American court hearing recordings and interviews - Season 8. Episode 3. April 29, 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. Robert Brady, on behalf of Leisure, Investments, Holdings, LLC at all. We thank the Court for hearing us this morning on some important motions. As we've done the last few hearings, I'd like to start with just a brief status report on our efforts. These are the debtors' efforts to obtain control over the debtors' operations, books and records, protect the animals and other estate assets, and develop our strategy to reorganize. to reorganize these companies. The debtors have hired an animal welfare expert

who is now on board. In fact, he's currently handling a move of sea lions. Regulatory bodies in Florida forced the closure of a sea lion pen at the Gulf World facility in contemplation of needed maintenance. So we, using our animal welfare expert, are moving those sea lions to a different location. He's also actively conducting diligence on the animals and the conditions at the various facilities that we have access to.

The debtors have hired an investment banker. That motion was becoming Greenhill was the selected banker after interviewing five different banking firms. And we hired a real estate consultant, Keene Summit. Of course, I'm sure very familiar with Keene Summit. We've had kickoff calls with both of those advisors to get that process. started. We have completed the governance changes in Italy. As a result, Riveron is leading for Italy tomorrow. Since my schedule freed up a bit this week, Your Honor, I might join them, but they're going there to conduct necessary diligence and meet with the management team in Italy.

We've had several meetings with the Mayor of Miami on the Miami Sequerium litigation. animal welfare. We retained regulatory council to assist with our dealings and discussions with the United States Department of Agriculture. So they're on board. And we continue to make progress on affecting the governance changes throughout the corporate structure. As you'll learn today, your honor, one area that we've struggled to make progress, despite a significant amount of work and effort and that is in Mexico and it comes down to in our opinion mr. Albor's in refusal so you don't have to take my word for it your honor we have three witnesses available today that we would proceed with we think it makes sense to

just start with that motion since it is so vital to our efforts before we start with the motion if you would like to make your thank you your honor James Moon M-O-O-N on behalf the Guaduador. Also with me as our local council, Michael Dusenkel. Let me ask this. I saw in the responsive papers an overture to work toward a resolution. Have there been discussions? As soon as Mr. Moon was retained, we did have a conversation. I think they were careful in the papers to talk about giving us access to information on the US entities.

We really need, I mean, as you heard on the first day, the company stopped sending financial statements to the banks, stopped doing any reporting almost a year before, and that's really why Mr. Albor was replaced, that they were in default, necessarily, reported. We need access to those financial statements, the books and records. We understand, and you'll hear today, Mr. Albor, challenges the, the Mr. Strom's position, but I think you'll learn today that as of now, Mr. Strom is the valid corporate governance of Control the Door of Dolphin while litigation is pending. He is the sole director. So we're entitled to that information, and it's necessary. Again, they have no access to any liquidity. So I don't know how the Mexican entities are spending the bank's cash collateral. with the lender's cash collateral, but they are,

they are operating the business in default, utilizing the lender's cash collateral, which we think is impermissible. But we need access to that information to make sure the animals are being cared for, we understand the financials, and we can start the process of determining the best way to reopen. Mr. Mann, just on that briefly, Your Honor.

So, yes, actually, as soon as we made our appearance, Your Honor, the first thing that we did was called Debtors Council. We've been doing this a long time. We don't sandbag, and we wanted to make sure that we reached out to find out is there a way that we can work with this. And we've got some really hard practical issues here. The first, obviously, is that Mr. Albor does not want to offend this court. He is a businessman of great reputation in Mexico. I gave a little bit of that background in our response, Your Honor.

But the issue is that he has real issues with respect to his due process rights and those of control Lodora in Mexico. Now, they say that it's completely resolved. We say that it isn't. And, you know, from my view, Your Honor, the fact that they're asking for another $300,000 retainer for Mexican Council tells you it's not resolved, and it's not going to be resolved necessarily fairly quickly. We have conflicting orders from the very same court, the very same judge.

We have different orders from Cancun, from Mexico City, from the Concurso Mercantile Court, which are all under review. and those are going to have to be resolved pursuant to Mexican law. We have to remember, Your Honor, that these particular entities filed well before any of these actions were taken on March 28th with respect to the Mexican entities. There was, as you saw in the papers from both sides, there were precautionary measures entered. And, Your Honor, I don't know if this is the right time to do it, but we did see that there had been a declaration filed yesterday from their Mexican. counsel we felt the need to respond with ours I have a copy of it because I didn't know if you had a chance to look if I may approach your honor you may thank you so

the point of it your honor and I'm sure you'll get a chance to read it is that and this is not to disparage any lawyer or any position but advocates advocate you're hearing two different sides from two very well entrenched respected legal teams that are dealing with this, that are fighting tooth and nail in Mexico to deal with what they both believe are their rights under the documents. The problem is because this was initiated in Mexico, these orders originated in Mexico, the appellate procedures are in Mexico, the Imparo proceedings are in Mexico. Mexican courts need to deal with this.

And the problem is if you interfere with that, two things have happened. One, you may issue an order that conflicts with those orders, and now we have a problem of international comedy because what is the Mexican court to do? They've actually, if you look at the April 10th order, you'll see that they talked about issuing a letter to rogatory to this court to let you know what's going on. They're not hiding. They're trying to tell you this is what's going on.

The other issue, Your Honor, is it looks to me from the papers. There's this clear intent to try to make it look like the April 5th order is somehow better or of more validity in effect than the April 10th order, which did not supersede it, but post-dated it. It's not true, Your Honor. Both of those honors, both of those orders, were entered ex parte provisionally

in this exact same manner, Your Honor, and the April 28th order, which you will see an actual certified translation of that order attached to Mr. Barajas' declaration that makes very clear, and Mr. Barajas points out, nothing has changed. The only thing that's happened is that there's been a motion to

accommodate or accumulate, a motion to accumulate those orders, because the same judge that issued them needs to figure out what to do with these two orders. And he will do that. And my guess is fairly soon, but that process has got to play out. In the meantime, what are we to do? Well, we obviously don't want the dolphins to go without food or being cared for, and we certainly want employees to get paid. So the issue from our perspective is, number one, that, They are very convinced that they had a right to enter Mr. Albor's building. We have shown that they did not. We've actually attached the proof that he was able to provide just one of the documents

to the district attorney in Cancun, which showed that this is Mr. Albor's building. There's not any of the Dolphin Group entities' buildings. There is no possessory interest in that building, which means that if you want access to those books and records, which we're saying we're willing to work with you to get them, we need a protocol on how to do that. And I think that's reasonable. I've been doing this quite a while. Normally the parties are able to talk to each other and figure this out.

And where we don't agree, we can come back to the court and have that decided. But the second problem you have is that if you issue an order that says he's either, you turn over those records by X date, if he and his legal team in Mexico are telling him under Mexican law that he has a right under his due process rights in Mexico not to comply with it, he will not because he can't. The issue here is not that he's, it's not that he's just entitled to avail himself of Mexican law. You'll see in our papers we talk about the fact that he has a requirement to do so.

Mr. Brahe has actually puts that in his declaration as well from his legal counsel. So, you know, this is a very sticky problem. And if this were a law school exam problem, it would be interesting, I suppose. But for us, we have to think about practically how do we deal with the situation in front of us without violating due process rights of those that are entitled to avail themselves of it. The other issue we have, Your Honor, is if, think about it, we came in, I think, on April 17th. I think by that time, by the terms of the interim order, he was already not in compliance with that order, assuming that service was correct, assuming that the service by his last known email address was correct,

which may not even have happened because they even talked about the service. fact that some of the emails got blocked, but even if it didn't, in Mexico, their position is that they're entitled to process to be a service through the Hague, because they're a Hague signatory. I realize all the issues in the case law about alternative service, but, you know, the issue is not ultimately at the end of the day, which I think they want to try to prove today, which I would think would be grossly inappropriate, that they now control the company. That is disputed under Mexican law, okay? You've finally broken loose from work.

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I encourage you, and I'm sorry for the late time. It's just I was traveling on a plane yesterday. I was dealing with this at 12 o'clock last night to try to get you something to respond so that you understand if you're getting just one side of an advocate and a legal proceeding in Mexico, you're not getting the full story about what it is. But even if you have both sides, you're on it, is it this court's job to determine what a Mexican court should be doing with the Mexican court's order? I don't think so.

So that leaves us with practically what do we do? I think, as I said, day one, tell us exactly what it is you need, right? Because, number one, as you're hearing, they're in charge of a lot of properties, apparently in Italy now. They're obviously in charge of the properties in the States. There are some kinds of books and records there. I understand that some are not, but I don't know what they are because they haven't told me. We've asked for a list, what exactly is it that you think that you need from this headquarters building, as you call it? We're saying it's Mr. Albor's building, which it is where there are some records of Dolphin.

The second thing is, Your Honor, if the issue is related to financial documents, it would be surprising to me that this company doesn't have electronic books and records, which means that we would need a protocol for giving you stuff or access to stuff that satisfies the issues with respect to what you need for the entities you control, that do not invade Mr. Albor's personal records or non-debtor company records and also with the understanding that some of those are going to be protected right now

because of the Mexican entities of the documentary. So I'm just trying to resolve this practically, Your Honor, because I'm trying to put my head to, how does this court tell someone that is actively engaged in the legal process, availing themselves of their due process rights in Mexico, you can't do that. I'm saying that Mexican law doesn't apply to that.

I just don't think you can, Your Honor. And so let's try to work practically to fashion something in the interim where the animals are taken care of, employees are paid with respect to entities that they have, and I have not heard yet with respect to this hearing that we're having in three business days before the May 5th hearing,

what was the emergency? Seems to me from what I see in the papers, the emergency has to do with Mr. Waxstaff basically trespassing and illegally seizing Mr. Albor's building. And keep in mind, Mr. Albor did not come and throw these people out with a group of thugs, as they suggest with their purported state police. He went to the district attorney in Cancun. He has testified now for 10 minutes. We have evidence for that. We have evidence with witnesses in the courtroom available for cross-examination. I don't believe he has anybody here.

But these declarations can't come in. Mr. Brady, let me ask you a question. Mr. Brady, that Mr. Moon is raising issues that I have been thinking about in preparation for this hearing, which is what is happening in Mexico. What should I be doing with respect to these entities while there are contested proceedings, as I understand it, in Mexico?

and several orders, which on the surface appear to be contradictory, which a judge has in front of him in Mexico. And what should I be doing in that context? Well, Your Honor, looking at the declaration they filed this morning, paragraph 4, they acknowledge that the April 28th order states, that the March 28th resolutions, those are the resolutions that put Mr. Strom in place, shall be considered valid until the court rules on the motions to accumulate. So they admit, in their own declaration, that right now Mr. Strom is in charge.

Until further notice. The counsel, we did have a conversation. He's not provided a single document to us, not a single document. since April 16th. We asked for the electronic books and records. We asked for access to the corporate servers for Dolphin. And we've received nothing.

So it sounds nice that they want to be practical and provide us with information, but they haven't. And that's why we're here. We're here to make clear that the automatic stay and your Honor's turnover order requires them to provide us us with the company's books and records. I don't know what they're hiding.

I don't know why it should be this hard. But they have not provided us a single document. Nothing. We have the orders. We're asking them to comply. Then they ask us, well, what do you want? We want the company's books and records. We're entitled to them.

And we think Your Honor can enter an order that confirms that the automatic stay covers the debtors' debtors property that includes the books and records of the debtors and we're entitled to them here the evidence I will need to read the declaration that was submitted and I will have questions about the status of the orders in Mexico because to me they look like they were provisional in nature akin to a preliminary injunction kind of equivalent not final orders which is what the blurbs for the cases that I received from

counsel were talking about final orders and it didn't appear to me the non-expert in Mexican law that these were final orders so I need to understand more so I hear the evidence we'll go from there table setting thing your honor is it it was confusing to me at first so there are two proceedings in Mexico ago. And the motion to accumulate that was followed by the debtors is to consolidate, essentially. The April 28th, there's two April 28th orders, and that's confusing. The one that the declarant for Mr. Albert talks about one in the proceeding that he commits. The April 28th order that's attached and discussed by Mr. Reyes Eskenon is in the proceeding in which the motion

to accumulate was filed. And it's that order. It's the one that. It's the one that. It's the one that, that their declarant concedes in paragraph four says the provisional orders are parked until I rule on the motion to accumulate the March 28th resolutions that appointed Mr. Strom as sole director of all the Mexican enemies in the Dolphin Group remains valid and it's the same resolutions that kicked out Mr. Albor and the other directors so as the table sits currently the Mexican court the one that's deciding everything has said Those resolutions shall be considered valid. Okay, and don't we have a third proceeding, which is the Conforso or whatever, the Mexican bankruptcy proceeding?

Your Honor, that was dismissed. And I understand that the dismissal is subject to some appellate type relief, but as things stand, it was dismissed. Your Honor, if I make motions to reconsider that have been filed with respect to the Conquerso-Mercintill dismissal. There is an Emparo direct proceeding that's been filed and has been accepted. There's an indirect impertore proceeding that has been filed and is pending acceptance, Your Honor. So it gets even more complicated. And what's an Empirot proceeding? So, Your Honor, you do have, I can't see them, but we do have some of our Mexican Council on the line as well.

They can tell you. My understanding of it, and I dropped it in a footnote as well, that they said it was okay. It's akin to a constitutional, like my constitutional rights have been violated. It's not an appeal. It's something a little different. It's saying, you violated my constitutional rights by entering this order. It needs to be undone,

but it's not necessarily an appeal. That's a separate proceeding. And appeals are also the accurate way to go about, but the April 4th and the April 10th order, and also with respect to what they're referring to in here, keep reading the declaration, because also with respect to whether something's still in effect, the April 10th order is still in effect.

Both of them are in effect. fact because they are pending determination by the court that is hearing the accumulation. Okay. Mr. Nyberg. Thank you, Your Honor. So just to show the path forward, the debtors will seek to admit three declarations. We'll take them in order. The first is the declaration, Mr. Strong.

It's the first aid declaration, Your Honor. Docket number 10, Mr. Strom, you met at the first day hearing. He is here in the courtroom. Do you have any objection to his declaration? to his declaration coming in subject of the cross? So, Your Honor, my only issue with that, I have no problem with the declaration coming in for the fact that it was filed.

I have not had the chance to ever meet him. I've not had a chance to oppose him. And especially on an expedited hearing like this, I've had absolutely no opportunity to prepare for a cross. It would be severely prejudicial. But he's brought in for truth of the matters that are raised therein. I have no problem with the fact that they're there.

And you can see what he said. that's what he said we have on the other side our verified response and you can accept that determine what you think about the veracity of the parties but it's it's ridiculous for me to try to cross somebody at this at this juncture your honor the declaration has been on the docket since May 1st 2025 debtors filed their motion over a week ago full assertions in the declaration to which they disagree I've got an objection to the declaration coming in and it's a statement so you can put him on the stand but I'm not going to accept the declaration. He would say the declaration is admitted.

Does that mean Mr. Grischer could make arguments based upon statements that remain in the declaration to the extent of the time? I'll take a break and let you all talk. Okay, what I'm going to do. We're in recess. 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. Mr. Ablo, Bruce's resolution in terms of we'll seek the introduction of the strong declaration, as well as your honor, we ask that the court take judicial notice of the Chapter 11 petitions

and the resolutions that are attached to them that are on the fourth pocket. I think Mr. Moon may have some clarifying language in terms of purposes for which declarations will be in. It may seem like a peaking point of his testimony that that was his declaration that he filed as a first stage motion with respect to his authority and all that. We're here on a motion to enforce an automatic state that specifically finding that Mr. Albor has violated that. That declaration does not speak in large part to any of that. So my only issue is, did he file that declaration? Yes, he did. I have no problem with that.

That's what he says his corporate authority is. Your Honor also understands, from the contrary, we dispute that. So, yes, he said that, and yes, he filed that declaration, but it's not really pertinent in large part with respect to the relief requested today. So if you do proper that, I have no objection to that. He did file that declaration, and at some point, Your Honor will be able to look at at that assumed that it's true and hopefully you'll be able to look at stuff that was filed under penalty of perjury on our side and determine that at the appropriate

time as well with some of the documents that we have your honor that was my only time okay thank you again next the debtors will introduce and admit the declaration of mr. Wackstaff enforcement motion the need for a proper but the debtors exhibit planning the declaration of mr. Wax staff references and lays the foundation for what has been identified as debtors exhibits three to eight in the binder through the declaration seek the introduction of those documents into the record if necessary I could offer a short proffer about the documents that are at tabs 14 a through D your

honor these are letters that mr. Waxsaf received in his capacity as the debtors chief of structuring officer their letters sent or emails sent by on behalf of mr. abhor or council representing him lastly your honor for the debtors evidentiary presentation seek to admit the declaration of mr. Reyes Escondone which was docket number 91 there's evidence and I take it you have nothing no evidence just just my verified response is they are declarations under penalty of perjury of the laws of the United States of America's honor. In objection?

Your Honor, I think in terms of the verified response, we do object. Declaration where there's identifiable facts, it's law and facts mixed. Under federal rule, civil procedure, 43A, that's the call is shown why the witness is not present. He's not even present remotely. So as of right now, it's just someone signed

a one page slip of paper and representing that everything stated in the response is true. Well, in facts, we just think that at the very least, we should have been on Zoom. We should have been here. All the debtor's witnesses are here. So we just object to the court taking in the response

as evidence, because it's not evidence. First off, I actually have a group of people that I think you can see it. Who are we looking for? I'm getting messages. We should have a few Mexican council. Mr. Al-Bor was going to be on. My partner, Dan Gonzalez, Mr. Barajas, I think,

was going to be on. Let's get sure who was going to be attending. I just figured I'd see them on Zoom. Yes, yes. We are here. Mr. Barajas is also in the call. I'm going to consider the verified response admitted with respect to facts that are in it,

not legal argument. Doing that because obviously this was a short notice hearing and given that everything's coming in by declaration, I think it's appropriate. there I'll see Mr. Albar on the screen is available across examination to the extent that I wish to do that we wish to have to have to confer with counsel okay well in a recess for ten minutes and you can ask Alfoncho honor Sean Gracher from Yon Conaway thanks for giving us some time this morning to figure things out I think we've agreed on a path forward for this hearing and also the hearing that is scheduled for next week on the Section 542 parties intend to proceed with depositions of the various witnesses. Those depositions will take place in person in lovely Miami, Florida, the Middleton, Delaware.

So is the idea that we will continue this hearing, will continue the hearing next week. And in the meantime, is there some agreement on any kind of necessary access to documents? I was going to get there, Your Honor. Okay. Obviously, the vetters have a very different view of the status quo and the implications. Yeah. We will take up counsel, his job board's counsel, on the offer and proposal to provide necessary documents and information. top of the head the one piece of information that we would ask for in particular is

information regarding period there is there is not a meeting of the minds need court court intervention to help resolve it but we certainly don't want to be in a position where to the extent our position is successful that are the funds that you're talking about are they park receipts what are they what are the funds They would be park receipts, visitors who were attending the parks. As we understand it, the company was likely a position over the patent. So the accounts asking for parties to surrender any of their substantive rights, we're just simply asking for the information.

Obviously, I'm putting Mr. Moon on the spot with respect to that request, but there will be a handful of other requests that we will work with him. to make sure that we understand what's going on over the next. Mr. Albor is on the Zoom. He's at the back of the boardroom that you see there. His camera, the zoom's in on him, I guess, when he talks, but he is here, and he does respect his court. The issue that we're trying to work out, Your Honor,

just from our perspective, is we have to be very careful with respect to the jurisdiction of Mexican courts and what he can agree to. Not that he doesn't want to, it wants to be cooperating, cooperative he's going to definitely try to be as we as I was directed to do as soon as I got under the case you on me so you just wanted to make that recommendation okay well I'm hoping there's a sharing of at least information so that whoever is an actuality controlling day-to-day has what they need to ensure that the animals are being taken care of and the people are being

paid for their work and other operational matters are being resolved while the management governance dispute is out there and I recognize that may mean that that split that whoever is actually on the ground handling things is split some is the debtors team and and and some is and particularly I guess in Mexico is Mr. Albor's team. So we need to make certain that notwithstanding the governance issues that regulatory concerns, safety concerns, people are being paid. But I would hope information could flow and that there wouldn't be a violation of any order that's been entered in Mexico to share information. So thank you.

The Prudential Insurance Company of America, Prudential Legacy of Insurance Company in New Jersey, and Cigna Health and Life Insurance Company, which I'll just refer to as the first lien lenders. The first lien lenders are happy and pleased that the court has set a schedule for depositions and for continuation and the scheme. I'd be remiss if I did not afford the court that the first lien members do have great concerns. First and secondly, debt, total amount outstanding at this point is approximately 200. The debtors have been picked in the last couple of weeks.

We're very busy weeks. The debtors are flush with cash at this moment. In the spirit of lender's view, insist, quite frankly, upon some kind of transparency during this interim period. So that court does rule in the better's favor. There can be some accounting of sending the report. We can't see how that could possibly violate anything. AO party, the loan agreement, reports that they have been done enough requests over the lease. request over these.

Now to see when I can fit you in. So we're in recess. Council, the reasons that you set forth in the motion and I think as you've gotten the flavor of today, various issues that have a recognition of that and recognize significant departure from exposed to authority to pay advance retainers to those firms. Revision to put upon receipt and any amounts funded pursuant to the order should be subject to clawback. I think the change is appropriate. If you upload that revised order, I will sign it. Thank you.