American court hearing recordings and interviews - Prima Wawona bankruptcy hearing February 28, 2024 (In re MVK Farmco, Delaware bankruptcy case 23-11721)

Episode Date: March 24, 2024

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Please be seated. Good morning, Your Honor. For the record, Joe Barry of Young Conaway on behalf of the debtors. Your Honor, appearing with me in court is my colleague, Andrew Mark, and also appearing with us via Zoom is Mr. Bennett and his colleagues from Kirkland and Alice. Your Honor, we do have a few items on the agenda today. We are appearing before you on an uncontested basis, so with the court's permission, I'd just like to walk through the agenda.

We filed an amended agenda with apologies to chambers. last night with our third interim dip order but if we could just roll through the agenda in the in order I would to proceed that way okay thank you your honor the first item would be the quarterly fee applications for the debtors and the committee professionals we did receive some informal comments from the US trustee we do appreciate her working with us on those as to young Conaway we agreed to a modest $2,200 reduction there were no reductions for the Hulahan fee application.

The committee advisors, it's my understanding. First of all, we were going to submit a consolidated order for all the professionals, but the objection deadline for the committee professionals were a little bit staggered beyond what the debtors' advisors were. I think they're still working through some issues with the U.S. trustee, so they will be submitting an order under certification of counsel once that's resolved. So with that, Your Honor, we filed an order for the debtor. debtors professionals, Young Conaway and Hulahan on Monday. That is unresolved, and Mr. Sandal from Hulahan is on the line in case your honor has any questions with respect to Hulahan,

and of course I will address any questions you have for Young Connoe. Okay, I'm sorry. What was unresolved, he said? The debtors fee applications are resolved, Young Connoe and Hulahan. Committee advisors are still working through submissions with the U.S. trustee. The order that was submitted on Monday does not approve the committee's fees. just the debtor's advisors. No, I don't have any questions on Young Conaway or Hulahan Loki,

except for certain expenses, airline Wi-Fi and general cellular service. And if someone's going to charge for airline Wi-Fi, I want to know that they had to get it for the case. They only used it for this case. They didn't send a personal email. They didn't do anything. And cellular service, general cellular service, I need to understand. Very well.

We can have Hulahan submit. We can work on that and submit either a supplemental declaration on that, unless Mr. Sandell, you wanted to address those up front, but I think we could submit a supplemental declaration with respect to those expenses. I would ask, Your Honor, if we could get the fees. and expenses approved as is and any deductions that would come off for these items would come off the next quarterly, if that's acceptable to your honor? That's fine.

Let's not have the same charges on the expenses on the next quarterly. Of course, Your Honor. So we'll work with who we'll hand on a supplemental declaration of some kind, or an agreement to write those off, and we'll submit that, and we'll address that at the next quarterly fee hearing. Okay. I'd really like to do away with these kind of, call them, rink. Dink expense requests in the context of $1,000 plus an hour fees and or, you know, $150,000 monthly. Understood, Your Honor.

Maybe that Rules Committee could work on that, Mr. Davis. Loud and clear, Your Honor. We will take that up for sure. Okay. Thank you, Your Honor. So with that, that would take us to item. Number five, which is the interim dip order. Your Honor, again, with apologies, we submitted the third interim dip order to Chambers late last night,

which is obviously the bad news. I think the good news is that literally the only changes to this order from the second interim order were to change the word second to the word third and to upsize the interim borrowing. As I communicated with Chambers over the course of the last couple days, we are going to need to upsize the dip, and we're going to need that financing, I think, before the end of the week after next. So we're hoping to get a very brief slot on your calendar at some point late next week for that upsized dip. Again, I'm anticipating an amendment to the pending dip motion. And we would expect that that would be uncontested.

And hopefully we could do that under certification of counsel or a very brief, you know, 30-minute hearing. If that's going to be done under certification, and I guess I'll have to see which file. At the least, I'm going to need a declaration that goes along with it for the need of the upsizing. And if there are any substantive changes other than the amount, then I would need support for that as well. We will absolutely do that, Your Honor. Okay. So as I'm looking through in terms of this third, on, because I'm flipping through the pages here.

Yes, I see nothing substantive and just conforming to a third amended. And there are no objections? No, Your Honor. Okay. Anyone wish to be heard? Okay. There are no objections. It was noticed out.

It just, as I said, just conforms, so I will approve this. Thank you, Your Honor. and that takes us to item six, which is the 2019, the Global 9019 motion. Happy, I'll pause your honor. I'm like this. Thank you. This is the 19, the global 1919 that was previously contested.

It's now resolved, and I think Mr. Bennett reported that resolution to the court last week. We are, I think, in the final strokes of updating the stipulation just to simply conform to the current version of the plan and our hope is our hope was to have that heard today on an uncontested basis. I think that our hope is to submit that as well under certification of counsel, and if Your Honor has any questions, we'll take that up at the next hearing. We will, of course, submit a supporting declaration once that's finalized, so Your Honor has the evidentiary basis to consider and approve the 2019. Okay, thank you.

And it is important, I think, if possible, to get that approved ahead of confirmation, just so folks are locked in, and we sort of, know the path to confirmation so it's baked into the final and your honor that takes us to the final two items for background i'll just take them sort of together these are the debtors motions to sell parcels of property and to lease certain other parcels of property all of which is in california as i would know mr sandal did submit a declaration in support of of these motions. It was a single declaration in support of both motions that appears at docket number 690. Because this is uncontested, Your Honor, we didn't want to incur the cost, including

airline Wi-Fi of bringing Mr. Sandel in for the hearing. So we would note that his declaration is in the binder, and again, it appears at docket 690. As court will recall, we commenced a pre-petition marketing effort in about February of 2023. process continued post-petition. No qualifying bids were received in the court-approved sale process. So the debtors decided to proceed with the agent's credit bid of $229 million in what has been referred to as the equitization transaction that will be consummated through the plan. As Your Honor knows, the timeline for these cases has been extended for a variety of reasons, and we're now We're now bumping up into the prep work that's required for the 2024 harvest.

So that's going to require a significant amount of cost outlay and work. The debtors, as just previewed by the fact that we need to upsize the dip, debtors have limited liquidity. So the debtors and the lenders have thought about and collaborated on ways in which they can avoid the costs attendant to preparing for the 2024 harvest and bringing in some cash. And the culmination of that effort is what's before the court in these two motions. So this is phase one. There are actually pending two other motions that will be heard at some future date.

Again, similar to these, one motion to authorize the sale of properties, one motion to authorize the lease of properties. Before the court, the sale motion contemplates 21 non-insider transactions that will result in about $90 million. sale proceeds and four lease transactions each of which has an option to purchase I wanted to clarify one thing the the motion itself I think referred to $122 million of sale proceeds I think mr. Sandell's declaration refers to an even greater amount to clarify when the motion was originally filed there was $122 million worth of sales we withdrew the trans one of the transactions for about $30 million because we started to renegotiated

that deal with the prospective purchaser bringing us down to 90 mr. Sandell's declaration refers to the aggregate across the two sale motions so what's before your honor will result in about 90 million dollars of sale proceeds the values that are going to be achieved in these sales are are at or above the values implied by the the agent's credit bid and your honor any party that submitted a land bid in the earlier process was contacted by either Hulahan or Pearson and was obviously had the opportunity to participate in the process and we also sent notice of this motion to anybody that participated in the earlier process. So, you know, in sum, Your Honor, we would submit that

these are good deals for the estate. They will, you know, ease our liquidity issues, ease up on those prospective costs, attendant to preparing for the 2024 harvest season, and otherwise we would ask that they be approved, subject of course to any comments Your Honor has. Okay, I waited on these because it wasn't clear to me exactly what was going forward. There was an amendment that was filed to one of them

and I guess maybe a withdrawal of the motion with respect to the one. sale so so that's why I decided to wait and see where we were on these we just there was a couple of clarifications we had one withdrawal because we're still negotiating we had some glitches in the property descriptions that we fixed and then there was a typo in the rent under one of the leases so the amendments attending to clear all that up but as in the proposed orders that were filed Monday or Tuesday of this week.

Everything is final and fixed, as stated. Okay. Apologies, of course, for the volume of documents here, but we wanted to do this sort of in bulk rather than hit your honor with

I guess what would be 25 independent motions to approve these in Syri-Adam. Does anyone wish to be heard with respect to start with the sale motion? Okay, these are private sales that are being put in front of me. Private sales, of course, are permitted under the bankruptcy code.

These private sales come after and auction a public an auction process, which contemplated the sale of any and all properties that the debtor owned. As counsel indicated, the auction, didn't occur because we didn't have qualified bids that lenders were willing to accept at this time. So the debtors went back out and have now come up with these private sales. And based on the declaration submitted by Mr. Sandall, in support of the sales, I will approve them as meeting the requisites under the 363 for a sale free and clear. the properties were marketed.

There are, well, there are no objections to the sale. The properties were marketed. After an auction, the lenders are willing to let them go under the terms that have been negotiated.

The prices are above the indicative prices that were manifest. in the credit bids and there is no suggestion of any insider deal here or any improper collusion and Mr. Sandahl's declaration supports that. So I will approve the sales as meeting the standard and sign the standard. and signed a proposed form of orders. I do not have any issues with the forms of order.

Thank you, Your Honor. The sales are obviously free and clear, with liens to attach to the proceeds. Okay, so our second motion is the leases. And with respect to the leases, again, there is no objection to this motion. There was, again, an amendment with respect to that, which I think just deals with the total rent payable under the leases.

Again, there is no suggestion that there is anything untoward with respect to entering into the leases. There is no suggestion that these are insiders. And again, I have Mr. Sandahl's declaration to support the marketing efforts and continued marketing of the property after the debtors are entering into these lease agreements. They include an option to purchase the lease premises and the rent, according to Mr. Sondall, is within the range of our exceeds the rent debtors previously paid for these properties. and they support an income stream that the debtor say will assist them go forward. Again, Mr. Sandal testifies to the good faith of the counter-contract parties,

and I have no evidence to show insider or collusion. I will approve them as requested and sign the order as submitted. Thank you very much, Your Honor. appreciate that. Just wanted to double back to one thing, which is the amended dip. Would you prefer that I contact Chambers

about the date for a prospective date for next week? Yes, let's do that. My schedule's getting crowded. So I want to make sure we get the, my Chambers has a chance to take look at the date. As someone who's partially responsible

for that year on, I totally understand that. That's all the business. we have with your honor this morning. Okay, very good then. We are adjourned. Thank you, Your Honor. Thank you, Your Honor.