American court hearing recordings and interviews - Season 5. Episode 2. May 1, 2023. In re Virgin Orbit Holdings, 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 District of Delaware

Episode Date: May 2, 2023

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May please the court, Your Honor, Michael Nester, Young Conaway Stargant Taylor, on behalf of the debtors. Your Honor, I want to, first of all, I want to thank Your Honor and Chambers. And I think a lot of people who are not here in the court thank you as well for communicating relative to the hearing today. As I'm sure you know, hearings have a way of making things resolve if they're going to resolve. And that's what happened late Friday and also last night. So we thank Your Honor and Your Honor's chambers. Your Honor, we did submit orders, but I don't know if Your Honor had any questions. about the orders that we submitted under certification of counsel.

We have the dip, bid procedures, OCP, and then the supplemental wages motion. Okay, supplemental wages and OCP have been approved, but perhaps not uploaded. Great. Yet. I saw the revised bid procedures order and final dip. Do you need to make any presentations with respect to them? Not unless, again, it was fully consensual with every party in the courtroom. Okay.

I'm hesitant. Well, let me just ask for the final dip. I had the opportunity to review that and I appreciate the changes that were made to the order. They were clear to me in the red line. Was there anything that was made it to the dip credit agreement substantively? Because that's a document that I don't necessarily appreciate. So if changes were made, that made material changes, I guess I would like to know what those changes were. Thank you, if it pleases the court, I'd like to see the podium, the Mr. Clodonis, who is living it a lot close to that.

That would be fine. Thank you. Good morning. Morning. Your Honor. George Klonan is from Leithman Watkins on behalf of Virgin Orbit and the debtor affiliates. There were a couple, I would say notable substantive changes, especially ones that came up on the first day. Okay.

So as far as the fees go, I remember there was a little bit of a back and forth on the 18% roll up or 18% interest on the roll up. The dip lenders have agreed to go down to 12%, which was the pre-petition secured note. pre-default rate. Okay. So pre-petitioned it was 16% 12 plus 4, the people who have agreed to bring it down to 12%. Okay, thank you. The initial roll-up fee, which was 3%, was subject to the final order.

That there wasn't a change in that other than it's subject to the final order, which we had agreed to, but we made a few changes in the actual credit agreement. There was a concept that. There was a concept in the credit agreement about mandatory prepayments in the event of excess cash, and the number was $2 million. With discussions amongst the debtors, the dip lender, and the UCC, it was increased to $2.5 million. So once it hits the $2.5, then the sweeps begin? Correct. Okay.

So the 3% fee on the rolled up amount is still present. It was not removed. I believe that's right. I thought I saw a red line with respect to the fee, so that's why I'm asking. I just couldn't follow the changes in the dip credit agreement. Yeah, it was removed. That's right. It was removed.

Okay. And then a couple of the events of default were increased in terms of the thresholds, including the ERISA event liability, went from $10,000 to $50,000. Judgments against any credit party were increased from $10,000 to $50,000. Same for foreclosure amounts. and the debtors now have an opportunity to cure any material adverse events. It went from three business days to seven business days. Also, there was a provision that if any suits related to pre-petition notes were brought by the debtors,

that would be an event of default. That was also removed. Great. Well, thank you very much. I appreciate that explanation. Does anyone else wish to be heard in connection with entry of the final dip order? May it please the court, play clarity of Potter-Henerson and Corridson. I'm appearing on behalf of the official committee of unsecured creditors and joined by my colleague,

Caitlin Morales, and also from the Hogan Levels firm, Edward McNeely and Catherine Lynn. Pro Hocx have been approved for them, and Edward will be addressing the court this morning. Okay, thank you very much. Good morning. Good morning, Your Honor. Edward McNeely from Hogan Lovels on behalf of the committee. We're glad we're having this hearing on a fully consensual basis. we were able to work through most issues quickly and cooperatively with the debtors

professionals last week and your honor had already entered most of the second-day orders and other orders under certification of counsel and we're grateful to our committee members too who were very diligent and responsive and helped move that process along as mr. Clodonis has already outlined there been a number of changes to the dip it was a hard-fought negotiation and we believe that those changes and some others including some modifications to the challenge provision a waiver, certain waivers of marshalling, limitation of credit bid rights that materially improved the terms of the financing from the perspective of unsecured creditors.

And we're now looking forward to working with the debtors to achieve a value maximizing sale process. I want very briefly to address the reply that was filed by the debtors, which we found a little surprising given that we'd already reached a settlement. We're very glad we're here consensually today, but we do stand behind that objection. We have a active committee that takes its duties very seriously. We believe our objection raised important issues, and the committee intends to investigate it appropriately in accordance with its duties under the bankruptcy code. Thank you very much, Your Honor.

Thank you very much. Good morning, Your Honor. Brian Resnick of Davis-Pulke and Wardwell on behalf of the dip lender. I also wanted to thank Your Honor and thank the debtors and the committee for working together with us on the dip. I do believe that this is a fair and appropriate dip facility under the debt. the circumstances not to litigate these issues obviously for another day but we were sort of equally as surprised by the by the committee's objection and a lot

of the statements therein and I understand that they have a job to do but we wholeheartedly disagree with many of the characterizations of the process and you know if and when there's a there's a time for it will be before your honor on those issues okay thank you anyone else well I did have the opportunity to review that the most recent final order. Thank you for answering my questions. And I have no issues entering the revised form of order, as agreed to by all the parties,

and I appreciate them working very hard to reach a consensus today. Obviously, the relief is necessary and warranted, and given the agreements by the parties, it's appropriate. So I will go ahead and enter that order after the conclusion of today's hearing. So I think that leaves us with the BIF procedures order, which I had ample time to review.

I currently have no questions, but I'll ask if anyone wishes to be heard in connection with that relief. I do think there's a missing time in that order. It needs to be revised, I guess, and uploaded for the sale hearing. It's scheduled for May 24th. We have an omnibus hearing already scheduled for 2 p.m., so if you could just have someone change the dates and re-upload the order, that would be great. You don't need to file a certification of counsel for that. Okay, great.

Thank you, Honor. All right, thank you very much. I will go ahead and enter that order. I think it's appropriate, and I appreciate all the parties reaching consensus on the terms of the bid procedures and the timeline for the sale. Look forward to seeing you all at the sale hearing,

if not before then, on a stalking horse. Well, I hope that there's not a hearing on the stalking horse, so that would mean that it would be contested. But regardless, that's my job. So anyway, I hope it's a value-maximizing process, and I look forward to seeing you all at the sale hearing on a good bin. all right with that we'll consider this hearing adjourned unless there's anything else we

should discuss nothing okay thank you all very much