American court hearing recordings and interviews - Listen to the BlockFills 4/16/2026 bankruptcy hearing in Delaware (In re Reliz Technology Group Holdings)

Episode Date: April 17, 2026

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Mr. Hurst. Good afternoon, Your Honor. Welcome back. Yes, thank you. Second time this week. Yeah. Your Honor, for the record, David Hurst, McDermott, Will & Schulte, on behalf of the debtors and debtors in possession in these cases. Your Honor, today the debtor has two witnesses in the courtroom, and I just wanted to introduce them.

One, Mr. Mark Renzi, right here. Yeah, Mr. Renzi, you're a chief restructuring officer. You met on Zoom, but now he's here in person. And then also, James Brennan. from J.S. held. Hello, Mr. Brennan's our expert witness with respect to all matters crypto. Right. Okay. As you've seen, the agenda was filed an amended agenda, now the second amended agenda earlier today.

Yes. A total of 11 matters. We've managed to dispose of 8 of the 11. And in doing that, we really had a lot of help from the U.S. trustees' office, from the committee, from Celsius, certainly. So we worked hard to try to limit the number of matters going forward. I think we did a pretty good job and got rid of some ones that usually have some objections. So we're down to three matters at this point, Your Honor. The first is the debtor's cash collateral motion. That's agenda item number eight.

And today we're here seeking approval of a third interim cash collateral order. And I hope that you saw earlier today we filed a notice of filing of amended proposed third amended cash collateral. order. Yeah, I saw it. In any case, right. We made some progress and thank you very much for your guidance. Yesterday's hearing, I think we helped to move things along considerably there. Second thing on the agenda is the Alberta claimant's motion to lift the automatic stay, and

that's at agenda item number nine. And finally, the debtor's motion for entry of a preliminary injunction at agenda number 11. So those three are going forward. With your honor's permission, I'd like to turn the podium over to my colleague, Mr. Evans, who would take us through the beginning with the first matter, unless you have any questions for me. I have no questions for you. Okay. Thank you, Your Honor. And just because he's on screen, let me ask, Mr. Hayden, did you wish to be heard about something?

Thank you, Your Honor. I just filed my pro hoc two days ago representing Artha investment partners. And we do have, we want to be a prize, obviously, the litigation stage. we would be bringing our dispute in some form claiming fraud and conversion against the individuals. So I want to be apprised of this conversation, even though we're a little bit late to be briefing in. And then we had an adverse filing against us last week by the debtors claiming that our loans that were made in December and November are unsecured. And so we need to contest that as well. So we have a strong interest in the conversation today, even if we haven't had any a briefing, and we would welcome the opportunity to submit some briefing on these.

Okay. Well, the normal course of practice would be to enter an appearance on the docket if you wish to request notice, and then you'll receive everything that you are entitled to receive notice of under Rule 2002. Okay. Thank you, Your Honor. Thank you. Okay. I just ask Gold participants who aren't speaking to turn off their cameras, please.

Okay, thank you. Mr. Evans, welcome. Your Honor, Joseph Evans, Vic Dermott, Will, and Schulte for the debtors. Good afternoon. Good afternoon. Just some organizational items. I thought that the way that this proceeding would proceed most efficiently is that we get all the evidence in at once. Sure.

We have some witnesses that will overlap among various motions, and then we have argument. once all the evidence is in, if that suits your honor. Of course it does, yeah. First order of business, we seek the admission of the Renzi Declaration in support of the cash collateral motion. Okay. Does anybody object to the admission of Mr. Renzi's declaration in support the cash collateral motion? Mr. Patterson.

Yes, Your Honor. Good to see you. Thank you. Thank you very much. Good to see you, Your Honor. Thank you. I would reserve objection until after cross-examination. I believe he's going to testify.

Yeah. So the way that we would typically do it, and just let me know if you have any objection to proceeding this way, the declaration would come in as his direct evidence subject to your right of cross-examination. So if you don't object to the declaration coming in as his direct, you know, that way we move on. Otherwise, I'd ask Mr. Evans to put Mr. Renzi on the stand and elicit his direct testimony. the hard way. So, however...

I don't want to be disagreeable, but I do want to cross-examine. Certainly, certainly. Okay. Absolutely. Okay. Mr. Renzi's declaration in support of the cash collateral motion is admitted, but he will be subject to cross-examination. Thank you, Your Honor.

Thank you. Okay. Do you wish to admit any of the other exhibits at this point, or are you going to call Mr. Renzi? We call Mr. Renzi for crosses if anybody wishes to cross-on. Okay. Very good. Mr. Renzi, please. Good afternoon.

Yep, just stand right there, and Ms. Gadsden will swear you at. Mr. Mr. President, please raise your right name. Here's our name was all the truth, the whole truth, and I think of the truth for the best of your knowledge and I believe. Yes, I will. Did you please state your full name and spell your last name for the record? Mark Anthony Renzi, R-E-N as the Nancy Z as in the zebra, aye. Thank you, May you see me, thank you, Mr. Renzi.

Okay. Okay. Can I approach and, I believe the practice is to have the, exhibits for the witness? Sure thing. Thank you. Okay. Did, are those that those are the debtors exhibits? I take it or you're... I did both. Well, I did both before they saw, they apparently had a supplementation this morning. I didn't get those in, but the first four that were omitted timely way. Okay, very good. We'll work it out as we go along. Yeah, Mr. Evans. Just one housekeeping matter. Sorry. There's actually two.

declarations of Mark Renzi, one for cash collateral and one in support of the TRO. We asked to enter them both, and then the cross-examination can happen on both items here. Okay. That's what I understood. Then just for good housekeeping, I'll ask, does anybody object to the admission of Mr. Renzi's declaration in support of the injunctive relief? Do you read my glasses? Oh, no. Okay.

I forgot my glasses. Yeah, I run back and get them. Thank you. Okay. I thought you're going to object to the admission of your declaration. No. This would be a twist. Okay.

I hear no objections to the admission of the declaration of Mr. Renzi in support of the injunctive relief. And that declaration is admitted. And again, Mr. Ramsey is subject to cross-examination. Are you ready? I am. Thank you. All right. So you are familiar with the accounting books.

and records? In general, yes. You're familiar with GAAP, generally accepted accounting principles? I'm not a CPA, but yes, in general. You're experienced in financial fraud matters, conversion theft, those kinds of things? I am a financial advisor. I think I'm not a forensic accountant, but I'm a financial advisor with extensive amount of history in restructuring. Do you have experience with fraud claims? Fraud actions, fraud investigations? Only to the extent that, not from a forensic standpoint, but from a general analysis standpoint,

we deal with litigation all the time. And, well, in the prime core technology case, you were a testifying expert in that case, where you're not? What's that case? I don't think so. Okay. Okay. You're familiar with the Bitcoin economy?

I am very familiar with crypto. You're familiar with finance matters? I am. Management? I mean, the answer for management is yes, but a little bit more specific would be helpful. Accounting? We're just getting some background here. Yes. Okay. And marketing?

Yes. Okay. And you were hired in August of 2025, correct? Yes, sir. And was there an engagement letter that you signed in order to be hired? Yes, there is. And was that in August of 2025, or was that somewhat later? It was thereabouts the end of August, if I remember correctly.

Okay, and who approached you about the assignment? The company's interim CEO. Who was that just for the record? I wasn't done. There were two people. The company's interim CEO, Joe Perry, and then Brian Sorbel, who's also on the board of the company. Okay. Spell the last name of the second person?

Z-O-R-B-E-I-L, I think. Okay, thank you. Now, did you do any review of the books and records of Blockfills before you were hired? No. And how soon after you were hired did you review the books and records? personnel at my direction reviewed them relatively quickly to make sure we understood the general books and records and financial condition of the company. Was Blackfield's insolvent in August of 2025? I think Blockfield's had a liquidity issue.

To say that they're insolvent, I think that requires, I think, a more extensive analysis. Did their liabilities exceed their assets in August of 2025? The company's books and records hadn't been audited for quite some time, and there wasn't an official audit. So to conclude on that at that point in time, I think wouldn't be fair. Were they financially impaired in August of 2025? Your Honor, objection as to scope, this was not in either of the declarations on the date by which Blackville was or was not in Solvenable.

Any response, Mr. Patterson? Sure. I have a right to – I've listed them as a witness in our case. I think it's the safe time. We ought to just get them on and off the stand at one time. I think that's fair. He will also be, he is identified as a witness. You can answer the question. Do you mind repeating the question, please?

Not at all. Did the assets, were the assets less than the liabilities of block fills in August of 2025? We didn't have audited financials at that point in time. I think the current assets were less than the current liabilities is the way I would answer the question. And that was as of August 2025? Or are you saying as of today? I just want to make sure the record is clear. Well, certainly as of today, as of August 25, I didn't have specific financials for what you're implying would be July of 2025,

because obviously there's a lag. I'll ask you it this way, then when, to your knowledge, did Lockfields become insolvent? I haven't done an analysis to conclude on the timing. And have you done an annat? Can you tell me generally when Lockfield's liabilities exceeded its assets? Well, do you mind being more specific? I think I just testified to current assets versus current liabilities, which is different than assets versus liabilities. Yes.

And I'm asking if it's insolvent today, then when is the U.S. earliest date it became insolvent? I think I just testified I'm not sure when it be the earliest date they became insolvent. And you've been concentrating your efforts on Blockfields since August of 2025? Yes, sir. And you reviewed the books and records? Yes, I didn't. You reviewed assets and liabilities.

Yes, I did. Okay. Now, how soon, if at all, after August of 2025, did you get the idea that blockfields needed to restructure? I think within a month, my view, was the company needed to do something to enhance its liquidity. So it was within a month of engagement. And this was a plan then that you had to restructure? plan to restructure implies a lot of different things. Could you be more specific, please?

Well, was there a plan to restructure? Well, a plan of reorganization like we're discussing. I'm sorry, sorry, I just don't understand the specifics of your question. Sure. Did you write down any ideas as to how to improve the liquidity of blockfills? Yes. And when did you do that, approximately? Soon after being engaged.

All right. And that document still exists? I'm sure there are plenty of documents that exist that present ideas to improve liquidity at that point in time. And who did you provide those documents to? The board, the management team of block bills. And was part of your plan to seek investors in blockbills for blockbills? investors or potential buyers, I think you could say it synonymously. Yes, so either or or. And as part of your plan, did you analyze the books and records, the assets and liabilities of blockbills?

We were consistently analyzing the books and records and working on getting an audit closed for the company. And I believe you testified or in your declaration it says that the audit was delayed. Is that correct? Yes, the audit. was delayed. And who was responsible for that? The CFO at the time was responsible for the audit. And what was it that delayed the audit if you know? I think there was additional testing required by the auditors for a period of time and additional analyses required by the auditors. And that took some time into some period of time into January.

And were those additional questions asked because there was no chart of accounts set up according to Gap? I don't remember the specifics. I know that there were just additional support was required. And that support hasn't been provided even as of today. Is that correct? We were issued an audit in January. Was it a final? I think it was final in January for 2020, the end of 2024.

But that's what I was. There was no audit done for 2025. No, not that I know of. And the audit or draft audit, whatever it was, said that they thought that the company would be insolvent within one year from 2024. Is that correct? I would need the document in front of me to. validate that statement. Okay. Did you rely on that in preparing your declaration? In preparing my declaration, I worked with counsel and just my knowledge of the general case. Yes. Well, I know that in your declaration, do we have an objection, Your Honor. You said the declaration, there's two declarations at issue. I think the declaration that Mr. Patterson may be referring to is the first day declaration, which are not any of the declarations that we're seeking to admit today.

If you could just be a little more specific, when you talk about which declaration, that would be... Yeah, that would help the court make a cleaner record for sure. That's fine, Your Honor. Thank you. The, uh, did you rely on documents to make your first declaration? Yes. Did you rely on documents to make your second declaration? Yes, sir.

And did you work with counsel on your first declaration? Yes, sir. And did you work with counsel on your second declaration? Yes. Okay. And so is one of those documents that you relied on for either of those declarations, the draft audit or the final audit, whatever was provided around January of 2026. Yes.

Okay. Now, with respect to these documents that you relied on for either or both declarations, are those documents available in like a red weld or a box? I'm sure we can produce them electronically too if we need to for financial statements. Your Honor, just one point out of objection. There are three declarations that they could issue. I saw me sure the records clear. There is the first day declaration which we did not seek to admit.

There is the declaration in support of the cash cow collateral motion, which we did seek to admit. And then there is a declaration in objection to the motion to lift stay, which we did seek to admit. And so we're talking about declaration first and second. There's three at issue. First day declaration, we didn't seek to admit. The other two we did. So make sure the record's clear. That's what we're talking about.

And Mr. Rancy understands what we're talking about that. You're right now. having the same thought. There are three declarations. Two of them are in evidence. The cash collateral declaration is in evidence as debtors, Exhibit 1, and the declaration in support of the injunctive relief and the adversary proceeding is it was admitted today as debtor's exhibit 2.

So if we're talking about a document that hasn't been admitted yet, we'll need to be specific about that. But you can call them Debtors 1 or Debtors 2 or the cash collateral objection or the P.I.A. declaration, however it works. With the court's permission, I'll just refer to the two declarations that are in evidence, and if there's another declaration I want to discuss, I'll mention that specifically. You got it. Thank you.

Okay, Judge. I have a question, Your Honor. It's okay for all three. I just need to state, do I need to state that myself when we're going through this, or? I think it's dependent on the context of what question is he's asking. Okay. I won't tell you how to testify, but if there's any, lack of clarity.

Okay, understood. Okay, I'm just trying to cooperate. It would be helpful. I appreciate that. With respect to the documents that were relied on by you for the two declarations, they haven't been, those papers haven't been commingled with other papers, have they? I mean, I would generally say that I have electronic documents. I don't think of it as paper documents, so I think they're distinct files.

is the way I would say it. But, I mean, would you have to review a big universe of files to select the documents that you relied on for your affidavit, or do you have them in a separate file or folder? In a virtual electronic folder, they're probably not all in one spot. Just they're organized in whichever way my team needed to organize them so that we're organized. Who is your team? What do you mean by team? Well, in terms of restructurings, I'm just the chief restructuring officer, which I have responsibility for doing things that I'm doing right now.

But I'm not omnipotent. I have a team of three or four people that can help. We have one of my team members as an interim CFO as the CFO resigned. I have other team members that are effective in producing statements and schedules. And so in order to accomplish things like today, it's easier to have a team. It can't just be me. And so which parts of the declarations, one and two, were prepared by a team member as opposed to you? All of my declarations are a team effort because I can.

can't find all of the I want to find the documents as speedily as possible and having me find them on my own is not if not efficient and cost effective could you go through your declarations and determine which sentences were based on documents and then list the documents to I'm not sure I understand your question if you have sentence one in your declaration right and it's based on a document would you be able to say is based on this document, annotated in that way? I would think that I'd need a series of documents in front of me, and then I could correspond them to each sentence if that's helpful,

but I think that that would be quite expensive for the estate. I'd feel, frankly, I'd feel guilty spending that kind of money. But if that's what I'm required to do, we'll do it. I mean, it could have been done at the time you were preparing the declarations. Sorry, you're asking me to do something that's what I would call atypical, But I'm happy to do it. Could you have listed the documents you were relying on as you prepared the declarations? As you were reviewing the documents, preparing the declaration, could you have listed it?

I could try, yes. And then some of your declarations, one and two, were based on conversations, were they not? Yes, sir. And the conversations with Mr. Perry, Gordon Wallace, any others? I mean, correct. I've been, as you stated, sir, you, Rightfully so, was engaged at the end of August. Some things in my first day declaration I wasn't present for because it was the background of the company.

I haven't been there since inception. So absolutely, I've had to rely on the facts of the books and records of the company as well as the institutional knowledge of the executives. And have you listed which parts of your declaration were based on conversations? I don't think we did that. And did you keep notes of these conversations that you had with people so that you could prepare the declarations one or two? Well, I understand your question. I think from a practical standpoint and expediency, we have the benefit of the executives of the company to go through and make sure that the declaration is properly drafted and that we have the appropriate facts to state things. to the best of our ability as factually correct as possible.

Sure, but a statement of Gordon Wallace, for example, that's hearsay if it's just put in your affidavit, isn't it? Your Honor, that's a legal question, objection? It is a legal question, sustained. It's a, you would rely then on statements of others, people out of court and are not subject to cross-examination and preparing your declarations. Your Honor, same objection.

It's a hearsay objection to a witness. That's what he's asking. Yeah, sustained. These conversations that you had with the these other company officials. Did you make notes of those conversations? Your Honor, objection, asked and answered? Overrule. I mean, generally we work together and would have put them directly into the document.

There may be cases where I have notes. There may be cases where I don't. And could you note in your declaration which statements in there were based on conversations with people in the company and which were not? Sorry, I think I tried to answer that before. I'm sorry that it wasn't clear. It was documents, I think, before, unless I'm not done speaking. I wanted to clarify before we got too far down the road. I'm off track.

Do you mind repeating your question? I'm sorry. I think I asked before about documents if you could have just listed the documents as you were preparing the declaration. Now I'm asking about these conversations. Could you have listed the conversations in the declaration as you were preparing it? Sorry, I think I answered this before, trying to be as clear as possible. I think some of them I could and some of them I couldn't. And then, so with respect to the statements in your declarations that you cannot attribute to a document or a person's conversation,

what, if anything, are they based on? Well, as I said before, the management team has been there much longer than I have. Sorry, I don't understand. I'm just saying what is, if it's not based on a conversation or a document, what's it based on? Your Honor, objection. I'm not sure where this is going, but each of the declarations, one is 11 paragraphs, the other one's 13 paragraphs, the second paragraph in each explains exactly where Mr. Renzi got the information for the declaration, whether it identifies specific conversations or not or stuff within those

declarations. We're talking about a two-page declaration each here. I think we're going a little far afield is what documents relied on the declaration With all that they are. With all respect, I object to a speaking objection, especially in front of the witness. Where are we going with the questioning? I'm trying to remember the declaration was admitted into evidence subject to cross-examination. So I'm trying to show that the declaration is based on hearsay and double hearsay, maybe triple hearsay,

and therefore is entitled to less consideration than would otherwise be the case if it was based on something he observed or some opinion he had as an expert in the case. any hand as an expert in field. Your Honor, if I'd me to respond, I can now or we can table it. Yeah, why don't you respond? Your Honor, we sought the admission of the declaration as is common in this court. Mr. Renzi was here to testify and direct,

and Mr. Patterson had the ability to request a direct examination. He did not. He allowed the declaration into evidence subject to his cross-examination, which he's going now. And so the declarations and the statements they're in are now omitted. I think that's fine as far as it goes, but he is calling him as a witness in his direct case.

So it would be, you know, witness of an adverse party. So if Mr. Patterson sought to elicit evidence from Mr. Renzi and Mr. Renzi brought in evidence that he believes is Ursaid, then he can have whatever objection he likes to that testimony. That would be his direct testimony of Mr. Renzi and have to cross his elimination. I don't think so. I'd be allowed to cross him as an adverse witness, and I can move to strike his affidavit's after the cross. I don't think Mr. Renzhenz identified

to exhibit any reason to be viewed as an Evers witness. Well, he's a witness called by an Evers party as well. Look, I'll let the questioning go for the moment, see where we're heading with this. I agree with you, Judge. That's all I'll say. Okay.

Okay, is there a live question? I don't remember it, Your Honor. You don't have anybody who can read it back, do we? So I have it exactly? No worries. So with respect to sentences in your declarations that are neither based on a document or based on a particular conversation, what, if anything, else would they be based on?

I mean, Your Honor, do you mind if I read my paragraph of paragraph four, I think this is of my declaration as of 316? Is that okay? Read it out loud. It answers the question precisely, so I'd be perfectly fine with you reading from your... Yes, Your Honor. So I'm just going to read for the record what I did to make these declarations and what materials I relied on to answer your question. So this is just for the court's benefit.

This is page 2 of 5 of my declaration that was filed on 31626. It's paragraph 4. This is debtors exhibit one for the record. It's a cash collateral declaration. I think that's right, Your Honor. Yes, it says debtor's one. Yes, sir. In making this declaration, I have relied in part on information and materials

that the debtors, my colleagues at BRG, and the debtor's other external advisors have as applicable, gathered, prepared, verified, and provided to me, in each case, under my ultimate supervision, at my direction, and for my benefit in preparing this declaration. Unless otherwise indicated, any financial information contained in this declaration is unaudited and subject to change, but is accurate to the best of my knowledge. such information is presented on a consolidated basis for the debtors, except where specifically noted. If called as a witness, and I think I am being called as a witness, so I think the rest is self-explanatory.

So my question is, if there's something that's not based on one of the documents or one of the conversations of the people you listed there, then what, if anything, is it based on? I think these are fairly limited declarations, everything in this paragraph is absolutely correct. I didn't ask you that. I don't understand the question. I'm sorry. Are you saying that every sentence in your declaration is based on one of the sources set forth therein?

I think paragraph four that I just read is completely accurate. My question was, is there anything in your declarations that is not a source for which is not listed in that paragraph that you so kindly read? I think I've answered the question. I'm sorry if I haven't. I'm not understanding the distinction. I just want to make sure the record's clear. The sources that you listed in that paragraph are the sole sources of information that you consulted in preparing your declarations, correct? I wouldn't say it the way you said it.

I would say it the way I wrote it. My question is different, though. That's why it's cross-examination. I don't understand the question. I'm sorry. With respect to the sentences in your declaration, the source of those sentences, every source for every sentence in that declaration is listed in your paragraph, correct? I don't usually do this, but let me jump in here.

In paragraph three of his declaration, he's testifying as to the basis of his knowledge for the statements made in the declaration. He says it's his personal knowledge, his discussion with the debtor's external advisors, his review of documents and information concerning the debtor's operations, financial affairs, and his experience and knowledge of the debtors industry operations and financial condition. It's all right there. That's his direct.

Are you, I'm not, you're asking him. Everything in the declaration is based on one of those sources that he listed in that paragraph, correct? It's based on paragraph four that I just read into the record. Yes. The sources. And paragraph four lists the sources. I mean, I don't, I want to be as respectful as possible, but in some of this is just,

general backgrounds of who I am and what I've done in this industry. So I don't need any of those sources. The source would be me. I am the chief restructuring officer. I speak the English language. I've gone to the schools that I've verified in this declaration. So nobody other than me, you know, and having done this for 25 years, I mean, and submitted multiple declarations, some of it would be supported by other declarations to list my background. So I think, yes, paragraph four is completely accurate, but there are things that are intuitive based on my industry experience, such as my background, such as my industry experience, such as testifying in these courts before. So the answer to my question is, no. You didn't list every source in that paragraph.

You have other sources, right? Well, I am the source for that, so I have listed that. Okay. So in other words, it's either you, your personal knowledge, or the sources listed in that paragraph. Then we have the entire scope of what you relied on to create your declarations. You just made a statement, sir. I don't follow the question. Is there a question?

You listed sources in the paragraph that you read, correct? Yes, I listed sources in paragraph four. And then you just explained that you were a source based on your experience. Correct? Yes, that's in paragraph four. Okay. And so, and that's, that's the universe of sources of information that you use to create the declarations, correct?

To the best of my knowledge, correct. Thank you. Now, as part of your restructuring plan, you sought investors for blockfills, did you not? Yes. And one of those investors was. labeled acquisition counterparty in paragraph 69 of your declaration which declaration I think it was I think you're talking about the first day declaration we look we've got to this is gonna take a long time if we don't get

this straight in the declaration in support of the chapter 11 petitions and first day motions that's the affidavit I'm talking a declaration I'm talking is a copy of that in this binder I should be okay Do you know what? There are 30 tabs or so. Do you know which tab that's on? Can you approach? Yes. Thank you. Let me ask it based on this, a recollection.

You listed an acquisition counterparty that you solicited for an investment. Is that correct? Yes, we've spoke to many investors, including existing investors. And what was the name of the acquisition counterparty? I don't I'd like the document in front of me to just remind myself what I what I testified to there are many we've been in front of the name acquisition counterpart that's why I'm asking for the name if you don't remember you can say you don't remember your objection yes the the counterpart for the pre-petition sale project process that's under our confidentiality research okay also objection has to relevance of this examination we're going on a far field here

I'm going to sustain the objection. We're questioning him now about his first state declaration, information contained therein. The debtors have not moved it into evidence. It's not on your exhibit list. So we're not going to cross-examine him about a declaration that is not an evidence at today's hearing. You said you solicited investors. I'm allowed to ask about soliciting investors, correct? That relates to the plan, the likelihood of success of the plan, which is a key part of their objections to my motion and in support of their motion.

I think, Ms. Evans. John, if he wants to ask one question, let's see how it goes in the statement of objections. Yeah, I think it's very, it goes to one of the elements that the debtors have to prove up in supportive and jump-tip relief. Thank you, Judge. Do you mind repeating? I'm sorry. No more, no worries. The, what, can you list as many of the parties that you solicited for investment?

I know a number of parties are under confidentiality agreements. I can speak to numbers and then, Your Honor or for referring to my counsel, happy to produce a list under confidentiality if that's helpful for you. We have a confidentiality order in. the case and I would designate this as confidential pursuant to that. But the case is public and I don't want to violate any. You can put it under seal after the hearing is over. Your Honor, objection.

Council's making a discovery request to the witness. If you can limit it to cross-examination, that will be correct. Yeah. Sustained. How many investors did you solicit? Over 50. Okay. And is there anyone you wanted to solicit that you weren't able to solicit?

There were some investors and our potential strategic and, excuse me, potential strategic buyers that we thought would in theory be a good buyer, but jeopardize the overall process. So there were some we consciously excluded. How many? I would say under 10. And do you plan to solicit them now? We will solicit as many as reach out and or that we use in pre-petition, but we want to be conscious of the concerns of the UCC so that we don't go too far afield and want to make sure that we are doing everything we can to maximize value for this estate. So the answer is there are thousands of potential investors.

That is too broad, in my professional opinion, and that there are. are some active buyers that we know of, that we are approaching, based on my extensive experience in financial services and in fintech, and more specifically in crypto. How many? That number is yet to be determined. Your Honor, we're getting into details on the sales process, like how many people were contacting and how many are available. He's already identified the number from Mr. Patterson seems to be seeking for strategy,

and what we're going to do in the future, and if we're going to reach back out, I would note that the provision or the element that he's citing as a basis for this testimony is to likely be a successive reorganization, and the case law suggests that all we need to establish is that we're proceeding on track, and we are. And so if there's testing questions about the sales process, I think he's had them. Yeah, the fine details of the strategies that they might pursue. is not really relevant to my determination on the probably of success on the merits prong and is either beyond the scope of appropriate cross-examination

and is not relevant to the determination of that matter before me. Did you prepare solicitation materials for these potential investors, the 50 that you mentioned? Yes, we did. And you still have them? Yes, we have copies of them. And did they review the finances of blockbills? Yes, they reviewed some finances. Your Honor, objection, same objection?

Sustained. And did those materials fairly explain the finances of blockbills? Your Honor, stand objection? Sustained. The answer is... There's no pending question, Mr. Renz. I sustained. Your Honor.

counsel's objection to the question. So when I sustain an objection, then you don't need to answer. I made a mistake. No, it's okay. No, thank you, Mr. Renz. Now, before you became the chief restructuring officer, Blockfield's had equity raises, did they not? Yes, they did. And they started out with $250,000 in capital and then had a $750,000 line of credit. I believe that's correct. And in May of 2021, they raised $7 million in a pre-series A raise, equity raise. I believe that's correct, too. And in January of 22, they raised $36 million in a series A raise. I believe that.

Injection or referring to facts not in evidence. Mr. Patterson, any response? This is, he's the chief restructuring officer, and he says he reviewed all the books and records, trying to figure out what money they took in and what money they spent out. part of the tracing. I'm sorry, Your Honor. Part of the tracing. I'm not understanding. I thought we were talking about the sales process and the likelihood of reorganization and whether our

court on track. Well, we're doing, in fairness, I think we're doing, we're taking evidence on the three matters that are before the court right. We got the cash collateral motion, the stay relief motion, and the injunctive relief. Right. So given that we're doing that as a, you know, one shot with each witness. I think it's fair. I'm struggling with the relevance of it for tracing, but that's okay. That's a case that Mr. Patterson certainly can make.

Thank you, Judge. Your Honor, is there a bottle of water or something I can describe the thing? And did you make any determination as to whether there were profits from operations in the years before you became the chief restructuring officer? We reviewed the historical financials. Were there profits? It'd be great to look at the schedules. I know that the company had gone back and forth from being profitable to not being profitable.

And the company has sustained losses, correct? Yes, the company has sustained losses. Celsius was about a $4.8 million loss. I don't think of it exactly the way you said it, but Celsius was there a settlement with them. And you had to pay them $4.8 million. That hasn't been paid. Yes, but that's not the same thing as a loss. Understood.

Okay. Babo, there was a loss there of $8.5 million. Yes. Coin Sur, there was a loss of almost $2 million. Yes, I think so. And NXO or NXO, something like that, there was a loss. there too wasn't there I I would just say there were settlements and or losses but yes I think I think the general gist of the way you're presenting it is fine and and the

professional services because of those litigations were substantial I believe so and were those losses paid with the series a money raises I don't know the answer to that the the money that was raised in this pre-series a in the series A in the series A, did you make a determination as to when that was depleted? No. Could you have? I think of cash as fungible. I don't think that I could have tagged it to one thing or another.

When you conducted your review of the documents and talked to Blockfield's personnel, after you became chief restructuring officer, did you review? the company's accounting, finances, marketing, and management? Yes, we reviewed the financials of the company. Yes. And management? I'm not sure I follow your question. Did I review the management?

Did you look at the systems? We worked with management, but to say I am not an IT expert. So, unfortunately, I can't determine. and whether or not the software systems are appropriate or not. It's not my skill set. Did you review the company's marketing efforts? Yes. And did you review the customer contracts that were entered into?

Not specific contracts. In general, I knew there were contracts with customers, but not specific contracts. Did you ever look at one? I have looked at a customer contract. And did you do so on or after you were hired? as a chief restructuring officer? I would have done it after I was hired and her engagement letter was signed, but I don't remember when. Would it have been in 2025 as opposed to, say, after litigation began in 2026?

I don't remember. Mr. Patterson, I don't remember one. And did you ever suggest any changes in the customer contracts that were being used? Mr. Patterson, I'm not a lawyer, so I... I would not have, that would have not been, it's fine, right? No, I'm just trying to be as helpful as possible. It would help me if you just answered the question and stuck to it, but you do what you want. Thank you.

Did you suggest any change in how the company marketed to potential customers? No. Did you review what kind of marketing they did to potential customers? Mr. Patterson, I was focused on marketing to investors more so than how they're marketing to customers. So the answer is no. I can't recall specifically if one might have been used for the other, so I don't know the answer to that. So to the best of your knowledge, you didn't review the marketing that they did to customers, as opposed to potential investors, correct?

Your Honor, objection, whether Mr. Enzi reviewed or comment on marketing is no relevance to any of the prongs on any pending motions. So there's a relevance objection. Yeah, I prefer not to state it to in front of the witness, but I think I can tie it up, Judge. Your Honor, if... I can't roll on the objection if I don't have a response other than I'll get to it later. Well, can we excuse the witness then? if you're done with your cross-examination and no I just don't want them to hear the colloquy between council that's all

your honor if he wants us to go to cancel a typical but I'm happy to do it if that would be helpful Mr. Patterson I'm happy to step out your honor if you'd like me to I bet you are I'm happy to be here too church if I can have a little bit of latitude I think it would serve to move things along faster why don't you go out the way you came in and Yes, sir. Is Balbony-Legrave you when I'll be ready for you?

Okay. If somebody could come and get me. Yeah, yeah, we'll do that. Mike Clerk will get you. You know, just as a housekeeping matter, I think we should exclude witnesses from the testimony. I think I see Mr. Brandon there. Your Honor, that's pretty atypical,

and I also see Mr. Patterson's client sitting in the audience. Well, clients are allowed, but witnesses are not? I'm not. No, we're not doing that. What else can I help you, but? Where are we going? with that, with your response to that objection. Yeah.

The part of what we have to show in order to prove tracing is that there was a trust relationship between my client, Mr. Bertram and his company, and Blockfields. And we have contracts to do that. And part of what we have to do also in this situation is to prove that Mr. Bertram and his company's situation was unique as compared to other unsecured

creditors. And I don't know what the contracts were with respect to other unsecured creditors. I haven't seen them because there hasn't been discovered yet. And I know that our contract, what it says, and I know that we were one of the last people to become a customer of blockbills. We didn't put our money in until January 16th of 2026. And they stopped honoring withdrawals on February 6th, 2026. So we have less than a month to trace. But I don't know, in terms of the trust relationship, I don't know what the difference is between us and them.

And they submitted on the declaration that we were all lumped together as unsecured creditors, and I'm not sure that's the case. In fact, I don't think it is. Your Honor, the objection list of relevance as to whether Mr. Renzi had reviewed marketing material the company. Sure, but that's not relevant.

But that obviously leads to, if he is. If he is, I could complete. Oh, sure. Go ahead. What he's describing as tracing, I think he's trying to establish a trust relationship. So if he's trying to do that, then we should be focused on the contractual terms and the relationship that his client had with block bills. That's not what he's asking about.

What he's asking about is Mr. Renzi's input on marketing and systems and a whole bunch of things that don't have any relevant to whether he has a trust relationship or not. Traceability is a technical question as to whether he can identify his clients, Bitcoin, and USC as compared to anybody else's. That's all Mr. Renzi should testify about today. What's the theory on the marketing materials? Did they represent to people that their money would be held in trust? And did they represent to Mr. Bertram that his money would be held in trust? Did they represent to others that their money would be held in trust?

Are all of the creditors the same? and if he doesn't know, he doesn't know. But what they said in their initial declaration was that we're all the same. And I don't know if that's true. I don't think it's true. Maybe I'm wrong. So I don't think it's true. Are you trying to lay a just, I think I know where you're going,

are you trying to lay a foundation that he's reviewed the marketing material so you can get the answers to what promises that were made in the materials? And if he hasn't reviewed him, then that stops the inquiry. That's why I thought, you know, if I had. a little bit of latitude I could clear it up, but I'm not quarreling with your desire to hear the argument now. Yeah, I understand. Your Honor, two things. One is with respect to the contracts in Plaintiff's own complaint and motion papers,

they said they had no ability to edit the contracts because they're all the same contracts all in line. And so there's own distinguishing between his client. Well, that's different from the marketing materials, right? I agree. As some marketing materials, we'd like to ask Mr. Renzi if he has any communications with his client or he's aware of communications that other directors had with this client. Fair game. But whether he reviewed every piece of marketing material out there, he already said it didn't.

And so we're going around and around in a circle on what Mr. Renzi did as compared to anybody else. He's an officer of the company. He could speak for the company. So if he wants to ask that they marketed a certain way, have at it. But who reviewed what seems to be going pretty far. Well, I think, yeah, I know what you're saying, but I think he's got to lay a foundation, right? I mean, we could skip over the foundation and get right to the questions. But I understand where Mr. Patterson is going.

And, you know, given what his burden is and the arguments that his clients have made in the state relief motion in particular, I think, on this issue, I think it's a fair line of inquiry. Okay. Ms. Balboni, would you mind grabbing Mr. Renzi if, yeah, you're ready to resume Mr. Patterson? Oh, sure. Yeah, okay. Yeah, please forget, Mr. Renzi. Thank you. It could be halfway to the airport at this point.

You know, if you wanted to have a sidebar, I proposed a solution that would have obviated the need to take evidence today. I'm sure you saw it in my objection to the cash collateral order, but yeah, Mr. Renzi, please take your place back in the witness. Thank you, Your Honor. Yeah, thanks. If you think Mr. Patterson that it would be helpful to take a break for further discussion, I don't need to know what negotiations about the conduct of the hearing the parties may have had.

I view that as sort of not my business. But if you think it would be productive to have a conversation and see if there's any way that, you know, you could narrow or otherwise tailor the course of the discovery, I'm happy to take a break. And would the court be willing to participate in that or hear what discussions? I'm not calling. No, no, no, it's fine. No, look, and different judges have different views on that. My approach is I deal with what happens in open court, and I don't tend to get into off-the-record conversations with the parties.

That maybe is something I'll have to reconsider at some point. Well, I'm willing, but I haven't had any overtures at all from the debtors, so I'm not. That doesn't matter to me. I'll let them decide if the sidebar would be useful or not. No pressure. I mean, no. I'm happy to talk to Mr. Pettis whenever you like to say.

Well, I think what you're saying is that if you thought there could be a conversation too that would bear on the way that the remaining examination might run, maybe I misheard you. I think I could propose something that would obviate the need for continued testimony. Okay. You know what? If there's something good, that'll stop this proceeding. I'm all of yours. Okay, I'm taking five.

We're in recess. If you finish up sooner in five minutes, just let Ms. Cassidy know I should agree. Please be seated. Okay, Mr. Patterson. I'm sorry, Your Honor, I failed, so we'll have to keep going. Okay. Mr. Renzi. Thank you.

That's right. Okay. You're already sworn in, so you can have a seat and we'll go back at it. Thank you. Okay, Mr. Renzi, I think when we broke a, we were discussing some foundation questions. Like, did you review the marketing efforts of people for customers? I think the answer I gave, if I remember correctly, was I was focused on marketing efforts for investors for the company.

I'm not sure if those marketing efforts were shared. The materials that I prepared for that purpose were shared for new customers. I don't know the answer to that part of it. So you don't be clear on that. I appreciate that. And so excluding the investor marketing materials, just looking at the customer marketing materials, did you review any marketing materials?

In terms of customer marketing materials, I think the only thing that I would say is different. There are certain customers on the platform that we sent investing materials to, in regards to the plan sponsor. So I don't think anything else other than that context to answer your question. I think I understand. Other than investing marketing materials, you did not review marketing materials to customers. I don't believe so.

Okay. And I believe you said you didn't remember reviewing in 2025 any of the actual contracts that the company had. with their customers, not investors, customers. I'm sorry, is that a question? Yes. I think I testified slightly differently. What I testified is that I don't remember the timing of which I looked at the contract

if it was in 2025 or in the beginning of 26. But thereabouts that time frame. And did you ever suggest any changes in the customer contracts, investment contract, customer contracts? Sorry, I should have let you finish. No, not that I recall. And did you learn that anyone else had ever made any change in the customer contracts? I knew that just from knowledge but not necessarily my own review,

that there were the contracts, it was expressed to me by that most of the contracts are generally the same, but there may be some that were slightly different, but I never saw that. directly. And was it ever explained to you that the customer contracts promised to keep Bitcoin and other assets provided by customers in trust? I would just have to look at it again. I don't remember the specifics of it. Or that they agreed to use customer provided Bitcoin only as collateral. Can you just clarify the question from me? Sure. I ask you if you were ever told, for example, that customer Bitcoin would be held in trust. And you said you didn't recalls, right?

And so I'm asking the same question with respect to collateral. Were you ever told that customer Bitcoin would be held only as collateral? I think I understand the question, but I know that people put collateral on the platform to trade. The specifics or legality of how it was done was not in my purview of how it was done. done. So, okay. Did you ever look at Mr. Bertram's contracts with Blockfields? I don't believe so. Were you familiar with the fact that it was a custom and practice at Blockfills to sweep Bitcoin out of customer accounts after they were deposited? My understanding that there was general wallets for funds that were held in crypto. So, and I think they were concentrated in

you know, a limited amount of wallets. So whether or not in how they were swept, it wasn't really my purview of how that happened. In other words, you don't know. I know generally how the company function, but I don't know the specifics or the mechanics. Like, it's almost like asking me if I have to wire funds out of Bank of America or Citibank or... I don't know exactly how that works, but... But I know that I hit a few buttons and it works. And do you know whether customer bitcoins were swept out of their wallet by automatic operation of the software or by the intervention of someone pushing a button?

And do you know whether that was all, did you have any knowledge as to whether that was always done or whether it was only done in some cases? I don't know. I can't testify to that. Okay. You don't know whether if there was commingling of Mr. Bertram's Bitcoin with other Bitcoin of blockfields, you don't know whether that was in accordance with the contracts or contrary to the contracts. My understanding is that there were wallets that most of the crypto were held that were held together, but me physically seeing that or physically understanding that, that would be an overstatement.

All right. So in other words, you don't know whether, if they commingled Mr. Bertram's Bitcoin, you don't know whether that was proper under the contracts or improper under the contracts, because you haven't seen them. I don't know. I can't, I'm not sure I can really fully answer your question. You don't know? I don't know. I know that they consolidated. He's asking Mr. Renzi a legal question? Yeah, to the extent you're asking if it was proper, that's a legal question. strike his response in so far as he's given his view on whether that was appropriate.

Have you reviewed the insurance policies that Buckfield's had in this case? I reviewed the DNO policy. And do you know if the D&O policy proceeds would be assets of the estate, bankruptcy estate or not? John, our objection, a legal question? that does ask for a legal conclusion, and I will sustain the objection. Do you know whether the insurance proceeds are at risk of being lost to the bankruptcy estate if our action in Illinois is allowed to proceed? I don't know.

And do you know if the indemnity, there are indemnity obligations, are there not, that Bockfields has? Do you, can you just be more of? Of course. clearer. Sure. Blockfield has agreed to indemnify its officers and directors against claims, correct? Yes, that's my understanding. And that would not include fraud claims, correct? I don't remember the specifics of the indemnity. And do you know, and as you said, you're not a lawyer and correct? Yes, sir. All right. And so you wouldn't know what the cost of discovery would be in a litigation, would you? I am familiar that litigation is expensive, but on the specifics here.

You wouldn't know whether there's a difference in discovery costs if a case proceeds in Illinois as opposed to whether it proceeds as an adversary case here, do you? I would think that if we don't, this is my opinion, I think this is an efficient process to have in one spot. I'll be sure not to tell Judge Cannelly that you said he's not efficient. I did not say that. I'm sure I know some judges in Chicago. I think very highly of them, and I have worked with them. So for clarity, I just think that this process under this court is efficient, and that's our intent. But you don't know what discovery would be different in Illinois as opposed to what discovery would take place here.

Do you? I can't answer that question. I don't know. So, and you wouldn't know, as a non-lawyer, you wouldn't know whether collateral estoppel is implicated by having a case in Illinois as opposed to having an adversary case here. Is that correct? Objection, Your Honor, calls for a legal conclusion. Sustained. You have an estimate as to how much cash or other assets creditors will get if your planned restructuring proceeds and is approved?

We are in an ongoing marketing process to sell the business. I hope it's more than what we started with in the instance, which is approximately $30 million in cash in crypto, mostly in crypto. And the cash collateral order you seek to spend how much money in the next two weeks? If somebody could put that back in front of me, that'd be great. But you don't know? I don't have that at the top of my... No worries. And do you know whether that money can be spent without using 40 bitcoins that Mr. Bertram put into blockbills for trading purposes?

I think. If you know, not think. I don't know the answer to your question. Okay. Is it correct that you and the other restructuring people are not intending to bleed the estate down so that it lacks all assets whatsoever? Are you? No. That is not our intent.

Our intent is to maximize value and do the best for creditors as possible. And what are the assets of blockfills now? The assets of blockfills are a limited amount of U.S. dollars. Most of the assets are held in crypto in terms of liquid assets, which include Bitcoin, Eth, and Solana. And then we have receivables. you know, that are longer-term receivables from other estates, and I believe we still have some equipment, mining equipment. And I'm sorry, my question wasn't clear.

I was looking for a number. What's the estimated amount of assets that Lockfield has now? I think I testified we filed with somewhere in the range of around $30 million. But you also asked me the receivables number. for the remainder, and that's more than $30 million, but that's not as liquid. Okay, and so what's the total assets, liquid or unliquid? Estimated. I believe it's over $60 million.

And the cash collateral order that you're seeking today would not exhaust that whole $60 million, would it? No. All right. And is it your intent to do anything further? as a debtor to prevent the tracing of Mr. Bertram and his companies, Bitcoin, and other assets. Are you asking our intent? Yes, sir.

Our intent is to maximize value and get out of – I'm sorry, I don't understand. If you're shaking your head at me, sorry. My question was with respect to Mr. Bertram's claim for constructive trust. Are you intending to do anything in the next two weeks and the next two months to hurt or make it more difficult for Mr. Bertram to trace his Bitcoin that he invested with blockbills? So this is in conjunction with speaking with counsel, which I don't know if I can testify to, but don't testify as to anything that your counsel told you. Okay. The general intent is to treat customers on a pari-pursu basis, which means on equal footing. And I wanted to make sure that these cases are done in the most transparent way as possible,

and treating people fairly and equally. My question is, is it your intention to do anything further in this bankruptcy to imperil Mr. Bertram's ability to trace his Bitcoin? I understand it may have been impossible to trace because of things that were done before this bankruptcy was filed. But I'm asking you whether you intend, as part of the bankruptcy process, to do anything to further prevent the tracing of Mr. Bertram's Bitcoin. I am not trying to prevent anybody from doing anything that they are legally allowed to do. Thank you, Your Honor. Okay, thank you. Does anybody else wish to cross-examine Mr.

Renzi. Okay, I hear no response. Redirect? Very short redirect. Yes, sir. Mr. Renzi, good afternoon. Please turn to Declaration 1, which is Debtors Exhibit 1. I think... I think my binder is... The binder is... Loading. There you go. Which of the three...

This is a declaration in support of the motion of debtors for entry of interim final cash collateral. I'm not sure if you have our binder their binder so yeah it is in there one is in there he looks under D1 D1 you'll have the right tabs okay I just mr. Evans which which one should I number one number one okay exhibit one or the very first page yeah you were asked questions about the basis for your declaration by mr. Patterson do you remember that yes I do just you identified paragraph four as one paragraph in which you described the basis for your declaration.

Yes, I do. I believe it's the one that's filed 316, 26, page 205, paragraph four. That's correct. Yeah. So the record is clear. The first sentence, can you read the first sentence for me, please? In making this declaration, I have relied in part on information and material. that the debtors, my colleagues at BRG and that debtors other external advisors have, as applicable,

gathered, prepared, verified, and provided to me in each case under my ultimate supervision at my direction and for my benefit in preparing this declaration. I would just note that that seems like a run on, but I would have put more punctuations there. Sorry about that. And it does say in the first sentence I have relied in part on information and materials. Do you see that there? I do see that. There is also another paragraph right above paragraph four, paragraph three.

I see paragraph three. Can we the second sentence of paragraph three, please? Except as otherwise indicated, all facts set forth in this declaration are based upon my personal knowledge, my discussions with members of the debtor's external advisors, my review of relevant documents and information concerning the debtors operations and financial affairs, and my opinion based on my experience and knowledge of the debtors industry, operations, and financial condition. Okay, thank you. So the substance of your declaration is based on what's in paragraph three, what's in paragraph four,

and importantly, that it says in part of what's in paragraph four. Is that fair enough? Yes. Are you an officer of Blockfields? I am. What's your title of Blockfields? I think I have two. One, Your Honor, I was Chief Transformation Officer and Chief Restructuring Officer.

I use them synonymously. I think Chief Restructuring Officer is appropriate for the court here. And do you have the authority to act on behalf of the debtors? I do. Can you sign contracts for the debtors? I've signed declarations, so yes. Can you speak on the debtor's behalf? I can.

There were some questions concerning the costs of discovery and other litigation expenses in Illinois. Do you recall that? I do. Okay. And Illinois, there is an action against the debtors, but also three individual directors and officers. Are you aware of that? I am. Okay.

And to each of those three individual directors, directors and officers have their own law firm representing them? I think so. I think so. Okay. And have each of those directors and officers put their D&O insurance carrier on notice of a claim? I believe so too. Have each of those directors and officers and their counsel put the company on notice of a prospective indemnification?

Your Honor, this is an officer of the company. Yes, I believe so. If officers of the company that are named defendants in the Illinois lawsuit are required to show up to court, take depositions, and participate, how would that impact their day-to-the-operations at the business? I think it would add to the burden that they already have. And are those officers and directors important to the sales process and ultimate reorganization in this company? Yes, they are. We're running this as leanly as possible and leverage. the employees to the best of our ability and they're key to doing that.

Mr. Patterson asked you questions about the deposit that Mr. Bertram provided to block those. Do you recall that? I do. And he talked about 40 Bitcoin. Do you recall that? I do. Do you know where those 40 Bitcoin are today? No.

Okay. If I asked you to take those 40 Bitcoin and segregate them, would you be able to do that? do that? No. Why not? I think the assets are co-mingled in one wallet, and I wouldn't be able to identify them specifically. No for the question. Okay. I can I ask a couple based on the regret? Yes, certainly. Am I correct that to your best knowledge and beliefs you could segregate 40 bitcoins and not spend down blockfields, bitcoins to the level where they were less than 40 Bitcoins, correct? Could you rephrase the question? Sure. You don't plan to have the debtors spend all the bitcoins that Blockfields now has, do you? My goal, in my experience, is to keep as much

of the assets in crypto as possible, and as using U.S. dollars first. That would be my goal. Right. So you don't anticipate a situation in which you were going to have to deplete Blockfield's Bitcoin so that it dips below 40. Is that correct? I hope I don't have to spend 40 Bitcoin. Okay. And you don't know, you're not a tracing expert, is that correct? I am not a tracing expert. Okay. So you don't know whether they can be traced or not, correct? I do not know. All right. Now, did you get a subpoena? My office received subpoena while I've been in New York and was in New York yesterday. And that requested all the documents in support of each of the three declarations that you have made.

Your Honor, objection outside the scope of the cross or direct however you want to call it, but outside the scope of the first examination. It's beyond the scope. It was related to paragraphs three and four of his declaration, the source material. In other words, I asked for the source material. by subpoena and didn't get it. Mr. Patterson's discovery concerns could be raised with us or our counsel from Mr. Ante if he has an independent, but it's not appropriate scope of examination here.

I can ask him if the witness saw the subpoena and if he sought to obtain documents that were requested by the subpoena. This is not a motion to compel. He had his opportunity. I'm sustaining the objection. And if the, you talked about. litigation expenses then. Are you saying that

if there's an adversary claim made against the three officers and the debtors in this court that they will not put their insurance company on notice and will not seek indemnity and will not each have their own lawyers?

Objection, Your Honor, calls to speculation. I'm not sure where explain that one. He's asking him in the event that they file an adversary proceeding in this court against three directors and officers. Will those directors and officers make – Would it be his intention? Would it be an intention?

Or have a right to D&O's insurance coverage? And would their counsel do that or not? Can you rephrase a question, maybe break them down? I think it was compound. I'm trying to get on. I'm trying to get on. No, I understand. Sure.

So you said that you know that the three individuals sued in Illinois. have put their insurance companies on notice? I think it's one insurance company, and I believe they're on, yes, on notice. And your testimony is that those three individuals have separate lawyers. I believe they have separate lawyers, yes. And it would add to their burden of litigation if they had to defend the Illinois action, correct? Yes, it would add to their burden. And if I file an adversary, basically the same case or maybe updated and improved,

against these three officers and the companies in this court, as an adversary claim, is it your testimony that they won't put the insurance company on notice? I think that they would put the insurance company on notice if you filed a suit against them. And if there's an adversary claim, they would notify the company of the indemnity obligations. Isn't that correct? I believe so. All right. And that there would be a burden on them to the extent all litigation is a burden if there's an adversary claim filed here, correct?

I think there was a distinction on relative burden. We were trying to say, and as I testified earlier, consolidating was more efficient, in my opinion. But I'm not a litigator. My skills are in finance and dealing with. So you wouldn't know for sure. I'm not a litigator. So I don't know specifically, I do think having two separate litigations is more expensive than one. Right, but if there's adversary claims here, there'll be whatever is involved in the bankruptcy in terms of the plan, creditors doing this and that, and then there'll be our adversary claim.

The same claim as in Illinois, right? I don't understand the question, I guess. If you're asking me a question, I thought you're making a statement. Thank you, Mr. Patterson. Any further direct? No, you're on. Okay. Okay. Mr. Renzi, you are excused. Thank you. Thank you.

Okay. Where would you like to go from here? We've got ten minutes this afternoon. Your Honor, next item on the agenda is the claimant's motion to lift stay, and so whatever evidence or witnesses they have would be the next order of business. Well, let me ask this then. Is the debtor's evidence in support of the cash collateral

motion closed at this point? Or do you have further exhibits or witnesses? Yeah, we have one more witness, but really the witness is Mr. Brennan. Yes. Yes. We were anticipating calling them in connection with our

calling him after their expert went. Right. Okay. He's here today, though, Your Honor. Yeah, no, I understand. Mr. Monsad, do you want a second with them? Yeah, go ahead. I'm opposed counsel for the official committee on circuit creditors. Oh, so I don't believe Mr. Brennan is testifying in connection to cash collateral.

I just want to make sure we're clear. Because I think we want to close that record if we can on cash collateral today. I'm asking, yeah. And look, we're doing what we were doing what we always do. If there are multiple, or if witnesses are going to testify, he's more than one motion, we do it all together. But if Mr. Brandon is not, he's not testifying in connection with cash collideral. Well, let me explain, Your Honor. I believe it was yesterday there was an expert witness identified by the claimant.

Yes. And that witness intends to testify about tracing and what have you concerning their argument about constructive trust, which is relevant to their cash collateral argument. And so as a rebuttal, Mr. Brandon will rebut that witness. and that's why we've added six or seven additional exhibits to rebut the report that we received last time. Yeah, and here's the complexity, because I think in fairness, depending upon the testimony of the experts that would bear on the relief that Mr. Bertram is requesting in his objection to the cash collateral motion.

So we probably do need to complete all the evidence before we can really move on to, consideration of the three different matters that are on the agenda. Do you gentlemen agree with that as a general proposition? I do, yes. Yes, Your Honor. I thought we'd get all the evidence in. Okay. I think it's the only thing we agree on. There is one issue, though. I believe the cash collateral order does not consent notice. The one issue, judge, is that the cash collateral order expires today. Okay. Then I'm going to so order the record for a one-day extension of Murchin needs cash collateral under the second interim cash collateral order with the intention of wrapping up and ruling tomorrow. Okay?

Let me, this is dangerous because, you know, I know I probably know enough to betray what I don't know, right? But and you're going to have experts. But when it comes to, okay, my understanding is Mr. Bertram and his own. entity deposited with the debtors, a certain amount of Bitcoin and a certain amount of USDC. The experts will probably look at me and say, like, you're an idiot. You know what you're talking about. But my understanding is that, you know, Bitcoin can normally be traced through

blockchain. The USDC, it may be different. But, you know, maybe we'll get to it tomorrow. But it just strikes me that there's a resolution to be had on the cash collateral order. If Mr. Bertram's concern is that, you know, you've got my Bitcoin, you've got my USD, say you're going to send it out the door. And while I'm litigating here over stay relief or over, you know, over, you know, whether I end up back in Illinois or I'm going to have to file a complaint in this court, that the concern is that the Bitcoin goes out the door, the U.S.VC goes out the door,

and then if you're able to prove up a constructive claim or a trust claim later, or otherwise just prove that it was never a property of the estate in the first place. What's your remedy except a monetary remedy? And that may be tough to recover in a bankruptcy case. It might sort of state it. Yes, Your Honor. And all we won't, I'm sorry. Yeah, I'm addressing Mr. Patterson right now.

No, I'm addressing you, sir. Yeah, that's basically it. We do not want them to use the bankruptcy proceeding as a sword. I'm fine to protect, allow them solicit investors and get a plan together and operate in the meantime if they can do that without dipping into my client's Bitcoin and the other assets. And that's all I'm seeking is if I cannot trace before they find, the bankruptcy petition then I understand what the consequences are to that but if I can trace it up to then and then they say oh but in bankruptcy we dissipated is then that's not fair to me yeah I understand the argument mr. Evans yes

just to respond to your your statement on the Bitcoin and USC on the differences so yes Bitcoin is known as a digital asset that can be traced except it can be traced while there is what's called a UTXO unspent transaction output it can only be traced until there is what's called a co-spend transaction once there's a co-spend transaction that UTXO is eliminated and a new UTXO was created think of it like melting pieces of gold down into bar and applying a new serial number to them that's exactly what happened here and so every asset that mr. Bertram provided to block fills you got

swept into an amiss wallet, it went out, and it ultimately came back to the same one was wallet. That ominous wallet during that time reduced almost zero, and now that's where the assets sit today. So it's not right to say that the U.S.C. is not traceable, but the Bitcoin is. Either the Bitcoin nor the U.S.C. is traceable with respect to this work term. Okay, so it went out to zero. The account went to zero, and then the wallet came, the wallet went down to zero, and then it came back. Okay, I understand. it went to zero and then it was dispersed to other wallets and then it came back. So it can be traced.

Okay. We disagree on that point, Your Honor. And the reason why it cannot be traced in our view is because when it came back, that was after the UTXOs, the specific identifier for each individual Bitcoin have been spent or deleted and then reassigned, meaning that the Bitcoins that came back are Bitcoins that are coming from a variety of different exchanges, liquidity. providers, other wallets. And so the current Bitcoin that's sitting in Blockfield's wallet today, none of those have the same UTXOs as the Bitcoin that Mr. Berkton provided initially on January 16th. Right. And there was a series of really what happened is Mr. Berkton put the assets on blockfills and executed about 25, 30 different transactions. No, that's not. He's talking. In order to fill those transactions, those assets went out to various different places.

when we were talked about the reason for the transfer, that's what it was. Yeah, with all respect, and I'm sorry for interrupting. That's okay. There were only four trades, and they were made after they had swept the Bitcoin out of his account. And we think that the Bitcoin can be traced using court-approved methodologies and standards, and that there's no harm to them if they say that nothing they did in bankruptcy impeaches or destroys our claim. If it was destroyed as he claims before they file bankruptcy,

and if the legal system won't permit remedy, then I understand what my options are. Right, but you want to live to fight another day? Yes, and it's a preliminary injunction. Yeah, okay. So, look, I've learned two things. One is that I'm correct that I don't know as much as I think I know about this. And, you know, the other is that I understand the party's positions a little bit better.

And Your Honor, not to interrupt, just one thing. The concept that it wouldn't harm us just to take $7 million out of the equation or $40 billion out of the equation, that's not right. It would trigger a provision in the cash collateral to deplete our equity cushion, then that per deal would work. Okay. Well, look, I've got, you know, tomorrow I've got to decide what to do with these issues. The, you know, request for segregation of a certain amount of employment, certain amount of U.S.D.C. came in an objection to the third interim cash collateral order. We're a month into the case.

and nobody has sought such relief in this court. So I think that's kind of why we are having this discussion today instead of a few weeks ago. But nonetheless, they share the concern that, you know, I don't know what the, ultimately the legal conclusions are going to be that I make. That's to be decided. But I do have a concern, and I'll just leave you with it overnight. I have a concern that if it turns out that Mr. Bertram prevails on all of these issues, that he's left without any sort of remedy.

And I'm not saying that I'm deciding that you have to segregate a certain amount of Bitcoin and a certain amount of USC because I don't know all the consequences of that, and that would be the subjective argument tomorrow. So I'm laying this out to kind of give the party some idea of what I'm thinking. thinking and you know and you can you can think about it for your arguments and the evidence you want to put on and maybe tell me like you know I'm just not getting it which is a possibility and you'll set me straight tomorrow thank you judge but I'll leave it there unless anybody else has has anything that would be helpful for me to think

about me tomorrow I'm sorry what time do we resume tomorrow noon tomorrow and we have two hours tomorrow so you'll probably want to chat as well about the conduct tomorrow's hearing and how you get it all in there. Thank you, Judge. Thank you, Your Honor. Mr. Renzi, I don't think we need them tomorrow, so he wasn't planning on attending. We're done with the testimony, I believe. That is fine.

I hope Mr. Renzi enjoyed his visit to the State of Delaware. I have family, very, honor. Oh, good. Okay. I hope you get to see them. Okay. Thank you, sir, Your Honor. Okay, thank you.

I'm sorry. Mr. Manzo, did you say? Okay, thank you. We're adjourned. Have a good evening.