American court hearing recordings and interviews - Season 6. Episode 30. September 11, 2025. In re BlockFi Inc. et al., chapter 11 bankruptcy case no. 2022-19361, audio of hearing held in the BlockFi bankruptcy proceedings filed in NJ, USA #crypto

Episode Date: September 16, 2025

For other filings on the BlockFi chapter 11 bankruptcy docket see https://restructuring.ra.kroll.com/blockfi/Home-DocketInfo

Thank you, counsel. Thank you. Number 13, Christopher Bates. Motion to dismiss is carried to 925 at 10. Number 14, Laura Poulson is a motion to attend the time to object to discharge. It is unopposed, and it will be granted. And number 15, Milagros Caprio. Motion to dismiss has been withdrawn by the trustee.

All right. That takes us back, I believe, just to block five. Unless there's anyone else on the call on another matter. All right, silence is good. Let me have appearances, please, for the Wind Down Debtor. Good morning, Your Honor, Daniel Stoltz, Genova Burns, Local Counsel to the Wind Down Debtor. Good morning, Your Honor, Kenneth O'Brien, Counsel to the Wind Down Debtor. I'm joined by my partner, Tristan Axelrod.

Welcome. Good morning. And I would also note we have Matt Manning, who is our replacement declarant for the motion as Mr. Meiji was unavailable. We submitted a replacement declaration last night that mirrored Mr. Mejee's declaration. I did see that. Thank you. Good morning, Mr. Manning. On behalf of the U.S. trustee. Thank you, Your Honor. Lauren Bielski with the Office of the United States Trustee, really just observing today's hearing. All right.

I see creditor of counsel and his client. Good morning. Mr. Malgaly, you want to enter her appearance? Yes, Your Honor. Thank you very much. Joe Magelhays, on behalf of John Venturgin Jr. And Matt Eckert Siemens, thank you, Judge. All right, and welcome, Mr. Ventubesian.

All right. I have read the submissions and the objections. It is clear that two of the objectors have fallen by the wayside as a result of Third Circuit activity. Mr. Wynn's case was dismissed on appeal to the circuit by the circuit, and Mr. Gero's, Mr. Jero was withdrawn his objection, and the circuit also affirmed the district court with respect to his pending appeal. And we still have activity, obviously, on Mr. Van Tubergens matter, just to advise the parties I'm about probably when either today or tomorrow to docket an opinion on the each issue. but I will wait for that. Leave you all in anxious anticipation.

But with respect to the motion today, I have just a couple of questions at the outset. And then I'll let counsel proceed. First, I guess, Mr. Alette, do you want to try to direct it to you? Or is Mr. Axelrod? Yes, Your Honor. For the record, Kenneth O'Ladde of Brown-Rutnik.

Yes, Your Honor, there were a couple of customer objectors in addition to Mr. Van Tuberkin. Correct. I believe that we have, I don't know that we got any of them to resolve it, but to be clear, as we said in our reply, nothing about the allocation motion affects the right of any customer to receive their distribution. anybody whose distribution is in flight, it is imminently going to be sent, or they're still doing the required KYC process. Nothing about this affects that, and the distribution methodology lists all of the reserves that are being held for those customer claims. Really, the only thing in there about those is just a warning that the plan administrator has been waiving certain timelines in the plan. Under the plan, if you don't collect your distribution within six months, you forfeit the distribution.

However, we have been willing to reissue a distribution up until, shortly, before we closed the estates. And we wanted to warn people that that window is closing. But, you know, the principal issue was the allocation of the remaining value, because when the plan was drafted, I don't think anybody seriously considered that we would be here today, having been able to pay all customer claims in full. And so the plan was a little bit ambiguous on exactly how do you implement the voluntary subordination of FTCS and certain regulators to all customer claims in a case like this where they're subordinated to creditors of another entity. that has not been substantially substantively consolidated. And so we wanted, because this is a significant amount of money, we wanted to do this openly on notice

to make it very clear how and why we are allocating the remaining value to block by lending and not block by ink, because there are slight differences in the subordinated claims of both entities. Happily, there have been no objections on that point. I believe Mr. Van Tubergen's objection, you know, made some references to it, but I didn't understand that to be objecting to the overall principle of, you know, the surplus value being distributed as subordinated creditors goes to be creditors of lending, not ink. and on that I would ask the court to enter the declaration of Matthew Manning as the evidentiary basis for that allocation. All right. We keep getting on the chat and I'll ask Mr. Humphrey to cease doing that.

Mr. Humphrey's concerns that he has not been paid on his crypto. I don't know if Mr. Humphrey was on the line when you indicated that this motion will not prevent anybody who's waiting on a claim based on continued processing issues. It will not prevent them from getting paid, but it was your intent, and you can reiterate it that parties understand they have to complete all the paperwork. and the extensions and the waivers of the time to do so will soon come to an end at some so that it's not being ended by this motion, but customers who are still waiting for their distributions, who are entitled to distributions, and that's the key. If they're entitled to distributions, they have to do so. We've all done it.

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In compliance with the requirements to complete all the necessary paperwork, Yes, Your Honor. And for Mr. Humphrey, I will confirm again that nothing in this motion affects the right of customers to receive their distribution. That said, Mr. Humphrey had asked you to email me at K-A-U-L-E-T at Bradbrunuch.com. A number of the people who have said they never got their distribution. We made several attempts to get them their distribution that have failed. So I search my email. I don't believe I have an email from Mr. and Mrs. Humphrey so that I can't pull up the details.

But to the extent that they have an entitlement to a distribution, we'll get that done. Maybe you can have somebody put in the chat your email address for Mr. Humphrey. And as far as Mr. Manning's declaration, is there any objection to it coming in? As evidence, all right, the court accepts Mr. Manning's declaration, has direct testimony in support of the pending motion. Mr. All right, I have a question, and then we'll get to the heart of the issue.

My understanding, and I'm struggling round numbers, the dendor has, the whine-dow debtor has roughly $177 million. dollars. It's putting in reserve roughly $38 million for administration. So I have two questions. What happens under the plan with respect to unclaimed funds? Where do they go? Are they going to the subordinated creditors? Are they being reissued to, well, everybody else has gotten 100 cents? So I would assume subordinated credits. And also, to the extent the funds that are being reserved, the 38 million, not used up. Where do the leftover funds go? And how does this process work if this case is closed? Thank you, Your Honor. So you are correct. Unclaimed funds at this point would go to subordinated

creditors. Our view is that the same principles of allocating surplus funds to lending mean that any surplus, any unclaimed funds should be returned to lending for distribution to subordinated creditors. As to how any leftover funds in reserve would be allocated, we're going to propose a solution to still let funds be transferred to subordinated creditors when we move for final motion closing the cases, but we haven't done that yet. And we're going to finish putting all customer distributions in flight before we moved close the estates. All right. Thank you. So I have a question actually for Mr. Malgahez.

I understand your client is concerned about there being no set aside, no reserve in the event you're successful on appeals. The question I have is what amount should be reserved? I know there's the issue and it was brought up in the litigation over the Eath. The principle upon which distributions have been made to date is that the parties are limited to what's required under 502, which is to fix the claim as of the petition date, and therefore the dollarization of all claims has been fixed based on the values as of the petition date. So if I were, and I'm going to listen to arguments

or additional arguments, but if I were to mandate a reserve for your client in the event is a successful appeal, what amount should there be a decision? be. Judge, first, I know it's a technical matter. Everyone's frozen on my screen, but I'm hearing audio. So I take it.

You folks can hear me speak right now. We can hear you, and nobody seems frozen on our end. Great. That's great. That's great. So, Judge, I mean, the most direct answer I could give you would be the delta of whatever, if anything, and we pray you award something

in connection with the remanded eth issue. So it would be the delta of the facial amount of the claim. 10 million minus that. In our papers, Judge, both in response to the estimation motion and the most recent papers we filed, we asked for whatever reserve the court would be inappropriate. And we weren't trying to be cute with that.

We just know that the court never reached the issue of damages during our first go-round before your honor. We argued for liability. And then we had some damages, calculations, asked to the overall claim featured in our arguments, but the court never reached that. And I understand the position as to that the crypto should be valued as of the petition date. We, analyzing the proof of claim, we attempted to argue that Mr. Van Tubergen's claim,

since those funds weren't kept in those specific accounts, that it should not be subject to that. But the court has not ruled on that specific issue. I know it's ruled on the issue at large as to other creditors. I don't know if that binds my client on that issue in terms of the date evaluation. I know my client feels incredibly strongly that it should be present-day evaluation. But as I said, Judge, to me, the cleanest way, and it can easily be done, given the ample funds held by the Block 5 lending estate, would be to simply take the facial amount of the claim on appeal, $10 million, to debit whatever, if anything, the court awards

in connection with the missing ETH issue, and then have the reserve be for that, Delta. All right. Let me turn back and we can get to the heart of the objection, I guess, because the court doesn't have an objection to the relief being sought under the motion in any respect and as to all other creditors

I want to focus in we're going to put aside Mr. Ventubogen but given that the other appeals seem to absent certiorari to by the Supreme Court seemed to be going nowhere and I've expressed

my concerns with the relative positions during our mediation on Mr. Van Tubergens claims, and I indicate that I will be issuing an opinion probably later today or tomorrow. But Mr. Olet, let me go back to you, and I ask you to address a concern that I have in that I'm uncomfortable under the divestiture rule with a pending appeal. I certainly, and that rule has allowed for additional bankruptcy court, when there's an appeal taken from a bankruptcy court decision, it's a judge rule of, it's a prudential rule that says this court doesn't have

jurisdiction and shouldn't interfere and pair pending appeal with further court order but in a bankruptcy context, certainly further administration of the case has been allowed to continue, and other orders have been entered that are collateral to the issue that's subject to the appeal. But it seems to me in this case that if I were to estimated zero and allow for the distributions to all other creditors and basically moot out the pending appeal, I'd be doing exactly what I shouldn't be doing. absent a final resolution of the appeal. How can the relief comport with those restrictions? Of course, Your Honor.

So let me just take a step back. There is one point that I agree with Mr. Maggley's on, that there is a component of his claim that has not been resolved by Your Honor. And we had hoped that that would be resolved by now. It isn't. And so we clearly need to keep. reserve for that. And so the issue is really what kind, and I think we say in our papers, if Your Honor awards him some amount of money on that, we're going to pay it and be done with

that portion of his claim. The issue is what do we do about things on appeal? And there, Your Honor, I would be very specific that we are not asking, Your Honor, to estimate anything at zero. the plan does so automatically. And I would know Mr. Van Tubergen did not object to the plan and that this has already been upheld on appeal because Mr. Jero, as you'll recall, appealed your order overruling his and Mr. Van Tubergen's objections to the distribution notice about a year ago. And, you know, I was surprised to realize this was a year ago,

your honor said, there's not a motion to stay pending appeal before me. And there has, you know, a year has passed and there's still not a motion to stay pending appeal in front of your honor on the portion of Mr. Van Dubrin's claim that is estimated at zero by virtue of the plan. And I think it's important to go back and look at the plan because it's very clear that any disputed claim that is subject to appeal shall be deemed to be estimated at $0. And so nothing in the allocation motion asks Your Honor to estimate Mr. Van DuBring's claim at zero because that's already happened.

What it asks is at the end, it says unless ordered otherwise by the bankruptcy court. And what our motion submitted, Your Honor, was we've been at this for a very long time, Your Honor reminded everybody a year ago that you've got to do something if you believe that assets should be held up based on your appeal. And to go back to what we argued a year ago, the plan does not give a standard by which your honor should rule on what that alternative estimation should be, but that we submit that it should be essentially a stay pending appeal standard. because that is what is being in effect sought that the order disallowing Mr. Van Tubergen's claim should be stayed such that, you know, on appeal.

So that and, you know, the fact that Mr. Van Tubergen didn't object as a result, I think, to the plan determines this issue because it's a very reasonable provision to put into a plan. it's for the benefit of all creditors to be able to proceed as quickly as possible to getting funds put out. Somebody might, you know, lose out because they are in Mr. Van Tuberan shoes. We've all done it. Stuck our fridge with good intentions, only to sacrifice nutrition for convenience. Keep your body and mind nourished with whole-body meal shakes from Kachava. It's got 25 grams of protein, 6 grams of fiber, greens, and so much more. But it actually tastes delicious.

Try one of Kachava's indulgent flavors today. Shop now through December 2nd to get 30% off your first purchase of two or more bags. Go to Kachava.com and use Code News. That's KACHAVA.com, code news. Point of the plan, you don't know who's going to be losing out on appeal rights. It's very similar to arbitration. People agree on arbitration all the time because you don't know who's going to win, but you know you'd like to spend less on lawyers.

so why not do it in a quick process? And this also comports with the bankruptcy code because the bankruptcy code is specific that estimation is mandatory. It's not even option. It's mandatory. The court shall estimate a claim where failure to do so would unduly delay the reorganization.

And so even if the plan hadn't provided for this automatic estimation, we submit that estimation here would be not only appropriate but mandatory because it will unduly delay the reorganization by holding up the completion of these cases and by what we're probably looking at maybe two years at this point of appeals. Mr. Van Tubergen filed for reconsideration of your order. That was denied so appeal in the district court is filed for reconsideration of the district court appeal. Then we go up to the Third Circuit. We don't even have an appeal in the Third

Circuit yet. This is going to take a very long time, and that's exactly what Congress sought to prevent by passing 502C and making it not merely optional, but mandatory estimation occurring in these circumstances. So what I would submit as appropriate, Your Honor, is that, you know, We will not distribute the money on Mr. Van Tubergen's claim, or we will reserve money for Mr. Van Tuberin's claim that is under submission, Your Honor. But we submit that the plan is mandatory, that not only are we entitled to hold no reserve for his claim pending appeal, but we're not supposed to, and that he needs to file a motion, and I'd submit that it would be the same. standard for a stay pending appeal to change that.

He's had a year to do that. He hasn't done it. If Mr. Van Tubergen doesn't get what he'd like in your order that will come out, then we can give him a three to seven business days or three to seven days to seven days to seek a stay pending appeal before we distribute help. those funds. But at the end of the day, it's been a year. And not only did your honor say, there's not a stay pending appeal in front of me, but that was reiterated by the district court when the district court specifically upheld keeping no reserve against Mr. Jero's claim.

Mr. Jero's claim that was disallowed is basically the exact same kind of claim as Mr. Van Tupin's. no meaningful difference why it would be acceptable to reserve zero on Mr. Jero's claim that's pending appeal while not for Mr. Van Tuprigan. Given that Your Honor is going, said you hope to have an opinion by Friday, it may be a moot point how much we should be reserving if it's the one million, little over a million dollars that we submit is the only amount of his claim before you, versus This is the $8 million that I believe he's put in his papers, but that's how I would suggest that we proceed on that particular issue.

But I submit, Your Honor, that the plan and the bankruptcy code not only make it appropriate but mandatory for Your Honor to permit the estate to finish the liquidation. All right, thank you, Mr. Online. Mr. Maggallis. All right, thank you, Judge. So I believe that the unless otherwise ordered language in the plan is the only way that plan would have been confirmed, because to have estimated those claims finally at zero is absurd, given where the case was, and given that claims litigation was ongoing.

So I think that, again, unless otherwise ordered by the court leaves all issues on the table and gives us a free way to do what we need to do, and as to other potential law of the case, you know, I've looked over the order overruling objections of George Garrow and Mr. Van Tubergen in approving notice of disputed claims reserve. I've read that over several times. It's docket number 2389. Yes, the objections were overruled, but essentially as I read it, it was to, it did not grant us what we wanted at the time, but it still allowed us to live to fight another debt. I don't believe it foreclosed anything, and it's permitted the proceedings we have today. And I think the proceedings we have today and also the estimation motion, they are proper avenues, the proper freeway, to address some of the relief that Mr. Van Trubridge in seeking. The argument regarding a stay, I believe, is respectfully inaccurate and also a red herring.

Because first of all, we did seek a stay. We saw it by way of docket number 2142, which was our, it was our, it was. are, we didn't call our motion for reconsideration because we get into this, you know, the language issue judge, but that's what it was. It was a motion or post-order relief. And I'm looking at the table of contents on, yeah, on page 22, we began our argument seeking a stay. And so we did package that request within that motion. Now, in your orders, in your judges, In the court's order sustaining the objection, the court noted that it wasn't reaching the issue because no notice of appeal hadn't filed. So that's why the court didn't touch upon, I suppose, the stay relief request.

But that stay relief request was then made to the District of New Jersey. We filed a motion there. It's an individual motion for a state of relief. But then there, the court didn't rule upon that before coming down with its in-part referments in part remand, and therefore it was mooted there. So I think Mr. Venturigen, you know, soundly twice requested a stay. But to me, that's a red herring because upon the remand, we all had a discussion about how we could see the procedure unfolding. We discussed the estimation motion, and now we have these proceedings, which I believe flow from that prior notice

of disputed claims reserve. So I think procedurally, Mr. Vantirman is on all four is to request what's being requested. And I think it's a common sense request, Your Honor. If I may briefly, because our overall theme judge is very much, as Mr. Allette said, we do believe that they can proceed 99% in the fashion that they want. We're just saying that one percent, that's Mr. Van Tubergen, the last man standing. As Your Honor noted, you know, he has appeal rights that we believe would be, it would be unfair, among other things, to cut off those appeal rights.

They can easily be accounted for, given the assets held by Blackfile lending. I don't see why we're in such a rush to give the money to the FTX estate. I understand. Because I'm not trying to be outrageous. That's one thing I want to do very careful about. I want to make sound legal arguments and common sense arguments that I think resonate well before this court. And so we all know what FTS was in the headlines for. We all know that it led to a lot of cascading effects that we believe did wind up hurting people like Mr.

Mantubrigan. We don't have to get into that here. But to say that we have to be in such a rush to fork over $177 million to FTCs while Mr. Van Tugin is fighting for his life effectively in the appellate process. To me is absurd. And it's further absurd when you have $37 million being held in reserve for continuing administration. With all respect to Mr. Alet, he's done a great job for his client in his case, obviously. How quickly do we intend to burn through, not he, whomever takes the reins here,

how quickly do we intend to burn through $37 million in admin? Because if we're saying that Mr. Ventubergens' appellate claims are going to last two years, Well, then certainly a portion of $37 million can be put aside for whatever happens, whether before the district court or stuff is still pending or the circuit of appeals. So I don't see what the rush is to cut him off at the knees. You can still go forward with the overwhelming majority of the machinations that are necessary to wind down the estates and still look after Mr. Ventuvring's due process rights. And look, I'd be remiss if I didn't mention the substantive consolidation issue.

I'm just going to say right now, because again, I'm not trying to be outrageous. I didn't read it as a distinction without a difference in the papers because in paragraph 10 of the, because it was a little foggy in the motion itself. So in docket number 2643, I know that the wind-down debtors, the main motion before you wrong, Judge. I know that the wind-down debtor spent some time on this issue, the characterization issue in terms of, I suppose, the distribution to BlockFi Inc. We weren't trying to get in the weeds with that. We were just saying, Mr. Van Tubergin is a proper creditor of BlockFite lending. There's $177 million in tribute to the estate. However we get there, he should be taken care of

through some reserve. Given a supplemental filings, I do feel compelled. And we, and we, didn't object to them being allowed in the record, Judge. We're trying to move this along. I get it. But allow me at this point to just, you know, quote paragraph 10 of docket number 2660, it says, to address this issue and fund customer distributions, the plan administrator upon the advice of its professionals, including M3, directed the transfer of distributable assets primarily held at BlockFi lending, which had a surplus following its customer distributions. to BlockFi Inc, which had a deficit of distributal assets available for customers. To me, that can't be read as a characterization issue that has to be read as money going from one pot to another pot.

And therefore, when you look at paragraph 9 of the same declaration, it says this created a practical problem. In some, the debtors were not substantively consolidated, and each BlockFi entity possesses. certain assets. And it continues. Well, that's not a fractal problem. That's a legal problem. Because we know that substance consolidation is a far cry from procedural consolidation, i.e. joint administration. And again, we're not trying to throw, you know, a grenade here on this issue. Again, that just supports the notion that the Block 5 lending estate is the rich estate. And if we have $37 million for administration to conclude, I'm sorry, to go on after this, then surely money can be put aside from this event too region.

Because it's not as if we're saying we're closing up shop and everything's done. The sudden substance of the motion is that we're going to somehow wind down these estates, but there's going to be a life after. And for that life after, we need to pack our car with $37 million. So to me, it's crazy to think that you could load the cars, so to speak, with $37 million, drive away, close this estate, and then cut off appellate rights. There's still a motion for a hearing pending. So that's my opinion, Judge.

All right. Thank you, Counsel. Mr. Orlett, anything in response? Yes. So first, look, I still don't understand why Mr. Magalese is talking about substantive consolidation. This is a issue to implement a specific contraction. agreement with essentially with certain subordinated creditors of blockfile lending who agreed

to be subordinated to all creditors. There's no dispute that there is assets available at blockfile lending. In fact, that's what the plan administrator is seeking to confirm here. So, you know, I just frankly don't understand why that is coming up. As to the 38 million, that's not there for. legal fees. There's potential tax filings that the estate is still open this year. There is all sorts of movement in value of assets that potentially makes, you know, we have to keep a reserve in case we owe the IRS money. There was a settlement with of the litigation that the

the state had against D&O insurers. It was merged with a settlement of a class action against certain directors and officers where that proceeding, where the approval of that settlement was significantly delayed in the securities class action and only recently got preliminary approval. But it leads to a problem that all of the information that we will be getting rid of when we close is information that the plaintiffs and defendants might need should that settlement fall through and it doesn't look like the settlement will get final approval by the time we would like to close. It's things like that that are driving the need for reserves. But the point absolutely,

and I want to be very clear so that there's no confusion, the absolute point is that we would like to cut off Mr. Van Tubergen's appeal rights because waiting two years does not comport with the requirements of the plan or the bankruptcy code. Mr. Van Tubergen has had his day in court in this court. It's had his day in court in the district court. And it is a well-understood feature of bankruptcy. We've all done it. Stock our fridge with good intentions only to sacrifice nutrition for convenience. Keep your body and mind nourished. with whole-body meal shakes from Kachava. It's got 25 grams of protein,

six grams of fiber, greens, and so much more. But it actually tastes delicious. Try one of Kachava's indulgent flavors today. Shop now through December 2nd to get 30% off your first purchase of two or more bags. Go to Kachava.com and use code news. That's K-A-V-A-V-O-C-N-N-N-U. It occasionally appeals get mooted. It's the whole equitable mootness doctrine where the most

significant thing in Chapter 11, the confirmation of a plan, can often some appeals be mooted by the plan going effective. And so where this court, where appeals courts have upheld repeatedly that you can, in fact, lose your appeal rights when the underlying issues get mooted if you did not seek and obtain a stay pending appeal. It's how the bankruptcy code is supposed to work. As for the stay pending appeal that Mr. Van Tuberin requested and Mr. Magli is referred to, that's from February of 2024, it's a year and a half ago. It was denied. It was denied before, Your Honor, before we had the whole issue over the previous reserve amount. To the extent that Mr. Van Tubergen wanted to file a motion saying, here's what reserve, you know,

I want to overturn the estimation of the disputed portions of my claim at zero. It should have been filed sometime between, I think it was, Your Honor said that on September 6th of last year and today, September 11th of this year, over a year later. And instead, what we have is a request for a reserve in an amount to be determined by your honor. I don't know what the plan administrator is supposed to do with that. The plan says zero. There's no argument for what would be an appropriate reserve because no motion was filed. And so, Your Honor, I would submit that the only appropriate reserve is zero.

And the actual relief sought in the motion, again, was not to estimate the claim at zero because that's already done. But to say, you had enough time, the time to file new motion. seeking a new reserve is over. All right, Mr. Magales. I'll be very brief, Judge. I have to take umbrage that. We discussed the concept of the wind-down debtor's estimation motion being a vehicle to try to hash out some of these issues.

Now, I understand that motion has not been ruled upon yet, but the, you know, Mr. Arlette's going along on what I view as procedural quibbles after we've shown that, yes, we did seek a stay. But that's not even, I don't want to be discussing that because we can get to the heart of issues like the court is right now. But to suggest that there was not some mechanism in vision to address this, we all hashed out that the estimation, their estimation motion would be that view. And, you know, I appreciate them finding, a filing this additional motion in part pursuant to the prior notice of disputed claims reserve. But I don't understand the point. These issues are properly before the court, and the court has sufficient discretion to award the relief

requested. Now, it might be mercurial in some sense, because I understand, Judge, we did say, as the court may deem appropriate, we have faith and confidence in the court, and we're comfortable at that. And on the record, I've said today what it could be, but, yeah, I don't want to say the procedural arguments. I don't know where we're going with those, the support of equity, and we discussed the potential means of resolving these issues in good faith, and we're here now. All right. Thank you, counsel. Courts facing an issue here where it's been asked to approve a pathway which will, in effect, moot out future appeals.

Now, Mr. Magalie is on behalf of his client, Mr. Van Tuprigan, has argued and asked for this court to exercise its equitable powers under Section 105. It is, in this court's view, not equitable to have Mr. Van Tubergen's ability to pursue his appellate rights mooted out at this juncture, where the relief sought. by the wind down debt it could be accomplished almost incompletely and still provide some avenue of relief for Mr. Van Tubergen. By the same token, it is not equitable in this court's view to have creditors, whether they're subordinated or not, take on the costs of having Mr. Van Tubergen continue to

any of his efforts to tilt that windmills in this court's view in the appeals. Let me be clear and avoid any guessing, guesswork by parties. Mr. Ventubrigan is not recovering on his east, in my opinion. All right, it'll come out and it will advise why in the legal and factual basis for my denying belief that he has requested in finding that there is no missing Eath at all. But that doesn't end the inquiry or the problem that we're facing. That just makes it makes it a larger number for which Mr. Ventrubrigan will continue

to his appellate efforts to recover because he won't have any funds in hand that reduced the amount that is still seeking. I am concerned that this court would be acting in a manner that violates the divestiture rule that courts operate under in taking actions that impede and impair the appellate process. So I am going to grant all the relief requested in the motion with the exception pursuant to the authority I reserve myself in the language of the plan that provided for unless otherwise ordered to mandate that there be a reserve. The wind down did is already reserving $38 million or so.

Several more millions of dollars in reserve won't have an impact. You could still make, the Windown administrator can still make substantial distrable contributions to SEC and FTX and other authorities, what I will require is that the amount set aside from Mr. Van Tubergens' claim, it should act almost like a wasting insurance policy in that any fees incurred by the wind-down debtor in contesting the appeals should not come from other creditors. That's not equitable either. The rest of the creditors shouldn't bear the cost. of Mr. Ventubergen continuing to pursue his appellate rights when he's had a fair opportunity at initial appeals so that the wind-down debtor estates costs in defending these appeals will come out of that set-aside amount. The question becomes, what is the proper amount to be set aside? the $10 million request in the proof of claim is of no greater validity necessarily than the, actually had less validity than the zero estimated amount that I've already fixed. So to say put aside $10 million has no basis, but no one has given me a sufficient factual basis to decide how much is fair to set aside.

side. Yes, the court did assist in trying to mediate. I have a sense of where the parties could have gone in mediation, but that's not recovering an appellate rights. But absent any true way of fixing a claim, a set-aside amount, that is not simply pulling a number out of thin air, that's exactly what I'm going to do. is pull a number out of fit air and ask that the whined-down debtor set aside $7.5 million to cover any reversal on appeal and allowance of claim. We've all done it. Stock our fridge with leafy greens and good intentions, only to have our future self-sacrifice quality nutrition for the convenience of takeout. Keep your body and mind nourished all day with a whole-body meal shake from Kachava. It's got 25 grams of protein, 6 grams of fiber, greens, and so much more.

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Code News. Mr. Ventubergen can achieve through his appellate rights, but also to cover any of the wind down debtors costs in defending those appeals. I would urge the parties to try again at reaching a sensible number in settlement. But I'm issuing this ruling based on the court's concern that there should be some equitable treatment of both the wind down debtor and Mr. Van Tubergen as he pursues his appellate rights. without harming the subordinated creditors further or anyone else. And I think this is the best the court can come up with. So I'll respond to any concerns or inquiries.

And let me make sure that this is clear. This is without prejudice to the wind down debtor coming back before me. Should things, should events develop that require the court to reconsider, maybe certain outcomes on the appeals. And the same for Mr. Venture, Bridgen. As long as there's additional funds on hand, he can ask me to reconsider the fixing of the amount. But there has to be a reason.

So with that, all the other reliefs sought, and as outlined by Mr. Manning and his declaration, can be accomplished. And Mr. Aled, I'll let you submit a proposed form of order. Thank you, Your Honor. All right. Mr. Magley, is anything else on your end? Obviously, Judge, we're just on the edge of our seat to read the ruling.

I don't want to push the court. Could you give us the preview, like the trailer, Judge? I think I did. Your client loses, unfortunately, from your perspective. And it'll be out in a day. All right. Thank you. Thank you.

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