American court hearing recordings and interviews - Season 7. Episode 11. March 6, 2024. 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: March 24, 2024

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All rhyme. So, good afternoon. Judge Goldblatt, we're on the record, in-ray yellow corporation at all, which is case number 23-11069. Slate, Your Honor, take us through our agenda. Thank you, Your Honor. Mike Slade for the debtors.

There's two matters up for the court this afternoon. The first is the arbitration motions filed by the two sets of 11. pension funds, and then the PBC has a motion. Neither. I'm responding to both of them, so I think what we propose to do is have the arbitration motions go first. The pension funds will go first. They will go in seriatum, and then anybody that's supporting their position would go, and then I would address the matter for the debtors, followed by other people who are opposed to the motions. Okay. Very well, Mr. Sullivan.

Good afternoon, Your Honor. Bill Sullivan, Sullivan, Hazatine-Aulson, on behalf of both the Central state's pension fund and the group of pension funds who have been appearing here jointly. Your Honor, with respect to the two motions to compel arbitration, my co-counsel, Ed Mehan from the law group, will go first. He, his firm and my firm represent the ten pension funds, and then followed up will be Dan Sullivan from Central States. And then, as Mr. Slate, said there'll be other responses. So unless your honor, oh, Your Honor, there was one other matter on the agenda. Number eight, the motion for leave to reply. We filed that on Sunday because we filed the reply on Sunday. I'm not sure how I'll roll in the motion, but I have read the brief.

Okay. That was a joke. I'll grant the motion. Yes, thank you, Your Honor. And with that, I'll turn the podium over to Mr. Mehan. Great. Very well. Thank you, Your Honor. First of all, for the courtesy of allowing me to appear in front of you. Welcome to Wilmington. We arranged beautiful weather for you. Well, I noticed that. I did try to dance between the raindrops on the way over from Mr. Sullivan's office. He did not give me an umbrella, but I didn't come prepared, so I guess we'll both have fallen on that one. Your Honor, as I understand from the debtors papers, I'm here on what the debtors consider the most important issue in the case. And that may well be the case.

It is critically important. There's no doubt about that to the debtors. It's also critically important to at least a... 11 funds. I'm speaking on behalf of the 10 and Central States will have their own counsel, but as I believe the court must have noticed at this point, we've actually coordinated quite a bit. Much appreciate it. And we see it in our interest, too. The debtor is interested in moving this forward. We are absolutely interested in moving it forward. And so, Your Honor, I think in that spirit, I would suggest that there really is not much of a debate over whether you're on has the power to do what we are asking, which is to send these withdrawal liability, claims,

disputes to arbitration. From the policies expressed in Flying Tiger to Hayes and, of course, most especially the Mince case, the only serious debate I would suggest in the Third Circuit would be whether Your Honor is required to send it to arbitration. So I understand. Can I back up for a second? Of course. I want to make sure I understand the... procedural posture of what I have in front of me. So your motion is captioned, I think, a motion to compel arbitration.

Right. Or in the alternative to lift the stay. Okay. And so I want to make sure I'm wrapping my brain around the applicable standards, which is why I'm asking this kind of pointy-headed question, because a motion to compel arbitration is a thing under the Federal Arbitration Act, where you, under Title IX, right, where someone files a lawsuit. in a case in which arbitration is mandatory and there's specific statutory language as the court can compel arbitration.

And the situation, as I understand it, under ERISA is slightly different. It doesn't really contemplate there being a lawsuit, right? It contemplates the, it has a dispute resolution procedures and then says either party may, there's no shall, either party may initiate essentially the arbitration. So I'm not sure that there's such a thing as a motion to compel arbitration in this context. I think what we've got is a motion for stay relief. And so the suggestion, I think this is not you. I think this is the other fund that suggests that I should direct the debtor to initiate an arbitration. And that actually struck me as a little bit curious.

I'm not sure what my authority is to do that. So I'm thinking about these things as motions for relief from stay in which you're asking me to lift the stay and allow you to go initiate an arbitration under Title 29. But if you think I'm thinking about that through the wrong framework, I want to give you every opportunity to tell me that. Your Honor, I will say we can certainly live with that. But the way we would look at it is under the Federal Arbitration Act, that is the structure under MEPA, the act here.

We've had this battle of what the word shall mean. We have the shall in terms of the bankers. So Section 502 says shall and the ERISA statute, MPA, says shall. And so we've got, it seems to me, if I take both of those statutory commands, literally a classic conflict. And the task is to harmonize those provisions to the best of one's ability. And that gets complicated. And you can fight all day long about which one is more specific. I'm not sure of that.

I think that might battle to draw. but that's what leaves me to tentatively think, particularly in light of the fact that there are, you know, the equity holders have also sought to participate, which might take us out of the mince circumstance that I've got. I'm not, look, let me tell you where I, just because I have a terrible poker face, I'd like to tell people what I'm thinking and call it transparency. I actually think I've got a discretionary judgment that we've got to reconcile these statutes and figure out what makes sense. That you can't, they conflict. And so either side has a perfectly fine story. You've finally broken loose from work.

Three friends, one tea time, and then the text. Honey, there's water in the basement. Not exactly how you pictured yourself. Saturday. That's when you call us, Cincinnati Insurance. We always answer the call, because real protection means showing up, even when things are in the rough. Cincinnati Insurance, let us make your bad day better. Find an agent at CINFIN.com. Good beginning, middle, and end about why they're right. The problem is you have to pick. and I don't know how to do that other than to think hard about the facts and circumstances before me

and figure out what makes the most sense. And I'll say, let me just, I'm sorry for talking so much. I actually want to hear what you have to say. But let me just say as a kickoff matter, I'm assuming, I think it only makes sense for me to resolve the pending motions on the assessment. assumption that the arbitrators or this court would apply the same legal standard and that we both do our best to get it right. And that, you know, an argument that one or the other should resolve it because, you know, it's important that so-and-so prevails is, I view is essentially a non-starter

from how I'm thinking about this. This is just a question of who decides. And we're both, we would both be applying the same set of rules. And so the question is, under the circumstance, who ought to decide it? That gives rise to a question that I have for you, because I know your briefs have been very helpful in teaching me about the way pension withdrawal liability works, but I am by no means an expert. So as I understand it, when, if under the NPA, if this were to go to an arbitration, an arbitrator makes a decision. And as I see it, the statute says that they're factual fine. This is enforceable in a federal district court of competent jurisdiction that the court should essentially. defer to the factual determinations by the arbitrators.

But am I right that the arbitrator's determinations on questions of law is subject to de novo review? Correct, Your Honor. Exactly, as the court stated. Okay. And I understand Flying Tiger says that's not a reason why you don't arbitrate. I get all of that. But it does seem to – if at the end of the day – and I don't know whether the dispute

between these parties is mostly a factual dispute or a legal dispute. I'm certainly aware of the issue with the PBGC regulation, and that sounds like a legal dispute. There may or may not also be factual disputes, and I'm not here to hear the merits at all. But in terms of how this comes out, it seems to me, if I were to do it, I would make whatever, I think claims allowance is a core matter, so I would make findings of fact that would be subject to death. differential review and my legal determinations would be reviewed de novo in the district court. And it sounds like if it were going to an arbitrator, essentially the same thing happens. So at some level, as I'm thinking about this, in terms of where this goes, in either event, it ends up in the same place.

Am I thinking about that the wrong way? It may be a different district court. I understand that. Your Honor, I would say respectfully that I think the court is thinking about it very closely, but there might be some... Okay, help me. Yes, some subtle distinctions here, Judge, but I think we're going to end up trying to get to the same place here

in terms of what the focus of the decision-making in front of Your Honor would be is the Third Circuit in Minsk briefly, and I trust the court is very familiar with that decision now, does not see a conflict in terms of the bankruptcy code and MEPA, and the Third Circuit did come out with the notion that matters. So mince is a federal arbitration in that case, not an MPA case, right? It was dealing with withdrawal liability issues. We're thinking about different mince decisions.

Oh, Your Honor, I apologize. I apologize. With the policies, the policies behind the arbitration were where the notion was, is there a conflict? And is there an indication about preserving judicial remedy? So in that regard, Your Honor. Okay, I'm going to do that far. So the focus here, Your Honor, I think, is on the idea of if it goes to arbitration, yes, I believe Your Honor has stated it correctly that the factual findings of the arbitrator would be given deference.

To the extent Your Honor is making factual findings similar outcome. If it is an issue of law, if it goes to the arbitrator, then that is subject to review in district court in a de novo fashion. there would be a similar outcome if the matter were kept with Your Honor, issues of law from a de novo outcome. So, Your Honor, where we begin to look at it again is not over this idea of should we be arguing. Is it mandatory? Is it discretionary? The question is only does the court have the power. And that's where I began with. I believe Your Honor does have the power.

The question is whether to apply it. And the factors that we would suggest are the ones that would govern that decision concern. is there a negative effect on the debtor's estate of sending the matter to arbitration? Is there a prejudice to the funds of having it not go to arbitration? And bottom line is, if the case is sent to arbitration, is it going to affect the ability of this court to orderly? order we handle the balance of the case. And that's where we would suggest, Your Honor, those discretionary factors should be considered,

and that's the grounds in which we are, you know, happy to run through. Okay. So I understand that, and that's very helpful. Just so that I understand where we are, as I saw the agenda today and the pleadings, no party is seeking to put on evidence. Am I right about that? Here today? Yes. Correct, Your Honor.

Okay. That is my understanding as well. Okay. Your Honor, with respect to the issue of delay, that seems to be the focus, as we're reading the debtor's papers, are concerned about the delay, that this particular set of issues needs to be addressed before the case can move forward. There are two responses, if I may, to that, Your Honor. first response is that this matter, whether it's heard by this court or by the arbitrator, is in our judgment and understanding going to proceed on more or less the same track in terms of timing.

So what basis do I have? I've got a scheduling order in front of me, so I think I know what that looks like. What basis do I have to form a judgment one way or the other about how long it would take to arbitrate? Because Your Honor has entered an order that was. negotiated between counsel and again compliment debtors counsel we work very effectively together to get to that schedule that is now an order of this court that that applies to matters in front of me but my question is at what confidence do I have other than speculation about what would happen in an

arbitral tribunal your honor we view ourselves as bound by that order and we intend to comply with that order whether this is matter is resolved in front of your honor or in arbitration the only thing your honor is that we obviously can't control is because we don't have an arbitrator just yet, and I do have some suggestions about how to move us along in that regard, is that if the arbitrator who is selected is likewise available the first week of August to begin this matter, I suppose we can't know that right now. But most of the work that we need to do is laid out in that order in terms of discovery,

in terms of providing information about expert witnesses, in terms of dispositive motions, all of that, We have already begun. The parties have exchanged discovery demands. We have begun to produce discovery. We have informally discussed with Debtors Council that we are going to have meet and confer discussions. Hopefully, in fact, after this hearing, we had contemplated we would talk about that. So from the perspective of the 10 funds, Your Honor, I'm representing to this court.

We are fully committed to that schedule. 100% is what we put in our reply papers, and that's what we intended to say. We thought about that with great care. So that is the schedule that we believe will govern. There is a strong desire by the funds to resolve this promptly as well. The sooner we have this behind us, the sooner we understand where we may end up in terms of what is an allowed claim. Distributions, obviously, are an issue for a later day. I take it look.

As I understand it, as I understand it, there's no real dispute. at the very least, we're talking about there being hundreds of millions of dollars available for distribution after the funded debt is paid. And so I take it no one is disputing that getting those funds in the hands of whomever it is who's entitled to them sooner rather than later is a serious interest. That seems to be a mutual interest among all the parties as far as I can tell, Your Honor. It's certainly out. Okay.

So, Your Honor, the question becomes, as I think at the heart of this, to the extent Your Honor is viewing this as a matter of discretion is, to what extent referring the matter to arbitration would result in delay. I've given as strong as representation as I possibly can in terms of that schedule. One of the issues that the debtors have brought up, Your Honor, may recall that initially their concern was that there might be 20 different arbitrations with 20 different arbitrators. That's as I understand it, because we have 11 states plus our 10, plus I believe there are approximately nine more funds out there to which there has been. no objection. But I understand it is the debtor's plan to object those funds. As I understand it,

again, I'm not here for them, but they are in a somewhat different situation, not having received the special financing assistance, which is a big part of the debtor's objection. I cannot speak to why the debtor did not initiate all of these claims objections some time ago. They did what they did, presumably they were busy with other men. matters. We had it split so that there was the one, then the ten, and the nine to remain. When we came in, what we were focused on my law firm and when we were invited to be a part of this proceeding, we were focused on can we assemble. So we assembled the ten. We've developed a strong working relationship with Central Station. I can represent to the court that

among the 11 funds, there is a commitment to selecting. one arbitrator so that we don't have this specter of 11 or 20 or whatever it might be different arbitrations, that one arbitrator with the expertise and the experience with Inwood Withdrawal liability matters would be selected. That is an issue that we saw the debtors raised. We tried to address it. We understand also the debtors are raising a concern that we may have trouble selecting an arbitrator. I can let the court know again between counsel, myself and counsel for the debtor. We have begun that dialogue. Now, how soon we'll get to a resolution or if we'll get to a resolution, time will tell. But we have developed a very good working relationship. Some of the

relationships in this room, Your Honor, including between debtors' counsel and myself go back quite away. I expect that we will be able to work together very effectively. But we are committed to do everything we can to advance the selection of an arbitrator. The AAA has procedures which set certain timetables. We are perfectly, perfectly willing to agree to an expedited procedure that would move that along very rapidly. And there is one other point I guess I would make in terms of trying to address the debtor's concerns all about delay and all about fracture is at the end of the discussions when parties are attempting to select an arbitrator, if they cannot do so in good faith, and I do expect good faith here, but if they cannot do that,

there is a procedure that either party can go to a district court and petition for the appointment of an arbitrator to the extent it moves us along here, certainly from the position of the 10 plus the one, and I believe central states will confirm, we are amenable, Your Honor, to having that selection process done by this court, if that is something that the debtor would want. And I don't mean, in a sense, you're going to get too ahead of our discussions, but I just want to make very clear that we have no incentive of any kind to slow this down, and we are at least as anxious as the debtor moved us along.

We were not dragged into that schedule. We negotiated for it. both sides seem to be very interested in pursuing that. There's one other thing, Your Honor, that I might suggest. And again, recognizing that I don't want to get ahead of the rest of the room, but by the way the draw came out, I am speaking first. I'd like to put a placeholder out for something, and I may, if it's okay with Your Honor, return a bit later.

I know there's a motion that's going to be pressed this afternoon by the PBGC. and no no secret that we again have tried to you know work with them cooperatively to make sure we're all exchanging views and and make progress bankruptcy courts are well known for being pragmatic and trying to get to the end of the process in a thoughtful way and we are very much interested in that so your honor what i see hearkening back to some of your earlier questions is where we seem to be now now that we believe we have solved the 20 different arbitrations issue, the 20 different arbitrators issue, and we've got it all in a funnel to go to one in what we hope will be an expedited manner, we do know that your honor has to make a decision over whether it goes to arbitration or not. We are going to engage over that selection process while your honor is considering

that. But what the debtor seems to be focused on now, if I'm reading their paper, papers, is, if I'm reading their papers properly, is if this matter goes to an arbitrator, just as Your Honor was asking earlier, to what extent is their deference, to what extent is their de novo review, the debtor's threshold objection is to seek to invalidate the PBGC regulation. That's their regulation. They will speak to it. Your Honor may have noticed in paragraph 23 of our reply, we indicated that they had raised what we called a thoughtful issue. The thoughtful issue, bearing your honor, that our position is everything goes arbitration, but the thoughtful issue that PDCC has raised is whether Your Honor has the jurisdiction

to address that threshold issue or whether that issue under the Administrative Procedure Act must go to a district court. As I understand the debtor's position at this point, It is that everything must remain in front of your honor. Nothing goes to arbitration. Nothing goes to the district court. Well, ultimately. Well, I guess, I mean, it's this initial stage. And to the extent I were to get wrong, the question of the consistency of the regulation with the statute,

that's reviewed de novo in the district court. And so there's this long body of jurisprudence in the bankruptcy context involving review of bankruptcy. court decisions where the cases basically say whether the bankruptcy court technically could have done it or not becomes essentially water over the dam once it gets to the district court and is subject to it to an over review anyway. Problem is this. The water goes over the dam ballpark seven or eight months from now. And I want to put something out there to save all of that time for everyone's mutual benefit. As I say, our position is everything goes to arbitration. But if Your Honor determines that the PBGC's position that this is an APA district court matter has some validity,

then Your Honor would presumably then have that threshold issue go to the district court if the debtor is inclined to pursue it. I guess at that point, Your Honor can decide whether you leave that up to the debtor to challenge that regulation or let that defense go or whether Your Honor actually directs the debtor to file a lawsuit against the PBGC. Again, I'm not going to weigh in on it, but I do want to tease this. I'm going to leave this teaser out here because what we, Your Honor, for the funds, and I believe actually is not in the debtor's interest either. What we wouldn't want to see happen is this, that Your Honor accepts the debtor's position.

Why? Because it hurts everybody, helps nobody. And this is why I say it. If the debtor is persuasive to you, Your Honor, that you keep the entire matter, we do have a schedule that contemplates that we will at least begin a trial in August. And I said, five times already, we're committed to it. But the debtor has put in their papers the expectation that they need to conduct certain discovery. They have some factual issues that they have indicated that they wish to blend in the, with the legal matter for this court to be considering, presumably, after that trial, which begins in August whenever that is completed.

So if we just count it out, we're looking at probably the earliest September by the time everything's completed and Your Honor has an opportunity to consider everything. And at that point, we all know. Somebody's going to appeal it. In all that, we have to presume that in our planning. Of course. notwithstanding that will obviously be right. Well, Your Honor, I have great confidence that this court will make the right decision on what we're doing.

I'm being playful, obviously. No, I understand. And people are entitled to appeal. I understand. And, you know, I did learn that it's the court that gets to make the jokes, but I'm trying to fall within your wake just a little bit. But that was a bit of a risk on my part, but I appreciate that. You let me get a word. We're all good.

Here's the thing. If there's going to be a dispute over whether Your Honor does or does not have jurisdiction here, that threshold issue, one of these parties, the debtor or PBC is going to be unhappy with what Your Honor decides on that score. And that's, in all likelihood, going to lead to some appeal by one of the other than that. So I hear this. It seems this is obviously closely related to the PVGC motion that I'm hearing. this out. Right. And where I'm going, and where I'm going with this, Your Honor, is, again, we want speed. We don't want delay. The issues concerning that threshold matter, if Your Honor believes the

PBGC position is persuasive, we, Your Honor would suggest that that matter move forward in the district court immediately while the other matters go to arbitration. And by other matters, I mean, for example, I truly don't think there would be a legitimate debate over whether this court should be taking on issues coming from the debtor's papers in their objections, whether the, quote, actuarial assumptions and methods used in determination of unfunded vested benefits were in the aggregate reasonable, or the parties or the Plans Actuary made a significant error in applying the actuarial assumptions and methods. That's from their objections, our claims, paragraph 17.

Issues such as the reasonable rate of return assumptions on the SFA money, expert testimony to establish the appropriate discount, right? I could go on, Your Honor, but paragraph 17, 36, 57, 55, 51, all raise issues that are in the wheelhouse of these experience, which are all liability arbitrators. So, Your Honor, from an efficiency point of view, from a speed point of view, and from eliminating any risk that if Your Honor keeps the threshold issue or more, that that gets somehow reversed down the road, we will have lost all of that time. So from a practical point of view, I am, Your Honor, trying to cut through it to where I think probably the best outcome would be from a practical point of view reserving all positions. you know, in any other matter, obviously.

Your Honor, that's really the essence of what I wanted to present to the court, and I hope Your Honor sees we're really trying to be helpful. I appreciate that, and this was constructive, so thank you very much. Thank you, Your Honor. Thank you, Your Honor. Good afternoon, Your Honor. My name's Daniel Sullivan. I'm here on behalf of the Central State's pension fund.

I will endeavor to be brief. I know we have a lot of things, but, of course, it goes without saying. Interrupt me any time, Your Honor. For the most part, I think I agree with everything Mr. Meehan said, but I would like to just touch on a couple of other points. Just the first thing that Your Honor raised as to sort of the procedural niceties here. As a background matter, 29 U.S.C. 1401B3 does provide the Title IX of the U.S. Code, which is the Federal Arbitration Act, does apply absent a specific conflict with ERISA and so on. So I would say that as an initial matter, I think that there is nothing wrong.

with a motion... Except that... Go ahead. The normal situation where you see a motion to compel arbitration in district court is plaintiff files a lawsuit against defendant.

Defendant says this is subject to mandatory arbitration, and they essentially move to dismiss or on the alternative to compel arbitration. What you're suggesting is something that I don't think I've ever seen in the district court, and if it's happened and I don't know about it, I'm happy

to hear it. But the notion that I should direct the debtor to initiate an arbitration. And I appreciate that this is a technicality, but it's a fine point that I think that might matter to what the procedural posture of what I'm doing is. And the way I view my job as a general matter is the debtor makes its decisions about how it's going to conduct the case. Certain matters are subject to approval by me, but I rarely direct them to go off and do something, which is what you're asking me to do. And that struck me as your request for relief from stay, I understand, but I don't really get the notion that I issue an order that says to the debtor, I can't think of another circumstance in bankruptcy

where a bankruptcy judge issues the order to the debtor. If you had a contractor right to specific performance, you could go enforce that, but I don't think that's where we are, and it struck me as procedurally odd that I direct the debtor to initiate an arbitration. And so therefore, I think of your relief just so that I can wrap my my brain around it, you know, and conventional bankruptcy principles, your request for relief from the state so you can initiate it, I understand entirely. And that just strikes me as a more sensible framework for thinking about what you're asking for. But, again, if you think that your first request, there's authority for,

and I'm the only one in the rumor doesn't know it, enlighten me. Well, Your Honor, I will go a little out of order on your question. I'll start with the last one first. I certainly think that's a fine result to reach 29-401A does provide that either party may initiate arbitration. Either party may. That's right. So it doesn't contemplate a court ordering someone to. Exactly.

I'm interested in these procedural questions as well, so I will try and give my answers to the rest of them. I will, however, acknowledge what Your Honor is saying that, you know, as it sounds like you did, if you go into Westlaw and you try and find an instance of an employer being compelled to arbitrate in a withdrawal liability scenario, you will find that to be unusual. The reason that is unusual, and I can say this because I've litigated several of these cases, is because the better tack is to say nothing and wait for the statute of limitations to expire and then accuse the employer of having waived its rights and let them die. Now, that's far less available in the bankruptcy context.

I think there's some case law, perhaps in the Third Circuit, but I know there is in the Seventh Circuit, so I imagine it's right, that you may be tolling that chance to arbitrate. But I would like to point out that, you know, again, going back to the Seventh Circuit, so only persuasive, but a case called Slotky v. Central States, 956, F-second, 1369. There is some remark there that it doesn't prejudice the estate to go to arbitration. Because effectively what it is doing is vindicating its rights, protecting itself, because the presumption is actually the assessment is correct, if not disputed, and if not disputed under the channels of the statute. Okay, so I understand that. In thinking about how we got to where we are, though, maybe I'm the only one who found this interesting.

Right, so you filed a proof of claim. That, I'll hear out the debtor, but for one, I'm disinclined to find that that's a waiver of anything. It seems to me you were required if you want to protect your rights to file a proof of claim. And that even though the Title 29 says that you can, initiate an arbitration, I take it your view would have been that the automatic stay would, if that's an attempt to collect a pre-petition debt against the bankruptcy estate and that the automatic stay would essentially trump that. You couldn't ignore the automatic stay and just start an arbitration, which to me highlights the broader conundrum, which is everyone agrees the

bankruptcy code has some application in ways that are inconsistent with what the NPAA says. and we've got the task of reconciling them to the best of our ability. Am I thinking about that the wrong way from your rights? Your Honor, you know, with reserving my rights on waiver and on appeal and everything, I think you're absolutely right. Okay, look, I'm not looking to trick anyone. I'm just trying to get this. I'm doing my best to get it, right?

I mean, I'm 99% with you. I think it's probably discretionary with your power. That's correct. Okay. Okay, that's helpful. So, Your Honor, and then, you know, Mr. Meehan touched on this, so I'll be very quick, but just, you know, on the point of speed and efficiency and how an arbitration is going to look, we are doing this because we do think it is going to be the more efficient course.

We do think it is going to be more effective for the parties. There are a couple of reasons for that. Now, I would like to point out that I understand debtors as debtors in possession as well as debtors' counsel. Do have a very strong fiduciary duty to protect the estate. I believe they're doing that. But we don't have a fiduciary interest just. we also have an actual material interest. The reason I say that is that even if the regulation is invalidated,

Central States would still have a withdrawal liability claim in the amount of some tens of millions of dollars. I mean, it would be significantly reduced, but we would still be one of the largest creditors in this case. We still have contribution claims in this case, and we still have our breach of contract claim in this case. And those are not subject to arbitration, as I understand. That is correct, Your Honor. Yes.

Okay. And so my point being, Your Honor, is that, you know, we have every incentive in the world, and I would respectfully state to the debtors' counsel that we frankly probably have a better incentive than they do to keep this moving along. And I do think a central feature of arbitration is that for the most part it does move as fast or as quickly as the parties make it move. Can I ask you this question? So under the bankruptcy code, as I read it, any party in interest has the right to appear and be heard on anything that affects their economic interest. and so here we've got joined her by certain equity holders who would like to participate in the dispute over this.

What am I to think about the ability of the equity holders to participate in an arbitration? Your Honor, in this case, I think that the theoretical issue probably doesn't present itself with as much practical force. I do acknowledge that there is that conflict, right, by default, you know, not every person can sort of walk into an arbitration than other parties conducting. You know, in this case, when we are thinking about what is likely a discretionary decision and the degree of prejudice that equity holders, you know, something like 40% MFN, 30% the United States Treasury,

and approximately 30%, I assume, small equity holders, you know, to the extent that those parties are prejudiced, I would think it's relatively minimal just because we have seen how closely, the debtors have worked with MFN. Just to the point being that, and I have no confidentiality objection, I'm not saying you can't tell MFN what happens in the arbitration absent a further order or something. So I do recognize that, you know, in some case, in some case there could be a real concern

that comes from that theoretical divide, but we think here it's probably not compelling and certainly not more compelling than, again, subject to your honest discretion. the fact that Flying Tiger Line does describe this is a substantive protection for funds. This does help the funds out. This does, you know, fit within a broader protective scheme for multi-employer pension funds. Okay.

So, like I said, you know, we have every incentive to keep this moving quickly. As Mr. Mehan said, we've been collaborating very closely with him. I think at this point, we are probably further ahead in the process than you would be even if it was one employer and one fund. So, you know, to the extent, Your Honor does have a discretionary decision to make, I would respectfully submit that the fact that it's 11 funds as opposed to one fund, I think that problem's been solved. And then one other thing, Your Honor, you know, you did mention that there might be a legal component, there might be a factual component, and while I agree that the PBDC regulation, you know,

is the largest aspect of this in terms of dollars and cents, I do think that there are going to be factual components at issue here. We were served with discovery requests by the debtors' counsel. and they, you know, raise at least a dozen questions related to sort of core actuarial type issues, the sort of thing that MPPAA arbitrators frequently deal with, you know, why did you think this asset class can be worth that much, this much, so on and so forth. And that gives us to the sort of the other, that's the point I was making a moment ago. That's why we want arbitration, because, you know, you're out of showing, you're on the ball,

you're paying attention to this case, and I appreciate that. but an arbitrator would have a head start on these issues. He would have known, okay, this actuarial issue is a real issue. That one's, you know. I appreciate the point of that specialized tribunal, and I get that. Let me ask this question. To the extent you've got matters that are not subject to arbitration, how much factual overlap, if any, is there between those issues

and the ones that you think are subject to arbitration? As it relates to central states, Your Honor, I believe it's minimal. I'm thinking out loud a little bit, so please be patient with me. Our claim for contributions is principally for contributions that would have been owed for June and July of 2023. The withdrawal liability calculation goes through December 31, 2022. So there's probably no overlap there besides. Actually, let me ask my question. Okay.

Okay. Okay. The scheduling order that I've entered for the case that is the claims allowance dispute that is in front of me, at least for now, does that contemplate resolving only the matters that was subject to arbitration or would it address all of your claims? Oh, yes. So, yes, Your Honor. So the scheduling order that was entered applies to all the withdrawal liability claims and

all the central state's claims that would be adjudicated in this court. So I think your next question then is, as it stands right now, you know, there would be the two claims sort of proceeding, you know, on the same basis. I think as a member of the Central States team, you know, I think that's not necessarily, you know, the workload on us is not a reason for not doing it, although, you know, if the hearings are scheduled at the same time, I do admit, we could have a problem there.

Okay, okay, thank. That's helpful. Thank you. And then, Your Honor, I'll just make one last brief point. And I imagine, Your Honor, is far more familiar with this than I am, but there is one thing that I would like to clarify that Mr. Meehan said at that that. the very beginning where he said this is probably the most, or this could be the most important issue in this case. I don't disagree with them per se, but I would just like to say this isn't

the only moving piece. I understand that. Okay, well, then I'll just very briefly, you know, there's the Warnack claims, there's the EPA objection. I don't think there's really any particular reason to believe that even if the arbitration does cause this to slip by a month, that that's going to meaningfully impact recoveries to creditors or to any other class. So unless your honor has any other questions, that's all for my presentation. Thank you, Mr. Feldon. That's very helpful. I appreciate it. Thank you. Mr. Mayhan, I see you've risen again, and let me give you the chance to follow up as necessary. I realize it's my first time here.

Unconvention. I care more about substance and form, so if there's something that I should know now, why don't I give you a chance to tell me? Thank you, Your Honor. Two very quick points, because I thought instead of trying to come back later, on the participation of MFN, the party an interest point, two things, Your Honor. One, according to their own papers, they're shoulder to shoulder with the debtor, so they really see everything together. And as we pointed out, they appear to have been working together from more or less day one on these matters. But, two, if MFN wish to participate in the arbitration, that's fine with us.

I speak for the 10 there. Then, Your Honor did ask a question about these other claims. Central states does have the contribution claims and other issues to which the debtor did object. the debtors have only, with respect to the tent, objected to the withdrawal liability claim. So that's all at this moment that's in dispute as far as the ten are concerned. You just want to make sure that was clear? Thank you.

Thank you, Your Honor. I'm going to detour from what I was going to argue and start directly with the points, Your Honor, made. First, I mean, obviously the debtors, we're fiduciaries for all stakeholders in the case. It's our job to try to advocate to Your Honor for what we think is the best outcome for every. And there is no doubt that your honor keeping the case subject to the current scheduling order, which has a trial starting, I believe five months from today, is the best course of action for all stakeholders.

It's not just MFN that would likely want to participate in the trial in front of your honor. The PBCC probably wants to participate in the trial in front of your honor. They're not provided for an arbitration. I am certain that other creditors will be interested in participating given the unanimity, the agreements. We agree on nothing except for the fact that this is the most important issue in the case. And that issue should be presented in front of Your Honor. I want to address the procedural question that your Honor asked. This is a claims objection.

We filed a claims objection as subject to 502. Essentially what they're arguing, Your Honor was asking, what is this? I think it's really more of like an abstention motion. Well, look, I actually think, look, I mean, Rekine itself was claims allowance. and the notion was the court should, in certain circumstance, grant relief and stay when the case is on the eve of trial, right, before, and it's a pre-petition claim against the estate, but if there's a court, you know, that has specialized knowledge, knows the case well and can get adjudicated promptly, right? That's a factor that counsel's in favor of stay relief. It is claims allowance in the sense that all they do there is decide the amount of the claimant that flow. back through the bankruptcy process as an allowed claim. But this seems to me to be, no one talks about the vaccine factors in their papers,

but this ultimately seems to me to be an argument that I ought to lift the stay and allow this to proceed in another tribunal. And the arguments for it are, you know, there are at least plausible arguments. I mean, there is a federal statute that addresses this, that's entitled to some respect, and there is, you know, expertise on these matters.

And, you know, look, how complicated it is, I don't, we can have a conversation about. But, you know, unlike an arbitrator, I haven't, you know, spent my life with actuarial assumptions. So I, you know, so the arbitrators haven't either. But, yeah, the reality is, Your Honor, as far as the Rexion factors, we did address those in our papers because we don't even think they're even close to satisfied by the, I mean, there are, as Your Honor notes, there are many circumstances in which you would lift the state to allow a claim to be liquidated. elsewhere, EVE a trial, if there is a matter that mostly is going to be covered by insurance anyway, so it won't have an impact or material impact on the estate. There is no precedent for a court lifting the state to allow the most important issue in the case. Well, look, the fact that it's the most important issue in the case clearly is a relevant consideration.

And I don't think there's, you know, you could fight around the margins, but there's no dispute that this is of enormous importance to this estate. One other point on that I would make is, let's say theoretically, Your Honor decided that this case should go to. It would be arbitrations. Okay. We would be back in front of Your Honor anyway, on a 502C motion, because that issue would get decided somewhere else and get appealed somewhere else. We would have to propose a plan at some point. We would have to be back in front of Your Honor on a 50-C motion to estimate the claim for purposes of any plan that we would propose. Well, because it's such a large.

Can I ask you what you mean about that? Because the term estimation is used in bankruptcy in a lot of different contexts. And it's one thing if you say you should estimate for voting purposes. But if you're contemplating an estimation for distribution purposes, then that seems, it would seem surprising that I would lift a stay and allow an arbitrator to decide it and at the same time entertain a motion for estimation. So I guess I am interested in understanding, right? You only 502C estimate if there's, look, I understand getting this resolved promptly. I'm not minimizing. I presume that the excess funds that the estate is holding

is in an account subject to the U.S. trustee guidelines, getting, earning very little, and getting it into the hands of the ultimate beneficiary seems to me to be a pretty important thing. But in terms of do we have the kind of exigency that would require a 502C estimation once we've already started an arbitration, what would the story be for that? Well, I think it's likely that we will be proposing a plan. We would need people to be able to tell people what you are going to be. get in the plan. Okay. So, okay, but, but you, you've done this a lot of times. You have, there are ranges, there are lots of different ways of doing that at the closure statement stage.

I think the odds of your honor not having a way in on the question are pretty low. Okay. Is, is the point I was making. So the next thing I wanted to hit is, um, what does arbitration look like? So I think, um, it just that an arbitration order would not solve any of the problems. that the funds aren't trying to solve. First, there are 11 funds here. There are between seven and nine others that we will be filing objections to their claims as well. And what schedule do you propose those proceed on? We're going to propose a schedule that has another hearing after this current hearing. Okay. And these are also withdrawal liability claims. They are. Correct. Okay. Second. The other question you asked Mr. Sullivan was whether there's overlaes.

with the non-wil withdrawal liability claims there is. Their other largest claim is this claim under an agreement for missed contributions, and that a lot of the defenses overlap materially, i.e. that this is an effort for double recovery. They've already gotten the same money multiple times. So I think there is material overlap with those claims. But let's talk about what arbitration would be. So we would have to make a decision, I guess, if Your Honor were to direct us to arbitrate or lift the say to allow them to arbitrate.

Assume I'm not going to direct you to arbitrate. I just don't understand what the source of my authority is to issue such a direction. So they would initiate at least 11 different arbitrations. And then we would have to decide whether we as the debtor were willing to consolidate all of the arbitrations. I understand. I'm not sure we would. I'm not sure any responsible fiduciary would put the fate of the whole estate in every creditor's recovery in the hands of one AAA arbitrator who we don't know who it is. Okay, but let's assume we did that.

No, I understand that. But look, let me say this. If we go, the scheduling order that we've entered here consolidates them all, right? Yep, for a single hearing in front of the bank. No, I understand that. But I meant what I said, that I'm going to have a hard time. with an argument that says it should go forward in front of me instead of someone else because I think I'm better than somebody else.

Like that's not a line of argument that's going to get a lot of traction here. But the point I'm making is even deciding who the one or 11 people is going to be, I think the odds of us agreeing to that. I like Mr. Mee and we've worked well together in the case so far, but our clients have exactly the opposite interest. And so as nice as the guy as he is as I... No, I understand. That happens in litigation sometimes.

So let's talk about the AAA process. Your Honor asked that. AAA, I'm sure Your Honor was through, I can't remember having an arbitration with Your Honor before you took the back as possible. We did. Lessa, AAA spits out a list of 15 names. You can rank and strike them.

You can strike everyone, and people often do. They give you two weeks to respond. When there's no match, they do it again. No, I have some experience with this process and including cases in which, well, arbitrators and bankruptcy courts contended they both had exclusive jurisdiction over disputes. I get the challenge. And then all 11 and then the other seven would have to agree that the same court would hear

the dispute over who the arbitrator is. I think that the odds of any arbitration getting set up in the next 90 days are pretty low. Could happen, but probably won't. And we're going to be way behind. In the interim, we have all these interim deadlines. Some of them are discovery deadlines. We do have significant discovery issues, as we noted in our papers. Central States, which is the largest counterparty, is basically stiffing us on discovery. So we're going to be back in fine to your honor. We're confident that will be resolved quickly in arbitration. That takes a long time.

I think the odds of the current scheduling order sticking, picking an arbitrator or arbitrators, making sure that person or person schedules match, it's just not realistic. Okay. Can I ask you the question that I think is the hardest on your side to get your reaction? And so the Third Circuit decision in Minsce, that's binding on me. And, you know, you address it in your briefs on the ground that, well, that was an adversary proceeding. But that was an adversary proceeding brought under the Truth and Lending Act as an objection to the allowance of the mortgage lender's claim. And so it's a claims allowance case.

And if you look at the reason, so Judge Carey, who at the time was a bankruptcy judge in Philadelphia, was the bankruptcy judge in that case. And what he said in his decision that was reversed in Mints was this is claims allowance. It affects the whole estate. All of the parties are affected. It was a Chapter 13 case, but it was the debtor's home. It was the most important thing in the case. And he thought it was critical that the bankruptcy judge that could hear from all of the effective parties keep that case.

and resolve it. And it said it's claims allowance. And holding aside the importance of core non-core, which I think is a red herring, and you all were helpful in largely staying away from, the point that is relevant is this is part of the collective nature of bankruptcy, which is what Judge Carey was saying. And I'll tell you, when I read what he said, like every fiber of my being said, that makes good sense.

But that was reversed. and so we've got to deal with that. And I guess I'm interested in hearing from you. How do you deal with it? So I think the Third Circuit's decision in Mids is completely distinguishable. Your Honor, notes, that's an adversary proceeding affirmatively brought by the debtor. And what the Third Circuit said in that case is that this particular issue does not raise any issues that are created by the bankruptcy code. And thus there's...

But that's true in exactly the same. same way. That was ultimately a claims allowance question and the underlying claim. But they didn't see it. The Third Circuit did not see it that way. I think that's, if you look at the procedural posture in which it arose, this is also a claim that arises under non-bankruptcy law. I understand it's a 502 allowance, but that was a 502 allowance. If you weren't through it, that was a 502 allowance also. I don't think that's the way the Third Circuit saw it at all. And they specifically said that it did not address anything that's presented by the Bankruptor. The only thing that we are asking Your Honor to do in that we do not raise any request for relief in our case, we are not asking them for anything. All we are doing is saying 502 requires us to object to the proofs of claim, and that is exactly what we are doing. And 502 shows Congress's intent for what should happen exactly in situations like this one. And that was not addressed by the Third Circuit at all in the Mitz case. And they relied primarily. And they relied, primarily on the Hayes case, which was this other Third Circuit case.

And the Hayes case was similar in the way I described it. It was an affirmative lawsuit by the debtor suing of brokerage. No, I understand when the estate or the debtor in possession is suing on a claim that the debtor held before the petition date. And if the debtor wanted to pursue that claim beforehand, it's subject to mandatory arbitration. The estate, just under ordinary like Butner-like principles, the estate gets the same, or Chicago Board trade or what have you, the estate gets the same thing that the pre-petition debtor had and doesn't get out of an arbitration clause. I think that's totally different from this. Yes. And that's why the post-mince cases, right, there is this split of cases that when there's

an adversary proceeding where the debtor is seeking affirmative relief, the courts say, you're bound by the contract, you sign, the contract has an arbitration clause. No, exactly. Proofs of claim objection are not subject to the same rules. This isn't an FAA case anyway, Your Honor. This is a case No, I understand. But is there really a difference in the sense that we've got a federal statute that says these disputes should be heard by arbitration in much the same way that the FAA says when the parties agree to arbitrate, we enforce that agreement. So I guess as I think about it. I do think there's a material distinction.

Okay, go ahead. For a number of reasons. One is, like, the ERISA language is very specific about what it says. We don't even think this dispute falls within the language of ERISA for the reasons that we described in our papers. but there's a reason that it would make sense for an FAA, you know, governed proceeding to go to an arbitrator, and it's exactly what you talked about with the standard of review. If an FAA-related arbitration, it's almost impossible to get it overtration, even if the wrong on the law, even if the arbitrator gets the law completely wrong, you may not get that.

Whatever manifest exactly. Yes, yes. Yes, the MPAA is the opposite. Legal determinations are reviewed de novo. makes much less sense to get an arbitrator involved. Okay. I think the, so I think it makes a lot, a lot less sense to get an arbitrator involved. And I think I would dispute the relevance of the, you know, any expertise of an arbitrator

for a lot of reasons. I know, Your Honor, we don't even know who the arbitrator is going to be. So it's kind of speculation. But the reality is the key issues are legal issues. The key issues are, you know, the way we would characterize it is whether a. fully funded pension fund can assess withdrawal liability against a debtor as a matter of law under ERISA. We have made these other arguments that are legal arguments. There are factual issues that we think inform the legal judgments, but all of the key questions in front of the court are going to be

legal questions. A few of the other points I just wanted to make on it. I mean, there is, there is case law on this question. There are six cases that address the precise issue. I understand that. And all of them have bankruptcy judges making these decisions? I know, but those are outside the Third Circuit or before Mints. So to the extent, to the extent one reads Mints to say, as a general proposition, claims allowance where the underlying claim is subject to mandatory arbitration, is remained subject to arbitration. But to me, that, I understand if it weren't candidly, if it weren't for the Third Circuit saying that, this would be a lot easier for me. I've seen those cases and they make good sense to me,

but I'm not here to do what I think makes sense from first principles. I kind of have, I understand my role in the hierarchy. Yeah, I mean, I think a couple of points I would have on that. Like, one is none of the post-min's cases read mince that way to say that a proof of claim of objection is automatically has to go to arbitration if there's a, none of the post-min's cases say that. The second thing would be, Your Honor, that a lot of, of bankruptcy courts here withdrawal liability disputes. In fact, if you read the decision in the

TDMA case, the TDMA case cites a lot of circumstances in which bankruptcy courts ruled on withdrawal liability questions. And of course, there are a lot of times where this arbitration issue was never even raised. In fact, I've, I had a big, withdrawal liability trial in front of Judge Raine than I did. It happens, you know, all the time. There is no court so far. that has said bankruptcy courts have to defer on the question of withdrawal liability, proofs of claim. This court would be the first to do so. And I guess on the lift stay factors, maybe I'll hit that since Your Honor raised it.

I don't think it's even close. Like none of the Rexine factors would favor lifting the stay. There's clearly no additional burden on the pension funds proceeding in front of the court. there's already a scheduling order in place. The only thing going to arbitration would do would add additional levels of process in picking the arbitrator and fighting about who the arbitrator is and appealing on a de novo basis. So in terms of the burden argument, there's no reason to lift the stay. On the merits, the primary questions I issue are legal questions that are going to be reviewed de novo anyway. And they actually, Your Honor asked the first question, is anybody going to introduce

any evidence and everybody said no, if they're finally lift stay motion and they haven't introduced any evidence, Your Honor shouldn't lift this thing. Okay, unless you have any other questions. No, thank you, Mr. Clay. That's helpful. Thank you. I mean. Mr. Mann. Thank you, Your Honor.

First of my may, I'm glad to hear he likes me, but at this point, what I've got to say is the argument boils down in great respect. I don't want to. That's the argument. I don't want to. If you make me arbitrate, I won't agree with my friend. We'll never agree on an arbitrary. take forever. That can't be the standard, Your Honor. In fact, I'm not, I'm sure they don't

even really mean that. The issue here of other creditors may, or other parties' interests may wish to be heard, we've been as open and as inclusive as we possibly can be, but I don't see anybody to PDGC in here. I haven't met anybody from MFN, so I presume they're here, but maybe they aren't. Nobody else is here. The issue that the debtor has been calling is the most important in this case over and over and over and over for months. Nobody else is here. And according to debtor, we are 90% of the creditor pool. Your Honor, that should not be something where it's used against us. The debtor does want something from us.

They want our money. They want our money to give it to MFA. That's what they want from us. So, Your Honor, and I... That sort of begins with the conclusion, right? The dispute over whose money it is. That's exactly what is, but, you know, when Your Honor allowed me to, the courtesy of coming up two times in a row before. I don't remember exactly how your honor phrased it, but it was something

like, you know, you're not going to stand on the formality of the procedure. It's formal substance. I understand. So that's the essence. There were a couple references to, we don't know who the arbitrator is and who knows if they know anything. Well, we all know that they know so much about withdrawal liability because they will come from a specialized panel at AAA. I understand. And all of those actuarial issues, Your Honor, of which there will be quite likely dozens of actuaries testifying, all of that will be in language that these arbitrators have heard so many times before. And I say possibly a couple dozen because we have 11, each of whom will have one or two actuaries, the debtors have an actuary. We're going to have

25, 30 actuaries here. But, but, Mr. Meant, Ms. Wray did make the point, and I think this is borne out in the case law, that there are lots of cases in which bankruptcy courts have resolved these disputes, right? There are cases, yes, sir. Okay. And that goes back to the question that we began with, which could be debated, is it mandatory, but we think it can be applied as a matter of discretion. And so when I'm speaking to are the factors to exercise the discretion. Okay.

So it's not that it's impossible, but it is most practical and important. We think, Your Honor. And I guess I would just finish with, Your Honor, we agree with what the court seems to see as the precedent of mince. and the interpretation of Ments and the policies behind that, we think that's something that cannot be looked past, even if one might disagree with the higher court's opinion, it is nonetheless binding in that most respectful way, I say. Okay, I appreciate that. Thank you very much.

You know, why don't I hear from, Mr. Stelman, why don't I give you a chance just so I get this in order and then hear from the committee? I will again endeavor to be brief, Dan Sullivan, again on behalf of the central state's pension fund. Again, very briefly, just as to the point of whether we are talking about arbitration or arbitrations, as well as this sort of difficulty about choosing an arbitrator, Your Honor. I remind you that, you know, this is a substantive right.

This is a substantive protection by Congress. And, of course, you know, it's one thing for Your Honor to decide, well, it's better for these states to do this or to do that. But to say that the funds should not get this substantive protection that's possible. part of a congressionally mandated system because an employer won't play along, I think is a different basis for a decision altogether, and I think is probably not proper. And I honestly think that's sort of what it boils down to. So I don't mean to quibble over language, but the way I see it, the substantive law that an arbitrator would apply or this court would apply is exactly the same, and that what you're talking about is a procedural right to be heard in arbitration as

opposed to through the claims allowance process. But there's no difference. Am I missing something in terms of the substance of the underlying rule of decision? That's going to be the same in other place, no? Yes, that's correct, Your Honor. All I'm trying to do, and if my brevity caused me to be inaccurate, I do apologize, is direct your owner, again, to Flying Tiger Line and its progeny, where it uses words like important and so on and so forth to describe it. Understood. But that was not the distinction I was trying to draw, so I welcome the correction. And of course, Flying Tiger did a rose, you know, where the question was a district court and didn't involve all of the circumstances of bankruptcy. That is also correct, yes, Your Honor.

And that's why, again, subject to the caveats and the asterisks, I do think it's probably that it's in Your Honor's discretion. Okay. Then, Your Honor, you know, just to the extent that we think Mince turns on, you know, the right of contract versus the statute or so on, I would like to point out, I'm very sorry. I don't have the docket number in front of me because I didn't anticipate this coming up. But as attached to our response to the debtor's objection to our claims, we did attack some participation agreements. They have agreed in contract to arbitrate these disputes and to follow the terms of the plan document and so on. I think the distinction is probably academic, to be frank with you, but if that ends up matter. Understood.

I appreciate that. And then just two other sort of brief aspects of this, Your Honor. As to the letter claim, again, I would just direct, Your Honor, to the filing that we had that I just mentioned. I don't think that any of the arguments that Mr. Slade mentioned, with all due respect, I don't think they're serious. The letter itself disclaims that it's withdrawal liability. So to get up and say that, well, that's withdrawal liability, they overlap. I just don't think it's a serious basis for the two proceedings and, you know, for opposing the two proceedings, excuse me.

And then just one thing, I know you're under going to get into it. I disagree that we were stiffing the debtors. We produced 16,000 pages of documents. And I point out that Mr. Slade's predominant point is that this is a legal issue, and to say that we have to keep a legal issue because they're not cooperating with discovery, I think, doesn't quite jive for it. I'm not going to resolve it. I totally understand. Okay. And that's all I had, Your Honor.

Okay. Thank you. All right. Two seconds. Just to be clear about one thing, the participation agreements, contractual obligations, each of these funds have participation agreements or CDAs. Okay. They're all going to arbitration. Okay.

Mr. Meaghan. MS. Good afternoon, Your Honor. MS. Ms. Ms. Ms. Your Honor, as a threshold matter, there is another party in interest in these cases,

other than the folks that have been identified so far, and that is the Creditor's Committee. And contrary to what folks may be insinuating in pleadings, we have been actively involved in the evaluation of this and every other matter implicated by these cases. As Your Honor clearly has done, the Committee has carefully evaluated all of the materials before the Court. listening to Your Honor's opening comments, I was noting the similarities of what the presentation is I'm about to make to the court because we had a lot of the same comments and reactions and questions.

That doesn't mean you're thinking about the right things. I'd like to think it does, Your Honor. Based on the committee's review of the applicable case law and the materials that are before the court, we agree with the court that we think the court has the discretion to decide whether it wants to hear this issue or whether it wants to allow the parties to lift the stage, to allow this issue to proceed to an arbitration. And on the question of whether this is the single most important issue in the case that the court is currently hearing, I think the parties that all concede that the underlying issues that are implicated by the dispute that would be heard here or in the arbitration are one of the critical issues of the case.

The committee views this proceeding that's occurring before, Your Honor, today, as largely procedural. And obviously, Your Honor, has noted one of many of the reasons why we believe that to be largely procedural, and especially given the fact that folks have highlighted the fact that presumably setting aside the potential for settlement, whoever loses and whatever forum this dispute proceeds in front of will appeal and will meet an over-review of legal issues, etc. The committee, again, has reviewed the record, and we've been obviously listening to all of the arguments that have been made in this courtroom today, and we find that it is not clear from the record which approach will result in a more efficient and economical resolution of the disputes, and the committee is relatively agnostic on the procedural question of which form here is the disputes, again, given appellate rights, et cetera.

I know there's been some discussion about whether or not arbitration is less preferable or more preferable because parties may be prohibited from participating. Given our relationships and our interactions so far with every party in this courtroom, we are confident that if the court were to refer this to arbitration, that the committee would be actively involved in that proceeding as well. we do think that ensuring an economic and efficient process is of paramount importance to this court's determination as to how this matter should be resolved. And that's obviously informed by our understanding, again, of appellate rights and how the process would play out. And it's also

informed by what's been represented to you here today, that if the arbitration process were to be the one that proceeded, we hear the MEP claimants confirming to this court that they will abide by and live with a scheduling order that has been established in these cases. Your Honor, I also rise to address another slightly different issue, and that is a statement made in a footnote, and MFN's pleading insinuating that the committee declined to formally take a position and submit more papers to this court on this issue because it is conflicted and thus presumably incapable of exercising its fiduciary duties given the conflict. I hope this goes out saying, but I do want to reassure the court and all parties of interest, but this is far from the case. As a threshold matter, this committee has been extremely active, very involved in every aspect of the cases.

We have regular, and by that I mean practically daily, dialogue with the company's advisors, including the matters before the court today and every other matter in this case. And the fact that we have not yet need to seek court intervention should be lauded and not criticize as it has been any benefit to the estates and avoided the need for additional expenditure professional fees. In the event, a matter arises where one of more committee members, members is conflicted, which is the case with respect to certain of the meth issues. We have a nine-member committee. We have a number of committee members, obviously, that are not conflicted. These are very sophisticated committee members who are more than capable of acting

on any issues that are presented to the committee. The committee takes its fiduciary duties very seriously, and any insinuation to the contrary is simply not true. Unless the court has questions, that's how I have. Thank you, Ms. Laude. Good afternoon, Your Honor, Eric Winston of Queen Emmanuel, on behalf of MFN partners, LP. I'd like to offer a few remarks, Your Honor, in support of the debtors' objections to the two motions to compel or seek relief and stay. I think if I can, I would like to start with where Your Honor started, which is the standard. And I agree with Your Honor. Motion to compel isn't the right way to think about it.

It really is simply a relief from stay, for which I do not believe the 11 MEPs have demonstrated good cause. We filed our joinder for a pretty straightforward reason. As Ms. Leahy just commented, the underlying issue here, the underlying resolution of withdrawal liability claims, we would say are, in fact, the most important issues in these cases now that we've gotten past the asset side, which is working together to generate a very, very, very significant return that has paid off all the secured debt.

we believe the resolution of these claims is the difference between general unsecured claims being paid in full with a substantial return to equity. That's the public shareholders like MFN as well as the United States government, and equity being wiped out and general unsecured creditors receiving pennies on the dollar. In fact, we would like to see a situation where we can get to an unimperment plan, meaning that we will pay general unsecured claims that are allowed in full in cash. and just move from there. That would be one of the greatest results in modern bankruptcy history of a company that had gone into an unforeseen liquidation. But isn't going to happen if there's a $7 billion allowed to the claim. Exactly, exactly. Which is why I think the debtors have made this claim objection a priority.

I understand it. And you appreciate that the merits of that I'm going to be completely agnostic on this until we get there. Absolutely. Absolutely. This is to set the stage, Your Honor, why it matters. Okay. That's all, and that's why we filed our fairly short calendar. To have these issues decided in private arbitration or arbitrations

without the benefit of a collective proceeding is simply not what the law provides or should provide, and really is the antithesis of bankruptcy principles. These principles explain why creditors have to file proofs of claim like the MEPs have done in this case. It explains why any party in interest, MFN here, the creditors' committee, other creditors or equity security holders can object to produce a claim. This is what distinguishes it from when an estate has an affirmative claim. In that circumstance, arbitration clauses make sense because the debtor is bringing in an affirmative claim. It is not something that is subject to collective action.

And other parties in interest in those circumstances, if they want to participate, have to get your honors express permission to do so. And if I can, I'd like to push back a little bit on minutes, because the underlying decision, I think, did treat it as a claim allowance circumstance, but the Third Circuit decision, including reliance on haze to which the court heavily relied. I understand. Very clearly. Look, I understand that one could, there's certainly room to quibble about what the Third Circuit was saying there.

I understand that. So I hear you, and I take the point that Mr. Slade made about the way post-Mince cases have read it. it's also true that it arose from an objection to a proof of claim that had proceeded just as a procedural matter as an adversary proceeding, and it was, in its context, probably the most important matter in that Chapter 13 case. I have no disagreement with how that process worked out except, and this is why the Third Circuit, I don't think, touched upon the issue that's actually before your honor. because it wasn't in fact a claim objection process, and therefore parties in interest did not have an automatic right to participate. There's an adversary proceeding of a rescission claim of the debtor.

I think it makes a difference on how that comes out. Let me just throw out the following. I think another way to skin the cat is to say that was a claims allowance process in which no one other than the debtor objected to that creditor's claim. Here we're in a different situation because you have exercised your statutory right to object, and I think that is a base. tentatively subject to going back and looking at it, saying why, even if you read Mints for all it can be worth, it didn't cover the situation in which another party in interest

has exercised its right to be heard. That just, to me, that just gets you into, I'm not saying anything new. That gets, by the way my little brain works, into the world of, then we have a discretionary decision, as, as is Sullivan was saying, and that then, you know, then lead you to the question, what's the wise and prudent manner in which to exercise that discretion. And I think I've heard a lot of interesting points on both sides. Right. And my definitely smaller brain views this as a relief from stay circumstance for exactly that reason.

No, I understand that point. If you're on the verge of trial, it makes a lot of sense to grant a relief from stay. But when the debtors have actually brought the claim of objection to your honor, and we're now having a scheduling order in place, and we're hoping that if the counsel makes the representation correctly, that we can select an arbitrator and be fast enough to do it, it's the same as a claim of objection, both in timing and substance. I think that's purely speculative when the code tells you how you're supposed to handle this,

they haven't demonstrated the good cause. And as we pointed out in our papers, and I think this is important, pension withdrawal disputes take a long time. It is not without importance that you see the awards come out several years after they are, And then goes to de novo review. So, Mr. Winston, I saw the chart, the back of your paper. That was helpful. And obviously, a part of the reason that takes a long time is because when you've got

high-stakes disputes, there are appeals, and the appellate process takes a while. That's going to be true regardless of whether I hear this or the arbitrator hears of that, right? There's no reason to think the appeal process is faster. Indeed, the district court across the street from us is a pretty busy court. I certainly don't disagree that there's a high likelihood of appellate process and that can take a while. And these are really important issues of which one of them is a pure legal question that really stands outside of the typical withdrawal liability circumstance, the notion of whether the SFA regulations can be validated and how they impact whether these claims are $6 plus billion or significantly less. That issue is not one that really anyone has any expertise on yet, which is why it should be resolved.

resolved by a court. The court that Congress said, unless it's a personal injury claim, really supposed to do it. But ultimately it will be. And the question is which of us is the way station? And I think that's, if I could say it this way, Your Honor, the reason why the claim objection process and claim allowance process is in the hands of a bankruptcy court, even though, as we all know, the issues Your Honor seeks, resolves cut across the universe of every conceivable legal issue is because you're supposed to do it in one court. and it's this court.

I understand that. Okay. The only other thing I'll say is, you know, there's been some pot shots taken us, and that's perfectly fine. That is fine. I think if the debtors are able to give us money, as counsel stated, that means every other allowed claim has been paid in full. That's a phenomenal outcome.

I hope that does happen. And yes, we are going to stand shoulder to shoulder with the debtors whenever we see a claim that is subject to disallowance. That's, it's to our economic benefit. It's also their fiduciary duty. But if, by implying we're one in the same, which I don't know if they meant this, but if they're probably one in the same, it's almost a recognition where the fulcum security, fulcum security always wants to have a say in every matter.

I think the argument, as I heard it, and maybe you heard it differently, is not that you're one in the same, but that your rights are ultimately derivative of the debtors. That is, they are ultimately derivative of the debtors and what the code provides. And the last thing I'll say is I'm hoping committee counsel understands the point of the footnote was there's been quiet. We don't want the quiet to mean there's acquiescence. And it sounds like we just heard today there's not acquiescence. There's agnosticists. I've seen the footnote and appreciate the back and forth. I don't think there's a ripe dispute for me to resolve. So I'm happy to move on. Thank you, Your Honor. Unless your honor has any

further questions. No, thank you, Mr. Winston. Thank you. Okay. As to the two motions, is there any other party in interest that would like to be heard? Okay. It's not I'm happy to hear from the movement with respect to the PBGC dispute. Good afternoon, Your Honor. Stephanie Thomas on behalf of the Pension Benefit Guarantee Corporation. We've heard quite a bit already this afternoon about the importance of the PBGC regulation to this proceeding. And I would like to start by just pointing out that that is an attack on our regulation. There's an attack on the validity of a regulation issue. Can I, I guess I want to, and I've read the papers,

but I'm trying to wrap my brain around specifically what relief you're seeking, and is it part of the merits of the claims allowance, or is it something separate? So help me with the concrete relief you're asking. I understand that you've issued a regulation and that part of the debtor's defense against. the claim is that the regulation is invalid. I get that.

Are you saying, first of all, are you saying that that turns the claims allowance proceeding into an APA action? I'm saying, Your Honor, that it needs to be an APA action and that the claims allowance processes is... So, I find that really surprising, and I could be wrong, but just help me with this. like every day there's a dispute between a hospital and a provider

of like a drug provider and there'll be a question in their bilateral private dispute about the meaning of say some HHS rec that happens every day and courts adjudicate those disputes and if along the way one side or the other seeks to challenge

the validity of the reg. That happens in federal district court in actions that don't arise under the Administrative Procedures Act all the time. And sometimes the civil division will show up and sometimes they won't. But why is this fundamentally different from that? Well, in some instances, Your Honor, there are private rights of action under certain statutes. Yeah, and here there is too. Here there is, is, is, is, not with respect. The NPA, there's a pension, there is under the statute, there's a dispute between the fund and the employer, and they've got the ability to claim against one another under the terms

of the provision, under the statutory provisions, as to which we should have readulation. I understand that. And I, you know, to the extent I end up concluding I should hear the case, would totally welcome the PBGC's participation and give you every opportunity to be heard in defense of the regulation. But I don't understand why, the way I think of the Administrative Procedures Act to operate is that's when someone is bringing essentially a direct challenge. An agency has directed someone's primary conduct,

and the regulated entity takes issue with the regulation and brings an action under the Administrative Procedures Act essentially for declaration, I guess the language is, to set aside the regulation. And here what we've got is a claim that isn't... I mean, I understand it implicates the regulation, but it seems to me to implicate the regulation in the same way that regulations get implicated in litigation every day. And so that's why I was surprised by your position.

It seems quite different from what you see, you know, in other agencies. And I think the PBGC is entitled to every, the same deference than any other federal agency gets. I get you have independent litigating authority and, you know, that you're here not the civil division. But I don't know why the rules should be different than they would be if you were. or HHS or the Department of Transportation. Your Honor, the APA addresses, so to adjust one of your points about an entity that's directly regulated, the APA states that anyone who has an issue with, considers themselves injured by a government agency action can bring action.

to bring an action against that agency, pursuant to the APA and pursuant to that agency's enabling statute, which in this case is ERISA. So I think there's a little bit of a difference there. In terms of other statutes, I know there are some statutes, for example, the EPA statute, that an entity and interested party, someone can bring an action sort of as a private attorney general, that they can bring an action against a third party that has done something related to the regulation. That's not the case here. Although the dispute is between the debtor and the multi-employer pension plans,

the regulation at issue is issued under the Special Financial Assistance Program, which is a separate program from the multi-employer with all liability. Do you think that the debtor would be a person aggrieved by your regulation that is standing to bring an APA action against the PBGC for issuing regulation in the absence of a determination by a court about how the regulation works? Yes, Your Honor, I do. Under 1303, 1303 of ERISA, and there, various people, it identifies with people who can bring an action, and one of them is a contributing

sponsor, a contributing sponsor can bring an action against PBGC if they consider themselves injured by PBGC action, and issuing a regulation is PBGC action. Okay, okay. So I think I understand your position. There's also, I'll also know what you're on it, that, I understand what you're saying, but there are, I have found no, or very few, maybe one or two, instances where the validity of a regulation was addressed in a claim's objection, and I have found no cases where a regulation was overturned in connection with a claim's objection. Section 502 is somewhat constrained and identifies the basis for which, you know, under which a debtor can object to a claim. Right. So I'm not disagreeing

with you at all about the rarity of this arising in the claims objection. The point that I'm making is a somewhat broader one, which is for APA purposes, that this arises in the claims objection seems to me to be no different than if the validity of regulation arose in private litigation between two entities, neither of whom was the agency, where it seems to me courts consider the validity of agency regulations every day. And I don't know why the APA is more. implicated by this than it is by that. Does that question make any sense? It does.

And I've looked at some of those cases. I haven't looked extensively at cases like that. But in the cases I have looked at, the agencies involved, the agencies whose regulations were affected did have the right to intervene. So they could bring, you know, bring themselves into the action. Okay. And you have that here? Well, we, well.

If someone tells you otherwise, let me know, and we'll deal with it. Yeah, well, it's been stated otherwise frequently by the debtors. Well, that's fine. But if you want to bring a motion to intervene, you're welcome to bring the motion. My view is I've expressed it, again, this is subject to whether I'm proceeding or not, is that bankruptcy is a collective proceeding, that part of what it does is creates a mechanism in which everyone who has a stake can appear and be heard. And one form of stake is obviously an economic stake,

but conceptually, I don't know why your regulatory interest ought to be viewed any different as far as Section 1109B is concerned. Well, yeah, Your Honor, I do agree that a regulatory interest makes us a party an interest in any bankruptcy proceeding that involves a regulation or that involves us in some way. I don't, I mean, I don't think, Let me say it this way. There was a case in Ray Rhodes in the bankruptcy court for the Northern District of Georgia

in which the court held specifically that 502B cannot be used as a vehicle to attack a PVGC regulation and that it constitutes an end run around a proper challenge to a PBGC regulation. That court also noted in that case that allowing a regulatory challenge in the form of a claim would upset the congressional scheme for uniform treatment of those liable for the amounts of unfunded pension liabilities. And so the substance of our position on this, Your Honor, is about that kind of uniformity and about procedural protections. The regulation at issue here applies to the withdrawal liability of all withdrawing employers of all SFA recipient pension plans.

That affects not just the parties in this case. It affects people and plans far beyond what will be affected in this case. We're expecting to give SFA to 200 plans with 2 million participants all over the country. And the point of SFA, or the SFA, I guess, was designed to provide solvency to the struggling pension plans through 2051. And if this regulation were to be invalidated, those SFA applications rely on certain assumptions. And those assumptions interact with the requirements of the regulation. So it could cause a situation where certain multi-employer pension plans would become insolvent sooner than projected sooner than 2051. In that event, Your Honor, when a multi-employer pension plan becomes insolvent, PBGC steps in to pay the benefits of the participants.

Those benefits under the multi-employer section are restricted. And many people face cutbacks in their benefits because the guarantee under statute is, for example, for someone with 30 years of service, is under $13,000 a year. I do, I think, Your Honor, that PBGC has an interest in being a party here. And I feel like we could also use the procedural protections of the APA, of being in an adversary proceeding or of proceeding district court. Well, let me ask this question. If I were to lift the stay and allow this to proceed to arbitration,

are you heard in that arbitration? Your Honor, I think that would dovetail well with hearing any challenge to PBDC's regulation in a district court. So tell me how you think this is supposed to work. So imagine, let's back up a second. Imagine there weren't a bankruptcy case here. And Yellow, you know, withdrew from the fund and didn't have the $7 billion that was alleged to be the withdrawal liability. And someone were to bring an arbitration under arrest on the NPAA against them.

and they were to respond by saying, hey, you know, basically make the argument that we've heard today, which is you're not underfunded, so therefore you don't get pension liability, notwithstanding the PBGC reg. What happens? If they make that argument, that's a legal argument that they can make, right? I'm sorry, Your Honor, make a legal argument that the regulation, is invalid? So I confess that I haven't fully wrapped my brain around the details of how the reg exactly fits in,

but imagine that they make the same argument that you're concerned about the making here that was a challenge to your regulation. And they were to do it in the context of what is essentially an arbitration that takes place under the statute. How do you, I understand that when that gets, appeal to a district court, you're welcome to file whatever kind of brief you want to file. But would you take the position that the arbitrator couldn't make a determination about the validity of the regulation?

That's correct, Your Honor. The arbitrator cannot make a determination about the validity of the regulation. It's still governed by the Administrative Procedure Act. Arbitrators need to apply the law. And so the PBGC's regulation is the law, and the arbitrator would have to. is the statute, and so if the regulation is inconsistent with the statute and the employer wants to argue that both are a law, I don't mean to be so flip, but there's a hierarchy of law. And if an employer wants to argue that a regulation is inconsistent with the statute,

therefore can't lawfully be applied to it, what does the, what does the arbitrator do? Well, the arbitrator has to apply the law. So I think if someone wants to challenge the regulation, they need to do that separately. Okay. I mean, I assume that the arbitrator would stay the arbitration until such time as a decision was issued on a legal issue of the regulation. What's the best authority for that proposition? There, of the, of the, of the, that the arbitrator has to apply the law? Not that that to apply the law, but that they have to apply the law, but that they have to.

to accept your version of the law. Well, Your Honor, the regulations have the force of law. I understand, except if they're inconsistent with the statute, then they can't lawfully be applied because agencies don't have the authority to issue regulations that are contradicted by the text of the statute. Well, yes, Your Honor, but I feel like we're going to just keep going in the circle, but the Administrative Procedure Act

governs how a regulation is invalidated. is the only way to do that and that, okay, I understand your position. Yeah. Okay. Okay. Okay. I don't know if I should understand. And, well, in terms of the arbitration, Your Honor, we don't see any issue with the arbitration

going forward and the challenge to the regulation going forward separately. We do think it's, I think several people have made the point, and I think it's a good one, that it would actually be more efficient for the challenge to the regulation to go. go forward in a district court rather than be subject to appeals as I'm assuming it would be on either side.

So I think that it does serve the efficiency and the ability to get creditors paid more quickly. Okay. I think that's, unless your honor has more questions. No, that's very helpful. I appreciate it. Thank you very much. So, Mr. Ford, before you start, so your challenge,

what, can you just help me in it to get to be a little more granular about what the regulation. I understand the regulation essentially spreads out the amortization over some period of time. The, what ERISA describes how you calculate withdrawal liability, that it's the, you first have to determine whether there are unfunded vested benefits. To the extent there are unfunded vested benefits, then there is an attribution calculation that's provided by the statute. And so is your argument then that bottom one that the regulation can't be squared with

the text list. It's just like a Chevron Step 1 argument, essentially. That is our argument. Okay. And so, Your Honor asked my colleague on the other side, what would happen outside of arbitration, outside of bankruptcy? They would have assessed, they would send us an assessment of withdrawal liability with a schedule. The they now is not the agency. It's the funds. Okay. The 11 funds, we would have initiated 11 arbitrations challenging that. We would make this argument that we just described to your honor that they have to calculate. withdrawal liability consistent with ERISA. This particular regulation is not consistent with ERISA.

So you can't use it to calculate withdrawal liability. Whoever lost would appeal. And then in the district court, I'm certain PVGC would interview it. And no one would object to that. And that's what typically happens. Okay. But we are inside bankruptcy. Okay.

Do you have any issue? If I were to keep this case, do you have any reason, is there any reason why PBGC to extent we're going to have an argument about the validity of the regulation, why they shouldn't come here? and whether they're an intervener or whatever you call it, to me, is of less importance. But their fundamental right to stand up and say, our reg is valid, judge. So I said this at the scheduling hearing, and I'll say it again, we welcome their participation. We hope they will participate in the discovery process.

And if they want to put facts into evidence like Ms. Thomas just mentioned, we would like to take discovery of those facts and discuss them with the court. But yes, we welcome their decision. Okay. I'm not resolving discovery disputes today, just so we're all on the same page. Yes. So, I mean, their essential arguments, Your Honor, is that they can pass in what is, let's say, a hypothetical scenario where they pass an obviously invalid regulation that crushes the debtor and all of its other creditors. Their position is that that regulation, even though it's obviously invalid, is the gospel from God and must apply unless the debtor has the resources and the time and the energy to initiate a separate lawsuit against the PBGC.

in Washington, D.C. and when, you're honest, that can't be right. And that's not what their cases say. I mean, she mentions this Rhodes case from Georgia, the Northern District of Georgia. In every case, they cite the bankruptcy court actually addresses the substantive issue on the merits, including Rhodes. Roads was, the Rhodes case found that the particular regulation in effect was valid. So they looked at it on the merits it said it's a valid regulation that it applies. But the Rhodes case actually cites two other cases, one from the Tenth Circuit, one from the Sixth Circuit, that did the same thing, analyzed the question, and found the regulations invalid. The core thing was what Your Honor said

at the beginning. These sorts of disputes happen every day. In district courts across the country, this is a dispute between private parties. The regulation is an aspect of the dispute, and if the private parties want to argue about whether the regulation is applicable or whether it's invalid. That's what the APA says that you should do. The APA expressly gives courts authority to resolve those questions. They claim that ERISA somehow changes that, but it doesn't. And the very part of ERISA that they rely on expressly exempts withdrawal liability disputes. So they can't be right, Your Honor.

We would ask their motion to be denied. But just to be clear, we welcome their participation on the merits, and we look forward to working with that. Okay, very well. Thank you. Thank you, Your Honor. I'd like to address a couple of points that debtors counsel made. I have a real concern about this idea that someone can pre-decide whether a regulation is invalid before they decide whether the Administrative Procedure Act applies. The Administrative Procedure Act sets forth the procedure under which you decide whether a regulation

is invalid. because the debtors think this regulation is invalid. Doesn't mean the regulation is invalid. And we have actually very good reasons for this regulation that are completely consistent with ERISA. I don't, you know, I wasn't planning on going into the merits of that, but it is not, it is hardly a case where it's, you know, some sort of crazy regulation and who knows where it came from. We have very specific reasons for bringing it. But to the main point, Your Honor, I don't, I don't see how the, how the, how the,

It seems like the APA is meaningless if we get to pre-decide whether a regulation is important or not to bring under the APA. Like, who decides that, then? You might think that the APA is about where the challenge is to agency action or inaction wrongfully withheld or unduly delayed or wrongfully withheld or whatever the statutory language is, and that where the validity of a regulation ends up coming up as an issue in private litigation, a court of otherwise competent jurisdiction isn't disabled from resolving the dispute before it. I confess that's how I've always understood the, I'll look at this more carefully,

but that's how I've always understood the APA to do, but I'll look at it, and if you're right, then I'll come back and tell you that you've changed my mind. I think, Your Honor, I mean, there's some nuanced issues here around jurisdiction and venue and party. Say a few more words. Trying to bring them out. So under the APA, PBGC contends that we are the proper party.

Now bankruptcy makes this a little odd, forget bankruptcy. To me, to me, The way I deal with this problem should be highly informed by what would happen if there was a dispute over withdrawal liability that took place outside of bankruptcy, was heard first by an arbitrator, and then appeal to a district court. And I understand you're taking the position that the arbitrator is duty bound to apply the regulation, and no one should be allowed to be heard to argue the regulation is invalid. And look, if that's what the law is, then that will matter to me, but that would surprise me. So that, to me, is the question. I would have thought the charge, I've seen in Title 29 what the charge is to the arbitrator,

and it seems to me that's to apply the law, and that would include all of the principles around when, you know, paying appropriate deference to agency regulations that are entitled to deference and treating them as persuasive when they're persuasive. And if they were to conclude that it can't be squared with the statute, I would think I would read, again, from first principles, the regulation to require them to do their level best to apply the law. And if that is that the statute, the regulation is invalid because it can't be squared with the statute to say so. Again, if I'm wrong about that, I'll look at the cases more carefully. But that's what I would have thought from general first principles about how this language ought to work. I think, Your Honor, I mean, obviously the arbitrators

are instructed to apply the law. I think what you're saying makes sense, but only if there's a extraordinarily clear conflict between the... No, I understand. There's an issue of applying the law versus interpreting, I mean, interpreting the law versus invalidating the law. Okay. Look, I do think I understand your question. Okay.

I'd like to address also, Your Honor, but the judge counsel misstated what happened in those cases, in Rhodes and in all of those cases. PBGC was heavily involved in those, and I personally have worked on those as well. The issue in those cases was PBGC has a regulation under its single employer plan provisions that dictates how unfunded benefit liabilities are calculated, sort of analogous to here. That regulation, before,

the court's decision in Raleigh. Several courts looked at our regulation, and then they looked at 502, and the bankruptcy judges basically said, I can decide how a claim is reduced to present value. And that was one of the things that our regulation did. So the issue really was whether our regulation could be ignored on equitable purpose, equitable principles also was the other thing. Can PBGC's regulation be set aside for the purpose of calculating claims based on equitable

principles under the bankruptcy law? And then after Raleigh, all courts except for one that was very early in the process, held that you had to apply PBGC's regulations in determining the unfinded benefit liability. So it was not... makes perfect sense. Okay. And so it was not a case of them validating or invalidating the regulation. It was specifically the regulation versus equitable.

Okay. And then, Your Honor, my debtors counsel made some reference to me saying I wanted to put facts into evidence. And I'm not sure where he got that from. But I don't want to put facts. This is a case that will be, you know, regulations are reviewed on the administrative record. So there's no facts to be put into evidence. It's just an administrative record. And I would welcome debtors to welcome our participation because so far that's been very difficult.

Okay. Well, it sounded like there was agreement on that point, but if there turns out to be a dispute, I'm happy to address it. Yeah. Okay. Nonetheless, Your Honor, we do think it would serve the efficiency of this case and be more in line with protecting the rights of the plan participants and the other plans in the SFA program. given the wide impact of this regulation on those programs to put this into a district court.

So dismiss it here and let them bring it in the district court. Okay. Thank you. Anything further on that set of issues? Okay. So this has been enormously helpful. Thank you for all of your patience with me and my hairbrained questions. It's been I very much appreciate it.

I'm going to endeavor to try to get this resolved promptly. It's not going to be right now, but I hope that it's going to jump the queue and get resolved. I appreciate the need to move quickly, and so I'll get you a decision as quickly as I can. Anything else that we can do to be helpful? Not from the debtors, Your Honor. Thank you very much for hearing us today. Thank you, Mr. Slake. Any other party in interest wish to be heard while we're here?

Okay. If not, my thanks for you. to all of you for today's terrific presentation.