American court hearing recordings and interviews - Listen to the BlockFills May 28, 2026 bankruptcy disclosure statement hearing (In re Reliz Technology Group Holdings)

Episode Date: May 29, 2026

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Thank you. Mr. Hearst, great to see you. Good to see you, Your Honor. Good morning. For the record, David Hearst, from McDermott, Will & Schulte, on half of the debtors and debtors in possession of these cases. Yes. Your Honor, we filed an amended agenda last night, and I hope you received a copy. I believe we did send that to chambers.

I did. Thank you. It reflected the good news that although there were nine items on the agenda, only one's going forward. That's the debtors motion for approval of the disclosure statement. and the solicitation procedures. Your Honor, before we jump into that, my colleague, Mr. Asman, like you to give the court a quick update on the case. Great.

And then Mr. Steinman will take us through the disclosure statement. Okay, sounds good. All right, thank you. Okay. Mr. Asman, good to see you. Good morning, Your Honor. Good to see you too, Darren Asman from McDermott, Will & Schulte for the debtors. Your Honor, I want to begin by thanking the Court for accommodating our slight move for today's hearing.

anticipated having a lot more fireworks for you but thankfully we were able to resolve them as mr. Hearst noted there's really only one item on the agenda for today that's unresolved and it is the debtors disclosure statement approval motion I note that the outcome that we achieved today as you saw there's quite a lot of paper that was going to be on for today that outcome wouldn't have really been possible without the cooperation of the committee the US trustee and other stakeholders that were involved in following those pleadings and responding to them and we appreciate all their engagement

and really the collaborative and constructive approach that everybody took to getting those things resolved in a way that I think moves this case forward As part of all that process the debtors have incorporated a number of informal comments that we received from both the committee as well as the US trustee and Celsius Both into the plan and the disclosure statement and we think those revisions resolved nearly all the concerns that were raised At this time we understand that the only remaining objection is in narrow one. It's from the U.S. trustee, and it's the opt-out mechanism. As Mr. Hurst said, I'm going to turn it over to Mr. Steinman in a few moments to address that issue. Very good. You can hear from the U.S. trustee. Before turning it over to Mr. Steinman, I do want to provide

a brief case update. Your Honor, since the outset of this case, the debtor's objective has been to move on an expedited path toward confirmation of a plan. That effort began with filing an initial plan just a few weeks after the petition date. And the initial plan contemplated a dual track process that you might recall. It included the evaluation of a term sheet that was submitted by an ad hoc group of the debtor's largest creditors, alongside on the other end, a potential sale process, depending on what interested bidders wanted to do. As I can say is often the case in crypto cases, the case evolved, and through discussions with the committee and the debtor secured creditor Celsius, the parties ultimately determined that pursuing a traditional sale,

process open to participation by the ad hoc group by the way followed by a liquidating plan would be in the best interest of the estate it was just a more streamlined process to to move the case forward and that is what we pivoted to as a result of that traditional process the debtors have selected key rock as a successful bidder for a portion of the debtors assets that proposed transaction is expected to generate up to 3.25 million dollars in value for the estate we're currently finalizing the APA and we intend to file that in advance of the June 16th sale hearing.

In addition to the monetary consideration, the $3.5 million, the transaction will provide an important benefit to customers by preserving access to the platform, the Block Fills trading platform, through which customers can continue engaging in the things they were doing prior to the petition date. Your Honor, unless you have any questions about the status or anything I've covered, I'm happy to turn it over to Mr. Steinman to address the open issue on Ludus disclosure statement. Okay, I appreciate the update.

I don't have any questions. All right, thank you, Your Honor. Thank you. Mr. Steinman, good morning. Good morning, Your Honor. Greg Steinman and McDermott, Will & Schulte, on behalf of the debtors. Yes. Your Honor, we're here today seeking approval of the disclosure statement and entry of the proposed

solicitation order. At the outset, I'd like to echo Mr. Asman's comments and thank the Committee, the U.S. Trustee, and Celsius, for their cooperation in bringing us here today. We believe that we're at a nearly consensual basis, and that wouldn't have been possible, everybody's engagement over the past week we've received informal comments from each of those parties and we've incorporated nearly all of those comments into the amended solicitation order plan and disclosure statement that was filed last night at docket numbers 380 and 381 your honor I'm happy to provide

a general overview of the changes I'm also happy to walk through a page turn and walk through the red lines unless your honor has already reviewed them and feels comfortable I have reviewed them so it unless there's anything that you want to highlight I'm happy for you to stand on the papers thank you your honor there is one change in discussions with the committee it's going to be a sentence that we're going to add to the updated section on the sale process okay what it's going to say is and we'll work on the final language but I wanted to just read this into the record is there has not yet been a determination of the

allocations of the sale proceeds as between the debtors if any Your Honor, unless you have any specific questions on the plan and disclosure statement, I'd like to turn to the solicitation motion. Yeah, let's turn to the solicitation. Through the solicitation motion, the debtors are seeking four types of relief. Approval of the amended disclosure statement is containing adequate information for purposes of Section 1125A, establishment of the dates to set forth in the order governing solicitation and confirmation, approval of the solicitation procedures themselves, and approval of the materials to be included in this solicitation package,

as well as the notices and other information that's going to be sent to other creditors and interested parties. As we've said multiple times now, the contested issues have been narrowed to just one. But before addressing that issue, I just want to emphasize that the disclosure statement provides extensive information.

This includes information about the debtors in the cases, the debtor's business, relevant corporate history, events leading up to the petition date and events post-petition, a summary of the plan, and information regarding the risks associated with the plan. We believe the amended disclosure statement

that was filed last week contained adequate information. We certainly believe so now with the additions from all of the parties in interest. So we respectfully submit that this more than satisfies the adequate information standard, provides creditors with sufficient information to make an informed judgment. Unless Your Honor has any questions,

I'll turn now to the one contested issue. Yeah, let's turn to that. The remaining issue is whether the plan's opt-out mechanism and third party release render the plan unconfirmable. As an initial matter, this Court has repeatedly held that inclusion of third-party releases with an opt-out mechanism does not render a plan unconfirmable at the disclosure statement stage. And specifically in the Third Circuit for a proposed plan to be unconfirmable, it must be obvious at the disclosure stage that a later confirmation hearing would be futile. First of all, as this Court has held, the inclusion of third-party releases does not render a confirmation hearing futile, particularly given that it's a confirmation issue. To paraphrase, Your Honor, and your decision at the Norcold disclosure statement hearing,

the court remains of the view that it is a plan issue that is satisfied through confirmation. And the second point, Your Honor, is that although the U.S. trustee alleges that the third-party releases are not consensual, the objection actually does not provide a basis to deny approval of the disclosure statement today under the patently unconfirmable standard. But simply, the objection raised by the U.S. trustee is premature and should not prevent the debtors from soliciting the plan. I think that, you know, one of the objections that the United States trustee raises, which I think is a fair one, is that I don't want to misstate their position, but as I understand it, that, look, if you're going to go and solicit and there's a significant risk of having to resolicit because the forms of the opt-outs aren't going to be approved, then is it an efficient and wise use of,

of the state resources to proceed. So I do agree that it is a confirmation issue, but there's also the sort of practical issue. And, you know, maybe you could address your comments to this. The opt-outs as I read them are on the more aggressive end. And, you know, I think I noted, I think it was a, Walker Edison confirmation hearing, which was the first time that I discussed, I guess, my more developed approach to dealing with opt-outs and pointed out that look, I think it's an evidentiary

issue. I think, you know, a debtor is entitled to come to a confirmation hearing and put on evidence showing that the form of opt-out that they used can persuade the court that there has been consent as required under Purdue. And I don't foreclose that possibility. Nobody's tried it since, right? And I'm not suggesting that you need to walk away. That's your business at this point because it is a confirmation issue. But I think there's a practical issue that Mr. Hackman is raised.

So, you know, maybe just address that issue, if you would. Yes, Your Honor. I would say that what we tried to do with our ballots was narrowly tailor them to what this court has approved previously. We've included additional language on the ballots that includes the definition of the release parties and releasing parties, and we think that we've made it clear what creditors need to do to opt out on the ballots. So we would respectfully think that our ballots are acceptable. And then if it gets the confirmation and this becomes an issue, you know, we would have that evidentiary hearing.

And if it's determined that our ballots were not acceptable, we can make adjustments as to whether or not the opt-out mechanism should be removed and the third party releases drop or if we need to resolicit, we can resolicit. Okay, because the way that I read it, and correct me if I'm wrong or if there's been a modification, that I didn't just catch up to, but parties who were deemed to reject, but, and therefore do not have, do not get a vote on the plan, would be required to return an opt-out form to be excluded from the third-party releases.

Am I right about that? I believe that we changed it so that the only people that are subject to the opt-out, Sorry, that's not phrased correctly. The only people that would be subject to the third-party release are creditors that have to submit a ballot either accepting or rejecting. It does not include anybody that's deemed to reject or deemed to accept. We're not sending any notices. Okay, so deemed rejecting creditors are not subject to the requirement to return it off doubt. You just need one moment, Your Honor.

That's okay, yeah. But I believe that's correct. Okay, okay. That's correct, Your Honor. Okay, thanks. Thanks. I'm glad I asked the question. Okay.

So to summarize the first argument, we think that this objection is premature and that it's a confirmation issue and we should be able to solicit the plan and have the disclosure statement approved and to the extent that we need to argue this at the confirmation hearing, we'll be ready to do so. Okay. The second point is that kind of consistent with the conversation that Your Honor and I just had, I think that even if this issue was right today, the objections should still be overruled because the opt-out mechanics that we follow

are from the precedent from this court, and given the fact that we've limited it to people that are affirmatively partaking it in the process by voting on the plan and having the opportunity to opt out. There is nobody that is not a voter on the plan that is going to be subject to this provision. So based on the court's rulings in Walker Edison, America First and Norcold,

we think that these are consensual releases. And of course, as your honor knows, A lot of what goes into this process helps the confirmation hearing because at that point, we know other people have opted out or not. And it shows that if we get the confirmation and somebody has opted out, it's very clear that these people understood the ballots and understood what they needed to do to opt out. And for that reason, we think that these are consensual releases. So just to summarize, Your Honor, we believe our plan does comply with governing precedent from

this court and the objection should be overruled. Unless you have any other questions with respect to the U.S.R.C.'s objection, I just have a other points I'd like to make. Yeah. Yeah, thanks for clearing up my questions about the parties who are affected by the opt-out, but yeah, please go on to the other points.

I just want to briefly address the committee's reservation of rights. We appreciate the committee's efforts in this case. I don't think that they've had the easiest job. The committee was appointed during a case that was moving at lightning speed. I think they've done a great job working with us. They've engaged quickly, constructively.

We've reached a lot of resolutions. Obviously, we recognize we have not reached a global resolution on the plan and we we understand their concerns we're hopeful that we can continue to work with them constructively and by the time we're back in front of you for plan confirmation we can hopefully have a consensual plan and just to wrap up your honor just want to note that there's no pending objections to the current form of the solicitation procedures order and so therefore we respect that order be entered but i understand that other parties would like to be heard before that happens okay thank you mr simon let me first ask the

if they wish to be heard. Mr. Waxman, it's great to see you. Good morning. Your Honor, it's always a pleasure to appear before you. Jeff Waxman of Morris James, on behalf of the committee, I'm joined with me today by my colleague, Eric Monzo. Your Honor, first of all, one of the first things that I thought of when I saw the opt-out was Walker Edison, because we represented the creditors committee in that case as well.

And that, of course, was an issue. We are not taking a position today, but I do note the differences between the Walker Edison opt out versus the ones that are in this case. But again, that's a confirmation issue. First, Your Honor, the committee's investigation is ongoing with respect to potential claims against the insiders. and the committee is also trying to work through issues with Celsius towards a resolution of that as well. We are hopeful that by the time we come back before your honor, everything will be resolved with respect to both of them. I also want to reach across the aisle and thank Debtors Council for working collaboratively with the creditors committee, even this morning with respect to the additional language,

with respect to the allocation of the sale proceeds. They've certainly been working hard. Again, this is a fast-moving case. It's not the largest case, but it is a fast-moving case with a lot of dynamics, and we certainly appreciate their efforts. Your Honor, we only filed a reservation of rights. We recognize that there's still a lot of wood to chop.

They're hopeful as the debtors are that by the time we come back before you, there is a resolution with respect to a number of the outstanding issues, which I won't get into today. I'll have been just to say the committee's investigation is again on. Good. Unless your honor has any questions, I will sit down and raise its issue. No, I appreciated the reservation of the rights and the way it provided me, you know, with a roadmap to the, the outstanding issues that the committee is engaged on with the debtors and understand what could be to come, but maybe not. Yeah, well, hopefully, you know, once the smoke has cleared, everybody will come in hand in hand with a process and a document that everybody can agree upon.

Yes. Thank you, Your Honor. Thank you very much, Mr. Waxman. Could I hear from the Office of the United States Trustee, please? Mr. Hackman, it's always great to see you. Good morning, Your Honor. May I please the Court, Ben Hackman for the U.S. Trustee. It's great to see your honor. Our office had sent informal comments to debtors' counsel about the plan and disclosure's statement on April 10th.

Council has accommodated the vast majority of our comments, and I thank them for that. There was a revised plan filed last week at docket item 351, and then a further revised version filed yesterday at docket item 381. And as I read the plan, the definition of releasing parties has been narrowed fairly significantly compared to what was in the original version of the plan. It still proposes an opt-out mechanism, which the U.S. trustee opposes. We filed an objection on this point at docket item 373. We acknowledge, Your Honor, has overruled our objection on this point and approved opt-outs in other cases. And so I would rest on the arguments and the authorities cited in our objection.

If Your Honor has any questions, I'll do my best to answer them. But otherwise, we'd respectfully submit that the ballots should obtain consent for third-party releases through an opt-in box instead of opt-out boxes. Okay. Thank you, Your Honor. Is there anyone else who would like to be heard? Okay, I hear no response. Mr. Steinman, do you have anything further or do you stand on the comments you made on the opt-outs earlier? I'll stand on the comments.

Okay. Okay, thank you. As always, I'm grateful for the office of the United States trustee and the trial attorneys in our office here who do such outstanding work under down a few people. And so I want to really express my appreciation to Mr. Hackman and his colleagues. As we discussed earlier, I view the issues as being confirmation issues. and the opt-out issue, as I understand the argument, is the only remaining objection to approval of the solicitation procedures and the disclosure statement.

So I'm going to overrule the objection as being one that can be raised at confirmation. And customarily, I've told the trial attorney from the Office of the United States trustee that if they wish to stand on, the disclosure state, statement objection as their plan confirmation objection. I'm happy to consider it in that context. They don't need to produce additional work product. I'd be happy to consider it later if that's more convenient and and serves the purposes of the office United States trustee.

But I will grant the solicitation procedures motion and preserve approve the disclosure statement because I do find that there's sufficient information in the disclosure statement within the understance of section 1125 and that the disclosure statement should be approved for solicitation thank you your honor again David Hurst from McDermott will and Schulte thank you very much for that and we will go ahead and upload the proposed order we'll get back to the office very good okay is there any other way I can try to be helpful this morning I don't think so your honor okay okay very good well thank you very much and I wish everybody a good day and a good weekend

and we'll see you soon. Okay, we're adjourned. Thank you, Your Honor.