American court hearing recordings and interviews - Season 7. Episode 1. August 9, 2023. In re Yellow Corporation et al., chapter 11 bankruptcy case no. 23-11069, audio of hearing held in the Yellow Corp. bankruptcy proceedings pending in Delaware, USA, #trucking

Episode Date: August 25, 2023

For court filings and other information about the chapter 11 bankruptcy proceedings, see: https://dm.epiq11.com/case/yellowcorporation/info For news see: https://www.costar.com/article/2060186871/old-dominions-15-billion-bid-for-yellows-truck-terminals-sets-stage-for-upcoming-bankruptcy-auction

Good afternoon, all. This is Judge Goldblatt. We are on the record in Ray Yellow Corporation, which is case number 23-11069, as well as the various affiliated cases. We are proceeding this afternoon by way of Zoom. So the courts, my preference in terms of Zoom, hearings for what it's worth is that I ask that counsel leave your microphones

muted unless you're addressing the court that counsel introduce yourself for the record each time you address the court and finally my own preference is if folks would leave their cameras off unless you're either addressing the court or wish to be recognized not that I'm not happy to see everyone but I do find it helpful as a way of managing a Zoom proceeding that if folks turn their cameras on when they would like to be recognized, I can then recognize you. But if you would otherwise leave your cameras off, that would be helpful.

So with that, I'm happy to pass the baton to counsel to the debtor to take us through the agenda for our hearing this afternoon. Thank you, Your Honor. Ms. Jones. On behalf of Yellow Corporation, the related debtors. Your Honor, first of all, let me thank you for giving us time what we know has been an extremely busy week already for the court, and we truly appreciate that.

Your Honor, you should have before you an amended notice of agenda that we filed, that gives, Your Honor, the current status of matters. Your Honor, also, we have submitted to Chambers prior to this hearing some black lines of some of our proposed orders. Your Honor, those black lines disclose and reflect changes that we have made after numerous conversations with the U.S. trustee. And if I may, Your Honor, I would thank Ms. Leamy

and Mr. Sheppercard, who have spent quite a bit of time with us trying to get through those orders. And I think if not all done, we are very close to being all done on all those proposed orders with respect to the U.S. trustee comments, and we thank you for that. Your Honor, personally, I have the pleasure of, in Co-Counsel, with Kirkland and Ellis on this case.

and, Your Honor, if I may, Mr. Nash has got his video on, and I would like to yield to him. Terrific. Thank you, Ms. Jones. And I have seen those red lines, and I appreciate those being submitted. Mr. Nash, let me pass the baton to you. Good afternoon, Judge. Pat Nash from Kirkman and Ellis, proposed counsel to Yellow Corporation and its affiliate debtors. We're, of course, here for our first day hearing. I want to echo Ms. Jones' thanks to the court, to chambers, and to the U.S. trustees' office.

for all the accommodation leading up to today. Your Honor, before diving into the agenda, if you permit me to, we've had an active few days since we filed the cases on Sunday night. I want to make Your Honor aware of where things stand with respect to our debtor in possession financing and also lay out for Your Honor why we filed these cases and where we intend to go here.

Your Honor, of course, it's common in most situations for debtors' counsel to open up a first-day hearing, describing in-depth and at length the circumstances that led to or caused the company to be in Chapter 11. I am not intending to do that here today, Judge. One of my favorite phrases is people stand where they sit, and it's particularly true in restructurings I've found over the years. Different stakeholders have different perspectives.

a restructuring or a troubled situation. And with respect to the path forward and what the current state of play and what we hope to accomplish in these cases, with your permission, Judge, I think I'll focus on that. The current state of play, Your Honor, is that yellow has ceased all operations. There is no prospect of a going concern reorganization,

and there is no prospect of a going concern sale, And as painful as that is and painful for the employees, former employees of Yale, first and foremost, they're the ones most impacted by this. That is the current situation. The fact of the matter is that the week of July 17th, Yellow's shipments fell off a cliff. It was not uncommon, judge, in the weeks leading up to July 17th, for Yellow to have as many plus or minus 50,000 ships. shipments on any given day. That shipment count declined precipitously the week of July 17th. And on Friday, July 21st, Judge, Yellow picked up zero or near zero new shipments. So then the

week of July 24th, Yellow affirmatively stopped picking up any new shipments and spent that week focusing on flushing the shipments that it had in the system through the system. And as of July 30th, approximately 28,400 of yellows, approximately 30,000 employees were let go. And when we think about the stakeholders in these cases and who is most impacted by the demise of this 100-year business, it's certainly the employees. And as you'll hear later in my remarks, we have every expectation and intention of honoring all. employee obligations during these cases. We believe we're going to have proceeds to do that, and we're certainly confident that any of those claims that constitute priority claims,

or to the extent they constitute administrative claims, we do not see any issue with those being paid, and that's been a focus of the company. So where are we going to go from here, Judge? We are, we filed these cases for the purpose of selling substantially all of yellow's assets pursuant to Section 363, converting yellow's assets to cash and distributing yellows assets to cash, pardon me, your honor, to yellow's stakeholders. And when we talk about yellow's assets, what are we talking about? We've got approximately 308 service facilities, 169 of those, our own, 142 of those are leased. Those are terminals, Judge. We've got approximately 42,000

trailers, approximately 38,400 of those are owned, approximately 7,200 of those are leased, and we've got approximately 12,700 tractors. That's the truck, you know, judge that used the trailers. Approximately 11,700 of those are. owned and approximately a thousand of those are leased. Your Honor, with respect to this collateral earlier this year, the terminals in the rolling stock were appraised at an approximately $2.1 billion valuation, approximately a billion one for the real estate, and approximately $900 million for the traders. Then, as I said, that is a recent appraisal.

DeSara, the company's proposed investment banker, is already judge in the market marketing these assets. And I am pleased to be able to report that as of today's hearing, as of this morning anyway, we could have a few more now that we're sitting here just after 3 p.m. in the Eastern Time Zone. But we've got 93 parties under NDA, including. including 21 strategics. We have gone out, Your Honor, at 292 parties,

and only 15 have declined at this point to participate. Approximately 184 are continuing to evaluate whether to participate. And from our perspective, we are very optimistic that the sale proceeds are going to exceed the entirety of the better secure capital structure, including any post-petition financing. You know, Judge, there's been a ton of media coverage around the yellow situation, and I've read numerous articles where industry experts are describing this as a once-in-a-lifetime

opportunity for interested parties to secure assets such as these and the volume of these assets. Yellow's terminals are located all over the country. many of them are in what are already built up urban areas. So if you are interested in a terminal in a specific built-up urban area, you know, they're not building any more of them. So we do have a lot of optimism around the sale process. We do not think that there's any prospect of administrative insolvency, and we're cautiously optimistic that there's going to be material proceeds available for unspure creditors.

probably premature for me to speculate, you know, how many millions, how many hundreds of millions, but suffice to say, we have a high degree of optimism around the sale process. And that has been borne out at a work that's been done to date. Judge, in terms of Yellow's existing capital structure, we've got an ABL facility, we've got what we call a B-2 term loan, and we've got two tranches of funded term. loan debt from the United States Treasury Department. The ABL facility, Your Honor, has a priority lien on cash, accounts receivable, and deposit accounts. As of the petition date, there was approximately $900,000 drawn on the ABL and approximately $359 million in undrawn letters of credit.

With respect to the B-2 term loan, Your Honor, there was approximately, as of the petitioner. petition date $501.5 million, owe to the B-2 term lenders. That facility, Your Honor, is secured by a first lien on all of the company's real estate, as well as a first lien on certain of the company's rolling stock. The U.S. Treasury loan, Your Honor, it's got two tranches, as I mentioned, what we call the tranche A, and owed under there is $337 million approximately. and we've also got, Your Honor, the Tranch B U.S. Treasury loan, and the amount outstanding there is approximately $400 million, and that U.S. trustee, Tranch B loan judge, has a priority lien on certain of the company's rolling stock. Also, importantly, all of these funded debt issuances, all of these secured debt instruments have, you know, shared, all this collateral share.

So certain of these facilities have a priority senior lien, but all of them have, you know, crossing junior liens on all of the collateral. Of course, we do expect that there is going to be a lot of unsecured claims generated here and expect that there will probably be a lot of work to be done on that denominator. But the unsecured predators are obviously an important constituent, as they always are, but particularly here, because we do not think the secured debt is the problem. bulker. And then with respect to the equity, Your Honor, approximately 30% of this company's equity.

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Let us make your bad day better. Find an agent at CINFIN.com. Approximately of the equity is owned by the equity is owned by L.P. A private investment fund based in Boston, Massachusetts. And you'll hear more about MFN here at BIT, Your Honor. So we file these cases, judges are aware because we filed a motion and whatnot. We file these cases with dip financing from certain of our B2. lenders. And the B-2

DIP facility would provide $142 million of new money to the company. And let me say, Judge, that was a hard-fought negotiation. And we certainly didn't get everything that we want, but it was a good faith negotiation. We are very appreciative of the B-2 lenders who stepped up and demonstrated a willingness to finance these cases post petition, we're clearly better off having committed dip financing.

The cases are, they benefit from having committed dip financing. So we are very appreciative of it. Notwithstanding everything I just said, Your Honor, there are aspects of that financing that we wish were different and that we didn't love. First, you know, I'll take through a couple of these, because I think it's relevant to the overall picture of where we're going and what we're dealing with. The financing that we have in hand is expensive, but so is probably every dip financing proposal I've ever presented to a court.

The financing is predicated on a day one roller. $142.5 million of new money predicated on $501.5 million getting rolled up at the interim hearing. We resisted that mightily, as Your Honor might expect. We have questions ourselves as to whether Your Honor, would have allowed, will have allowed us to do that. But in any event, the financing that we filed these cases with requires a day one roll-up. The financing that we filed these cases with has a milestone that would purport to require

the bid procedures order to be entered within 10 days of the petition date. So in 10 days of Sunday, we anticipated that Your Honor might have a problem with that. And then also importantly, Judge, the financing that we have in hand is for effectively a 90-day case. The dip facility matures within 90 days that's extendable to 105 days with lender consent. And, you know, is 90 days a sufficient amount of time to dispose of all of these assets for more than the secure debt? We think that it is. But if it was up to the debtors and we had our druthers, do we think that we would benefit by having a little more time than 90 days?

And the answer to that question is we do. In a perfect world, the interest in these assets is so robust that maximizing value will, in a positive way, take longer than 90 days. Also, Your Honor, another issue that we have with financing, as much as we appreciate it. It is premised upon, and it is a requirement that the bid procedures be acceptable to the dip lenders. And those bid procedures, Your Honor, that are acceptable to the lenders, limit the debtor's flexibility in certain ways that the debtors would prefer to not have their flexibility limited.

Most importantly and specifically, those bid procedures preclude the debtors from, selling assets piecemeal. Now that's not to say that we have some specific intention of selling assets piecemeal, but if we're up to the debtors, Your Honor, we would have the freedom and flexibility in our business judgment to bring assets to market and to sell assets in the way that is most value maximizing, you know, even if that is piecemeal. And so where does that leave us? Yesterday, judge, we received a financing proposal from MFN part. Oh, you know, before I talk about the MFN financing judge, let me describe a couple other aspects of the dip financing that we have in hand. The dip financing that we have in hand, Your Honor, is predicated on the day one

roll-up in the new monies, so that's $644.5 million to dip financing under that proposal. that financing would be senior and priming on what is the B2 priority collateral. The real estate and that portion of the rolling stock for which they are already priority senior lenders. That financing would not prime the ABL lenders with respect to the ABL collateral, and that financing would not prime U.S. Treasury with respect to the U.S. Treasury, with respect to the U.S. Treasury priority collateral. And that financing package that we started these cases with, Judge, with respect to the use of cash collateral by agreement,

we have an arrangement with our ABL lenders, where 80%, 80% of each day's AR receipts would be turned over to the ABL lenders to secure their undrawn letters of credit, and 20 cents of every dollar would be available to the debtors to fund these cases. So that's the financing that we have in hand. Yesterday, Your Honor, we received the financing proposal from MFN Partners. And what MFN partners has proposed to the debtors is to effectively step into this same financing arrangement, provide the company the same $142.5 million of new money, they would be doing it a little bit more, a little bit cheaper.

The fees, the interest rates is saying, the fees that would be payable there under are less than what would be under the dip financing that we have in hand. With one, you know, important issue or consideration, Your Honor, their 142, and a half million dollars of new money, they are proposing and insisting that it is parry to the existing B-2 debt. So their $1403.2.5 million would be parry to the existing $501.5 million that is owed to the B-2 lenders. The B-2 lenders, as Your Honor might expect, you know, are not willing or, you know, not willing to be, and I don't know if it's primed, it's effectively priming.

It's priming with respect to approximately 20% of every dollar generated from their collateral. And they have, no surprise, expressed an unwillingness to be primed in that fashion. The other aspect of the MFN financing proposal, another important aspect, Judge, is that they would be proposing a 180-day process. so they would be giving us more time to the extent that we needed to maximize the sale value of these assets and also given that they are the largest equity owner, Your Honor, we have every expectation that when it comes to the sale process and the strategy and tactics around how to bring these assets to market and sell them, we anticipate, that the debtors would have certainly more flexibility,

if not total business judgment flexibility with respect to how we market those assets. Because they're not an existing lender, there's no roll-up component to the MFN financing. And so there's a lot that is very positive about the MFN financing, and there's also the challenge, Your Honor, that they're existing,

that they prime the existing, B-2 lenders at least with respect to approximately 20 cents of every dollar generating. Your Honor, then this morning we received, and we're at the, we have, there's other, you know, of my colleagues who are, you know, down the hall negotiating with Estes Express Lines, a strategic participant in the trucking industry. Estes has indicated, Your Honor, a willingness to effectively provide the same financing that the B-SERC of the B-2 lenders have already provided and that FFN has indicated that it would be willing to provide.

They have indicated a willingness to step into that same financing structure. I may not have mentioned, Judge, but I should. The MFN financing, I think I did. They would not be MFN, like the existing B2 lenders, would not be priming the ABL owners with respect to ABL collateral, would not be priming the U.S. trustee with respect to U.S. trustee priority collateral. And similarly, Estes is proposing to not prime the ABL lenders or Treasury. But importantly, Your Honor,

SDs has indicated a willingness to give the company the money that it needs on a junior basis, also to the existing B2 loan. So their new money would be next in line as to the B2 collateral, but would be junior to the other secured parties with respect to their priority collateral. And we are, you know, feverishly going back and forth with SDs to document that proposal, reduce it to a term sheet. We do believe that it is real and that it is viable. Another very important detail, the SD's financing judge is, would be, Estes is prepared to advance the company up to $230 million. The existing proposal that we have

and the MFN proposal is for $142.5 million. Estes has been, prepared to upsize that facility. And one of the primary, if not the primary motivation for upsizing that facility would be to give the better, sufficient proceeds to pay priority and administrative employee obligations, PTO and otherwise. Without question, Judge, the other secured parties in the case, notwithstanding that I am preemptive,

preemptively reserving their rights. I'm sure they're going to get up and also reserve their rights. From the debtor's perspective, the fact that we have a dip lender who is prepared to loan us money to make sure that the 28,400 already let go employees and the 1600 employees who are currently working themselves out of the job to the extent that we've got a party who is prepared to loan us the money so that we can pay any of those obligations that are, admin and priority claims in a case that we do not see a prospect for administrative insolvency. We are very pleased to receive that proposal.

Obviously, there's no financing in front of Your Honor today. There's nothing that anybody needs to reserve their rights. All right. So, Mr. Nash, apologies. You may have told me this already, but in looking at my notes, I don't have it. So my apologies, if I'm asking to repeat yourself. But the pricing of this SD's proposal, is that comparable to the other terms in terms of fees and interest? It's two percent – the interest rate is two percent less judged than the other proposals.

And the fees are 4 percent of the new money. And the fees associated with the MFN financing is 5 percent of the new money. And the fee associated with the financing that we have in hand is at least 5 percent of the new money. Got it may be more than percent. Got it. Okay. And I saw the first-year declaration that described the ability to refinance out the original term. I take it that's perhaps

overtaken by events, but I think I follow that much. Okay, apologies for the interruption. Let me let you continue. No, I appreciate it, Judge. Any other questions, please stop. So where we find ourselves today, Your Honor, is not

comfortable moving forward, seeking approval of a day one roll-up and the financing that we have in hand as much as we appreciate having it in. We do think that you know, these other two proposals that we've received are compelling. The SD's proposal, Your Honor, is also contemplates up to a 180-day case.

And no one has seen that proposal. And so, you know, obviously everybody's rights are reserved as to that proposal. The other parties in the case have at least seen a term sheet with respect to the MFN proposal. Optimistically, Judge, to the extent that Your Honor would have time, for us later in the week. I know it's already Wednesday afternoon, so there's not that much time left, and I understand you're very busy this week.

But in a perfect world, Judge, if we had a hearing date from Your Honor sometime on Friday, we would be in a position to get amended debtor in possession financing papers on file, and if the SDs financing ends up truly materializing

as described and as we're discussing with them, which is, you know, stepping into the existing structure that all these pre-petitioned secured parties have signed off on. And in fact, doing it junior to the existing B-2 dead, you know, I'm cautiously optimistic that we would have an agreed order for your honor on Friday. Or, you know, maybe we would be fighting about whether a semicolon should be a comma or something like that.

But we should optimistically, perhaps, but hopefully be in a better place. position to have, you know, a more fulsome record and a higher level of consensus, folks having had an opportunity to review this financing and whatnot. I also want to point out for my colleagues who represent, you know, the other pre-petitioned secured parties. With respect to the Estes financing, what we're discussing with them, Judge, is the same $60 million first day draw as contemplated by the financing that we have. hand. So to the extent that any of the other parties have questions, concerns, or Ajita about the

upsize amount as, you know, 230 as compared to 142.5, none of that is going to be up. If we are in position to have a hearing in front of your honor later this week, the balance of that financing is going to be kicked over to a final hearing. It's going to be kicked over to after a committee is formed. You know, these other two finances, Judge, whether it's MFN or Estes, they contemplate us getting bid procedures on file only after a committee is formed

and only after a committee has an opportunity to weigh in. And, you know, Judge, a case like this where we've got like a billion, multi-billion dollars of assets and the entire case revolves around selling those assets, we frankly think it's pretty important that the official committee, when it gets formed,

have an opportunity to weigh in those procedures and so apologies for you know we're not all that settled right now but the fact of the matter is is that the developments from our perspective since we filed the cases have been positive. Okay so so mr. Nash so thank you for that that's very helpful let me say the following I mean first of all it's always cheering to see competition over over dip financing I understand that we are available at 10 o'clock on Friday to the extent you want to come back with a diploma then. What I'm going to say that is going to be less helpful to all of you is the following.

If what we have on Friday is essentially in agreed order or a conversation about wording, I'm happy to do it by Zoom. if we've got a priming fight where I've got to hear evidence about value in order to make appropriate findings but adequate protection or the like, I do want to do that in person. So I don't know, and I appreciate that you may not know the answer to that and that it's complex. You've got to make decisions about travel and I appreciate that that's not perfect. But I think it's frankly better than the risk that I have to conduct a hearing where I've got to make findings on a contested factual question. question of valuation or adequate protection based on a Zoom record. So, again, if you're able to get to a, you know, non-evidentiary hearing, I'm happy to do that by Zoom under the circumstances.

But if we're going to have a contested hearing on Friday, I'd like to do that in person. Is that clear enough? Clear and totally understandable. And frankly, I anticipated as much. Thank you, Judge. Great. And thank you for me. And thank you.

what we appreciate first and foremost is the time at 10 a.m. on Friday, so thank you. Terrific. Your Honor, in terms of before, one thing I neglected to mention that with us in the virtual courtroom is the debtor's first aid declarant Matt Doheny, the chief rest of pressuring officer of Yellow Corporation. And at some point here, you know, we'll move his declaration into evidence to provide the evidentiary basis for the first day relief that we are going forward with here today. also, Judge, we do anticipate after we get through the agenda at the end of the hearing, very helpfully, and again, appreciate.

My colleagues and the council to the ADL lenders are working on a consensual cash collateral order to bridge us. I believe through Monday of next week, you know, Friday or hopefully in a position to get dip financing approved. We do have a payroll that would come do tomorrow. We have another payroll that would come due on Friday, and a few other limited and discreet items that, again, with thanks and appreciation, we do believe that we're going to have consensus around using cash collateral coming out of today's hearing and didn't want to neglect to mention that. We'll deal with that, Your Honor, because that order is being worked on.

We'll deal with that. It's okay with you, Judge, at the end of the hearing. That makes good sense. Mr. Nash. Okay, and with that, Your Honor, I will move Mr. Doheny's declaration into evidence, or should I wait until other people, I see other folks may want to be heard. Let me, let me see if others want a chance to be heard. So I think the order is Mr. Dunn, then Mr. Sue, and then Mr. Winston. So Mr. Dunn. And then Mr. Nelson. And then Mr. Nelson.

Thank you. For the record, Dennis Donne and NoBank, LLP, on behalf of certain investment funds and accounts managed by affiliates of Apollo capital management. With the court's indulgence, I just wanted to spend a few minutes kind of sharing the perspective of our client with the company, its recent history, and the matters before the court today. it will allow me to provide perspective on the dip, which isn't going forward today, and also allow me not to interject repeatedly as we consider the individual motions, and I don't think I'll take more than, you know, five minutes or so. So with the court's permission, I would afford to do that. Okay, you can appreciate it.

Thank you. Apollo owns a majority of the V2 term long, which Mr. Nash described accurately earlier, approximately 500 million is due as of the petition date, and the loan is secured by first lien on the terminals and other assets and the second mean on the cash and certain ABL collateral. This case, Your Honor, has really been an extraordinary one and surprising in many respects. You know, at the highest level that, you know, such a kind of story franchise in a critical industry is filing Chapter 11 to immediately liquidate.

is extraordinary in and of itself. In my career, it has been extremely rare to be involved with the business that starts its Bankruptcy case having ceased operations and solely to liquidate and monetize its assets and run it to the absolute priority waterfall. I think we've all been involved in cases that ultimately decided to liquidate after using Chapter 11

for some period of time to attempt to reorganize or sell itself through the goal of concern. And this company, just at the end of last year, the company was doing $5 billion in revenue, I believe, and over the period of new to evita, and they went from there to shutting down and liquidating. How we arrived here and the decisions made by the company over those quarters in reaction

to the conduct of the union in otherwise will no doubt be hotly debated and contested, but that's not, for me, that we're not gonna wade into that thicket today. But what is relevant today, and on Friday, honor is that once the company made this decision to liquidate pre-petition and wind down its operations, Apollo and the other lenders immediately sprung if actually about to work with them. We engaged with the debtors to better understand their preferred

path forward relevant cost and timing and potential impact on our collateral. And these interactions demonstrated that this again is an unusual case because the contemplation process in order to maximize the value would require more liquidity than the company could access through the use of cash collateral alone. So we became pretty clear early on that there was an additional funding need. And we worked tirelessly with the company to kind of size that dip financing amount that would offer the debtors the necessary liquidity. But that was predicated on a heavily negotiated, carefully calibrated budget to ensure that we're going to ensure that that both the assets were sold thoughtfully and on a reasonable and appropriate timeline.

But here we are today actually not moving forward with that stip facility because the debtors are received at least one, maybe two uncommitted dip proposals, and they want to hit the pause button to explore them. One of which is on a pari-pursu basis with our means. Again, I'd say this is unusual, at least in my career. career. I've certainly been in cases where the vendors have paused to receiving kind of committed facility and commitment letters that were materially better or that took out the incumbent lenders. The MFN one is on a junior basis and the other one I haven't seen any terms of yet. But it's a decision that while it's surprised at us, it basically

just has this concerned and a bit fatigue and you only have to look at that recent history to understand why. A few long ago we were loaning to a company that had five billion in revenue and hundreds of millions and eitha dot, but then the company, for whatever we began, fell to execute on the plan of integration of their various business lines, and the business as Mr. Nash said a few minutes ago, kind of fell off a cliff, and that denters found themselves with no choice but to cease operations and to liquidate in tens of thousands of jobs, Your Honor, and lost. And Apollo, together with the other pre-petition B-2 lenders,

were prepared to provide dip financing to fund a controlled and we thought thoughtful sale process in Chapter 11 based on the debtors belief that a controlled line down over that timeline would yield the best results. The debtors are now pivoting away from that in the hope that something better comes along. But it's those decisions or indecisions that make us continued to be concerned about the trajectory of the cases and the value of our collateral.

We hope that this doesn't need to additional delay and degradation. We're really just looking to protect our collateral and receive payment on the claim. Your Honor, a couple of points about the dip, and this is all kind of real time that I wanted to raise, because this will be important to your others speak. One knock-on consequence to the debtor's decision yesterday to not move forward with our dip today is it deprived us of the usual time, the usual interactions to refine and finalize our dip terms. What's what I mean by that? And I know Your Honor knows this, both from your time on the bench and during private practice.

But in that period between filing and the first day hearing, the dip leaders field numerous examples from the U.S. trustee and other parties with respect to prospective objections to the dip and proposals to resolve those objections. That's exactly where we were 24, 36 hours ago. And as a result of those interactions, economic or other changes, are often made before the hearing.

Indeed, I frequently rise at the beginning of these hearings to say, good news, Your Honor, we've revised the dip in the following ways to address or resolve most, if not all, the concerns of the U.S. trustee or others. The point I want to emphasize here is that that annealing process on our dip didn't happen. And so any summaries you hear of the dip, you should take with that caveat in mind, plus we haven't had the benefit of Your Honor's thinking on it either.

Your Honor, with respect to the collateral, just two points. One of the dip lenders, the one that precipitated the adjourn, MFFN, their dip is coming in parry. That always concerns us because that means notwithstanding Mr. Natchez's contention that they believe we are extremely over-secured, the dip lenders unwilling to underwrite that proposition they don't want to be junior to us. And if we ever get to a contested hearing, you'll see the appraisals that were done in very different circumstances and under very different assumptions with respect to increased use and going concern assumptions. One other notes is more a disclosure point about one of the prospective dip lenders, MFN, which I think Mr. Nash mentioned, is either a large or the largest stockholder of the debtors.

I saw today that it's been publicly reported. They're also the largest stockholder, XPO, a strategic competitor, and I think somebody who is under NDA now and potentially a prospective bidder. So the alternative dip lender has a significant economic interest in one of those bidders. The courts just needs to be aware from the outset of any potential economic influences there. A couple other points, and then I'll yield your honor. The time factor, the debtors tout the fact that the sale milestone might be as far out as 180 days under the alternative dip proposals. I want to make two points there. one of which is more time is not always better, Your Honor.

For one thing, lawyers, and I mean this with all due respect, they're like a mirro gases, Your Honor, they expand to fill up the allotted space, an extra three months guarantees additional fever and administrative expense burden, but with no concomitant guarantee of higher sale prices. We spent a lot of time with the debtors reviewing their pre-petition efforts to attract interest in their assets, the current number of parties under MDA, how much time? time those parties would likely need to transact among other inputs. The debtors that we concluded that 90 days was an appropriate milestone for that sale. It was longer, frankly, than we thought was necessary and we deployed under other liquidations, but we exceeded to the debtor's request

there. One telling point, though, Your Honor, is the debtors never pushed us for 180-day sale milestone. The debtors first request before this refinement process, I just mentioned, concluded. sort of 105K milestone, 105, not 180. So the much-touted milestone provides substantially more time and corresponding risk of drift than the debtors sought with us in terms of milestones. The roll up, if we're back in front of you, I would talk about it slightly more than 3 to 1.

We don't believe it's off market. But here, if the debtors are right, we're always secured and it hurts no one. On the junior facility, we haven't seen anything in writing about it. Obviously, a junior facility is better. We'll review it if the one it materializes. But right now, it's an expression of interest.

If it is materially better and truly junior and doesn't hurt us from a credit fitting remedial or other standpoint, we'll work with the debtors on terms and adequate protection and timeline. But we'll see how that plays out between now and Friday. My last point, Your Honor, and I apologize, because it's unfortunately a technical one, is adequate protection.

We, as is common, request protected adequate protection prior to the filing in connection with our negotiation of the dip and a corresponding adequate protection package acceptable to us and the debtors. Had we move forward with the dip today, we'd be seeking the court's approval of that adequate protection package at its terms. The debtors, if you heard, have decided to adjourn today's dip hearing. There are two potential paths forward. One path, when we're next to the court, maybe we're moving forward with our dip, an out of protection in any event, in which case, Your Honor, will judge the propriety of that package

and it will rise or fall on its own. The other path is the reason I raise this now. It's possible, although I hope unlikely, that the debtors don't move for approval of a consensual out of the protection skip with us and we have to fight for it. In that case, we need to be clear on one item, and it is why I'm putting it on the record now.

We requested out of protection petition, we requested it already, And to the extent we have to formally seek it in the future, because the veterans decide not to prosecute the stipulation we have with them, we seek out of the protection from the petition date forward. It's from the petition date that we made our request, and at all times have made our request granted protection from the petition date. I don't think I can say it's more clearly than that.

Your Honor, I'll have a lot more to say about the alternative dip facilities on Friday, but let's leave it for then, and unless Your Honor, there's any questions to me, I'll yield the virtual podium, and I appreciate the time. Okay, thank you, thank you, Mr. Dunn. Look, I think everyone appreciates the circumstances of this case are sort of challenging and unfortunate, though. I guess we're all used to taking the case as we find it. So that sort of is what it is.

And as unfortunate as it is, of course. But I take it, Mr. Dunn, you're not taking issue with the debtor, to the extent the debtor can finance its way to a subsequent hearing using cash collateral, that isn't your collateral, you aren't taking issue with their decision to allow a competitive process to play itself out, and then we'll see where we are. Your Honor, short answer is yes, the longer one is that we have a second on the cash, but the ABO controls the consent to use the cash collateral. Got it.

Okay. Okay. So, thank you, Mr. Dunn. So, Mr. Sue, I think you are next. So let me give you a chance to be heard. Good afternoon, Your Honor. This is Henshue from the DOJ on behalf of the United States Treasury. We thank you for your time, and we appreciate the difficult circumstances in front of you today.

The Treasury extended a $700 million loan to the company during the pandemic, and we are focused on protecting the taxpayer's interests on behalf of the Treasury in this bankruptcy. Along with Treasury's outside counsel at Arnold & Porter and other advisors, we have worked closely with the company and other stakeholders leading up to the bankruptcy and negotiated certain protections for Treasury. There are many moving pieces now, but we understand and we expect Mr. Nash to confirm later on the record that the advocate protection we have negotiated for Treasury will still be implemented regardless of which dip financing is ultimately selected. And Treasury and everyone on our

side, we will continue to work throughout this bankruptcy to protect the taxpayers' interests. Thank you, Your Honor. Thank you. Okay, I confess I may have lost track, but Mr. Winston, I think perhaps you're next. Yes, Your Honor. Thank you so much, Eric Winston. of Quinn Emmanuel and Hart and Sullivan on behalf of MFN Partners LP. As Mr. Nash described, MFN holds approximately 42 and a half percent of the common stock of yellow, and we believe it is the biggest stockholder. We were prepared to object to the DIP motion, and we did provide a superior alternative proposal. One aspect of it then, Mr. Nash, I can't remember if he talked about it or not,

But by eliminating the roll-up, that actually ends up saving the estates at least $32 million, maybe it's $41 million in fees that would otherwise have incurred on that roll-up amount. So to the extent that Mr. Dunn is worried about fee burn, that's a massive savings instantaneously. And we've been pleased and appreciative that the debtors and their professionals in the last 24 hours have taken our proposal under very serious consideration. And it appears whether it be MFN or S-DIS or really anybody else, there is going to be a better dip-financing. And from M-FN's perspective, whatever is the best one for the estates is the best one that should be picked. It does not have to be MFN.

MFM just wants these states to have the best economic terms and the ability to maximize value for all stakeholders and not to be handcuffed, especially with respect the timing and the flexibility to market assets in the most intelligent way. That seems to be where the alternative financing is headed, better economic terms, and importantly, longer time to conduct a robust marketing process that benefits all.

MFN, with its advisors, at the larger shareholder and perhaps the dip lender, does expect to be heavily involved in developing and monitoring the bidding process. It looks forward to working with the debtors, U.S. Treasury, which itself is the second largest shareholder in the company, lenders, and a committee as formed a committee to achieve this goal. I do want to just make one comment because I heard something that Mr. Dunn said about MFN. It is an investor in, I guess a competitor, a completely passive investor, and that company does what it does with no input from MFN.

I wouldn't be surprised a lot of the folks that are representing lenders and other constituents would be surprised they are also involved in competitors or anybody else that may have interest in this. And I'm sure that we can get through this, whether MFN is the dip lender or not, it is not going to be an issue. But I just wanted to respond to that point. Your Honor, with that, I think for the time, and we look forward to going to going to be an issue. forward on Friday, whether it's MFN as to somebody else.

Okay, very well. Thank you, Mr. Winston. Appreciate it. Mr. Nelson. Your Honor, good afternoon, Philip Nelson on behalf of Altadomas Products Corporation, which is the administrative and collateral agent for the B2 loans, a B2 agent. I wanted to just raise or address a technical point that Mr. Dunn brought up at the end of his remarks, which is, you know, obviously he and his administration.

firm represent Apollo as the majority of the largest lender for our loans, but to the extent that it needed to be clarified, I wanted to make clear that the collateral agent joins in that adequate protection request with respect to the entire facility and all of these secured parties under the B2 facility. Okay. Thank you, Mr. Nelson. Thank you. Mr. Silverman, I think you might be next, though.

If I'm wrong, I apologize to whomever I've allowed you to skip. Well, thank you, Your Honor. Can you hear me well? I can. Thank you. Your Honor, Ronald Silverman, Hogan Love, to us LLP. We represent Bank of New York Mellon as the administrative agent and the collateral agent with respect to both the tranche A, U.S.T credit facility,

and the Tranch B, U.S. credit facility. So the United States Treasury is the lender under. each of those, but similar to Mr. Nelson, his role as collateral agent, administrative agent, we likewise have a similar role and we wanted to say again, importantly for the first day, that we reserve rights generally with respect to the debtor financings. Secondly, that we understand and understand that the debtors will be stating on the record that the all the adequate protection arrangements that have been negotiated with respect to the U.S. Treasury facilities will be implemented regardless

of which dip facility is put in place. That does seem like the case based on the statements that the other dip lenders are willing to step generally into those terms. And lastly, as Mr. Nelson said, as client, we do request and have requested and seek adequate protection from the petition date. So thank you very much, Your Honor. Thank you, Mr. Soverement. Mr. Griesman. Thank you, Your Honor. Can you hear me?

I can. Great. Scott Reiseman, Whiteen case for Beal Bank. Beal Bank is a 45% holder of the B-2 loan and echoes all of Mr. Dunn's statements and is an agreement with Apollo that the situation leading up to the filing and presently is actually quite problematic. I won't repeat all of Mr. Dunn's statements, but I will. emphasize a couple of points. One, there are presently no buyers for these assets. Two, the appraisals Mr. Nash mentioned are months old and it is unclear if they were predicated on a going concern or go dark basis. But non-operating terminals and non-operating rolling stock

are obviously much less valuable potentially at going into an extended sale process. And going into an extended sale process beyond 90 days takes us into seasonal issues that require a much greater expenditure of the state resources to preserve that collateral. And so in addition, I understand Mr. Winston's point that the roll-up costs a bunch in respect of additional interest. The additional 90 days also costs a bunch in respective additional interest and also does take into account the substantial state expenditures that are likely to be required to preserve this collateral. Bill Bank won't agree to a priming or pari-pasu dip facility. I think that everyone understands that, and Apollo agrees with that as well.

And if there is a junior facility proposed, obviously the devil is going to be in the details. It's not just a junior lien in priority. That would be concerning, but also the rights of enforcement and other inter-creditor discussions that can actually get very complicated in these scenarios. It's hard to understand how all this is going to get pulled together by Friday, but I won't, I guess, begrudge Kirkland for the opportunity to try, but the situation is a lot less rosy and a lot more problematic

than they're explaining at the moment, and we are very concerned about the collateral coverage here, and we will be watching this very careful. Thank you. Okay, thank you, Mr. Graceman. So I see someone who else has your camera on, who's identified as Conference Room 35C. Apologies for describing you that way,

but if you'd like to be heard, let me give you the out opportunity. Thank you, Your Honor. My apologies for not having a technological skills to change my name. This is Kevin Samar and Chodhawd-Oft-Stuart. We have counseled to the Citizen Bank as the ADL agent. As Ms. Nash stated, of all parties' rights are reserved.

We appreciate that the other party is working real time with us keeping us up to speed, but until we see final terms will lead to the reserve all rights. One thing I'd like to point out is that while the proposed SES dip is not priming the B2s, it is while they end up priming us on our ABL priority collateral, as Mr. Nash stated, the ABL lenders have a second on the B2 priority collateral. And a third on the U.N. trustee, U.S. Treasury Party collateral. So in fact, those, that dip would be pronged on those assets. So we have our rights with respect to adequate protection, our rights with respect to consent. We have concerns with additional dollars, in addition to the $142.5 million being funded.

We also have concerns with respect to the extended milestones. While a little bit more time may benefit the debtor, doubling the milestones, we have not, we've asked for, but we've not seen the justification and the cost-benefit analysis on those points. As Ms. Nash stated, we have worked with the debtor today to come to what we think is that conceptual use of cash collateral, the ABL priority cash collateral so we can bridge the debtor to pay payroll and a couple other necessary items through Wednesday of next week, if necessary. Thank you, Your Honor. Thank you very much. So, Mr. Nash, I think back to your

you to continue through the agenda unless there are taken no one else what would like to be heard more broadly seeing no one mr. Nash let me let me pass the baton back to you thank you judge let me make the statement on the record that Treasury is looking for we absolutely intend that we are going to respect the existing cash collateral arrangement and stipulation with Treasury The financing that we came to court with, Your Honor, was very carefully and painstakingly crafted. And in terms of our discussions with the potential alternative dip financing providers, we have made it very clear that from our perspective, they need to step into, or in the case of Estes, in fact, be better than because we could be junior two, but step into the same exact financing and collateral arrangements that the B,

two lenders had reached with the other pre-petition secured parties. And we have every expectation that to the extent that we're presenting alternative dip financing to your honor, we are going to be respecting those inter-creditor arrangements that are already in place. I also would like to just make clear, Judge, we unsolicited received two proposals that offered 180 days. We may not need

180 days. We didn't ask for 180 days. We do think that having more than 90 days could be helpful. And just so Your Honor doesn't think that, you know, I fell off the turnip truck yesterday, $142.5 million as contemplated by the MFN financing

and $230 million as contemplated by the Estes financing if you want to think about, you know, 80 or 90 of, that being sort of earmarked for employees. $142.5 million is not enough to get us to 180 days if you're not making any assumptions around asset sales.

As we've been discussing with both of these providers, to the extent that we don't sell an asset between now and the 90th day, $142 million is going to be enough money. But to the extent that we're selling assets and generating cash, $142 million, maybe enough money, and it may be enough money for a case that ultimately takes 112 days or 118 days or 121 days. We were offered 180 days and we're discussing the financing and we're going to be discussing it with the other pre-petitioned secure parties.

And with respect to Mr. Dunn's comments of medical protection, I'd be shocked, Your Honor, to the extent that we've got alternative. financing of the type and nature that we've been describing, particularly as a glazed vests, I'd be shocked if we don't have a consensual adequate protection package. I want to reiterate because, of course, you could perhaps draw a different conclusion, but the debtor's demeanor when we say how much we appreciate the financing that we have in hand, how much better it is to have that financing in hand. We do think it's a positive development that there's competition. And so with that, Judge, I think, you know, we can probably move into the agenda.

And before doing so, with Your Honor's permission, I would move Mr. Doheny's declaration into evidence for purposes of the relief that we seek here today. Okay. Is there any party in interest that objects to the introduction of Mr. Doheny's declaration, which I believe is DiI-14, admitted, as Mr. Nash says, purposes of the relief sought today. Okay, seeing no one it will be admitted, is there any party that wishes to cross-examine Mr. Dohanyi with respect to the matters

before the court today? Okay, seeing no one, Mr. Nash, you can continue. Your permission, I'm going to yield the podium to my colleague, Connor McNamara. Okay, very well, thank you. Thanks a lot, Judge. Thank you. Mr. McNamara. Good afternoon, Your Honor,

Connor McNamara, Kirkland-Aales, proposed counsel to the debtors. He'd be taking you through the next several motions for the hearing today before seating the podium to my colleague, Mr. Jacobson. And I will start with the joint administration motion filed at Doct Number 3. Motion requests that the court jointly administer the Chapter 11 cases, the debtors for procedural purposes only, and for administrative efficiency. No party has objected to the motion. Unless your honor has any questions, we would respectfully request entry of the order. Okay, is there any party in interest that would like the opportunity to be heard with respect to the debtor's motion for joint administration?

Okay. Seignan, I've reviewed the motion in order. I'm satisfied the relief sought is appropriate, and we will enter that order. Is the NOL motion filed at docket number four? By this motion, the debtors are seeking to establish. equity trading procedures designed to ensure that certain valuable tax attributes are preserved. Specifically in this instance, with respect to the sale procedures to offset any taxes that may be resolved from the sales. Under the procedures, shareholders of yellow corporation would need to

provide notice for disposing of or acquiring equity in that entity. Importantly, before filing the motion we provided the trustee and secured lenders including counsel to the U.S. Treasury an opportunity to comment on the form of order. The order originally filed with the motion incorporates comments from counsel to the treasury and the revised form of order submitted to chambers incorporates additional comments from the trustee. Don't believe any party has objected and let your honors any questions we would request entry of that revised order submitted to chambers. Is there any party an interest that would like the chance to be heard with respect to the NOL motion. Okay, seeing none, I've, I'm sorry, Mr. Mince.

Good afternoon, Your Honor. We, on behalf of Treasury, we did provide comments to that order that was incorporated. We have not seen the comments and the changes that were made with respect to the comments received from the U.S. trustee. We would just ask for the opportunity to see those. I don't anticipate an issue, but it's just something we were not provided. Okay. So, Mr. McIntyre, under the circumstances, Does it make sense to give you the chance to be sure that you've run those by Mr. Mince before they are – I don't know if they've been uploaded, but if you could run those by Mr. Mince and let chambers know that those – that there aren't issues that require further consideration? Ms. Jones? Thank you, Your Honor.

Your Honor, I would note for the record that none of the orders have been uploaded. we anticipated that Your Honor may have some comments, so we thought we'd wait to the balance to the hearing is over. So in that regard, Your Honor, yes, we can provide a copy to Mr. Mince and the interim while Mr. McNair is talking. Okay, terrific. So I'll take, if they're uploaded, I'll take that as a representation that those, that there aren't for other issues.

Is there any other party in interest that would like the opportunity to be heard with respect to the NOL motion? Seeing no one, I've reviewed the most. motion and the proposed order, I did have the chance to review the red lines that have been submitted reflecting, as I understand it, the discussions with the U.S. trustee. I'm satisfied that the relief sought is appropriate under the circumstances, and we will, when it's uploaded, enter that order, which is, of course, on an interim basis. The next motion, as the wages motion filed at a packet number 20, under the wages motion, the

debtors seek to pay pre-petition wages, salaries, and other compensation and continue certain employee benefits programs in the ordinary course for employees employed by the debtors on a go-forward basis and also payroll for former employees who were terminated before the petition date. Currently, the debtors employ approximately 1,600 employees on the go-forward basis. It will be critical to implementing the sale process in these Chapter 11 cases as they have historical knowledge of the debtors assets and operations. By the interim order, the debtors are only seeking authority to pay approximately 17 million in wages and employee benefits.

Denters are not seeking to pay anyone over the statutory caps, nor the debtors seeking to pay any severance during the interim period. As with the other orders, we provided the U.S. trustee and also the secured lenders an opportunity to comment on the form of order. Those comments are largely incorporated. I don't believe any party has objected. And unless your honor has any questions, we would request entry of the revised order to submit the chambers.

Okay. Is there any party in interest that would like the opportunity to be heard with respect to the debtor's wages motion? Mr. Mintz? Same request, Your Honor, and I would ask for the opportunity to, I won't keep arising, but with respect to the orders, I know things were moving very quickly so I understand the DIMAN, but we would appreciate the opportunity to see the revisions. All right.

We'll treat that as a standing understanding that nothing will be uploaded unless and until you've had the chance to look at it. Thank you. Any other party in interest would like the opportunity to be heard with respect to the wages motion? Okay. I've reviewed that motion in order. I'm satisfied that the relief sought is appropriate, and we will enter that order again on an interim basis when it's uploaded. Your Honor. The next motion is the creditor matrix motion filed at docket number seven.

By this motion, the debtor receipt release to file a consolidated creditor matrix, consolidated the top 30 creditors list, and to redact certain personally identifiable information of the debtors creditors that are natural persons. In addition, the debtors request authority to serve creditors by email that have a valid email address on file, but no physical address. information on file. We provided the US trustee with an opportunity to comment on the form of order. Those comments are largely incorporated. I do believe we missed one and so as with the others we will submit a revised order after the hearing for your honor's consideration.

Okay. Is there any party in interest that would like the opportunity to be heard with respect to the creditor matrix motion and related relief? Okay. Seeing no one, I've reviewed that motion in order. I'm satisfied that that relief is appropriate and will enter that interim order after it is upload. The last item I will take you through today is the insurance insurity motion filed at docket number six. Debtors seek relief to continue their insurance policies and security bonds in the ordinary course. There are approximately 82 insurance policies and over 150,000. million in charity bonds, collateralized by over 80 million in letters of credit.

On an interim basis, however, the debtors are only seeking to pay approximately 3 million, and that is largely related to the premium financing agreements until we are back in front of your honor on Friday or early next week. The proposed order incorporates comments from Old Republic Insurance Company, comments from Chubb, insurance, comments from the U.S. trustee, as well as comments from other parties in interest. I don't believe there are any objections, so unless your honor is any questions, we request entry of the revised order submitted the chambers as well. Okay. Is there any party in interest that would like the opportunity to be heard with respect

to the debtor's insurance and surety motion at the I-6? Okay, seeing none, I have had a chance to look at that motion in order. I'm satisfied. The relief sought is appropriate, and we will end. enter that order on an interim basis. Thank you, Your Honor. With that, I will turn over the podium to my colleague, Mr. Jacobson, to take you through the balance motion for today's hearing. Perfect.

Thank you, Mr. McIntyre. Mr. Jacobson. Good afternoon, Your Honor. Rob Jacobson, I'm Perklin and Ellis on behalf of the debtors. I'm going to walk the court through the balance of today's agenda, as my colleague, Connor, McMara, just alluded to. The next item on today's agenda at docket number 11 is the debtor's 156C application. to retain Epic as our claims and noticing agent.

As a preliminary matter, attached as exhibit EAD to application is the declaration of Kate Mayew, senior director at Epic, in support of the application. Ms. Mayhew is on the Zoom line today, and I'd ask to move her declaration into evidence for purposes of this application,

subject to parties, rights to ask her questions if they would like to. Okay. Is there any parting interest that would like to be heard with respect to Mr. Jacobson's motion to move into evidence the declaration of Ms. Mayhew. Okay, seeing none, that will be admitted. Is there any party interest who wishes to cross-examine Ms. Mayhew?

Okay, seeing none, Mr. Jacobson, you can proceed. Thank you, Your Honor. By appointing ethic as the claims of noticing agent in these Chapter 11 cases, distribution of notices and processing of claims will be expedited, and the clerk's office will be relieved of the administrative burden of processing the proofs its claim. Consistent with the claims agent protocol, we solicited multiple claims agent bids,

and we found that Epic's proposal was competitive and the basket for the debtors. We've reviewed this motion with the lenders in the U.S. trustees' office. No party is objected to this application, and so unless your honor has any questions, we respectfully request entry to the proposed work. Thank you.

I have reviewed that motion in order. I'm satisfied that that relief sought is appropriate, and we will enter that order. Thank you, Your Honor. The next item on today's agenda at docket number nine is the debtor's motion to authorize Yellow Corporation to act as foreign representative on behalf of the debtor's estates

and legal proceedings in Ontario's Superior Court of Justice in Toronto, Ontario, Canada, pursuant to the Company's Creditor's Arrangement Act. Your Honor, Yellow Corporation is the ultimate parent entity of the debtors. Yellow Corporation is commencing ancillary proceedings in Canada to request that the Canadian Court recognized the Chapter 11 case of Yellow Corporation as a foreign main proceeding under the applicable provisions of the CCAA. To that end, the debtors require authority for Yellow Corporation to act as foreign representative

on behalf of the debtors of states. Recognition of its Chapter 11 case is necessary to protect Yellow's assets in Canada and to obtain a Canadian order staying self-help remedies by stakeholders. The lenders in the United States Trustees Office have had the opportunity to review the form of order and no party is objected to this motion. Unless your honor is any questions, we respectfully request entry of the proposed order. Is there any party in interest that would like the opportunity to be heard with respect to the debtor's motion for an order that would authorize the debtor to act as foreign representative under Section 1505.

Okay, seeing none, I've reviewed that motion in order, I'm satisfied that that relief is appropriate under the circumstances, and we will enter that order. Thank you, Your Honor. The next item on today's agenda at docket number 10 is the debtor's cash management motion. By this motion, the debtors are seeking authority to continue to operate their cash management system

and maintain their existing bank accounts, honor certain pre-petition and post-petition obligations related there to, maintain existing business forms, and continue to perform intercompany transactions. Your Honor, Yellow's cash management system is complex and comprehensive. The cash management system is made up of two things silos. There's the USA cash management system, which consists of 30 bank accounts, and the Canada cash management system, which consists of 14 bank accounts. Because access to the cash management system is imperative to meet the immediate term obligations,

any disruption to the cash management system could have an immediate and significant value-destructive effect on the debtors of states, which would be to the detriment of all stakeholders. Accordingly, the debtors submit that the relief sought in the motion is necessary and appropriate under the circumstances. Prior to filing the motion, we received an incorporated comments from the landers and the U.S. trustees' office, and after we filed the motion, but prior to submitting the revised order earlier today, we received and incorporated informal comments from J.P. Morgan Chase relating to the merchant services relationship between Chase and the debtors. No party is objected to this motion,

so unless your honor has any questions, you respectfully request entry of the proposal. Okay, thank you, Ms. Leaming. Good afternoon, Your Honor. Jane Leamy for the U.S. trustee. We're resolved on the form of order. The U.S. trustee would like to be heard on a motion in a particular Section 345 compliance. Section 345 of the Bankruptcy Code obligates the debtors in possession to acquire from an entity with which the estate monies are invested. One, a bond having features defined in Code Section 345B or alternatively to the deposit of securities consistent with 31 U.S.C. Section 9303, unless the court orders otherwise.

In connection with the cash management motion, we would do. make more observations. First, section 345 places an obligation on a debtor and possession to require protection towards money from the institutions which hold such money. Second, while section 345 does not mention the US trustees office, the US trustees office in its supervisory role assists with protection of debtor and possession funds

by entry into uniform depository agreements or UDAs. UDAs obligate depositories to make in collateral for bankruptcy funds on deposit in an amount no less than 115% of debtor in possession and trustee deposits, which exceed FDIC limits. The U.S. trustee maintains information on the banks that have executed UDAs, and there's a current list posted on our website of those banks. Third, in order for a debtor and possession to comply with Section 345 where a UDA bank is involved, the debtor and possession must first identify and disclose all.

accounts where monies are held, and second, contact those banks to ensure the relevant accounts are designated as debtor and possession accounts. Fourth, recent bank failures highlight the importance of the debtorne possession's compliance with Section 345 for the benefit of all of its stakeholders. The U.S. trustee seeks specific language in any interim cash management order that identifies concrete steps and a definite timeframe to achieve compliance of Section 345. The U.S. trustee encourages the debtors here to act promptly to ensure full compliance with Section 345, and we reserve the right to be heard on the cash management motion at the final hearing.

Thank you, Your Honor. Thank you, Ms. Leamy. Is there any other party in interest that would like to be heard with respect to the debtor's cash management motion? Okay. Seeing none, I've reviewed the motion in order. I'm satisfied that the relief sought is warranted under the circumstances, and we will enter that order on interim basis. Thank you, Your Honor.

The next item on the agenda at docket number 12 is the debtor's critical vendors' motion. By this motion, the debtors are seeking authority to pay certain pre-petition claims of certain vendors who will be essential to the debtor's post-petition windout efforts on a go-forward basis. As describing greater detail in the motion, the critical vendors include, among others, suppliers of certain essential services, including terminal security. to protect the debtor's valuable rolling stock assets. The debtors have tailored the critical vendor relief

to only that relief, which is necessary to avoid irreparable harm to the debtors wind down efforts and their objective to maximize the value of their estates. To give your honor a sense of just how narrowly we tailored this relief, the critical vendors represent less than 1% of the debtor's total vendor population. For today's purposes, we are only seeking relief to pay pre-petition critical vendor claims up

to $1 million on an interim basis. Your Honor, the lenders in the U.S. Trustees' office have had the opportunity to review the form of order, and no party is objected to this motion. Unless Your Honor has any questions, we respectfully request that you enter the proposed order. Thank you. Is there any party in interest that would like to be heard with respect to the critical vendor motion? Okay.

Seeing none, I've also had a chance to review that motion in order. I'm satisfied that the relief sought is warranted. and we will enter that order on an interim basis. Thank you, Your Honor. The next item on the agenda at docket number 12 and is supplemented by docket number 148 is the debtor's customer's collection motion. Earlier today, we filed a supplement

to the debtor's customer collections motion following discussions with the United States Trustees Office. Attached as exhibit aid to the supplement is a declaration of Mr. Michael Leto in support of the motion. As a preliminary matter, Mr. Letto is not on the Zoom line today, and I'd ask to move his declaration into evidence for the purposes of this motion, subject to the party's rights to ask them questions if they would like to.

Got it. So first, Mr. Jacobson, apologies. I think you said this was at D.I.12, if I'm understanding, I think this is at D.I. 19 and the critical vendors was D.I.12? Do I have that? Just to... I apologize, Your Honor. I misspoke. Okay, no worries. Okay. So D.I. 19, and so you're now moving into evidence, Mr. Lato's declaration, which I believe is at the I-148. Is there any party in interest that would like the opportunity to be heard with respect to the motion to admit Mr. Lato's declaration to evidence? Okay, seeing none that will be admitted, is there any party in interest that would like the opportunity to cross-examine Mr. Lato? All right.

Seeing none, Mr. Agamon, you can proceed. Thank you, Your Honor. By this motion and is clarified in the supplement, the debtors are seeking authority to consent to a modification of the automatic stay solely to permit the set off of certain customer claims against the debtors. Further, the debtors are seeking authority, but not direction, to continue to administer certain customer programs in honor undisputed pre-petition obligations related there to. As described in greater detail in our pleadings, the debtors have approximately $465 million in an account receivable from their customers.

These receivables are clearly a very valuable asset of the estates. On the other hand, in connection with the customer programs, the debtors owe their customers approximately $60 million on account of such pre-petition programs. Your Honor, our customers refusal to remit to the debtors the amounts owed on account with the accounts receivable would irreparably harm the debtors' estates because the debtors may be unable to collect a significant portion of their accounts receivable, which is critical to these Chapter 11 cases. And to that end, we are seeking entry of an order to facilitate.

set-off negotiations with our customers on a customer-by-customer basis, which would be conditioned upon such customers promptly remitting accounts receivable to the estates. We believe that permitting the debtors to negotiate set-offs on a customer-by-customer basis and to continue programs in the ordinary course will be essential to maximizing the debtor's collection efforts. I want to be clear, Your Honor. The debtors do not intend on consenting to a set-off for any customer who does not agree to promptly remit outstanding accounts receivable to the debtors. As I previously mentioned, we worked with the Office of the United States

trustee prior to the hearing to answer their questions and resolve all concerns. No party has objected to this motion, and unless your partner is any questions, we respectfully request that you enter the order. Thank you. Is there any party in interest that would like to be heard with respect to the customer set off motion? Okay. Seeing none, I've had the chance to review the motion and the proposed order as well as the

supplement to the motion, and I'm satisfied that the relief sought is appropriate and in the best interests of the estate, and we will enter that order on an interim basis. Thank you, Your Honor. That brings me to the end of the motions that I was covering today. So I would like to at this time pass the podium off to Mr. Nash. Okay, very well. Thank you, Mr. Jacobs and Mr. Nash. Thank you, Your Honor. Thanks, Judge. I'm back to talk about the potential use of cash. collateral. Please to report that we do have the specific consent of the

ABL vendor which is mr. Dunn helpfully reminded all of us they control but we do think that you know we're doing this with the consent of all of the pre-petition secured parties we have consent your honor for the limited use of cash collateral through I believe next Wednesday either until next Wednesday or through next Wednesday and specific specifically, Your Honor, and at docket number 156, we filed a cash collateral budget that will be operative for the next five days. And what we have agreement with respect to, Your Honor, is approximately $16 million in wages, which are due tomorrow or, you know, payable tomorrow and Friday. We also have agreement with respect to the payment of approximately $2.6 million in insurance premium.

insurance, which ensures the collateral, Your Honor. And we also have agreement to pay approximately $1 million in critical vendors. About 500 of that is post-petition, and about 500 of that relates to pre-petition, consistent with the motion that was presented a few minutes ago. And, Your Honor, the reason we seek that now is specifically that million dollars are targeted towards security providers who are safeguarding the collateral around the country and also collection agencies

who are overseeing in real time the collection of yellow's accounts receivable. We don't have Your Honor filed. We have an agreed cash collateral order with an interim cash collateral order that would be operative for the next five days and that is out being reviewed by parties. We don't have it.

It's not in front of Your Honor, so we can't page flip it. I do think it's relatively garden variety, and it's only going to be in effect for the next couple of days. We do in there grant replacement liens and claims to the pre-petition, secure parties to the extent of any diminution in their collateral over the next five days. And otherwise, Your Honor, I think that when this order is uploaded, you'll find it unproblematic. Okay, let me ask this. It's being distributed and is the suggestion that it's being uploaded will essentially amount to a representation that all of the affected parties have signed off on its terms? Yes, sir.

Okay. Is there anyone who objects to proceeding on that basis or would require a certification? Okay, I don't see anyone objecting. So I'm happy to proceed on that basis. Obviously, if I have questions, I'm looking at it, I'll reach out. But otherwise, in the absence of questions or concerns on my own, I'd be happy to end. And I do appreciate the time sensitivity to upcoming payroll

and the need to have access to cash collateral. Mr. Sue. Hi, Your Honor. Your Honor, I hensho, on behalf of Treasury. I just wanted to set out on the record. the conditions under which Treasury is consenting to the short-term use of the cash collateral. One of the issues is that the cash collateral budget

remains subject to treasuries review and consent, and we ask that we receive the budget sufficiently in advance of hearings so that we can actually review the budget before the hearings. As Mr. Nash mentioned earlier, mentioned earlier, we understand that the cash collateral order that we had negotiated will be implemented in connection with any debt financing, and that includes the company's commitment, among other things, to pay treasury the agreed upon adequate protection payments,

consisting of cash pay interest at the default rate, and the payment of professional fees and expenses. And we also, and also a commitment to not prime treasuries links in respect to the Trunch B priority collateral, with the Trunch B joint collateral. And that one of the conditions is also that the commitment that treasuries collateral will be so consistent with a milestone set forth in the cash collateral order, subject to modifications, which may be a very, agreed to by the Treasury and the bidding procedure shall be reasonably acceptable to Treasury and that the dip budgets, the sizing, the maturity, and all the dip terms affecting Treasury's rights and interests where the sale process will be reasonably acceptable to Treasury.

And as adequate protection for the interim use of cash collateral, we agreed that we continue to receive the adequate protection links and super priority claims, accrual of adequate protection payments, and no expenditure outside the cash collateral budget. That's what we agreed to, so I just wanted to confirm on the record now. All right, except that you confused me a little bit. So as I understand the current, the debtor's current ask, they're asking for authority to enter into an order that would provide for the use of cash collateral for five days pursuant to a budget that has already been docketed. So with respect to all of your rights, with respect to some future dip order, I don't think they're affected, but your reservation of rights with respect to all

those things gave me a moment of pause to ask me whether I misunderstood what's actually in front of me. Mr. Nash, am I right that all you're asking for is this five-day use of cash collateral pursuant to an order that the parties will have signed off on and that everyone's rights with respect to what happens with respect to a future dip motion is everyone's rights are fully reserved with respect there too. Do I have that close to right? Perfectly correct, Your Honor. Got it. Okay. Mr. Mintz. I want to make sure we have an understanding here because we add it back and forth with Mr. Nash before this hearing that Mr.

Sue was putting on the record, which was a commitment from the debtor that the terms of the cash collateral order that was specifically negotiated for U.S. Treasury would be part and parcel of any dip financing

that is ultimately presented to the court. So that is a commitment that goes beyond the five-day period that we're talking about now. And we had an understanding with the debtor that that was a commitment. commitment that they would put on the record, and that is a condition to our willingness to consent today. I believe I did that judge more than once.

Okay. And it may have been only that I introduced the confusion. So to the extent that the thing I did, I apologize. I, but it sounds like Mr. Minst, are you satisfied with Mr. Nash's representation? Not by anyone. Okay. And apologies to all to the extent that I made it more complicated. So the person who's next introduced himself last time, and I confirmed.

that your name fell out of my head. My apologies for that, but let me give you that opportunity to proceed. Thank you, Your Honor. It's Kevin Samar and Trinnell and Stewart for Citizens Bank as the AVL agent. As Mr. Nash stated, this is a very short-term use-to-catch collateral motion. It is a very limited budget. No parties fees that expenses are being paid, including the ABL agent. That will all be addressed in the final, you know, wherever we land on the dip order or cash collateral order.

The idea here is to bridge this debtor for the next week to allow them to solidify the dip that proposal. As just a Dunn stated under our credit agreement with the U.S. Treasury and the term lenders, as the order is limited solely to the ABO, proceeds of the ABO, prior to collateral, Citizens Bank has consent and the other parties are deemed to have consented. That's not our goal here. We hope everybody reviews. the order is satisfied with it.

We provided an adequate protection liens and prior administrative claims to the Treasury and to the term lenders. It would be the route will go so that this debtor can move forward, pay its employees, and get to get the next stage of this case. Thank you. Thank you. Ms. Leamy, I think you're next then, Mr. Sulferman. Thank you, Your Honor.

Just to follow up on a point, Your Honor made earlier, I think since this is a new order that hasn't been a form of which hasn't been filed yet, I think it might be better to ask the parties to file that under certification of counsel just to make sure that any party that thinks it should have reviewed it already has done so before it's presented to your honor. Okay. Mr. Nash or Ms. Jones, any objection to proceeding as Ms. Leamy suggests? Go ahead.

I'm sorry, Mr. Nash. No, just mechanically, Your Honor, yes, we can do this so there's certification of counsels that is submitted to the court. Okay, very well. Thank you. Mr. Soverman. Thank you, Your Honor, very briefly, just for the record, on behalf of Bank of New York Mellon, we read it to be iterate and adopt the statements on that Bank of New York Mellon that Mr. Schu and Mr. Mince made with respect to treasure. Okay, very well. Okay, so Mr. Nash, I guess back to you. Where to from here?

That concludes everything we have in front of Your Honor today, and we will be in touch with your chambers real time with respect to the time that you graciously allotted us on Friday morning, whether that will be in person or Zoom. Thank you, Judge. Okay. Thank you, Mr. Gristman. I see you've also raised your hand. Let me give you a chance to be heard. Sure, thank you, Your Honor. We just reviewed. It was just sent over the so-called Junior Dipiscolian proposal, which I think at least based on the one paragraph that was contained in the letter, was junior name only. We don't have to get into details on this call, on this hearing. at the moment, but I'd like Mr. Nash to commit

to getting on the phone with us and with the Milbank team to discuss the propometers of Friday's hearing, whether they truly intend to have evaluation of trial on Friday or whether we're going to

try to work through what is I think a questionable proposal for junior financing and how we plan to handle the next 36 hours. There's been weeks of negotiations. There's been weeks of negotiations. over this DIP facility.

They have toggled now really on almost a moment's notice to a contested hearing on Friday, and we'd like to figure out how that's all going to work. So we don't have to get into it on the call on this hearing, but I'd like to get on the call with Mr. Nash and his team and the bill banking immediately or as soon as possible that this year. Okay, I take it Mr. Nash, you don't have an objection to continue discussions with affected parties with respect to the relief you're seeking.

As you might expect, honor, I do not. Okay, very well. Okay. Let me start by, well, finish, by thanking all of the parties for the, oh, I guess while we're here, what we haven't done, and I'm not sure we need to do this now or we can do it on Friday, is for the relief that's being entered on an interim basis. I guess if you're going to serve out those orders, we should probably include a date for a second day here. Does it make sense to address that now? Or would you prefer to come back to that on Friday? What's Ms. Jones, you have a preference in that regard? No, Your Honor, that's totally to the court. We had, your chamber's had reached out seeking a date. And I had advised that it's probably 21 to 5, 25 days out for things like the finals

of retentions or other utilities, things like that are interim type orders. So we stand at Your Honor's pleasure on that. Obviously, Your Honor, the only reservation I would make is depending on how Gip is moving through with respect to Mr. Nash and his team. Obviously, Your Honor, I'd want to stay flexible on that. Okay. Mr. Nash, any other thoughts? Should we identify a date or do we just come back to that on Friday? It works for Your Honor.

Would penciling in September? 18th at 2 o'clock? Is that work for the parties? For me, Judge. Mr. Your Honor, we could use that for second day for all the other type motions. Terrific. And we'll see where Mr. Nash ends with respect to whether we need to use that in any respect for dip financing. Okay, very, very well. So let's plan on the ordinary second day materials, you know, motions to be considered for final approval on that date.

and obviously with respect to the dip to the extent there are moving parts will address that as it arises. Okay, look, I appreciate that this case arises in unusual circumstances and presents a number of challenges. I do appreciate the debtor's efforts to obtain the most favorable dip terms that it can, consistent with its fiduciary obligation, so everyone's efforts here appreciate. that everyone's substantive rights are fully reserved are appreciated. So let me thank all of you for the good and hard work you've done. And with that, I guess we will see you on Friday in some form or fashion. If there's an emergency that arises between now and then,

of course you know how to find us to the extent orders are uploaded, we will enter those subject to the subject to the, filing of a certification for the cash collateral order. And with that, and my thanks, we're adjourned.