American court hearing recordings and interviews - Listen to the Saks bankruptcy court hearing of June 5, 2026, 11:33 am

Episode Date: June 13, 2026

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All right, good morning. We're back on the record in case number 26-9013 with respect to the confirmation hearing for the global debtors. Before me is the confirmation hearing of the global debtors for the reasons that I will set forth. I'm going to confirm the plan. First, I find based on the testimony provided that the debtors have met the requirement of 1129 in order to confirm the plan, I will address each of the objections in turn. I think that this is an extraordinary result in the sense that this company was very much at the beginning of the day, we started with a seven and a half hour long first day hearing where the company

was basically in a very distressed situation. I think that the work that the company did with the ad hoc group as well as with the unsecured creditors committee has allowed the company and the evidence is undisputed to get back on its feet and to get back on its feet and to get back to work. I think the company has and counsel have done an extraordinary job of addressing a very, very large volume of objections and concerns that have been raised. There have been many, many parties who have been involved. So I find that the debtor, based on the evidence, which is largely uncontradicted, has met the requirements of 1129 in order to confirm the plan.

There are two buckets of objection. The first bucket is the U.S. trustee with respect to the opt-out releases. I find in this case that the releases are consensual. There was an extensive process to notify parties, many, many parties. opted out. It was done for consideration. We're in a situation where the dip is impaired and the parties and yet many of the unsecured creditors are receiving substantial recovery if not full recovery if they're treated as critical vendors. I also find that the plan was proposed in good faith and there have been several arguments made. as to how somehow it wasn't proposed in good faith, but, you know, good faith is, is it intended, is the plan intended to achieve the reorganization results that was intended, and I think,

and I think it was. So as it relates to the U.S. trustee's objection that the releases were non-consensual, I find that the releases meet the requirements of both the code, and the code, and the, that they do not run afoul of Purdue Farmer or Pacific Lumber and that they're strictly in following with the container store case so I find that they are consensual for consideration with sufficient notice second there are objections to I guess three objections by former officers and directors let me address the bankruptcy objections first first there's a an objection

that for some reason there is unequal treatment with respect to similarly situated individuals. I don't believe that that is the case in this case. I think that all non-go-forward officers and directors are limited in what their obligation, the company's obligations would be that were all being treated as unsecured claims, whereas the new officers and directors on account of their go forward consideration are being are being provided with the indemnity rights. So I don't believe that this is unfair discrimination for similarly situated creditors. I also don't believe that this is in favor somehow on account of their pre-petition claim. this is really on account of their post-petition service.

Second, there's the argument that somehow Delaware corporate law would trump the bankruptcy code both 365 as well as the 1141D. Without reaching the issue of whether Section 303 of the Delaware corporate law, you know, specifically addresses this argument, which I think there are very good arguments that it does and that you don't really need to do it. But I think that the bankruptcy system would be totally upside down if states could pass statutes which would somehow override either 365 or the discharge in an 1140. So I think that the overall, you know, the fact that, you know, prior officers and directors have unsecured claims for whatever indemnity obligation except to the extent of insurance versus current officers, go forward officers and directors would have their indemnity rights. I don't believe that that is disparate treatment.

I've seen it in many, many plans and I think it's perfectly appropriate. Finally, there's somehow the allegation that these are post-petition contracts that somehow that there are, that they should be treated differently. You know, there's a limited record in front of me. Obviously the contracts were signed pre-petition. that there is somehow the argument that, yeah, they were signed pre-petitioned, but the intent was. So I don't believe that that is a confirmation issue. I think to the extent that there are proofs of claim filed, either for the pre-petition indemnity claim

or for any post-petition work to the extent that there is any, I think those will be dealt with in the claims objection process. But I think that the primary objections, both the confirmation, as well as the good faith argument, the 1123-A-4 argument, I'm going to overrule those. So, Ms. Sinclair, I'll wait for a proposed confirmation order from you that has the other cleanup language, and I'll review that and enter it at the time. Yes, Your Honor, and we are just about ready to file that with Your Honor, so my presumption is that by the time this is done presenting me Brookfield motion at the end of the hearing, you'll likely be in a position to be able to sign that. Okay, thank you. All right, so now we go to the SACS digital debtors confirmation. I think, Your Honor, this is Jared Martin for Sacks off the Dahl. I'm having some camera issues, so bear with me one second.

I can see you. You can't see me. Okay. Thank you. Thank you. We all heard today. No, I can't say you. I'm sorry.

I can't see you. I can see Mr. Reardon, but he wasn't talking, so. I'm going to exit the meeting and rejoin. Okay. But if you'll give me one second. When that's going on, may we be excused at this point, this kept close to that for sales school? I don't know about that, Mr. Prostock.

Of course. Of course you could be excused. I'm just happy you didn't make fun of my fault in today. All right. That's what I'm pleased with that. All right. Thank you. Thank you.

All right. I can see you now, Mr. Martin. Thank you, Your Honor. Appreciate it. You're already here today for final approval of the debtor's disclosure statement. and the third amended plan of liquidation. Your Honor, just like SACS Global ran a successful reorganization process, the debtor's here ran a, what I would say,

the very successful liquidation process. Going into this case, the financial projections gave great doubt as to whether the liquidation of the SACSOPFIFE e-commerce platform would be sufficient to pay off the, the debtor's term loan. Those projections turned out to be happily inaccurate in that the well-run process

by the debtors in conjunction with the professionals and the individuals over at Facts Global who assisted at this process as well resulted in a liquidation process that not only paid off the term loan but left millions of dollars leftover for payment to general unsecured creditors and consigned.

and creditors. And that's a credit to the employees that stayed around with SAC's office to help manage that process and the fantastic results obtained by Great American in running the liquidation. Your Honor, with that, I would like to briefly go into the exhibits and the evidence unless the court has any questions regarding the third amended plan, which primarily addressed mechanical changes negotiated between the debtors and the unsecured creditors committee regarding our responsibilities allocated between the liquidation trustee and the plan administrator. No, no, no questions. Go ahead.

Thank you, Your Honor. Docket number 2659 is the SO5 digital debtors witness in exhibit list, exhibits 1 through 15. Exhibit 3 is the Declaration of Andrew Heed. And exhibit 10 and 14 are the declaration of Letitia Sanchez, managing director at Struddo. We move to those exhibits subject to cross-examination. All right. So does anyone object to the admission of the declaration of Mr. Andrew Heed as his direct testimony in connection with confirmation hearing of the digital debtors subject to cross-examination? and it is exhibit 2659-3.

Okay, hearing no objection that would be admitted subject across examination. Thank you, Your Honor. The remaining exhibits are various certificates of service or other plan-related documents that the court can either take judicial notice of or admit directly into evidence, including the New York Times publication affidavit and various certificates of sorts relating to solicitation, and service of the plan and the confirmation will remove to admit the remaining exhibits on docket number 2659 to evidence. Well, okay, so exhibit 29, I'm sorry, 2659-1, 2659-2, are the notice of the disclosure statement and the modified plan.

I'll take judicial notice of those. Exhibit 2659-3 is in evidence. Exhibit 2659-4 is the order approving the conditional disclosure statement. I'll take additional notice of that. 2659-5 is a certificate of service for solicitation. 2659-6 is the affidavit publication. Does anyone object to the admission of those exhibits? All right, there will be admitted.

2659-7 is the notice of filing of the plan supplement. 2659-8 is the notice of filing of the second amended plan. I'll take judicial notice of those. 2956-9 is Mr. Hedey's amended declaration. Does anyone object to the admission of his amended declaration as direct testimony in this case? subject to cross-examination. All right, 2956-9 will be admitted. Actually, you know what?

There is, okay, then 2956-10 and 2956-14 are Ms. Sanchez's declarations as to the voting. Does anyone object to the admission of Ms. Sanchez's declaration as to the voting at 26-59? and 2659-14 subject to cross-examination. Okay, those will be admitted. And 2659-11 is the second modified plan. And 2659-15 is the third modified plan. I'll take the additional notice of that. And then 2659-12 and 13 are additional certificates of service.

Any objection to the admission of those? Okay, they'll be admitted. So all your exhibits are in, Mr. Hedy and Ms. Sanchez's subject to cross-examination, if anybody desires. Thank you, Robert. Excuse me. The remaining factors for approval of confirmation, we would rest on our confirmation brief, unless the court has any specific questions regarding those.

I'm happy to go over formal and informal objections and address those. those separately and would note that almost all objections have been resolved, save and except for the objection of the United States trustee, which was similar to that of the global betters plan. All right, Mr. Hunt, Mr. Wynn? Yes, Your Honor. I did file an objection. It was very similar to the global better objection,

but the first time it was found this case, I didn't think it complied with the container store because there was a gatekeeping provision. There was no option for the bill of the kind of class. But based on the latest amended plan, a lot of these issues were resolved. So in terms of my objection, I only have our general objection to the use of the opt-out as it relates to consent. I'm happy to sit down and do overdo it on that.

I think you have another form to make those arguments. But other than that, Your Honor, I'm not going to prolong my own. arguments and I will address on the pleading. Thank you, Your Honor. All right. Thank you. Yeah, I do agree with you that the amended plans cured all of the other, cure all of the other issues. So I think there's the only issue left is the, is the one that you, you've taken on appeal. So, all right, anyone else wish to be heard? Ms. Bradbury, did you hit five star? Just hit it one time. Five, okay, there you go. Did I just unmute you?

No, Your Honor, you unmuted me, Ben, Johnson, Quinn Emanuel. I'll wait for my turn. Okay. All right. Mr. Faroli, I am muted you, right? No, no, you're not unmuted. Are you muted on your side? I thought I unmuted you.

Can you hear me now? I can. Perfect. Thank you, Your Honor. Good morning, Rafferiolli of Morrison and Forrester. On behalf of the official committee of unsecured creditors, I'm not sure that we have much to add other than we support the plan. And I will echo Mr. Morton's comments that this is a tremendous result for the digital debtors

and hats off to the professionals who shepherded this process. There is value here for unsecured creditors, for consignment creditors, and all in all we are supportive of confirmation. All right. Ms. Bradbury? I can't hear you. So hit five star just one time. All right.

Did I unmute you this time? Yes, I think he did. Thank you, Your Honor. All right, go ahead. Pry, Dr. Ed Morris, representing the Trup insurance companies. We just wanted to quickly note for your honor that we did file an objection with respect to the digital data plan and we have been working with Council for the Digital Data's and we have arrived at mutually agreeable language.

There were just a couple of little paragraph reference. issues in the language and the version of the confirmation order that was filed this morning, which we've already noted for counsel, but we just want to make sure that any entry of the orders is subject to fixing those little glitches. All right. And to confirm, Your Honor, we, we have been in discussions with Chubb prior to this hearing, and we will be uploading a revised proposed order after the hearing that addresses the issues that chubb flagged but also

Mr. Feinstone's client as well which is a separate issue for HB strategies relating to the reservation of rights. All right, Mr. Feinstone. I have nothing further. Okay. I have nothing further. Thank you, Mr. Martin. Mr. Feinstone, I really like your tie.

I thought I could get away with that one, Your Honor. Apologies. All right. Okay, anything further? Your Honor, I just wanted to take a quick moment to thank the professionalism of all of the professionals in this case, from the team at Wolky Far, Paul Weiss, the committee, and all of the others that have worked with us. This is a straightforward liquidation, but it was less than straightforward because of what it is and was, which was the e-commerce arm of Saks Office attached to one of the most storied brands and companies in,

in retail luxury history. So it took a straightforward case and made it less than straightforward. And we would not be here without the professional courtes and the engagement of everyone that's on this hearing right now. And also thank you to the court for, you know, the time today and every other time

where we've been in front of you. All right. Mr. Lehane, are you here for this or for the next matter? For the next matter, you are. Okay. Does anyone else wish to be heard on the digital debtors confirmation? All right. So I've had a chance to review the plan.

And for the second time this week, I'm agreeing with Mr. Martin that this has been a very successful liquidation. For some reason, you know, most liquidations, unfortunately, don't turn out the way people envision. I think this is one that surpassed people's expectations. So I'm very happy. I'm happy to see that there was a recovery for unsecured creditors in this case. And I'm happy to see that it was done in a way that didn't distract or otherwise impinge on the global debtors' reorganization efforts. So I commend you, Mr. Martin, and your team. I think that the only really only remaining objection is the objection of the U.S. trustee.

And I think for the reason stated before, I'm going to overrule that objection. And I do appreciate Mr. Wynne resting on his papers as he's been doing recently, at least for the last few months. So I think that, you know, for the reason to state it below, I do think that the releases, as they've been, you know, modified since the first plan, do comply with container store and I'm going to approve it. So I will look forward to the revised form of confirmation order when you upload that. And I'm confirming the plan. I think it meets all the requirements of 1129 for confirmation.

Thank you, Your Honor. All right. So Ms. Smith, are we up to you now? Hi. Can you hear me okay, Your Honor? I can. Perfect. Thank you.

For the record, Allison Smith will be far and Gallagher for the global debtors. Before I jump into the GDP matter, as Ms. Sinclair noted, we did upload a revised form of confirmation order that is at docket number 2669. So that order is ready to be entered by your honor at your convenience. Okay. Thank you. Thank you, Your Honor. Recognizing that I am the last thing standing behind between a number of folks and

their lunch, I'll endeavor to be as brief as possible. The final item on today's agenda is the 1990 motion seeking approval of the omnibus agreement between the global debtors and GGP. That document was filed on an emergency basis under seal on June 3rd at docket 2579. We did file the final exhibit to that agreement also under seal last night at docket number 2653. In connection with the motion, we submitted the declaration of Mr. Weinstein, filed as a the C to the motion. Mr. Winesden is available and in the conference room with my

colleagues, but unless you have any questions or anyone else wishes to ask questions of Mr. Winesden, we would ask that his declaration be submitted into evidence. All right, so it was filed at, let's see. It was docket 2579 and exit C of that docket. Okay. Right. Does anyone object to the admission of the declaration of Mr. Mr. Weinstein found that docket 25,

Exhibit Zeta docket 2579, it's his direct testimony in connection with the settlement agreement with GTP. All right, hearing no objections that will be admitted subject to cross-examination of anybody wishes to cross-examine. Thank you, Your Honor. Your Honor, this motion seeks approval

of a comprehensive settlement between the global debtors and GTP, one of the global debtor's largest landlords and commercial counter parties. The agreement is the product of extensive arms-length negotiations and resolved a wide range of issues relating to 13 properties across the fax and the new market portfolio. The settlement is a critical component of the global debtors' efforts

to rationalize their store footprint, align operations around their core luxury retail business, and position the enterprise for a successful emergence from Chapter 11. Under the agreement, the global debtors will continue operating at seven key locations, monetize certain owned and leasehold interests, exit certain non-core locations, and resolve numerous lease, operating agreement, and redevelopment disputes that otherwise likely would have given rise to costly time-consuming litigation, delaying the global debtors exit from these cases. Under the agreement, the global debtors, excuse me, further, the economic benefits to the estates are significant.

The agreement provides for cash consideration to the global debtors and facilitates the sale of one-party. property to a third party again for additional cash consideration. Additionally, the agreement provides for certain capital improvement allowance that will be invested at certain of the full debtors go forward properties, helping to preserve an enhanced value at stores that remain central to the go forward operations. As part of the overall resolution, the parties have agreed on the treatment of a soon rejected and terminated leases, including the resolution of cure and reduction damages claims. And finally, and perhaps most importantly, the agreement preserves one of the global debtors' most significant land board relationships.

The global debtors in GGP have worked collaboratively to create a framework that allows both parties to move forward. The global debtors can focus on their optimized retail footprint, and GGP can proceed with certain redevelopment initiatives at various locations. Accordingly, the global debtors believe that this is well within the range of reasonableness, required under bankruptcy rule 2019. It resolved again complex disputes, generates substantial value to the estates, eliminates litigation risk,

preserve important commercial relationships, and advances the global debtor's restructure and objectives. Unless the court has any questions, we respectfully request that the court approved the on the bus agreement and grant the motion. All right. Mr. Lehaney.

Good afternoon, Your Honor. Robert Lee Hain, Kelly Dr. Ryan Warren, on behalf of GGP. retail, Brookfield, and I will try to be very quick, Your Honor, echo the sentiments of Ms. Smith. This was one of, if not, the most complicated real estate relationships and restructuring within retail bankruptcy we have ever been involved with. It was not easy. It was 286, the file was 286 pages.

Were you getting paid by the page? It was tremendous. And just this sub-deal, the GDP-Roehl relationship, Your Honor. It required tremendous effort on all sides, and it was not easy. And over the last several weeks, and as Smith noted, the final pieces were not in place until just yesterday and filed very early this morning under seal. We are now very happy to have concluded this on this agreement, and all related agreements are informed ready to move forward to closing simultaneously with the debtor's emergence from bankruptcy on the effective date, which was the critical goal of GCP all along. So we have to express sincere and hearty thanks to everybody involved from Emilio Amidola at A&G and his team. Counsel on all sides.

Bob Britton, the folks of Paul Weiss, the lenders, counsel to the UCC. GGP was a member of the UCC, but Mofo, Larento-Marenoosie, the Coal Shops team, Alex partners, and of course the Wilkie team, a particular Allison Smith and her colleagues. We had real estate co-council at Goodwin, Brian Lerman, and his team. my colleagues at Kelly Dryne, Megan McLaughlin and Jennifer Revelli, and last but not least, the team at Brookfield, GGB, many of whom have been dealing with these issues literally for decades, Marjorie Zesser, Kristen Pate, and James Costello. Sincere apologies to anybody I may have left out, but this is a massive undertaking,

a tremendous accomplishment. So congrats to everybody involved, and I'm happy to answer any questions Your Honor may have. No, I'm good, thank you. Mr. Marnozy? Your Honor, I know how to follow up, but I'll secure it. except in speech, but the committee's on board with the settlements. It's a great result for the company. I could vouch for the amount of work that Mr.

Lehain and his team put into this, and we're supportive. All right, Ms. Smith, anything further? Nothing further, Your Honor. All right, well, I had a brief opportunity to review the motion. And, you know, based on the declaration of Mr. Weinstein, this is well, well beyond, you know, well within the range of reasonableness. I mean, it's a good result for the company, and I suspect it's a good result for GCP. Otherwise, Mr. Lehane wouldn't be agreeing to it. So I find that this meets the standards of 11, rule in 2019, and I'm going to go ahead and approve it.

Is there a form of order that has been filed for me to start? Yes, apologies for interrupting you, Your Honor. It should have been attached to the filing at document 2579 with the original motion. Let me pull up and get the exhibit number for you. Okay. Is there anything in the order that is, needs to be under seal. I don't believe.

I don't believe so. Okay. Let me just take a quick skin that that's all right. Yeah, please. And Mr. Lehane, take a look at it too. Because if you file something under seal, it's like for me to get it out to put it in, it's treated completely different. It's put like in a vault and then I got to go do it.

So if you could just file the form of order on the docket, that would take me two seconds to sign. I'm not going to say, Your Honor, we can upload the former board. And not under seal, so that helps. We'll do, Your Honor. All right. All right. So anything further we can do on SACS today this morning? No, thank you very much for your accommodation, Your Honor.

All right. We'll be in recess to 1 o'clock for QVC confirmation hearing. Thank you, Your Honor. Thank you. Thank you, Your Honor.