American court hearing recordings and interviews - Season 8. Episode 2. April 15, 2025 Bankruptcy Court Hearing (The Dolphin Company/Leisure Investments Holdings LLC, et al.)

Episode Date: May 23, 2025

This audio recording and other filings in the bankruptcy proceedings are available here:https://www.veritaglobal.net/dolphinco/document/list/6300

Please be seated. Good morning, Your Honor. Sean Griecher from Young Conaway on behalf of the debtors. Your Honor, thank you for setting this special hearing time. We don't have a lot on the agenda, and you may have noticed there's not a lot on the docket, but there is, I can assure you, a lot going on off the docket around the world, so I thought maybe it's a good time to give you just a quick update.

My World Wildlife Fund calendar in our kitchen said that yesterday was National Dolphin Day, so why don't I start with animal welfare issues? So the independent director and the Riveron team have spoken with authorities in Florida, companies' existing advisors. We've been speaking with the company's employees who are located in the Florida Parks, particularly the veterinary staff. We've also been speaking with parties to serve as an independent advisor to the independent director and the CRO regarding animal welfare efforts at the company's facilities.

So that can take it to be operationally and financially. The Riveron team has made good of progress, getting our arms around the financial and operational details at the U.S. parks. As Ms. Milki will be discussing in presenting our emergency wage motion, we are engaged with the companies, employees that are doing what's necessary to ensure appropriate stewardship of the business and the animals. And, of course, a critical part of that is paying our employees. Governance-wise, outside of the U.S., as we discussed at the first day hearing,

the process of affecting governance changes that are necessary based on the corporate laws of various foreign jurisdictions remains ongoing. These are simply processes that in many cases require some time. All is moving forward on that front. Now onto Mexico, as we mentioned at the first day hearing, the Concorso Mercantile was filed by prior management with respect to one of the company's Mexican entities. Evidence has been provided in Mexico that this filing was done without the requisite corporate approval. The dismissal of that concourse has been opposed by prior management's counsel, and the judge overseeing that proceeding has been reviewing the papers, and we expect that dismissal will occur. Additionally, the federal civil court in Mexico City issued orders in joining the former CEO, Mr. Al Gore, from acting as an authorized reprimalized.

representative of the company, avoiding the board meeting that purported to authorize that filing. We also obtained an injunction that directed all governance activities run through Mr. Strong and Mr. Wagstaff. Those orders were obtained in Mexico City, the federal civil court. On Friday last week, the state court in the state where the company's Cancun headquarters is located. Tannaro, I tried to say that properly, I'm sure I didn't. But the state court there entered a companion order, recognizing the federal order.

With that, the Riveron team was able to, for the first time, access the headquarters and begin to communicate with staff at the headquarters regarding records of the debtors that are needed to conduct these cases. Unfortunately, at some point, after midnight on Saturday morning, at the direction of the former CEO, The headquarters building was forcibly and illegally retaken. The Riveron team was barred from the premises and prohibited from any further communication with company staff or access to the debtors books and records.

So the debtors professionals in Mexico were taking appropriate steps to address that, to enforce the valid court orders that have been obtained and ensure that Riveron can regain access. Those efforts have been feverish. They've spread throughout numerous courts in Mexico. Council's been working around the clock, traveling around the country, personally appearing in court and in person at the facilities in connection with these various steps that are being taken alongside the Mexican authorities.

Given the ex-CEO's conduct, we suspect that this high level of effort will unfortunately be likely to continue, particularly if the circumstances continue to escalate, as we fear they may. In the meantime, at a minimum, we view the former CEO's actions to exercise, possessive session and control over the books and records related to the debtors' assets, liabilities, and operations, and to bar Riveron from access to such books and records as brazen violations of the automatic stay. Additionally, Your Honor entered an order on the first day of the case compelling former officers, including the former CEO, to turn over books, documents, records, papers, ESI,

and emails related to or connection with the debtor's property and finances. That order was sent to the former CEO's counsel on April 4th with a demand for turnover such materials by last Friday the 11th. There has been no response to this demand from counsel to the former CEO. Indeed, the former CEO's actions this past Saturday morning suggest, I think, an intent not. All this said, assuming no change in circumstances, the veterans anticipate the need to file a motion as soon as possible to enforce the automatic stay and to enforce the court's Section 542E order.

Given the urgency of the request, we'd request a hearing on short notice. happy to work with Your Honor or Your Honor's Chambers to find a suitable time for this hearing. Additionally, as we mentioned, the former CEO's conduct has required Herculean efforts from Mexican Council, firms that are not familiar with U.S. bankruptcy, and frankly, for whom the expenditures of the time and costs here have been very significant, in order to ensure that we can see this process through. And I'll note the parties should have no doubt that the debtors are resolute in their intention to see this process through. We will be requesting authority to provide some advance retainers to Mexican Council, subject to their retention as ordinary course professionals.

So we wanted to at least let Your Honor know all of that was coming, likely in short order. If there, any questions about that, preamble. If not, I'll turn over the podium to Ms. Milkey to address the motion that we did file. I do not obviously reach out to chambers as usual when you have papers that are ready to be filed, and we'll figure out how to squeeze it in somewhere. Thank you, Your Honor. I appreciate that accommodation, as always. Okay.

So, Melchie of Young Conway for the debtors. It seems like a hard act to follow up. That update. As Mr. Greacher preview, the debtors have been working diligently to stabilize operations, to gain the trust of their employees and to mitigate any uncertainty

that these September 11 cases may have caused. We are before you today requesting certain customary and limited relief to ensure that the debtor debtors can satisfy their payroll, which is due to be paid today. The debtors specifically are seeking authority to pay up to $514,000 in payroll obligations. Those primarily comprise compensation liabilities and wage deduction and taxes. As indicated in the Wagstaff Declaration, which was attached to the motion, the failure to make payroll,

would severely disrupt the company's operations and cause substantial financial hardship to the company. employees thereby causing irreparable and immediate harm. Mr. Wagstaff is present on Zoom today. We thank you for that accommodation. He is available for questions of the court and other parties in interest. At this time, we'd like to move his declaration into evidence. Is there any objection? None. It's admitted.

Your Honor, the relief we requested is very customary. I'm happy to answer any questions that you have, but otherwise we'll rely on our papers. Thank you. I guess the only question I had in reading this is that this is that this is that this is This request goes to U.S. employees. It does. And what's happening with employees worldwide? It's an excellent question.

For the, we don't have this ability into the payroll of those entities. And frankly, we don't have access and control to the books and records that would inform us of that information. We are working diligently, as Mr. Greacher mentioned. We will be back before you with additional relief. We anticipate filing sort of traditional operational first days with respect to the Florida entities and those operations because we do have visibility of kids we are able to operations that are not in the US and not in Mexico maybe I should have asked mr. breacher this but what is happening with those locations right so to the

extent they are debtor entities your honor the information that's necessary to operate those is being held at the headquarters in Mexico so to some extent the criticality of getting into Mexico and getting those books and records is really what, you know, what will open up. With respect to Italy and some of the other Caribbean entities that are not quite debtors, we are presently undergoing sort of the governance processes in those jurisdictions to effectuate the transition of the board. So in some, for example, in Barbados, if there's a notice requirement that requires, you know, various steps in certain time periods to pass. So we are going through those processes and, you know, up. There have been site visits? Not to, for example, Italy or Jamaica,

but we have been in contact with the operators with those entities, and we're in close contact and trying to obtain additional information. You could volunteer. I could. You're not the first to me, that joke, Your Honor. I'll volunteer for Italy. Maybe someone else would like to check out Barbados. Your Honor, just Sean Breacher.

Mr. Wagstaff has personally, visited most, perhaps not all, but most of the parks located in Mexico. He did look at them from the outside looking in to some degree, had some communications with individuals at the parks, but given sort of the situation in Mexico, that process is complicated. Yeah, sounds like it is. Okay, and I hope that Mexico people are taking whatever security precautions need to be taken, including retaining security to the extent necessary.

Yes, Your Honor, that has occurred. Okay. Okay. Does anyone wish to be heard with respect to the employee wages motion? I hear no one. I did review it. As we just discussed, it addresses the U.S. employees, which is, which the debtor has visibility into.

And the relief is obviously appropriate. We need to ensure that employees. who are working get paid. I did have nothing in the motion shall be deemed to violate or permit a violation of 503C. I assume that language I think is a little, well I assume what this language says is we're not giving anyone, any insiders, any bonuses, etc.

Correct, we're not authorizing payments made pursuant to section 503C. So let's, why don't we say it's not being authorized. There are no, rather than that, I think that's actually better. better. Nothing in this emergency order is authorizing or permitting any payments under 503C. We can make that. And just to clarify. Make sure. I'm looking at the final order. I apologize. I understand why this is in here, but I would prefer to deal with future debtors in a separate motion or something else, but not preview that. revise the order and upload a replacement.

Yes. And there's no reason to do a COC on that. Okay. That's all we have for today? It is. Okay, very good. We're adjourned.