American court hearing recordings and interviews - 9 - Saks bankruptcy court hearing, 2/6/2026

Episode Date: February 6, 2026

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Good morning. It is 9 a.m. on Friday, February 6, 2026. We're here on two matters in case number 26-9013 SACS Global Enterprises. So two things. One, please mute your lines when you're not speaking, so I don't have to activate the hand-raising features. Second, everyone makes sure to go to my web page and note your appearance because that's the way we keep track of formal. appearances in the case so I'll start with a council in the courtroom and then I'll go to council online good morning your honor Kelly Northlet from Haines and Dean on behalf of the global others morning good morning Jared Martin from Bradley area for the SO5 digital letters also joining me in the corner that's my calling my corner good morning your honor Kathy Patrick at Gibbs and Bruns I'm counsel for the plaintiffs and the interchange litigation that are here on the motion to seal Good morning, Your Honor.

Howe for the U.S. Trustee? All right, let's start. Mr. Einstein. Hello, Your Honor. Matt Eisenstein, from Arnold and Porter on behalf of Visa, Inc. All right. Mr. Michael. Good morning, Your Honor.

William Michael for non-party MasterCard. That's a defendant in the interchange litigation, I'm here for limited purpose of addressing any questions the court may have in connection with the debtors motion to seal This uh, Mr. Spiegel. Morning your honor, Robin Siegel, Wilkie Far and Gallagher, counsel for the debtors. Mr. Ward is also with Loki. He's going to be presenting.

I actually appeared because his camera wasn't working. So I'm going to go off camera. Thank you. All right, thank you. Mr. Manel. Uh, good morning to your honor. Dougman Al from Morrison and Forrester for the official committee of unsecured regulations.

All right. Ms. Boers. Good morning, Your Honor. Alicia Rose from Boarys Taders, Timor and P's on behalf of the plaintiffs, facts, and the underlying interchange litigation. All right. Mr. Hopkins. Good morning, Your Honor.

Christopher Hopkins of Paul Weiss for the ad hoc group of bondholders and deplenders. Mr. Ward. Good morning, Your Honor. Nathaniel Ward from working fire and Gallagher on behalf of the debtors. All right. Mr. Castleman. Mr. Castleman, I don't have anyone muted. Oh, okay, sorry, Your Honor.

In case, David Castleman from Walker, I'm a half of Bank of America as ABL agent. Why don't we take up the interim cash collateral first? Thank you, Your Honor. Jared Martin again for the SO5 digital debtors. We resolved all objections to the third interim order. We filed a red line. at docket number 694-2.

694-1 is the order we'd like you to sign. And just as a matter of course, we moved in exhibits, one and two at docket number 695, which is the first day declaration of the amended approved budget. The primary changes were to release the funds in escrow to the global debtors, which amount to approximately 700 $100,000 and then to increase the escrow to $3.50 on a go-forward basis, and then we'd ask to set the final hearing contemporaneous with the other second-day hearings in the jointly administered cases,

which I believe is going to be February 20. But to the extent that date changes, just have it matched with those dates. All right, that's fine. Does anyone else wish to be heard with respect to the third interim cash collateral order for the digital debtors. Your Honor, if I could briefly, and if I could ask, it was very difficult to hear the council speaking. I don't know if people are not on mute, but I would like to just spend a little bit of time, Your Honor. This is the first opportunity to appear before you in this matter, and maybe perhaps say

a few things to introduce the Interior Committee and then remark on the cash rod. order. Sure, go ahead, Mr. Okay. Thank you, Your Honor. It's appointment on January 27th. The Unster-Creditist Committee has engaged my firm, as well as the Cole Shops firm as local counsel, Alex Partners, his financial advisor and Hulahan Loki as an investment banker. And, Your Honor, you may be aware that the committee is comprised of 11 members. It makes up some of the debtor's largest vendors, including luxury brand, Chanel, LVMH, Zena, Curing, and Rosen X, as well as the debtor's major landlord GGP, the union, PBGC, as well as Amazon and computer share, and finally the service provider, Keller Mayor. In other words, Your Honor, the committee is representative of the life

bread of this business. It has representatives from the vendors, from labor, and from real estate. It's been a extremely busy week, Your Honor, and the committee members have been fully engaged, and we truly appreciate their efforts here. We are getting up to speed. We have reviewed some financial information from the debtors, we expect more. We've had numerous calls, hopefully the debtors, as well as the lenders professionals. And we are actively engaged with them regarding the debtor and possession financing and the second day release, and we very much appreciate the brief adjournment to hopefully get us on the same page before the second day hearing.

In addition, Your Honor, we've had an in-person meeting very early since we were just appointed recently, Your Honor, with management and members of the committee. and we look forward to continuing the discussion between the principles regarding partnering with the debtors on a business plan going forward. But, Your Honor, what is front and center today on everyone's mind and is a particular focus for the Interior Creditor's Committee is the need to repair the debtors' relationships with the brands and the vendors, and without whom there simply is no business.

Your Honor, the debtors have made significant progress in their efforts. and they have obtained significant debtor in possession financing. And you have awarded them authority to make those payments that are critical to the debtor's success. Your Honor, that money needs to start going out the door immediately. We are hopeful that the debtors understand this, we've got the message, and we are optimistic, Your Honor, that when we get back before you in a few weeks, we'll be able to report back that those payments have actually been made. We look forward to continue our efforts to find common ground, both with the debtors and the avocer.

and to avoid a contested second day hearing, but of course, we're not shy, we'll let the court know if issues arrive. With respect to the issue of the cash collateral war, Your Honor, the committee has no objection to the interim order being sought. A lot of the committee's issues have been preserved for the final hearing, and we've got before, Your Honor, if we can't work things out with the debtors and the lenders on this.

All right. All right, anyone else wish to be heard? All right. I had, obviously, I've reviewed the first, the second, and now the third interim order, and in connection with the digital debtors and what they're trying to accomplish, I think the proper exercise of the business judgment preserves the issue of the intercompany relationship, and there is a payment being made. So I'm going to go ahead and approve that order. And I'm going to mute the lines. So hit five star, if you want to be heard. Thank you. There's just a lot of people on and a lot of background. Conference muted. All right. That order has been signed and sent to Doc. Thank you, Your Honor. One housekeeping item. I understand that the second day hearing has been or will be adjourned to the 20th. I think we would like to keep the 13th for the final hearing

on the liquidation motion, just based on the pace of the liquidation of the assets on the website. I think pushing that one to the 20th puts it a little bit further into the timeline for the liquidation I think for all parties and interest it should still go forward on the 13th and we'll be in touch with Mr. Laws about that all right and and just make sure you coordinate with the committee on that and we we do obviously have time on the 13th it would be at the 13th would be a virtual hearing of course and the 20th will be a virtual hearing both of them would be thank you all right thank you all right I've unmuted a 646 number is that you mr. Ward yes yes your honor. 646-248 is

mine. Doug Nantle, sorry you, got it. Okay. And Mr. Ward is you, are you 2129.05 number? I've unmuted someone at 212-905. Just hit 5 star one time and I will unmute your line.

You're under the Castam-Fonterman. I'm the 905 21095 number, but that was just to make the appearance. Got it, okay. Thank you. Mr. Ward, I can't I don't see anyone showing up. Can you hit just five star one time on your phone? If you hit it the second time, it lowers your hand.

Can you say something? No, I can't hear you. Five star? Conference unmuted. All right. Yeah, I think I just got a new driver. Yeah, no, I unmuted everybody. Go ahead.

Great. It was doing hand-raged and Lord. but I'll proceed it. Are we ready to receive then, Your Honor? Yes. Yes. Great. Okay, well, thank you, Your Honor.

For the record, again, Nathaniel Ward from Milky Far and Gallagher, representing the global debtors. Your Honor, we're here on the debtor's emergency motion to seal, which is document number 641, filed in connection with our Rule 9019 motion seeking approval of settlements arising from, the underlying litigation related to interchange fees charged by D-Send MasterCard. For the record, the sealed version of the 9019 settlement motion is a docket number of 637, and their adapted version is at 642. Yeah, and let me just, before you go on, so under our local rules, the way that the motions to seal work is you can file a motion to seal, so and it will be heard on 21 days notice.

And it's automatically glaranted for that 21 days. The purpose for the hearing today is to unseal it as to some people while that 21 days runs. Because at the end of the day, we're going to need to have, you know, if there's an objection to the ceiling after 21 days, we'll have a hearing on that as well. So the relief today that I'm considering is just really limited to your ability to provide the committee subject to whatever confidentiality agreements may exist in a case that was filed. I believe in 2014. I allow him to do that. So that's the limited relief I'm considering today, which is what I understood your order to be asking for. Correct. Yes, that's exactly right.

So, Your Honor, I think it's worth just at the outset recognizing that it probably gets to what you're saying, but it is a bit of an unusual motion in a few respects. First, it's unusual in that the information that the debtors seek to seal and permit some limited disclosures of, as you mentioned, is extraordinarily sensitive. It relates to settlements that arise from the multi-district litigation involving interchange fees and claims by millions of merchants and disclosure of that information could directly affect Visa, MasterCard, negotiations, ongoing negotiations with other participants in that litigation. Second, the confidential information that we're seeking to redact and use a limited disclosure of, it doesn't belong to the debtors. It belongs to Visa MasterCard. As a result, the debtors can't choose to disclose that confidential information without risking a violation of the underlying protective order in the interchange litigation or of the terms of the settlement agreements and the other agreements themselves.

And then last is exactly that you hit on, Your Honor, is that because you can't disclose those terms to the parties and interest for the 19-19 settlement motion, until we can't do that until we have an order of the court, we risk sort of a procedural hiccup where we end up with a 42 days of notice, or 42 days before we can really have a hearing on the 9019 federal motion. Your Honor, it sounds like you're obviously very up to speed on all this, and I have arguing I can walk through, but it may make more sense if you have to consider questions or things that you'd like me to address.

No, just two, two concerns. I just want to make sure that nothing that I do invades the province of the court in the underlying litigation. That's number one and then number two. I'd like to hear from people. I understand this is a really a practical issue that needs to be resolved in order for the debtor to be able to proceed with the settlements. And obviously the settlements have to be evaluated on their merits and at a minimum, I think, minimum, I think that, you know, the committee is entitled to know exactly what the settlement is. You know, they're in a state fiduciary. And I'm not sure that the, that the members of the

committee have to know, but certainly committee council and committee professionals likely need to know. So we've got a practical problem. And my question is, you know, how can we best solve it? Great. Yeah. And I think on the first question, From our perspective, and it may be helpful also to hear from counsels from Visa and MasterCard, but from our perspective, if we're able to obtain the relief we seek in the motion, then we're not going to have any comedy concerns or inconsistent rulings, that sort of thing with the court in the underlying litigation. And then on the practical concern, too, I think, you know, what we're approaching here,

What we're trying to do here is to, you know, navigate the balance between observing the confidentiality requirements and the protective order in the underlying litigation and at the same time make the level of disclosures we need to in order to have a full and fair hearing on the 9019 motion. We're asking, as you know, from the order that the council committee itself get access subject to confidentiality agreements

and requirements. obviously the U.S. trustee as well. It's our position that individual members of the committee, given the nature of the underlying litigation, it just really wouldn't make sense for the individual members of the committee to get access to this highly sensitive information, frankly related to litigation that some of them have themselves participated in. So I think that's how I would probably answer those two questions.

All right. But who else wishes to be heard with respect to this? Patrick. Your Honor, I would, Kathy Patrick, we're plaintiff's counsel in the underlying litigation. I would simply echo some of what Mr. Ward said, but give you a little bit of color, particularly as it pertains to the consideration for the settlement, which is monetary and non-monetary. That is highly sensitive information, not just for Visa and MasterCard, but in my view, for the debtors themselves. The rates they pay to accept Visa and MasterCard payment cards are competitive information for them. You should know that we treat this so sensitively that none of our other clients, all of whom have now settled their claims,

knows the rates that the other clients got in the settlement. we were assiduous in keeping that separate because it was so sensitive and because they are also competitors. And so there is a reason why, and as long as the committee is willing to accept it on a professional's eyes only basis, we don't have an issue, but there are merchants on the committee, and that's the sensitivity. And I know that Mr. Eisenstein and Mr. William would have the same, Bill Michael would have the same concern for Visa and MasterCard. All right. Thank you. Thank you. All right, anyone else?

Mr. Haugh, Mr. Wynne. Thank you, Your Honor. I did have a chance to take a look at the ceiling motion, and I also looked at the redaction. I know today is not today, but we do have some problems with it. You know, in the motion, it says that the ceiling is narrowly tailored to protect the sensitive information that are on the settlement, but the entire sheet is redacted.

And this is an asset of the state, and you know there is a public interest in terms of inspections and copy of judicial records that we need a balance but to To provide us and the committee that that's a significant step in disclosure, but there's also a balance and in a case where there's press There are customers. There are thousands of creditors from this state they they should have access to information I'm not saying go out disclose the rates that the debtors are paying but the very least we need to know what the assets we need know how much of the money is coming in. So in terms of the redaction, I think there's a way we can work it out instead of redacting the whole term sheet. So in the next one day's, I hope to work with the debtors and the plaintiffs to come up with some sort of solution that balance the disclosure required under both Section 107 and the common law interest, the common law right of the public to access judicial records.

That's under the Supreme Court case, Nixon. So I'm hoping to have this resolve. I don't want to fight this, but. I'm mindful of the fact that we are already dealing with a confidentiality of order that has been in place since 2015 in another case. So I don't want to do anything that would in any way run afoul of that order.

That's correct, Your Honor. And I've seen some of those. I've tried looking it up. I mean, there was like two cases site within, so I was trying to look for that confidentiality. You're not attached to the exhibits. Okay. I would take a look at it, but thank you, Your Honor.

Well, yeah, they usually like you to do it in data the very day of the loan. All right, can everyone please mute their line? You mute your lines. We're getting a lot of background noise. All right, who else wishes to be heard? Thank you, Jared Martin, for the. SO5 digital debtors. I just wanted to note for the court that the digital debtors are also

parties to the 9019 motion and the motion to seal. This settlement is material to our estates, and we are very much in favor of the sealing motion. I wanted to flag one thing, we'll work with the committee and our lenders on this issue, but to the extent that our cash collateral budget contemplates settlement proceeds, we'll work to either redact that or find some find some work around so that that is also complying with the protective order in the and the ceiling motion understood thank you thank you all right who else wishes to be heard uh you honor Doug mannell proposed counsel for the end to get better's minutes two things your honor briefly the proposed order talks about council having access

and i would ask that that be revised to have all professionals um i became a lawyer because i'm not very good at math so i appreciate being able to share it with my financial advisors And the second thing is we just haven't had time to fully discuss this with the members of the committee. So we have all of our lights to the final hearing, if one is necessary, we're just up to this matter. But I appreciate the debt of efforts here. All right. Anyone else?

All right. Mr. Ward, is, you know, I've reviewed the, obviously I've reviewed the motion. I think this is a good solution to address a practical problem. that has significant commercial implications. You know, and I'm prepared to enter the order. And do you all, do you want to discuss with Mr. Mantle, the all professionals, or should I just interline that in the order? It's that?

Gerar, if I could just be heard on the professionals issue. Yeah. This is just an odd feature of this case. As in many bankruptcy matters, there are people who are. are investing in claims or proceeds of claims, we would need a representation from the committee's professionals that they would have an ethical wall between whoever, I don't even know who their professionals are.

Cool ahead and Alex. Okay, that they would just not be advising anybody on the purchase of claims or investment in claim proceeds because that then blurs the line and creates that issue, assuming we can have that modification. We have worked that out with the ad hoc lenders advisor, They made that the representation. It's just fine. I just wanted to flag that. All right. All right. So Mr. Manel, can you work with Mr. Ward just to make sure we have that?

I don't know it has to be in the order, but it can just be a representation. I'm happy to work with Mr. Ward as well as Ms. Fax, it's absolutely your honor. And your honor, if I may, uh, William Michael from Ashercard. Yes, sir. That is fine. Uh, uh, that is fine. Uh, the financial. advisors having access, subject to the limitation outlined by Ms. Patrick, I would just add that that would, from our perspective, also need to be subject to an undertaking to be on order in the underlying litigation. All right, understood. All right. So I'm going to grant the motion, Mr. Ward, and would you please just let work with Mr. Mantle and the others to see if the language

in the order addresses it or if we need to have a change to the order and then once that gets done just have someone contact my chambers and i'll get that order entered as soon as possible you know with the i would hope that by monday this is all cleared up so the committee has a couple of weeks to look at this um just some question are i'm just really confused about um the committee itself and what sort of confidentiality obligations we're considering having them sign up to. No, I... We were anticipating them. Yeah, the committee, the committee, we're talking only about Alex Hulahan and

counsel, all right? And, and, and, you know, you need to address Mr. Michaels. Ms. Patrick's concern was that Hulahan and Alex and presumably the lawyers would not be advising anyone on claims purchasing with respect to this, which I think is reasonable. And frankly, I wouldn't have thought that a financial advisor to the company would be advising that another branch, arm of it, would be advising trading in claims in the company, but that's a different issue. So I think that the concern is that We don't want to do something that runs afoul of the, you know, confidentiality order, the protective order in the underlying case.

So I think this is all, in my mind, plumbing just to make sure that we have it all correct. I don't think it's a substantive issue. And I agree that, you know, hopefully we'll get this resolved today and I'll enter the order and Monday the information will be able to be assured. Okay, I think that sounds good. We'll make sure that we're not going to be contrary to existing underlying agreements. But I just so that Visa MasterCard are, had an opportunity to object with it if they want to. I don't think that the council representing the committee would be actually signing the underlying protective order. They would be downed by their existing confidentiality obligations, not signing up to some of the

additional order. All right. I'll, Ms. Patrick? Your Honor, what we have done in the past is people have agreed, I apologize. Yeah. I should just stay up here. What we have done with prior professionals and firms is the firms and their advisors have given an undertaking to abide by the restrictions. They don't sign the protective order. Nobody does.

It's Judge Brody's order. Right, exactly. Yeah, it's just we'll abide by those terms. All right. Right. Yeah, as long as the committee is different fact, and I think we're good. Thank you, Judge.

I don't think anyone has a choice that there's an order out there that governs this already before I ever came on the scene. So. Your Honor, in fairness, I have not seen the protective order. I presume that it should be fine, but we'll come back to the court if there's any other. I think it's, though, it's attached. The actual order itself, is a minute entry. There is a long stipulation and a letter that in a letter like the practice in

New York where you send a letter and attach it. And then that's I think at docket. 277. 277 in the MDL case. And then there's a there's a two sentence docket entry that says the order is approved. So it's so it's so it's not assigned order it's a it's so ordered on the docket it's ordered on the docket so you have to look at both of those and it and and they are at judge I think it's attached to our exhibit list yeah that's what I'm looking for six 80 your honor yeah six 80 680 dash one yes it's it's 680 dash one is the letter with the protection order submitted and then 680-2 is the minute entry where the judge approves that letter. So six in our docket, 680-1 and 680-2.

Okay, we're on. We'll follow up with Mr. Ward and Ms. Patrick. All right. Thank you so much. All right. Thank you, Ms. Patrick. Yes, ma'am. All right.

Anything further today? All right. We'll be in recess to my 10 o'clock.