American court hearing recordings and interviews - 4 - Saks Global Enterprises LLC continuation of first bankruptcy court hearing, 1/14/2026, 9:27 pm (fourth recording)

Episode Date: January 19, 2026

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All right, we're back on the record in case number 26-9013. Go ahead, counsel. Thank you, Your Honor. It's a very, very brief redirect. I realize we're short. To pull up the organizational time that you were shown earlier in your testimony, can we... Okay. Mr. Imer.

You can be the presenter, Mr. Amir. And this is what you were discussing with counsel that happens off. earlier, is that correct? Correct. Is much bigger? When you see entity, you mean SACS Global? Or let's zoom out. Yes, yes. That is the entity that a lot of the operating company rolls up under.

You're understanding that that company is an ultimate corporate parent? Yes. Who call errands? I do. They're the two current independent directors of SACS Global. I believe they are. And did those decisions include the filing of the chance? To be clear, when I refer to the independent members of the board earlier in the cross-examination,

those are the two gentlemen I was referring to. I'm sorry to enter into. The dip finance. Yes. Yes. There are lots of other assets that could be used to satisfy the dip. Yes, there are those claims at Hold Code 2, but that doesn't mean that at the end of the day, that other assets won't be used to address the ultimate resolution of the dip.

Are these other assets did they serve as collateral for? They're not the only collateral for the dip. I believe you've testified about this a couple times, but I just want to ask again to make sure your testimony is clear. Was there any other executable proposal for dip financing without liens on? No, there was only one other executable dip financing proposal. As I mentioned, the likelihood of success of implementing that was significantly lower than the proposal we're moving forward with, and that was the only other proposal

that had the same treatment of whole code two. What would happen if the def financing is... If the dip financing is not approved today, there would very likely be irreparable harm to the debtors. We need to pay bills. There's really two aspects to that. I think I alluded to this earlier. A, there's our ability to pay bills as they come due. which is obviously requirement under Chapter 11,

as well as, you know, the critical trade payments, which would address pre-petition, which is also important, very important. But there's also the perception of SAC Global, you know, right, the company understandably has been much maligned over the last many months and has lost credibility with the brand partners and other important partners. And securing financing today with community. an extraordinarily strong message to that community that we are going to be here, we are going to continue to do business, and we are going to be somebody you want to do business with.

And for our employees, it's critically important. As you can imagine, you know, irrespect of anything you say in meetings and encourage people to feel good, once you actually secure the financing, people feel a lot better. And so it's really important to get that messaging out today. And do you think the company could continue to operate without? All right. Thank you, Mr. Weinstein. You may call your next witness.

I will turn the podium over to my colleague, Stuart Lombardo. Your Honor, one, just three free clarification. One point of Mr. Weinstein's testimony was imprecise. He refers to the Bradley firm having been hired by 12B. 49th Street. But in case, it's not entirely accurate. The Bradley firm is conflict, counsel, to assist solely with reviewing the operating lease amendment.

So I just wanted to clarify the scope of it. Thank you, Your Honor. I know it's late. It's the only one in the courtroom time. We really, really appreciate your time. As you know, there's a lot on the line here. A century's old, the icon of retail, thousands of jobs. We really appreciate you giving the chance, giving us the chance.

The global debtors call. To raise your right hand, sir. You solemnly, sir, affirmed to tell the truth, the whole truth of nothing about the truth. Mr. All right. Thank you. Go ahead. Mr. Lombardi.

Are you aware, Mr. Bear, that Amazon has argued that Holt Code 2 either does not need dip financing or, if needed, should procure smaller, more reasonable dip financing. I heard that. What's your reaction to that statement? The entities in the flagship part of the structure need dollars to rent off the rent obligations in the five-chip needs. So you can sort of say they don't need a dip, but they need dollars, and dollars in bankruptcy come with,

unions, associated costs. What about the concept of a smaller hold coat two only dip? Why didn't hold coat two enter into a smaller hold code two only debt? A couple reasons. wasn't on offer. And then additionally, I think it would have jeopardized the dip we have. I don't think that the existing lenders would have wanted to lend into that structure. Jeopardize the dip we have.

What do you mean by that? Means we have a billion dollars coming into the company during dependency of the case from existing lenders to the company. I don't know that they would have been as forthcoming with those dollars in that structure if Holdco 2 was leaned up by somebody else. Did the debtors have a financing proposal from anyone to finance the global debtors minus Holdco 2? Everybody wanted me on the flagship part of it. What would have happened to the debtors as an operation without financing for the other? boxes, the non-flagship box.

I mean, I think you heard Mark talk about it, right? I think you'd run afoul of being able to pay bills and obligations to come due almost immediately, which in a retailer winds, you know, pushes you ever closer to liquidation in any given... You know what, dip like that wasn't on the table, a dip that car... In any point in your dip marketing process, did any prospective lender express a willingness to extend the dip only to hold code two? No. I mean, again, we've heard about it.

Amazon the Friday before a presumed Sunday filing said that they would be willing to consider a hold code two dip. But there were no actual proposals from them. prior to that and no one else was prepared. Some points in time prior to that Friday before the filing, did the debtors approach Amazon seeking financing? There's a paragraph in my dip declaration, I believe it's paragraph 15 that refers to someone generically. That was Amazon. We spent months with Amazon going through all range of options on.

on flagship, on the whole company, whether financing or potential sales of assets, and nothing bore fruit. Did nothing bore fruit? Did Amazon make any actionable proposals to you? No proposals. About how long did those discussions last?

I think mid-November till, you know, the end of December, ballpark. They slowed down when, it became clear that we weren't sort of getting equal engagement on the other side of the table. So we started emphasizing others. When you say you weren't getting equal engagement, what do you mean by that? Meets, in our discussions of Amazon, they took in a lot of information and they didn't provide a lot of solutions. And so we had to focus on where we could find solutions.

Now, when you say that Amazon didn't offer solutions, how about IPs, did you make any proposals to Amazon on behalf of the debtors? Yeah, no on-paper proposals, but, you know, the beginning of the process in the middle of November and even into December, I mean, at one point we were having daily calls to sort of brainstorm solutions. again, they tapered off. We'd have a long meeting to brainstorm solutions. So we were desperately searching for liquidity from every milk and cranny we could find it, and we had hours and hours and hours of conversations with Amazon about all range of possibilities. Could you give to court an example of something in that range of possibilities? Yeah, we asked if they wanted to finance effectively a philop.

on the ABL, so behind the DABL loan, we asked if they wanted to finance the flagship assets. We asked if they wanted to buy the flagship assets. We considered a range of options. Those are several that come to mind here. Did Amazon move forward with any of those ideas? No. At any point in time, before the Friday, before the debtor's filed for banks, did Amazon offer to provide dip?

No. Did Amazon offer it to provide dip financing to any of the global debtor boxes? No. More about that Friday letter. Are you present in the room when Mr. Weinstein was cross-examined about a January 9th letter from Amazon's counsel to the Global Debtors Council? Yes. You, potential dip floated in that letter is actionable. No.

Why not? We were miles down the road with both the existing lenders. and a potential third-party non-consensual priming dip that is detailed in my declaration as well. We were documenting both. We, I think we're moving closer and closer with the existing lenders every hour, and we were actually aiming at a filing on Sunday night.

We wound up, so the letter came two days before we were actually aiming to file. we wound up extending the filing in order to finalize papering the transaction. But, you know, you're, I don't think you're getting that dip done in two days. And again, the history that we've had in the discussions didn't indicate that it was. Anyone wish to cross-examine Mr. Bear. Yes, Your Honor, Chris Harris for Amazon. Go ahead. Thank you, Your Honor.

You were in the room for the earlier testimony, so I don't need to go over these terms. again, right, sir? I'll try to remember. Yep. You don't have a trying to save some time. Just remember, PJT was retained

in May 2025, right? That was a previous engagement, yes. Okay. I was in connection with liability management transaction in the summer of 25, right? Yeah, you're

breaking up for me a little bit, but yes. That was with the liability management transaction. Okay. And at the time, did Sachs' advisors, including PDT, advised the company that they thought they would address the company's liquidity needs? That's not what we do. No.

We, you know, we heard from the company an estimate of the dollars that they thought they need. and that was on the order of magnitude of $600 million, and we spent time trying to figure out how to raise it. Okay, so the company thought the L&E transaction would provide the equity it needed, right, sir? Yes, that's my understanding. And then very quick draw, right, sir? That happened to be the case, yes. Okay, and in fact the company has continued to miss its projections, updated projections,

throughout 2025, right, sir? I don't, I don't recall sitting here. You don't recall that the company has missed its updated projections? Is that right? I don't know what you mean like updated projections. The company has not been doing well, if that's your question. Okay. And both PJ and VRG have been involved since early 2025, right, sir?

We were not involved in early 2025, no. We got involved for the liability management transaction and towards sort of the middle of 2025, I think. Okay. And what anybody has retained PJT? I mean, I think a lot of them. I don't know. I'd have to go look.

We provide advice to the debtors and affiliates. Do you don't know if you've been retained by whole took food? I believe we have. Okay. And PGP led the company's efforts to secure debt financing right? We were, yes, we were one of the, one of the advisors that solicited debt financing us. Okay, and that process started in mid-December 2025, right? No, well, it started, we started educating people before them, for sure. Well, but the actual outreach to potential lenders was in mid-December, 2020.

Right, sir, that's when it started. For it, maybe for a dip specifically, but again, we were talking to potential financing sources about other things in a, in it well in advance of that. But outreach about a potential dip in specific. It was just a few weeks ago, right, sir? I can't recall the exact date sitting here, but sure. Okay. And who from SACs participated in the process of attempting, um, attempting, to procure dip financing?

Who from SACS? I mean, the management team was involved in all different ways. I'm not sure I understand the question, though. Okay. Well, let me ask you this way.

Was there anyone, whether from SACS or any of the advisors to SACs, who's acting just on behalf of Holtow 2 in the DIP process? I'm not sure. Can you identify any person? for the court. It said I'm not sure.

Okay. But PGAT was authorized to seek a hold code two only dip, right? That was within the scope of its mandate, right, sir? We were authorized to seek dip financing in the best possible form for the, for the debtor, for the debtor entities. And TGP never solicited a hold code two only dip, right? We solicited dips in any possible. form that people would give them to us.

Okay, that's not my question. Did you ever ask any potential lender whether they would provide a hold-co-to-only gift? I did not call everybody and ask about every box on this page, no, if that's your question. I asked people if they would finance the company and how they would do it on the best possible terms to get us the most possible proceeds to finance the case. You never asked anyone if they provide a whole code two only dip, right sir? I'm not sure if it was for a dip or pre-bankruptcy conversations,

but we certainly asked Amazon if they would finance the flagship under any circumstances. You asked Amazon, sir, you asked Amazon if he would buy the flagship. You never asked Amazon to provide a loan for whole code two only, did you, sir? We asked Amazon if they would finance the flagship. I didn't say hold code two specifically, no, but we asked if they would want to put financing at the flagship. Okay. You never asked Amazon or any hold code two only creditor whether it would provide an unsecured hold code two only dip, right? We, again, not specifically to hold code two.

We asked for, we asked a number of parties if they would provide junior financing. We never asked Trump, asked about. a dip size just for the cashies at Holco 2, right? The CNBS monthly payments of under $5 million. You never asked anyone if they'd be willing to provide a Holco 2 only dip size to that amount, right, sir? We did not ask that specific question, no. Okay. You never asked anyone, including Amazon,

was they provided on an unsecured basis, did you? When we spoke to Amazon, we said, would you provide financing for the flagship on any day? Like, it wasn't specific to secured or unsecured. or otherwise it was would you finance for flagship entities. The debtors have other assets besides the flagship that, you know, could be in Arbin used to secure debt financing, right? Like Neiman and Marcus and Doug Goodman, right?

Yep. Okay. And did the debtors ask any third party lenders whether they'd be willing to provide a dip of any size secured by assets other than the flagship property? we, again, we ask if anybody would be willing to finance pieces of the company or the whole. We tried that out of court and that didn't land. And so then we started soliciting dips in whatever form people would lend to the company. So my question is when you are soliciting,

tips, did you ever ask any of the third parties if they provide a non-flagship dip? Did you ever ask that question? Yes. We asked people to finance the company excluding the flagship, but the answer was no. We asked the existing lenders if they would do it without the flagship, and they said no. Did you ask third-party lenders? Okay. Now, I believe he said both the ad hoc group and third-party lenders said they would not provide a dip,

unless it was secured by the flagship property, is that right? Yeah, they were both the same structure, and they wouldn't change the structure. So the ad hoc group was only willing to do a dip if they could obtain the value at the flagship property, right, sir? Yes, that's my understanding. The ad hoc group has liens on the operating assets, right, sir? Among others, yes.

So they apparently didn't think that the dip increase the value of those operating assets enough to just by making a dick just based on those operating assets, right, sir? Objection, Your Honor, calls for speculation. Sustained. Yeah. I don't know why I sustained. I sustained the objection. Okay.

Sorry. Okay. You sent a little on your direct about expenses that the whole code to. entity needs. That would be funded by the dip. Do you call that, sir? No, I said somebody had to pay rent on the flagship. I see.

Are you going to have any other material expenses at Holco 2 or its subsidiaries besides the... Our system will end this conference in five minutes. To extend this call for one hour, please enter the moderator pin now. $6 million for months. Your conference has been extended. for 60 minutes. CEDA. is you'll end up using any of the cash

from the interim gift, right, sir? Uh, don't. I believe the company needs to make the payments down to those boxes, so I would assume that they need that money. Well, Sacks needs the money to make its

pay its obligations, right, sir? Under the lease, yeah. Okay. Now, you heard Mr. Weinstein testify that the Sachs lease payment was just reduced? You heard that testimony, right, sir? I did hear that. In fact, it sounds like it was been just reduced down to mass the amount of the CNBS interest

payments, right, sir? I don't, I don't recall. Okay. Well, if in fact the lease payments were reduced from $7.7 million down to $4.6 million, that'd be about a 40% reduction, right, sir? Okay. I trust your math. Okay. Well, you've done discounted cash flows before, right, sir? I have done discounted cash flows before.

Okay. So if I'm valuing the value of the property encumbered by the lease and the lease payments go down by 40%, the value of the encumbered property probably goes down by approximately that amount, right, sir? Objection, Your Honor. Improper, hypothetical, and lax foundation. hasn't been established that that's why any lease reduction was done. Well, I don't think that's the question. I think the question is if you reduce the cash flow by 40%, does that impact value? I think that's the thrust of the question. I think Mr. Baird can answer that.

I did not value the real estate. I don't know what the payments were, what the expectations of future payments were. I don't know what the cash flows are today or yesterday. In general, if you lower the cash flow of an enterprise, then the value could go down. But there's a million other factors that could come into that. Have you seen any analyses, quantitative analyses, of the value of the property encumbered by the SACs lease at its new reduced value?

What you mean by new reduced value? I've not seen analyses of the value of the property as of today, if that's what you're asking. Do you know whether the new ground lease payment is more or less what a placement tenant would pay? Okay. The utility hold code two is essentially a holding company for real estate, right? Not my area of expertise. Well, it's essentially a landlord, right? Again.

Would you agree that through this dip, Holkot 2 is essentially guaranteeing a loan to its tenant? Well, you realize the SACS operating entity is its tenant, right? The tenant of its subsidiary, right, sir? SACs owns the boxes in this chain. SACS is pledging those boxes to a loan that it's taking, if that's what you're saying. Yeah, well, I'm trying to analyze just from the benefit of Hulco 2, as if it were actually an independent company with independent fiduciary. So from that perspective, it's a landlord and has to guarantee a loan to its tenant, right, sir?

A loan to its tenant. I'm not, again, I'm not following, but the chain is owned by SACS, right? So it's an asset of the SAC's global enterprises. So it's pledging an asset to a loan that it's taking out. So then you run a quantitative analysis just on behalf of whole company. to determine whether it was not beneficial to Whole Code 2 to guarantee a $2.6 million loan to a bankrupt tenant? I don't know. In your experience, have you ever seen a landlord guarantee a third party's loan to its tenant?

Has PJ2 or any other advisor analyzed the likelihood that Whole Co2's guarantee will be called? I wouldn't know what that means. I'm not sure what you're asking. You don't know what a guarantee is? The likelihood that it would be called? Yeah, what's the likelihood that, in fact, Hoco2 is going to have to make a payment on account of guarantee? Do you know, sir?

That's perfect. I think we were on too long. Just dial back in. Sorry. Barrett, are you still on the line? We're back. Sorry. We're back. You know, this is Mr. We haven't got our video up yet, but I don't want to waste your time. I could ask questions.

Yeah, go ahead. The video looks great. Okay. And I forgot the question. I'm sorry. My question was, has anyone performed an analysis on behalf of Hoc2 indicating how likely it is that it will have to perform under the guarantee, make payments under the guarantee? Right. All right. Can you just imagine with me that Hoco2 was an actually independent company like

Vernado or Simon? And they came to you and said their tenant wanted for Vornator to guarantee a loan to that tenant. And that is if you want to know the percentage likelihood, the guarantee would get called, right? I mean, it's not that crazy if you think about it because those guys benefit from having that tenant in their door. So I might not be. tracking the question. I think you are, sir. I think you are.

I mean, you'd want to know, for instance, whether the current lease of that tenant is above or below market, right, sir? I'd want to know that they can pay the lease. Well, if in fact they could, if in fact, Vornado could get more from having the lease canceled, they wouldn't really have an interest to guarantee their tenants loan, right, sir? I mean, there's a lot that goes into that question. You don't just cancel leases because you can get a different.

price in the market. You want to know at least by how much the current lease is above market if it is, right, sir? I lost the chain. In terms of what analysis? Say Borneido was the owner

of the flagship property. David, want to know whether Sachs is paying above or below market, and above, they want to know how much above market, right, sir? In order to do what? They're to determine whether they provide a $2.6 billion dollar guarantee to SACS.

Well, NATO would want to know whether the SACs lease is above market or not. They'd want to know how much above market it is. They'd want to know how likely the guarantee is going to get called. They'd want to know all that, right, sir? I think you'd want to know a lot of things, but I think most important is that your tenant's going to pay the rent. Mm-hmm. You'd also want to know if the tenant is going to pay the rent through the life of the lease,

right? you're going to want to know that they're going to pay the rent for the foreseeable future. Yeah. Okay. And no one here has done an analysis to determine whether the new market, the new lease is above or below market, and whether it's so much above market to justify imposing a $2.6 billion liability on HOPO2. Isn't that right, sir? I'm not sure what the question was.

I don't, I don't, I don't, I didn't track the question. Do you recall anyone doing an analysis to determine whether the new SACs lease is sufficiently above market to justify imposing a $2.6 billion liability on POS? I'm not sure if anybody, I don't know what analysis exists or doesn't on the lease payments. Okay. A few more questions. Did the debtors ever send a proposal to the ad hoc group that did not include the guarantee at whole code two or its subsidiaries? I don't recall if we sent one on paper, but we certainly discussed alternatives with them that would have included not leaning up the flagship. Okay.

Just a couple more questions, sir. Can you tell me today another interim dip that imposes $1.5 billion of dip obligations on an entity that doesn't meet a dip? I think the entity needs cash flow, and the entity is in bankruptcy, and in order for people to provide capital to bankrupt enterprises, they usually want liens, and that often takes the form of dip status. Do you tell me another dip where the debtor has rolled up on the one entity, almost 1.4 billion three petition debt that sits at other debtors. I don't know that that's the case.

Okay. Nothing further. Thank you. Thank you. All right. Anyone else wish to cross-examine Mr. Baird? This Jim Dukai from Sidley.

No, Your Honor. I think Mr. Harris covered the couple questions I was going to ask. All right. Anyone else? Any redirect? No redirect, Your Honor. All right, thank you, Mr. Baird. The Graper, for the record.

We just wanted to flag that the utilities order was uploaded. I believe this, docket number 189. Right, just give me a minute. Thank you. Your Honor, this is Caroline Rackler. While we're waiting to join, could you try to reset perhaps the go-to meeting because we can't get back on?

We tried with computers, phones, everything. All right. Why don't we, let's just take a five-minute recess, and I will get off a Go-ToMeeting, and then we can come back on. So we'll be back at 1015. Thank you, Your Honor.