American court hearing recordings and interviews - Season 6. Episode 15. August 30, 2023. In re BlockFi Inc. et al., chapter 11 bankruptcy case no. 2022-19361, audio of hearing held in the BlockFi bankruptcy proceedings pending in NJ, USA #crypto

Episode Date: September 1, 2023

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Okay, good morning, everyone. We will start the BlockFi, I guess BlockFi calendar this morning. Those are the only matters I have on. We are hearing the matter remotely. So the usual rules apply. If you wish to be heard, please raise your hand. And I will do my best to spot you and hear from you. My understanding is the pending motion.

to intervene has been resolved. The JPL's motion to intervene, I believe in order or proposed order was sent. So Mr. Bernard, I see your hand raised. Yes, Your Honor. Richard Bernard, a favorite drinker on behalf of the Joint Provisional Liquidators. Yes, yesterday afternoon, towards the end of the day, we came to agreement on the form of order with the U.S. government. It's been circulated. I don't think the committee has any issue. with it and I know the debtor signed off on a prior version of that form of order. And we've submitted it informally to your honor through your chamber's email, but we understand that there's a more formal process to submit an agreed order.

All right. Ms. Dwarzkin, did you want to be heard? Yes, Your Honor. Sharon Dwarfkin from Brown-Ruddin for the committee. We have no objection to the JPL intervention and no comments to the order that was that was circulated to us and that will be submitted. That's fine. So I'm happy to look at the order, and if there are any concerns, I assume, parties will reach out for the court.

That leaves us with, I believe, two matters that are contested. the motion by the lead plaintiff or proposed lead plaintiff Cameron Wyatt to revise the prior orders of the court with respect to the proposed class action matter and the contested motion to stay the adversary proceeding with the United States pending a determination. of the motion to withdraw the reference. Ms. Chavez, let me hear from you. Thank you. Good morning, Your Honor, Jordan Chavez, along with Amy Furness of Haynes and Boone on behalf of the Block 5 debtors. Good morning.

Good morning. I agree with you, Your Honor. Those are the only two remaining matters set on the agenda. If it's okay with, Your Honor, before we take up those matters, I would like to just take a moment to briefly address the data privacy issue that arose over the last few days. I think that would be appropriate. Thank you.

Thanks, Your Honor. We were notified by Kroll that through a swapping attack on an employee's mobile phone, they fell victim to a data breach resulting in a leak of personal information of the BlockFi creditors, including the name, address, and e-mails and phone numbers, the type of information that BlockFi would have provided to Kroll for the creditor matrix and for servicing purposes. is. Kroll is still conducting a more thorough investigation, but Blockby took immediate action along with coordinating with the committee and Kroll to provide the relevant communications to the affected parties, along with discussions with the U.S. trustee and the relevant regulatory and government authorities. I did just want to confirm on the record that Blockby was not the subject of the attack and that its system is still secure. All right, that's good to hear.

It's frightening that this information is so readily available through such, what would seem, facile ways of accessing it through telephone. It's alarming in so many respects, but I'm glad that the debtor, and all the debtors that are involved in these cases are taking the proper steps. Does anybody else wish to comment on it? All right. Let me turn to debtors' counsel. Is there a preference for which matter to be heard first?

Yes, Your Honor. I think we would propose taking up the green adversary first, which will be handled from RN by Ms. Burnett. All right. Thank you. then let me turn to let me have appearances on the degree on this matter your honor Michael Etkin Lowenstein Sandler

on behalf of the proposed lead plaintiff Mr. Wyatt and with me as my colleague Michael Papandrea as well as Brian Calandra who is proposed

lead counsel in connection with the class action representing Mr. Wyatt. All right. It is your motion. Why don't you proceed then? Thank you, Your Honor. Just a couple of observations at the outset. First of all, we are requesting extremely narrow relief from the existing injunction that was entry back in April. We simply want the district court or courts to be able to rule

with respect to the pending lead plaintiff motions and issue and order with respect to those motions. There have been no objections by the counsel on behalf of the plaintiffs that executed the stipulation. We know that Mr. Gretaxie. Mr. Green's counsel has advised us that they support the motion that's before Your Honor today. In addition, we have not seen any objection by the Creditor's Committee. With respect to the individual defendants who are the beneficiaries of the injunction and have been referenced by counsel for the debtors, there's been no objection filed by them.

And in fact, it's worthy of note that there actually was no declaration filed by any of these non-debtor defendants, the individuals, regarding the so-called impact on them and whether they even intend to try to take a position with respect to the lead plaintiff motions. They have not weighed in at all. You would think, Your Honor, that if there's an allegation that they would drop everything

with respect to their responsibilities to the debtor and focus their entire attention on lead plaintiff motions where they actually have no standing to weigh in at all, it's a bit beyond the pale. Another observation that's important, Your Honor, is the claims that are asserted in the class action. Those claims are claims in connection with the purchase or sale of a security. In this case, the BIAs are alleged to be securities covered by the federal securities laws. and as I'm sure the court is aware, under Section 510B of the code,

those types of claims are statutorily subordinated. So those claims would not be entitled to a distribution under the plan, the proposed plan, and I don't know that whether anyone has even filed a claim against the debtor in the bankruptcy proceeding, the debtors, are obviously not parties to the class actions. Those class actions were filed after the petition date. So there's no impact on the debtors with respect to the class actions altogether. Of course, doesn't that assume that we're dealing with securities?

I mean, that's just not such a given, given the cases that have come down recently. No question, Your Honor. That's an issue that the district court will have to wrestle with down the road. But in terms of what's before you today, if they're not securities, then there are no federal securities claims, and the class actions fail on the merits. So, excuse me. So, you know, that's not a today issue. And if there is a resolution of that issue that the BIAs are not securities,

then there are no federal securities claims. So that's really the bottom line, and your observation is correct. Your Honor, as I indicated, there's a very limited purpose to our moment. motion. But the debtors have put in front of you a parade of horribles that I'd like to address briefly. I know they're addressed in the briefing, but I think it's important to point some of them out. First of all, even dating back to the debtor's opposition to the motion to shorten time, the debtors, who, again, are not parties to the class action, and there are no claims certainly asserted

by our client. We don't know whether there are any other claims asserted based upon the violations of the securities laws. But the debtors take the position that somehow the district courts deciding the lead plaintiff's motions would force the debtors to participate in the class action lawsuits and forfeit their due process rights. Now, those are lofty words, Your Honor, but there's no explanation as to the basis for that kind of perpourality. There simply is no impact on the debtor, and the debtor's due process rights are not put into play by virtue of this court granting the very limited relief that we're seeking.

Second, they take the position back then and in their opposition that we're looking to solve a problem that doesn't exist with respect to representation of putative class members. They claim that the Creditors Committee is already representing these class members. members with respect to the claims asserted in the class action. Well, the problem with that, Your Honor, it ignores the distinction between the status of those individuals as holders of BIAs. And with respect to that status, yes, they are general unsecured creditors and part of the creditors' committees' constituency. but with respect to the subordinated claims that are asserted in the class action,

which may or may not have even been asserted in the Chapter 11 cases, and even if they were, they would not be entitled to any distribution by virtue of that subordination. The Creditor's Committee doesn't represent their interests with respect to those claims. that would be an interest that would be represented by a court-appointed lead plaintiff. And we're just looking to get to that point where there is a court-appointed lead plaintiff who has certain responsibilities and fiduciary obligations to individual class members, regardless of whether a class has been certified or not. and is empowered to take certain positions with respect to the class, again, even in advance of certification.

And Your Honor, what's looming now and why the motion was made is a confirmation objection deadline of September 11th and a confirmation hearing on September 26th. and to the extent the class and their claims in the class action are a need protection, and to the extent that a position needs to be taken, we believe it's critical that a lead plaintiff be appointed. Now, the debtors also harp on the fact that there's no guarantees that the district courts will rule in time. Well, we get that. That's a risk. We don't know what the district courts are going to do and what the orders are going to say. And whether Mr. Wyatt will, in fact, be appointed by the district court. But one thing is for certain. If the district court is precluded from even considering the motions and the relief that we're requesting is not granted,

then there will be no a court-appointed lead plaintiff who's in a position to take a position with respect to the plan and confirmation, whatever that might be. Simply put, Your Honor, Mr. Wyatt, or any lead plaintiff that's appointed would be handcuffed by virtue of not having the imprimatur of an Article III court. in terms of an order appointing him or some other individual to assume the role of a lead plaintiff, order the appointment of lead plaintiff's chosen counsel, and put them in a position to act in the bankruptcy proceeding. But let me ask you, Mr. Atkin, if I were to grant the relief to allow the process to go, forward? Is the logical next motion on short in time going to be, Judge, the district court hasn't decided the motion for lead plaintiffs yet? We need to adjourn the confirmation hearing and this process to allow the lead plaintiff to be appointed and to be in a position to participate at the

confirmation hearing. Is that what's going to follow? Well, I don't know, Your Honor. Thanks for pointing out an option to me with respect to this. I doubt I needed to point that out. But, you know, to be frank with the court, I don't know that that that's something that we would entertain. I think the first thing that we would do if the court were to sign an order and hopefully sign it quickly, allowing us to go forward is to advise the district courts that they can now decide the lead plaintiff motions and point out the schedule with respect to confirmation and try to get them to issue an order quickly.

Your Honor, as you know, I'm somewhat familiar with the fast-moving train of a confirmation process, and the danger of trying to step in front of that train. So, you know, I don't know that we would take that step. I think that our preference would be to advise the district court quickly, advise the district court that timing is an issue and important, and hopefully get a decision out of them. in advance of the objection deadline, which is obviously why we moved on short notice in the first place,

and certainly in advance of the confirmation hearing. And, you know, to the extent that doesn't happen, we would have to weigh our options. Fair enough. Your Honor, this is not an attempt to push the class actions forward to anyone's detriment. there would be no merits determinations here. The individual defendants obviously don't care by virtue of the fact that they did not weigh in at all on the motion, and that they did not even execute a declaration with respect to the factual allegations in the debtors' opposition.

So the issue of whether the individual defendants' hair will be put on fire by virtue of a district court deciding a lead plaintiff motion, I just don't think that there's any substance to that kind of argument. Now, the debtors also argue that, like they pre-examine. reviewed in their objection to the motions of short in time, that the same considerations that would support, excuse me, the same considerations that would support the injunction in the first place are at play with respect to the limited relief that we're requesting. Well, you know, leaving aside the merits of those arguments from Mr. Wyatt's perspective, as well as the extent to which those arguments support a preliminary injunction regarding all other activity in the class actions, which is not the subject of our motion. They certainly have nothing to do with what we're asking the court to do.

And let me just get into that, you know, briefly. Mr. Wyatt inherited the stipulated injunction order. It's not a complaint, Your Honor. It's just a fact. And it does contemplate that the district court, and I'm talking about the stipulated order, it contemplates that the district court can enter certain unidentified orders, and it does not expressly prohibit the district court from a,

entering orders with respect to the lead plaintiff motion. But here we are. We're not taking that position on the merits. We're in front of Your Honor asking for relief. Let's talk about each of the three issues that the debtors raise, the collateral estoppel evidentiary prejudice. I'm lost with respect to that one, Your Honor. I don't know what the relief that we're requesting would have to do with respect to any residue,

or collateral estoppel, evidentiary prejudice on a debtor that's not a defendant in the class action, where there are no claims against the debtor. And even if there were, those claims would be subordinated and not entitled to a distribution under the current version of the plan. So I'm at a loss to know where that's coming from. With respect to the impact on the individual defendants who are still at the company and who are performing services for the company, again, I've raised this issue, the papers deal with the issue.

the idea that they're going to drop everything and focus their attention on the district court deciding these lead plaintiff motions just makes no sense and there's no evidentiary support for it. So again, I don't know how that figures in as a reason for the court to deny the limited relief. we're requesting. And lastly, Your Honor, they focus on their indemnification obligations. Couple of things to say about that. And we do raise that in our reply. Number one, the indemnification with respect to a claim

against these individuals that's based upon the purchase sale of a security is likewise subordinated under 510B. So those indemnification claims, when you look at the code, clearly would not be entitled to a distribution. The debtors may point out, although there didn't in their papers, that the debtors assumed certain indemnification obligations under the terms of the plan. well, there's a carve out with respect to those indemnification obligations, Your Honor, as it relates to gross negligence, fraud, willful misconduct.

Those are the claims that are asserted in the class action. So to the extent that the class would be successful with respect to the claims, those claims on their face would not be carved out of any indemnification obligations. And lastly, Your Honor, with respect to the somewhat newly minted settlement with the committee, several of those key defendants have waived their indemnification claims against the debtor, in any event, under the terms of that settlement agreement. So in terms of indemnification, Your Honor, and of course there is insurance with respect to those claims as well. So in terms of those arguments, Your Honor, there's really no substance to them, certainly as they relate to the relief that we're requesting in connection with emotion.

the debtors also raised in their opposition that the selection of lead plaintiff is complex and time-consuming. Well, I've had the opportunity over the years to be involved in that process where there's an intervening bankruptcy. And I haven't seen that. It's a competitive process. It may be complex as between those. for the role with respect to lead plaintiff motions. But there's nothing before the court that supports the conclusory allegation that the process is complex and time-consuming. And frankly, Your Honor, if the district court believes that, they'll act accordingly.

but they need to be given the opportunity to make a decision on that in the first instance. And that's why we're here. Finally, Your Honor, the debtors take the position that, well, by virtue of the terms of the stipulated injunction, once the plan goes affected, you can do whatever you want. So no big deal. You know, the problem is that there are issues that the plan creates vis-a-vis third-party releases, an issue that this court and many courts have been wrestling with for quite some time. And at the end of the day, if the plan is confirmed without the participation of a court-appointed fiduciary,

on behalf of class members, 30 days after the effective date will come, and those claims that are the subject of the class action could be wiped out or severely eviscerated under the terms of a plan. So, you know, while we appreciate the injunction is automatically terminated at that point in time, that's, that, that's, that, that, That's going to be much too late with respect to that issue as well as other issues that may exist under the plan that may require some involvement by a court-appointed lead plaintiff. So, Your Honor, the idea that there's no harm in waiting until then really doesn't provide. provide what's required and avoid the prejudice that would happen without an appointment by the district court. So with that, Your Honor, we would urge the court to grant the motion and allow us the opportunity to advise the district court that they're free to make a decision and hopefully

they will make it quickly, and whoever the court appointed lead plaintiff and their counsel are, would have the opportunity to weigh in with respect to the confirmation process. All right. Thank you, Mr. Eckett. Let me turn to Ms. Furness. Thank you, Your Honor. The loss is over. One significant issue here.

There are two cases. We have the Green Matter and the Ellis Matter. One is in New Jersey. One is in Massachusetts. Mr. Edgson didn't address it today. They didn't address it on their reply. But consolidation and whether there are two cases that go forward at the exact same time and two different courts based on more or less the same action has to be decided first.

First, the PSLRA says that, quote, if any party has thought to consolidate those actions for pretrial persons or for trial, that have to be heard before the lead plaintiff process. First, sometimes Mr. Eck can use district court, sometimes he used district court, and we believe that this entire issue was ignored simply because it goes back to the original issues that we brought before this court in April of this year. The defendants in the class action purported class actions have every right to participate and weigh in on that consolidation. The TFLRA says any party, federal rule of civil procedure allows any party to address consolidation. That must be heard first.

To the extent it hasn't been filed, it's because this court stipulation allowed the lead plaintiff's motions to be filed and said nothing else. That's where we are. That's where it's stopped. So the idea that there's absolutely no harm here and the harm that we identified in April has gone away now is absurd and without basis. The same concerns that we presented previously, one, for indemnification, and two, for divided times of our offices and directors, still exist today. As far as evidentiary substance on that, we presented that with the original TRO application, Your Honor.

You've got it in the file. If they have to turn their attention to matters such as these, again, in which descendants have the absolute right to participate, they won't be. be focused on the debtors during this incredibly crucial time. We have less than a month prior to the confirmation of the plan. Mr. Edkin talked a lot about the indemnification provision and why that doesn't matter as it relates to the debtor's concern with this moving forward. But, Your Honor, you know this. Mr. White counsel seems to have ignored it. The plan hasn't been confirmed, right?

So to the extent anyone in the officers and directors have waived their right to indemnification in the plan, that's not confirmed yet. And until that is, it is a concern for the debtors. And we're entitled to have the full focus of our officers and directors. As far as what the debtors can do on the lead plaintiffs, or excuse me, as far as what the descendants can do on the lead plaintiff's process. in each of the two district courts again that we're talking about. It's not necessary that this court make a decision related to not.

Instead, we presented the court with cases that clearly say defendants can and do participate in both the lead plaintiff process, whether the plaintiff is adequate and the lead counsel process. Whether these district courts, again, two of them, in both New Jersey and Massachusetts, actually take the take the arguments of those defendants or not is not before this court. They can participate, whether the participation leads the court to review those things or not. Again, it is that participation that deprives the debtors of their officers and directors' time

during a very, very crucial moment in these bankruptcy cases. Mr. Wyatt and the proposed class have demonstrated absolutely no irreparable harm here. It is their duty to come here with good cause. There's no evidentiary basis. You heard, Mr. I can argue that repeatedly as far as the debtors. But again, we presented the evidentiary basis, which is before this court when we came to argue for the TRO and we got the stipulation agreed to by Mr. Green's counsel, Mr. Ellis' counsel.

There's been absolutely nothing presented. No declaration or anything on behalf of Mr. Wyatt or this purported lead plaintiff. There's nothing to show irreparable harm. And again, going back, and, Your Honor, I'm confident you've read our briefing, but there is no standing in this bankruptcy for purported class counsel, purported plaintiffs, in a class action against non-debtors. We presented you, Your Honor, with a Dynagy case. There's another case out of the Eastern District of Virginia that goes to the exact same analysis.

somebody as a lead plaintiff in a securities litigation does not provide any authorization for them to come into the bankruptcy cases. It doesn't provide them any status to come into the bankruptcy case of being a lead plaintiff in one type of litigation is not, quote, tantamount to a blanket consent to any litigation that class counsel may wish to pursue. So they've admitted they have no claims here. There's no place here for someone who has been designated as lead plaintiffs solely in a one of two district courts related to a PSLRA action to come to this court without further authorization, further moving, asking for this court to clarify or to classify a class, certify a class, there's just absolutely no basis. So again, because there's no basis, there's no error. harm that they've shown or can show in this case, especially considering, again, when the last month before confirmation and stipulation by its own terms expires 30 days after confirmation of the plan.

As far as Mr. Atkins' argument that certain of these purported class members have a basis to object to confirmation, they can't. They're more than welcome to Mr. Wyatt, clearly have counsel. and each one of them can come to this court and object to the confirmation in whatever way they feel. It's just not appropriate here for a class action. In addition, Mr. Atkins said that these folks have claims that, quote, could be wiped out or eviscerated. That's simply not true, Your Honor. The plan includes an opt-out.

These folks received the disclosure statement that discusses and executive. explains the opt-out provision of those releases. So if the individuals want to opt-out, they can. It's possible. Mr. Wyatt has counsel. He can do it. I also point the court, again, to the delay that Mr. Wyatt has shown. In April, the stipulation was entered into by Green Council's, Green Council and

Ellis' counsel. The lead plaintiff motions were filed in May and these first waited three months, three months to come to this court to ask for something else to go forward. They asked for it on an emergent basis, simply one month before confirmation. Again, Your Honor, this is their burden. They presented no evidence to you. There is no irreparable harm here. These individuals have the same rights that they have with or without Mr. Wyatt being appointed as class counsel and at the end of the day this harms the debtors because our officers and directors attention will be focused on other matters at a time when we really need to have their attention focused here as

we move towards confirmation in less than a month. Thank you. Thank you. Thank you, Ms. Pernas. Mr. Calandra, I see your hand raised first. Thank you, Your Honor. I just wanted to, as the proposed lead counsel in the class actions, I just wanted to speak to the issues about consolidation that were just raised,

which really are meritless. It's the same movements in both New Jersey and Massachusetts with the same certifications, so the same lead plaintiff is going to be selected in each. The one with the greatest losses which we submit is Mr. Wyatt, and there will be nothing having to do with consolidation that goes forward under the terms of the relief that we're looking for. And it was a nice bit of three-card Monty that counsel was trying to play with the nature of how consolidation must be addressed under the PSLRA. But there is nothing in the PSL array that says consolidation must happen before a lead plaintiff is elected. It's just that if a party wants consolidation, they need to move for it. And I can represent that none of the filers, who, again, are all the same in both actions,

are going to be seeking consolidation under the very limited relief that we are seeking. Counsel for the debtors also brought up the cases purporting to allow people like, people like defendants in the current cases to weigh in on the lead plaintiff motion. As you saw in our papers, Your Honor, those cases are simply not, they're number one, a minority in cases. Number two are not relevant here. There is nothing wrong with notice. There is nothing wrong with the certifications.

And there certainly is no issue regarding loss causation. In the case against Twitter, the defendants pointed out that the proposed lead plaintiffs, the movements could not have experienced any losses because they sold. before the corrective disclosure. Here, everyone held through the corrective disclosure, which was Block Fy's decision to file through bankruptcy. So there is absolutely no role they have to play. And I would suggest if they do try to play a role,

it would be specious because there is just nothing that they can do. And finally, Your Honor, I wanted to say that the debtors emphasize again and again that they don't want their own. officers and directors to be distracted. Their officers and directors are seeking to release these claims. They are focused, at least in part, on their own personal matters in this bankruptcy, and allowing this very small step to go forward would require absolutely no further attention on their part, and certainly no greater distraction or focus on themselves that they've already expressed. Thank you, Mr. Calandra. Mr. Gold. Your hand is raised.

Good morning, Your Honor. Dan Gold from Sherman and Sirley, I represent the individual defendants in this security class actions. Thank you for less to be heard. We did not file a formal abduction simply because the debtors are covering the issues. And duplicative paper did not seem to benefit the court and use the waste of the attorneys to use. We do want to address, we do have a role to play in the lead plaintiff process. Where there are issues, it is appropriate for us to weigh in. And in particular, the consolidation issue is a key one. We do have the two cases.

The lead plaintiffs may not intend to. The plaintiff moves may not intend to move for consolidation. That doesn't mean the defendants do not intend to be so at the appropriate time. What we can't have are two different lead plaintiffs appointed on behalf of the same class, in two different courts. There needs to be a degree of coordination and consolidation between the two courts. The defendants have an interest and a role and important role of play and making sure that that happens.

And what I'm hearing from at least one lead plaintiff movement is that we are now going to be forced to engage with six or seven individual clients to move on an expedited basis to get that coordination and consolidation among the courts. taking away from the roles and then they don't have to play with the debtors. All right. Thank you, Mr. Gold. Mr. Calandra again? Your Honor, that's just simply not true.

If they want to move for consolidation in their papers, they suggested that they would resist any consolidation motion. But there is nothing that defendants need to do with regard to the plaintiff motion in this case because they could only object to perhaps loss causation. certification and notice, and none of those. They don't suggest that they are an issue because they are not. And there won't be any need to wrangle multiple people under the very narrow relief that we are seeking.

It will be the same plaintiff ordered in both cases, and they will be dealing with exactly one lead plaintiff, hopefully. Thank you, Your Honor. All right, thank you. And finally, Ms. Verness? Thank you, Your Honor. Briefly, Mr. Calandra, seems awfully confident in what I think are opinions of what a court may or may not do.

While he thinks that no matter what argument Mr. Gold's clients have, they will fail, that's not for this court to decide Mr. Calandra and Mr. Atkin have, you know, come to the court and said, well, debtors didn't present anything that shows the notice or wrong, or this is not an adequate plan. If it's not the debtor's job, the debtors aren't but defendant in that case. we're not required to do that. The point is, Your Honor, Mr. Callander cannot absolutely say that. He can't guarantee that the court won't allow the defendants to do something.

In addition, you also have not heard, in which we do believe is significant, that you pointed out. They have not committed to this being it. This is not it, Your Honor. Simply doing this is not going to be the end of this. The reason they've asked for it, the reason they think they have irreparable harm is that they can come in, again, with a month prior to confirmation. ask this court for further things, for example, delay of the confirmation hearing. And again, Your Honor, there is no irreparable harm. Each of these individuals in this purported class can do what they want to do to protect

themselves. The disclosure statement allows, gives everyone the information, the plan allows an opt-out for the releases. There's no irreparable harm hearing, Your Honor, we would just respectfully request that you deny the release requested by Mr. White. All right. Thank you all. Your Honor, can I make one last point? And I apologize for the brief for all.

But Ms. Freness keeps talking about irreparable harm. I think the standard is a good cause. And injecting an irreparable harm standard into this is just not correct. We believe the good cause is obvious, given the timing. We've set it out. If the individual defendants wanted to weigh in about consolidation, they should have filed papers. They didn't. If they want the cases consolidated, they can come in and file a motion tomorrow for limited relief from the injunction.

That's up to them. But as Mr. Calandra pointed out, consolidate. is not the issue before the court, and none of us can presuppose what the district court will say or do with respect to the lead plaintiff motions. This is all about giving the district courts the opportunity to weigh in. And what they do, what they say, what orders they entered, and when they, what orders they enter, and when they enter them,

that's going to be up to them, and we'll have to deal with the consequences of that. All right. Thank you. Thank you, Mr. Reckin. Well argued. I appreciate the movement's transparency and candor in coming to the court. It's clear the purposes that would be served by the court. court modifying the stipulated injunction and order that's already in place.

And I agree with Mr. Ecken, the standard is cause. Is there cause to do so? Where I disagree is that I don't find cause. I don't find any change in circumstances from when Mr. Trey Green and Mr. Antony Ellis, from pronouncing correctly, stipulated and agreed that for essentially an exchange, the opportunity to file the motions in advance of a deadline to do so, and how important that was, and the acknowledgement that their efforts cannot and should not impair the efforts of this debtor to reorganize. Those efforts included a hotly contested

mediation, several hotly contested mediation settlements proceedings in front of mediators, also in which the court took part in, which has not been completed because there has been no confirmation of any plan yet. The agreement that Mr. Green and Mr. Ellis has, acknowledged and through their stipulation was to allow the process to go forward not to restrain or handcuff the necessary participants so that it would impair and the insiders that it would impair the reorganization and we are on the cusp of a plan I don't know if the plan's being going to be confirmed I don't know what the voting is going to be but we are on the cusp of having that, I believe it's scheduled for September 26th.

Certainly the prospects of a plan that would impact the claims of Mr. Green and Mr. Ellis were contemplated when the stipulation was agreed to. There is no prejudice to either those dependents or, in this adversary or the plaintiffs, or Mr. Wyatt, in participating further in the Chapter 11 process without a court-appointed fiduciary on their behalf. Indeed, that's where I disagree to the language that's been in the brief, that class members should have a court-appointed fiduciary for purposes of this Chapter 11. These individuals, these, these, these, class members, these proposed lead plaintiffs, have counsel, and even without counsel.

They have the ability to represent their interests and take issue with any aspects of the proposed plan that impacts and pairs their rights. Indeed, and all counsel knows that there are opportunities apart from having a court designated fiduciary as part of the class, creditors often form ad hoc committees and retain counsel to get themselves involved in the case. And there's no surprise that we're at confirmation. That was contemplated in the three months between the time the stipulation was entered, that that was the opportunity.

I don't find cause. I understand that Mr. Ellis and Mr. Green may consent to the, motion to modify the stipulate injunction, but that would operate as a backdoor for them to agree and allow another party to come in to get more relief than they requested in the stipulation. And again, I see no prejudice. It's not an issue of irreparable harm, but the plan is an opt-out plan, but more importantly, these plaintiffs in the class action have an opportunity to engage with this court with respect to the merits of the plan, and the process in the class action can proceed along the lines of the stipulated injunction.

What I will do to make sure, because we don't know what happens on September 26th, if there are other delays. And I would agree that the class actions can't be delayed interminably. The debtor is supposed to have an opportunity to confirm a plan. They have that opportunity on September 26. So I will carry the motion to September 26. And to see if it looks like the plan process is being retarded, if there aren't votes, or if there are certainly questions as to whether there is a viable plan, then I think the court should take another look at letting these plaintiffs proceed in either of the courts or where the class actions are pending. But the agreement in effect and in the court's view, the proper basis to enter the stipulated

injunction haven't changed. and the circumstances haven't changed. And the potential impact and the potential, the potential impairment of the ability to pursue a reorganization and the mechanics involved in reorganizing warrant, denying, well, not granting the relief today, but simply carrying the motion to September 26th. So I'm not going to enter an order.

Unless plaintiffs wish, well, it's move and it's wish for me to enter an order denying it. My inclination is to simply carry the matter to September 26th. Mr. Ecken, does that, do you prefer a denial? I'm trying to save you time to having to refile in case the circumstances change. Well, I understand, Your Honor, and we appreciate that. and we'll live with carrying the motion to the 26th. All right. Thank you, counsel.

Thank you. You're welcome to stay on for another interesting argument, or you may be excused. Thank you, Your Honor. Thank you. Thank you, thank you all. Thank you, Your Honor.