American court hearing recordings and interviews - Hooters - audio of April 2, 2025 hearing before the U.S. Bankruptcy Court for the Northern District of Texas in case number 25-80078

Episode Date: April 17, 2025

This is the official court recording of the hearing held by the bankruptcy court on April 2, 2025, docketed as docket number 117.For free access to the Hooters bankruptcy court docket and more information about the Hooters bankruptcy proceedings, see https://cases.ra.kroll.com/Hooters/Home-Index

Thank you. Please be seated. All right, good afternoon. We're here on the 3 o'clock docket. We have first-day matter set in the Hooters of America case, case number 25-8078. I'll go ahead and take appearances. I'm going to start in the courtroom.

This was noticed as a WebEx-only hearing. Ms. O'Neill was here all day in another matter and is asked for permission to walk over from the conference room where she was dealing with her other case to attend the first day. So I'll start with Ms. O'Neill. Thank you, Your Honor. Holly O'Neill, with the law firm of Foley and Lardner on behalf of the debtors. And with me today, Your Honor, is my colleague, Mr. Jones,

who's also probably warned our welcome with the court today. And also on WebEx is our colleague, Zach Zon, with Foley and Lardner. Additionally, Your Honor, I'd like to introduce the court to our co-counsel, with Robs and Gray. There are quite a few folks today, and hopefully most will have an opportunity to present some motions for the court today. We've got Mr. Chris Dickerson,

Mr. Ryan Dahl, Ramon Brown, Michael Weig, Heeshoe Park, Alexis O'Garek, Maggie Tombs, Regina Castilla, Lauren Knight, and Ben Wagner, all with the law firm of Robson. and Gray. Additionally, Your Honor, with Accordian Partners LLC, we have our proposed Chief Restructuring Officer, Mr. Keith Mabe, who is a senior managing director with Accordian. We also have our proposed investment banker with Solick Capital Advisors LLC, Mr. George Kootzen

Nikola – Nicholas – pardon me, let me say that again. Kutzen Nicholas, who's a managing director with Solig. We also have various members of the management team of the debtors that are also joining us today. We appreciate the court's time. Thank you. All right. Welcome. All right. And for the rest of the appearances, I'm going to start by going down the electronic appearances that have been made other than those that have already been announced. And I'll either go by party or firm. So why don't I start with the U.S. trustee. Good afternoon, Your Honor. Asht Republic for the United States, Trustee.

All right. Province. Mr. Rosen, are you with us? All right. I'll go to Drive Train Agency Services, folks from Seward and Kissel. Yes, good afternoon, Your Honor. John Ashby, of Seward-Kissle on behalf of the

Control Party Drive-Train Agency Services. Good afternoon. All right, how about the folks? at Kramer 11. You might be on mute. I don't hear anything yet from the Kramer 11 folks. All right, we'll come back to them. Hoot-Awl restaurants. Good afternoon, Your Honor, Ben Butterfield. Thank you. All right, sorry. Somebody was talking over each other, so let me try again for

Hoot-Awl restaurants. Good afternoon, Your Honor, Marcus Helt and Ben Butterfield. for Pink Owl restaurants. All right, good afternoon. And let me try again. Was somebody just speaking from the Kramer Levin firm? I know, Your Honor. This is Ben Butterfield of Morrison and Worcester,

representing Fruit Owl and Cooter's Inc. They are the two members of the buyer. All right, thank you. BPH Investments. Mr. Beddaz from BPH Investments. All right, we'll go on. Stanley Schwartz, Alabama, LLC. Yes, this is to Lee Schwartz of Schwartz-Hentinger.

All right. M.GBL properties. Ms. Prendergast, are you with us? My apologies, Your Honor. I think we were muted. All right. Thank you. All right, Your Honor. I think we were muted. Leanne Prendergast on behalf of NGVL Properties with me as my colleague, Dan McGuire, of Pearson, Ferdinand.

Thank you. All right, welcome. Bank of America. You've finally broken loose from work. Three friends, one tea time, and then the text. Honey, there's water in the basement. Not exactly how you pictured your Saturday. That's when you call us, Cincinnati Insurance.

We always answer the call, because real protection means showing up, even when things are in the rough. Cincinnati Insurance, let us make your bad day better. Find an agent at CINFIN.com. Good afternoon, Your Honor. Kyle Hirsch, the law firm of Ryan Cave-Late-Layton-Faiser, representing Bank of America as depository institution. Good afternoon. All right, how about the folks at Sidley?

Good afternoon, Your Honor. Can you hear me, Your Honor? Yes. Juliana Hoffman from Sidley, Austin, on behalf of Saltick Master Fund, LP, as pre-petition lender and proposed dip lender today, also, hearing on behalf of XYQ, Kaman, LPD or limited in its capacity as pre-petition term loan lender, and FFI Fund Limited, FY, I Limited, and OlyFN Fund Limited, as consenting of holders.

And with me, Your Honor, is my colleague, Genevieve Weiner, and she is on video but was having some audio issues, but she's also dialed in by phone. All right. Good afternoon. All right. How about the White and Case folks? Good afternoon, Your Honor. Brian Pfeiffer from White and Case, joined with by my partner Amanda Paracrist, and we are representing the secure the ad hoc group of secured note holders in the case. All right. Good afternoon. Good afternoon. Gray Reed.

Good afternoon, Your Honor. Lydia Webb of Gray Reed, also on behalf of the ad hoc group. All right. Welcome. All right, I'm going down the list. The folks of Ballard Spar. Good afternoon, Your Honor, Joel, I'm sorry. Good afternoon, Your Honor, Joel Newell with Ballard Spar, appearing on behalf of Landlords, Beltline and Grande L.P., Realty Income Corporation, and Store Capital. As Ms. Hyland just noted, she's also appearing telephonically. All right, good afternoon.

All right, I'm going to go ahead and open it up. Have I missed any appearances? on WebEx? Good afternoon, Your Honor. Michael Reardon from Bradley Arant on behalf of Bags of LFC. Good afternoon. Good afternoon, Your Honor. This is Dwayne Brashe of Clark Hill, representing Westchester Fire Insurance Company,

federal insurance company, the surety bond providers in this case. Good afternoon, Your Honor. Michelle Shriero, and I'm here with my colleague, Will Doorward, and we represent Kimcoe Realty Corporation. Good afternoon, Your Honor. Good afternoon, Jeffrey Gutman here with Douglas Donella representing Palmer South Boulevard LLC. Good afternoon, Your Honor, Bruce Akerley of Akerley Law on behalf of creditor and PACA trust beneficiary, Benny Keyes Company.

Appearing with my colleague, Robert Ward, College. Good afternoon, Your Honor. This is Nathan Coco from the law firm of Mince Levin. I'm joined by my colleague Keith Coleman. represents Citibank NA as trustee and securities intermediary with respect to the pre-petition secured notes in the aggregate amount of $350 million. Good afternoon. Good afternoon, Your Honor. Vicki Driver here on behalf of a group of landlords, Four Corners Limited, Four Corners Limited, Four Corners Limited, Four Corners Limited, Nine, Four Corners Limited, 15, Four Corners Limited, 16, Wing Lord, Limelord, Limited, and the Odelian Group Partnership Limited. afternoon.

Good afternoon, Your Honor. This is Sharon Knighton with the law firm of blindbarger, Goggin Blair and Samson. I'm here representing several Avalor and Property Taxing Antiches in Texas. We are still researching our clients in this case, but so far I'm appearing on behalf of Bear County, Cameron County, Dallas County, Ector Cad, Fort Bend County, City of Friscoe, Harris County Emergency Services District Number 11, Harris County Emergency Services District number 28, City of Houston, Houston, Houston, community college system Houston ISD City of Humble Irving ISD Katie ISD LISD Louisville ISD Loans Star College System noasis County City of Pasadena San Marcus consolidated independent school district city of Seabrook and Tarrant County welcome good afternoon your honor this is Mark Stout with Alfa Lumpfielden

and I'm here representing Regents Facility Services afternoon Good afternoon, Your Honor. This is Ashlyn Bernard appearing on behalf of FTI Consulting. I am with Kramer Levin of Tallis and Frankel. I understand that you called us earlier. I apologize I was having some technical difficulties. No worries. Thank you.

Thank you. Good afternoon, Your Honor. Catherine Dunn from Chase Rottenberg and Friedman representing NCL Properties LLC. All right, welcome. All right. Last call for appearances. All right. Before I turn it over to the debtors, I'll just let everybody know. I've signed a lot of Prohag Vici orders.

If you have filed an application or motion, and I haven't signed the order yet, not to worry. Everybody's welcome. The orders will be signed either today or tomorrow. So with that, I'll turn it over to the debtors. Thank you, Your Honor. Again, Holly O'Neill on behalf of the debtors. Your Honor, as the Court is aware, on March 31st, Tudors of America, LLC, filed, along with 15 of its affiliated entities, have filed bankruptcy.

And we've got a proxy, I'm sorry, we have 30 affiliated entities, and we've got 15 first-day pleadings to go through today. For the sake of simplicity, we'll go through the motions, effectively one at a time, and all of the first-day motions will be handled by our colleagues at Ropes and Gray. The debtors have worked with our noticing agent, Kroll, to do our level best to get as much notice out as possible, recognizing this is a shortened notice period, but it is for first-day motions, which are obviously critical to the operation of the business. In conjunction with Kroll, the debtors served the voluntary petition, the first-day motions, agendas, and notice of hearing were served out yesterday on April. first to the opposite of the United States trustee, the top 30 insecure creditors, the secure creditors, as well as ad hoc group of note holders, et cetera, a myriad of folks in that,

the certificate of service for that notice is at docket number 72. Since following the motions, the debtors have been in open and ongoing discussions with the dip lender in the United States Trustees Office and other parties regarding the first day matters. The debtors believe that with the extensive service provided by the claims agent, the limited interim

relief requested today is warranted in that the notice was adequate, and with all rights reserved for final relief, of course, and we believe that good and sufficient cause has been established to proceed today with the relief requested.

Additionally, Your Honor Just for the record, we want to, Crowl, our noticing agent has set up a website in that. You've finally broken loose from work. Three friends, one tea time, and then the text. Honey, there's water in the basement. Not exactly how you pictured your Saturday. That's when you call us, Cincinnati Insurance.

We always answer the call, because real protection means showing up, even when things are in the rough. Cincinnati Insurance. Let us make your bad day better. Find an agent at C-I-N-F-I-N-N-com. So that parties can retrieve pleadings and other information related to the case, that website is at cases.org-R-A-D-R-A-R-O-L-L dot com, backslash Hooters, H-O-O-T-E-R-S. Obviously, pleadings can be downloaded from that site free of charge.

Before moving to the agenda, and by the way, Your Honor, in fact, as we started the hearing, an updated amended agenda was filed at docket number 84. And before we start moving through the agenda and the first day motions, we'd like to get a little housekeeping out of the way in terms of presenting some of the declarations and support of the various motions that are set for today. For the, we did file a witness in exhibit list, that's at docket number 45. Your Honor, exhibit one is the declaration of Keith Mabe, our chief restructuring officer of the debtors, in support of the debtors Chapter 11 petitions and first day motions.

That is ad docket number 19. Exhibit number two is another declaration of Mr. Mabe, in support of the debtors' emergency motion for interim and final orders. authorizing the debtors to obtain post-petition financing and use cash collateral, granting liens, and providing claims in super-priority administrative expense status, modifying the automatic stay, scheduling a final hearing, and granting related relief. That declaration is at docket number 17. The next declaration that was filed is the declaration of George Kutz and Nicholas in support of the debtor's emergency motion for interim and final orders authorizing the debtors to obtain post-petition financing and use cash collateral, granting liens and providing claims with super priority administrative expense status,

modifying the automatic stay, scheduling a final hearing, and granting related relief. And that declaration is at docket number 18. Additionally, we have the declaration of Mr. Benjamin Steele in support of the debtor's application for appointment of Crowell Restructuring Administration LLC as the debtor's claims noticing and solicitation agent. And I believe that is filed at docket number 5-2. The first-day declaration as our first exhibit today contains a detailed description of the debtors. their operations, the nature of the current financial distress that the debtors find themselves in, the need to file these cases in the specific support for each of the first day motions. I will mention, Your Honor, Mr. Chris Dickerson, or for Oaksing Gray, does have a presentation.

I'll hand off to him shortly, but to give the court a better overview of the cases, of the debtors and the cases. Your Honor, at this time we would ask, just as a precursor in support of the various motions, that those declarations be admitted into the record. All right, so my practice is to swear the declarants in, and it won't take long. If Mr. Mabe is handy, I'll just start with him. Mr. Mabe, can you hear the court? I can, Your Honor. All right.

All right, I see. If you'll raise your right hand, you swear or affirm that the testimony you're about to give through your declaration or otherwise is the truth, the whole truth, and nothing but the truth, so I'll help you God. If so, please say I do. I do. All right, and I've seen your declarations.

Do you have anything to add or change about them? All right, and then any objections to the admission of exhibits, one and two the declarations of Mr. Mabe. All right, those are admitted. And I'll switch to Mr. Kutz and Nicholas. I hope I haven't butchered your name. You can hear me. Yes, I can.

All right. If you can raise your right hand, I'll swear you in. Do you swear or affirm that the testimony that you're about to give through your declaration or otherwise is the truth, the whole truth, and nothing but the truth? So I'll help you. If so, please I do. All right.

Any changes or additions to your declaration? All right, thank you. All right. Any objections to admission of exhibit number three? All right. So three is also admitted together with one and two. And then Mr. Steele, are you with us? Yes, Your Honor.

All right. All right. If you'll raise your right hand, do you swear or affirm that the testimony that you're about to give through your declaration or otherwise is the truth, the whole truth, and nothing but the truth, so help you God.

If so, please say I do. I do. All right, any changes or additions to your declaration? No, Your Honor. All right, thank you. Anybody object to admitting exhibit number five? All right, five is admitted. Thank you, Your Honor.

The debtors otherwise filed a witness an exhibit list at docket number 45, and those have a myriad of exhibits. Mr. Jones just showed me that an additional revised proposed interim dip order has been filed at docket number 83-1 as well. We would move to have those exhibits admitted for purposes of proceeding with the motions. They also are supported by the declarations. So that's Exhibits 4 and then 6 through 18. we'll start with those.

Any objections to 4 or 6 through 18? Those are admitted. And the red line Ms. O'Neill at 8. Doggett 85? It appears to be docket 83-1. I'm sorry. And that is the revised, proposed interim dip order.

And then 85, okay, 85's the red line? That's correct. Okay. So we can just admit 83, you're offering the document of docket 83? Within document number 83, Your Honor, is the, just so all parties, it's a lengthy document. So at docket number 83, the revised proposed dip order, you can find the dip budget at page number 267 of 427. So there's a placeholder on the witness and exhibit list for the dip budget, and that's where it's located. All right, any objections to admission of that document?

All right, that's admitted as well. Thank you, Your Honor. And with that, I see Mr. Dickerson, and I will hand off to my co-counsel at Robson-Rourke-Gray, Mr. Chris Dickerson. All right. Thank you. Thank you, Your Honor. Chris Dickerson from Roops & Gray on behalf of the debtors.

Can you hear me okay? Yes, I can. Thank you. I'm getting a little bit of an echo. I think someone may not be muted, but I'll proceed if you can hear me. Yeah, I can hear you, and there's no, I don't hear any echoes on my end. Great. Thank you.

As Ms. O'Neill described, Your Honor, I have a very short PowerPoint that will hopefully have fried you and other interests of parties some information about the company, how it got here, and where we hope that it will be going. We have filed this presentation as a demonstrative on the docket. It's docket number 74. All right. Thank you. You've finally broken loose from work. Three friends, one tea time, and then the text.

Honey, there's water in the basement. Not exactly how you pictured your Saturday. That's when you call us, Cincinnati Insurance. We always answer the call, because real protection means showing up, even when things are in the rough. Cincinnati Insurance, let us make your bad day better. Find an agent at CINFIN.com. If we could go to the next page, is that me, if I can do this?

Your Honor, as indicated, we are here on behalf of Hooters, who's been in business since 1983, and operates a number of restaurants that provide world-class chicken wings, beer, and sports entertainment, among other things. As I said, founded in 1983, there are 151 company-owned stores, 154 franchises outside of the company. And then they have three franchises are what are known as hoots, which are primarily to-go chicken wing restaurants that compete with Wing Stop and other similar ideas. Their headquarters is in Atlanta, Georgia, although we do have amongst the debtors there are three Texas entities. They have approximately 5,957 employees, 101,945 of which are full-time, and then the remainder part-time. As you can see there, the performance revenue for the debtors is $381.5 million within EBITDA last year of $15.3 million.

Your Honor, the primary reason we're here is the need to reconfigure the company to balance its, to address its balance sheet, and address the increased costs as compared to its revenue so that it can continue to operate on a go-forward basis. You can see the breakdown here on this slide of the revenue from each side, and as you will see that while it makes significant franchise and license agreement revenue, approximately $23 million, the majority of its revenue is through the operation of those 154 company-owned restaurants. Just a quick overview in the United States.

You can see the red – I'm not sure. sure what to call that symbol, but the red dots are where a company-owned stores are located, and the orange ones are where the franchise-owned stores are located. So it really is a coast-to-coast operation. It's also a global operation. These are the locations of franchisees. They're all our franchisees outside of the United States. Quickly, Your Honor, as I mentioned previously, these are the debtor entities, those 30 of them. The ones that are colored in orange are non-securitization entities in which you'll find will be called the manager entities throughout these proceedings. And then the ones in blue are the securitization entities.

This is an important aspect of the cases, Your Honor. The securitization is a whole company securitization, and it pledges all of the debtor's assets essentially to the securitization. The manager entities simply provide management services to the restaurants and to the securitization itself while those restaurants are being operated. So the only collateral assets that are owned by the non-securitization entities, those manager entities would be the right to payments from the services that they provide. This is a quick overview, which will be discussed in a little more detail as we go through some of the most. specifically the dip that shows what the debt structure of the debtors are. You'll see there's a manager advance loan, another amendment loan, term loans, and then those indentures that have been described before, that number of 306 does not include interest,

so it's likely a little bit larger. As to how we got here, Your Honor, I described that briefly before, but here's a little more detail. detail. Obviously, COVID was a very difficult event for all kinds of retail operations, especially dining operations, and Hooters is no exception. In addition to that, given the current economic situation in the United States and abroad, the debtors were faced with rising labor costs, costs of food and other items, consumer demand for casual dining in general, because as the economy had softened, there was less free liquidity for families or others to go out to casual dining restaurants. In addition, I think as everyone is aware, and Your Honor is undoubtedly aware,

the lease obligations that were entered into pre-COVID have now become a little bit out of market and difficult to maintain. In addition, the costs associated with the debt that was described on the previous slide has become a significant drain on the ability of the company's liquidity position. As I said, approximately $376 million in funded debt. They have $19 million in debt service obligations coming due in 2025, including interest payments that were coming due here, in May of 3.9 million. In addition, there is another obligation that undoubtedly will be described in more detail as these cases proceed, which is a lags royalty obligation. As the company began to recognize that it needed to restructure its balance sheet

and if it wanted to be able to continue to operate on a go-forward basis, it did take a number of steps to try to deal with that situation, both outside of court and then ultimately led to the decision to restructure inside of a Chapter 11 proceeding. Highlighted on this slide are some improvements, excuse me, operational improvements that were undertaken in the last year in 2024, primarily the closing of 48 underperforming stores. And then they entered into a new line of business in which they manufactured,

supplied and distributed Hooters branded frozen meals to grocery stores around the country. As the debtors realized that those steps alone weren't going to be sufficient to address its balance sheet issues, it did engage other advisors, including my firm, Robson Gray. Accordian, who you've heard is the proposed chief restructuring officer and a financial advisor to the company, and then the proposed investment banker Solick was retained, engaged by the company in 2020. In addition to that, the board appointed an independent experienced fiduciary to the board of managers, Mr. Adam Paul. Mr. Paul is on the WebEx today. And they formed a special committee at the parent company on the board of managers in order to facilitate an independent review of the strategic alternatives that the companies were exploring.

and they delegated all authority regarding those transactions to that special committee. That special committee is a committee of one, Mr. Paul. In conjunction with Mr. Paul and the advisors, the company then entered into discussions regarding its liquidity position and in an attempt to try to deal that on an out-of-court basis arranged to have certain funds which are described here at the bottom released and provided to the company for liquidity purposes. That totals of approximately $15 million. That did provide some runway

and allow the company to negotiate with other stakeholders to try to reach an out-of-court resolution. But as described previously, that was only a band-aid with respect to being able to get the issues addressed in a more holistic manner. As I said,

And the company and its advisors entered into discussions with various stakeholders and potential transaction parties. Solic leading that charge, and they engaged with more than 95 parties. 38 NDAs were executed. They had held extensive diligence calls and explored the market in a very fulsome manner. In March of this year, they successfully drove a consensus among the pre-petition lenders, those term loan lenders, the ad hoc group of note holders, and potential buyer. That buyer, as mentioned before, is two current franchisees, including a group that is made up of

the original owners and founders of Hooters who have been involved in the business since 1983. The process led to what I would say is somewhat remarkable success. The company is entering into Chapter 11 with a restructuring support agreement that has 100% of the term loan lender support, 100% of the manager advanced loan parties support, and holders of approximately 94% of the securitization note holders. The RSA has been filed. It's an exhibit to the DIP credit agreement, which was filed as part of the DIP order.

So that is available for parties to review as well. That's how we got here, Your Honor. Where we're trying to go is that we would like to emerge on a fairly rapid timeline, and currently that's expected to be about three months. As I said, we have the support of all of the debtor's major constituencies, and what that process will entail will be a plan process. that will transition the company from company-owned stores to purely franchise model. They will, in fact, through the plan selling those 154 stores, well, hopefully all 154 stores,

but a significant portion in excess of 100 of them are already contemplated to be transitioned and operated by franchisees as part of the new company. in order to allow that, the term loan, the pre-petition term loan lenders have agreed to provide a dip in the amount of $35 million of new money. A small portion of the previous expended or provided term loan and the amount of $5 million is being rolled up under that facility. But that will be described in more detail when we present the dip motion. The RSA also includes customary plans, for covenants, and also a customary fiduciary out. To the extent that there are other parties there that we hadn't identified previously

who would like to come participate in a process that's more value maximizing for the debtors, we are more than willing to entertain those interests, that interest, and the other parties in interest here recognize that that fiduciary out is a very important part of this process. With more specificity, Your Honor, the RSA does include milestones. Here's a quick overview of them, but as you'll see that we're looking to try to have the plan effective by the end of June, that obviously puts a lot of pressure on us to make sure that we get our work done, and also it's obviously subject to the requirements of the bankruptcy code and the availability of the court in order to allow us to meet all these milestones.

They are aspirational, but we do intend to keep to them as much as we possibly can. And we hope to not be in bankruptcy any longer than we have to because that's, as everyone knows, is a very expensive proposition. And we would like to get the balance sheet fixed and get the Hooters restaurants back into out of bankruptcy and operating as a successful enterprise. A little more detail on the dip financing, which again will be described in even more detail. with the presentation of the dip motion. As I said, the pre-petition, the lender is the pre-petition manager advance lender.

And I think I'll stop for just a second because I've been using a word and then a phrase that is very important to these cases, but I think sometimes needs a little bit of explanation. The first is manager. As I said, the non-securitization entities are in effect. the manager of all the company-owned stores. They provide the contracts for the food. They make sure that the stores are stocked correctly. They make sure that employee wages and insurance

and all the things that an overall manager of a restaurant operation would provide. And so that is, they receive a management fee for those services. As I said, as well, it does not, those entities do not have any other assets other than Goodwill and their overall expertise. The other important phrase that I've been using is the manager advance. The pre-petition loans were conducted as manager advances, and a manager advance is a creature or a function of, of most securitizations that are dealing with businesses of this type.

In short, a manager advancement as a safety measure, which is put in place in the securitization indenture to address any liquidity shortfalls that the securitization entities might have. The expectation originally is always that the amount of the management fee and other liquidity that the manager has, has been provided by the securitization entities is sufficient to pay for those costs incurred by the

securitization entities, but that is not always the case. In order to cover that shortfall, the manager will undertake what is called the manager advance and use its own funds to pay for the outstanding securitization expenses. The indenture then allows for repayment of those advances to be. placed at the top of the payment waterfall, the use of the of the of the of the funds that are received by the manager on behalf of both the company own stores and the franchise fees and in effect primes all other amounts until those advances are repaid. This structure in the waterfall that exists a pre-petition will

continue during the bankruptcy proceedings and as you will hear shortly when the dip motion is presented is the basis upon which the dip credit agreement is founded. In other words, the dip is being treated as a manager advance and will move to the top of the waterfall per the indenture as a permitted current pre-petition by the indenture and will keep that structure in place. Back to the dip financing, Your Honor. I'll leave most of this to my colleague, Mr. Brown, who will be presenting the dip later. But I just want to emphasize the last note there is that without the dip facility, the company will not possess sufficient liquidity to administer these Chapter 11 cases and would be forced to

likely convert to Chapter 7 and without that relief. Lastly, Your Honor, I know this was, we spent a fair amount of time at the beginning of the case to identify the various parties. I thought I would do that quickly just so that you can understand who's talking at what time and who they represent, as there are a number of parties that, as you already saw when we went through appearances. The company management team, the CEO is Mr. Salmeli, the CFO is Mr. Ms. campaign, and as mentioned previously, the CRO and our first data clarinet is Mr. Keith Maype.

Vetter's professionals, my firm, Robson Gray, our co-counsel, Folling Lardner, accordion is the financial advisor, Kroll is the proposed claims-and-noticing agent, Solic is the investment banker, proposed investment banker, and C-Strake. Street Advisory is our PR firm. The independent managers of securitization debtors. Those entities that were not

part of the manager is the law firm of Goldberg-Cone. The pre-petition term lender, the manager advanced lender, and the dip lender is represented by Sidley and Hulahan Loki as their financial advisor. The 94% of the security certification note holders

is represented by Whiteen case and M-3 partners as their financial advisor. The Securitization Control Party is Seward and Kessel, and the buyer group is represented by Morrison and Forster. Omitted here inadvertently was the trustee under the notes, and that's Citibank, and they are represented by Minselaven. With that, Your Honor, I'll stop talking for a bit and see if there are any questions that I can answer, and then if not, we will move to the agenda and start going through the motions. All right. No questions at this time. The PowerPoint was very helpful, and I also appreciate that you filed it on the docket, so everybody else can see it. So thank you. You're welcome, Your Honor. With that, I think I will cede the podium to my colleague, Mr. Wagner. I'll note that, as mentioned previously, we do have a number of different Ropes and Gray lawyers presenting today, and I would just let the – I would like to let the court know that some of them are presenting for the first time in court.

So it's a momentous day for them and look forward to their presentations. Thank you, Your Honor, and I will now turn it over to Mr. Wagner. Just a quick note. I was in court most of the day, but I did see the red lines that were filed that's very helpful. I got through all of the red lines except the dip red line. I think I refreshed and saw it when I was sitting up on the bench. So I will go through that, of course, when we get to the dip motion. But otherwise, I've seen, I think I'm up to speed on every.

everything on the docket other than the dip border red line. I think, can you hear you? Now I can hear. I think you had actually only been muted, so I can hear you know. Okay. I'm sorry, Your Honor. I was simply thanking you and your chambers for working with us to have the hearing today.

And also the office of the U.S. trustee, who we've been working with to try to resolve any issues that they might have that I think we've made some very productive. steps with them and i don't think we have too many open items if any uh and then last day i would like to thank all the other parties uh we've been working very hard over the last few months especially over the last week to try to get the these cases to a place where we could file and so i deeply appreciate all of the hard work from all the parties so thank you your honor i hope that our that congeniality and uh continues with uh us as we work through the cases so thank you all right now over to mr wagner right thank you good afternoon your honor uh

for the record, Ben Wagoner from Ropes and Gray on behalf of the debtors. Your Honor, if it's all right with you, we would like to present the motions in a slightly different order than what is on the revised agenda. That's fine. Thank you, Your Honor. Your Honor, the first item that I'll be covering is agenda item number one. This is the debtor's motion for joint administration filed at docket number two. As the court is aware, bankruptcy rule 1015B provides that if a joint petition of two or more

or two or more petitions are pending in the same court. By we're against a debtor and an affiliate, the court may order a joint administration of the estates. Your Honor, that is what we have here. All 30 of the debtors in these cases are affiliates, and joint administration will provide a significant administrative convenience without harming the substantive rights of any parties in interest. We've provided a copy of the motion and the proposed order to the United States trustee

and received no comments. Accordingly, we respectfully request that the proposed form of order at docket number two be entered by the court. All right. Any comments, questions, or concerns about the joint administration motion? Mr. Butler? Thank you, Your Honor. Nothing to add to the newest trustee. All right. The proposed, by the way, my normal practice for first days, since I've reviewed all the proposed orders, is to just adopt the findings and conclusions that are in the orders rather than do my own mini ruling for each matter. So if I approve it, I'm adopting the findings and conclusions.

The only, I guess, the potential ask on this one, because I did share this with the clerk's office as well, paragraph nine asked the court put a docket entry that refers to the joint administration. The only request on that one, potentially, is to just shorten it up, rather than list them all out individually, maybe just refer to the first debtor at all.

It would just shorten up that docket entry, but that's not a huge. Not a huge issue. Otherwise, I didn't have any comments or concerns about the joint administration motion. So, Mr. Bublik. Your Honor, we will submit a revised form of order incorporating that change. All right. I think Mr. Bublick's good to go. Is that right? Yes, Your Honor.

Oh, sorry. Can you hear me, Your Honor? Yes, I can now. Okay. Yes. U.S. trustee is fine with that. Thank you, Your Honor. All right.

So that motion is granted. Thank you, Your Honor. The next item on the agenda that I'll be covering is agenda item number five. This is the debtor's creditor matrix motion filed at docket number six, and the revised order is filed at docket number 76. By this motion, the debtors are seeking entry of an order, authorizing the debtors to file a consolidated creditor matrix in lieu of submitting a separate mailing matrix for each debtor,

file the consolidated top 30 creditors list in lieu of submitting a separate list for each debtor, serve certain parties in interest by email, except when a party to be served by both has a mailing address, the debtors books and records, and files or has, and files are as designated a mailing address and is requested hard copy U.S. First Class mail service. Redact certain personally identifiable information, including the home addresses and email addresses of the debtor's current former employees and creditors who are individual persons from the consolidated creditor matrix, the consolidated top 30 list, the debtor schedules and statements and affidavits

of service filed with the court. in these Chapter 11 cases. The debtors are also requesting the court approve the form and manner of notifying creditors in these Chapter 11 cases and also approve the bar date for filing proofs of claim. The debtors proposed bar dates include the general claims bar date for filing proofs of claim for pre-petition claims at June 15, 2025, which should be 76 days after the petition date.

The governmental bar date at September 29th, 2025, 182 days after the petition date. the rejection bar date by which proofs of claim arising from the rejection of executive contracts or on expired leases must be filed at the later of the general claims bar date at the governmental bar date as applicable any date this court may fix in a rejection order or if no date is set in such order 35 days after the date of entry of such order your honor the motion and proposed form of order have been shared with the united states trustee at the request of the united states trustee the unredacted version of the The matrix will include a header with language putting the party in interest on notice of this court's order and the redacted nature of the publicly filed order.

We've also made minor changes with respect to the noticing procedures after conferring with our proposed claims agent. We submitted revised form of order at docket number 76, but we'll be further submitting a revised form of order reflecting the change of the general claims bar date from May 15, 2025 to June 15, 2025. unless Your Honor has questions. Effectfully requests that the revised form of order will be submitting reflecting these changes be entered by the court. So June 15th falls on a Sunday. Do you want to...

Your Honor, may I confer with counsel? Yeah. Your Honor, we proposed June 16th, 2025. All right. I think June 16th makes sense. Thank you, Your Honor. We will make that change in the revised proposed order. And then for the governmental bar date.

I didn't check that one, just make sure it doesn't fall on a weekend. Anybody else have any comments, questions, or concerns about this motion? Mr. Bublic, are you good? Yes, thank you, Your Honor. The U.S.OC. appreciates that debtors council worked with us to reach an agreeable bar dates. All right. Well, thank you. Other than that date change, I didn't have any other heartburn items, so that motion is approved.

Thank you, Your Honor. The final item on the agenda that I will be covering is agenda item number eight. This is the debtor's taxes motion filed at docket number nine, and the revised order is filed at docket number 79. By this motion, the debtors are seeking entry of an order, authorizing the debtors to remit and pay certain taxes of fee, taxes and fees accrued prior to the petition date that are payable or will become payable during the pendency of these Chapter 11 cases,

including any penalties and interest thereon, various federal, state, county, and city taxing and licensing authorities, and to remit and pay any audit amounts that may become payable in the ordinary course of business. Your Honor, the debtor's proposed order submitted as an exhibit to the taxes motion, admitted language requesting authority to pay taxes and fees accrued prior to the petition date that, quote, are payable as of the petition date. The debtors have submitted a revised form of order, including language requesting the authority to pay taxes and fees that are paid. payable as of the petition date. In addition to the authority to pay those pre-petition taxes

and fees that will become payable during the pendency of these cases, as of the petition date, the debtors had a portion of their property taxes due, which they had been unable to pay due to liquidity issues. This is the reason for the proposed language addition. Your Honor, the motion and the proposed form of order have been shared with the United States trustee, and we receive no comments. As of the petition date, the debtors are in the process. of disputing a completed audit with respect to their sales and use taxes with the state of Florida. The debtors maintain an audit reserve in the current amount of that audit, but it is subject to possible reduction. The debtors have also received notice of a potential audit with respect to their sales and use taxes with the state of Texas from the period of April 1st, 2021 to December 31st, 24,

but no date for the audit's initiation has been declared. the debtors seek to pay any audit amounts on a final basis, as they may arise in the ordinary course. Unless Your Honor has any questions, we respectfully request that the revised form of order at docket number 79 be entered by the court. All right. Let me start with Mr. Bublic. Mr. Bublic, any concerns about this one? No concerns from the interest of your honor. Thank you. All right. Any other party have any comments or concerns about this motion?

Yes, Judge, Jeffrey Gutman on behalf of Palmer South. We're a landlord of one facility that's being operated by the Hooters better. I have not seen this disorder, and we are owed real estate taxes, and it's not clear to us whether our debt is covered by this order or not. They didn't share this order with us, and I think it should be shared with us, so we are owed real estate taxes, and it's not clear to us whether our debt is covered by this order or not. they didn't share this order with us, and I think it should be shared with us so we can review and comment. So it was filed on the docket. It admittedly was filed today, but there's a proposed form of order that was attached to the original motion that was filed. Do you have ECF access by chance?

Not handy, Judge. Okay. Maybe counsel could address how he's dealing with landlord property tax issues. Mr. Dinell, Your Honor, we are, Your Honor, may I confer with the counsel for a second. Sure. Your Honor, this motion is not seeking to reimburse landlords for property tax obligations or other tax obligations. This motion is simply seeking authority to pay taxing authorities directly. We'll be working with landlords with respect to any assumption, an assignment, and or rejection of real property leases to handle contractual issues.

to handle contractual issues with respect to reimbursement of property taxes. All right, that makes sense to me, Mr. Donola. I don't think your client's prejudiced by the entry of this order. I agree, Jake. And then we'll deal with it at a later time on our issue. All right, very good. Anybody else have any concerns about this motion? All right.

Well, that one's granted as well. Thank you, Your Honor. I'll now see the podium to my colleague, Ms. Knight. All right. Thank you. Good afternoon, Your Honor. Lauren Knight of Brobson, Gait. On behalf of the debtors, the first matter I will be presenting is agenda item number four,

that is at docket number five, the debtor's application to retain Kroll as claims and noticing agent. I'll note that we filed a revised form of order at docket number 77. Additional support for the application is, step forth in the declaration of Benjamin Steele, a managing director at Kroll, which is attached as exhibit B to the application. Mr. Steele is on the WebEx and available to testify. If you or any of their party has any questions. Your Honor, pursuant to 28 U.S.C. Section 156C, the debtor seek authority to retain and employ Kroll Restructuring Administration LLC as claims,

noticing, and solicitation agent in these Chapter 11 cases. Your Honor, the debtor's proposed Kroll is their proposed claims and noticing agent based on Kroll's capabilities, experience handling cases of this size and complexity, its acceptable pricing terms, and its disinterestedness. Thousands of likely claimants and entities to be noticed in these cases. It would be administratively burdensome to perform the services that Kroll is proposed to provide absent Kroll's retention. Your Honor, we are also seeking authorization to replenish Kroll's $75,000 retainer, which was applied to all pre-petition invoices to hold the retainer under the engagement agreement as a security for the payment of fees and expenses.

Your Honor, we previewed the application with the U.S. trustee and resolved all of their open issues. Unless Your Honor has any other questions, we respectfully request that you enter the revised form of order at docket number 77. All right, thank you. I did not have any questions for Mr. Steele after reading his declaration, and I don't have any concerns about the application the red line looks good to me so let me ask mr. public uh u.s trustees good to go on this one yes your honor no concern with this any any longer

thank you your honor all right anybody else have any comments or concerns about the the the cruel retention application all right that one's approved thank you your honor the next and final matter that i will be presenting on as agenda number item number seven that is a docket number eight the debtor's insurance motion by this motion the debtor seek authority but not direction to maintain their existing insurance policies and pay all obligations arising there under or in connection there with to renew supplement modify or purchase insurance coverage and to continue to honor their obligations under the surety bond program the coverage provided for

under the insurance policies is essential to preserving the value of the debtors assets and in many instances require by various regulations, laws, and the United States trustees operating guidelines. Your Honor, as an overview, the debtors maintain 26 insurance policies that provide coverage for, among other things, property, general liability, workers' compensation, access liability, directors and officers liability, and crime protection. And, Your Honor, exhibit B to the order includes a summary of all of the policies. In sum, the total amount of annual premiums on account of those policies is approximately $6.2 million. Most of these premiums are financed pursuant to premium

financing agreements. The aggregate amount of remaining monthly payments under the premium financing agreements is approximately $2.1 million. Finally, Your Honor, the debtors maintain 114 surety bonds with an average base amount of $9,000. Pursuant to the surety bond program, the debtors remit payments when the bonds are issued or renewed on an annual basis. The surety premiums total approximately $18,000 per year. Currently, the debtors are not aware of any outstanding amounts owed on account of the surety bonds, but seek relief to pay any should they arise. To continue their business operations post-petition,

the debtors must maintain their surety bonds to provide financial assurance to the various agencies that regulate the debtor's operations. As such, the debtors seek authority to pay surety bond premiums as they come due and renew as needed in the ordinary court. pending any questions from your honor the u.s trustee or any other parties in interest i would request entry of the order all right thank you why don't i start with mr public again any concerns about this one no concerns from us trustee your honor thank you all right any other party uh good afternoon your honor this is dwayne brescia uh for the surety companies

Westchester Fire Insurance Company and Federal Insurance Company. Easier just to call them the Chubhury Group. No objections to the entry of the order. I just have been retained this morning on this matter. I'm not able to confirm or deny many of the allegations in the motion are stated today. I have no reason to oppose them. Just reserve our rights to clarify the record if needed at a later date. Otherwise, no objections to the order.

All right. Thank you. All right. Any other party? All right. That motion is also granted. Thank you, Your Honor. I will now see the podium to my colleague Maggie Tombs. All right. Thank you. Good afternoon, Your Honor. Maggie Tom's of Ropes and Gray on behalf of the debtors. I'll be presenting three motions. The first will be the Sofa extension motion. Filed a docket number seven listed on the agenda as number six.

By this motion, the debtors are seeking entry of an order extending the time to file sofas by 30 days for a total of 44 days. These are complex cases Your Honor comprising of 30 debtors, and as explained in the motion, the debtors operate a global chain of restaurants. Due to the nature of the debtors' businesses, they routinely engage with a considerable number

of suppliers across the country. As such, the debtors anticipate that it may require 44 days to complete the sofas. For the reason set forth in the motion and in the absence of any questions from the court, we respectfully ask entry of the order at docket number seven. All right. I'll start with Mr. Bublick. Any concerns about this one? No concerns, Your Honor. Thank you. All right. Any other party? I don't have any heartburn with this one either. I've looked at the order and that one's also very.

Thank you, Your Honor. Next, I'll be presenting the utility motion filed at docket number 10 listed on the agenda as number nine. The debtors are requesting entry of an order approving the debtors propose adequate assurance of payment for future utility services, approving the debtors proposed procedures for resolving requests for adequate assurance, prohibiting utility providers from altering, refusing, or discontinuing services, and authorizing but not directing payment of undisputed invoices for utility services, including the debtor's utility consolidator in accordance with pre-petition practice. The debtors obtain electric, natural gas, sewage, among other similar utility services

from a number of utility providers. Without these services, the debtors operations will be severely disrupted, and it would undermine these reorganization efforts. The debtors intend to satisfy post-petition obligations owed to utility providers with cash on hand, cash generated from the ordinary course of business, and cash available to the debtors under the dip facility. But in addition, the debtors are proposing additional adequate assurance of payment, and the debtors proposed to deposit approximately $419,000 into a segregated account for the benefit of the utility providers. In addition, the debtors seek approval of the adequate assurance procedures. If a utility provider believes additional adequate assurance is required, they must serve a written request on the notice parties. If this request is not served, the utility providers shall be deemed to have received satisfactory adequate assurance and are forbidden for altering or discontinuing the utility services. Unless Your Honor has any questions, we respectfully request that the proposed.

form of order at doc number 10 be entered by the court all right I don't have any questions on this one any party have any comments questions or concerns all right that motion is granted thank you your honor the final motion that I'll be presenting is the wages motion filed at docket number 11 listed on the agenda as number 10 by this motion the debtors are requesting the authority but direction to pay pre-petition workforce obligations and to continue to honor their compensation and benefits programs and to pay related expenses. The debtors workforce consists of about 6,000 employees, about 2,000 of Wedger full-time. Of those

employees, 559 are salaried and the rest are paid hourly. In addition, the debtors utilize eight independent contractors to provide marketing, IT, and learning and development functions for various projects. The debtors are requesting approximately $4.04 million of relief on account of the debtors' compensation and benefits programs and pre-petition workforce obligations. Although the debtors believe all compensation and benefits programs are vital to the debtor's businesses, pursuant to the order, the debtor, are only seeking authority to the extent that they believe it necessary to prevent immediate and irreparable harm.

Importantly, the debtors are not requesting relief to pay any amounts on account of compensation obligations that are in excess of the statutory cap set forth as Section 507A4 of the bankruptcy code except for amounts paid pursuant to the EEOC proceedings. Your Honor, the employees provide the debtors with separate. services necessary to conduct the debtors businesses. And the debtors believe that absent the payment of pre-petitioning compensation obligations, the debtors may experience employee turnover and instability at this critical time. For the reason, Seth, excuse me.

Additionally, the debtors have worked with the UST and have agreed to kick the expense reimbursement for senior level management to the second day. For the reason set forth in the motion, and in the absence of any additional questions, Your Honor, we respectfully ask entry of the revised firm of order, which we will be filing, which will include the expense reimbursement language. All right. Mr. Bublick, anything else on that one? The U.S.S. she appreciates that are working with us to resolve our concerns. We also had some concerns regarding the independent contractor, so to the extent that we're going to the extent, that debtor is able to. We would like to hear evidence that the contractors,

that independent contractors, they do seek to be paid, do qualify under 507, A4B. Thank you, Your Honor. Is this evidence to be supplied after the hearing, or are you looking for that now, Mr. Bubble? Your Honor, we were awaiting a list of the independent contractors that they did seek to get paid, and we have not received that yet.

So to the extent the debtor is able to put on that evidence now or commit to providing that, later the U.S. trustee would appreciate that to resolve its concern as to these independent contractors that are sought to be paid. I'm fine either way if the debtors want to commit to providing that information to the U.S. trustee after the hearing. I don't have any problems with that. Yes, we'll do that, Your Honor. All right. So I guess that one will be granted with the first modification, which I understand is coming in a red line, and then I'll let you work on Mr. Bubwick after the hearing. I'll just assume that if the orders uploaded, all remaining issues have been resolved. But with those caveats, that motion's approved.

Thank you, Your Honor. I'll now see the podium to Mr. Park. All right. Thank you. Good afternoon, Your Honor. For the record, he's a part from Ropes and Gray on behalf of the debtors. The motion that I'll be presenting today is the debtor's cash management motion. This is valid document number 12.

It's agenda item number 11 on today's agenda list. All right. Thank you. Your Honor, through this motion, the debtors are seeking to, one, continue the debtor's cash management system to honor any pre and post obligations on account of bank fees. Three, to maintain existing business forms and for to continue the debtor's cash management system in the ordinary course. The debtors maintain a total of 27 bank accounts.

Those are maintained at U.S. Bank and Bank of America. Both of those institutions are approved by the U.S. trustee as depositories and all of the debtors bank accounts are FDIC insured. In order to assist the court's understanding of the debtors' cash management system, I think that's to view the cash management system in two different categories. The first category is what we call

the non-secretization entities. And as Mr. Dickerson alluded to earlier, these are the manager entities that are involved or associated with the corporate activities of the company. The main operating account at this entity is the main corporate account. This is maintained at Hooters of America LLC, bank account number ending in 0215 at U.S. Bank. And this account is the main operating account where it makes any disbursements on account of corporate activities and collections to the extent that there are any.

Importantly, in the ordinary course of business, Your Honor, the manager, the manager, the tutors of America LLC as the manager of the securization entities makes certain advancements to the securization entities in cases where there are insufficient funds to operate the securization entities. And once the funds are made, the right to reimbursement of these entities sit at the top of the waterfall for repayment of the securization entities under the indenture.

The other half of the debtors' cash management system, are the securitization entities. These entities are involved with the debtors' operations of the restaurants and also the franchise activities. With regards to the franchise activities, the debtors collect certain fees on account of, in the form of franchise fees and royalty fees under the franchise agreements that the debtors have with certain franchisees. Once the proceeds come in on account of these restaurant activities and the franchise activities,

They are funneled into what we call the main collection account in the motion. And this is where all the proceeds from the restaurant activities and the franchise activities are gathered after accounting for any of the disbursements that need to be made. Once it hits that account, it's then transferred to a bank account maintained by the U.S. Inventor trustee. And the trustee then for the purpose of making the payments under the waterfall that we described. Your Honor, the debtors believe that the ability to continue the debtor's cash management system is imperative for purposes of operating in the ordinary course of business. The failure to do so would tremendously impair the debtor's business in the ordinary course. The debtors believe that we have circulated copies of the motion beforehand with the U.S. trustee.

I believe that we have resolved all of the comments, but we have not had the chance to upload a report. revised order. So subject to by your review, Your Honor, that there is respectfully request that the order be entered by this court. All right. Thank you. We're going to we're going to mute that person first and then I'll go to Mr. Bublick. Mr. Bublick any other thoughts or comments on this one? No, Your Honor, the US judge again appreciates that are working with us to on a form of order that would be accepted to the US and appreciate the resolution that we reached on that.

Thank you, Your Honor. All right, any other party? Good afternoon, Your Honor. Kyle Hirsch for Brian Cave, Leighton Paisner, representing Bank of America. We have not had a chance to confer with Debtors Council. There is a modest provision that we would be requesting of Debtors Council. So to the extent there is a proposed order that is being amended for uploading,

I think we can get that address. I don't expect it to be controversial. It relates to authorization for the bank to charge back to accounts for returned items. That's an important provision for the bank to include its cash management provisions. But I do expect that to be a non-controversial discussion with Better's Council. And with that additional revision, we don't have objections to the proposed order. All right. That sounds like something that should be able to get worked out in,

fairly short order after the hearing before the orders uploaded. Yep, you're right. I will agree with Mr. Hirsch and make sure it's addressed in the order. All right. All right, thank you. Any other parties? All right. Well, that motion is granted with the understanding that that little tweak will be made before the orders uploaded.

Otherwise, everything else looks good to go. So that motion is granted. Thank you. Now I yield the floor to my colleague, Ms. Regina Cassillo. All right. Thank you. Good afternoon, Your Honor. For the record, Regina Castillo from Robs and Gray on behalf of the debtors.

I will be presenting the next two matters. The first matter I'll be presenting is agenda number 12. This is the debtor's critical vendor motion filed at docket number 13. By this motion, the debtors are seeking entry of an order authorizing the debtors to pay certain pre-petition claims of vendors whose goods and services are essential to the debtor's continued operations. Claimants whose claims are entitled to administrative expense priority under Section 503B9 of the bankruptcy. code and claims that give rise to statutory constructive trust under Paca and Pasa. In this order, the debtors are seeking this relief on an interim basis up to an amount of approximately $4.7 million. Your Honor, the debtors, along with their advisors, have engaged in a thorough

review of the books and records and reviewed diligently to identify the vendors out of the debtor's entire vendor population that are truly critical to their operations, and without whose goods and services, the debtors of the states would be significantly and irreparably harmed. We worked with the United States trustee in advance of filing to address any questions and concerns and believe that the proposed interim order attached to the motion and submitted in advance of the hearing is acceptable to the United States trustee. Unless Your Honor has any questions, we respectfully request that the proposed form of order at Doctrine Number 13 be entered by the court. All right. I'll start again with Mr. Bubble. No concerns, Your Honor. Thank you.

All right. Thank you. Any other party? Your Honor, this is... First Acrely, on behalf of, as I stated earlier, Benny Keith company, a significant creditor in this action out of Fort Worth, Texas. My client is a food service provider to Hooters restaurants in the Texas and outlying areas. My only concern, I don't necessarily object to the critical vendor, but I wanted to comment that we are working with the debtors to, try to resolve our status as a critical vendor. We are owed over $2 million for pre-petition debts from the restaurants that we service or supply. In addition to that, we are a preferred creditor under the Parishable Agricultural Monetaries Act

trust provisions, which give us priority over all creditors, secured, unsecured, or otherwise, in connection with the debtors bankruptcy case. Again, I emphasize that we are working very closely with the debtors to resolve our status in the bankruptcy case, but I wanted to make at least some statement that we reserve our rights with respect to the treatment of our claim under the critical vendor motion and also more particularly under the debtor-in-possession motion,

which is going to be per minute. We are, like I said, we are owed quite a significant amount of money. The motion currently before the court does not identify any creditors per se. We have been advised that we are deemed by the debtor to be a critical creditor. However, we have not had a resolution, and I'm concerned only that with our claim at $2.2 million on pre-petition debt and other creditors that they may consider critical vendors, that the amount that is being a set aside for treatment of critical vendors is adequately sufficient to maintain the goal that the debtors seek to achieve by this motion. And that's all I would have at this time.

Thank you, Your Honor. All right. Well, I think the entry of the order won't prejudice your client's rights to continue to work with the debtor to try to convince them that they are critical. So I understand the comment. So thank you for that. Any other parties? Your Honor, Mark Stout here on behalf of Regents Facility Services, Inc.

Your Honor, shortly before the hearing today, I had an opportunity to call Debtors Council, and to their credit, I sent them an email just a couple hours before the hearing, and they immediately responded. My understanding is that my client will be listed in a revised order, that they are submitting to the court.

Listening to counselors presentation, it's unclear to me if the order that has previously been presented to the court is the one that they intend to upload or if there's going to be a revised one. But my understanding is that my client is in the revised order for $321,206 on a claim amount of $726,000.

I reserve all rights to object to the treatment. I have not had. had an adequate time to dig through it with my client, but I did want to make sure that my understanding that we were going to be listed as a critical vendor is correct and that the court was aware of that. Thank you. All right. Well, I guess I'll hear from the debtors on whether the agreement was to list you or whether they just consider you critical. It doesn't really matter to me, however. The debtors would like to confirm that Mr. Stodd's clients are critical vendors. However, we will not be submitting a revised order. All right. Very good.

Your Honor, if I may. Thank you, Your Honor. Will the debtor confirm that my client, Betty Keith, company is a critical vendor and will be treated respectfully under the court's order? Your Honor, the debtors confirm. Thank you. All right. Well, that motion is also granted,

no matter what standard applies, whether it's co-servor or some other standard. I think the debtors have satisfied it with the evidence and the, declaration, so that motion is granted. Thank you, Your Honor. The next item on the agenda that I'll be covering is agenda number 13. This is the debtor's customer programs motion filed a docket number 14. By this motion, the debtors are seeking entry of an order, authorizing the debtors to maintain and administer their existing customer programs and to honor their pre-petition obligations

related to their two. Your Honor, the continuance of these customer programs is critical to the debtor's business. In particular, it's essential that the debtors maintain their valuable customer relationships, goodwill, and continue maximizing the debtor's reputation and customer satisfaction. The debtors run a variety of customer programs and rewards that are designed to drive brand excitement, attract customers, and maintain positive customer relationships at each of its restaurants. This includes certain promotions and a loyalty program maintained by the debtors. The loyalty program is structured as a tiered membership system where guests accrue points with each

visit for amount spent at the debtor's restaurants. Additionally, the debtors provide rewards for non-purchasing activities. such as birthdays, holidays, or other qualifying events for participants of the loyalty program. There are no pre-petition amounts due under the debtor's loyalty program beyond the non-purchasing rewards, but the debtors request authority to continue honoring these promotions. Additionally, the debtor seek authority to continue its gift card programs, which is administered by a third-party stored value solutions. The third-party administrators paid a monthly processing fee of $3,200.

As of the petition date, there are approximately $10.6 million, and give cards outstanding. However, in the three months prior to the petition date, approximately $670,000 were deemed pursuant to the program. The debtor seek authorization to honor any accrued obligations, including obligations incurred on account of the processing fee, and to continue to honor all customer obligations on a post-petition basis consistent with past practices. Finally, the debtor seek authority to continue its partnership with its third-party delivery services and first-party delivery providers who facilitate direct ordering and delivery services. The third-party delivery partnerships collect payments from customers and remit payments to debtors net of commissions and fees,

where the first-party delivery providers collect monthly fees as well as a transaction fee of approximately $49,000 a month. As of the petition date, the debtors do not owe any outstanding obligations under the delivery partnerships, but seek authority to continue the partnerships and the ordinary course on a post-petition basis. Your Honor, maintaining these critical relationships will benefit all the debtors, creditors, and stakeholders, And the debtors believe that the damages from disregarding these obligations under the customer programs would far exceed the costs associated with honoring them, as canceling any of these programs would result in brand damage, loss of goodwill, as well as loss of returning customers. Unless Your Honor has any questions, we respectfully request that the proposed form of order at docket number 14 be entered by the court. All right. Mr. Republic, any concerns on this one? No concerns with this motion. Thank you, Your Honor.

All right. Any other party? All right. The order on this one looks. to me so just as with the others I'll adopt it and that motion is granted thank you honor with that I'll see the podium to my colleague missed the court all right thank you good morning your honor for the record Alexis O'Gorick from Ropes and Gray I'll be representing two motions the first of which is a debtor's lease rejection motion which is found at docket number 15 and agenda number 14 on the proposed revised agenda we We have spoken with certain counsel to the landlords and we are continuing to work with those landlords on a revised form of, a revised proposed form of order, pardon me, and we will upload that order after this hearing when it's agreed to. In terms of the relief, the debtors are requesting authorization to reject certain non-residential real property leases and abandon certain personal property at such lease locations.

The debtors have ceased operations at 36 of its restaurant relocations prior to the petition date. The debtors have either surrendered possession of the premises and provided notice to the landlords or the debtors have been locked out by the landlords. The debtors are requesting the rejection of leases as of the petition date as well as abandoning to minimis property assets included, or abandoning property, personal property assets therein. The debtors do not believe there is personal or there is valuable property remaining. at the locations that they have surrendered to the landlords. And the debtors are requesting relief effective as of the petition date to minimize post-petition administrative expenses.

We've provided a copy of the motion to counsel to the U.S. trustee. And accordingly, if there are no questions, we respectfully request that this court enter the lease rejection order, which, again, there will be a revised proposed form of after. All right. So when I read this one, I think last night, the original certificate of service just said that it was served on the court's pacer system, but at some point, I think over lunch I saw there's a revised affidavit of service, and it looks, I didn't have time to go through and look at the details, but it looked, I think, towards the end, was it, I, and J, you were able to get service on the affected counterparties, either by email or overnight service, is that right? Your Honor, I believe that's correct. Were there any counterparties that you didn't have good,

that you didn't have addresses for for overnight service, whether it was like a post office for a post office box or nothing stuck out. Your Honor, I do not believe so, but I can confirm. All right, so I'll just trust that the service is good if there was, If there was a problem serving anybody, you can follow up after the hearing. So let me start and ask, are there any parties have any questions or concerns about this motion? Your Honor, this is Joel Newell with Ballard Spar. There were a couple of questions related to this, and I will echo counsel's comment that we have had some dialogue with counsel as to some prospective language to be included in the order.

The first being, since this is a first day motion, one of the concerns is why this needs to be done on such an expedited basis, given the non-protunk relief as to these properties that it wouldn't incur any additional administrative costs. The second being, as counsel noted, these 36 properties, one of particular an interest to our client, has left the, essentially the restaurant equipment and everything. there and getting clarifying language in the proposed order that the landlord can dispose of that property once the order's entered, similar to what we may see in a later motion on the rejection procedure that is, you know, not necessarily compounded, but expanded upon from the standpoint of some of that property on site on these closed businesses, maybe third party, and the difficulty of the difficulty of, then the landlord being in the position of having to determine whose property that is. We did get a list of the third party holders of that property and trying to work with the debtor on coordinating that. But some of those concerns are still outstanding in relation to the respective motion and the immediate relief asked by the debtors today. So tell me you've floated some proposed language or not.

Have you had a chance to do that? Yes, I apologize, Your Honor. Yes, to clarify or reaffirm, yes, we have sent some proposed language to debtors council to be considered. The comment that I believe we received in response was that they needed to confer with the secured lender or lender in general on those proposed changes. And we at this point don't have affirmation whether that's been accepted or not. But we'll continue to work with debtors council and whomever on continue to discuss that proposed. order itself.

All right. From the debtor's perspective, I don't know if you can give me an update, if you've had a chance to confer with the, I guess, the lenders that would have the concern, I guess it would be the lenders that have a lien in the stuff that the landlords are proposing to go dispose of.

Your Honor, sorry, apologies for that. I'm not sure if I was on mute there or not. We are continuing to work with the landlords council to continue working on a provides revised form of order in terms of the specific comments by counsel that was just raised. Actually, I'm sorry, may I have a moment to confer with my colleagues? Sure. Thank you.

Your Honor, can you hear me? Yes, I can. Sorry, thank you so much for that. So we have notified the third parties who have interest in the property that is left behind at the locations, and we are not directing one way or the other what the landlord should or should not do with that. We have provided the contact information and we will continue to provide it if any more is needed so that the landlords and those third parties can continue working that out amongst themselves. As for the specific comments by this landlord that were raised and to which

we responded that we were working with our secured lenders, we are still working with our secured lenders on that. Obviously there are multiple parties in interest in this case. So I cannot confirm those specific comments at this time, but we will continue dialogue with the landlord council and with the other parties in interest all right so just as a heads up because this this has come up in other cases giving a little bit of a preview for the next motion with the abandonment procedures of I've never quite gotten comfortable with the concept that the the language in and again that's we're not calling that motion yet but the that the abandonment would be free and

clear of liens claims and then comrades is abandoned to the landlord free and clear of liens claims and encumbrances I haven't quite got comfortable with language like that is that what the proposed language that's being discussed for the current rejection motion is that the type of language that you're looking for your landlord client your honor are you referring to the rejection motion that we're discussing now or the rejection procedures motion well I'm asking if the type of language that this particular landlord is asking for to resolve his concerns about this motion, is he asking for that type of language, the type of language that's in the procedures for abandonment?

Because is that what you're asking for to be able to go get it free and clear of liens, claims, and encumbrances, or is it just that the stays lifted for you to exercise whatever rights and remedies you might have? I think, from my perspective, that's the type of language that I would be comfortable with. Your Honor, I apologize. Sorry. Go ahead. Go ahead. Thank you, counsel.

Yes, to answer the court's question, the language that we would be proposing or have proposed would include that the property that is abandoned by the debtor is free and clear of those interests of the creditors to otherwise dispose of as provided in the abandonment of. the property in those rejected leases so you'll have to help you'll have to convince me that that's appropriate because i've in prior cases i haven't approved language like that because the why would the abandon me be free and clear of liens claims and encumbrances i know that that would be helpful to the landlord but uh wouldn't it be sufficient if the landlord is just free to exercise whatever rights and remedy it may have under applicable law to dispose of whatever's left? Well, in similar cases, this language has been utilized,

and part of the issue is the cost of the storage of trying to then determine whose property it is or the lien holder rights. And the language provides that, and maybe it's a clarification to my prior comment, and I apologize, Your Honor, that there's no free and clear language, but the language that the property will be abandoned in consultation with the lenders. So the landlords need further clarity that the lenders have been consulted and are waiving their liens.

And I think that addresses the court's issue because it wouldn't be so much as the court's determining that the landlords can dispose of free and clear is that they're waiving their liens as to that. So I think it would be at that point a mutual per se release of the lien for that once the orders entered for then the landlord to dispose of the property that's abandoned by the debtor. So that's where I believe the secondary comment that counsel raised that they're still conferring with lenders comes into play with regards to the language in the proposed order.

So I wouldn't have any problem if the lenders who are represented here agree to language that say once it's abandoned, they're waving or releasing their liens so that you can do with it what you want without having to worry about those lenders that are expressly releasing their whatever interest they might have in the equipment. If that's what you're talking about, I don't have a problem with that. I guess I'll just have to rely on the debtors to let me know if the order's uploaded, who all has blessed that language in the order. Thank you, Your Honor. Yes, and I apologize for any confusion I may have created with my prior comments, but I believe at the end of the day, with conference, with the lenders, it will be a waiver and inclusive in the order itself. So we'll work with debtors council post-hearing to address that.

All right. Does that work for the debtors to try and wrap up that particular concern with language that's agreed to by the debtors, this landlord and whichever lenders want to expressly release their liens? Yes, Your Honor. That works for us. All right. Any other parties? Yes, Your Honor. Cheryl Knighton on behalf of several Avalorum Property Taxing entities in Texas.

Going back to the comments that were just discussed about abandonment free and clear of liens, under pursuant to Texas law, the liens held by the Avalorum Taxing Entities are the same. senior liens on any tangible personal property. So they would object to any abandonment free and clear of liens at this juncture. All right. So it sounds like for this particular motion, I don't think anybody's trying to get that language in there. So I understand your concern. So if the debtors want to try to resolve the issues for these landlords after the hearing,

I don't have any problem with that. I will grant the motion. and allow the debtors the opportunity to tweak the order to resolve the concerns of particular lenders about particular liens, but I'm not anticipating that this order will be uploaded with just general language that says that the abandonment's free and clear. I think that would address Ms. Knighton's concerns, correct? Yes, Your Honor. That would address the taxing authorities concerns. All right. All right. Does that work for the debtors also, then? Yes, Your Honor, that works for us.

All right, very good. Well, that motion is granted then, and I'll keep an eye up for some form of agreed order. Thank you, Your Honor. The next motion I'd like to present, as you previewed, is the rejection procedures motion. And similarly, we continue to speak and work with landlords to address their concerns, and we'll upload a revised, proposed form of order after this. I keep having trouble saying that. As previewed in this, as in the previous discussion,

the debtor seek entry of an order authorizing and approving procedures to reject certain executory contracts and non-residential real property leases. And while the debtors have also requested authority to reject certain leases effective as the petition date, this one creates procedures for future rejections of contracts and leases. The proposed procedures require that the debtors file a rejection notice,

which sets requirements regarding, abandonment of personal property, objection procedures, deadlines for filing claims, unresolved objections, and treatment of security deposits. We have provided a copy of this motion with counsel to the U.S. trustee, and if there are no questions that we respectfully request that this court enter the rejection procedures order, which we will upload after this hearing. So what about... So what about...

All right. So what... My concern about the abandonment language, what do the debtors propose to do with that? So that's the, it's the, it's the language in the order that says after the debtors specify that they're going to abandon it. Absent a timely objection, it's abandoned free and clear to the landlord. Your Honor, we are comfortable removing that language. All right. So I'm fine with the abandonment.

And to the extent that the, if any particular lender, wants to agree to procedures where they're releasing their particular liens, that's great. But with that change, I don't have any other concerns about that motion. Does any party have any comments or concerns about the motion at Docket 16? Judge, if I may be maybe heard just on this one. Counsel had said she's going to be submitting a revised order. I don't know what the changes are anticipated in the revised order. I'd like her to address that.

Sorry, I don't know if I'm off mute yet. All right, now I can hear you. Go ahead. Thank you, Your Honor. We can share the revised proposed form of order with such counsel. We have not decided on all the changes yet, so I can't walk through them at the moment. But happy to share it. How could we approve an order without even knowing, it's not even been shared with anyone?

So I understand she's going to propose, any proposed order will be sent to you. I guess from my perspective, as long as the abandonment language is tweaked, I don't have a problem with the order. Tell me what your particular concern is with this order. Just as an example, if she changes the amount of time. I mean, on behalf of Mr. Donella, as sooner we know whether or not this scooter's location is going to be sold or taken over or operating, it's important to us to know where we stand. So, for example, they're changing the time of their rejection that affects us dramatically. When you say the time of the objection, do you mean the time you have to respond to a proposed notice?

Either way, the time that they're going to give the notice or the time for us to respond to it. So I don't think this sets a deadline for them to give you a notice. I don't recall seeing that. Is that in the order somewhere that I missed? It just generally provides that the debtors, I mean, they have a lot on their plate. At the appropriate time, they decide which proposed leases they want to reject, and there's no deadline for that, after that decision is made, they would then serve the proposed rejection notice on the affected counterparty, which would include your client.

At that time, your client would then have the opportunity to, object. There's an objection period. The objection period is 14 days, your honor. 14, all right, thank you. So 14 days. So I don't think you're prejudiced by the entry of this order

and the types of changes that I think that the debtors are talking about making are non-material changes, not something that would wildly change the proposed procedure. And that would give your client the opportunity to look

at the proposed rejection, and if you have an objection, you'll have 14 days to file it. So I think the proposed order fully preserves your client's rights. It's not doing anything now other than setting a process in motion for the debtors to then file notices as in when they see fit. All right. Thank you, Judge. Your Honor, Vicki Driver, on behalf of a litany. of landlords I won't repeat. I just would like to see a copy

of the order before it's uploaded. I don't think we'll have any issues within it all, but would just like to see the final copy. All right. I think that's a fair request. I don't think the debtors have any problems with that. And I don't have my official entry of appearance on file.

I just spoke with the clients this afternoon, but I will get my contact information over to counsel for the debtor today so that they know who they're talking to and who they're talking on behalf of. All right. Thank you. Thank you, Ms. Driver. All right. Any other parties? Have any concerns about this motion?

All right. Well, it's granted other than with the one tweak on the abandonment language that I raise. Otherwise, I think you're good to go. So thank you. Thank you, Your Honor. I will now be seating the podium to my colleague, Mr. Brown. All right. Thank you. Good afternoon, Your Honor. Remand Brown, Frope St. Gray, on behalf of the debtors.

Good afternoon. I'll be presenting. I'll be presenting the debtor's dip motion filed at docket number four, agenda item number three. As noted previously, the revised form of order was recently filed just before the hearing at docket number 83 with the red line filed at document number 85. Also, as previously noted, in support of the dip motion, the debtors filed the declaration of Mr. Keith May at docket number 17.

the debtor CRO and the declaration of George Cucin Nicholas of Solic, the debtor's investment maker. That's filed at document number 18. Your Honor, by this motion, the debtors are seeking approval of what is a $40 million dollar dip facility provided by the debtor's pre-petition lender. This just facility includes $35 million of new money and a roll-up of $5 million with the pre-petition, manager advance credit agreement claims. As noted by my colleague, Mr. Dickerson, these funds, these dip funds will be provided to the debtors

for the purpose of funding manager advances, solely for the purpose of benefiting the securitization claims, which are the, I mean, securization entities, which are the restaurant and franchise operations. Of the $35 million of new money requested, $5 million will be, made available in the interim period with the ability to request an additional up to one

million dollars each week through entry of the final order as your honor would expect the the dip is requesting super priority priming liens subject to generally the carve out and any permitted wings during the first four weeks of these cases the debtors expect and As referenced in the, or as noted in the budget filed with the interim order, the debtors anticipate spending just under $10 million in the first four weeks with a significant portion of these amounts going on account of vendor claims, much of which with respect to certain of the critical vendors mentioned just earlier.

Your Honor, without access to these funds under the dip facility, the debtors would not have sufficient liquidity to pay their ordinary course operating expenses, nor would they be able to fund the administrative cost of these estates. Obtaining dip financing at the outset of these cases is critical and necessary to maintaining the debtor's operations as of one concern. As described in Mr. Kooten-Nicholas's declaration, the debtors undertook a pre-petition marketing process seeking to obtain proposals for, among other things, post-petition financing. At the conclusion of that marketing process,

the debtors, the proposed dip facility was the only viable post-petition financing option available to the debtors. I would also note, Your Honor, one clarification and with respect to the declaration and is reflected in the revised papers that with respect, With respect to the DIP facility, there are no fees contemplated as negotiated between the parties.

I would like to emphasize, Your Honor, that the DIP facility is a key aspect of the overall restructuring contemplated in the RSA that was recently filed this morning in connection with the interim order. I do not have the docket number, but it should be just after the revised former board voted dr 85 all right the debtors your honor require access to the dip facility immediately to avoid irreparable harm and to continue operating in the ordinary course as contemplated in these cases for these reasons your honor the debtors met that prove up the debt facility is in the best interest of the estates finally your honor we worked with a number of parties including the us t that tried to resolve a number of issues leading up to the hearing.

We were able to resolve a significant amount of the issues as reflected in a revised form of order, though we continue to discuss with parties additional comments. So we expect that at the conclusion of this hearing will still be resolving issues and will file a reform of order post-hearing. Your Honor, with that, Your Honor, I'm happy to address any questions or if help, we'll walk through the revised form of order. Why don't we go through the road? revised order and then I'll open it up for any comments after that. All right. Thank you. This is the one right line that I didn't quite have time to get through.

So I'll start looking at it in real time here. Your Honor, I'll note in most of these changes here I would describe as non-substantive. If helpful and just given the size of this dip most, I mean dip water, I can flag what I think are the highlights or more substantive. changes here. Yeah, that'd be perfect. Thank you, Your Honor. First, I would note on page 10 of the red line,

and this is paragraph F, Romanite I, B. Your Honor, just want to note the change here is just correcting the pre-petition term, one amount. All right, I see it. Your Honor, the next change I would flag is on page 14 of the red line, subparagraph C. I just want to note that the parties agreed to move this language regarding certain pre-petition reporting that was included.

All right, I got it. The next one I would note is on page 32 of the red line. It's paragraph 2B Romanette 4. Your Honor, this is just authorization for the debtors to make certain payments to secure parties on account of any fees indemnification or expense reimbursements to the no-holder parties all right i got it you honor the next one i would flag is page 47 of the red line it's paragraph 11 a like at the top of the page your honor i would just flagged that the professional fee carve out um is no

longer subject to the budget. All right. Your honor, the next change is on page 74 of the red line. That will be paragraph 26A at the bottom of that paragraph. Your honor, this change is just authorization for relevant third parties to enter into account control agreements. And I'm I'm sure other parties can speak in more detail about this, but generally, Your Honor, this is providing for a city bank and I believe the pre-petition or the dip agent to enter into account agreements, account control agreements with each other. All right. For the record, you're on, the city bank would be the securitization trustee.

All right. Thank you. Then the final, I would say material change I would like to note is paragraph 58. of the interim order. This is a reservation of rights for lags equipment LLC that we received early this morning with respect to any rights they would have with respect to the lags for O2 obligations. Your Honor, I'd say the balance of the changes are, I'd say, mostly related to dip lender and note holder, the ad hoc group consent rights and other clarifying changes. And with that, I'd open up to any questions from Your Honor or comments from other counsel. All right.

Well, thanks for walking through the order, the material provisions for changes. So let me open it up. Why don't I start with, I did see the reservation of rights that was filed by Citibank. Why don't I start with Citibank? Thank you, Your Honor. This is Nathan Coco from Ms. Levin on behalf of Citibank, which is the trustee for the pre-petition secured notes. As we noted in our reservation of rights, Your Honor, the pre-petitioned Doste trustee has not been involved in the negotiations among the debtors, the dip lenders, and other stakeholders regarding the terms and conditions of this dip financing and cash collateral arrangement, nor have we had discussions over the last couple of days with the debtors regarding their proposed use of the trustee's cash collateral. And I understand that this case, as is often a case, was filed perhaps under exigent circumstances.

But we have undertaken to quickly analyze the DIP motion and the proposed form of order, including some of the revisions and red lines that have come across the Transom. There are other materials in connection with the DIP that we haven't yet had an opportunity review, including the credit agreement. And although the trustee is not objecting to the interim relationship, that's being sought by the debtors today. We filed our reservation rights to make clear to the court and to other parties in interest that the trustee is not in a position at this stage

to consent to final relief being sought under the dip motion, particularly with respect to the priming of the trustee's liens. And because of that, the trustee expressly reserves its rights, claims and objections for purposes of the final hearing to the extent that it has objections. All this having been said, you know, we hope to keep to keep. continue to engage with other stakeholders in the case, most particularly the debtors,

on any issues we may have as we continue our review. We understand that this is an important motion, mission critical to the debtors, but we wanted to make the court aware that we have not yet had an opportunity to fully review all the materials, and we have not had meaningful discussions at this point with the debtors and other key stakeholders. So we are reserving our rights. All right. All right. Thank you. I understand your comments. I appreciate the heads up. Any other party, Your Honor?

Yes. Hi, Your Honor. Brian Pfeiffer from Whiteen case, and we represent the ad hoc group of securitization note holders. And I think it just gives you a little bit of background. So Citibank is our trustee, and I'll get to it in a moment, but we intend to work with them between the interim and the final to address any concerns. But just from our perspective, from the bondholder perspective, let me start by saying, you know, our ad hoc group, we have seven institutional investors who own 72% of the class A notes and 100% all of the class B notes. And just for a reference, there's 266 million of class A notes and there's plus some interest and 40 million plus interest of the class B notes. together with some note holders that are affiliated with the dip lender and that are also parted to the RSA.

The collective note holders that are supporting this agreement, the SDRSA, and the dip are well over 94%. We're about 94% according to Mr. Dickerson's speech earlier today. And so, you know, there is a large amount of the bonds that city represents that are covered here. We fully appreciate their perspective and appreciate their reservation of rights. You know, I think as everyone, you know, the last month or so has been a sprint for everybody. We are happy that we're at this place with a RSA, with the Buy Group, with the dip lender, and with the note holders. and we know that there's a lot of work to still be that needs to be done, but I think that serious progress has been made.

And I guess the point that I would make is given this level of noteholder support, we do look forward to working with Citibank and, you know, the way that these securitizations, they do add some complexity. There's a control party that is represented by Mr. Ashmead, who's on the line for drive train. We'll work with both city and drive train to make sure that any animal. all of their concerns on this score are addressed. And I'm sure the debtor and other partisan interests will as well.

But I think given that we are their chief constituency, I just wanted to raise that, you know, that's how we see this unfolding. And we appreciate that, you know, the reservation of rights and that we're really just talking about the final. And our hope is that we'll be able to come back to you between now and the final and have resolved any of their concerns. All right. Right. I appreciate that. Your Honor, if I may, John asked me to Sewerty-Kissle

Council to drivetrain agency services, the control party under the securitization. You know, given that the holders have a strong super majority of the notes as stated by Mr. Dickerson earlier today,

approximately 94% of the outstanding amounts are party to the Restruction Support Agreement and support this filing and this dip motion. We believe at this juncture, and they believe that the restructuring transactions set out and the restructuring support agreement will lead to the maximization of the recovery on the notes. And for those reasons, the control party is not objecting to the interim relief sought today, and we look forward to working with Mr. Pfeiffer and his constituency and Citibank,

and the debtors to do whatever's necessary to be done by the time of the final hearing. All right. All right. Thank you. Good afternoon, Your Honor. Bruce Akerley, again, on behalf of Benny Keith company out of Fort Worth, as I mentioned earlier, we have over $300,000 in Parishbillia Cultural Commodity Act trust claims. These claims prime all claims, again,

the debtor, including secured, unsecured, and otherwise. And while we're working with the debtor to make sure that our claims are properly treated, and we're having a conference again on Friday to discuss the matters with respect to critical vendor status and payment of pre-petition debts, which will completely resolve all the issues, I want to make sure that the instant order is going to be interim in nature to allow the parties to weigh in prior to a final hearing on the cash collateral. We don't necessarily object to the order per se, except to the extent that we are not able to work something out, which I think is pretty low in the scheme of things.

But I just want to make sure we preserve all rights. Thank you, Your Honor. All right. It's definitely an interim order, so I think that should satisfy your concerns. Thank you. Thank you. For the record, Your Honor, Michael Reardon on behalf of Blacks, I'm going to ask for an LLC. royalty interests that the debtor has been referring to as the legacy royalty obligations in their filings.

And when I made my appearance at the outset of the hearing, I admitted to mention that I'm also joined on WebEx by my colleagues from Bradley, Brian Bates, and Jared Martin. So when we first started reviewing the debtor's first-day filings, we were actually pretty surprised to find that our client had been singled out by the debtors in both the first-day declaration and the div motion, with reservation for rights language that essentially called into question of validity of our client's royalty rights. And I believe if I heard debtors counsel correctly earlier, earlier on in the slide presentation, he did confirm that the debtors do intend to challenge lag's royalty interest. So it does look like we're going to be front and set in this case, and we look forward to appearing before your honor to protect lags legitimate rights.

As the interim debtor order, we did reach out to the debtor's counsel yesterday, asking if they'd be metable to inserting some reservation of rights language that mirrored theirs. Just to make it abundantly clear that whatever dispute is going to happen in the future, It's not being dealt with now, and no one's being readjust at this point. And I can confirm that language has been added in the bid order at paragraph 58, and I just want to express my appreciation for the professionalism of debtors' attorneys engaging with us on that. All right. All right, thank you.

I did see that language when it was pointed out to me, so it looks like you should be squared away for purposes of the interim order. Yes, thank you, Your Honor. All right. Any other party? Your Honor. Leanna Hoffman from Siddly Austin on behalf of the proposed dip lenders. Your Honor, my colleague, Jennifer, Jenner, is trying to unmute her line, but I think we're having trouble.

Is there a trick to unmuting a telephone line? For telephones, it would be Star 6, I believe. Okay. Star 6 to unmute if the audio is on the... You're on now? Yes, I can hear you. Okay, great. Thank you. And apologies about that.

I'm having issues with my computer audio. But again, for the record, Genevieve-Winer was still in Austin on behalf of the proposed dip lender. And thank you, Ms. Hoffman, for jumping in. I want to reiterate the comments of Mr. Piper and Mr. Ashmead and, you know, a sure city council that this was the first that we had heard from them in terms of the filing rights, right before the hearing, but they should, of course, feel free to reach out to us. As I understand it, though, there's nobody objecting here as to the error and, you know, the order as proposed with potential changes that will be negotiated afterwards will be entered.

But again, as I understand it, no one is objecting to the interim rule there. All right. Thank you. Your Honor, Vicki Driver. I just had a question on the budget, but if we're just on the order, Right now I can reserve that for going through the budget separately. I don't care. If you have a question about the budget, why are we knocking out now, I guess? And I'm happy for debtors council to address this. I don't necessarily need a witness to attest to this.

But in looking at the budget, there is a line item referring to occupancy cost. And I believe it's approximately $1.891 million for the first week. My question is, is that referring to lease costs? And if so, has the debtor made any decisions as to whom those payments are to be made? Yes. I believe those are with respect to lease obligations, particularly rent in some instances, including tax and other lease obligations. I will say that for any, and I believe that that is for any locations that are not being rejected as a petition date, we do expect to honor our lease obligations. Thank you.

And I'll just, I'll be in contact in a little bit more detail with you guys as I've been brought on board. So I appreciate you addressing that on the fly. Thank you. Thank you. All right. Any other parties? Any concerns about the dip motion? Your honor.

This is Joel. of our we had provided some additional proposed language that I don't see in the red line but we'll continue to work with debtors counsel presumably to be addressed in the final order specifically in relation to paragraphs five and six and paragraph 28 of the interim order but just made that note but we'll continue to work with them and presumably will be addressed prior to the next hearing all right all right very good any other parties last call for comments on the DIP motion. All right. Well, that motion is approved. After the hearing,

I am going to go through just quickly and go through the rest of the red lines, the rest of the comments on the red lines. I didn't see anything that stuck out to me, and so I fully expect I'll sign that order once it's uploaded with all the revisions that are made. So that motion is approved on an interim basis for Mr. Aiken, Lee's benefit. Thank you, Your Honor. With that, I'll pass the podium back to my colleague,

Stephen Jones. I'll see him at the podium from O'A. Lawner. All right. Good afternoon, Your Honor. Stephen Jones, on behalf of the debtors, I think the last item we'd like to address with the court today is docket number three, and that is the notice of complex case.

So, essentially, Your Honor, we're asking for complex case treatment under the complex case procedures in the district for work with Ms. Burgering to secure omnibus hearing dates. Otherwise, the complex case procedures would control. No comments on these on the proposed order as filed with the U.S. trustee or anyone else. All right. Mr. Bublic, are you good with this one? Yes, your hire.

No concerns. All right. Anybody else have any comments on the notice at docket number three? All right. So I'll enter that order. I didn't have any problems with it. Thank you, Your Honor. I think that concludes the better presentation for the day.

We certainly appreciate the court's time, both in this matter or earlier matter. Actually, Your Honor, I think we have one other housekeeping matter. I think we do need to schedule the second day hearing. My apologies. It's Chris Dickerson for the record for Robs & Grate. All right. So I don't know, since I've been in court all day, I haven't had a chance to check with my courtroom deputies out,

but we have some stand-ins that are helping with the schedule. I don't know, have you reached out or have you gotten a proposed list of dates, or have you, do you have any idea when you might want to come back? I think the only one that we've, are, I think we can work around primarily the final dip hearing, Your Honor, which would need to be at least 28 days. So anything that you would have available a month out, I think would be hopeful and acceptable, obviously, subject to your calendar. I think 28 days out takes us to the 30th.

You give me just a minute. And, Honor, I didn't mean to surprise you. I know you've been in court all day. If you would like us to take this offline with your scheduling clerk, we're happy to do that as well. I'm happy to knock it out now. I'm just, I'm looking. Thank you. My normal court deputies out.

And so I think it's probably just as well to look at the calendar now. So on the 30th, there's a case that's listed. that is set for all day, but I'm familiar with the case, and I don't, I think it's at most an hour hearing. And that's at 9.30. I have some preliminary lift hearings at 1.30. I don't know. Do you prefer mornings or afternoons? I think for those that would be traveling, Your Honor, would make it a little bit easier to do an afternoon. How about 2.30 Central? Would that work? Is that too late? That works, Your Honor.

No, I think that's acceptable. I obviously allow others to speak up if there's an issue, but that works for the debtors. All right. Anybody else have any problems with the 30th at, what did I say, two or two-thirty? 230. 230? 230. Yes, Your Honor.

All right. Why don't we go with that, then? Thank you, Your Honor. And I think, as Mr. Jones indicated, that is all we have for you today, unless there's anything else you would like to cover with us. I don't think so. again for the time. Sure. I will say the papers were excellent.

The presentations were excellent by everybody who presented today, so I look forward to seeing you all in court again for the second days and the other hearings. And I appreciate the efforts of all the parties on reaching agreements on the matters that are set today. So thank you all. Unless anybody else has anything else for this afternoon, court will be in recess. Thank you. Thank you.

All right.