American court hearing recordings and interviews - Season 3. Episode 11. October 23, 2023. In re Core Scientific, Inc et al chapter 11 bankruptcy case number 22-90341, audio of hearing held in bankruptcy proceedings pending before the U.S. Bankruptcy Court for the Southern District of Texas #crypto

Episode Date: October 25, 2023

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Okay, good morning, everyone. This is Judge Lopez. We'll get started in just one minute. Conference, muted. Okay, good. Morning, everyone. This is Judge Lopez. Today is October 23rd. I'm going to call the 10 o'clock case status conference in 22903-41. Core Scientific, Inc. at Al. It's about 90 people on the line, so I've enacted the mute feature. If you know you're going to be speaking today, why don't you have hit five star and I will unmute your line. And if you just want to make an appearance, we now have a link on my home page to make a chapter 11 appearance in this case. Why don't you just jump on the Southern District of Texas website and make an appearance

there electronically as well? The purpose of today is just to have a status conference. Obviously, I was assigned to this case very recently. I wanted to get up to speed. as quickly as possible. I've been doing a lot of reading, but I thought it made sense to just have a short hearing so someone can kind of at least tell me from everyone's perspective, kind of where we are, where we're going, and what you need from the court. So I'm going to start by taking appearances in the courtroom, and then I will open it up on the phone line.

Once I unmute your line, I just ask that you please monitor yourselves. I'm just going to keep your line unmuted, but for now I'll start in the courtroom. Good morning. Good morning, Your Honor. Cliff Carlson, a wild gotcha, on behalf of Core Scientific and its affiliated debtors. Here with me in the courtroom is Alfredo Perez and also in Crabtree, and then joined on the line is Ray Shrock and Ms. Berkovich. Okay, good morning. All righty. Let me just see if anybody else wishes to make an appearance in the courtroom and then I'll open it up and then I'll turn it over to Mr. Carlson. Morning, Your Honor. Kieran back Moody from Vincent Elkins appearing on behalf of the official committee of equity security holders. I'm joined today here in the courtroom with my partner Paul Heath and also David Meyer, who's appearing virtually for us.

Okay. Good morning. Ms. Hardy, good morning. Good morning, Your Honor. Jennifer Hardy of Wilkie Farr on behalf of the official committee of unsecured creditors. Also on the line of my partners, Brett Miller and Todd Goren. Okay. Good morning.

Good morning, Your Honor. Ashley Harper of Hunt and Andrews Kerth on behalf of Predators, Fier 3V Corps. Thank you. Good morning. Okay. Let me open it up. I'm just going to click a few lines here, and then we'll get started. Let's see.

Here's a 2-1-2 number. Yes, Your Honor. It's Ray Schrock with Wild Genssel. Good morning, Mr. Tron. Good morning. Here's another 2-1-2 number. Meyer, Vincent Elkins, on behalf of the Equity Committee. Good morning.

6-46 number. Good morning, Your Honor. It's Chris Hansen with Paul Hastings on behalf of the Ad hoc committee of convertible note holders. Nice to see you again so quickly. Good to see you. 617 number. Good morning, Judge Lopez. This is John Bentola, Chodal, and Stuart on behalf of B. Riley Financial.

Okay. One more. There's another 2-1-2 number. Good morning, Your Honor. Rene Ferkovich from Wauk, 12, for the better. Okay, good morning. All right. For the lines that have am muted, just please monitor yourselves.

I'm going to turn it over to Mr. Carlson. Thank you, Your Honor. So, Your Honor, we have a presentation. We've filed on the docket at 1348. I would like to take you through that. okay and I think Mr. Shrock is going to lead things off for us okay perfect let me pull this got it mr. Crabtree should be the presenter mr. Crabtree is the presenter Austin Crabtree all right yeah I gotcha perfect can you

can you hear me okay your honor just fine okay great once again Ray Schrock while gosh look for the betters um thanks for having having us before you this morning. We've tried to put together a short presentation that will help frame up kind of some of the issues from further background about the case. I know you've been doing a lot of reading and then hopefully where we intend to go. But Austin, if you could flip the page for me, we'll try and move through this speedily. I know that other parties, I'm sure, want to speak.

Yeah, so just on the roadmap slide, you know, I'm going to handle the old. overview and case status. I'm going to turn it back to Mr. Carlson to hand some background on core scientific, and then I believe Ms. Bergerovich is going to round it out for some progress during the case and talk about a bit of the next steps. You know, in terms of the background, Judge, you know, as you know, from reading, you know, this company was founded in 2017 as blockchain infrastructure. you know, a hosting provider and digital asset mining company.

It's a pretty unique company in that its revenue streams are from Bitcoin to mines for its own account, which we call self-mining, and for providing hosting services to third-party customers. We've built a considerable asset base with approximately 145,000 minors, gained market trust as a hosting provider and demonstrated a multi-year track. mining for ourselves, that is generating Bitcoin is our most profitable business segment, and it's a primary focus of the company's business plan moving forward. We have eight operational data centers in the U.S., Texas, Georgia, Kentucky, North Carolina, and North Dakota, 275 full-time employees.

A company is cash flow positive, always has been, before debt service. You may remember that as we were going to come. company initially filed back in November, back in December of last year, we were kind of going through people called the crypto winter, you know, where the price of Bitcoin and other crypto assets had declined substantially. That certainly played a role. And, you know, a lot of the events that we'll talk about that were events, you know, leading up to the case. But, you know, the price of Bitcoin has since rallied. And, you know, and we'll talk about, we actually have an official equity committee in this case. And it's our strong belief,

you know, there is significant equity value in these states, which is, you know, somewhat unusual. Now, when we talk about the circumstances leading up to these cases, I would say that, you know, there was an increase in power cost that came, you know, through the summer of last year. We had, you know, a dispute with Celsius, which has since been resolved. and related litigation. There was significant build-out costs for the mining facilities and for the computers and all the real estate. We had pretty high equipment financing indebtedness and amortization,

and then we had a series of, I would say, challenges in the summer and fall of leading up to the case related to equipment financing and then ultimately a cross-de-fault under the convertible. notes. And then, frankly, there was just some litigation and other deaths that we were struggling with. And let's go to the next slide. So the key parties you should know, Judge, just to, you know, you'll hear from during the case, the chief executive officer is Mr. Adam Sullivan. I believe he's on camera here for you today, or should be, you know, available. Our senior your vice president of capital markets and acquisitions, Michael Gross, and the chief legal

officers, Todd Duchesne. The chairman of the board is Mike Levitt. We do have two independent special committee members, Neil Goldman and Neal and Youngblood, both of which have significant experience in Chapter 11. The other board members of Darren Feinstein, Jarvis Hollingsworth, and Matthew Minnis. of course representing the company, PJT, led by John Singh, is the company's investment banker, Alex Partners is the company's financial advisor. Here it saw Mr. Hansen, he's the lead for Paul Hastings for the convertible note holder

group, their senior secured creditors effectively. MOLUS led by Mr. Barat Klein. The equipment lenders do have an ad hoc group that we've negotiated a settlement with. and the Unsecured Creditors Committee, you've heard from counsel. DeSera is their investment banker. B. Riley, which is a significant unsecured creditor, as well as the company's dip lender, as represented by Choate, and the official equity committee, B&E, led by Mr. Meyer,

and his team as well as FTI. A judge, the major claims against the company are as follows, and I didn't include the litigation claims in here, but, you know, I just want to go through. this quickly because I think it's helpful. And these amounts are that we're listing here, these are the amounts that are pursuant to the economic terms of the mediated settlement that we've reached with Judge Isker. The dip claims, notably the dip, which has been, you know, was refinanced out after the initial days of this case, is provided by DRI. We've already paid

down, I think, about 21 million of the dip. There's about 15.5 outstanding. The April and August convertible notes, they were in two tranches, which have some importance that we'll talk about and you'll hear about as we move through the plan process. There's an April tranche at 350 and then in August convertible note tranche at 360. There's minor equipment lender claims like equipment financing claims of 253, other secured claims. and including some mechanics liens that are at 36 mortgage claims of about $0.8 million, and then general unsecured claims of roughly 79, of which E. Riley is overwhelmingly the largest claim that we can see that hopefully be allowed in our opinion against the company. So bringing all these parties together has been tough, I would say, in our view.

And it's, you know, there's been a lot of good faith negotiation without breaking mediation privilege and all the things. I think I can fairly say that everybody has been participating in the mediation in good faith. And we've reached an agreement and principle with three of the, five stakeholder groups on the economic terms. They add Hock Group, the equipment lenders, and the official committee, official equity committee. B. Riley and the UCC are not there yet, but we're working on it. And our goal is to have a consensual process, but these cases are expensive, and as we'll talk about in the timeline, we really need to keep moving and get this company out of

Chapter 11. But just to give you a little bit of history, you know, we had an agreement in principle with the equipment lenders in mid-July, you know, we're surrounding their treatment. That was the first constituency that we were really able to kind of get on board. And on July 12th, we entered mediation with the key stakeholders with Judge Isker. And approximately, you know, two months into that mediation, you know, we had this mediated, you know, the economic terms of the mediated settlement. There was a lot of details still to come from that, but it was a big milestone,

certainly for the company and I think the major stakeholders in this case to get there. We filed a joint notice announcing the mediated settlement. We've had multiple in-person meetings. We've been meeting still over the weekend. There was a lot of activity between, you know, the three primary groups and as well as B. Riley. and, you know, we are nearing completion, and, you know, I've had updates as recently as like five minutes before this settlement, before the status conference, and, you know, I think we're quite close, you know, really on kind of the primary terms of a deal. Now, I'm sure others will correct me if they disagree, but we really believe that we're very close and we're going to be in a position to file the plan and move forward here. in the very near term, you know, at the end of this month.

We're also, just to emphasize that once again, those ongoing discussions with the UCC and B. Reilly, they're not on board yet, but we are very hopeful that we will get them on board, and we're going to certainly work hard at that. But we have to have a base from which to go forward, and that base was really with the Equity Committee to Converts and the company as well as the equipment lenders. Let's flip it, please, Austin.

So this is, I would say it's illustrative, but these are the dates that certainly the debtor is striving to meet and that we're working with parties to try and hit. It is, you know, contemplates that, you know, we file an updated plan at the end of this month, you know, subject to the court, you know, notice, appropriate notice, and everybody, frankly, getting there, you know, a hearing on the DS and backstop we'd like to have as soon as November 14th. There's going to be a substantial, you know, equity rights offering that would be part of this plan. And, you know, that's going to have to be something that commences shortly after, you know, the disclosure statement and backstop motion. And then really culminating in a confirmation hearing that we think could come if we have consensus, of course, you know, as soon as December 22nd of this year.

Now, I will say, of course, if I were an objecting party, I would say, wait a second, I don't like things that fast. So I'll save them the trouble to say they haven't agreed certainly to that timing, and this is something that we're just telling you that this is what we're working on and this is what we're working toward. But we do think that getting to an effective date in early 2024 is very, achievable and frankly for the company, you know, extremely necessary. Because although there is equity value here, the cases are very expensive. You know, the run rate here is significant for a

company of this size. And, you know, we are, you know, it's a volatile industry. We need to strike while we can, get the company out, and reorganize, and move this case forward. You know, the actual dates that we end up with here, of course, are, you know, subject to change. We know that other parties are going to have issues that, you know, they're going to want to be resolved. But this will talk about, you know, we've made quite a bit of progress during these cases. I mean, we really have, and it is, you know, we believe we're at, you know, the last quarter, certainly, of this case.

And we're very much looking forward to working with Your Honor. all of the parties and frankly moving this company out of Chapter 11 as quickly as possible. So unless you have any questions, Judge, I'll turn it over to Mr. Carlson from here. No questions. Thank you very much. Sure. Mr. Carlson. So, Your Honor, these next few slides are just to give you a little more background on the company.

This first slide here is just kind of a stat sheet that shows some of the financial and operational figures as of the end of the third quarter here, September 30th. So the company is headquartered in Austin. As Mr. Schreck mentioned, it's got eight data centers across five different states. Currently, operational capacity is at 724 megawatts. The company's business plan contemplates expanding that by an incremental 372 megawatts to get above 1,000 megawatts. to give you a sense of how much mining is done on a daily basis.

On average, the company is mining approximately 32.1 Bitcoin per day. And this last, this self-energy, this energized hash rate is a measure of how much power is needed to actually operate in the data centers across the country. Financially speaking, the company generated just a, just, under 250 million of revenue during the first half of 2023. So this next slide here shows the eight data centers are located, the five states. I think we've got a few in Texas, one in North Dakota, Kentucky, North Carolina, and Georgia here.

And each of these data centers, you know, they both house and provide miners both that the company owns and mines for its own account, as well as, hosting miners for customers and generating revenue that way as well. So then this next slide, this slide is intended to depict how Core actually generates its revenue. At a later hearing, we'd like to have somebody from the company that can really walk you through the nuances of the mining process and the industry, but just at a really high level here. So Core operates over 200,000 of these miners. which are specialized computers across his data setters.

These computers are used to solve algorithms and compete with other miners to solve a puzzle. And if a miner successfully solves the algorithm, it's rewarded with Bitcoin. And so there's sort of two forms of revenue, primary forms of revenue. One is Bitcoin, it's mining for its own account, and it's got about 145,000 miners that it uses.

And after a miner successfully solves an algorithm, of them it's rewarded with a Bitcoin, and then the company will sell the Bitcoin for cash. In addition, then, it has a number of hosting agreements with customers where it hosts machines for third parties in exchange for a fee or a share of the proceeds. And so this far left here showing, to actually operate these facilities requires a tremendous amount of power, and so it uses local utility providers to to power the facilities. And to give you a sense of like the breakdown of revenue,

it's about 70% of their revenues from self-mining, and approximately 30 comes from payments collected under their hosting arrangements. These next few slides are going to walk you through on the progress during the cases. Thank you. Good morning, Your Honor. Can you hear me okay? Just fine. Good morning. Great.

So this is the timeline. As your honor can see, the company filed this Chapter 11 cases at the end of December. Our first day hearing was December 22nd, and according to the calendar Mr. Strock shared earlier, we'd like our confirmation hearing to be scheduled on December 22nd, exactly a year later. So we've been in Chapter 11 for a while, but that's not for lack of effort. Management has been working very hard along with the professionals, make as much more. progress is possible. I say there are three main reasons that the Chapter 11 has taken a while. The first is the change in circumstances in the industry. As Mr. Schrock mentioned,

the company filed when Bitcoin prices were really after lowish in the midst of the so-called crypto winter. Very shortly after filing, circumstances changed. So much so, the company was able to shift with a couple of months from having an RSA that provided the secured lenders with 97% of the company to having an equity committee point to the points in just a few months later. The second reason is the complexity of the particular situation, including, as Mr. Schrock mentioned, the volatility of the industry. And third is the number of parties involved.

Not only do we have the five main key players that Mr. Schrock mentioned, but due to the nature of the company's business, there were a lot of other business relationships that led to issues that the company was able to resolve in the chapter of living cases from the general contractors who filled out the company's facilities, who had mechanics liens to large customers like Salthias. The company is proud of the progress that we have made in the chapter loving cases. I'll touch on a highlight of the key moments in the chapter 11 pieces. Next slide, please. So when the company filed, we did so with the deal with the secured predators, holding a convertible note.

They were the only party willing to provide must-needed dip loan to the company. And to do so, we also entered into an RSA, as I mentioned, that had a plan and had us coming out of Chapter 11 pretty quickly. Very shortly, after we filed, there was a dramatic increase in the company's financial situation. First, the price of Bitcoin increased dramatically, very quickly. And secondly, energy prices, which are huge components of the company's business, also went down. So pretty soon after, the company was able to refinance the dip and ran a new process. The party that came out with the dust terms there was C. Riley. So on February 1st, the court approved a replacement

a zip loan with C. Riley, who's our largest fund-secure as our dip lender. The company used the proceeds to pay off the original zip loan and terminated the RSA. That bought the company time to work on a new business plan that reflected the new circumstances and the company quickly turned to their stuff. So over that next few months, the equity committee was appointed. The company worked on a revised business plan and then met with all of the constituents to educate them on the business plan, get their input, and hope to get a consensual

Chapter 11 plan. We ultimately, after many weeks of negotiations, filed a Chapter 11 plan on June 20th. That did not have the support of any parties at that moment, but we did so to push things along and we proposed at the same time a global mediation. Shortly thereafter, we reached our first settlement. Mr. Schrock mentioned this. That was with the group of equipment lenders. They hold, as a, the equipment lenders in total holds about $250 million of claims against the company.

And pursuant to the settlement, equipment lenders have three choices. Each one makes its own choice. It has separate collateral that backs its loan. They can choose the default option, which is what the Bankruptcy Code entitled them to do, which is a, take-back secured debt of the value of their collateral and an unsecured claim in the cup class

for their deficiency. Secondly, if they don't want take back debt, they can have their entire claim equitized as their choice. And the third choice is the settlement option that the equipment lenders negotiated with us, which is

secured payback state debt equal to 80% of their claims. The terms that make that were negotiated quite heavily and then the key point the key benefit for the company is that those equipment lenders choosing this option would agree to waive their deficiency claims so 20 percent of their points that's resulting in more distribution for other stakeholders next slide please those are the key terms obviously um there are details beyond that and then i will uh back over to Mr. Carlson to go over the next slide please oh sorry the mediated

of stand settlement so we had mediation starting July because is there was a masterful mediator really on pushing the parties and coming up with creative suggestions for all of us yet many meetings with him and without him and We were happy to reach a deal in September. We filed a notice in this regard with both the Equity Committee and the ad hoc route, the top and the bottom of our capital structure, as well as the equipment lender deal, which was built in. And we are focused on finalizing the terms of that settlement and having them be part of an RSA that we would file, filing a revised plan and disclosure statement that reflect the deal,

having a disclosure statement during on November 14th. And again, as Mr. Schrock said, continuing discussions with both the Unsecured Creditors Committee and with the Reilly with the hopes of reaching a completely consensual plan. Now I turn it over to Mr. Sopold. Thank you. Your Honor, this next slide here, just wanted to flag a few other, you know, major settlements and transactions that the companies entered into that are, you know, liquidity enhancing. The Celsius settlement, which Mr. Schrock previewed at the beginning, that was a pretty significant milestone in these cases.

By far, our largest litigation claimant, you know, asserting over 300 million in claims. And as part of that transaction, which has been approved by the court, where the company is selling a facility that isn't part of its go-forward business plan, and it's expected to generate about 14 million in proceeds for the estate. And, you know, we expect to close that transaction in the near term. In addition, Your Honor, we've entered into and gotten court approval of a number of M&M lien settlements where we've settled claims at a substantial discount in many cases. And then finally, Your Honor, the companies entered into a transaction with Bitmain to acquire 27,000 minors for $77 million. dollars you know the benefits there are one we that that will be the bulk of that purchase price will be paid in equity and reorganized core and so the the company will benefit from you

know liquidity and then number two is that it's it's part of the the company's business plan to expand its operations and all of that purchase price will be paid post emergence and we intend to file a motion soon is to seek approval of that as well so this next slide you're Honor is intended to just flag a few other pending items that Your Honor's inherited here. First, there's exclusivity. We filed a motion to extend exclusivity last week. That's supported by the equipment lenders, the ad hoc group, and the Equity Committee. Next, we have the Harper settlement here. This is another M&M lien settlement. The motion's been pending. We're working through some open issues with the ad hoc group but but hope that we can resolve those and file a certificate

of no objection by the end of this week and then wanted to flag your honor we do have a number of claims objections on file and just to flag a few that i think are either scheduled for trial or ready to be scheduled for a hearing first is um is fear um the court had previously entered and agreed the scheduling order a few months ago that's set for trial and or in early January. The parties are working through discovery right now and marching along there. And then second, Your Honor, is the securities class action claim. That has been fully briefed. There's an objection. There's also a motion filed by that claimant to seek to file, have a class certification. We're in discussions to try to schedule the hearing

with the claimants' counsel, so we'll be in touch with the chambers. How long do you anticipate or does the scheduling order for the sphere trial? Is that a, yeah, how many days you know, had scheduled for trial on that? I believe it's a three, it's, we've reserved three days for it. Okay. I don't know that we need all things necessarily, but that's what we reserve. Okay. Okay.

So then turning to the last slide just to talk through next steps and how we see process, you know, in the near term here. So we're working to finalize the restructuring support agreement. among the debtors, the ad hoc group and the official equity committee, and we hope to get that finalized by the end of the month, as well as finalize the updated version of our Chapter OTH & Planner's Stolder Statement to have filed by the end of the month as well.

We're also working to, we're in advanced discussions regarding a backstop commitment agreement for our equity rights offering and are also aiming to finalize that backstop commitment agreement and file a motion that we would ask to have heard, with our disclosure statement hearing on November 14. And then, of course, we'll continue discussions with the UCC and B. Raleigh to try to get to a global settlement. Okay.

Thank you. Thank you, Your Honor. Yes, actually. That'd be great. Thank you very much. Thanks for helping on today, too. Okay. Let me open it up.

Ms. Hardy. Yes, Your Honor. Jennifer Hardy of Wilkie Far on behalf of the Unsecured Creditors Committee. Your Honor, as you heard from the debtors, the creditors committee is not yet part of the multi-part settlement that they've been discussing. One of the main reasons for that is that the creditors committee has actually not been wrapped into the mediation discussions. We received a term sheet last week. We reacted very quickly and provided an issues list to the debtors on Friday. So we, our main focus here is to ensure that unsecured creditors are paid in full and receive everything that they're entitled to under the code. And so we hope and expect that we will receive meaningful engagement from the various parties on our issues.

So we'll look forward to those discussions because we agree, like the debtors, that a contested confirmation hearing would not be in any of the party's interests. Okay, thank you. Anyone else in the courtroom wish to be heard? Good morning, Your Honor. Again, Ashley Harper for Sphere 3D. Just to supplement what Mr. Carlson said, the parties are marching along pursuant to the scheduling order at Docket 1188. We're in the midst of discovery, and there's a meeting confer in fact this afternoon, and to the extent that we have a need for Your Honor's assistance and resolving any things we can't work past, I just wanted to preview that for Your Honor that we might need to come before you. Okay, thank you.

And I will let both of you know. I'll be ready to go for the trial on January 3rd. I'm not going to – if you need three days, we'll figure it out. Right now, January 3rd, 4th, and 5th work for me. So if you all need time – and I'm not writing you to it, but I'm just telling you, if those are the three days, we will – I'll make it work. And, you know, there may be a couple of moments in there where I have to fit in a couple of other hearings, things that nature,

but I will make those dates work. I will just kindly ask that if something changes over the, you know, around New Year's, that you let me know, so I'm not preparing on January 1st for your trial. Just let me know as soon as not. But if not, I'll be ready to go. Okay, thank you. Let me open it up. Anyone on the line wish to address the court at this time?

Your Honor, this is John Ventola on behalf of B. Riley, may I be heard briefly? Absolutely. Thank you, Judge. So I wanted to give a little more background. B. Riley, as debtors counsel said, was both one of the debtors' largest unsecured creditors and was also the replacement dip lender here. And as was said, the replacement dip loan is on much more favorable terms to the estates and we thought really changed the trajectory of the case.

Since the replacement dip was funded back in February, we've worked very closely with the debtor and their advisors. B. Riley has been extremely supportive of. the debtors' reorganization efforts and have participated in good faith throughout the mediation process. I think it's, well, we have to be very mindful of the mediation privilege, Your Honor, and certainly we're not going to breach any of that. I think it's fair to say that we've been a bit disappointed and a bit surprised by the way

the mediation has played out since Judge Disker was first involved. So I very much appreciate the debtors saying that we are not on board and making that clear to the court. We are certainly open to continue negotiations, Your Honor, which we will do with any party who wants to engage with us. I did just want to say that I think as we sit here right now, we are probably a bit less optimistic than the Veterans Council on reaching a deal and just didn't want the court or any part of interest to be surprised if we didn't react. So we hope to reach a deal, and we will continue to act in good faith at all times. But right now, I think we're a little skeptical that we will get there.

and don't speak for the creditors committee, but obviously recognize they're not yet on board either. So thank you for the time, Your Honor. Certainly available for questions if you have any. Thank you very much. Anyone else? Yes, Your Honor. Chris Hansen and Paul Hastings on behalf of the ad hoc committee

of convertible note holders. I just wanted to note that obviously there are a lot of details beyond the broad economic terms coming out of the mediation that we've been hard at work trying to. solve with the debtors and the official equity committee and the other parties in interest over the course of the last many number of weeks. We're getting there. They have on our side primarily run through our mediation steering committee. We have a broader committee that we've been keeping apprised of some of the larger points, but obviously can't discuss with them some of the more narrow points.

So we will get there eventually with them. We remain hopeful that we can arrive at a consensually filed plan and that we can move this process along quickly to conclusion. I think that's at everyone's best interest, as Mr. Schrock noted, and the entire wild team noted, and that's our goal as well. But obviously the terms that we're working through aren't non-economic in the sense that they do have an impact on the economic outcome of everybody's treatment under the plan. And again, our goal is to get there consensually. but if we don't, we stand ready to continue to move forward like we were previously, but hopefully that's not the outcome. Thank you.

Anyone else? Your Honor, can you hear me okay? Just fine. Thank you, and I apologize for my voice today, Your Honor, David Meyer, Vincent Elkins, on behalf of the Equity Committee. The report that the Wilde team gave to you is accurate from the Equity Committee's perspective. We have worked constructively, proactively, and productively with the company and a stakeholder, to achieve this result.

Part of that process, Your Honor, is going to be if the Equity Committee is helping to diligently organize an equity rights offering that will help fund the companies exit from Chapter 11. So when the terms of the settlement here are finalized, we want to capitalize on that momentum, finalize the capital raise alongside the debtor's management team, and work to present that to Your Honor. We're going to aim for the timeline that Mr. Schrock outlined with you all. There's a lot of details that still need to be finalized.

I agree with Mr. Hansen's comments. We were on the phone right before this hearing began, but we are motivated to finalize the agreement in principle. We want to achieve a consensual result for the same reasons that everyone else is outlined here. One issue, Your Honor, just that you're aware of, is the Equity Committee's professional fees are going to exceed the cap that was initially part of the order establishing the committee's mandate. We expect this is one of several issues that will be presented to Your Honor as part of a consensual resolution if we get there. But just in these comments to you, I wanted to make sure that we highlighted those points from our perspective and where we sit as well. Thank you, Your Honor. Thank you.

Anyone else? So, Mr. Carlson, just one question. In terms of timing for the next time we will meet, I know that, you know, I'm proposing November 14th, does that in stone already, or is there something that you need to file the trigger that? That has been noticed. Okay. We will file a motion for conditional approval. Okay. Of the disclosure statement, and as I mentioned, a motion to approval back.

Just get that on file as quickly as possible, just so people have as much notice as possible. I appreciate the comments. I think this was incredibly helpful for me just to really, really help me get up to speed as quickly as possible, and as well as just kind of get to know who's involved in the case and where things stand and some of the tension points that are there, but also some of the possibilities for a consensual resolution. So I'll let the parties get back to their work. We'll see each other in a few weeks.

My goal is to make sure that this case stays on whatever pace it wasn't scheduled to stay on. You know, parties have their rights. But in terms of, you know, I do not intend to slow this case down any bit. So whatever was happening before Judge Jones will continue in front of me. And, you know, if anyone needs a hearing dates, then just reach out to. to Ms. Saldanea, and we'll get you a date. But I just really want the parties to know. I'm working incredibly hard to just make sure

that the work of the court continues at the same pace that it would have. And it's just so I appreciate everyone coming in today. If there's nothing else, see y'all in a few weeks. Thank you, Audra. Thank you very much. Have a good time. Yes.

Thank you. Thank you.