American court hearing recordings and interviews - Season 7. Episode 2. August 11, 2023. In re Yellow Corporation et al., chapter 11 bankruptcy case no. 23-11069, audio of hearing held in the Yellow Corp. bankruptcy proceedings pending in Delaware, USA, #trucking

Episode Date: August 25, 2023

Hearing starts approximately 5 minutes into the audio.For court filings and other information about the chapter 11 bankruptcy proceedings, see: https://dm.epiq11.com/case/yellowcorporation/info For news see: https://www.costar.com/article/2060186871/old-dominions-15-billion-bid-for-yellows-truck-terminals-sets-stage-for-upcoming-bankruptcy-auction

Testing, testing. MR. Good morning all. This is Judge Goldblatt. We're on the record in In-ray Yellow Corporation at all, which is case number 23-11069. We're proceeding this morning's hearing by way of Zoom. So usual Zoom rules apply. Let me pass the baton to counsel for the debtor to take us through our agenda this morning.

MS. Thank you, Your Honor. Good morning. these Dang Zeeland Jones on behalf of Yellow Corporation and the related debtors. First of all, Your Honor, you should have before you an amended notice of agenda that came to you fairly close to this hearing, so I want to make sure Your Honor has that. I did receive the amended agenda along with the red lines of the remaining First Day orders, so I've had the chance to review that, so I think we should be good. Thank you very much, Your Honor. And, Your Honor, with that, I'm going to pass to Mr. Nash.

Thank you. Thank you, Ms. Jones, Mr. Nash. Morning, Judge, Pat Nash from Kirkland and Ellis, proposed counsel, the Yellow Corporation, and its affiliated debtors. I'm consistent with the amended agenda, Your Honor, with respect to the dip financing, we will be proceeding this morning by way of a status conference. The update there, Judge, is you'll recall that when we were in front of you on Wednesday, I had articulated that Estes Express lines had expressed the willingness to provide the new money on a junior basis,

although that was kind of a very real-time update. Please report that over the last 36 or however many hours it's been, that financing proposal has continued to gel. We've got term sheets. Parties in the case have received those term sheets, that term sheet, pardon me, marked it up. Also, pleased to report that since we were last in front of you, MFN, is now stated a willingness to provide the necessary new money also on a junior basis. You'll recall when we were last in front of you that was proposed to be on a Perry basis. So we've got MFN stating its willingness to provide the money on a junior basis.

We've got Estes with its willingness to provide new money on a junior basis. It's also the case judge that since we're in front of you on Wednesday, We, the debtors, have received a number of inbounds, believe it or not, from other parties who say they're prepared to provide the new money on a junior basis, one of whom has retained counsel, and we've been in contact with that party's counsel. Since we were last in front of you, the B-2 lenders, their counsel, and the ABL lenders, their counsel, those two parties late last night, overnight, we saw it this morning when we came into the office. They've marked up the financing term sheet to contain, you know, their position

on what it means for new money to be junior. We appreciate them working hard yesterday and through the night to get us those comments. We've provided those markups to each of MFN and to Estes, you know, with the message of, look, if you want to put money in junior in a way that we know works for the pre-petitioned secured parties, this is where they're at. I will state, you know, probably not going to preempt, you know, a reservation of rights, but we don't yet have U.S. Treasury's comments with respect to their position on what it means to be junior. We do know those comments are coming, and when we get them, we're going to get those comments around to the potential financing sources. We, the debtors, Your Honor, as you might expect,

we're also reviewing those comments to see what does and doesn't work for us. But as I stand here today, I have optimism that we are going to have, you know, one of these parties posting. Maybe we'll have both of these parties posting, which will make this even more interesting. But we think we're going to have, you know, at least one of those parties posting, willing to put in money on a junior basis, on terms and conditions that work for the pre-petitioned secured parties as well as for the debtors. If I'm not being Pollyannish, and that proves to be true, we could be in a position where, if it would work for your honor, we're submitting an agreed

financing order and, you know, financing documentation under certification of counsel. Without question, it's going to be much more favorable than what we've filed the cases with. So from our perspective, you know, perhaps that would work. I would also, though, judge, in case I am being polyanish, and if we do need a little bit of help from the court, to the extent that Your Honor could find time for us Monday or Tuesday of next week, and at that point, we might as well just, you know, all agree that that'll be in person if it's necessary, because it frankly shouldn't be necessary, but if it is necessary, we may as well all be in Delaware. At some point early next week, we are going to have to bring an end to what has been a positive, competitive process for the dip financing.

But from our perspective, early next week, it's going to be important to get a dip financing order entered and get on the case. Okay. So I'm sure there are other parties who want to be heard. But let me say the following. I believe, so the current cash collateral use expires on Wednesday the 16th, is that right? 12.1 a.m. on Wednesday, Judge, we think we're okay Monday and Tuesday. Okay, so I believe subject to Ms. Barksdale, correct me if I've got this wrong, that Wednesday afternoon, Wednesday afternoon of the 15th is open.

So I'd propose, oh, she's telling me I'm right. Okay. So I'd propose that we set it for, say, 1 p.m. on Tuesday the 15th. Does that work from your perspective, Mr. Nash? It does, Your Honor. Okay. So let's – so let me say the following. First of all, what you describe, you know, is the reason the bankruptcy system depends on the operation of markets.

So everything he describes sounds like good news and the way things ought to work. If this, if you're in a position to submit an order on certification, meaning that none of the parties in interest objects to its entry, that would be great. And I'd be happy to enter an agreed order subject to reviewing it. But if all of the parties in this case agree, it would surprise me if I were the obstacle. If there's a dispute and you need a hearing, I'm of course prepared to do the job for which I signed up. and we could have a hearing on, I'm sorry, I said Wednesday, what I meant was Tuesday, the 15th at 1 p.m. So if there's a dispute, we can have a hearing on Tuesday the 15th on a motion seeking approval of whatever dip motion you're able to present. Thank you, Judge.

If no other party wants to be heard, I would pass the podium. Or when we get through with people making comments, I will yield the podium. of my colleague for the two motions that are otherwise. Okay, very well. 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 your 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.fIN.com. Let me say at the outset, to the extent parties want to reserve your rights, you should understand that all of your rights are reserved and that nothing's happening today is prejudicing anyone's rights. To the extent that parties want the opportunity to be heard, I'll permit it. But it isn't, no one should feel as if the failure to speak prejudices their client's rights.

That said, I see both Mr. Dunn and Mr. Winston, so how about in that order? And then we'll take it from there. Thank you. Good morning, Your Honor. Dennis Dunn from Milbank LLP on behalf of certain investment funds and accounts managed by affiliates of Apollo Capital Management LP. I'm not rising to reserve rights. And thank you for that statement, Your Honor, so that I don't have to actually wait into any of that. And I actually don't disagree with anything that Mr. Nash said in terms of updates for the court. and I'll be very brief. Since the last hearing, we have been constantly engaged with the debtors and other parties to review and revise the inchoate dip proposals that the court heard much about at our last hearing. And I want to underscore what we indicated the last hearing,

that we're perfectly willing to work with financing sources who are proposing to loan dollars to fund the estate's costs on a junior basis to us. But we've also been quite clear that being junior means being junior not just to our liens, but to our remedies and other rights that we have as a senior secured lender. For instance, it means that the junior dip provider can't credit bid on assets without taking us out. We can't be in a position where assets leave the estate for no cash, but only the satisfaction of a junior dip that's behind us on the waterfall. And we're working through these issues, and hopefully, you know, we can resolve them before next, next Tuesday.

We're also working with Mr. Nash on the terms of an adequate protection package for us, including an appropriate timeline for sales and who bears the risk of any delay or drift. But as Mr. Nash said, we'll either resolve them and it'll be consensual or we'll present any of those issues, hopefully discreetly and cabined for the court for adjudication now. Thank you, Your Honor. Okay. Thank you, Mr. Dunn. Look, and I appreciate that at the margins, there are questions about what it means to be completely junior and what counts as priming and what you know what counts as adequate protection and if and when those questions are presented I'm happy to resolve them but don't propose obviously to wait into any of that right now thank you your honor okay thank you mr. Winston thank you your honor

Eric Winston of Quinn Emanuel on behalf of MFN partners I want to thank the the statements of mr. Nash and actually mr. done as well I want to confirm that MFN is in fact willing to put money subordinates, the B-2 lenders, fully respect that what junior means is going to be hashed out, and I'm ready-willing able to work through that. The one comment I just want to make, and this is really our concern, and I said this on Wednesday, I want to reiterate it here, we want to make sure that whomever is the dip lender, if it's MFN or somebody else, that it allows for the estate to have a robust marketing process,

doesn't give a leg up to anyone that's interested in bidding, that that and if it's us, great. If it's somebody else, that's fine, but it should be not only the most efficient economically, but the efficient to allow for that robust marketing process. And that is, in fact, our concern. And we expect over the next few days that if it's consensual, it will reflect that. Thank you, Your Honor. Okay.

Thank you, Mr. Winston. And again, everyone's rights in this regard are fully reserved. Is there anyone else that would like to be heard with respect to the status conference with respect to the dip set of dip lending issues. Okay, seeing, Mr. Dunn's, your hand is raised on the Zoom, but unless you tell me otherwise, I'll assume that, okay, it's now gone down. Okay. Then I'm happy to pass it back to Mr. Nash or any of your colleagues

with respect to the other matters on the agenda today. Thank you. Thanks so much, Judge, handing the podium over to my colleague, Rob Jacobson. Okay. Mr. Jacobson. Good morning, Your Honor. Rob Jacobson and Kirkland and Ellis on behalf of the debtors. I have two first-day motions to present to the court this morning, the taxes motion and the utilities motion. Your Honor, we wanted to go forward with these motions today in anticipation of obtaining dip financing to avoid the need to come back in front of your honor at a later date with respect to these motions. payments pursuant to these orders would be made subject to access to a dip and an approved budget.

To the extent something in the approved dip order where the approved budget requires a modification to date to today's proposed orders, we will submit a second interim order under certification of counsel until we get to a final hearing on September 18th. With that, Your Honor, I will start with the taxes motion filed at docket number five. By this motion, the debtors seek to pay a variety of accrued and, unpaid taxes, which are usual and customary for this type of company. Your Honor, we are requesting authority to pay $12 million in the interim period, which will get us to the second day hearing scheduled for September 18th. We've provided our lenders in the U.S. Trustees Office an opportunity to comment on the form of order.

No party is objected to this motion, and unless Your Honor has any questions, we respectfully request entry of the proposed order. Okay. Thank you, Mr. Jacobson. Is there any party in interest that would like to be heard with respect to the motion to approve the taxes motion at D.I.5. Mr. Lee's, I see your hand is up. If you'd like to be heard, you should be your honor. Thank you. I actually wanted to address something else, so I'll wait until the appropriate time.

It concerns the possibility of a contested hearing next week. So I'll wait until the debtors finish their agenda. Okay. Okay. Is there then, we'll get back to that after the next two motions. Is there any party in interest that would like to be heard? with respect to the taxes motion that's at DI5. Okay, seeing none, I've reviewed that motion and order.

I'm satisfied that the relief sought is warranted based on the record before me, and we will enter that order on an interim basis. Thank you, Your Honor. The next item on the agenda at docket number 13 is the debtor's utilities motion. The debtors are seeking an order approving certain standard adequate assurance procedures and prohibiting utility providers from altering, refusing, or otherwise discontinuing services. As of the petition date, the debtors maintain 311 transportation centers, of which 169 are owned and 142 or leased. The uninterrupted utility services provided during these Chapter 11 cases will be important to maintain and ensure the security of the debtor's terminals.

In accordance with the proposed adequate assurance procedures, the debtors will deposit approximately 1.5. million dollars into a segregated account. This figure represents approximately two weeks of the debtor's estimated aggregate monthly utility costs. The lenders and the U.S. trustee have had the opportunity to review the form of order, and we have incorporated all comments received. No party is objected to this motion. Unless, Your Honor, has any questions. We'd respectfully request that you enter the proposed order. Okay. Is there any party in interest that would like the opportunity to be heard with respect to the debtor's utility motion? at DI-13.

Okay, seeing none, I've also reviewed that motion and proposed order, as including the red lines submitted this morning. I'm satisfied that the relief saw is customary, appropriate, and warranted based on the evidentiary record, and we will enter that order again on an interim basis. And I take it that those orders will be uploaded, and when they're uploaded, we will enter them. Okay. So from the debtors perspective, Mr. Jacobson, anything further this morning? No, Your Honor. Okay. Let me turn back. Mr. Lees wanted to be heard with respect to the hearing that might or might not go forward on Tuesday. So Mr. Lees. Thank you, Your Honor. I just wanted to address a process

point, which is while the debtors have expressed their optimism that things will be moving forward consensually, we don't know if we're going to get there. And there remains a possibility that we will have a contest over the dip, adequate protection issues, and the like. And should that happen, there may need to be discovery. By the way, Your Honor, I should just, sorry, I forgot to make an appearance. Alex Lees, on behalf of certain managed and affiliated funds of Apollo. Should we wind up needing to have a contest next week, we want to make sure that we had a chance to take discovery so that we can put on evidence and not just wait and see and then find ourselves on the eve of the hearing not having had the chance to do that.

We've been trying to get information and discovery from the better since Wednesday, but they have not been responsive. I just want to make sure that that doesn't continue to happen and that we are able to get the information we need just in case. We hope that we aren't having a contest. We just need to be prepared. All right. So look, let me say the following.

I'm not going to rule at the moment on a discovery dispute that hasn't ripened. But, you know, there's a motion that's been filed or perhaps, perhaps, that may be revised. But in any event, you know, my standing chamber's procedures are that if there's a discovery dispute, I don't require formal motions practice. Parties are welcome to write letters and we'll – if there's a need for a hearing, that we will do by Zoom unless it coincides, of course, with the time when we're otherwise here in person. And I'll do my best to resolve disputes as fairly and promptly as I can to keep the case moving. But those are the usual – that's not a special rule. That's how it operates in this court.

And if that were to arise, I'm happy to resolve a dispute. And if there isn't a dispute, I'm happy to let the parties work it out. Thank you, Your Honor. Okay. Mr. Nash, anything further from the debtor's perspective that I could accomplish or be helpful with this morning? No, Judge. Thanks so much. That concludes it from our perspective.

Okay. Is there any other party in interest that would like the opportunity to be heard while we are gathered this morning? Okay. If not, let me encourage the parties it sounds from Mr. Nash's and from all parties' comments like this process is proceeding as the code contemplates. So that's all terrific. And if again, if there's an agreed order, that would be great. And if there's not in a dispute to resolve, I'm happy to see everyone on Tuesday at 1 o'clock. So with that and my thanks, we're adjourned. Thanks, George.