American court hearing recordings and interviews - Prima Wawona bankruptcy hearing December 27, 2023 (In re MVK Farmco, Delaware bankruptcy case 23-11721)

Episode Date: December 27, 2023

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Please be seated. Kenny, Nose, Young Conaway, Stark, and Taylor, on behalf of the debtors. Your Honor, we just have two items on the agenda today, cash collateral as well as the disclosure statement. With respect to cash collateral, Your Honor, we did submit a, I believe we're on our fourth interim order under-certification of counsel last night. I'm not sure if you had an opportunity to review it. However, to the extent you have any questions,

Rob Jacobson, of Kirkland and Ellis, to be happy to walk you through it. Thank you. So I reviewed it this morning. Does anyone else want to be heard with respect to the fourth interim order? I hear no one. I reviewed it. Looks like it simply extends the period further and permits the use of cash collateral. I'll sign it. Outstanding. Thank you very much, Your Honor. I believe that takes us to the solicitation procedure's motion and the disclosure statement. With the permission of the court, I'll cede the podium to Mr. Bennett of Kirkland Ellis.

Mr. Bennett. Good morning, Judge. Ryan Bennett of Kirkland Ellis on behalf of the district. I'm here today with my colleagues, Mr. Gremlin, Mr. Jacobson. Before I begin, I just want to take a brief moment to thank Your Honor and your court staff for accommodating us, particularly this week in between Christmas and New Year's. Also, thank the others for joining us in the courtroom today and on Zoom, and really for all the substantial work that has been performed over the holidays, as we hope to obtain Your Honor's approval today of the disclosure statement.

As we stated before, to Your Honor, and throughout our papers filed with the court, The debtors commenced these cases to effectuate a third-party sale transaction, or if a third-party sale transaction could not be consummated, implement a transaction through a plan that transferred the assets and ownership over to our secured lenders and wind down the estates. To that end, we filed an initial plan and disclosure statement just before Thanksgiving on November 21, and those plan and disclosure statement documents include that toggle between two outcomes for these Chapter 11 cases, which we are calling Path A and Path B. Path A was to implement a third-party sale transaction for the going concern company,

and Path B was if that sale transaction would not be achievable to transfer the ownership and control of the estates to, or the assets to our secured lenders. As my partner, Ms. Fogelberg mentioned at the last hearing, the debtor's post-petition sale process did not result in a third-party bid that was higher than the, or better than the $275 million. floor that the lenders put down. And so we are toggling and have toggled to a Chapter 11 plan and disclosure statement

that reflects our path B. Mr. Gremlin will tell you we received two objections to our disclosure statement, one from Negotius Libertad LLC. That's an entity controlled by our former CEO, Mr. Growan, and the unsecured creditors committee. In response to those objections on December 23, we refiled further revived, revised versions of the plan and disclosure statement at docket numbers 414 and 415 respectively. The revised disclosure statement includes additional disclosures that we believe address the

objections as to the adequacy and provide further clarity to voting creditors. We also filed a reply to the objections on docket number 408 and attached to that reply as a chart where we succinctly address each of the objections and provide further. reference. Before I hand the podium over to Mr. Gremlin, though, to handle the disclosure statement specifically, I'd like to briefly preview for the court where we're going in the Chapter 11 cases. If Your Honor does approve the disclosure statement this morning, the debtors will complete service of our solicitation package by this Friday, with the goal to be in front of Your Honor for a confirmation hearing in early February. As we previewed, Your Honor, previously, the debtors also

anticipate that we will require the injection of incremental liquidity in mid-January to bridge to the effective date of our plan. To that end, we work constructively with certain of our pre-petition lenders on the terms of a dip and are actively negotiating a term sheet in dip order. We have scheduled court time on January 8th for an interim dip hearing, and we intend to file our dip motion as soon as possible, as soon as perhaps tomorrow. You know, finally, Judge, as early as immediately following today's hearing, the debtors and our lenders intend to sit down with advisors to the Unsecure Creditors Committee to talk through a path to a settlement. We want to identify, we've identified certain assets that we believe in assets and actions that we can take to increase the numerator and decrease the denominator for unsecure creditor recovery. And we want to have that conversation so that we can avoid the cost of litigation and potential delay in the bankruptcy case.

In the event that we do strike a settlement with the unsecured creditors, we can amend the plan accordingly, and it will not require resolicitation because we are not soliciting that class. And it will only improve their recovery at the end of the day. And for that, Your Honor, I'm going to turn the podium over to Mr. Gremlin to walk you through our disclosure statement. Gladly answered your questions. I was just thinking about you. you're saying you're not going to resillate, you're going to try to increase the numerator, decrease the denominator, but you still won't be soliciting the class.

That's correct, Your Honor, because we've gone ahead and structured it so that they're deemed to reject. Right. And right now they're not getting, they're not set to get any recovery because there wasn't a bid that exceeded the secured creditor's waterline. It's interesting. Okay. All right, thank you, Judge. Thank you.

Good morning, Your Honor. Dave Gremlin of Kirkland on Ellis on behalf of the debtors. I'm cognizant that we refiled the disclosure statement, the plan, and the proposed form of order twice shortly before the holidays. So in the event that you need a particular red line or draft, we have those handy and can provide. Okay, yeah, that's the version that we're working off of today.

But in case you find that that red line maybe is not totally helpful, we have red lines between the 1121 and 1218 version. as well we can handle this however you'd like I'm available for any questions that you'd have but there are a few things that I'd like to hit on mainly a summary of the information and the BS and why we believe it's adequate the objections that we received and one informal response as well and our responses well some of our responses to those and an overview of our solicitation materials and procedures sound okay section 1125 of the Bankruptcy Code requires

only that a proponent of a proposed Chapter 11 plan must provide adequate information so that holders of claims that are voting on a plan can make a reasonably informed judgment as to whether or not to accept that plan. We think that our disclosure statement, I'm not gonna go through all of it. It's 108 pages.

Clearly provides that, particularly, Your Honor, when you take account of whose votes are being solicited here. As Mr. Bennett noted, at this point, we are not planning to solicit general unsecured claims the holders of those, and we're only soliciting the debtors pre-petition lenders, which is approximately 20 banks, each of whom is a sophisticated party, many of whom are represented by counsel.

Several of those councils are in the room here today, and several of them also were intimately involved in the drafting of the plan of the disclosure statement. So we think that while we think that the information contained in the DS is voluminous, we think particularly accounting for the parties receiving it, it is more than adequate to it. allow them to decide what they should do with respect to the plan for themselves. The DS covers, among other topics, the nature of the holder's recoveries that they can expect on the plan, including the consideration that they would receive, key plan provisions, including the release, exculpation. You've finally broken loose from work.

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Analysis, that's what we're the status of those risk factors to be considered when voting on the implementation of the plan and the description of the debtor's court-approved sale process. As Mr. Bennett noted, we did receive two objections which were filed on the docket. we also received some comments from the United States trustee. I'm aware that Ms. Sierra Fox is not in the courtroom today. I believe that there is a representative from her office here. So he can, I'm sure you can correct the record or supplement if I say anything wrong or incomplete, but I just wanted to touch on a couple of key points that we discussed with Ms. Sierra Fox last week.

The first one is the liquidation analysis that I mentioned. The debtor's view prior to filing a disclosure statement is that one wasn't necessary in this case. chiefly because of two facts. The first one is that we believe that everything is encumbered, and I understand that the challenge period hasn't yet expired, but so far nobody has expressed a different view to us. And in light of the debtor's extensive sale process, which resulted in the credit bids,

which were well below the amount of debt that was secured by the debtor's collateral, I mean the debtor's assets, we believe it was very clear that there was not going to be a scenario in which general insecure claims received any recovery in a chapter 7 in light of the fact that the value was well below the amount of debt secured by the debtors collateral. However, we spoke to Ms. Sierra Fox and she was of the view that, you know, it's just pretty easy for people looking at a disclosure statement to look at that side by side. Here's what you should expect to get under the plan. And here's what you should expect to get in a liquidation. And, you know, that made sense to us.

So we agreed that we would put one together. However, we weren't ready to file one that we were totally able to stand behind all the assumptions that would go into it as a filing of the disclosure statement. So we asked if she would be comfortable including it in a plan supplement. Our plan supplement deadline is one week ahead of the voting and objection deadline in our procedures. And we're comfortable doing that. And she seemed comfortable that that would give parties an interest enough time to evaluate it before submitting their votes or filing any objections that they may want to.

Another point that was important to her that I thought I would raise today is that she's reserving her rights generally with respect to confirmation issues, but in particular she was concerned about the third-party releases, particularly here where we're presenting holders of general insecure claims with an opt-out form, and they aren't currently expected to receive anything under our plan. So I just thought I would, noting that she wasn't going to be here, note that that was something that she had communicated to me. The other objections raised a handful of information-related objections and confirmation issues.

The information objections generally related to potential claims and causes of action against parties that the debtors may hold, including actions against the debtors' owners, the status of the debtor's investigation into the same. The related derivative action filed by negotios, again, that's the entity owned by Mr. Garawan, against PSP and certain individuals which purports to be on behalf of the debtors and some unclear language that was around the mechanics in the professional fee escrow account We revised the plan and the disclosure statement to add information on those topics and to be clearer on the professional fee escrow account and I can get into that if you'd like But we think that that should resolve all of the information related objections and then a a similar point the committee included in their objection a draft letter Which they would like included in the solicitation package and

which essentially urges parties. It just gives their view of whether or not parties should accept to reject the plan and whether or not they should opt out of the releases contain therein. Your Honor, I think it's entirely appropriate that a letter from the fiduciary, the estate fiduciary that represents general and secured claims in this case to have their views known. So we've amended our order, which is the revised form in front of you, to contemplate including the committee letter in the solicitation package. which will go to the entity's voting,

and then also specifically to Class 7, which is the class of general insecure claims. Your Honor, we think that the remaining objections relate to confirmation of the plan, and so we think that they don't go to the narrower question of whether or not the disclosure statement contains adequate information. We think that they should be overruled today on that basis.

And I would just quickly summarize the solicitation package and timeline, if that works for you, and then that would conclude my comments and take any questions you have. The solicitation materials that we contemplate sending out are to the voting classes. That's classes 3 through 6, which are the bridge new money claims, the bridge roll-up claims, the pre-petition prop code debt, and the pre-petition op-co debt. Those voting classes, each member will receive a ballot, a cover letter from the debtors, a notice of the confirmation hearing and the committee's letter.

Unimpaired classes, that's classes one and two, will receive a notice of non-voting status informing of them that they're not able to vote under the plan because they're unimpaired, and they will also, that's available at Exhibit 4 to the proposed order, and they will also receive a notice of confirmation hearing. Impaired classes that are deemed to reject,

that's the general and secured claimants in class 7, and then classes 10 and 11, will also receive the notice of non-voting status informing them of their status not voting on the plan, they will also receive an opt-out form. With respect to Class 7, they will also receive the committee letter, and those classes will also receive a notice of the confirmation hearing. And then as to our timeline, we set the voting record date subject to your approval last week on December 22nd. That is also the day of the general claims bar date, so that sort of tidal-e

will define the universe of claims that our plan is addressing. Our solicitation deadline, that is the deadline, to put everything in the mail to get to the parties that are voting or have the opportunity to opt out or otherwise are getting notice under our proposed procedures. That would be two days from today on the 29th. I don't know that this will be relevant here where we are only soliciting claims of secured,

pre-petitioned secured claimants, who's a loud amount is defined by reference to. to the plan, but the deadline to file 3018 motions will be 10 days after mailing of the confirmation hearing notice or after there's an objection filed to a claim and our deadline to respond to 3018A motions or to object to claims for voting purposes. Again, we don't anticipate needing to

since any claim that is voting on the plan is defined by reference to the plan and general and security plans aren't voting, our deadline would be January, January 16th, which would be 10 days ahead of the proposed voting and confirmation objection deadlines. And now I apologize, I'm going a little bit out of order. Our plan supplement deadline, as I noted, would be on January 19th, which would be seven

days ahead of the voting and objection deadline, which would fall on January 26th at 4 p.m. And Your Honor, I believe that Young Conway has reached out to chambers regarding a potential confirmation hearing date should you approve the disclosure statement and the solicitation procedures today and I think, and you know, nobody needs to agree to this today, but I think February 8th was what you were on or had available. We didn't plug that into the disclosure statements or the solicitation procedures anywhere at this time. And so I know I've said quite a bit.

I'm happy to take any questions that you might have at this time. I do have some questions, but I'd first like to hear what objections if any are so outstanding. Let me hear. Good morning, Your Honor. Andrew Bellman from Loenstein-Sandler on behalf of the committee. As Mr. Gremlin noted, and I guess before Mr. Bennett noted, most of our, I guess all of our pure disclosure-related objections have been addressed through additional disclosures in the disclosure statement.

We appreciate that. We appreciate the inclusion of the letter. We would like it to be directed to be immediately behind the debtor's cover letter, so it's not buried somewhere. But other than that, you know, on disclosure issues, were squared away. Our broader concern in this case, though, is the releases contained in the plan. The plan contains two buckets of releases, the debtor release, which does have a sort of carve-out for if the independent director ever concludes his 10-month-long investigation and says the debtors can sue themselves, then perhaps they'll be able to.

We don't anticipate that being their result, which is why the committee, which is duty-bound to investigate potential estate claims, is conducting its own investigation. in parallel. We don't think it makes sense to set a path in motion, though, to a plan that all but guarantees that the sponsor, the Dezano's, and others will be absolved of any liability for the utter destruction of value in this company. Just for level-setting context, because we've talked in the abstract about the debtor and the sale process. This debtor is the byproduct of the combination of two companies.

A 2017 acquisition followed by a 2019, we call it a merger in our papers. it was more of a sort of bolt-on acquisition combination. Two companies, a 70-year-old company and an 80-year-old company that had been profitable for decades and generations that got bolted together, got loaded with debt, and three and a half years later ended up in bankruptcy, $400 million underwater. A very, very, very bad outcome of a business combination.

And we recognize that Delaware has the business judgment rule and things don't necessarily get second-guessed. but with that kind of value destruction, our view is that where there's smoke, there's fire. And we've been conducting an investigation since our retention in late October. We are sort of starting behind the eight ball. We were eight months behind the independent director in his investigation process. We just don't think it makes sense to send the plan rolling down the tracks with a broad release by the debtor and perhaps more onerously, a broad release by creditors. This plan contains an opt-out-style third-party release, which as to commercially sophisticated

parties like the lenders may be something that's totally fine, but as to unsecured creditors, it's completely offensive. It's a third-party release that purports to generate consent by inaction from people who are receiving absolutely nothing under the plan, who have no reason to even open the disclosure statement and read it, much less read our very artfully drafted letter that will be included with it. They have no reason to do those things. They have no duty to speak, yet the plan purports to impose one on them on peril of stripping away their claims against third parties.

And that, to us, Your Honor, is simply offensive. We've suggested in our papers that the third party release and the debtor release should both be stricken. I think with respect to the third party release, if that were converted to an opt-in release, as opposed to an opt-out release, we would find that less offensive. But we just don't think it makes sense to start the solicitation process, expend a state resources, in a case that's already thin, that's already, you know, seeing the lenders take a massive deficiency, you know, and start that process today. Why do you think in the circumstances of this case

that were inexorably down that path and that these releases won't be appropriately dealt with at confirmation? The debtor release, perhaps, Your Honor. We think that, you know, the debtor release certainly could be dealt with at confirmation. The problem with the opt-out third-party release is, if your honor does decide, well, this should be an opt-in release, are we going to get to the middle of January or the end of January and say, well, we've got to go back and start over and re-solicit people?

I don't think so. I think then the debtor took a shot, the wrong shot, and the third-party releases wouldn't be approved then. Well, if your honor is willing to reserve that issue for confirmation, then we will follow your honor's directive. We would prefer it be stricken or converted at this point, but if not, We'll take your honor's lead.

Absolutely. I will say that in the circumstances of this case, all the releases will, if not resolved, if issues aren't resolved, be scrupulously looked at and we'll expect evidence for any and all releases. That is all we can ask of you today, Your Honor. That concludes our comments. Thank you.

Thank you. Mr. Detweiler. Good morning, Your Honor. May it please the Court, Donald Detweiler, on behalf of Dan Garowan and the Negotius Libertad investor. Your Honor, Garawan is a former CEO of the debtors and is the single largest individual investor in the debtors. Lifelong employee of the Garawan family farming business.

He had served a number of years as a single-year-old. of years as CEO and then had departed resigned from his position. Your Honor, Mr. Garawan respectfully disagrees with the statements or characterizations of Mr. Garawan that were in paragraph 11 and 12 of the reply. It's unfortunate, it's not appropriate. They do little to advance the disclosure statement or plan. But the debtors took their shot. They said it and all we'll say today is we respectfully disagree with that and we had asked counsel to you know perhaps move in a more productive fashion moving forward if they feel the need to make such characterizations of Mr. Garawan.

So we'll leave that there. Mr. Garawan filed his objection to disclosure statement making three very simple points. One, there was inadequate disclosure as to the derivative action. As Your Honor saw, the debtors now have included information about the derivative action. So it wasn't there. Now it is there. So that's a good thing. Investigation of estate claims.

What are these state claims? Who's investigating? Who's on first? Who's on second? Who's doing what? And what are those claims? And what is, and more importantly, the value of those claims. And then, as Your Honor is noted, and I'm not going to go into the release issue today.

but the consideration being paid for the releases that are being received by the parties. And we'll expect that that's going to be a hotly contested, as Your Honor, indicated a hotly contested confirmation issue. Your Honor, with regard to kind of improving upon where we are today, I spoke with Debtors Council, and I appreciate their time this morning, regarding some improvements as to where we are on the disclosure state. and they agreed to make a couple of additions and changes I think that will be helpful specifically in section three subsection are they added in language they

added language about the objectors and the objectors claims but significantly they focused only on the objectors in that section later on about three four pages later in the disclosure statement they put in a new paragraphs about what they're investigating. They agreed that in Section R, rather than just poking on the objectors, they'll also put what the debtors are doing, what they're investigating, so that Section R is clear. It's not just the objectors' complaints, but also that the debtors are investigating that,

and we will hold them to those investigations. With regard to Section 7F, subparagraph M 1 and 2 there they talk about Mr. Garwan in the derivative actions we asked that they provide in the disclosure statement a direct link to the derivative action

so anyone reading the disclosure statement can have direct access to the derivative action finally if your honor it does sound like you're going to go forward with the opt out we asked that in the ballot or the notice that's going out to those impaired creditors or investors who are not entitled to vote on the plan that the opt out on page five of their form be more conspicuous and that is counsel agreed to that as well

what we suggested is is that they put a big box around it and they put a little title up top says release opt-out form and it's clear so party have it right there they can understand that this is where you need to opt out and I think council has agreed to do that as well so there is there's one other point your honor I asked council about there you probably saw there was a hope of information about mr. Gerro-one that's now been added into the disclosure statement your honor I have not had the opportunity to confer with mr. girl-one regarding that section

the statements about the derivative action in him and I would like the opportunity to at least confer with him to make sure that what's in the disclosure statement that he is comfortable with and to the extent he has any changes or language that he would like to add to confer with debtors counsel regarding those statements just to make sure that our side of the story is there as well again not It was more mooted compared to what they put in the reply, but I just want to make sure that Mr. Garawan is comfortable with the sections in the plan regarding him and the statement of his actions. So I request the opportunity to at least after this hearing prior to the any changes to the order being submitted to the court under certification of counsel, just potentially add by the end of today any additional language that debtors counsel and we can agree upon with regard to the section dealing with the derivative actions and all that finally your honor I just noticed this when council was speaking with regard to the notice and non-voting status and opt-out

of releases I think it's exhibit five to the to the solicitation package they do say on in at the day dad in and we thank them for this you however you are entitled to elect whether you would like to opt out of the debtor release and third party releases on page five of the attached release opt-out form so we appreciate that they have done that the issue your honor though i just noticed was on the second page the next page the very last paragraph please take further notice that if you'd like to obtain a a copy of the disclosure statement to plan the plan supplement, you can contact the notice claims agent, and it's rather unusual by writing or writing via electronic mail. Well, the claims agent has a website, and they ought to put a link there to the disclosure statement and plan. They ought to put some link in here, too, and I apologize, I just picked up on this and hadn't had a chance to confer with debtors' counsel on this, but there should just be a direct link so that people aren't calling a claims agent and getting frustrated.

One thing they can prove on is they can add a Section C here and say, or alternatively, you may obtain a link to the plan and disclosure statement approved by the court in the solicitation package, and then they can link that to the claims agent, who I think is Stretto. Yes, strato, and they can just have a link directly to that. And then what they did agree to, and we greatly appreciate, is within the disclosure statement, there will be a link to the derivative action so people can get well informed with regard to better information to be well informed on the disclosure statement and the opt-out issues. So, Your Honor, I'll rest there, see if Your Honor has any questions for us. Now, I don't have any questions. I don't have any questions. One of the questions I did have is who's getting the disclosure statement.

It wasn't totally clear to me that anybody's actually receiving it as part of the package. And I want to hear about that. Yeah. But I don't have any questions. Okay, so for impaired, as long as they get a link to it, that'll be great. Thank you, Your Honor, very much. Have good good. Mr. Fox.

Good morning, Your Honor. I mean, please the court. Tim Fox on behalf of the United States, Trustee. I'm here as Ms. Sierra Fox is out of office this week. I just want to start by thanking debtors' counsel for accommodating my office's informal comments. As represented by debtors' counsel, our issues for purposes of today's hearing have been resolved. I would like to specifically note that the resolution as it relates to the liquidation analysis is predicated on the specific facts of these debtors,

and my office reserves all rights on that issue in future cases where circumstances may differ. With respect to these Chapter 11 cases, I did want to just read a specific reservation of rights into the record that corresponds to what Debtors Council had previewed for, Your Honor, and that is that the U.S. trustee reserves all rights in connection with confirmation, in particular, among other concerns, the U.S. trustee has raised with debtors that he takes issue with the debtor's attempt to extract a third-party release from the dean rejecting General Unsecured Creditor class, which is getting nothing under the plan. The U.S. trustee did not raise this issue. issue in connection with solicitation because the US trustee is mindful of this court's prior decisions and bench rulings on the opt-out processes your honor's further comments today are consistent with our understanding of how this issue is addressed before your honor so in connection with solicitation have not pressed that issue but is prepared to raise that issue with respect to the formal confirmation objection especially if that

confirmation the general and secured creditor class is still receiving nothing under the plan thank you your honor thank Thank you. Anyone else? Gremlin? Hello, Your Honor. Can you hear me over Zoom? I'm sorry. Mr. Zatz. Yes, hello. Am I audible and possibly even visible in the courtroom today? Yes, you are.

Good morning, Your Honor. Andrew Zatz is a Whiteen case on behalf of Robbo Bank. Robbo Bank is the administrative agent and Propco collateral agent under the pre-petition Bridge facility and is a lender under the pre-petition Opco facility. Roblo Bank does not object to the approval of the disclosure statement and solicitation materials today. We would, however, like to inform the court. The bridge agent does not yet support the plan that the debtors are seeking to solicit. As a reminder, prior to the filing of these Chapter 11 cases, a steering committee was formed consisting of the bridge agent, the Opco facility agent, MetLife, and Compere.

and ad country later joined the SIRCO as well. The SIRCO is not the same as the required lenders, as they are sometimes referred to. It is the MetLife Comp here and AdCountry contingent that speaks for required lenders and free-petitioned facilities, and the agents have been working with these lenders to, for the better part of a year, negotiate a path forward for Premier Wobona to address this liquidity issues, including providing the bridge facility in April, and planning for these Chapter 11 cases. One of the major achievements of the Stierco was negotiating a lender support agreement in advance of the Chapter 11 filing.

It is on file at docket number 371. Debtors are not parted to this agreement, and it is purely an inter-creditor arrangement. The lender support agreement represents an agreement amongst the agents and the required lenders under each of the debtors' three pre-petitioned facilities to quarry. operate on key matters in the Chapter 11 cases and a value allocation as between the opt-go lenders, propco lenders, depending on the result of the debtor sale process. The debtors have not sought court approval of the lender support agreement, but it remains a crucial guide in these Chapter 11 cases, and it is the framework for the plan the debtors are seeking to solicit.

One of the key components of the lender support agreement is that in the credit bid scenario that we now find ourselves in, the ACCO lenders are entitled to a $30 million promissory note from PROPCO. Parties on the OPCO side gave up meaningful rights for this promissory note, and the note was meant to be a dependable money-good instrument that would be repaid in short order. There's a disagreement among the Sierco as to what the lender support agreement says about the priority of this note,

and the agent's read of the lender support agreement is that the only debt that can come ahead of the note is the new money portion of the bridge facility. There are also a few other disputes regarding the plan mechanics and the relationship between ALCO and PRICO post-emergence. The agents were represented by White & Case of the Austin and Covington have been engaging in negotiations regarding a potential resolution of this dispute with the required lenders, represented by Morin Van Allen and Morgan Lewis. The plan does not yet dictate the outcome of the dispute, so if we can come to an agreement, that can be reflected in the plan supplement.

If we cannot come to an agreement, the agents may well be back before this court raising related issues around approval of any proposed facility or plan confirmation. We reserve all rights in that regard. Lesterner has any questions. That concludes my remarks today. No, I have no questions. Thank you. but it's prompted Mr. Siegel to stand up.

I had thought that perhaps this would be the hearing I did not need to speak at, but so be it. Your Honor, I don't specifically take quarrel with anything Mr. Zatz has said other than to say that we have our own views about what the lender support agreement yields and what rights are under there. We are working in good faith to resolve them. and we also reserve all rights in the event that we are not able to reach a resolution on that matter. I mean, that's that simple. Thank you. Anyone else? Your Honor, this is Genevieve Weiner, Rissadley-Austin.

May I be heard? Ms. Weiner. Thank you. And thank you for accommodating museum appearance. I very much appreciate that. I'll be brief. I just wanted to join in Mr. Zatz's comments and general reservation of rights and hope that we're able to resolve everything consensually.

But again, join in the reservation of rights that we may be before, Your Honor, if it's not possible. Thank you. Okay. And Ms. Weiner, you represent which bank? My office. I represent RBC as agent under the Outco facility and as a lender under the Outco facility. Thank you. Thank you.

...inons by reading my enormous stack of paper. As to the first thing that I'd like to address, well, first I did speak. with Mr. Detweiler this morning. He has represented our conversation completely accurately. I should have mentioned that in my initial conversation comments and all of the edits that he said that we agreed to. We did and we will file an updated form of order and disclosure statement reflecting those. As to the point that he raised with respect to the notice of non-voting status and the point that you raised with respect to who gets the plan and disclosure statement, we're happy to go a different direction but in short the answer was we weren't planning on sending a hard copy to

anybody in light of the particular facts where as I noted the voting creditors are sophisticated have been involved in the process and we're working on what we expect will be sort of a shoe string budget to get to the finish line in these cases we thought maybe we'd you know pinch up anywhere we could however if your honor believes that sending paper copies is appropriate we're happy to do so the workaround that we thought that we had was that the notice of the confirmation hearing is going to the full predator matrix and all holders of interest in these cases and page 10 of that notice does give a link to the shreddo page and say that all solicitation materials can be accessed there so we did feel that we had provided access to the solicitation materials admittedly electronically to all parties in the case however if it is your view that we should send paper copies to the solicitation parties to the unsecured creditors or or note somehow otherwise where they can access the information.

We're happy to take that feedback and update our materials. Well, I'm interested if the Office of the United States trustee has a view on this. The rules say what they say. But what's also interesting is while 1125 talks about the addresses the standard as what is necessary for voting parties to make an informed decision, I think it's an interesting question. interesting question as to to when you're asking for a third-party release where the disclosure statement should have to go so but nobody's raised that and nobody's briefed that issue for me but mr fox do you have a view on paper given the rules i don't know where the

u.s trustee is on this issue thank thank your honor may it please the court tim fox on behalf the United States trustee. Your Honor, this is an issue that comes up from time to time, and I believe that in general, there's often the push to make sure that people receive paper copies, or at least the USB hard drive or the CD. However, the different versions of it have been in the past. Ms. Sierra Fox did not press for that under these circumstances,

and I believe there's probably been orders from others on the bench that have allowed variations on what is permissible with respect to solicitation. I don't know if there's a uniform hardline position that my client has taken. This will be something that I can follow up further, but we did not take a specific position on it, especially with respect to these facts,

given the narrow universe of voting parties. With respect to the other larger issue of the third party release, Your Honor, we would view that as being very much part and parcel with, you know, did the debtors take the right shot with respect to the relief they're seeking? And as part of not raising that issue at solicitation, would reserve all rights to point out what we feel may be important facts for the consideration of that third party release relief at confirmation. Fair enough. Okay. The rules haven't had, the rules haven't caught up with where we are today. And this is coming from a dinosaur. Given that the lenders are sophisticated, they aren't objecting, they aren't asking for more paper on their desk.

I will permit the disclosure statement as, permit service of the disclosure statement as you're requesting. I do think it's appropriate to put a link to it on strato. It's easy to do, and that's probably where many people will. will go. You can even do that on a phone. So, you know, I think it's okay for purposes of this case. I'm not making a ruling more generally. The U.S. Justice's rights are reserved in all respects. Understood, Your Honor. And Mr. DeLeyler's point about the notice of non-voting status, that it could probably, you know, use a link as well. In addition, that's well taken. I would put it there if I will do that, yeah. Otherwise, I think that the main point that was raised in parties' responses was the third-party release and its propriety, I think, where the room has come down is that that's going to be an issue that will be either resolved ahead of or contested at confirmation.

And so I don't believe it's necessary for me to say more on that matter. And that concludes my comments. Your Honor has more questions. Mr. Debtweiler did ask for an opportunity to review. the new language that's come in with respect to his client and he I will grant him that opportunity and if he wants to have a sentence or two that says Mr. Gurwan disagrees with whatever I think that's fine and that's the purpose of a disclosure statement so that's I know that debtor will accommodate on that of course okay I'm looking at the form of order

Okay. Paragraph three does have a statement with respect to a finding, actually, that the disclosure statement in all exhibits is sufficient notice of the injunction, exculpation of release provisions in satisfaction of Rule 3016C, which I think only goes to injunction provisions and doesn't go to releases and exculpation, if my recollection of the rule is correct. And that requires bold and caps and whatever the rule requires. So I'll find it with respect to the injunction.

I'm leaving open the release issue because the U.S. trustee has and others have reserved on that issue in the circumstances of this case. Okay. We will strike exploitation and release. Okay. The Rule 3018 deadline I did have an issue with. but because I think it's way too close to voting but here given that the only people that could be subject to that are the lenders I'll permit it but I'm saying right now to the room and those of you who do debtor work a lot in this jurisdiction way

too close I would not permit it if they were objections to unsecured claims John Ollie. The first place I see this is in the footnote on paragraph on page. It doesn't have a page. The footnote following the deadline, the scheduling. It's footnote three in the order. Where it says the debtors will use commercially reasonable efforts to ensure that any holder of a claim who has filed duplicate claims, whether against the same or multiple debtors that are classified under the plan in the same voting class receives no more than one solicitation package. Again, maybe for purposes of this plan, it's okay, I don't know, but I thought this plan

was a single plan for each debtors that were not substantively consolidated. So how does this work with creditors? creditors who have claims against more than one debtor. Shouldn't they get a vote for each debtor? It's going to dovetail into this consolidated four-class ballot, which this is now the second time in a month that I've been asked to put more than one class in a ballot. In previous nine years, I've never been asked to do that. So I'm trying to understand how this works.

So I think our intention was just to avoid burdening parties with, you know, an unnecessary giant stack of papers. I believe we are putting forth the plan as a per-debtor plan. So one plan for every debtor, you get a vote for every debtor. I suppose that the correct solution would be to allow each party, to send each party, a ballot for every debtor that they have a claim against. So I think we have 10-ish debtors in this case with different claims against them. So it might be up to 10 ballots for some creditors, duplicate the other solicitation materials, if that's okay if you're on it.

That's fine with me. Mr. Siegel seems to have a view. Yes, and I think there have to be, and to be able to have a count, a valid count, we have to know which claim against which debtor. If you get too confusing, alternatively, we could make a grid with claims and debtors, and they could check boxes,

but I suppose it would be like a 40-box grid, but maybe we don't want them to have to muck through both on separate ballots. We'll update. Paraget 22 is an assumption notice, and is the debtor going to be assuming any contracts? definitive statements one way or the other we do anticipate rejecting a number of contracts between now and the end of the cases. We just wanted to preserve the flexibility because, as Your Honor is aware,

the Propco entity will be moving forward with its assets and we, in conjunction with parties in interest in this case, haven't fully evaluated whether or not there are any. contracts that they may want to take with them out of the Chapter 11 cases so we thought it would be helpful to preserve the flexibility to provide for assumption here okay my recollection of the notice itself is that parties don't get to object and on the theory that they had an they got a cure notice before and so now they don't get to object but aren't we really in a different place

now that cure notice went with respect to a sale the sale isn't happening we're now in a plan context maybe the cure issue maybe has been resolved but what if they have a problem more generally with the assumption so the two problems that are top of mind for me that they may have would be something cure related which we believe that performance has continued on all contracts on a post-petition basis so I believe we would send them the same proposed pure amount that they got before. And then the second issue that they might have might be related to the sort of identity

of the go-forward contract counterparty that they're negotiating with. Correct. I would be surprised if any of the contracts that the Propco, illegal entity that primarily holds land is party to, are personal services contracts or contracts that other. otherwise provide an excuse for performance for one counter party based on an ownership change of Propco. I can't tell you for sure standing here today that there are none of those contracts. What if they want adequate assurance of future performance?

Would Your Honor be comfortable with us taking the position that in the event that their right to object has passed, except with respect to adequate assurance of future performance, anything related to the new ownership of Propco, or a potential default that needs to be cured that occurred after we sent the original notice. Assuming your original notice was what I would anticipate it was, and I don't remember, then that makes sense to me, but I think they have to have an opportunity to object on all those fronts. Okay. We will update the notice and we will update this. We will update the order to reflect that. Right, and that appears as well in the solicitation of voting procedures on page 5, the

executive contract issue. Okay, I see that. We will update that as well. Okay, I did have a question on, now I'm in the solicitation of voting procedures, page 7. Okay. I did have a question about this established by reference to the plan, but I assume that the debtor and the creditors understand what that means in terms of their claims. So I do think we're on the same page with respect to what it means. My recollection is that the plan defines each of these by reference to the amount outstanding as of the petition date, and I believe that we have, and if we haven't, we will get with them to make sure that there's an agreed calculation. And are they going to be based on the amount outstanding as of the petition date or is anything that will reflect deficiency claims or no?

So I believe it will be the amount outstanding as of the petition date, which would include the amount that will likely ultimately be a deficiency claim. Okay. In terms of the voting and ballot tabulation procedures, I'm very much. purposes of this case given that we're talking about soliciting I think you said ten people ten lenders or twenty or something okay I'm okay with that I want any votes that aren't counted any extensions of time by the lenders anything that isn't just a straight counting of the ballot I want in the report so I understand the results okay the ballot is this combined ballot for class three, class four, class five, and class six, and an

ability to either accept or reject collectively. As I said, this is the second time now in a month that I'm being given a combined ballot. What's the purpose of that? So maybe I'm coming to the conclusion that it was ill-advised, but I think we just thought it would be simpler for folks. I think we anticipated that, and I understand that folks are allowed to vote their different claims to accept or reject and sort of bifurcate those. We, uh, maybe when we were originally putting this together, we didn't think that anybody would be doing that, so we thought it might be easier for, uh, Mr. Siegel's clients, for example, to just write a number on each line, click except once and be done with it. But, uh, I appreciate the issues that your honor is

flagging. We had been discussing, uh, amongst ourselves. as debtors counseling with Strato, we probably did need to send each party with multiple claims against the same debtor multiple ballots. I believe that our procedures do provide that all of your claims in a class need to go the same direction,

but do not provide, and I don't think that they would be able to provide your claims in different classes need to go to the same direction. So we had been planning to send, for example, if there were a lender that was in both bridge classes, three and four, and then in one or both of five and six,

sending them a corresponding number of ballots. It seems that now we're maybe getting to a place where we're sending them a large number of ballots, both for the different classes of claims and the different debtors, because some of the classes would apply to multiple debtors, but in this case where there are approximately 20 parties receiving ballots,

I don't think that the large number that certain voters will get, will be too burdensome on the estates at least they might find that they have you know 30 40 ballots but we can work with them to make sure that their votes are recorded the way they want them to be I guess you know I maybe ultimately don't care but for purposes of this case given who's getting it and if the lenders don't care but I want to make sure we have an accurate vote I don't want any mistakes about the vote because that's just that's then becomes a distraction.

Yeah. Maybe what we should do is re-cut it so that there is a class three ballot, a class four ballot, class five ballot, a class six ballot, and then we'll have a box for each debtor. You can tell us which way you're voting with respect to a debtor. Tell you what the other voting. And I'll try not to get creative in future cases. Creativity is okay.

I'm not opposed to creativity, but I just don't want to cause unnecessary issues with voting okay okay the notice of non-voting status with respect to unimpaired impaired or disputed claims not sure it matters but I'm on the unimpaired okay I think you have to read a whole lot before you get to the box where you check the out and I'm not even sure that people are going to realize that this is something they should send back because there's no title on it there's no anything on it and I don't think it should be labeled optional I think that's misleading it may be optional in the sense

that you can check or not check but it's not optional in terms of reading something and And I think it should have a caption. It should have opt out form. Could be the title, I suppose. And then right on the front is where that box should go. And then you can have all the other stuff that they should read. But I think, you know, five pages in is too, too much.

And when everything is, and when everything is, bolded or capped, then nothing is bolded and capped. So it's hard to find the important stuff, right? So to me, the important stuff goes on the front page, and that's where you vote, and you can say, please read below before you vote, or before you check the box or make your choices to whether you're going to check it or not.

I think it should be right on the front page with a caption. People understand it something other than the notice because the only thing somebody's going to send back here is that form. In fact, yeah, this form is nine pages. You know, it's more than some ballots. So I think we can rework it to change the title. Maybe we'll call it a opt-out form and notice of non-voting status. We'll move the checkbox earlier.

Maybe we'll, to the brunt. we'll maybe have that be a separate page that you can just send that back. We'll remove the word optional, at least to the extent that it's suggesting that it's... I think it's suggesting read this, don't read this. That's what I think it suggests. Those points are well taken. We'll update this form and the other notices of the operating status,

as discussed by Mr. Zatweiler, we agreed to... throw a box around the check box so we'll do that as well. Okay. We may all get some guidance on releases soon, but we'll see. But I have said the further people push getting third party releases, the more difficult it is to continue to grant them. You push the outer boundaries. Those are my comments on the order.

I am prepared to approve the disclosure statement. statement as a disclosure statement that are resolved all of the disclosure statement objections and I will find that the disclosure statement can statement contains information that is adequate for the lenders and the classes that are voting on the plan to make an informed decision about whether to accept or reject the plan and again in the circumstances of this case I'll approve these solicitation procedures but they are not a model for the solicitation procedures that I would approve in a plan where we have for example a general unsecured creditor

class voting and a debtor that's going to be ejecting to claims they would be scrutinized much more closely here. We have a sophisticated class represented by council who will assist in voting and we don't anticipate any objections to claims. Revisions that Mr. Dengue and I discussed and he reviewed for you to the disclosure statement, we will submit a revised form of order reflecting your comments on the record today and we appreciate your time, especially between the holidays I can thank my staff. We're aware that the list of people we need to thank for their availability and efforts is pretty long. The, and when you resubmit it, please contact Ms. Bats so that she knows and the Hickleafort.

Okay, February 8th, I did not have on my calendar. It is available. I'd actually like to take a minute to speak with Ms. Bats to make sure that if there's not something that I don't know about. That is on that date. So if you'll give me just a couple of minutes, we'll be in recess and then I can come back and confirm a date for you. Thank you, Your Honor.

Okay, February 8th is available. Do you want the morning or the afternoon? One second, Your Honor, we prefer the morning that day. Okay, 10 o'clock on the 8th. Well, I will see y'all then. Happy holidays, happy new year that evening.