American court hearing recordings and interviews - Listen to the Saks bankruptcy court hearing of May 1, 2026, 10 am

Episode Date: May 8, 2026

Hearing re approval of Saks et al, disclosure statementVery interesting. The Bankruptcy Judge presiding over the Saks bankruptcy called out that the disclosure statement submitted to the court included third party releases - in order words releases of parties that did not file bankruptcy - which runs afoul of the U.S. Supreme Court ruling in Purdue Pharma. It sounds like Saks' bankruptcy lawyers are planning to fix that.

All right. Good morning. It is Friday, May 1st, 2026. We're here in case number 26-0103, SACS Global Enterprises, and specifically for the conditional approval of the disclosure statement for the Digital S-O-5 Digital Debtors. So when we get appearances and then we can proceed. Good morning, Your Honor. Michael Gordon on behalf of the SO5 digital debtors, and joining me virtually is our CRO, Andrew Heed, who is here in case of testimony is necessary if the court has any questions. Okay. Okay.

Mr. Ferreoli, do you want to hit five-star or did you already? Are you 646? Yep. Okay. Good morning, Your Honor. Can you hear me? Yes. Good morning, Your Honor.

Rapp, Farioly, Morrison, and Forrester. On behalf of the official committee of Unsecured Predators, and I think my partner runs in our news, is on the screen. All right. Thank you. All right. Ms. Sinclair, do you want to make an appearance as well? Hit five star. Right. I've just unmuted you. You may be muted on your side because I have Wilkie conference room unmuted. Phone is broken. No, it's okay. It's back. Okay, Deborah Sinclair, we'll keep Warren Gallagher for the global debtor. All right. Thank you. All right. Go ahead, Mr. Ruden. Thank you, honor. And thanks for holding us over until 10 a.m. Um, much like the global debtors, we filed a bunch of revised documents last night.

Um, we got a red line for the proposed order at DCS 21 dash, uh, 2155 dash one. Uh, red lines for the modified chapter 11 plan is at, uh, ECF 2164. And the disclosure stated red line is at 2165. The thing that took me the longest was putting the order and the exhibits together. Apologies. If we can do it a little bit more organized, I promise we'll do it next time. Understood. Thanks.

We also filed amended witness list at ECF number 2167. We have five exhibits. At this time, I'd ask the court to admit exhibits 1, 2, and 5. Those are respectively the First Day Declaration of Andrew Heed, which was previously admitted in the first day hearing. Exhibit 2 is the declaration of Andrew Heed in support of initial approval of disclosure statement. disclosure statement and in the liquidation analysis we filed with the disclosure statement last night. All right. I'm going to go ahead and take judicial notice of the first day declaration and for that reason.

So with respect to exhibit number two, filed that docket 2032, the declaration of Mr. Heed in support of the disclosure statement. Does anyone object to the admission of his declaration as his direct testimony? connection with the disclosure statement subject to cross-examination. If anyone wants to be heard, hit 5 star, please. All right, hearing no objection that will be admitted as his direct testimony. Does anyone object to the admission of the liquidation analysis exhibit number five, which is filed at docket 2159-3?

All right, hearing no objection that will be admitted. Thank you, Honor. You don't have any formal objections to the planner disclosure statement. The plan and storage statement we filed last night resolve all the informal comments that we received with certain exceptions. One is a minor point with the global debtors concerning post-effective date plan support,

and we plan to continue engaging them in discussion on that and working that out before we get to confirmation. The other is the committee had some comments that we received this morning. and we have agreed on language to be included in the disclosure statement that's not reflected in the disclosure statement that's currently filed. So what we propose is just to upload and agreed revised form of disclosure statement after the hearing if that works for your honor. Yeah, that's my I have a couple of comments as well. Sure.

Okay. So this is a liquidation case and the way that you have your third party release set up, the debtors are getting a third party release are getting a, in essence, a beneficiary of the third party release. And as it relates to the case-related matters, I don't have an issue with that. But as it relates to the additional matters, I think that's basically a backdoor discharge. So I think you either have to take the debtors out of the definition of released parties or the easier thing would be to do to just limit the releases, the third-party releases to case-related matters. You know, one way or the other, usually, I mean, I usually don't approve,

I mean, I want to make sure that there's no backdoor discharge, and the way it's kind of structured here, It kind of does allow for that, that the debtors and their estates and the wind-down debtors are, in essence, getting a release for pre-petition conduct, and that shouldn't be it. The other question is you have two classes that are not getting any recovery, and under container stored. You would have to have an opt-in for those, but they're the inter-company claims and the inter-company interests. So I don't know whether that's necessary here. But under, I mean, they shouldn't get an opt-out form because they're not getting any recovery. So I don't know if you're just not going to solicit them at all or not give them a notice of a non-voting status.

I don't know what the intent was with respect to those two classes. And I think these are very fair points. As currently defined, intercompany claims are just claims as between the SO5 digital debtors. So I think they're not going to be any response out. I do believe the equity interests would implicate the global debtors, and we can, I'm happy to talk to them about it. I think this is something that we can resolve either by just switching them to opt-in or just saying we're not going to ask them to give releases pursuant to the planet. Okay. Yeah.

And then yeah, so those are, those are basically, you know, the two, you know, the two fixes that I think, I think we need. I mean, and they're easy fixes. Agreed, Your Honor. I think they're very fair points. All right. Anyone else wish to be heard with respect to the digital debtors disclosure statement? Good morning, Your Honor. Rafferling, Morrison, and Forrester.

First, I just like to thank Mr. Reardon for his patience and keeping an open line of communication with us over the last few days. There's certainly been a lot of paper moving around. We've had a number of discussions both on the disclosure statement and the plan, and I think that we are rolling in the right direction. Mr. Revenue that there are some revisions of our comments in the committee. I don't think that they'll be surprising, to your honor. They're mostly by way of reservations of rights, just given where the committee is right now

and its analysis of certain of the digital debtors affairs. And the scope of the releases is certainly something that we flagged as well, in part informed by the settlement term sheet that landed very late last night or early this morning, depending on you look at it. And certainly one of the things that we'll be focused on is ensuring that both of these silos in the release language of both these plans are working. in tandem and everything works the way it's supposed to work. Yeah, there's one provision, you know, which says that you can't be, you're not a,

let me just hold on a second. Yeah, it says no entity shall be a release party unless there are also a releasing party. But I guess the, the, you can be a releasing party, but you don't necessarily have to be a released party. So that's in the definition of released party. And there's that proviso. So I thought a little bit about that. I don't know whether if you, once you take out the debtors as being a released party, whether that works.

I mean, the debtor release is fine with me. I didn't have any issues. That's probably more your area. But from a non, from just a pure bankruptcy law issue, I don't have any. any issue with the debtor's release. It's just the, uh, the,

the, the debtor getting a third party release for pre-petition conduct. So that's one of the things you need. Uh, that somebody needs to make sure it works. Absolutely. Uh, and part of,

part of this is due to we've been trying to align our lease provisions with the global debtors to the extent that we could. And, um, you know, we got out of sync because of everything going on. last night. So I think this is all fine. You can go back and work this out. And I'll also express my appreciation to Mr. Farrelli for keeping lines of communication open and working with us. I think we're

going to be able to take care of this pretty easily. Yeah. And anything further, Mr. Farreale? No, everyone. Thank you. Anyone else wish to be heard hit five star? I've reviewed the disclosure statement. I mean, this is this is a situation where you know, getting this done as quickly and as inexpensively as possible is in the interest of all creditors here because, you know, we're not talking about a ton of consideration going to the parties. So I commend the parties for working collaboratively, and I think subject to these really minor tweaks, I'm going to go ahead and approve it. So should I wait on a proposed form of order, Mr. Reardon, or should I go ahead and see?

sign this one. I would do that's your Honor's preference. I think this form of owner probably accommodates any changes that we need to make, and it was just, we just upload a revised document later on today for the plan and disclosure statement. Yeah. Yeah. A solicitation

version. Okay. All right. So I'm going to go ahead and approve it, and it's the order at docket 2155. Is that the latest one? That's correct, Your Honor. And one of my team members is flagging me down because of

this morning we had a hearing at 9 a.m. And a hearing at 10 a.m., we've been communications with chambers and suggested that we asked for 10 a.m. But if you would like to have us at 9 a.m. with Global, we're happy to accommodate that as well on June 5 for the confirmation hearing. Okay.

Yeah, that probably makes sense. I'll just make that one change in the front. Yeah, Ms. Sinclair was too efficient. All right, so I'll put that at nine. And with that, Your Honor, I don't think we have anymore unless you have anything else for us. Nope. So give me a minute here. I've changed the time in the order.

You might have to change it in the notices and other things. So just make sure you flag that. Certainly. Thank you, Your Honor. All right. That's been signed and sent to docketing. And it won't surprise you, Mr. Reardon, that you should check the order to make sure I got it right when I put it together.

We will do that, Your Honor. Thank you very much, and I appreciate the hard of work. Thank you. All right. Ms. Sinclair, Mr. Raphael, anything further? Nothing further. Thank you, Your Honor. All right, so we will be in recess until 1 o'clock.

Thank you all. Thank you. Thank you.