American court hearing recordings and interviews - Ascend Elements bankruptcy - Listen to the 4/10/26 bankruptcy hearing

Episode Date: April 25, 2026

More information about the Ascend Elements bankruptcy is available on the free case administration website: https://veritaglobal.net/ascendAnd here's a link to Recycling Today's coverage of the Ascend Elements bankruptcy and events leading up to it: https://www.recyclingtoday.com/news/ascend-elements-files-for-chapter-11-bankruptcy/

Okay, good afternoon. This is Judge Lopez. Today is Friday, April the 10th. I'm going to call the first day hearing and ascend that elements, 2690440. Today's hearing is virtual. I'm going to ask that you please hit five star. I also ask that you please make an electronic appearance. Just go to the Southern District of Texas web page. You'll find my home page and a place to make electronic appearances. and you'll find a link to this case. But let's get started. I'm just going to unmute the lines on the order in which I see them. The 202 number, a 202 number, a 214 number. Mr. Mann, check your line. You may have met it yourself.

Let's get another number then. Let's go over to 516. Yes, good afternoon, Your Honor. Sonny's saying, well, got you on behalf of CERCELRIN investors. Okay, good afternoon. A 214 number. Good afternoon, Your Honor. Ryan Mann's,

General of Fullbright, proposed counsel for the debtors. Your Honor, I'm also joined today by the Send Elements CEO, Mr. Lynn Austin, who is on video. And I'm also joined by Adam Titus, our chief of structuring officer, and the Alvarez and Marcel, Jeffrety to our teams.

Okay, good afternoon. A 202 number. Sorry about that, Judge Lopez. I had someone ringing in that I did end call instead of what it's so. Jason, I'm up for the U.S. Trust. Good afternoon.

and all right. Anyone else, please hit 5 star, and I will unmute your line. You know, there are a number of parties who have filed ProHawks. You're more than welcome to appear today. We'll get to them. Is it 917 number? Good afternoon, Judge Lippethe, it's Rob Lennon's with Goodwin-Factor on behalf of Fitzwall. Okay, good afternoon.

On a 713 number. Madison, Halisen, on behalf of Turner Cook-Binkgoat, Joint Venture, Also, I believe, Mr. Lawrence Wilkes with Winston and John is also on the line. Okay. Good afternoon. For the lines that I have unmuted, I'm going to keep you unmuted on my end. I'd ask that you just please just monitor yourselves, keep your line on mute, and just so we can all hear each other until it's time to address the court.

Not I'll turn it over to Debtors Council. Thank you, Your Honor. Ryan Maynard again on behalf of the debtors. First of all, thank you to Chambers and your staff for all. all of your assistance with coordinating the logistics for today's hearing. Thank you as well to the United States trustee for the constructive feedback on our first aid motions. And a special thanks to the company and all the advisors for all the hard work to prepare for the filing and the support for today's hearing. Your Honor, we prepared a brief PowerPoint presentation that we would like to share with the court

that addresses some background information on the company, why we're here, and our objectives for the case. If you could please share the screen with Ms. Mosheka, we can walk through our overview. Okay. Great. I think you just move to the next slide, please. So I'll start with our first slide, which is our senior management team. Again, led by our CEO, Mr. Lynn Austin.

And Mr. Austin is our first day declaring. Other members of our management team include Mr. Deacon Powell, who's our general counsel, Eric Gretz, who is our chief technology officer, Robert Knight, our chief administrative officer, and then Mr. Ahmed Alouish, who is our CFO. Your Honor, this team has inherited some really significant challenges from their predecessors, but have nevertheless worked incredibly hard to transform the company over the last year.

And then beyond the senior management team, Your Honor, we have a very talented operation team and over 100 employees. So, Your Honor, what is the send elements? A sin is in the business of recovering critical minerals from used lithium ion batteries and gigafactory scraps to create black mass. Because of its emphasis on domestic production and critical minerals, as you would expect, if SIN's operations are extremely important to national security. I send refined black mass at scale into battery-grade materials,

including lithium carbonate and PCAM, and they do this by utilizing its proprietary hydrose to cathode technology. The company operates a black mass shredding and lithium carbonate facility in Cummington, Georgia, which specializes in the pretreatment and shredding of black masks. The company also holds a 50% interest in an operational battery metals recovery joint venture in Poland. In addition, the company assets include a battery material plant in Hopkinsville, Kentucky that is currently under construction. The Hopkinson plant is designed for the production of lithium carbonate and PCAM at commercial scale.

So, Your Honor, I tend leads to development of North America and Europe's domestic supply of critical minerals and battery minerals through urban mining and proprietary application. It produces new supplies of lithium carbonate entirely from recycled metals. Domestically, it produces high-performance engineered battery materials critical to EDs and battery-integrary storage systems. The company has access to a $336 million EU grant and $293 million EDRD loan to develop facilities in Poland. The company is the first and only U.S. producer of lithium carbonate from 100,000.

percent recycled content. In addition to its other assets, the company also has 154 patents granted or pending worldwide. As we move to the corporate org chart, I just want to highlight the overwhelming majority of operations run through the parent company, Ascent Element Inc. Ascent Elements Poland hold the company's interest in the Polish TV, and the other Polish entity was formed to hold the equity in the Poland companies. Ascent Elements UK and France are relevant to the companies import export logistics specifically with each stock purchasing in sales within the UK and the EU and then a thin elements you have to form to support the multiple executive team members that live and work in Texas on our next slide we have our capital structure we have approximately

20 million in senior secured convertible notes another 83 million in junior secured convertible notes we have a mortgage in Kentucky with approximately 400,000 outstanding and then a nearly 120 million in statuary lien claims. Mr. Mr. Madza, I think I'm having some issues on my end on presenting the share in the screen and I don't want it to affect what y'all are doing over there. So let's just proceed. I apologize. If somebody can just file the deck, it would be helpful for me to see it, but I think I'm just having somebody, I don't know, maybe to come. What's going on?

But I apologize. But please continue. Thank you, Your Honor. We're happy to file that on the document as soon as possible. And the last part of our capital structure, Your Honor, that I wanted to highlight is that we had approximately 36 million in unsecured claims. So when we speak to the key events leading to the Chapter 11, they include significant cash requirements that came due before the company achieved commercial scale operations. There are also legacy liabilities that attributed to project mismanagement that was largely attributable to the former management team. There have also been numerous construction delays in the speech.

and specifically at the Hopkinsville, Kentucky plant construction, which has been suspended and it's approximately 60% complete due to disputes with KJB and numerous subcontractors. There's also been market volatility in black masks, lithium and PCAM that have further hindered profitability. Your Honor, our objectives for the case are pretty straightforward. We want to preserve and maximize value as a going concern. We need to stabilize operations.

And then we want to focus on maintaining safe and compliant operations as well. Our goal is to facilitate an early sale and to continue to work with lien holders and other stakeholders throughout the process. As a preview of what's to come, Your Honor, we believe we have some straightforward first aid motions for your consideration. Again, we've had an opportunity to speak with the United States trustee and have adopted their comments.

My colleague, Mr. Jason Blanchard, will present our cash collateral motion. We have negotiated extensively with counsel to the senior secure note holders. and we have a consensual form of order that we intend to present to your honor today. And then on the first day motions, I'll have my colleagues present on those matters. Your Honor, I'm happy to answer any questions before we move to the next phase of the presentation, but I'll pause there for a minute. No questions at this time. I appreciate it.

If there's anyone who wishes to just briefly tell me something before we jump into the the motions now would be the time thank you your honor uh can you hear me okay just fine mr sing okay thank you honor nice to see you um and your honor sunny sing wogatchel on behalf of the senior clen holders and uh certain junior clen holders and joined today uh by my partner stepney morrison um as i mentioned we represent uh the largest of the clen holders both in the senior and junior class um your honor i've going to be very brief. I rise just to introduce who we are to the case, let you know who we're representing. Our clients have supported this company and its efforts related to its balance sheet needs up to today, including through their significant investments in the convertible notes that are

in the aggregate about $100 million that were entered into in last June and December. We continue to be supportive of the company. We're supportive of the relief requested today. We appreciate Mr. Mann, and his team and the company and their advisors working with us. We, as Mr. Rand's indicated, do have an agreed form of cash collateral use order that our clients have signed off on. And, Your Honor, we just look forward to working constructively with the company. It's stakeholders and other interested parties in the coming weeks, and I just wanted to say that. Thank you. Thank you.

Anyone else? Yes, thank you, Your Honor. Jake Zerner for the U.S. trustee, I just wanted to confirm what, Mr. Mann to just represent it moments ago and thank Mr. Manns and the rest of the Martin Rose team for working with us on incorporating our comments. So you'd probably be hearing very little for me today unless you have any questions. But from my perspective, I believe that we're all resolved on any open issues with the first day request. Okay. Thank you. Okay. Mr. Mans, I'll turn it back over to you.

Thank you, Your Honor. The defendant has the house taken matter, the debtors seek to have Mr. Austin's first day declaration, which can be found in document number 11, as well as the declaration of Mr. Titus, which can be found in document number 19, both admitted into evidence. Any objection to the admission of these declarations for purposes of today's hearing? Okay, they're admitted. Thank you, Your Honor. With that, I would like to turn the virtual podium over to my colleague, Mr. John Conover.

Okay. Let me unmute your line here. Good afternoon, Your Honor. Can you hear me? Just fine. Good afternoon. Excellent. Good afternoon, Your Honor. John Conover of Norton Rose Fulbright, proposed counsel to the debtors Prohockevichet motion pending. I'll be addressing agenda items four and five based on the agenda that was filed on the docket. Your Honor, the first item is the creditor matrix motion that was filed at docket number five.

With this motion, the debtors seek authority to file a consolidated creditor matrix, across both of the debtors to file a consolidated list of the 30 largest unsecured creditors to redact any personally identifiable information from that matrix and any documents that would be filed in the case. And finally, the debtors seek approval of the form for notifying creditors of the commencement of these cases. With respect to redaction specifically, this request is appropriate and necessary in light of the many privacy laws of the debtors subject to. The primary information being redacted here is home addresses and email addresses of individuals. As mentioned before, we've conferred with the United States trustee, and we have incorporated their comments.

Unless Your Honor has any questions, the debtor's request entry of this order. Anyone wish to be heard in connection with the creditor matrix motion? Okay, the motion is granted. Thank you, Your Honor. Turning to the next item on the agenda, docket number six, which is the debtor's motion to extend time to file schedules, statements of financial affairs, and reports under Rule 2015.3. The debtors here seek an extension of 45 days for a total of 59 days after the petition date to file schedules and statements. That would make the deadline here June 8, 2026.

The debtors seek this extension out of an abundance of caution, but given the potential sale and expedited timeline, the debtors aimed to file the schedules and statements as soon as possible. The debtors have voluminous books and records, as well as a complex array of contract counterparties and types of creditors. And so while the debtors and their professionals are working diligently to prepare the schedule's statements, the additional time requested will help to ensure accuracy and completeness. As before, we have consulted with and incorporated comments from the United States Trustee into the proposed order at docket number 6.1. We're also aware that the extension will put the U.S. trustee outside of the normal period in which they hold 341 meetings, and we understand that the U.S. trustee has the ability to call the initial meeting within that time frame and continue it for a more fulsome meeting with a more fulsome meeting with a more. benefit of complete schedules. And so, unless Your Honor has any questions on this motion or the proposed order, the better is respectfully request entry of the order at docket number 6. Okay. Anyone wish to be heard? Okay, the motion is granted.

Excellent. Thank you, Your Honor. With that, I will turn the podium over to my colleague, Ms. Makerska. Okay, Ms. Mukirska. Let me... If I've unmuted you, there you go. Good afternoon, Your Honor. My name, Mr. McIntyrecht of North Donald of Surzda, to the debtors. Can you hear me okay? Just fine. Your Honor, I will be addressing agenda item number six, the wages motion, which was filed a document number 14. The debtors took authority to pay pre-petition wages, salaries, employees, benefits, and related obligations. The debtors employ approximately 100 to employees and have also retained 14

independent contractors and staff contractors. Those employees and contractors provide essential services and are critical to DEDF businesses. As of the petition dates, the debt of estimate approximately $1,400,1,700 in outstanding free petition compensation and benefits. These amounts include employee compensation, payroll taxes, benefits, and other related obligations. The motion does not seek to pay any employee above this priority cap, of $17,150.

Your Honor, this motion is very important to the company and its management because it sends the right message that the debtors are taking care of their employees at the outset of the Chapter 11 cases. It reassures employees and contractors, but they will continue to receive their wages and benefits and that their company values their employees. For those reasons, the requested relief is necessary and appropriate, Unless the court has any questions, the debtor respectfully requests, entry of the proposed author.

So anyone wish to be heard with respect to the employee wage motion? I've had an opportunity to review the proposed order. It looks good to me. I'll approve the motion. Thank you, Your Honor. Next, I will be addressing the agenda number seven. The other PTAE's motion. As the Thursday declaration explained, this Chapter 11 cases were filed to preserve liquidity,

stabilize operation and pursue a value maximizing transaction. The utility motions sets those same goals by minimizing the disruption and preserving the value for their state. The debtors depend on electricity, gas, water, communication, waste removal, and similar services to operate safely and without any disruption. The debtors pay around 294,000 per month in utility expenses. and certain providers had already hold around 499,000 in letters credit, in letter of credit or surety bonds. The debtors proposed to another show known $20,315 deposit into a segregated adequate assurance account between 10 business days, which reflects roughly one half of average monthly utility costs after accounting for those existing deposits. The debtors will also pay post-petition utility obligations

in the ordinary course of business. The proposed order also protects utility providers in the event of post-pecision default. Your Honor, we shared the proposed order with the United States of the and we incorporated their comments. Unless Your Honor has any question, the debtor will respectfully request that the court entered the order at docket

number 15-1. Okay. Does anyone wish to be heard with respect to the utilities motion? It seems they're receiving adequate assurance and they can always come back and ask for more. Okay, I'll get this signed on the docket. Motion's approved.

Thank you, Your Honor. This completes my presentation and I will pass the podium to Mr. Berthium. Okay. Good afternoon, Your Honor. Can you hear me just fine? Just fine.

Good afternoon. Thank you. For the record, I'm Michael Berthew on behalf of Northern Rose-Fulbright proposed counsel to the debtors. I have four motions to bring to the court today. I'm happy to go in any order, Your Honor, but for convenience, I had plans to go in order of the agenda. So up next, if that's okay, would be docket number 10, the motion to continue insurance programs. Okay. Okay. Great. This motion seeks entry of an order. They'll give us four purposes, really. The first is to continue to pay our pre-petition insurance programs and any obligations that have accrued pre-petition. It also allows us to renew those insurance programs as that comes up post-petition.

And also it allows us to continue to honor our pre-petition premium financing agreements, which I'll explain briefly. And then like the insurance programs that authorizes up to entrance and new premium insurance programs as necessary. So from a very high-level view of the insurance programs, your owner, and you can find this in the declaration in that paragraphs 87 through 90. The debtors maintain 43 insurance policies. These are all essential operations. They cover things like the debtor's commercial liability, any equipment breakdowns, environmental liabilities,

and things of that sort. And annually premiums on all these policies run about $6.6 million. Of course, that's too much to pay a lump sum, so generally these debtors finance the annual premiums through the premium financing agreements that I discussed. And under these agreements, the debtors pay. generally about 25% of the premiums up front and then the remainder in monthly installments.

So with all this together, about 1.165 million comes due under these financing arrangements within the first 30 days of the case. That might be a little high, you know, relative to the case. The explanation for that is recently the debtors had to rework their insurance programs to account for certain production lines that weren't operational. So instead of paying full free to include production of those lines the debtors determined that it would be better to self-insure certain those assets so this shift actually saved the debtors about $800,000 annually but in the near term it did require that debtors make a new down payment on the premium financing arrangements so $668,000 of what's coming due in the first 30 days the case

is actually a down payment on a new premium financing arrangements and then the rest of the 1.165 is of course the general monthly installments so in addition to these the debtors also maintain surety bond programs and letters of credit which miss mortiske spoke about in the at in the utilities motion these generally provide of course financial assurances to those parties and those businesses are required to continue to do business with the debtors so we ask this will leave your honor you know first under section one 11 to the code a rate of course requires that we maintain adequate assurance and if we or maintains that we keep this insurance policies in place

and that insurance, then if we don't, it's cost for dismissal of the case. And you're our, we also think that our 363C received the bankruptcy code that we would be allowed to do this as an exercise the learning course of business. And then third, Your Honor, even if it wasn't an ordinary course, 363B

allows us to use property of state based on our business judgment. And, of course, the letter submitted this would be an exercise of this business judgment. And if you look to paragraph 87 of the declaration, you see testimony that the insurance policies are essential to the ongoing operation of the debtors business, and ensure the order would be necessary to ensure uninterrupted coverage under the insurance policy.

So on that record, Your Honor, we would, of course, request that the court grant the motion and enter the proposal. So anyone wish to be heard in connection with the insurance motion? Okay. This is obviously one of the more important motion, especially with the nature of the debtor's business, and maintaining insurance is really important throughout this entire time. case preserves value for the estate. The relief requested is reasonable. It's required. And today's the day to get it started. So I'll grant the motion. Thank you, Your Honor. Moving on, the next item on the agenda is at docket number 17 is the debtor's motion to pay

taxes. This motion requests authority for the debtors to pay tax and fees incurred by the debtors. Like all, the debtors in the order of course of their business are subject to a variety of taxes. These are described. and more in depth of the first day declaration of paragraph 85. Generally, though these are income and franchise taxes, property taxes, regulatory fees, audits, and then expenses that the debtors incur from their tax service providers. I think it's important to flag that during this first day relief, the debtors aren't seeking authority to pay pre-petition amounts under property taxes that are outstanding,

and we're not seeking authority to pay for our tax services providers at this time. This narrows the debtor's request at this time just to income and franchise tax. of the regulatory fees and audits fees that may be pre-petition and that's a pretty small amount and then of course the authority to pay taxes and fees that they come due in the ordinary force the authority for requesting these are lawrence is threefold first certain of the taxes and fees may not be property of state you know we certainly just full dose and trust for certain of the taxing and rate and to authorities second certain the taxes and the fees may be tied to priority treatment and then third payment of the taxes and the fees may be allowable as an exercise of the debtors business. judgment and in paragraph 84 of the Declaration of your honor DC testimony that we believe payment of the taxes of the fees will preserve a stake value and then failure of the tax of the fees could have an adverse effect on the debtors ability to operate and then further some of the amounts may be collected directly from the debtors directors officers and employees so for all these

reasons we think it's in the business judgment of the debtors to pay these taxes so on that record we ask the court in the proposed order and of course in the court of paragraph four the conference procedures, we have to be entered on the final basis. Anyone wish to be heard? Okay, motion is granted. You can pay your taxes. Thank you, Your Honor.

Next on the agenda is at docket number nine. The debtor's motion to restrict certain stock transfers. This motion requests entry of an order which would implement restrictions on transfers of the debtor stock. It would approve notification procedures for doing so, and then direct that any purchase or sale in violation of that order. is void. The reason behind this motion is a little dense. I have to learn a lot about the tax code, but I will do my best to summarize the relief we request and the reason for it. If you look to paragraph

91 in the debtor's declaration, you'll see that the debtors have generated over $300 million in net operating losses and other similar tax credits, and we define these broadly as tax attributes. These tax attributes, I understand from our tax partners, are very valuable to the debtors. they can be used to offset future taxable income. But I also understand that these tax attributes can be lost. Relevantly, if the debtors undergo what's called an ownership change, and especially if that ownership change is not carried out by a Chapter 11 plan, the value of those tax attributes can be materially harmed.

So therefore, the relief requestant of this motion seeks to prevent any inadvertent ownership change that would harm those tax attributes, which are property to state and subject to the other not to say. but in fairness the debtors don't seek to ban all trading of stop you know full stop instead the motion appoints a certain procedures to strike a balance we do want to allow training within reason or we want to enable the debtors and our advisors to monitor stop and if necessary avoid the sale that could have a detrimental effect on the estate so as I alluded your honor that the basis for this release is essentially a motion to enforce the automatic stay and enjoin any actions that would adversely affect property of the estate

Courts have ruled that these tax attributes are property estate under Section 541, and that has property of state their transfer is subject to the automatic stay under Section 362. And again, we're seeking to enjoy not seeking to enjoy these transfers wholesale, just implement procedures and oversee and approve transfers as they may come up. And again, if you look to paragraph 92 of the declaration, these tax attributes are valuable to these state and could provide a significant benefit to the debtors down the road. So on that record, we would request with the court into the order. Do you need a final hearing date?

Yes, Your Honor. This one, under the complex procedures, we would need a final hearing date. So we request the court hear this, you know, more than 25 days or soon. What date do you have in mind? You know, I don't believe we've discussed internally, and of course we'd have to get with our opposing counsel as well. Let's have some fun. Let's pick one ourselves.

What do you want? I get to pull up our calendar Mr. Manns, what are you thinking? Your Honor, we were hoping, I don't think we've actually reached out to chambers yet to confirm the court's availability, but a little bit less than 30 days from today

for our second day hearings. We also have, and I don't need to jump the gun, but at the conclusion of our hearing today, we'd like to talk a little bit about the big procedures motion that we'll be found shortly. So we anticipate putting that for hearing. I'll be ready to do. to talk about that.

Let's pick a date because I'm going to be disappearing. I want to make sure that I'm not going to, let's go to 30 days. That puts us. It could be just within 30 days around there as well because we have a milestone and a catch a lot of lower that requires entry of the final within 30 days. Yeah. To the course of the availability. Yep.

Let's see. What about May? Rosario, can I do May 7th at 1? Now, as I said two, so May 7th at 2, when don't we do that? Thank you, Your Honor. And then we'll set an objection deadline of, and I'll keep it simple. We'll do Friday, May 1st. Let me one second.

Thank you, Your Honor. 2 p.m. That's the objection deadline. Mr. Bethlehem, how does the motion define a substantial equity holder? Who's going to get the substantial equity holder notice? Yes, Your Honor. Anyone, if I recall correctly, anyone that holds more than 5% or 4.5% of stock is defined as a substantial equity holder and they'll receive notice. And what is this notice procedure?

This notice procedure alerts them to these procedures that we have in place, and they'll have to reach out to us if they decide that they want to sell any of their stock above 4.5%. So they'll have to reach out to the debtors with the proposed transaction, and we have 30 days to file a motion on the docket approving the sale. If we don't file anything, Your Honor, it's a negative notice. If we don't file anything, then the sale. And this is to preserve NOLs? Yes, Your Honor. What are NOLs? I'm sorry?

What are NOLs? NOLs are net operating losses. Anything when you lose money during the calendar year for $10,000. taxable purposes you can carry forward those losses and assert them against taxable games and successful years. All right. This one. See, you knew more than you thought you did about the motion.

You sounded all like you were worried about it. You didn't really understand it, but you actually do. So, no, it makes sense. Part of the undertaking. Okay. I'll grant the motion. It's an interim relief. We'll consider everything on a final, but we'll pick the day.

We'll go with that, what I say, May 7th, at 2, and then objection deadline May 1. Okay. The motion is granted. Where do we go next? Thank you, Your Honor. You have one more motion for me before I see the podium. That will come from docket number 16, which is the debtor's motion for authority to pay certain critical vendor claims. All right.

In this motion, Your Honor, the debtor seek contribute. order that would author us but not require us to pay pre-petition amounts to vendors that the debtors seem critical to their ability to maintain essential operations. This is described in the first aid declaration paragraphs 81 through 83. The debtors along with we and then our advisors of A&M put a lot of effort into distinguishing these vendors that we believe are truly necessary to operate the debtor's business and I will flag it this stage or not the relief is very narrow. It really is only those vendors that keep the facilities safe and keep the facilities operating compliance with the environmental and regulatory regimes that they operate under

and those vendors that we're going to be necessary to preserve the value of the debtors assets such as safe guarding inventory storing inventory maintain the equipment that we're looking to post for sale and your honor I'll submit that this relief is appropriate as an exercise exercise of the better business judgment if you look to paragraph 82 and 83 of the declaration and as is outlined in COServe as well, you'll see that the debtor have determined that these debtors are,

or these vendors are critical to the debtor's business, that without these vendors, the debtor to be harmed in a struggle to preserve asset value, and that there is no practical alternative to the vendors. So based on this record, Your Honor, we request the court enter the proposed order. And as I see, there is an interim order and a final order. The interim relief and the final relief numbers are the same

just because it's such a small amount. We would, of course, of course it had them in the course of the month. But it's such a small amount. We didn't see a reason to split it up into interim amounts and final amounts. What's the amount that you're seeking? What's the amount you're estimate? $3.5 million. Does anyone wish to be heard in connection with this motion?

Just looking at the order. Okay. I'll grant the relief request it, and we'll set the final hearing date at the same date. It's the same objection deadline as the prior relief. so we can have it. Okay. Motion is granted. Sounds great.

Thank you, Your Honor, and I'll pass the podium over to Mr. Blancher. Okay. Good afternoon, Your Honor. Good afternoon. Just fine. Good afternoon. Thank you. For the record, Jason Blancher, and Norton Rose Fulbright, proposed counsel to the debtors.

I'll be presenting the last two motions of today's hearing. First, the cash management motion at agenda item number 12, which appears at docket number seven, and second, the cash collateral motion. at the agenda item number 13, which appears at document number 18. With respect to the cash management motion, the debtors seek authority to continue operating their existing cash management system,

maintain existing bank accounts, pay certain related pre-petition obligations, and continue to perform inter-company transactions, all in the ordinary course of business. The debtors operate a centralized cash management system overseen by their Treasury Department with internal controls governing all flows of funds. As of the petition date, the cash management system consists of 20 total bank accounts, seven of which are owned and controlled by the debtors that are held at Bank of America and Silicon Valley Bank.

The remaining accounts belong to non-debtor affiliates. A schematic and a full bank account list or a temporary attaches exhibits to the cash management motion at docket number 7-1, 7-2 respectively. Now, in terms of cash flow, the operating revenues and loan draws fund the main operating account with the Bank of America depository account serving as a reserve and tops it off as needed. And from that main operating account funds flow out to cover payroll, interpayments, debt service, professional fees, and other disbursements that all is reflected in the schematic. Your Honor, the debtors also maintain a corporate credit card program with American Express. We're seeking authority to honor the outstanding pre-petition balance and continue the program post-petition.

If this continued, American Express could see collection directly from individual employees who use the cards in the ordinary course, and that's a disruption to the debtor's workforce we want to prevent, especially as the debtors pursue a sale on an expedited timeline. The debtors also seek authorities to pay pre-petition bank fees that have accrues remain unpaid at a petition date to maintain their ongoing banking relationships that are essential to the operation of the cash management system. Next, Your Honor, the debtors also seek authority to continue intercompany transactions in the ordinary course, including monthly payments to non-debtor foreign affiliates. Principally, the debtor's published joint venture, which operates a battery disassembly and black mass production facility in Poland, whose continued operation is critical to the debtor's long-term production strategy and overall value. With respect to post-petition intercompany transactions with such non-debtor affiliates,

The debtors proposed a cap of $100,000 on an aggregate basis, which we've referred to as a non-debtor affiliate funding cap in the motion without further court approval, but with payments being consistent with cash collateral order and budgets. Any amounts beyond that cap would require separate court authorization. And again, the continuity of these payments are critical to preventing disruption to the debtor's business and preserving value at the debtors seek to implement a value maximizing process and achieve a transaction during these cases.

Finally, Your Honor, to the extent the cash management system does not directly comply with Section 345 of the Bankruptcy Code or the U.S. Trustee Guidelines, the debtors have requested a temporary suspension of those requirements for an interim period of 45 days from the petition date to allow the debtor to work with the U.S. Trustee's Office on any necessary steps towards compliance. The debtors banks are well established and highly regulated financial institutions, and we do not expect this to be a material issue. Disrupting the cash management system at the outset of these cases would impose immediate administrative versions, risk mispayments to employees and vendors, and it would undermine the operational continuity we are asking the court to help us preserve. We have conferred with the U.S. Trustees Office in advance of this hearing and have incorporated its comments into the form of orders attached to the motion,

And at this time, we're not aware of any objections to the cash management motion. For the reasons set forth in the motion and the first aid declaration, specifically in paragraph 69 through 78 of the declaration, we respectfully request that the court would enter the proposed interim order attached to the cash management motion at this time. Anyone wish to be heard with respect to the cash management motion? Okay. Yeah, I'm going to grant the relief request that on an interim basis. This is really just kind of allowing the debtor to ease into the Chapter 11 process, but still providing transparency as to where the money is held and how it moves and providing notice there. So I'll grant interim relief.

Everyone's rights are reserved in connection with the final, and I'll set it for the same May 7, 2 p.m., May 1, objection deadline. Thank you, Your Honor. Attorney, the last item on the agenda, which is the cash collateral motion, the debtor seek entry of an agreed interim order, authorizing emergency use of cash collateral on a consensual basis, granting adequate protection to what we defined as the pre-petition secured parties to the extent of any diminution in value of their interests in the cash collateral and other related relief. The evidentiary foundation for this motion is the declaration of Mr. Titus, which is being founded at Duckett, number 19, which the court admitted at Evans earlier during a hearing.

As mentioned, Mr. Titus is the chief restructuring officer of both debtors and his president in the virtual courtroom and available for cross-examination. The cash collateral motion is the most critical piece of first day relief we're presenting here today. Without authority to use cash collateral, the debtors cannot operate. As of the petition date, the debtors do not have sufficient unencumbered cash to maintain their business operations and have not obtained post-petition financing. As Mr. Manns alluded to, the debtors entered these cases with the purpose of stabilizing operations, preserving the value of their assets in order to execute on a value-miximizing sale process.

With the assistance of the debtors proposed investment banker Jeffers, the debtors have commenced the marketing process for their assets and for dip financing. But that process requires time and access to cash. Without cash collateral, the debtors would be forced to immediately cease operations, terminate all staff, and abandon their assets, resulting in not only a potential hazard to the health and safety of the public, but a near complete destruction of the value of the value of the value of the public, of their estates. Mr. Manns also alluded to earlier today, the debtor's capital structure, just to cover that briefly, there are senior secured convertible loan notes that amount to approximately $20 million and junior secured convertible loan notes totaling approximately $83.1 million.

The senior note holders hold first priority liens with substantially all the debtor's personal property, including cash, collateral, and the junior note holders hold second priority lien on the same cash collateral, on the same collateral, rather. And other than the note holders, we do not believe in any other creditors have an interest in cash collateral. Critically, here, Your Honor, the note holders have consented to the debtors limited use of cash collateral, and the proposed order reflects a negotiated arrangement with those parties that have an interest in cash collateral, and the reality that debtors have no available alternatives. As discussed in Mr. Titus's declaration, access to cash, if necessary to stabilize and maintain,

to potentially bridge to a dip facility and to provide the runway to explore a transaction. The use is necessary to fund payroll, payments to critical vendors, and service providers for safety and environmental compliance. The proposed budget that has been attached to the proposed order covers a six-week period from the weekending April 10 through the weekending May 15th. In short, Your Honor, the budget is designed to keep the lights on, keep the workforce paid, keep the facility, safe and give the debtors the runway they need, nothing more. And in exchange for the use of cash collateral, the debtors are providing the pre-petition secured parties with a comprehensive adequate protection package designed to protect them against any diminution in value of their collateral during the pendenties of these cases.

And just to touch on the adequate protection briefly, the senior note holders will receive the first priority senior adequate protection liens on all collateral, subject, junior only to the car, out super priority administrative expense claims under section 507 B the Bankruptcy Code, payment of their reasonable and documented professional fees of their advisors and weekly reporting and information rights. The junior note holders will receive similar but a little bit different will receive second priority adequate protection means that super priority administrative expense claims junior to the senior note holders. The senior note holders have also conditioned the

debtors used to cash collateral on section 506 and 552B waivers and and a marshalling waiver. Last, Your Honor, I wanted to flag for the court the sales-related milestones that are reflected in the order that are designed to move the cases expeditiously towards a value-maximizing outcome. The milestones include a bidding procedures motion to be filed within two days of the petition date, a bid deadline of May 9th, bidding procedures order to be entered by April 16th, and a sale order to be entered by May 17th. The debtors are optimistic.

These milestones are achievable and intend to file the bidding procedures motion in short order. We understand – I'll defer to the act of the hearing to scheduling issues, but we understand that Your Honor may have – Yeah, go ahead. We understand that Your Honor may have availability for a hearing on next Tuesday the 14th. For what? For the bid procedures hearing. You're going to, yeah, but if you file it on Sunday, that means you're going to give people one-day business notice. Why would I...

Our intention is to file it this evening there are. Let's talk a date about that. I'm looking at the budget, so I know why you want a hearing early. I haven't read it, so I don't know what's coming. I'm willing to give you a... I don't know what's in it. And I can tell that the budget, if it's kind of... down the fairway one, rather give as much time as necessary. We could do, I don't know,

I think I can do the morning of the 16th, like 11 a.m. That will be great. Thank you, Your Honor. Subject to everyone's rights, obviously. Why don't we do that? And get it on file as soon as you can and give people as much notice as possible in the most efficient way possible. Let's talk. It sounds like you've been marketing this, but let's just get a good open, transparent process about bidding and pick the dates, and we'll see where it goes. But anyone wish to be heard in connection with this cash collateral interim relief requested?

Good afternoon, Your Honor. again Jason or up for the U.S. trustee. There was just, we have Mr. Blanchard and I had some brief communications in them along Mr. Wend. There was one paragraph, I believe, that was going to be modified that would require for there to be a hearing before there was any foreclosure on any of the disc collateral. I don't, maybe I missed it, but I don't believe that revised order

has been uploaded yet, and so perhaps that Mr. Blancher could just maybe speak to that. Yeah, Mr. Ruff is correct. We agreed to that form of language, and we have not uploaded a revised form of order, but the revised form of order will include those changes. You stole my thunder here, Mr. Rahn. I try where I can, Your Honor. Okay.

Now, so someone's going to get me in order, upload it, but I will – Mr. Singh, do you wish to be heard? No, Your Honor. I'm just here if you have any questions. We're fine with you order. I think there may be some other cleanup that's happening in the background to the order, but nothing substantive to my understanding. Okay.

Now, I understand what's going on, and it's clear that the debtor needs to use cash collateral, and the budget really is kind of a keep the lights on budget. I was looking at it carefully to just make sure that I understood it, but this one, it is just as what it is. It's just kind of a path to get to the process. And this is consensual. Makes sense. I'll grant the relief request.

It's subject to the tweaks about getting a hearing, just in case there's a default. I think it's just important to keep that process. So get me a revised order. Let my case manager know, and we'll get it signed and on the docket today. And if you can fill in the interim, and

objection deadline as well. Your Honor, just one quick comment, if I may. Sure. I just wanted to confirm for the record that counsel for Tennessee has reached out and there are some cleanup comments that we're also going to make to the proposed item order. And so I just want to confirm that for the record.

Okay. You all get it to me. You've got your, if May, April 16th at 11 a.m. works. Just go ahead and get it filed on the docket and let's set it there and we'll see where it goes from there. All right. Thank you, Your Honor. Anything else we need to take care of today?

Nothing further. Thank you again to chambers and your staff. Okay. Combeding us on Friday afternoon. Have a good afternoon. Thank you. Thank you. Thank you.