisal, I guess? I think the whole lot of questions is presuming the fact that it's not evidence, which is that there's some lack of identity of interest within this organization. The witness testified on direct that the entire

operation exists to preserve operations to SACs and that that there's a unity of interest. I think this whole lot of questions that tries to create, I just think it's all base. Your Honor, could I ask the counsel to limit his objections and not be speaking objections? I also just know, in this direct testimony, he literally testified the value of Hocchio 2 would diminish if facts closed. So clearly he is providing some amount of testimony about the impact on the value of the property.

So I'm going to overrule the objection. I think the question was fairly limited to, you know, did he use this appraisal in connection or any appraisal in connection with his determination? I think it was a fairly limited question. Go ahead. Do you want to rephrase the question? Just re-ask the question so that we have a clean record. Yes.

So did you use the 2024 JLL appraisal of the flagship property or any other appraisal of the flagship property in making decisions about Holco 2 in relation to? the dip or the bankruptcy filing? I'm not sure which appraisal it was, but there was a dark appraisal that there was an appraisal that we used to, you know, run various scenarios if there was a liquidation and, but I'm not sure which appraisal was used. Okay. I want to make sure.

So I want to have you look at the document that I think you're referring to. It is the one that's filed under seal, and for the court's benefit, we filed that at ECF-145. I believe it's probably dash four, although I don't have access, so whatever number is system the court used. And maybe your counsel could show it to you. We do have a copy, Your Honor. I'm trying to do this without saying numbers because I understand the debtors have a concern. So let me know, Your Honor, when you're ready and witness is well, obviously. All right, so it is 145-4.

I'm ready. Okay. And it just say JLL on the cover if everyone has that. Sir, if you look at page, if you look at a cover page, and then if you look at page four, you see this is a JLL appraisal and it has value conclusions, including a go-dark value on page four in a chart. Yes.

Yes. Okay. Is this the valuation you were thinking of? The GoDark value is... The GoDark value is the value you were thinking of, right, sir? Yes. Okay, and I don't want to say the number out loud, but you see it there right on the far right of this...

Your Honor, I would like a lot of an objection to this document as hearsay, to the extent we're using things that are in this document as evidence of the truth of the matter, sir. the best appropriate. I think the only question was, is this the document that he used, that he testified that he used in connection with a go-dark scenario? I think that's the only question. I don't think there's been any testimony issued as offered as to the actual value of it.

I think it's just a question, is this the document that he used? So I did not use it directly, but members of my team. used it and also in conjunction with the real estate team at SACS Global. I'm sorry, if I was talking, I can't hear. There may be a mic for this year again, Your Honor. I'm sorry. Mr. Harris, can you say something? I can't hear you, and I didn't do anything this time.

No, we can't hear you. I think you may have disconnected yourself. No? Did you dial back? in dial back in dial back in yes hit five star can you hear me now yes can you hear me your honor I can I don't know what happened but the I had I changed you to Latham conference room and it disappeared so I don't know what happened there okay well I'm my audio is on a cell phone and here's the video so hopefully it will work

for your honor all right no problem Okay, so I think when I stopped being hurt, I was just asking the witness to confirm that he sees the go-dark value at the bottom right of this chart. Correct. I do. Okay. And we want to send that go-dark means if the property is vacant and unencumbered, in other words, if the fax lease is canceled, right, sir? Yes. Okay.

I want to now talk about whole co-sue's liability, because he did go through them. I have a demonstrative chart I just want to show you. If we could, you can take this one down and put up the demonstrators, and it pretty much reflects what you said. I can swap them out. I'm sorry. I don't, because you hear me, are you able to pull down that chart instead pull up the demonstrative?

Can you zoom in on that? Okay, thank you. So on the left side, under pre-petition, you know, we've listed what we believe to be the live. liabilities at whole co tour or it's subsidiary um i think you testified to most of these already but um you see there's a CNBS phone down at the whole co entity of 1.25 billion right sir yes and we listed a potential make whole claim of 30 million there is that the mirror to you sir uh yes okay and then we listed the 200 million dollar um SBD notes that hold

Code 2 is guaranteed. Do you right see that, sir? Yes. And do you recall that Exonic also has a lien on the equity of 12 east? Yes, $180 million. Okay. So I just listed all those just in the bonus of caution. And the total of claims that would be ahead of my client, Amazon,

about $1.6 billion, right, sir? Yes. Okay. And then you also mentioned vendor claims that are about $180 million, right, sir? Yes. But that would bring us to a little under $1.8 billion of claims at Holt II at subsidiaries, right, sir? Correct. Are you aware of any other material liabilities of Holt Coture or subsidiaries? Currently, no, although there would be additional liabilities and expenses

if you're actually to go down the point of having to monetize, which aren't reflected there, but current liabilities, no. Okay. So as long as the flagship property on a dark basis is worth more than $1.6 billion Amazon could receive some recovery, right, sir? That's- In your eye that hasn't filed, yeah. I think he's just asking him.

I just think he's asking him, does the math work? I mean, I think you're just asking him a math question. I don't think it has any particular legal. That's ramification, so I'll let him. No, I think that, I think that's incorrect. I mean, it's possible, but on the face of it, it's not definitive because their cost to market the building, their expenses incurred while you're marketing the building, their risk to things, you know, actions the CNBS could take that would require payments to them,

which obviously wouldn't affect the ultimate recovery, but it's certainly in the nearer turn. have to come up with incremental cash and there's a cost associated with that. So just because the building, you know, a building might be worth more doesn't mean that Amazon would see a recovery because you have to counter all those costs. All right. Well, so you have made no attempt to estimate those costs, right, sir? Actually, we have in certain scenarios. And the other point I would add is that we also believe in consultation with the real estate team at Saks Global believe that, you know, in this scenario that we're currently contemplating where you shut down a liquidate, there could easily be a discount against the dark value, which would further bring down the value of recovery.

So net net, I wouldn't necessarily use the value in here is the starting point. Well, sir, you did use the value in here when you were analyzing scenarios for Holco 2. You testified earlier, right, sir? Sustained. That's the question, right? I'm just asking a question. You did use that dark value when you were analyzing Holoco2 interest, you said earlier, right, sir? I didn't say the user should he looked at it, but that's not the number we actually think would ultimately be a

recovery if you were to attempt marketing. Do you have another estimate of valuation if you were to liquidate the flagship property? I think there's been a recurring theme. We're using the same word value. We're talking about two very different things. I think counsel is using value to refer it in numbers. We're not doing that. We're not relying on the value of this property.

We're not relying on an equity question. We don't think it's appropriate. We talk about value. We're talking about general value, highest in business. best use, the kind of things that CRO would know. And I think trying to match up those two concepts with numbers that are frankly not in evidence. And are... He testified the value of the property would diminish.

If he's walking away from that, then I don't need to ask any more questions. But if he's sticking to it, I get to find out what the basis for that is. It is a challenge it with the only appraisal that it exists. This has testified that, again, we're not walking away from any testimony. We're talking about value in terms of highest and best use, not part numbers. All right. Why don't you re-ask? Have you quantified?

Sorry. Go ahead. Ask your question. So have you quantified how much less than the bark value appraisal in the JRL appraisal that the debtors believe the flagship property would receive in a liquidation? We ran scenarios from 25 and more as to what that would look like. Have you quantified it? Has the debtor formed a view?

The debtor's view was that ultimately the best decision, well, the value maximizing decision was to obtain the dip because the likelihood of the creditors at Hocco 2 getting nothing in the event of liquidation was fairly significant. I wasn't my question. Have you quantified what the value of the flagship property would be in a liquidation? I said we ran various scenarios for 25 and above discount to the 2.1. Okay. Do you run scenarios where there's a 25% discount of the debtors formed a view,

but that is the appropriate discount? The debtors didn't form a view of the appropriate discount. out the debtors formed a view that the risk of that happening was significant. We didn't land on a specific number, but understood that there's significant risk in the appraisal number that was used, and therefore, in the debtor's business judgment, took a discount against that and recognized that with the other items that I mentioned to market, the expense of winding, you know, running that process, you would, um, you would have to, there's a very good chance of ending up with no recovery whatsoever.

And that's the decision to enter into the diff would create a situation and increase the likelihood of getting a recovery. Have you quantified this in a way you can produce to me in response to the documentary request? I haven't seen it. I mean, I'm not sure what document requests you're referring to. So assuming I have a document request in the next day or two, there will be an actual, I think there's not an actual written document that shows this analysis you just asserted. I didn't understand the question. I didn't understand the question. I think the microphone issue. Is there an actual document that shows this quantitative analysis you just asserted?

I'll have to say, we definitely ran the analysis. I don't know the format is currently in. Okay. Have the debtors performed a liquidation analysis for Holt-C-2? We performed a liquidation analysis of the entity, which included Holt-Co-2. That's not my question. Are the debtors performed the liquidation analysis of Holt-2 itself? That was part of the analysis I just referred to.

When you do a liquidation analysis of the whole entity, you have to look at the waterfall at different entities. And to the extent there were specific claims that Hoka, too, that would be part of the overall analysis. So that, do you do have a liquidation now because you can respond, you can produce in response to a document request, you're saying? I, like I said, I have to, I don't know the current form of it. But we can still go through it. Okay. Do the debtors agree that Holco 2 is currently solvent? Solvent as long as the rent payments from Saxon Co. Continue, yes.

Without those, no. The debtors have decided if the rent payments stop, HALCO2 is not solvent? Well, part of solvency is the ability to meet your obligations. it depends what the definition of solvency is. But under that definition of solvency, no, they wouldn't be able to meet their obligations. Correct. How about on a balance? Sorry, how about on a balance he could...

It depends. You know, there's a good chance it wouldn't be. Today, with the rent payments, I would argue, their solvency without those rent payments, perhaps not. So without the perhaps there perhaps HOCO2 is

insolvent I mean that's what you said if the rent payments were to stop but today the rent payments are actually being made

and why is holco 2 in bankruptcy Hocco 2 is in bankruptcy because at the end of the day we needed to get a dip in order to get a dip we needed to pledge certain assets

and that was required in order to get the lien to satisfy the dip lenders And without that, as I stated earlier, the enterprise would likely liquidate. And we believe that the creditors at HOK2 would receive little, if anything, and very likely nothing regarding their claims. And this was the best opportunity to go forward. The Hocco 2 is. Sorry, sir.

I said including all constituents, including those. in Hocco 2, or parties in interest, I should say. I believe Holtz, you indicated HoltCat 2 is put in bankruptcy because that was required in order to get this dip. Is that right, sir? Yep. Yes, he does. And who authorized a bankruptcy filing on behalf of Holt C2?

Myself and the board. Okay. Was that part of a standalone meeting for Hocco 2 or was the same meeting for all the debtors? It was the same meeting for all the debtors. I'm sorry, Your Honor. I think there's a lack of clarity. I'm not sure the witness testified the board.

I'm not sure which board he needs. There's lengthy resolutions. I'm not sure I would call them board resolutions. There's lengthy resolutions attached to the petition, which show what was done in all order to put it in bankruptcy and to authorize the dip. I've reviewed those in connection with preparing for this hearing. So I'm not sure, you know, that this testimony is particularly relevant.

Was there any meeting or analysis just to analyze whole code two's decision, not the other debtors? There was not a specific meeting regarding whole code two. but there was definitely consideration of Holco 2 in the decision in that meeting. For 12 East, is that entity solvent? Same. As long as it receives rent payments, yes. If it doesn't receive rent payments, I would say it's not because it doesn't have the ability to meet its obligations.

Timely. Okay. If it doesn't receive that rent payments, is it solvent on a balance sheet? on a balance again it may or may not be but solvency requires multiple tests and you know it would definitely fail that one test therefore I would say it's insolvent

without the rent payments and who authorized the bankruptcy filing for 12E same as with whole code too okay I'm sorry just lack of foundation I don't think We know whether the witness knows off the top of his head who authorized the

accuracy calling. As your honor mentioned, there are lengthy resolutions, and I think those speak for themselves. Okay. In style, it's laxip entity. Why is that in any honor better? I've relied on advice from counsel. My understanding, it was better to keep it out, and so the decision was made that way. Is there anything?

anything that doesn't reveal privilege, you can tell me about why that decision was made. I don't want to get into your advice of counsel. I'm not certain. Okay. Let me talk about the debt burden of the dip and start with the interim dip itself. So the debtor, suppose interim dip has, they're just taking on a total of $400 million of new money debt, right, sir? Yes.

Okay, and Holt Code 2 is guaranteeing all that debt rate? Yes. Okay, and none of that is paying an interim expense of Hull Code 2, right, sir? This is really getting in a property speaking objections. You want to object the form or whatever that's fine, but he shouldn't be testified. Yeah, try to limit your objections, but what was the objection? I remember the question. I believe that that would be incorrect because the dip is allowing for the operating lease to continue,

which is serving to pay for the expenses of Holco 2. So the dip is necessary for that to occur. So Holco 2 has no expenses, right, sir? Well, the subsidiaries as well, I'm including those as well. Okay. So you're saying the dip is needed. So fax and code can make payments it's obligated to make. Is that what you're saying, sir?

To 12th E's 49th who turns around and makes payments to the flagship. Right. Okay. And the proposed interim dip also includes a $359 million roll-up of the pre-petition SBD notes, right, sir? Yes. Okay. And only $200 million of that pre-petition FD debt was, is currently debt of Hocco 2. right?

Correct. So $159 million of that pre-petition SBV debt was solely a debt of other debtors currently, right, sir? I'm sorry, can you repeat that? So $159 million of the pre-petition SBV debt was solely a pre-petition liability of other debtors, not Holt-2, right? I would disagree with that because Holt-2 was a beneficiary of that financing at the time. So I would say they were a beneficiary of that financing. But that wasn't my question. My question is liability.

Hocco 2 is not currently liable on 159 million of the SPD notes that are intended to be rolled up, right, sir? Correct. Okay. And then the interim dip would also convert 751 million of pre-petition second-out notes into dip obligations, right, sir? Yes. Okay. And none of that $751 million is currently debt a liability of Holger 2, right, sir?

It's not a liability, but again, it was a beneficiary of it. Okay. So it's effectively sort of like another roll-up, that $751 million, right, sir? Yes. Okay. So that's about 1.1 billion pre-petition debt roll-up in the interim dip order, right, sir? Yes. Okay.

And the right, sir, the debtor's obligation to participate in that $751 million second out notes program is irrevocable upon entry of the dip order, right, sir? The documents speak to themselves. I don't think this witness has. Justained. He testified he made decisions on behalf of all over too. I need to know if he was aware of that when you made that decision. You can ask him if he was aware. Okay.

Yeah. Are you sure we're aware that the debtor's obligation to participate in the $751 million pre-petition second note purchase is irrevocable upon entry of the district? I think that's a legal term and will be determined by the interpretation of the documents themselves. I'm going to go ahead and let him answer overruled. Go ahead. You can answer the question. Uh, that's my understanding. Okay.

So in total, the interim dip order will impose more than 1.5 billion. Some liabilities on Holco 2 when entered, right sir? Uh, yes. Okay. And 1.3 billion of those are liabilities that don't currently exist at Holco 2, right, sir? No, but again, it would be the benefit. again, it would be the beneficiary of those liabilities.

Okay. So you haven't quantified how much Whole Code II will benefit from the continuation of tax, right? I haven't quantified it, but if I think the alternative is the Whole Code 2 claimants get nothing, then I believe it's a better alternative in the debtor's business judgment to get the dip. and on the basis that with significant value being created in SACS global, that ultimately those claims would be addressed. So if the option in the debtor's business judgment is zero,

you know, the alternative is better. The longer that... Go ahead. I didn't mean to cut you off. Sorry, sir. That's it. I'm done. Okay.

You don't have a quantification that shows the benefits of Hulco 2 is, more than $1.5 billion, please. Not with me today, no. But again, when I'm looking at quantifying greater than zero is, you know, whatever the expected value is, you know, as long as it's greater than zero, that's a benefit. So you'd agree that a roll-up of $1.1 billion today would make it more difficult to find an alternative dip provider to come in at the final hearing, right, sir? Well

It may be Objection to lack of foundation I assume several facts I'll overrule that way I let them I'm going to let them I don't know Okay You're aware

I know I'm sorry but I didn't I didn't finish I don't know if it would be more difficult But what I do know is there would not be an opportunity to come in and refinance without this interim financing. Well, if there's interim financing without a roll-up,

it'd be a lot easier to refinance and an interim financing with this $1.1 billion roll-up, right, sir? Correct, but the roll-up is a condition of the new money, so it goes part and parcel, and it's fairly standard than Chapter 11 cases to have a roll-up associated with new money coming in. Okay. And you agree there's no creditors committee appearing today of, you know,

advocate for the interest of unsecured creditors like Amazon or vendors, right, sir? No, there's not been a committee formed yet. Okay. And then in terms of the remaining $600 million commitment, I assume there are contingencies and conditions precedent and closing commissions in the dip agreement. Is that right, sir?

There are some, but they're fairly standard. I would say that there's nothing. out of the ordinary or onerous there. But until those contingencies are met, it's not guaranteed that $600 million will come in, right, sir? No, it's not guaranteed. The only thing that's, but like I said, they were, they're reasonable milestones,

debtor's business judgment, they believe they're attainable, and, you know, are not concerned at this moment in time about the ability to meet those milestones. Okay. It's clearly possible that Holdko incurs its additional $1.25 billion of liabilities, and it ends up only extending the operating company's business for another 30 days, right? So that's possible.

It's possible. Sorry, go ahead. I'd say it's possible, but again, the alternative is worse. I see. And you haven't done an announcement. determine the likelihood that that happens, right, sir? I'm not sure what that analysis would look like. We're ascertaining milestones and the company's ability to meet them,

and the management team and the board of the company, or the debtors, are comfortable with our ability to meet those milestones and secure the additional funding. If we weren't comfortable with those milestones, we would not have entered into this situation. agreement because it would have been probably a bad decision in that case. So we're quite comfortable of our ability to meet those milestones. Okay.

The fact is also not today committing to assume the lease with a flagship property, right, sir? We don't have yet. It would be fairly abnormal to assume that any, you know, a lease on day one. So it's possible that whole code. encourages this $1.5 billion of new obligations and is still faced with a dark property, right, sir? It's possible, but the likelihood is reduced because if we get the whole premise of getting the funding is to allow us to continue to operate, to assume that lease, and to move forward

without the funding, that becomes less likely. Okay, so now that's not going to the proposed final dip. So the final dip has Holocco 2 taking on another $600 million of new money debt, right, sir? Correct. And another $449 million roll-up, right, sir? Correct. And that entire $449 million additional roll-up is of debt that is not currently at Holocco 2, right, sir? That is correct.

Okay. Okay. So that's a total of $2.6 billion of additional obligations that would be imposed on Holt Co 2, right, sir? Yes. Okay. And all of that would have to be repaid before Holt Co 2's existing creditors get anything, right, sir? I think that assumes that Holcoq 2 is the only source of payment for the debt. I don't think it's never.

Counsel, that you could just object not another, you don't need a speech. Refresh your question, please. Here on that. 2.6 billion would come, would be an obligation of Holco 2 before Hoc2's existing unsecured creditors, right, sir? Correct. Okay. Um, so, and I'm just going to do some hypothetical numbers here.

numbers here. If the flagship property is worth, say, $3 billion, you know, currently Hocco 2 creditors could be repaid in full, right, sir, on a dark basis. I'm sorry, did you say it's worth 3 billion? Three billion, yep. Which would be significantly more than the appraisal you referenced earlier, but by just doing that math, uh, that's correct. Okay, but at that value, they might still receive nothing. thing once the dip is put in place, right, sir? It's possible.

It's also possible they wouldn't even a $3 billion, depending on how long it would take to actually receive the $3 billion. If you were talking hypotheticals, it's possible at a $3 billion dollar valuation. They wouldn't receive anything either. Okay. You agree, sir, there's a valuation where the flag,

where an immediate liquidation is better for Whole Coast creditors than the dip facility, right, sir? I did not agree with that at all. An immediate liquidation we don't believe is better than for Hoco, too, and I've never said that. Well, that wasn't my question. There is a valuation somewhere above this $1.6 billion of existing debt where Hoco creditors are better off with immediate liquidation, right, sir? There is a value where it would be true, right, sir? There is some value, but again, in the realm of hypotheticals,

you know, as a debtor needs to risk assess, the likelihood of obtaining those values and doesn't believe that the opportunity to obtain those values reasonably exists, and therefore going down the path of obtaining the dip is the better course of action for HOKO2 as well as the rest of the SAC's global entities. Okay, but there's no quantification you've done that you can point me to to show that Hulco 2 benefits by $2.5 billion as a result of this dip rate? As I said, if you think the outcome is zero, anything above that is better or the opportunity is better. And the opportunity for the company to continue to exist presents opportunities to create much more value for the claimants at Hulco 2.

Okay. You're aware of sure that Amazon has a consent right over any new debt secured by the flagship property or guaranteed by those flagship silo entities? You're aware that, sir? No, I'm asking if he's aware of it. Yeah. I'm aware. Go ahead. I'm aware that there are consent rights, but I'm not sure those consent rates, as I understand them, preclude the debtors from seeking.

the liens and the dip, you know, the dip and the liens associated with the dip. You mean because bankruptcy? Is that what you mean, sir? In consultation with counsel, my understanding is that in the manner in which the authority was sought, we did not need to seek the consent of Amazon. Okay. Did anyone sign dip agreements on behalf of the dip? agreements on behalf of any of these three entities? Um, again, your honor.

I thought it was a different question. I thought the question was, has there, has anyone actually signed the DIP agreement? Was that the question? Did I misper? Yes, the honor. Yeah, yes, your honor. Um, I believe you've been executed.

Okay. And you're aware, sir, that Amazon informed facts that Amazon did not consent the new desk, which is a new desk, by the flagship property, beware that, sir? I am aware. Okay. Did you consider that under the LLC agreement, the flagship Kennedy is barred,

been taking on me, that? Do you consider that in your office? Again, in consultation with advisors, is my understanding that it was not barred, and therefore we're seeking the dip that we're seeing, Are you aware that the 12-eat-l-eat-l-e agreement? It's also barred from taking on new debt.

Is that something you considered? Similarly, my understanding is that we ultimately were not barred based on consultation with the advisors for seeking the dip financing and including 12thys 49. Okay. Before today, were you aware that Amazon offered to provide a gift to hold code two, the finance and cash needs of Hocco 2? Well, I think he's asking you is aware of it.

He's aware of it, yeah. I believe there was some reference to it in the letter. However, given the timing that we're on, I can't see how that was possibly actionable. And given the fact that we were in regular daily conversations with Amazon and its advisors for weeks. And this never came up. The fact that it came up in a letter on the eve of a filing

seemed to indicate that it was highly unlikely that it was actionable. The debtors never even responded to Amazon's proposal to discuss the whole person's debt, right? I don't know. Are you aware of the debtors ever responding to Amazon's proposal? I'm not aware of it, no. Can you aware that Amazon asked for financial information regarding

whole co-to's expenses, but they could size a dip? Do you wear that, sir? I'm not aware of it. And to go back for a second, I'm not sure what constitutes a proposal. In my mind, a proposal is an actual term sheet with proposed terms, not a passing reference to, hey, we would do, we propose that possibly we would do this. Okay. Well, why don't we pull up the letter then that we've all been talking about?

It's, I think ECF 144-9. Maybe, I see that if you could pull that up. It's Austin. Sorry. Okay. And if we could blow up the first paragraph because it's really hard to see. I'm sorry, I just got a whole document. Yes.

Thank you. Yeah. I think Mr. Harris. Do you see the letter is from Latham and Rockin to a debtor stuff at the will be far? I'm in the first paragraph. It says we request you immediately share this letter. Mr.

Aronson is a Tracy and then Sachs chief restructuring officer, which is yourself. Yeah, sir. Okay. And could you go to the third page, just Austin? And the first full paragraph starts if Holt2 requires financing. If we could blow that up, if possible. I don't know that it is. Thank you.

You see sure that Amazon is asking in the third line for information about Hoc2's expenses for purposes of sizing a dip proposal. Do you see that? Yep. Okay, and Sacks never responded to this request, right, sir? I don't know if it responded, but even if it had, given the timing of our chapter 11, I'm not sure how this possibly could have been actionable, but I don't know if anybody responded to. This letter did it January 3rd, right, sir?

January 9th, sir, right? Yes. Okay. Was there anyone who was acting only on behalf of Hold Code 2 that considered Amazon's proposal or an idea of providing a dip just for Hold Co2? There was nobody singularly looking out for a Hold Co2, but in the fiduciary responsibility towards all the entities, it was considered.

Okay. Just a couple of questions. you've got the debtors dip budget then and I think then will be done. So thank you for your patience. So actually, I'm sorry. My colleague has something to, okay. You did say you were involved in preparing the debtors 13 week dip budget, right, sir? My team was I reviewed it.

Okay. Um, you're talking to read, display that. It's, I think it's the last page of the dig motion, but it's also, I think, a separate document. Okay. So this is the entire debt budget, right, sir? It looks like it, I don't know it's kind of hard to read from here, but it certainly looks like it. Okay. Are you aware that Amazon asked the debtors to provide the 13-week budget in advance the filing, but didn't get it?

I don't recall if it was in the letter, perhaps, but I don't recall specifically a request. Okay. Now, you see there's one line item for total disbursements. It's the road number two. Do that, sir? Yes. And it shows that, you know, over 700 million of disbursements in the first four weeks, right, sir? I can't read it, but that sounds about right from memory.

But it doesn't tell anyone what those disbursements are, right, sir? Correct. It doesn't show the amount of professional fees or critical vendors or utilities or insurance or Any other details, right, sir? No, this is a pretty standard form to file. You think a pretty standard in a dip budget not to provide any details about what the cash is being used for? In conjunction with a dip, yeah. And a dip motion, yeah.

This is a pretty standard format. So how much of the interim budget is for professional fees? I'd have to go back to the underlying detail. I believe there's a funding. have a carved out early on, but besides that, I don't know that there are any other additional professional fees since there's, um, okay. Do you remember what is the amount of, I don't know, I didn't mean to interrupt you. Sorry, sir.

That was it. Okay. Do you remember what the amount of that carve out was being funded? So I think approximately 40 million. Okay. And that's being funded in the interim period? Yes. Okay.

And how much of the interim budget is being used to pay pre-petition claims of critical vendors? We, I believe, requested about, I want to say, I don't know if I had maybe 120 initially. And the dollars are spent over a 10-week period pretty easy. Okay. Can you tell them about what post-petition obligations are coming due in the next 14 days? The next 14 days, you would have, certainly have payroll, you'd have rent, you'll have goods, merchandise that we need to pay for, we have marketing contracts we need to pay for, we have transportation we need to pay for, we have insurance programs we need to pay for, we have benefit programs,

programs you need to pay for and there will be disbursements on all of those over the next 14 days. Okay. So how much are those post-petition obligations that will need to be paid the next 14 days? According to the budget, there's a fairly significant amount. Now, do I think that the number will come in less than that? Yes, but it's a fairly significant amount. Well, you say according to the budget, I mean, I can't tell. There's just a total disbursements line item that doesn't tell me how much of those is.

to post-petition obligations. So that's what I'm asking you, sir. Can you tell the court how much the post-picture? Most of it is post-petition. There's not much pre-petition in there. Sir, if you only pay post-petition obligations, do you know if you need to draw on a dip in the next 14 days? Yes.

By how much? A significant amount. I don't know the exact amount off my head, but it's a significant amount. We are actually largely out of liquidity and we are incurring post-petition expenses as we speak and we need to start receiving product and some of that you know I don't know what terms we're going to get and we're going to have to pay for that product and so we need to start making significant disbursements in very short

order and because we have almost no liquidity at the moment we need to draw on the dip. Okay. And then just focus on Holt Co2, kind of last point. Holt Co2 doesn't have any operations, right, sir? Well, it's subsidiaries, too. Well, one subsidiary just owns the property and the other subsidiary just passes it through on a lease, right, sir?

Yeah, but their expenses associated with that. That's why I consider that operation. All right. Well, none of those entities have any vendors providing goods and services to them, right? sir? Certainly the store has, you know, the flagship has services provided to it. So those these services are divided to SACs, not to any of the three, um, entities we've been talking about, right, sir? Well, all the, you know, I, the store would incur, I mean,

ultimately, they'll get funded through the lease, but there are expenses at the flag. that's something we get paid for, but they have to get the cash. So my question is it vendors. There are no vendors who provide goods and services to these three entities, right, sir? Well, services, yes, goods, not their worth. What service do you think are being provided to these three entities by a vendor? Flagship has legal services that it is the beneficiary. of.

12E.49th Street has legal services that it is the beneficiary of. There's accounting services, which they are the beneficiary of. So there are incurring services. Can you tell me how much those are on a monthly basis? I don't. I can't. Do you know whether any of the critical vendors provide good news services to Hoc2? We haven't fully identified the critical vendors. yet, but indirectly, yes, because to the extent that the dip provides for paying for critical

vendors and other critical services, HOLCO2 is the beneficiary, so it is the indirect beneficiary of those payments. I see. But now, they're not directly vendors to HOLO2, right, sir? That's correct. Okay. And HOLCO2 is not probably going for those critical vendors, right? I think the question is, do they, do they?

have a contract is does the entity that owns the real estate have contracts with trade vendors? I think that's the question. I guess, okay. So can you tell the court how much liabilities Hocco is incurring to pay pre-petition claims of other debtors just on an interim basis? Well, the liabilities it's incurring are the ones you outlined earlier. So one second, Your Honor, I think I may be done. Okay. Your Honor, and thank you, sir, for your patience.

Okay, thank you. Does anyone else wish to cross-examine, Mr. Weinstein? Yes, Your Honor. It's Jim Ducaye. Can you hear me? Yes, I can. Okay. Good evening, Your Honor.

Jim Ducay from Sidley Austin on behalf of Exxonix. I do have a few questions. May I proceed? Yes. Your Honor, I can you? Just raise one question. I think we've been on the record about significant amount of questions. It may make sense to take a break.

If not, I'm happy to go through. I just wanted to raise that with the court. Yeah, good point. Mr. Dupaya, how long do you think you're going to be? I don't think it's very long, Your Honor. Maybe 10 minutes. Okay. Well, let me push through and then we'll take a break before any redirect.

Okay. Thank you, Your Honor. May I proceed? Yes. Thank you. Mr. Weinstein, my name is, Jim Ducay, I represent Exonic. I just have a few questions for you, and I'll try to keep this relatively brief.

I want to focus, sir, in particular, on the 12-East 49th entity. We've been talking about that over the past couple of hours. That's the entity that holds the ground lease for the flagship store, correct? Correct. and you're aware of the fact that Exonic has a security interest in the form of a pledge of all of the LLC interests they're held by Holpco 2 of 12 East 49th Street. Do you wear that? Yes.

And you understand that the debtors here are asking for authorization for 12th, 12 East 49th Street to be a dip borrower under the proposed dip, right? Yes. And in connection with that, 12East would pledge its assets as collateral in connection with that dip, right? Yes. Okay. Are you aware of an estoppel certificate that prohibited sacks from amending or moderated

or modifying the ground lease that is held by 12 East or modifying the operating lease payments? I'm not certain, but what I do know is that in consultation with advisors, that we had the ability to change the terms of the operating lease. Did you do that, sir? Has that happened recently? Yes. Yes. How recently?

We've been the last year or two. And what was the nature of that modification, sir? There was a reduction in the rent paid in the debtor's judgment. Given the fact we were on the verge of Chapter 11, it made sense to try to preserve cash in the end. in the Saxon co-entity and otherwise would have rejected that lease because the amounts being paid under the operating lease were excessive, so either A, modify it, or be rejected. So we opted to modify.

Did you seek Exxonics consent to do that? We did not. Okay. Are you aware of the fact that the pledge that I just described that Exonic holds of the hold CO2's interest in 12 East 49th Street prohibits HULCO2 from taking action that would materially impair the rights of my client Exotic. As I just stated, based on consultation with advisors, it was my understanding that we could do this and should do this and therefore went ahead.

for the reasons previously stated, as well as, well, no. Okay. Let me just ask you a little bit more about the 12 East 49th Street entity. I think you just testified a few minutes ago. That entity doesn't have any employees. It doesn't have any vendors, correct? Correct. Okay.

It doesn't purchase or sell. inventory of any kind, right? It does not. And prior to the It does not, but it is the beneficiary of entities that do. But it doesn't itself, does it? No, it's not. Okay.

And prior to the petition date, there wasn't any funded debts that 12 East 49th Street had, was there? I don't believe so. Okay. In connection with the bankruptcy filing, was there ever any sort of

standalone liquidation analysis done specifically in respect of 12th Street? It would have been part and parcel with the broader liquidation analysis I referred to earlier. And what did it show, sir? Do you know? I don't recall top of my head. Now, it's true, sir, that the dip proceeds of the dip that's being sought here,

those are not in any way specifically earmarked for 12th East 49 streets use, are they? Not specifically, but 12th East 49th Street is a beneficiary of those dip proceeds by maintaining the ability to operate the 12th E49 flagship store, and therefore it is a beneficiary of it. Well, just to be clear, though,

12 E's 49 doesn't operate the store. it simply holds the lease, right? Yes, but there wouldn't be any lease payments to it in the absence of to store functioning in the ordinary course. Did you, in preparation for the bankruptcy, ever perform any sort of valuation of 12 East 49th Street specifically? I did not. Okay.

And do you know if that was done by any of your advisors? I'm not aware of that entity specifically, no. Okay. Are you familiar with the terms of the div credit agreement that was just filed with the court this afternoon? The basic terms, yes. In reviewing this, there's a provision in there. I just wanted to ask you if you know anything about. Section 5.17 of the credit agreement has

a bunch of affirmative covenants that relate to the SAC's flagship material agreements which is a defined term that includes the ground lease but the footnote in the version that was filed with the court says

to revise to reflect business agreements with respect to treatment of the flagship do you know what that business agreement is sir I'm not specifically sure what agreement that's referring to. Give me a second. I may, I actually may be done.

Can you tell me, sir, what are the cash needs of 12 East 49th Street over the next 30 days? At a minimum, they need to pay the rent back to the flagship entity. So that would be, you know, first and foremost, that expense. Okay. But that's money that would be paid as a result of a payment from the less or, right? Correct. Okay. Okay.

I don't have anything further. Thank you. All right. Mr. Lahane. I just want to just a technical issue, and Mr. Galardi has asked me to let you know he's been trying to get your attention to know about. All right. I'm sorry, Mr. Galardi. Mr. Glarity, go ahead, I'm sorry.

All right, did you hit five star? I can't hear you. You muted on your side? Say something. I can't, I can't hear you. And there's nobody, if you hit five star, I've unmuted everybody. Say something again. Why don't you dial back in and can you hear me?

Okay, go ahead, Mr. Hane. Thank you, Your Honor. Mr. Weinstein. Mr. Christine, Robert Lehman, Kelly, Warren. As you know, we represent a number of landlords. What I'd like to try to get at is if you know the total amount of the monthly rent obligations portfolio-wide. The total rent is 35-49. And thank you.

And do you know whether that rent was paid for the month of January? A little bit of it. You have an approximate amount of... Between two and five, probably. Between two and five million was paid, leaving approximately 30 million unpaid? Approximately. Thank you. And are you familiar with the concept of stub rent or the portion of the rent applicable

from the first day of the case being today through the end of this month? Yes, I am. And do you know whether that rent that, rent that accrued during that stub period is in the budget that we had up on the screen previously. It is in the dip budget.

I don't believe it's in the 13 week period that was on the screen, but it is accounted for in the overall dip budget and it certainly expected to be paid before exit. Thank you. That's all. All right. Thank you.

All right. Mr. Galardi. I don't see Mr. Galard. All right, here we go. All right, Mr. Galardi, I think I hear you. And I hear you, Your Honor. Thank you very much. But I was happy to defer to Mr. Lehane.

Okay. Go ahead. Has Mr. Lehman already finished so I can... Yes, he has. He has. Thank you, Your Honor. Mr. Weinstein, as you know, I'm Greg Galardi, and I know we've known each of their number of years.

I have a few questions to ask you. first, was any separate dip ever solicited for holdings to? Well, there was a separate dip that had the same treatment to hold the Hocco to, but there was not a specific dip solicited to my knowledge. But having said that, the PJT investment bankers ran a fairly open process to allow anybody that wanted to come present to the debtors dip options. And I'm not, to my knowledge, there wasn't a, aside from the reference in the letter that Amazon referenced earlier, I'm not aware of anybody offering a whole co specific,

whole go two specific dip. Okay, but I'm going to just ask a very simple yes or no question. Did anybody authorize PJT to solicit a dip? solely for the purpose of holdings to? Well, yes, on the basis they were authorized to solicit dips on any basis available. So by definition, that would include whole code two. And did they provide or have materials ready to anybody who was interested in providing a dip solely to holdings to? I don't know.

You have to ask them that question. I don't know. Okay. And it is the case. that Holdings 2 is giving first lien priority debt, securing the dip with first lien priority debt. Is that correct? Correct.

And are you aware that anybody solicited on behalf of holding two unsecured debt? I'm sorry, can repeat that question? I'm not sure I understood it. I'm asking you, in determining whether there was a dip for Holdings 2, I'm going to go through the code and ask you the question. And one was only secured credit for holdings to ever solicited. I don't know. But again, there was an open solicitation for any financing.

So once again, that would have been certainly considered in part of the solicitation process. I don't know if anybody stepped up and made that offer, but. But there was no specific holdings two. materials prepared in this general process to solicit dips for holding two. That's your testimony, correct? That's not my testimony. My testimony was I don't know if PJT had those materials, but if somebody had asked for them, I'm sure they could have been provided.

Do you think that anybody at the board or the committee on which you sat ever requested PJT to look for or consider a holdings two only dip? Are you aware of that ever happening? I'm not aware of that happening. And when did the DIP solicitation process actually begin? I believe the process of, I'll call it financing solicitation, because it wasn't necessarily DIP solicitation, starting in November before I began to re-engage with a company.

So it was any financing, not just DIP, because at that point in time, there was not a commitment to go down to Chapter 11 past. Okay, and I think you've used the word beneficiary of the financing about nine times in your testimony. I could be wrong. When you say that holdings to or what's been called the flagship entities are the beneficiary of the dip, what do you actually mean by that phrase? That by, first I didn't say they were the beneficiaries, they were beneficiary or are beneficiaries.

So to be clear, I'm not trying to suggest that they're. the sole beneficiaries of doing the debt. But by maintaining the operations, the ongoing retail operations of SACS Global, they are beneficiaries and the Holdco 2 is a beneficiary because there are unsecured creditors in Holdcoe 2 who have, who are trade vendors who may be the beneficiary of critical trade dollars. know yet, but they could be. Those same trade vendors could also be the beneficiaries of ongoing business with SACS Global, and therefore, without the dip, those unsecured claims would get whatever they would get in a liquidation as opposed to as an ongoing business. They would very likely

continue to do business with SACS, may get pre-petition payments on account of that through the critical trade and continue to make money by selling goods to tax global who now has the wearerous financial wearer also pay for those goods. Okay, so as you sit here today, well, let me start with a premise question. You have testified there's about $180 million of unsecure trade debt at hold at holdings too. Is that correct? That's correct.

That's my understanding. And you've also testified that Holdings 2 doesn't really have operations. So how did that $180 million of unsecured debt become an obligation of Holdings 2? It was, I was not, as I understand it, because I wasn't there at the time, but it was an inducement for trade vendors to ship, understanding they would get a claim at Hocco too. And do you understand that there were representations made to those vendors, that that was because that was a sovereign entity, and that would be serving as credit support for those

claims? I actually don't know what representations were made, and at the time, it was solvent, but, as I testified earlier in a liquidation, I don't believe it would be solvent, but at the time, the time, I think that's a fair characterization. And do you have an understanding that some of those agreements were entered into as late as December, the end of December of 2025? I actually don't know when those agreements were entered into. I'm not aware. I just know the aggregate amount.

As I said, my greater involvement with Sachs Global occurred. in just, you know, into later December and became CRO and January 1st. I was not aware of when those took place. And you've done credit support agreements in your history as a CRO, correct? Yes. And when you said the credit support agreements of Holdco 2, they thought that HoldCo 2 was a separate entity

outside of the other entities with which they did business, you would presume that too. Correct? I would not presume anything. I have no idea what they were assuming at the time. Well, if you got a guarantee from Holt-2, did you believe it was the same as having the claim against the property entity with which you did business? I don't know what they would think.

Well, what would you think if you offered a guarantee? Would you think that's the same thing? that's the same thing as the primary obligation or an obligation of a second entity that may be solvent? I would think the latter. Okay. And is it your testimony today that by adding $1.5 billion of additional debt, you are not undermining their ability to recover from holdings to? No, with that particular constituency, I actually think they're greatly enhancing their ability to recover the amounts owed that 180 by continuing to do business with the debtors.

They're uniquely positioned, actually, to continue to do business, potentially get critical trade, and do ongoing sales to SACS Global make margin on a go-forward basis. So I actually think their position is dramatically enhanced through the dip. With respect to go forward, what about with respect to the outstanding amount? I just said that. I refer to the critical trade amount they could be considered for that. I don't know that those commitments haven't been arrived at yet, but that could be. But without a dip, there is no critical trade.

Okay, so it's your testimony that they're going to benefit on by critical vendor on where they will get funds under the dip, not from them to, not from the whole. too, but on the other terms where they're actually doing business? It is my testimony that, A, they will continue to be able to do business and ostensibly make margin by selling to the debtors, and secondly, they remain in a position to potentially receive critical trade dollars to offset their pre-petition plans. now I have not seen because I have not privy to it there's been talk about an appraisal who did that appraisal I believe it was JLL yes and what is the date of that appraisal

March 27 24 okay and and is it your testimony that the company discounted that appraisal by about or did rain I don't know if it discounted it. But in then determining whether or not to give the dip, it was at least in consideration that the company believes that the GoDark value could be as much as 25% less than what is in that appraisal. If not more.

In addition to other expenses associated with monetizing that asset. And is it your testimony, that the JLL go dark value didn't include those expenses? As a go dark, to be honest, I'm not 100% sure, but we believe there would be incremental because we believe that with the liquidation of the business, it'll be a harder property to sell, and therefore we'll take longer and incur additional expenses

as well as the liquidity issue potentially posed by the default of the CMBS. And as you sit there giving that testimony, are you familiar with the JLL appraisal to say that they didn't consider those things? I'm certainly didn't consider the payment of the CMBS and a potential default. I'm not as certain regarding what expenses they included with the go-dark value. And do you know if that was based on a go-dark of sacks in general or just that particular location.

That location. And only that location. I believe so. And, according back to the phrase the beneficiary, you're saying they are a beneficiary, but they would not, they being the hold code too, it would not be

legally obligated though it is a beneficiary, right? They're now being legally obligated to repay the additional $1.5 billion, correct? I'll just try. I would have helped a quickly.

Sorry. It was pretty inarticulous, so I'll agree with that, and I'll try to raise it again. Before the dip is approved, or if the dip is, before there was a dip, you said that the vendors or Holt II would, is a beneficiary, uh, she's a beneficiary of the operations of SACs, correct? Yes. Okay. And so now you're testifying that they are a beneficiary of the dip because SACS will continue as a going concern company, correct?

Correct. And if all of the dip was on all the other companies, they would still remain a beneficiary of the dip, correct? BATO2. The answer is yes, but that was not a viable option because we did not have an executable dip. that provided for that. Therefore, you either allow this or you don't have a debt. So that wasn't really a viable option. Okay.

And so now you add $1.5 billion of debt on Holdings 2, correct? Yes. And are you saying that Holdings 2 is getting $1.5 billion of benefit for that? That's not what I'm saying. What I said is that without the dip, the likelihood of any claimant at Hold Code 2 recognizing on that claim is likely zero. And through the dip, you create the opportunity to provide recovery, maybe in full, maybe partial, to those claimants at Hold Code 2. Okay, and were you party to any negotiations where the debtors pushed back on the roll-up aspects of the dip being encumbering holdings to? I was not part of the negotiations.

I was aware they were taking place, not just for Hocco 2, but broadly. Okay. So are you aware of any specific negotiations on behalf of Holdco 2? to either limit the roll up or limit the amount of new money that it would be burdened with as a result of the dip. As I said, I wasn't specifically involved in those negotiations, so I would defer to others that were. I don't know the answer. I have no further questions. All right.

Does anyone have any questions of Mr. Weinson? Okay, so why don't we take a 10-minute recess, come back at 925, and then to the extent you have redirect, and then we'll have short closing argument. Thank you, Your Honor. All right, so we're in recess till 925. Your Honor, just one point. We do have another witness. We have another witness.

We have Mr. Baer from PJ. Okay. All right, well then do you want to do redirect now and then we'll take the break after that? I would actually prefer to do. Okay. I prefer to take the break to help again. Okay, we'll do that. We'll take the break and we'll be back.

So the witness just be reminded he's under oath and cannot be spoken with? Yes, Mr. Weinstein, you're under oath now and you cannot talk about your testimony with anyone until you come back. Understood. All right, thank you.