American court hearing recordings and interviews - Season 7. Episode 3. August 17, 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 approaching 3 1/2 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

So, good afternoon. This is Judge Goldblatt. We are on the record in In Re Yellow Corporation at all, which is case number 23-11069. We're proceeding this afternoon by way of Zoom, so usual Zoom rules apply. Ms. Jones, let me pass the baton to you. Thank you, Your Honor. Good afternoon. For the record, Laura Davis-Jones, the Petrosky, Spang, Zeeland-Jones.

behalf of the Yellow Corporation, the related debtors. First, Your Honor, let me thank you for your patience and your flexibility of us setting what we're doing with hearings and your agreement to let us do this hearing all by Zoom, and we truly appreciate that. Your Honor, you should have in front of you now as our third amended notice of agenda. The only change being on that, that it would be a Zoom hearing. I'm sorry, I do have that. Thank you, Your Honor.

And with that, Your Honor, I am going to yield to Ms. Smith. Okay, very well. So I think you may be muted. Sorry, can you hear me now, Your Honor. I can. You can proceed. Apologies about that. Allison Smith, Kirkland, and I would have proposed counsel to the debtors. First, wanted to just echo Ms. Chairman's statements about the court's flexibility and patience through this process.

We know we've been a bit of a moving target, but the additional time did prove beneficial. We are proceeding today as a status conference and have been extremely busy over the past week since we were last before you. So if the court will indulge me, I would like to give a quick update of what's occurred in that week and kind of where we are today. Terrific. I'd appreciate that, so you can proceed. Great. Thank you, Your Honor. As you are aware, we were before you on Friday, where Mr. Nash gave the update of junior dip proposal having been received from both S.D's express lines and our largest equity holder, MFM partners. We were working through documentation on the terms of a dip junior to the B-2 lenders. We had intended to submit in a great order over the weekend or early

this week, but in another twist, late Friday afternoon, the debtors were informed that Citadel had actually bought out Apollo and Beal's positions in the B-2 term loan and was also potentially interested in providing a dip. With our ABL lenders extending the use of our cash collateral through Saturday morning, parties have been working around the clock, and I'm pleased to say that we believe we have reached consensus on the terms of a dip financing. And before giving a high-level overview of those terms, we are in course, of course, in the process of documenting, and I'm sure I won't be preempting anything by saying that we understand all parties' rights are reserved while we do so. But again, think we have agreement in principle that is supported by the entire

capital structure from top to bottom. The proposed dip will still provide $142 million in new money with the potential for additional incremental capital at a later date. Citadel, the new B2 lender, will provide $100 million in new money, carry with the existing pre-petition B2 term long. There is no longer a roll-up of any pre-petition debt. MFN will provide $42.5 million on the same junior basis we have previously discussed. That is coming in second on the B2 priority collateral, but junior to the rest of the security collateral.

Each of MFN and Citadel will earn 4% in dip fees on the new money each is providing. MFN will earn interest at the rate of 15% for annum and Citadel will earn interest at the same rate under the pre-petition B-2 credit agreement. MFN will also provide, if needed, a delayed draw of $70 million on a completely junior basis that is junior to all secure collateral, including ABLs and Treasury's positions on the B2 priority collateral, but at slightly higher economics. The adequate protection packages will stay largely the same as what is on file under the original dip and cash collateral orders. And regarding the timeline, this new proposed dip includes a 180-day maturity, providing the flexibility for additional time to run a competitive sale process. Lastly, the proposed dip also contains a stapled stocky horse bid of one-

$1.3 billion with a 2% breakup feed provided by SD's express lines for all 166 of the debtors real estate terminals. We do intend to file a revised form of bidding procedures in order in the coming days incorporating this. And of course, we do still intend to seek the highest or otherwise best offers for all of the debtors assets, including the terminals, but are pleased that with the SD bid in hand, nearly all of the pre-petitioned and secured cashers. structure is covered by those contemplated proceeds. So it has been a very hard thought process, say the least, but the terms and provisions of the proposed Citadel MFN dip and stocking horse bid

request significant improvements in savings to the estates in comparison to the dip that was originally filed with these cases. Dip fees are reduced from 23 to 34% of new money down to 4%. This improvement, these improvements reflect potentially savings of $27 to $43 million for the estate, reduced interest rates reflect savings of approximately $300,000. The extension of maturity and certain milestones provide us with the greater flexibility to run a competitive and value

maximizing process. The roll-up feature is gone, and of course we have the SD stocking horse bid in hand for all 166 real estate properties. So as I mentioned at the outset, we are working to document all of this and we'll of course share with all interested parties, including the U.S. trustee, who we have not yet had a chance to share with that they have not yet had a chance to review and comment. All of this came together within the last 24 hours or so, but would ask if amenable to the court, that upon sign up from everybody, we be committed to submit the agreed order again

under certification of counsel. So I'll, yes, go ahead, Your Honor. No, go, I apologize. No, I was going to pause there anyway for any questions, or I'm sure there's going to be some hand and raised to the state was deli by. What don't I hear from parties that would like to be heard, starting with Ms. Leamy? And Ms. Leamy

Thank you, Your Honor. Jane Leamy from the U.S. trustee. I haven't received the documents yet, and I trust that I'll receive those after the other parties have had a chance to review and sign off. I did want to make Your Honor aware to the state you're not already that a creditor, Unsecured Cruders Committee was appointed yesterday

afternoon, and I understand that the committee is in the process of engaging counsel. So they may want to weigh in on this. I understand it's an interim order, but given that there is a committee now, I think it would be appropriate to consider that we should let them have a voice with respect to this order before it's entered. All right. Well, let's talk about the logistics of that.

So when do you anticipate the committee to have counsel selected? It's my understanding that they are, I don't have a date, but I know that, They are in discussions and have meetings today and tomorrow is my understanding. Okay. And Ms. Smith, what, I guess I'm interested. I should know this, but apologies, but what is the timing of A, when you expect to submit an order and be the existing use of cash collateral? We are hoping to submit an order as soon as this evening.

Cash collateral expires at 12.01 a.m. Saturday morning. And, you know, the ABL lenders have been extremely reasonable to work with, but we, We do need funding in really by Monday. Okay. Your Honor, Mike. Go ahead, Ms. Leamy. I apologize. Your Honor, Brad Berliner is a member of one of the – is a member of the committee.

His organization, maybe – and he has his hand raised. Maybe he could speak further to the issue of when counsel will be retained by the committee. Okay. Well, why don't I do that? Apologies for going out of order. I appreciate others – others chimed in sooner, but just given the relevance, Mr. Berliner, I'll give you a chance to be heard if you can address that question. Good morning, Your Honor.

Good afternoon, Your Honor. Brad Rillinger. I'm in-house counsel for Central States Pension Fund. Central States is the chair of the creditors committee. We are meeting tomorrow and expect to have creditors' counsel selected that. Okay. So, look, I guess here's what I propose. Ms. Smith, if at the time you have an order and are circulating it to parties in interest,

if you've heard from Mr. Berliner by then that the committee has chosen counsel, if you could include counsel in the circulation, and therefore if you file it under certification, you would be certifying that committee counsel has signed off. the timing of the selection of counsel is such that it puts the debtor at risk of essentially running out of access to cash. I don't think that would make sense. And so if the timing doesn't work, if you could indicate on the certification whether committee has seen or not, I'd be interested to know the answer to that question, but I don't think we ought to hold it up just in case there's a delaying connection. with appointment of the committee. Obviously, this is an interim order, the kind of order

that would typically be entered on the first day before there was a committee, and the entry of an interim order approving the dip would obviously be entirely without prejudice to all of the committee's rights in connection with final approval at the second day. Ms. Leamy, does that – does proceeding in that manner address your concerns satisfactorily? Yes, Your Honor. Thank you. Okay. Very well. Okay. So – Mr. Winston, I saw that your hand was up, so let me give you a chance to be heard. And I think that's Mr. Stratton who's got – it says Richard Riley, but if I'm – if I've made a mistake, apologies.

We have a little computer problem, and I'm not Richard Riley, and he's very glad of that. I'll let Mr. Winston go ahead, and then I'll – I have just a few things to say this. Okay, very well. So, Mr. Winston. Thank you, Your Honor, for the record, Eric Winston of Quinn Emanuel on behalf of MFN partners. I just want to reiterate of what Ms. Smith said. This was a very hard-fought and continuous negotiation over the last week. We're very pleased that we've reached this consensus.

You'll hopefully see the deal of documents and forms of order very soon. We're very pleased that this happened. very consistent with MFN's belief that value maximization requires, you know, a very robust process and more time. One of the things that you will see so that you're not surprised is that even though Citadel is putting in more dollars initially, MFN is the dip lender with the dip lender consent rights with respect to the sale process. And we just want to make sure your honor understands that. Okay. Very well. I appreciate that.

Mr. Stratton. Good afternoon, Your Honor. David Stratton of Whiteford-Taylor, Preston. We represent Estes Express lines. I asked to address the Court for two reasons. One, I want to thank Dentors Council and the other parties in the case for their efforts to get us in a position where we expect to be the stalking horse fitter, talking horse bidder for all of the debtors real estate at a price, an initial bid of $1.3 billion.

Second, as your honor might expect, there's a lot of work to be done to get from here to there. We're very, very optimistic. We'll get there. But as the saying goes, we're not there yet, but we hope to be there very soon. And we're excited to play this role in the case. Okay, thank you, Mr. Stratton. Is there any other party in interest that would like to be heard with respect to the overall status or any of the points that Ms. Smith has made? Okay, seeing none, Ms. Smith, where to from here? Thank you, Your Honor.

I think if, again, if it's okay with the court, we will just get back to work on finalizing this documentation so we are in a position to submit an agreed form of order as soon as possible and would propose to do so, again, under certification of counsel, but do you understand your point with the committee. Okay. So I appreciate that. So is there any other way in which the court can be helpful to the parties this afternoon? No, I think that's it for us, Your Honor. And again, our thanks and gratitude report has obviously been immensely helpful this far.

So look, what I've done is nothing. you're working much harder on this than I am, so I'm happy to do my job too. And do want to – look, I appreciate that this is a situation until everything is done, nothing is done, and so I want to not get in the way. But it does sound as if very good work is being done, and I appreciate all of the hard work of the professionals and their clients. So my thanks to all of you. and with that, we'll wait for an order to come across.

And if something arises, you, of course, should not hesitate to reach out the chambers. And with that, we're adjourned. Thank you. Thank you, Your Honor. 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.com.