American court hearing recordings and interviews - Klöckner Pentaplast - first bankruptcy hearing in US chapter 11 bankruptcy case in Texas

Episode Date: November 7, 2025

For more information about the bankrupt company see https://en.wikipedia.org/wiki/Kl%C3%B6ckner_PentaplastFor more information about the bankruptcy filing see article on www.plasticstoday.com below:Klöckner Pentaplast, a global packaging and specialty film manufacturer, has filed for Chapter 11 bankruptcy protection. Part of a comprehensive financial restructuring plan, the filing will reduce the company's funded debt by approximately €1.3 billion ($1.5 billion).The company and certain subsidiaries voluntarily initiated the prepackaged Chapter 11 process in the US Bankruptcy Court for the Southern District of Texas. Under the restructuring agreement, ownership of the company will transfer to certain Klöckner Pentaplast partners following completion of the process.https://www.plasticstoday.com/medical/kl-ckner-pentaplast-enters-chapter-11-restructuring-to-reduce-1-3-billion-debt

Good afternoon. This is Judge Lopez. Today is November 5th. I'm going to call the first day hearings in 2590642. Clairpatro Finco. I will take appearances virtually. This is a virtual hearing. There's no one in the courtroom. Everyone is on the line. Wish everyone a good day. Please hit five star and I will unmute your line. I would also ask. If you just jump on the Southern District of Texas web page, you'll find a place to make an electronic appearance. Just go to my home page. You'll find a place for complex cases and where to make electronic appearances. I'm just going to go in the order in which I see them.

Is a 312 number? Good morning, Your Honor. Chad, who's Nick with Kirkland and Ellis appearing on behalf of the Cleopatra debtors. Okay. Good afternoon. Here's a 917 number. There you are. Good afternoon, Your Honor.

Scott Greenberg's Gitching Dunning Crutcher on behalf of the ad hoc first-ling group and proposed dip lenders. Good afternoon. A 312 number. Good afternoon, Your Honor. Jack Lood with Kirkland-Alice on behalf of the debtors. Thank you. A 713 number. Good afternoon, Your Honor.

John Higgins and Shane Johnson, the Border and Hedges appearing as co-counsel for the debtors with the Harkoff team. Okay. Good afternoon. A 646 number. Good afternoon, Your Honor. Bob Britt and Paul Weiss on behalf of the SEPP parties. Good afternoon, Mr. Britton. And a 202 number.

Mr. Jimenez, that must be you. Good afternoon, Your Honor. Andrew Jimenez for the United States, we'll see. Good to see you, Mr. Jimenez. 312 number. Thank you. Good afternoon, Your Honor. Sean Scott of Mayor Brown on behalf of Kofos,

finance, GmbH, one of the factors. Good afternoon. Anyone else wish to make an appearance please hit five star and I will unmute your line One more check Okay, who should I turn this over to? Your Honor, Chad, who's think again with Kirkland and Ellis? I will take the lead if that's okay with your honor Okay

Before we jump into the hearing, I just have two housekeeping matters First, I want to say thank you to your honor and your staff for taking care of us I know you're very busy in other matters, and we've dumped a fair amount of paper on you late last night. So thank you for that. I also want to thank Mr. Jimenez in his office for working with us. I believe we are, for the most part, resolved on issues. We may have one or two issues here and there to work through with Your Honor. But I think with the Office of State's Trustee's help, we've been able to streamline those issues.

Your Honor, I also want to thank, not last, but I want to thank the parties and interests around the room. Your Honor, this has been a huge push to get to where we are today, and without them we wouldn't have been able to reach the agreement that's going to facilitate. But I think will be a very smooth process overall. And last, and very important to this effort was the debtor's management team. Your Honor, as most management teams do in these Chapter 11 cases, they need to do two jobs. One is running the business and keeping the trains running on time. The two is dealing with all the people around this room and getting ready for a lengthy Chapter 11 process to the extent we're unable to reach a deal. Unfortunately, we're able to pull it together, but the management team here did a fantastic job of working with us and getting everybody in the right spot.

Your Honor, the second piece that I want to chat about is the notice of the first day hearing. So we filed an affidavit of service at docket number 7.9. It is an affidavit of Ms. Latisha Sanchez of Strattow. I noticed, Your Honor, before the hearing entered the order authorizing Stredo to serve as the debtor's notice and claims agent as well as the joint administration motion. Sanchez and the straddle firm took care of serving the notice of the first day hearing via electronic mail on as many parties as we possibly could overnight delivery on others where we didn't have email addresses that includes in terms

of email service that include the lenders who are parted to the RSA the agent lenders the inventory trustees were applicable the cash management banks the the Attorney General for the various states around the union that we business in, as well as the Department of Revenue Service, utility providers, and ultimately the insurance folks as well, and last but not least, the factors that you've already heard from today. With that notice, Your Honor, we believe notice of the first day healing and the emergency the lead forward question today is appropriate. And once you have any questions, I'd like to publish a short presentation.

Okay. I think I've given the presenter role. It was a Kirkland presenter. There's someone who says they can't hear me. I just would remind folks to please dial in as well. I was going to do the presentation myself. I don't think there's... There was someone... You want to give it to you?

Sure. I have it ready. Sure. It's shown the whole thing. Sorry, thank you. There we go. I think you can see the presentation. Your Honor, we're here today for the first day hearing in the cases for Pletopatra Finco, Sorrow, and 24. It's dead or affiliate.

Your Honor, I'm going to refer to them as Plotner throughout the presentation, which is the more common business. common business for the debtors. Your Honor, as a result of the hard work and efforts of the folks around the room and please to present a fully consensual pre-packaged Chapter 11 case that eliminates 1.3 billion euro of debt, provides a full recovery to general and secure trade creditors, and positions the company to emerge from Chapter 11 as quickly as possible. Your Honor, as I already indicated, and as you're probably well aware, Your Honor, this is a packaging company. And we are one of the largest manufacturers of packaging materials around the globe.

And Your Honor, as I lay out here on the slide, the different areas that we participate in in terms of how we work. of how we break down our business between pharma, nutraceutical, medical devices, consumer packaging, et cetera. Mayor Honor, my last attempt at courtroom humor was in response to Judge Perez's invitation to get my ear pierce, and you know, my answer to that question was met with clear derision from a variety of publications

that shall go unnamed, but I got even more derision from here at Kirkland. here at Kirkland. So I'm resisting the urge, Your Honor, to make a joke about the nature of a packaging case in a pre-packaged case. And in fact, the associates at Kirkland who are working on this case threw it up on a wheel of chance, and the wheel said, no, Chad, don't make that joke. So I'm not going to make that joke today. Instead, I'm going to tell you that As with Mr. Susberg, I think I have a significant experience with the types of products that Klockner uses, and I frankly think everybody on this phone call does.

Whether it's the occasionally allergy pill or cold medication that you're popping out of a childproof blisters, the daily use of credit cards, purchasing fresh meat and seafood that are wrapped in packaging produced by Klockner, I suspect we've all had made a daily interaction with these types of products. But not to be outdone by Mr. Susberg, I did do something about a month ago. I went and had surgery just so I could say on this presentation that I was familiar with why they store the scalples in sterilized packaging and trays along the lines of what Klockner manufactures.

But joking aside, Your Honor, I think what makes Kaukner unique, is its investment in research and development. And we invest over 15 million euro every year on research and development to continue to be a leading provider of sustainable, specialized packaging. We've all done it. Stock our fridge with good intentions, only to sacrifice nutrition for convenience. Keep your body and mind nourished with whole-body meal shakes from Kachava. It's got 25 grams of protein, 6 grams of fiber, greens, and so much more.

But it actually tastes delicious. Try one of Kachava's indulgent flavors today. Shop now through December 2nd to get 30% off your first purchase of two or more bags. Go to Kachava.com and use Code News. That's KACHAVA.com, code news. That includes, for example, Your Honor, some of them are more recent packages like tray-to-tray and K-P-A-Leek, which use recyclable materials, produce the packaging and minimize the amount of packaging necessary,

which is an attractive trait to our customers who are attempting to reduce costs and reduce the overall packaging volume. KP-Infinity is another more recent example of the research and development that our R&D group has done. KP Infinity is a product that is recyclable in that it also retains heat. And so you're familiar by food service providers, packaging your meal in one of these.

What makes it super unique is it a multi-use type material moving away from the polyureth or expanded polyurethane, which is being rejected by regulatory regimes around the world. It's that type of innovation that has made Klockner what it is. It was founded in 1965 and it grew into the United States and Canada. in the 70s and ultimately is celebrating its 60th anniversary this year in 2025. Over that time, it has grown, Your Honor, to employ approximately 5,000 employees around the world, 27 manufacturing plants in 16 countries. Each year, Your Honor, we produce approximately 500,000 tons of high-performance film and packaging

solutions. Your Honor, the debtors efforts are led by the management team that you see here on your screen. I want to highlight two of the management team who are on the call today. First, the debtors declarant, Mr. Mark Rattella, he is the first-day declarant. I can see him on my screen. Hopefully, you can see on his. Second is Ms. Chenet Mitchell. She is the general counsel for the debtors, and has worked closely with us as we have prepared for today's cases. Your Honor, the debtors are managed by a board of managers. You see them here. I want to call special attention to two of those boards and managers,

Moe Meiji and Gary Beggamon. They have served as the better special committee throughout these restructuring. The debtor does have other additional independent directors on the board assisted along the way, but the special committee was comprised of Mr. Mange and Mr. Begman. Your Honor, the capital is structured here, while complex with many entities, ultimately it's really pretty simple. We have approximately 2.3 billion euro of funded debt. That's broken down, as you can see on the chart here. All of the shaded boxes on the screen are the 20

debtors that have commenced these Chapter 11 cases, the starred entities, Your Honor, are those that are party to the factoring arrangements that you'll hear about later in the hearing. We have about $1.8 billion of first lien secured debt. We have another $134 million of first lien bridge loan debt, and then we have some local debt in country, each of these tranches of secured debt are first lien debt secured by different collateral. That's an important thing to highlight. And then lastly, it is the second lien notes, which approximately 317 million euro.

Those notes are secured by the same collateral as the 1L debt that's highlighted here. Our one else are represented by an ad hoc group that has retained Gibson Dunn and Mr. Greenberg, do you see on the phone as their counsel. They've also retained Hula and Loki as their investment banker. The second lien debt highlighted here in the pink boxes is represented. One of the large holders of that second lane debt is Castle Knight. They hold, I believe, approximately $80 million of that debt. They are represented by Mr. James Savin at Aiken Gump.

And last but not least, our strategic value partners are FBP, that is the debtor. They owned substantially all of the equity, not all, but substantially all of the equity in the debtors. They also hold significant chunk of the 1L debt, it's approximately $150 million, and then they hold approximately $100 million of the second lien debt alongside of capitalized. And here's just a summary of that. Your Honor, I've already talked about Kirkland, of course, Mr. Higgins at Porter Hedges. You'll hear in our declaration and support of the DIP facility that the, the

declaration from Mr. Brent Hurleyhee, and then our financial advisors at Alvarez and Marcel, Mr. John Hickman. And finally, we've already talked about strutto. I've summarized that as well. Your Honor, the debtors refinanced substantially all their debt in early 2021 because they had debt coming due in 2022. At that time, they were riding a bit of the high coming out of COVID because a lot of the customers around the world increased their purchasing of the goods in order to create back inventory should things go sideways during COVID. The lenders underwrote those numbers and ultimately believed that the company's business would grow into the capital structure. over time. Unfortunately, the industry faced headwind.

There was a drop in demand that was caused as the customers realized that inventory was too much relative to demand, and therefore demand dropped. Meanwhile, the prices of raw materials that go into the production of the packaging materials increased significantly. Those industry headwinds obviously had a very negative effect on liquidity.

And beginning in mid-20203, there was a strain on the debtor's business. And there was a series of attempts to get additional liquidity, some of which you see in the first lien debt. But ultimately, it became clear as we headed into the end of 2024 through April 2025, as the debtors were attempting to try and refinance their first lien debt, there was a maturity coming up in the early part of 2026. It became clear that we were going to be unable to refinance that debt. So in February 2025, we obtained some additional financing that I just mentioned. And we use that financing to negotiate with our first lien.

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It's at this point, Your Honor, that we face a critical moment with waning liquidity. contrasting with the debtor's obligations to comply with law in all of the jurisdictions around the world, including in Germany, where we know the financial operational restrictions are quite strict. We had faced a conundrum. We could file a free fall Chapter 11 case, which would have likely been not mitigated disaster because the company was not prepared for a free fall Chapter 11. Or we could work with our state's stakeholders to try and find another solution. And it's here where the ad hoc group of first-wing lenders stepped up in a major way.

Your Honor, in about the end of August, we reached resolution on a forbearance agreement and a bridge financing agreement, which was in effect in advance on what would be dip financing. They provided us with 135 million euro additional liquidity that allowed us to satisfy the minimum liquidity standards that we needed to maintain to continue operating the business and to give us sufficient time to actually negotiate with all of the stakeholders what was going to happen here today. And it's as a result of those efforts, and I'd be remiss not to mention the efforts of the factors who also played along with us as we were navigating these liquidity issues,

that we were able to reach agreement on the terms of the prepackaged case that we filed last, that we launched last night for solicitation and filed today. Your Honor, with that, I'm going to turn the podium over to my partner, Mr. Jack Luz, to walk through what the deal looks like and what the timeline that we're proposing for these Chapter 11 cases. Okay. Thank you. Can Your Honor hear me okay? Just fine.

Good afternoon. Good afternoon, Your Honor. Looking ahead in our presentation, we have a couple more slides that just set the table as it relates to the overall restructuring transaction that we negotiated, as well as the dip financing that's tied to that transaction. And finally, what we view as the path ahead in these Chapter 11 cases, subject to your honor's approval of our proposed scheduling motion. As it relates to the overall restructuring transaction, Your Honor, it's a relatively straightforward restructuring transaction at the end of the day.

We executed, the company executed an RSA immediately preceding launch of their prepackaged cases in the filing of these Chapter 11 cases. That includes the debtors in these Chapter 11 cases. The first lien lenders represented by Gibson Dunn and Hulahan, plus certain additional consenting first-ling lenders, it gets us in the neighborhood of 90% of all outstanding first-ling claims, plus the Castle-Nite funds and SVP, which, as Mr. Huthnick highlighted, hold the significant majority of the two-out claims between Castle-night SVP and certain crossholdings held by first lien members that are funds that are part of the first lean ad hoc group. We have well in excess of two-thirds of all two-out claims, party to the RSA.

The RSA contemplates a prepackaged Chapter 11 process. In accordance with the terms of the RSA, we launched solicitation of a pre-packaged plan immediately before the filing, and we anticipate, as I'll come on to, the solicitation process, will continue through early December. In terms of treatment of claims in the Chapter 11 cases, the dip claims, which I'll describe in a little more detail, on the following slide, will convert in their entirety into a new exit facility. The company is not required to raise new financing to repay and cash the dip claims at Emergent. First lien claims will receive 100% of the new equity in reorganized Klockner.

There are some structuring considerations in the RSA as it relates to what type of equity instrument certain funds can hold, but effectively the first lien lenders will own 100% per out of basis of the equity in Klockner on the other side of the Chapter 11 process. The second lien lenders have negotiated a resolution with the first lien lenders in the company under which the headline term is that those second lien lenders will receive $17.5 million of incremental first lien loans under the first lien exit facility. So these will be Perry Pesu with the first lien loans that the dip is converting into. It will be an incremental 17.5 million euro, and those loans will be distributed on a pro rata basis to all 2L holders. And as I said, we have in excess of two-thirds of those holders already supporting the plan. Under the terms of this plan, in light of the fact that it is a prepackaged restructuring,

holders of unsecured claims and holders of other claims that aren't the first-in claims or second-ling claims, will be unimpaired. Existing equity interests predominantly held by the SPP funds will be canceled as part of this process. The plan also contains customary release exculpation and injunction provisions, which are for more detailed consideration when we get the confirmation. Flipping ahead a slide, a brief summary and we'll get into a little more detail in connection with the dip financing motion, Your Honor, but to sort of set the table for your honor as to the overall structure of the dip financing.

The overall quantum of dip financing is $984 million. That includes a $349 million new money component and a $635 million roll-up of existing first lien obligation. As it relates to the new money portion of the dip, $264,000,000. million dollars of that will be available on the first day following your

honor's entry of the interim order and finalization of the dip credit agreement at the final hearing an incremental $85 million will be made available as we've noted here your honor under the initial draw of the dip the pre-petition bridge financing which with accrued fees equates to approximately $134 million will be fully refinanced in cash. There is a distinction, and it is a distinction with the difference between the refinancing of the bridge facility and the roll-up of the existing first link claims. That will be a cash refinancing, the existing, the dip lenders are advancing cash to refinance

that loan. There is not one-to-one overlap between the dip lenders given the grant. growth in the group and the participants in the DIP facility as between the DIP and the bridge. And it was a negotiated part of both the bridge financing and the ultimate bid financing, that that financing would be refinanced in full as part of the bridge. That bridge was put in in late August with the specific intention of providing a runway for the debtors and their lenders to negotiate a consensual restructuring. Obviously, the initial goal was to negotiate a restructuring supported by the company and its

personally lenders. Ultimately, we were able to achieve much more consensus than that, bringing on board the two-hour lenders and SVP as equity sponsor. That bridge was always contemplated to be part of a broader facility that not only funded the negotiation period, but also the debtors broader restructuring. And the sizing even contemplated in late August has always contemplated that there would be a larger facility to fund the liquidity need of the debtors during the implementation of the restructuring that was negotiated and fill the liquidity need that the debtors

have to satisfy trade claims and other operational obligations. Under the interim draw, $130 million of cash stays on the debtor's balance sheet and will be available to satisfy operational needs with the debtors over the first portion of the case. The remaining $85 million will enable the debtors to satisfy the balance of the operational obligations and capitalize the debtors sufficiently for emergence. The plan does not contemplate that the debtors will be required to raise additional capital to exit. Unless Your Honor has any question on the dip structure, I was going to touch briefly on timeline and then pause before we go into the agenda.

Okay. Your Honor, we're here on the first day hearing November 5th. We contemplate a full solicitation process and compliance with the bankruptcy rules and applicable non-bankruptcy law. and have noted a voting and opt out an objection deadline of December 11th. And subject to your honor's availability, we would request a confirmation hearing, honor, about December 16th. The RSA contemplates a 45-day milestone for the confirmation. December 16th is around about day 42. When we get there, Your Honor, we would also request, we're going to need a second-day hearing inside of that date, given the company's cash needs, and the interim final release contemplated by the district.

What dates did you, around what dates did you, like around the December 3rd, 4th area, somewhere on there? 25 days. Obviously, we have Thanksgiving at the end of the month, so I think that puts us in the first week of December, Your Honor. Okay. Okay. Okay. As there any questions from your honor, that concludes our initial presentation. We would pause there if any other parties and interests have opening statements to make. Otherwise, we would jump into the agenda starting with the scheduling motion.

Let me just ask if anyone wishes to make a statement. Your Honor, can you hear me? Okay. Yes, just fine. Okay. Your Honor, if I may, just very briefly. Scott Greenberg, Gibson, Dine Corruption on behalf of the lenders. Your Honor, and I will be brief, Mr. Houssinik warned me to be very brief,

where he threatened me with more jokes for the court. But in all seriousness, Your Honor, there's a lot of history here, and look, we're at a really good place, obviously, coming before, Your Honor, with a pre-packaged case, so I'm not going to go all the way down memory lane, but I do want to just hit on a couple points. Your Honor, the members of our ad hoc group are part of a broader group that are the existing bridge lenders and the 1L creditors, and obviously the proposed dip lenders in these prepackaged cases. We are also parties to the RSA, which the debtors have mentioned, that supported. I think the numbers shook out right around 92 percent of the existing first-link creditors. And if it's ultimately approved the transaction contemplated by the RSA embodied in the plan,

results in a de-leveraging of approximately $1.3 billion of these debtors balance sheet. Your Honor, just quickly in terms of a little bit of background, because we've actually been involved in this case for quite some time, dating all the way back to April of 2024 when this ad hoc group first came together. The ad hoc group, I know we've thrown around a couple different numbers, but the ad hoc group is approximately $82% of the company is approximately $2 billion, of first-lean debt. We filed a 2019,

that's at E-CF statement 75 that has the detail. But it's a combination effectively of first-lean term loans, U.S. and Euro-denominated, given what the business is, first-leam bonds, and I think the group owns actually about 46, 47% of the RCF as well. I agree with Mr. Hussnick, it's not the world's most complicated capital structure per se,

but just given the global footprint of the company. It is challenging, and that issue came up in connection with the bridge facility we put in over the summer, which was referenced. Just by way of background, we've probably been in active discussions on and again, off again, with the company since the end of 24. The company did effectively an exchange offer in April of last year where they converted some of the unsecured notes into 2Ls. after they finished that exchange offer in the spring, they really turned to our group, which was more 1-0-oriented, because as you heard from the debtors,

you had maturities approaching, and they were having some issues recognizing they probably couldn't tap the capital markets to refinance us out. They also had some issues with liquidity. I will say, without going too far down memory lane, we spent a significant portion of time in the spring of last year leading into the summer

negotiating A&E transaction, which is where this originally started. That transaction literally got to a point where all documentation was done. I think I actually had started to restrict other lenders in the syndicate to get support for the A&E before we launched. And unfortunately at the end, for a reason, obviously in their own business determination, the company and the sponsors decided not to move forward with the A&E transaction. And that transaction, just to provide a little context of how we got to the bridge, since it's part of the dip refinancing today,

that transaction was effectively $275 million of fresh capital coming in to support the A&E, some of that for balance sheet cash, some of that to pay down our lenders in connection with rolling their maturities. And, you know, that fell apart in late July. And then in mid-August, as Mr. Hismick said, shortly after the A&E failed, which I think all of our folks were probably still licking their chops a little bit, having gotten to the finish line, we did get a call from the debtors' advisors, letting us know that not only was the A&E dead and the equity injection dead, but they needed approximately $100 million of liquidity and relief on our first lien debt payments that were coming due that month. obviously that was a bit of a 180 for us given we were going from a par exchange in an a and e and you know the sponsor staying in place to preparing to write a check to prevent the company from as mr husnick outlined and i agree with what would have been a pretty catastrophic collapse into chapter 11 particularly if you think about some of the foreign jurisdiction germany and the like which would have been implicated and are obviously a lot less forgiving than our processes here in the U.S. So against that backdrop, our lenders stepped up. They provided the incremental bridge.

That was about $112 million at the time. Obviously, some fees have accreted on that since. All I would say, and this just goes to the capital structure point. It was actually a pretty complicated bridge to put in place just because of where the assets are located in trying to take liens in foreign jurisdictions. It was a little bit of a hodgepodge of our Kirkland and Gibson's finance lawyers to really get comfortable that we came up with a collateral package that worked for the bridge. But I agree with the debtor's commentary. The thought process was always that we would get to this point in time where the bridge

would be taken out by a gift facility. And just by way of background, that bridge was put in place. Fantastic kind for all of us on the phone. It was late August. We put it in place. We backstopped it. And then Hulahan and company went out and did a post-close indication. and eventually we got, I think, about 84, 85% of folks into that bridge over the summer.

And just to fast forward, that's kind of Labor Day, from Labor Day to today or the last couple weeks. We've effectively been spending a lot of time with the debtors. They redid their business plan. As you saw at the outset, they brought in independent directors who got deeply involved and came up to speed. And the goal was to get to a soft landing into bankruptcy. And then the good news, obviously, is just in the last weekend, we were able to cut a deal with the second lien, mainly Castle Night represented by Aiken, with Mr. Britton's clients, SVP and the sponsor, both in their sponsor capacity and lender capacity, where we, I think, since Friday to today, pivoted from what was going to be a pre-arranged in front of your honor to a pre-pack. So a good result. So just to say it, I mean, it's been a long road.

It's gone from a consensual A&E to no deal to a liquidity crisis to a free fall to a free-arranged to a pre-catch. I would say the best, the last ending has been very good. And I won't get into the dip. We'll hit that as Mr. Lewis hits it in the opening presentation. But I think from our perspective, it's been a long ride. We've gotten to a good place. I think our hope, probably our clients hope is that they never have to talk to any of us again, make a focus on the business, and get this conversation.

and get this company in and out of bankruptcy as quickly as possible. So I appreciate the time, Your Honor. And with that, Mr. Lewis, I started to scale your thunder. I'll hand it back to you. Perfect. Thank you very much. Anyone else? Okay.

Who do I turn it over to? All right. Jack Lewis again from Kirkland Ellis on behalf of the debtors. I will be taking us through the first two motions that are up on the agenda. Before we jump into those, Your Honor, we'd like to move into the record the support for the first day motions and did financing those are the declarations of mr. Mark Rotella the CFO of Kockner docket number four and then in support of the did financing and use of cash collateral

the declaration of Brent Herlihy of CGT at document number 25 and the declaration of Jonathan Hickman from A&M at docket number 26. All witnesses are available in the virtual courtroom for cross. Okay, they're admitted. So up here to cross. Thank you, Your Honor. Moving on to the first motion on the agenda at docket number seven is the better scheduling motion.

Your Honor, I hit the high points of scheduling in the intro. We are seeking to advance these cases to confirmation by mid-December, subject to your honor's availability, we have requested a hearing date of December 16th, which we would expect to be a fairly streamlined to confirmation hearing. We have noticed an objection deadline and voting deadline of December 11th. I wasn't planning to go into much more detail, Your Honor, unless Your Honor has any questions about the orders or forms of exhibit. It's all relatively standard,

straightforward facilitation procedures, ballots, et cetera. We launched, as I said, immediately before the filing yesterday afternoon. Okay. Let me just see if anyone wishes to be heard in connection with this motion. Your Honor, Andrew Humannis for the USRFD, no issues with this motion.

I just want to just expand a little bit for the court, for everyone listening in that this order also includes deals with the 341 meeting and schedules. If the debtors are able to confirm a plan within 62 days, then the 341 meeting will be waived and the filing of schedules. However, if the debtors do not meet that deadline

of confirming by day 62, the USRC will schedule a 341 meeting and the debtors will be required to file schedules. That makes perfect sense to me. Thank you very much. Anyone else? OK. Here what we have is just a scheduling motion.

I've reviewed the proposed timeline. It's appropriate. We're solicit. It's already started. I'm going to give you a combined hearing date on December 16th at 1 PM. As soon as I will review the, again, everybody's rights are preserved in connection with.

with plan confirmation related issues. This is literally just a scheduling motion, but I'm also approving the forms of notices. So I do note in everybody's rights of reserve with respect to have what I would call more substantive matters related to plan confirmation, but the forms are appropriate. I've had an opportunity to review those.

They're customary in our district and quite frankly around the country. Everybody's, we're really just establishing dates. The dates are satisfied the bankruptcy rules and provisions of the bankruptcy code. So I will just, it looks like Mr. Lewis, I'm just going to fill in December 16th at 1. Your objection deadline works. And then we'll take those up. The forms of publication are obviously appropriate.

And again, everybody's rights are preserved, and I'll get that signed in on the docket. All right. Yeah, thank you, Your Honor. I think you have the only spot is important. paragraph to you there. Yep. I put it in the kind of the mini box, too, where it kind of just talked about December 16 or at any time.

I just added the at 1 p.m. prevailing central. Understood. Thank you, Your Honor. With that, Your Honor, we would move on to the debtor's financing motion, which is a document number 24. In the introduction, we went through the overall structure of the dip. Your Honor, but just to hit on the numbers, what we're seeking relief for today is for $264 million of $134 million of that new financing will be used to refinance the bridge facility in full. In addition, we are seeking on an interim basis, $480 million approvals roll up $480 million of existing first lien claim.

with the remaining $85 million of new money and $155 million of roll up being on the final order, those ratios remain consistent from interim to final. It's just that the company is in more need of liquidity up front. Your Honor, speaking to the overall liquidity needs, the company was running very low on cash in late August, which is why we required a new bridge financing facility. That bridge financing facility was sized for basically a six-week negotiation process,

and we would get to the terms of an RSA and launch implementation from there. We are now on week 10. The company has been required for several weeks now to manage liquidity very closely, and has had to bear the additional burden of the cost of the various professionals that are in the virtual courtroom today that it takes to get to a prepackaged plan. The company is in dire need of an additional liquidity infusion, the liquidity that's contemplated by the RSA to begin to normalize terms with its vendors and ensure that it's sort of hitting

its operational targets business as usual, which is what this facility is size for. what the company is intending to do after the funding comes in the door. As we sit here today, the company has less than $50 million, global cash, the portion of which is restricted in an aggregate amount, that's well below the company's normal minimum operating cash requirements. It's set forth in more detail in especially the declarations of Mr. Rotella and Mr. Hickman. but an interim draw is dives to allow the debtors to sort of normalize terms over the interim period and in some ways catch up from the stretch that's occurred over the past several years.

I touched on it before, Your Honor, the refi at the bridge. It escapes from the roll-up. That bridge facility was a very specific facility, as Mr. Greenberg mentioned, with a very specific position collateral that differs from the broader collateral base of the 1L. That's being refinanced, that sort of one-to-one basis, lenders, that are being refinanced since the overall did facility. The lenders really, or the debtors really think of this as one financing facility, money that was extended in late August, and the money that's being a good facility.

extended percentage dip to filly size to accomplish one restructuring and we're fortunate that the second basis of structure will be much more complicated how that we've had an opportunity to negotiate the terms of the RSA and so we submit that is an appropriate use fund on an interim basis and it's the protection that the lenders bargained for when they advanced the funds initially. And the company believes that they're entitled to now, given the extraordinary result that the

provision of the ultimately in these cases. The remaining roll-up is a typical roll-up of the one-l obligations. The dip obligations will be against all of debtors, which substantially overlaps with the pre-petition obligors And the dip obligations is your honor might expect the debtor is subject to the various sort of local law perfection requirement. That's just reference to the intro.

The company has entities all over the world and so we intend to comply with the various. Your Honor, the order otherwise contains a fairly standard suite of protections for the lenders with certain provisions being subject to the final order of your honor. We have to be certain conditions for subject to the challenge period. The challenge period runs 60 days from the later I should say, 60 days from entry to the interim order or for a committee to this appointment. We're not, of course, the anticipating appointment of a committee in these cases

that something changes to this. We did file a revised form of order. actually after the started that is the right line. It's the one that takes out the marshalling, the equitable. It's the one with the marshal language, right? Yeah, that is a resolution reached with Mr. Jimenez. Preserving the right?

Preserving the right, right? Nothing in the interim preserving the right in connection with the final to come in and still request and wiping them out. I did get a chance to see that. Makes sense to me. And another language in there is there's some cleanup, I would call it, language related to our factoring arrangements. There's some very specifically negotiated language in here as it relates to relative collateral and relative priority of our factors and our dip lenders. We appreciate both sides engaging.

Oh, I did see that, yeah. reaching a resolution but that is a resolution that all parties are happy with including the company so it's just the last point your honor on fees and cost as set forth in more detail in mr. Hurley he's declaration so it was an extensive arms-length negotiation between the company and its lenders led by the special committee of the board ultimately we landed at a suite of fees that we believe is reasonable under the circumstances and when taken in context of the broader transaction or ultimately the lenders who will be owning

the company we believe that the overall leverage levels is a result of the size that the dis-financing are sustainable that's more of an issue for six weeks from now but the the interest rate of yes plus three percent cash two percent pick five percent commitment fees seven percent back up the three and a half percent vehicle work fee all specifically negotiated for this facility and supported by the vast majority of secured lenders in this case and for the reasons that's declaration we leave are reasonable under the circumstances I'll pause there your honor I'm happy to answer any questions your honor has

about the order of the uploaded a full queen of the order that also attaches the credit agreement you will have a bit of work to finalize and tick and tie terms of the dip credit agreement, but the economic terms match what has been disclosed in the papers. As your honor might expect, there's some complexities around collateral and aligning covenants and things of that nature. They're not a particular economic impact. So we would expect to finalize that shortly after hearing and get closed in some

So there's one at 81, one at 82. Now, I know someone written filed. Which one should, I'm assuming 82 is more recent than 81, but maybe just such as the red line, but how does it, which one should I be looking at and which one attaches the credit agreement? I filed at number 82 include the redline and clean of the order. That was to ensure that Your Honor saw all the changes that were made. We also wanted to find a single compiled order that includes the credit agreement, which is a docket number 81.

Ah, okay. Let me just ask, does anyone wish to be heard in connection with the financing motion? I appreciate the clarification, Mr. Lund. Mr. Cohen, if you could hit five-star, I will unmute your line, and there you are. Go for it. Yeah, Your Honor. Are you hearing me? Yes, just fine.

Good afternoon. Great, perfect. Good afternoon, Your Honor. Michael Kellan Gibson, Dunn and Crutcher, on behalf of the ad hoc group, the first thing creditors and proposed dip lenders. I believe Mr. Luz covered the landscape pretty extensively on the dip. We naturally support entry of the interim dip order, but I'd like to take a moment in echo how critical it is to the lenders to see this business continue to get stabilized and find

the right landing here and continue to flourish as we hopefully, you know, swiftly get through cases especially given the expensive footprint in Europe and in other countries where maintaining the relationships with vendors in those jurisdictions is absolutely critical to that end I'll just highlight the DIP will fund over 170 million of vendor payments pursuant the first day orders here given that a vast majority of those vendors are in non-U.S. locations as well nearly 80 million of payroll over the budget period you know these are the types of This is the main focus for the lenders just to get this business in the right place and move through these cases.

And with that, those are my remarks. If you have any questions, Your Honor, on the order, I'm happy to take any of them. No, I did get a chance to review the changes over here. I did see the comments from, you tell me, with respect to the marshalling, and I think that makes perfect sense. I did see kind of the preservation of rights language for the factors. And I think all that makes sense to me. It's clear based upon the declarations that the debtor needs money. It's clear that there's been a year of negotiation.

It was a bridge loan, and now you've got another loan. First aid dips are always coming in different shapes and forms. but when there are a prepact that's proposed to unimpaire the trade, and on the first day you're seeking authority, and a lot of the money that is going to be used, is to really take care of trade creditors in connection with motions. I think things get a lot easier on my end because it's really one of the things you look out for

and dip motions at the beginning is to make sure that there's some protection for unsecure creditors in this process. And so, especially in an international case, if the goal is to take care of creditors around the world who may not have had access to some information and certainly due process went out, but just I feel a lot more comfortable today doing what we're doing, knowing that we're going to, that the company is intending

on taking care of its trade, keeping the business going, that there's a business there and there's agreement here. So 364 is satisfied the proposed financing, the terms of the financings are appropriate and reasonable under the circumstances. And I'm comfortable granting the relief requested. And I also note that there's a large agreement from a really large creditor to appear. And so I will get this signed and on the docket. Mr. Lewis, I need to give you a final hearing date on this. and I thought December 3rd at 9 a.m. is when I can do it.

To just make that one work. I know there's a bullet in here that I've got to add for just a blank to identify the factoring motion itself. It's like somewhere in there, and I'm just going to, I'll add that in as well. I think it's your footnote for the interim factoring order. But maybe I just, what I'm going to do to make my life a little easier is I'm just going to delete the docket number reference. If there's an interim order, it'll be clear what it is, but it'll just make me, in other words, I'm going to forget to go back and do this. And so this will make your life a little easier that we can get this done. So I'll get this signed and on the docket.

Where do we go next? With that, Your Honor, I would hand it over to Mr. Gremlin from the Kirkland team, and we'll take the next couple agenda items. All right, Mr. Gremlin. I appreciate it. Mr. Gremlin, if there's any thunder on the motion to seal, I'm going to sign that order. So no grand presentation on the motion to seal the factoring. I'll take care of that one, but I'll let you proceed.

How you wish. Mr. Grimman, good afternoon. Oh, I need to unmute your line so you can speak. Good afternoon. Good afternoon, Your Honor. Dave Remling and Perklin and Ellis on behalf of the letters. Can you hear me okay? Just fine.

Good afternoon. Okay, well, I didn't prepare expensive marks on the ceiling motion. That's great news, and I'll just jump right into the factoring motion itself. That is docket number 27. Yeah, all right. And see that. And Houstonic would have tried to make a joke on the ceiling and the factory. I'm just – we're just going to keep it moving on these jokes today.

We'll keep it moving. I think some of the packaging probably has a feeling component that I really know it. I know it. That's why I had to take that one off the docket. I signed that one and it'll get out on the docket. Okay. What do we go next? So the factoring motion is at docket number 27.

Yep. You've heard a little bit about the cooperation that we've received from the factors today. They're represented. There are two that we work primarily with, one named Kofos. They're represented by Mayor Brown. Another called facto fronts, I believe, is how they pronounce their name, represented by Denton. They worked with us on the dip motion in order, and they've also worked with us on the factoring motion and order, and we really really appreciate their cooperation to the date.

And in addition to the financing that Mr. Luzwalked you through, the debtors will support their liquidity during these Chapter 11 cases by continuing their pre-petition factoring arrangements. Now, the factoring arrangements are a significant part of the debtors, liquidity they take in on average more than $5 million a day through the sale of receivables and the debtors forecast that if they weren't able to continue the facility they would need an incremental $280 million to fund in chapter 11 cases and simply put your honor the debtors sometimes have lengthy trade terms and the factoring facilities allow them to bring them essentially down to zero

bringing cash in instantly and allowing them a liquidity pick up we think that they are ordinary course transactions. The betters do them every day and they've done them for years, but to the extent that your honor disagrees, we also believe that for the purpose of helping mitigate the liquidity flow, they also represent a good use of the better's business judgment and they should be approved for that reason. I understand that Mr. Jimenez has an issue with our requested release. He and I have been on the phone several times today. I'm sure he's tired of hearing me, but I do appreciate that he's willing to have a constructive dialogue on these points with me, but I do want to address the issue that he has if that's

okay with you. Okay. So Mr. Jimenez reached out of us and said that the main issue that he has is with an interim order paragraph 8. We provide a conditional grant of super priority claims to the factors, and the reason that I say it's a conditional grant is because it only kicks in if the sale of the receivables, which Your Honor we do believe is a true sale of receivables, is we characterize as a financing transaction or some other transaction. In that case, what we have requested is that the

factors receive super priority claims to the extent of any amounts that they are owed. First, Your Honor, we did push back on this provision being included, including after we learned that Mr. Jimenez was considering an objection, which we flagged for the factors through their counsel, and they have included that it stays in for the integral role that the factoring facility plays in the debtor liquidity. Where is the paragraph? paragraph 8 of the interim order if you're looking at the PDF that we file that's on page

Oh, I see it. Yeah, yeah, yeah, yeah. No, that's not going to happen today. It's an interim order. Nothing's going to happen in the next 30 days. You're not going to we're not going to... There will be no... This is a ship that will never reach its destination because there's no way in the world I'm considering recharacterization of anything in the next 30 days. So this is kind of an impotivism. possibility. You're more than welcome to ask for it in a final. Let's just keep it moving, folks. Let's just let the ship sail into the night. I don't see me granting this. But go ahead. You can try to convince me otherwise.

I appreciate the opportunity, Your Honor. Frankly, it's not you recharacterizing the transaction that we're concerned about. It's the international nature of the debtor's business. These factors are based outside the U.S. But I'm not going to hold another hearing until December 4th. So what are we talking about? So what we're talking about is in the event that another court perhaps one outside of the United States, that may not recognize Chapter 11, that may not feel itself within the purview of your own disorder. Come file an emergency motion and you'll get a hearing within 24 hours. I can't give you anything more than that. But if that's the concern, I can alleviate the concern within 24 hours,

And there'll be notice as to what's going on. You've highlighted the concern. You can just file a two-pager. I need a hearing on this very issue. I'm getting international issues. Somebody comes in, you got it. But there's got to be a little bit more notice. I can't do it on 24 hours' notice.

And before we move off it, you got to read the room, Mr. Grimley. It gets worse from here, that's what I'm saying? All right, all right. Understood, Your Honor. I'll feed the podium on this point. No, you can come in within 24 hours. If that's the concern, just come in within 24 hours, but I cannot, without more knowledge about what's going on

and whether this is truly going to be an issue. This all looks like it's academic, but I get the protection that they're seeking. I can just give it to you within 24 hours. You can get a hearing on it in 24 hours, and then we can talk about what's happening and what's going on, and if the factors have provided this protection and if they need it, I think the debtor can come, I promise you, you'll get a hearing real fast, 24-48 hours at the most.

Okay, okay, Your Honor. Understood. I take the feedback, and I'm hopeful that the factors will take comfort and your willingness to hear us quickly on this point in case we need to ask for that protection at that time. You got it. Just upload a revised order, and I'll get it on the docket. I didn't actually have anything else on my presentation. If I do it, I'm going to, if I do it, I'm going to mess something up. You know what I mean? If I do it, Mr. Grimling, I'm going to mess something up. But you can put something in there saying to the extent that any issues,

the court will, you know, will conduct an emergency. Am I hearing within, you know, within 48 business, within, you know, 48 hours, you know. Absolutely. And we'll work. Or within one to two business days, the court will conduct an emergency hearing, you know. put it in there. They're going to have the guarantee that I'll give them the hearing within 24 to 48 hours to resolve it, but you can put the language in there. I've got no issues with it, but I think Mr. Jimenez is right on this one. Okay. Understood, Your Honor. All right. Where do we go next? Next up on the agenda is the debtor's cash management. A motion that's at docket number 29, Your Honor, this motion, pretty standard cash management motion. We're just seeking the authority to continue operating the debtor's cash management.

management system to continue to move money between the debtors accounts to continue credit card programs to pay thanks to these we are asking for a 60-day extension of the 345 B waiver I just wanted to slide that for you and otherwise it's a three down the middle cash manager motion in order and if nobody has any questions I'd ask you to enter the interim order attached to the motion your honor if I may yes sir mr. Good afternoon. Good asking, Your Honor.

Andrew Jimenez for the United States of Chiefs. Your Honor, I want to start by apologizing to debtors proposed counsel because this is one of the issues that we discussed earlier. Earlier today, they reached out to see if we had any issues and I told them the only issue I have pending is pertains with the factory in motion. Just shortly before we started the hearing,

I spotted a hearing. issue here is something that we discussed before but it's just that on paragraph number seven it provides for the 60 days I'm only authorized by my client to agree to 45 days your honor and my apologies to debtors counsel for not not bringing it earlier when we were having conversations it's something that slipped I tried to send them an email before I did send them an email before that to start of the hearing order your honor does my own that's my only update that I'm requesting that instead of 60 be 45.

Your honor we can do 45 days. What paragraph are we looking at? At 29-1 paragraph 7 your honor. And we're gonna set the final hearing for the same December 3rd, right date? So essentially this will kind of, yeah, without prejudice to write to seek further extensions of the of the period. Where does it request the file? Final hearings at the top. I'm going to grant the cash management motion.

This is just to preserve cash flow without disruption. I just need to set an objection deadline. I'm going to put November 26th as the objection deadline. Just kind of a week before. It is the day before Thanksgiving. It is cool. But hopefully I haste to have to draft stuff during Thanksgiving. and I'm trying to make sure that the objection gets filed.

I'm going to put noon on December 26th, so that some poor associate, if anyone has an objection, I put the deadline at noon to make sure they can get out the office at a nice time. Okay. I have signed the cash management order. Mr. Luz, I'm not taking a no for an answer on the noon deadline for the objections. That's what you're coming in to tell me. All right, where do we go next?

They'll call for me, Your Honor. I'm turning the podium over to my colleague, Ms. I'm not. Mr. Gremlin, it's been a pleasure talking. Thank you, Your Honor. Your Honor, if I could just jump in. I don't know if Mr. Scott was trying to get off mute. If he can hit five-star, unless I've unmuted your line already. Mr. Scott.

Mr. Scott, can you hit five-star one more time for me? I'm raising my hand. Oh, I can hear you. Okay. Sorry, Your Honor. I was raising my hand during my hand. the factoring motion. I did want to understand, to give you a little bit of the background of what we were trying to accomplish and then make sure that we understand what protection

is available for the factoring parties. Okay. I do think this is an unusual case, and we did spend a lot of time negotiating the super priority claim here for what I think is a pretty nuanced situation. So apologies for taking us back in time. I was trying to write. It's okay. No, no. It's completely fine. What's going on? So, you know, I did want to ask to echo what Mr. Huisnick said, and there have been

robust negotiations around the factoring arrangements. But I think one of the nuances here, as you heard during both Mr. Huisnex remarks, and Mr. Greenberg is the fact that the transactions here take place

in a host of different jurisdictions. So for our clients, we have Germany, UK, Spain, and France, and I think for one of the other factors, Italy. And I did want to highlight that despite their multi-adversictional nature, we do think these are very normal course and straightforward factoring transactions, but the one big concern that our clients have is that there are not going to be ancillary proceedings in other jurisdictions. If this were only a U.S. related proceedings, I told you. Mr. Gremlin and I think I would agree with the U.S. trustee that probably the protections that we are seeking right now are

not likely to be implicated. But and I agree that the most significant protection for the factors is we have recognition of the true sale nature of the sales of receivables, the grant of a fallback lien. But what we want to the complexity here is that we have other jurisdictions, where at least as contemplated, it's not clear that local law would recognize this court's orders as binding on them. For example, under German law, to the extent that one of the participants in our arrangement has its coming or its center of main interest in Germany, it's quite possible and actually we think likely that a German court, if there were sub-twin and solvency proceedings there, might not recognize either the in order or the

final factoring order. So while the primary source of, I would say, coverage for our payments for our clients is the receivable of themselves, what we negotiated and the reason why we were seeking this super priority claim is there are scenarios where there could be local law and solvency proceedings. for instance in the UK where we deal with Limpact or in Germany where we deal with KP Europe where sales and receivable or means granted even by this court might subsequently be deemed to be void or voidable under local law. And at that point in time, my clients and Mr. Roberts' clients, Dr. Frantz, are taking the risk that at that point in time, they've effectively paid the purchase price of giving consideration to the debtors. And as you heard from Mr. Grumling and as you saw in the first day declaration,

creates significant additional liquidity for the debtors. And yet we are left after the fact with a claim that that sale is void or voidable under local law. So I understand, Your Honor's reaction that it is an unusual case. But I do think we have seen other circumstances, including the Audit case, front of your honor at case number 24-9-00-0-40. Mr. Scott, here's my concern. Here's my concern is that I'm doing it, I'm doing it on like 10-hour. I'm doing it on short notice.

What if you, that's the concern? Your Honor. And I don't, and I don't know why it's going to happen in the next, you know, what court is not going to recognize my order in 10 days or 15 days? You know, in other words, if what you're telling me is, In other words, you, I mean, if you and Mr. Houston, I want to come together and say, Your Honor, you know,

can we pitch this portion of it come back in, you know, 10 days or so? I'm, you know, I probably feel better about granting it, even if I stuck it. But I just, I'm not comfortable doing it today, but maybe

a hearing on short notice you know, if your clients are that uncomfortable with what it is and I got it, they're running a risk but I think with a little bit more notice, I could probably get more comfortable, but maybe seven to ten days notice out. I don't want to get too close to Thanksgiving holidays, but something where someone who's not here today may have an issue with it,

and I'd feel more comfortable if it went out. So I'm happy to work that into an order, if that's what y'all want to do, just something to give a little bit more notice, but get the factoring order in, and then this piece can tie in at a, at a slightly later date with some additional notice that gets me more comfortable i i understand the trustee's concern here on this one i think he's right but but i could get a little bit more comfortable mr humanez thank you your honor if mr squad is it's done then i'll i'll make a sure

remark yeah your honor all i was going to say is i will have to speak to our client i as i said i think the concern is that there could be commencement of claims or proceedings elsewhere and And at that point in time, I think one of the things you heard is in Germany, for instance, there is a risk, and the UK is another one, where if there were commencement of proceedings, at that moment, we could have risk over purchases of receivables. What I think is our client's position is it's going to be difficult to continue to purchase. So if I give you a hearing within 24 to 48 hours of you even getting a notice of a commencement, what's the question? What's the risk? What's the concern? I think as long as it's clear that we can stop purchasing receivables,

I'll have to speak to my client. That may work, Your Honor. I do think it creates concern over whether they'll be willing to continue to purchase in those jurisdictions without those protections. So we are relying on, it's not only the debtor's commencement. The concern actually is over a local creditor potentially commencing, for instance, a winding. up proceeding in the UK or a creditor in Germany deciding getting wind of this proceeding

and commencing proceedings in Germany. At that point in time, in both those jurisdictions, as I understand it, and I don't purport to be a UK or German Blytheirc, but we have spent many, many hours on the phone with Kirkland and Gibson Dunn, including lawyers across jurisdictions on that. There is a risk that no matter what happens, a purchase after that is void or voidable, regardless of the good face of our clients as a purchaser, the consideration paid to the debtors. That's what this is meant. This is narrowly meant to cover that risk off. And so, again, part of the reason I think the dip lenders were comfortable on this is this is not meant to open the door to a lot of claims.

We think in most scenarios, we will be well covered. It is meant to cover, admittedly, a corner case, but my client is very concerned about taking part of these transactions. given the multi-jurisitional nature here. So I'll pause there and yes. Mr. Jimenez, let me hear from you and then Mr. Houstonick, I'll turn to you. Thank you, Your Honor. Andrew Hemez for the U.S. trustee. Your Honor, I just want to take a brief moment to explain why this paragraph aid.

It's just inconsistent with the order and it's not justified under bankruptcy law. So, Your Honor, the debtors are asking the court to, to, to, you know, authorize the debtors continued participation in the factoring programs. That is a legitimate request on the first day. And the proposed order, Your Honor, take several steps to ensure this goal that I think are appropriate.

For example, Your Honor, the Internet order provides that the transfers, that, the transfers of receivables constitute non-recourse sales under applicable non-bankercy law and are deemed through sales. Now, these are part of the stipulations. The order also provides for better releases to each of the factors and their affiliates. The interim order also provides the binding effect

of the stipulation of the admission and releases contains in paragraph two and three of the order and also provide for a challenge for a challenge period. The order provides that the interring order shall constitute and I'm reading specifically from the order. This entering order should constitute findings of fact and conclusions of law shall take effect

and be fully enforceable noon proxon to the petition date immediately upon entry thereof. This steps, Your Honor, conformed with bankruptcy law and are, in my view, legitimate concerns to ask on a first-day basis. But, Your Honor, I don't think they can have it both ways. If this is a true transaction and this court is entering an order with stipulations to that effect, then this is what we have.

We have a true sale transaction of receivables. To say that, and also it provides for a challenge period, Your Honor. If someone can later, if the effect of pursuing a challenge is that then they're going to have to have a challenge. then they're going to have it, the factors are going to have a super priority, then this is not a meaningful challenge, Your Honor, because the factors will end up in a better position than before. Now, to the concerns that a foreign jurisdiction

might not recognize this court's order, well, Your Honor, if that is the case, it doesn't matter if it includes paragraph eight or not because they're not recognizing this court's order. So I'm not following how that provides an additional protection. I think the protection, It's embedded and it's clear in the order by characterizing this transaction

as true sales, Your Honor. I think that's where they get the protection. They are continuing the same, they want to continue post-petition with the same pre-petition practices, Your Honor. And that is okay. They should be allowed to view that, Your Honor. But there's simply no justification

for this super priority in fact of her aid, which, Your Honor, I think it also has the effect of no lawful. any possibility of anyone making a challenge. They provide a challenge period, but this will render that challenge period in effect, if your honor. So I think that the way to fix it,

it should take out a paragraph eight and any reference to a super priority claim. Mr. Houston. Your Honor, may I respond to that briefly just because I do want to make sure that the order that says clear. Again, for the record, Sean Scott, There's no intent to have this super priority claim cover pre-petition purchases.

That is the challenge period applies to that. The debtors have their stipulation, but we are not trying to cover that. What this is meant to cover is continuing the programs going forward. I agree. If we were only in the U.S., I would be very comfortable telling my client, you have a court order. It is the law of the land. It says these are true sales.

You can rely on that. you can be comfortable that you have that as a binding order. The concern, again, that we are trying to address is going forward tomorrow. When we purchase, when my client purchases receivable in Germany, there is a scenario under which next week someone commences an insolvency proceeding in Germany. There is a whole host of laws that none of us are expert on, Your Honor more so probably than the rest of us, but Germany has a very different regime for insolvency proceedings. and there is liability for engaging in transactions, potentially with debtors in Germany, that can result in transactions that you undertake being void or voidable,

determined to be in bad faith. I use the UK example. This is only meant to cover the scenario under which, and I guess one option that we had thought about, can we have this subject to further notice? I view this as a little bit akin to a lending in good faith during an interim period. My client does not want to take risk over the next, call it 10 days, 14 days, and in this case, it's purchasing, but it is akin to granting or sending credit for this period of time if there is a risk that over that time, not only can that be voided or call it back, but then we're fighting to say disorder.

Mr. Scott? I got it. I got it. Okay, sorry, Your Honor. I will, I'll see the podium. Mr. Houston. Thank you, Your Honor. I'm a little confused because this is

a form of financing, and in most cases... I got it, Mr. Houstonick. I'm just not granting releases on day one. And what I'm saying is folks can wait four and five days, and they can get a hearing on this. And I'm... If there's a scenario, I can back in 48 hours and give you one and no one is like taking me up on any of these

offers but I can assure you I can't grant releases on 10 days to a deal in which someone is telling me is intended to cover a scenario that we don't that currently doesn't exist I'm willing to do it on short notice I'm willing to do it have 48 hours note hearing on it fast just pick the one that makes the most sense and let's give people some notice come back in a few days and I'm gonna feel a lot better about it that's what I'm just telling folks and I I get it if there's a real risk that somehow there's a concern about some insolvency proceeding that's going to start that I can't handle in 24 hours. I don't see how that would exist.

What I am saying is then we have a real problem, and it's going to get a lot easier. Mr. Richard. Your Honor, I'm not. Go ahead. I totally agree with my honor that you confused about. Mr. Houston, there was a point where you cut off a little bit. I couldn't hear you. Totally understand your honor on releases and get that point.

What I'm confused about is Mr. Jimenez is objecting to this provision because of the super priority claim aspect. And I just want to tease this out because, frankly, if I walk out away from your honor, and the reason I'm doing this on the record is if I walk away from this hearing and the factors pull, which I have no ability to stop them from doing that because this is a financial accommodation, then I have a gigantic liquidity hole overnight. And so I want to tease it out on the record so that Mr. Scott can go talk to the client and get them to say yes. I can tell you, I'm okay with the – I under – this is a financing, and this is a financing deal, and so I get the 364 component to it, and I get it.

I get it. This is going to continue, and this is only covering post-petition stuff. No one's granting releases on the pre-staff. This is just a post-petition component. and this is intended to cover, this is happening in multiple jurisdictions, to the extent that there's an issue, that there's comfort, that there's going to be coverage, or still that they're still going to get the benefit, the economic benefit of the deal, even if, you know, a court doesn't recognize my order, there's still something in this order where this court, where I can enforce something and give them the economic benefit of the deal. I get it, right? I got it. I'm just saying, let's just do it on a little bit of notice, which is what I am really focusing on. And I'm telling you, I get it, I get it, right? Because what Mr. Scott's clients don't want is to go out there and then kind of have an order where I'm not enforcing something,

and then another court isn't enforcing something either. There's got to be something where they can get the economic benefit of the deal, which is the factoring and providing the liquidity. I get it. I really do. I just, I'd feel a lot more comfortable if we didn't do it today, if we did it on short notice. I'd feel a lot more comfortable. But I understand the economics. I understand the deal. I just know we're holding a first day hearing really fast, and I'd feel a lot more comfortable. I don't know, what's today, Wednesday, if we did it, Monday, I'd feel a lot better. And it's, that's what I'm saying, because people would know,

and there'd be a notice and people could wake out and see the docket and see what was going on and see that we thought about this a little bit and came back on Monday and and you got this all done but maybe and I suspect it could be I don't know depending on who shows up it could be a long hearing it would be a really short hearing but I'm willing to give you one or hearing on 24 or 48 hours notice you all tell me I'm just giving you optionality because I don't know I'm giving you options because I don't know what folks are going to with their clients, but they're going to feel comfortable doing. No, thank you, Your Honor. Sean Scott again for the record. I think obviously we'll have to confer with our client, and it's probably a discussion with the debtors as well in terms of, you know,

can there be a pause on purchases, at least in those jurisdictions, you know, during that time period. And I'm guessing Mr. Hewink is going to tell me no. I know that's the difficult question that we're going to face, I will face for my client tomorrow, is, you know, we, we, this was carefully constructed and crafted. This is meant to be, you know, you hear the terminology, a corner case, but this was also a big part of the protection.

The initial response is bankruptcy, particularly U.S. bankruptcy, we should shut down the program, for lack of a better term, right? We shouldn't continue to purchase. They're not a client that has done this type of structure before in the U.S. I would say this is very novel. And again, I credit that the team here, Kirkland, Gibson, Dunn, has worked incredibly hard to make this happen just given the various jurisdiction. I just thought of something else, Mrs. Scott,

and I think I feel more comfortable doing this. Because I really, I think a lot of this is academic, but I got it. It's going to give you a client some comfort. Let me run something by you. Sure. Yeah. Well, I'm just thinking out this out loud.

No, it's not going to, no, I was thinking about something. It's not going to work. Let's go back to this one. Let me, why don't we all think about this for the next? couple days because essentially what we're talking about is an academic exercise and we're not really between now and Monday so the chance of someone starting a proceeding where there's enforceability is just really odd to me as a risk but if you want releases I think that's also real no the releases are not an issue your honor I think that is subject of the challenge

period I'm happy but who's but who's that a who's that a in other words who's a challenge is the real question right but I think that isn't that true with the dip lender I mean it's essentially I guess the way I look at that your honor is everyone else right through that the one else and the two else are the ones that are essentially agreeing that that they are equitizing they are taking some impairment I think because they recognize as I said this is a far cry from some other cases in front of your honor these are these are arrangements that I think people understand debtors have acted properly.

These are well documented. This is a continuation of a program that is of immense value to all parties here, including the trade that will ride through unimpaired, the 1Ls and the 2Ls. So we've worked very hard to get to a construct that works for everyone. On the releases, I mean, again, someone can challenge them. We're not seeking that. I'm not worried about the releases. My big concern, as I come back to, is, is there a little bit of it?

scenario under which again another jurisdiction outside the US someone says the sales were void voidable because and I come back to the two these are what my clients have raised UK and Germany it could be raised by local law creditors yes they shouldn't do that right trade is riding through unimpaired there's no reason they should commence those proceedings but on the flip side I need to be able to tell them you're not taking incremental risk by purchasing when they from there you know again I will perhaps a Eurocentric viewpoint view that says we are taking those risks.

We shouldn't be doing business with an insolvent. It's kind of the framework. Let me let me let me let me let me let me let me let me let me let me let me let me let me let me let me let me let me let me get comfortable around this too. What if hold on what if you got interim approval today subject to a further hearing on the entire, we we in other words you get protection for the next seven days on this scenario which I don't think is like what happened. and in seven days, you kind of get a further interim that will take you to the final.

So at least you know you're covered for this period, and then we show up in another seven days, and then we everybody's rights are preserved. But at least you would know if something was going to happen over the next few days, you're covered. But then we could – but it's limited through that period. But in other words, whatever is going to – whatever you all are going to do in the ordinary course, you can continue to do. Everybody's covered. We show up on the 12th maybe at –

I don't know 11 a.m. on the 12th. I've got to fly out. I've got to be somewhere on the oh I got to be in DC on the 13th. No I have to fly. So what if we did that? So you're covered during that one week period, right? And just whatever was there and then it's just another hearing. I feel more comfortable that we had a further hearing and then it's good. It's almost like a kind of an interim to another interim and that will take us to the final. and then if if but I'd feel a lot more comfortable if we did that. Your Honor, I certainly think that would be acceptable with my clients. Obviously, I'd have to talk to them.

But again, you are solving for the concern that we have is just that gap period risk. And so I agree this is, I think we're all talking most likely as lawyers do about theoretical risk. But I also, you know, with a client that is running 200, well, purchasing 280 million of Euro receivable. They need to know that they're not right there. Why don't we do that? I feel more comfortable doing that. Let's just kind of an interim to another interim to another interim and apologies

to Mr. Gremlin. I told him that I shut him down and but he was on it, man. He was persistent. I got to give him. He was on his game. I did a fantastic job, Gremlin. I am. So, no, I'm just thinking out loud.

I get the concern. I get the concern, but I think that way we don't have to kind of come back on Monday. You've got the protection that you would need and it's probably an academic protection but we'll then come back and we'll have a little bit more notice and everybody can get more

comfortable. Mr. Richards I don't know if I've unmuted your line and maybe you can hit five star. Mr. Richards? Bob Richards for Pacto, France. You know, we're in the same boat as Coface with us. In fact, we're a joint lender on one of the facilities I was going to suggest the solution your honor came up with, and I think I'm a client in France,

so I need to reach them in the morning. You're not taking credit. You're not taking credit, Mr. Richards. I'm not giving it. Okay, no, I understood, but I think that's a much better approach that'll get my client more comfortable. Okay. No, let's do that. Someone drafted up.

I don't want to mess with the words, and then let Ms. Aldana know, and then we'll get it there. Let's turn to wage. To be sure we get the drafting correct we are drafting the order as proposed on a solely interim basis with the next hearing at 11 yeah yeah interim hearing to the final date that we set previously yeah yeah that's the way it would that's the way it would work and then mr. Luzza it'll be a virtual no one needs to come in for that just another a virtual hearing we'll log in we'll meet and then we'll go from there Understood, Your Honor. We appreciate that, and we will work to get a revised file. Okay. Sure.

Thank you. Okay. Sakuna. Good afternoon, or good evening or good something, wherever we'll. Good. Good, right in between, I think. Can you hear me okay? Yes, just fine.

Good afternoon. Great. Good afternoon, Your Honor. Olivia Coonio, Kirkland, Nenella, proposed counsel to the debtors. Up next is the debtor's wages motion filed at document. number eight agenda item number nine pursuant to this motion the debtors are seeking to pay and honor pre-petition wages salaries benefits and other compensation including certain non-insider severance payments to employees across the world and they're seeking to continue their compensation

and benefits program in the ordinary course on a position basis as i know your honor appreciates the company's approximately 3,000 employees are the lifeblood of this company and many of these employees would experience this significant hardship if their compensation and benefits were not paid. This proposed formal order does incorporate comments from the U.S. trustee and the debt funders, and we do not believe there are any outstanding issues. So unless Your Honor has any additional questions, we request entry the proposed order filed at docket number eight.

Yes. Anyone wish to be heard here? Is anyone over the cap, counsel? I'm sorry. Is anyone over the – Is anyone over the cap? Is anyone over the cap, the priority cap? So under the non-insider severance program, there are nine payments contemplated.

There is one that would potentially be over the cap. And I will add that in paragraph three of the proposed order, we did negotiate language with the BIPLunders and the United States Trustees Office. So we contemplate if there are going to be payments made over the test that we provide the notice with the court and then provide 14 days notice with the name of the employee being paid, the amount, and the proposed date of payments. Okay. So you're going to provide, okay, good. So the U.S. trustee gets notice, any committee gets appointed, and then the court gets notice as well. Okay, I'm comfortable with it. Yeah.

I am. Thank you. I will provide again I'm going to note that there's been proper notice and service relief request that is appropriate under the bankruptcy code I do know that this is going to take care of employees and make sure that it's sensitive issue for us around here and so I appreciate those making sure people get paid it's really important important and incredibly important people can maintain their health benefits and have some assurance about that. So I'll grant the motion. Thank you, Your Honor.

Okay, up next is the debtors all trade motion filed at docket number nine, agenda item number 10. So pursuant to this motion, the debtors are seeking to continue paying all trade claims in the ordinary course of business, confirming the administrative expense priority of outstanding orders and authorizing the debtors to satisfy the outstanding orders. So due to the consensual nature of this case and the substantial international footprint of the debtor's operations, all trade claims will be unimpaired, which is consistent with the RSA and the plan. And the relief we're seeking allows for uninterrupted operations as its debtor's business, both domestically and abroad. The proposed form of order does incorporate comments from the United States Trustees Office and dip lenders, and we don't believe that there are any outstanding

issues. So unless anyone else has questions or your honor has any additional questions, we'd respectfully request entry of the proposed form of order of the docket number nine. Okay. Well, the court is considered the one of call the all-trade motion, and again, this is going to take care of creditors and the course of business. It's sound exercise of the debtor's business judgment. It has approval of its dip lender. I'm going to grant the relief requested. I'm going to, again, just change the objection deadline to 12 noon on November 26, but I will set the final hearing day for December 3rd at 1 p.m.

And I'll sign that order, and it'll get hit the docket shortly. Great. Thank you, Your Honor. and I will see the podium to Mr. Black to take us through the rest of the agenda. Thank you, Mr. Black. Can you hit five-star, Mr. Blime? Hey, John. Good afternoon. Good afternoon.

So the balance of the motion, I believe that we have resolved any outstanding issues or questions with the U.S. trustee and that there are no more objections on the docket. So with your permission, I'll try to go through them a little bit quickly. Let's find out. All right. I wanted to start with the utilities motion that we filed asking if we could continue receiving utility services related release. We did discuss with the U.S. trustee incorporated comments. We have received no other objections.

Once your honor has any questions about the utilities motion, we request you enter the order as filed. No, I got a chance to review the utilities motion. and it provides for adequate assurance within the meaning of the code. Also allows parties if they wish, utilities if they believe that they're entitled to additional adequate assurance, their procedures there, they're not locked in, they could negotiate or they could ask for more from the court. And so there's a procedure here just to make sure,

especially in a business like this, that the lights stay on, which is incredibly important. So I'll grant the motion. Thank you, Your Honor. The next motion is the insurance motion at docket number 11. And this motion asked for release allowing us to maintain insurance and related programs. Insurance is important for the debtors.

It's required by the code. Unless there's any objections, we'd ask you to enter this. Does anyone wish to be heard in connection with the insurance motion? Certainly, insurance is incredibly important. required my U.S. trustee guidelines as well to maintain adequate insurance. So I would grant the motion. Thank you, Your Honor.

The debtors maintain two types of customer programs, and at docket number 12, we filed a motion requesting release to continue these programs. We have warranty programs and rebate programs that we offer. We don't believe that there are any cash dollar amount. outstanding, but if they come due, we want to honor them. And so the motion and request release that allows us to do that going forward. This is necessary to help us retain in their track customers, and we have discussed with the USJC and we have seen no objections on the docket.

So unless your honor has any questions, we request the order being entered up filed. Okay. Anyone wish to be heard with respect to the customer programs motion? Is this a... So you're just going to maintain the programs, just to kind of keep the business going, keep good well, and you're going to take care of trade creditors already, and you're going to keep customer programs going so that the customers stay happy, and the lenders are okay with that,

and it's consistent with the overall package of relief requested. So I will... had a chance to review this. It's all publicly noted. It's going to benefit the estates. The debtors are exercising their business judgment here. I will grant the relief requested. Thank you, Your Honor. Moving to docket number 13, the taxes motion requests relief allowing us to pay taxes and other related relief. This is a motion that we need. We need to pay taxes, even in bankruptcy. And we talked with the U.S. trustee.

We've seen no other objections on the docket. And unless there are questions that Your Honor has that I can answer, ask that you enter the order of file. You've got to pay your taxes, especially in this case, it's going to be incredibly important that you take care of all tax, outstanding tax liabilities, which could be in multiple jurisdictions and just to have the ability to pay it. And to take every care of that, there could be liability issues that arise.

And I've actually seen a case in which the government has come back and asserted claims against someone because the tax returns were not timely filed on payable taxes. And so it's real issues. And they affect people individually. So in dealing with foreign jurisdictions as well, there could be similar. liability. So I'm going to take, I'll sign the order and authorize the payment of taxes. And I would know that it's consistent with the overall package of satisfying these types of claims as well in connection with the prepack.

So I'll grant the motion. Thanks, Your Honor. The next motion is the, we call it the NOL motion filed at docket number 14. It allows the debtors to have the opportunity to preserve tax attributes. We have about $200 million worth of 163J carry forward, and we'd like to preserve those and other NOLs and other positive tax attributes. We did share this with the U.S.S.D, and we don't believe that there are any outstanding comments or questions on this. And unless Your Honor has any questions, we request the order to be granted this file.

I took a look at this. Obviously, you want to preserve NOLs in connection with especially a case like this, it's going to be incredibly important. This is really just providing notice to parties and providing procedures for them to kind of understand and to make sure that valuable tax attributes are preserved throughout the Chapter 11 cases. It's customary to approve this type of relief on a first day basis because they're really important, especially in a case like this. So I'll sign the order and let Strato to get to work and notifying folks about their rights. Thank you, Your Honor.

The next motion is docket number 15, the creditor matrix. It is a procedural motion that allows us to file a consolidated credit and some other representative relief. We think it's important. It's going to reduce the e-burn in the case to be able to administer. and send notice on one consultant. It's credit or matrix. And unless your honor has any other questions, we don't believe there are outstanding objections or questions or comments from the U.S. trustee on this. Anyone wish to be heard in connection with the creditor matrix motion? Okay, the motion is granted. The last motion. Your honor is that docket number 17.

You heard a little bit about the foreign complexities of the case. The automatic stay order is basically that we can send notice of the bankruptcy code protections and provisions for the benefit of our foreign vendor-based customers, others who do not understand the bankruptcy code and what it means for us to be in chapter. We believe it's necessary, especially given our multinational business. And once your honor has any questions, we request you, I'm sure. as we have entered the market. I think it's important, and I understand why you're doing this, and the trick is you've actually cited the code, which is what's really important here,

and you're not trying to extend interpretations of the code, but more just informing people about what the code says. So I'm comfortable with this type of relief, and I understand that it's important, so I'll grant the relief requested. Thank you. I think that brings us for the conclusion of our agenda today. Okay.

Anything else we need to take care of today? You've got dates. Mr. Hewsonick, you'll upload some orders and then get them to my folks, and we'll get them on file. You just give me one second. If it's not just to give everyone kind of a heads-up, I know that you're all going to get me a revised of that order. If you can get it tonight, and I can probably... enter it tonight or first thing in the morning. But at 9 a.m., I've got a hearing that's probably going to be a while, and so I probably couldn't get to it until, like, lunch hour. So I just,

if you can get it tonight, I'll do it first thing in the morning. If not, it might be noon now, or if not, you're on your own whenever that hearing ends. So I will, just wanted to give you a heads up about that. So just from the timing, so if my case manager, you kind of know, what it is, but if you can get it to, I can, yeah, I guess you're just adding just kind of this further hearing concept in the order. So maybe if you can get it to me tonight, I can, I'll sign, I promise you before either tonight, a first thing in the morning, before I step out on the bench on the other one, and then we'll see where things go. I really appreciate everyone's time. I really want to thank Mr. Jimenez and court staff as well for all their efforts here.

And I thank everyone who participated today. Thank you very much. Have a good day. Thank you, Your Honor. Thank you, Your Honor.