American court hearing recordings and interviews - Season 8. Episode 9. July 23, 2025 Bankruptcy Court Hearing (The Dolphin Company/Leisure Investments Holdings LLC, et al.)

Episode Date: July 25, 2025

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Sean Greacher from Young Conaway. On the first day hearing, you'll recall Mr. Brady described the three phases we anticipated in this case, phase one being stabilizing proper management and oversight of the business, ensuring animal safety and necessary operational controls in connection with the Chapter 11, getting our arms around the financial operations of the business, digging into the company books and records,

complying with reporting requirements called for by the rules and determining the best path forward through this process from an operational standpoint. Your Honor, we feel like we are getting close to closing out most of phase one. Sadly, it took much longer and was much more costly than anyone hoped. I think that that was caused largely

by Mr. Albor's willful stay were violations, and we still do have some gaps. We'll hear more about those later today. Unfortunately, we've uncovered a number of operational challenges resulting from some of prior management's decisions which the Redmond team has been tackling. Phase two of the case,

was state value maximization. That process is now underway, and we expect this to kick into full steam as the phase one process starts to taper off. The advisors, Greenhill and Skien Summit, have kicked off the marketing process. We hope that the procedural orders related to future sales will help us move forward quickly to preserve and generate as much value as possible. We've received substantial interest from various parties as to a number of assets, and we're optimistic that the process will be successful.

And then we talked about phase three. now do have most of the books and records preserved. We're learning more and more each day about how these companies were run, be poised for a full investigation. So I think in sum, we are moving forward. This has been a challenging case so far. With that, unless Your Honor has any questions, the agenda, let Mr. Koshanash, Koshanash, stand up.

Thank you. I do not have the claim. Chair, Koshnosh, from Young Conn-Wa-Star Ann Taylor, on behalf of the debtors. I'll be in the miscellaneous asset sale procedures and the bidding procedures motions. But first, a little housekeeping matter. We did submit a declaration from our investment banker, Mr. Jacob Molletschko, at docket number 364. Mr. Molletschko is appearing virtually today, and we thank your honor for allowing that.

So with that, we would respectfully move into evidence the declaration of Mr. Mellechco. Is there any objection? Muchco has actually an immovable conflict towards the end of the hour, so unless your honor has any questions for him, we would respectfully leave the virtual hearing. So starting with the miscellaneous asset sale procedures motion, I think before we get into it, it's important to sort of take a step back and set some context for when we were preparing these motions about a month ago. First, the debtor's assets, as you know, comprise a very diverse set of assets, both in terms of geography and the types of assets. They range from parks, equipment, and obviously to animals. Moreover, some properties are going to be sold as going concerned sales, while others may just be sold for the real estate. And obviously in addition to those levels of complexity, issues that Mr. Griecher was just referencing a moment ago,

where we have been struggling, obtained control of the books and records. So when we started out, this was sort of a black box. And as we've progressed through these cases, it has become less and less of a black box. But when we filed the motions, we did need to file the motions, and we needed to do so in order to, be ready to basically hit the ground running when the time came and that time is now. But so we in those levels of complexity to address those, we created a framework that we thought provided flexibility while also building in what we believe to be appropriate notice to parties in interest. But now that we have studied the ship, we are hopeful that this will, as Mr. Reacher, also alluded to,

become more of a normal standard sale process where we can hopefully group as many assets together and we are not running multiple parallel sale process at the same time. I think that we are trying our best to be efficient as possible while also progressing in a way that maximizes the value of the debtor's complex asset structure. So with that sort of high level background, I guess I've moved into the miscellaneous asset sale procedure motion which is agenda item number eight and docket number 298 I don't think I need to add much to what I've already said and what's set forth in the motion these miscellaneous assets sales are again designed to provide efficiency and flexibility to the debtors in monetizing their various assets

and with respect to this particular motion we have three categories of assets the real property the personal property and the animals all with their varying thresholds and notice periods but with that I guess I would open it up to your honor to address any questions that you have big questions I do have I guess on this sale motion is with respect to the animals which are included and who is getting notice with respect to the sale of a particular animal or group of animals? Because I did not see in this motion any notice to any regulatory body that's responsible for animal welfare. Understood.

I think we would give them notice, but I think we can make that more explicit in the order in by adding into the notice parties all applicable regulators, if that would solve your honor's concern? I think it's a must. Yeah. It's not discretionary. And they need to get notice of any sale of any animal. And I would like in here who that is.

I would like the applicable regulatory entities specified. The debtors should know who those entities are, the regulators or whoever they are, and they need to be notified on every sale of any animal. Or if something's, I can imagine, you're abandoning any animal or whatever the situation might be. But I thought that was a notable poll in these procedures. I think the miscellaneous asset sale notice to the extent that it deals with an animal needs to also include how that animal is being transported, how it's being protected, etc. There needs to be more. This is a unique, in this aspect, and maybe only this aspect, this debtor is unique. and multiple sales or we're selling it in piece parts

or they're not going concerned, none of that is atypical. I think the only atypical part of this sale motion is that we're dealing with animals. And so that's going to be my question on every sale or other disposition of any animals is how are they being cared for,

How are they being transported? Who's overseeing it? Do the regulators have the appropriate notice? That's what I'm going to be looking for. So that needs to be specifically put in here. Understood, and we will certainly do that. By no means we're the debtors attempting to flout any of their responsibilities to regulators. We are very keen and acutely aware of all the regulations,

and we understood if there is any disposition of animals. We certainly were intending to follow and provide notice to all the regulators, but I agree that we can include this more explicitly in the order and notice. Yes. And I should note, you mentioned abandoning. We do not, this is not like the other de minimis asset sales. I did a Control F for abandoned before I got here, and there is no mention of abandonment. So this procedure will not be dealing with abandonment. But we appreciate your Honor's comments and we will incorporate those.

The only issue that I had with the de minimis sale motion, so if you revise that form of order, submitted under certification after it's been circulated, I anticipate signing it. Understood, Your Honor. And for the notice, I guess we will put in a bracket to be updated as applicable if and when an animal is sold. Just for purposes of submitting the order under COC, in the notice we will put a bracket in for basically who will be in charge of the transportation to be updated at the applicable time when an animal is sold. To make it clear when the order goes out that if and when we sell an animal, that bracket will be updated with all the necessary information. Thank you. Thank you, Your Honor.

So moving on to the bidding procedures motion, we did receive several comments from several parties. And first, I'd like to thank the Office of the United States Trustee. Ms. Leamy is here, who is filling in for Ms. McCollum, who is filling in for Mr. Hackman. We thank all of them for participating in their responses. I believe they were very additive in this regard. But after we, and we did submit a COC, resolving the various comments from the parties, but when we heard from Your Honor's chambers that there was questions, alarm bells went off at the offices of Young Connoe, and we did a more thorough scrub of the order.

We didn't want to market too much further after we submitted a COC, but we did catch some more issues that may be helpful to Your Honor, And we did circulate an incremental red line to various parties, including the United States trustee, the official committee of unsecretters, and all the other respondents who did provide comments to the form of order. I do have an incremental redline. It is just seven pages, mostly clarifying changes. Proversial, and as I said, I believe all the parties who received this, I circulated a few hours ago. Most, if not all, have responded with saying they do.

not object, but just to quickly walk through the incremental red line. This first one on page 8, this just clarifies that the objection will be following the filing of a stalking horse notice rather than just simply thereafter, which was a little unclear in the order. On paragraph 15, when the debtors are serving the bidding procedures, we have added to the extent not already served. I believe that came about because the bidding procedures were originally attached to the motion. And so now we have included the bidding procedures as an exhibit to the order.

So I think paragraph 15 would have been a little duplicative in terms of serving. So that is the reason you see that to the extent not already served. The next one on paragraph 21, Electronical is I don't think a word although spell check did not catch that This I would say is the more substantive change, but again, I don't it is not prejudicial because this is with respect to the service of a cure notice. We had originally put in service on bid procedure notice parties which actually as a defined term included the creditor matrix and we don't I don't think we ever serve cure notices on the entire creditor matrix. So here we've changed that to the non-debtor contract counterparties

and all those entitled to notice to local rule 2002. The next one, again, is a clarifying change. Just making clear that the objection we are speaking about with respect to designated contract is with respect to the assumption and assignment of the designated contract. Paragraph 26, again, electronical. and then in the first sentence, rather than, say, listed above, we were more specific and put in paragraph 25, which sets out the actual specific items that we are referencing there. Paragraph 17, this discusses objections to the proposed form of adequate assurance.

This was, I think, a holdover that was not. updated when we received comments from the landlord it basically says that the original order had said that the objection will be heard at the sale hearing or supplemental designated contract hearing but we have since changed that in connection with some comments that we received so we just simply put in accordance with this bidding procedures order and again the last one is paragraph 32 and that is just again a clarifying change that objection must be filed no later than three business days but it can be filed

so that's the incremental changes from what was filed as a COC at docket number 369 and again I won't say I don't think I need to say much more than my introductory remarks with respect to the bidding procedures we design them in a way that we hoped balance the need for flexibility in these cases while also providing adequate notice to all parties in interest. So with that, again, I will open it up to your honor for... I have questions regarding the contract assumption and assignment procedures. And I'm not sure, quite frankly, if the motion differs from the order,

but I flagged some things in the motion, and particularly on page 31. 31 of the motion? Of the motion. I just want to make sure I understand what's happening. because of the way that these notices are going out, are people going to be, counter-contract parties going to be receiving more than one notice with respect to their contracts?

Are they going to have to keep looking for something else in the mail that says you may be impacting their contract? Because that's how it struck me as I was reading this, and I could be wrong. Well, first it starts, you know, we're going to post on the website. That's not noticed to anybody posting on a website.

Okay? So do I have to look on the website? Is it going to be changing? How many notices am I going to get? It just seemed to be a little unclear to me of all the places that a contract party is going to be expected to look to protect their rights. Sir, I believe the case website and the various provisions related there to were included as just a backup means to. in case other in case parties wanted to look or more of a belt and suspenders sort of approach.

With respect to whether they will be receiving multiple notices, I don't believe that would be the case, but if it is unclear that it's something that we can revise to make clear that I think the way it was structured or supposed to be structured was that the contract counterparties we'll be getting a notice as they typically do with respect to the cures. And if there's any amendments to that, we would file a supplemental contract notice. But I believe, I understand your Honor's concern with respect to how this is structured or at least phrased.

We can clean this up a bit to make it clear that they will only be receiving one notice. I think this was more, like I said, a belt and suspenders. Not meant to confuse anyone, but I understand your Honor's concern. Okay. The footnote on this page, for the avoidance of doubt, the failure by the debtors to list a contract on the designated contract list shall not be deemed in admission that it's not executory and not subject to assumption and assignment

and the proposed cure cost for any such contract shall be deemed zero. I don't get that. If you didn't put it on the designated contract list, there's nothing to deem zero. You've got to send a notice to somebody, and you've got to send them a cure amount. I'm not going to deem somebody zero by the absence of the contract on the designated contract list.

Understood, Your Honor. And I don't know that I found that in the order, but since it's in the motion, I'm raising it. If it's in the order or if it's in any of these notices, it needs to come out. Understood. I don't believe it is, but we will scrub the order and notices to make sure it comes out. Okay. Paragraph 40, a counterparty to a designated contract listed on the notice of assumption and assignment may file an objection.

Only if such objection is to the proposed assumption and assignment of the applicable designated contract or the proposed cure cost. What does that mean? They can't file an objection. on some other basis? Am I limiting objections that people can file? Again, I'm not sure I saw this in the order, but it's here in the motion. And it's to me an unusual provision. I think that was referencing specifically with respect to their, if they receive a, I don't think it's precluding them from raising an objection with respect to the sale or otherwise,

but if you are listed on the notice as a contract counterparty, If you are objecting to the notice itself, that would be limited to the assumption of assignment of such contract. But I don't think that is precluding... I'm not going to make someone file three different objections. They can file one objection to anything they have. If they want to file more than one objection and separate out their notice and cure amount from their cell objection, they can. But I'm not precluding people from filing one objection. to whatever it is, they think they have a right to object to.

So if that's in the order and I missed it, that's got to come out. Okay. Understood. I don't think it is. I will double check. I'm not sure if it is. I don't think it is, but we will double check to make sure. Paragraph 41 suggests the same thing.

So it's a counterparty to a designated contract. If they file a designated contract objection that is consistent with the requirement, set forth above, then something happens. I'm not getting that granular, okay? They file an objection, they file an objection. We deal with it. It doesn't have to be consistent with some preconceived notion that the debtor has about how that objection should look.

Again, I think these are unusual provisions and unnecessary. I'm looking at the order. Red line with the COS file. The red line. I'm not sure I fully appreciate the sliding scale you have here on all the different days. Somewhere I thought the sale objection deadline was 30 days after service, and here it's 15 to 60 days. So how does the – when does the 15 days kick in versus the 30 days?

I believe you are referencing paragraph – Oh, 32 says objections to any sale transaction must be filed no later. than the date that is 30 days from the bid procedures trigger date. Yes. And then in your timeline back in paragraph 2, the bid procedures triggered date is day zero, and sale objection deadline is 15 to 60 days. So how does that comport with paragraph 32?

Yes, this was something that we also saw and thought that we would discuss. But I think with paragraph 32, This is a no later than date. I think nothing in this chart that you're referencing was meant to deviate from any local rules or notice requirements. So I think the day 15 sale objection deadline is we would go out with, in some circumstances, the irregular 21 days notice with an objection deadline of 15 days out. But we are in no way attempting to deviate from any of the rules, and we can set the objection deadline for day 30 in the chart to make it clear and comport with paragraph 32.

And with respect to the outside date of day 60, that I think just reflects the potential for the debtors to set a later date, if necessary, which would be beneficial to creditors and provide more notice. But if there are anything that we could clarify with respect to this chart. I appreciate the attempt to try to build in flexibility, but I think you've actually confused many things in doing that, and I'm not sure it was necessary. I can tell you right now that if anybody misses a date,

there's going to be a lot of leeway given to people, because I think this is confusing. If 30 days is an outside date and you make something 15 and somebody thought they had 30 days because they read this, they're going to get 30 days. So I think it's confusing. And I don't know how sitting up here on the bench to make your order not confusing, okay, with respect to these sliding scale days. But I'm going to give people leeway that miss a deadline because of these sliding

scales and the inconsistencies. So that's all I'm saying. These notices go out. We will be clear on the specific days. I think the point of this order was to provide a sense of the potential timeline in connection with these sales. But when we do file a trigger notice, it will say your objection deadline is day X. Okay.

And what deadline am I approving with respect to that if it's not in here? and it's not clear. I think you would be approving if you're on it agrees with paragraph 32. The objection deadline set forth. It shall be no later than 30 days unless

I'm more concerned with it's no earlier then. No later than doesn't bother me at all. It's the no earlier then. If you said something for seven days that's no later than 30, but I might have a problem with seven days.

So it's really the note earlier then that I care about and that matters for purposes of appropriate notice, not that outside date. 30 days is fine for notice of a sale, I think, under our rules, but seven days would not be. So I find this order confusing on the dates. Understood. I think in paragraph 32, would it be acceptable to change it from? I think it should be no earlier then. I think that no later than doesn't matter.

Understood. So we will change paragraph 32 to no earlier then. No earlier than whatever the rules provide. Correct. Whatever date that is, which I don't know off the top. And then we will change the chart from day 15 to day 30. However your chart works, I will confess to finding the chart confusing. Understood, and like I said, this was unique circumstances, and I don't think you'll ever see this chart again, God willing.

Should put that in the order somewhere? But, yes, like I said, this chart was meant to set up basically parameters for how the sale process is going to play out to give parties at least some sort of idea as to when they would expect the various times, how the process would play out. and the various dates. But when we filed the applicable notices, we will do so in a way that comports with the dates ranges set forth in this chart, but they will be exact dates to make clear. It will not be, we are having an auction sometime in the future

between days 30 and 35 and 80. It will be, we are having an auction on day, whatever day 40 is, that will be the day that is in the, I think the attempt was for your honor to approve as long as the dates that we set forth in whatever notice that we file, as long as the dates fall into these date ranges, that is what we are asking your honor to approve. I'm going to posting again on this site, but everybody's going to get their individual notice. Correct. And if it's no cure costs, you're going to put a zero in there. What are the DCL instructions that are referenced in?

Those are the instructions, I believe, to access the case website. Motion on paragraph 39, page 31. Instructions regarding how to view the list on the case website. Last sentence says, if there is no objection, this is to a supplemental designated contract, then the debtors shall obtain an order of the court, including by filing a certification of no objection. objection shall should be may paragraph 29 I view this is substantive and we're in a procedural order so why should this paragraph be included in a procedural order

the designated contract list and need some certainty with respect to if they don't receive any objections or otherwise notified by the contract counterparty that they don't agree with whatever is being set forth and the information being provided, the debtors should know at that time certainty with respect to what the cure cost is going to be. I'll deal with what happens if somebody doesn't file an appropriate objection when they don't file the objection. But this is prejudging what's going to happen and it even envisions a subsequent order of the court. So I think that happens in the future.

So I'm not going to approve this. This is not procedural. Understood. We will strike paragraph 29. Paragraph 31, I think it's an unusual provision in it in the middle. It says, unless the court orders otherwise, the sale hearing shall be an evidentiary hearing on matters relating to the sale transactions, and there will be no further bidding at the sale hearing.

I don't expect there will be. But why is that in this order? Again, I think I would go back to the finality and certainty that we're at. Yeah, I'll deal with that when we get to the order. That suggests that an auction could never be reopened. It suggests all kinds of things, and I'm just not that substantive. Throughout the procedures, the lenders have consultation rights unless they become a bidder, an exercise or credit bid rights.

When do they have to make that decision? When do other parties get to know whether or not the lenders are going to credit bid on particular assets? I believe it would be the bid deadline. So for each sale, the lenders will have to indicate by the bid deadline whether or not they're going to credit bid. And once they do, then for purposes of that sale, they are no longer a consultation party. Those are my comment. The extent that I've got bid procedures here that reflect anything. that needs to be changed and needs to be changed in the bid procedures.

I see paragraph 38 of the sale order, which says to the extent this bidding procedures order is inconsistent with any prior order or pleading with respect to the motion. This governs, I think that's fine, as I believe that's cabin to this motion and nothing else that I'm doing. So with those clarifications and with revisions made, consistent with this discussion, I will approve the sale procedures. Does anyone wish to be heard?

Good to see, Your Honor. Ivan Gold of Alan Mackins for Keys Hotel Operator, Inc., which is the Hawkskay Resort. First, I want to thank the debtor for working with us on a number of informal comments. And I only rise because you're colloquy with counsel for the debtors kind of raised an issue that I think deserves a little clarification. And that relates to your concern you expressed regarding how many notices. And are we looking at multiple objections? And I appreciate the need for flexibility here. The debtor is not only selling unique assets.

You know, we're not selling two forklifts on an F-150. The likelihood of a global-going concern sale, and here global, meaning global, it's not impossible, but it is the less likely outcome. We're more looking at geographical pods, single locations, etc. And that's, I think, the intent of the chart, which confused the heck out of me too, is to create flexibility that we may have several tracks here.

And I get all of that. And what we were looking in our comments was for minimums to assure some level of due process in this process. But your concerns you raised regarding the motion, paragraph 40 and 41, and then the order paragraph 32, highlighted this question for me. And to the extent I may have missed this in my discussions with the debtor, I apologize, but I think it goes right to your honor's question. Is paragraph 32 contemplates an objection to quote a sale transaction?

That's different from the procedures that of a notice of intended assumption and assignment. So for example, and this shouldn't be surprised to anybody because we've raised it in prior pleadings, is we have concerns that are, the agreement by which the debtor operates at my client's property, may not, as a matter of state law, even be assignable. And our discussions with the debtors, we reserve that issue, and so that's an open understanding that we have. But as I read these procedures, and I listen to your question, the question is, do I need to file a separate objection

that this isn't assignable, separate and apart from whatever cure and adequate assurance objections I have. And, you know, given the nature of the debtor's operations, I may not be the only party with that concern. But, again, are we, am I looking at multiple objections? I don't have a problem with the second notice, or do I save that for when we have a buyer for my property, as opposed to this earlier, you know,

more metaphysical objection to selling it in the first place? If I were you, I'd raise it the first opportunity I had. Well, I already had, but yes, it could be early and often. It could be the answer to that. But, you know, the question is, is the way these procedures are drafted, it would appear that we are required to file two separate objections. Now, the first one doesn't necessarily have to be elaborate because we've already raised it. But it does, you know, you would ask that question.

And so I just wanted to approach with a real-life example. so that you could kind of get clarity before we delve any further into these procedures. Well, my thought was that people shouldn't be constrained in the objections that they are filing. You can only file a cure objection, an assumption, an adequate assurance objection. You can file whatever objection you want. And again, this is where I'm going to give some people some leeway, because I think these procedures are confusing. Let me hear if the debtors have a response to Mr. Gold's example

of parties are supposed to respond to the various notices they're getting. The point of the cure notice was to notify parties that they have to object to that cure at that time. They can raise sale objections at a later date pursuant to... But it was not meant to preclude people from raising multiple objections or how they choose to do so, only providing a deadline with respect to cure costs and the assumption and assignment notice, which I believe is fairly typical. And to the extent the motion is inconsistent with that,

I would not want to be the lawyer arguing to you that the motion controls over the order. Paragraph 32. Essential assumption assignment, it says any and all objections to any sale transaction. must be filed no later than a date that is 30 days from the bid procedures trigger date. Well, how does that intersect with all this other stuff they're doing? I mean, that's not my cure notice. No, it isn't. So this is something else.

This is something else. And how do we reconcile this something else with the cure notice is my fundamental question? Well, I don't think it's unusual to have the cure notices go out in the beginning of a sale process so that the debtor can understand, and the prospective purchasers can understand what the cure obligations are with respect to any particular contract. But my point is now I'm up to three.

I've got a cure notice and a cure response. We all agree at the back end once we identify a notice of successful bidder and they have an adequate assurance. Now we've got one in the middle. You can't sell my property. So now we've got three. I've got three notices, I've got three objections.

Is that different than normal? Three is a lot. Two is not unusual to your point, but I just want to clarify. I just want to make sure I understand when I walk out of here. Which one should I eliminate? I mean, that's the question. Which one gets eliminated? There's three, there are three different separate things because of the way this is developed

where you have to file an objection before the auction has taken place, which we can all discuss the merits off. line at some conference, but that's how it's developed, right? So that does put in this... Well, I understand, Your Honor, and it's traditional to have a cure notice prior to the auction, so everybody knows what they're bidding is. They have to. Stipulated.

I understand the filing of an adequate assurance objection once buyers have digested the due diligence information, they've decided to bid, the debtor selects them, they tell us and then we have the right to object or consent to the proposed assignment. So those two pillars are normal. It's the third one is what, you know, do I, you know, I just want to walk out of here understanding and know that I'm on the same page with you that these procedures contemplate. I've got a third pleading to file somewhere in the middle that would raise the salability of the asset, that that's not something I can do after the auction.

I can't wait under these procedures, or do I have to do it on this paragraph 32 timeline? And where that 30 days and how that fits in the chart, you know, I don't even know that this will be the second one. It could end up with the 30 days. It could be the third one. I don't know. That's where I'm confused, having heard your colloquy. I agree with your Honor's initial inclination. I don't think that this aspect of things are particularly different.

You have an assumption and assignment deadline, and you file an objection to the assumption and assignment. If you don't agree that the property that is being sold, which Mr. Gold will know what property is being sold, I mean, he only has, his landlord has one lease that it is responsible for. It will be involved. It will know who is bidding. It will know what asset, which is the lease, is being sold. So I don't know about other parties, but Mr. Gold can file an objection to this. He already basically has.

But I don't think this is particularly different than how normal sale process is run. Setting aside the chart, which I understand, I mean, is not the model of clarity, but this particular aspect of things is not different. You have an assumption assignment deadline. You have a sale deadline. And then if you don't agree with the successful bidder or the backup bidder, then you can object to the identity of the bidder. That is not strange or unique. It isn't.

I think it's the sliding scale nature of things that makes things more difficult here. I think your notices need to be very clear as to what they're noticing when people go out so that they go out so that people understand their deadlines for objecting. And I will say now, without giving anybody any leave, I am not restricting any objection that is filed to only, for example, the cure costs. If you've got any objection with respect to a contract, just put it all in that first objection, and you'll be okay in terms of notice as far as timeliness as far as I'm concerned. I would not wait and try to figure out, wait, I can wait on this objection until this later date, I wouldn't do that.

Understood, and to be, again, perfectly clear, that chart will not be in the notices, when they go out. That chart will be filled in with exact dates that comport with the time ranges set forth in the chart. That was the entire purpose of the chart, to set forth date ranges for everyone in your honor to see, as long as the dates within the process fall within those date ranges, that is what we were seeking approval of. When we go out with the notices, they will be exact dates. And I understand that Leeway will be given. I wouldn't expect anything else. I understand the unique circumstances of these cases, but we are going to go out with clear notice,

and whatever objections may be, we will deal with them. But in terms of assumption, assignment, and identity of bidders, like I said before, I think that is normal part for the course for bidding proceedings. Bill Hazelt-Tyne, on behalf of TradeWins, LPD, Trade Wins filed an objection to credit bidding because we assert a first priority lien on the assets in Florida. And we had worked it out with language in the bidding procedures that says that any party, objective credit bidding at the time of the sale objection. Yes.

And that satisfies our concern. Thank you. Thank you, Your Honor. I look for that revised form of order. With respect to this order as well, I did notice here on notice was going to regulators, who I assumed were regulators over animal welfare. But I think that should be specified in this order as well as to who the regulators are that are going to receive notice.

Understood. Thank you, Your Honor. Thank you. Your Honor. Your Honor, Sean Greacher, takes us to matter number 11. Stay enforcement matters that... Okay. The debtors first seek to admit the declaration of Mr. Wagstaff, which was filed at docket number 333, as well as exhibits to it, A through J.

Is that in the exhibit binder or is that... Correct, Your Honor. You'll see in your binder right behind tab 1 is the declaration. And then behind that are tabs A through J, which align with how they were identified in the declaration. Okay, thank you. Let me ask, is there any objection to Mr. Waxstaff's declaration coming into evidence? I hear none. Let me ask this. I do not see Mr. Albor in the courtroom, and I know Mr. Moon and Mr. Using Cowell have withdrawn.

have withdrawn, I permitted their withdrawal. Is Mr. Albor going to appear today, or is he represented by anyone in the courtroom? Purposes. Thank you, Your Honor. I'll just note for the record that exhibits DNF to the Declaration were filed under seal, which was approved by an order of the court.

There are banking records involving third party non-debtors, which is why we put them under seal, Your Honor. D&E? DNF. D&F. D&F. It's a great sure. The debtors would offer a brief offer

from Mr. Wagstaff that is intended to cover events that have occurred since his declaration was filed on July 9, as well as the debtors also filed what I'll call a sanctions notice, which was debtor's notice of submission of costs in connection with orders enforcing the automatic stay and imposing sanctions at docket number 355. I'll proceed with the proper, Your Honor. With respect to the stay enforcement motion, if called to testify, Mr. Wagsdiff would testify about Mr. Albers and Ms. Esteban's actions that have occurred or continued to occur since the filing of his declaration on July 9, 2025. Mr. Wagsdaft would testify that Mr. Alber and Ms. Esteban have continued to be uncooperative and have failed to turn over the records of the debtors and have continued their refusal to provide access to the records.

He would testify that Ms. Esteban has expressly conditioned the turnover records on a legal release and a payment of estate funds for alleged severance due to her. He would say Mr. Albert has refused or otherwise failed to return the keys to the debtor's legal department offices at the headquarters. Mr. Wraksuff would testify that Mr. Albert has refused to return the funds transferred to PES in connection with the operation of the debtors Mexican parks and has not returned the funds transferred by PES to his personal attorneys at the CDAA firm. Mr. Waxseth would testify that Mr. Albor has not provided the debtors with bank records of PES, PES, or Elysium, which would allow the debtors to trace the flow of estate funds through PES and Elysium. Lastly testify that Mr. Albert and Ms. Estefan have not returned the funds transferred to Elysium. There's a email at tab 2.

Mr. Waxdap would testify that state violations that he has identified since his declaration was filed include Mr. Albers' email response dated July 14, 2025, and that's at tab 2, Your Honor. And, Your Honor, with U.S.C. and also, as we did with some of the emails that were attached to his declaration, we included at the back end for Your Honor's benefit, a machine-generated. English translation, which Mr. Waxstaff, if you recall, is fluent in Spanish. He would testify that this is an accurate translation, at least as machine generated. Importantly, Your Honor, I think with reference to TAP2, Mr. Wax-F would say the important parts of Mr. Albers' email, with that Mr. Albar alleges that payments made by PES directly to CDA were made on his behalf, by his order and that the legal services that he received were personally provided to him by CDA. Mr. Wagsdaf would note that the funds paid to the CDA firm by PES do not constitute property of the debtors

and were from the cash flows of PES itself. That's what Mr. Albers says. And that Mr. Alber says the deposits from control of Dora Dolphin to the PES account were recurrent and began months prior to the petition date. Again, that's all what Mr. Albers says in his email. what Mr. Waxstaff would testify is, based upon these statements in this June, I'm sorry, July 14 email, Mr. Wagstaff and his team at Riveron investigated the flow of funds through the PES bank account. Based upon that investigation, Riveron determined that the average monthly deposits to this PES account between September 2024 and March 2025 was approximately $600,000 a month. and that the monthly credits from the account or debits yeah debits from the account during that same period of time was also roughly 600,000. However, Riveron determined that in the months of April 2025 and May 2025 after the debtors that commenced their proceedings and again trying to take control of the Dolphin Company,

P.S. noted that monthly deposits into the P.S. account were approximately $3.7 million in April 2025 and approximately $4 million in May 2025. And during those same two months, funds flowing out of that account in April 2025 were $3.2 million approximately and approximately $4.3 million in May 2025. So a dramatic increase in both funds going to that account and out of that account post petition. And Your Honor, just to help maybe just a picture worth a thousand words. Tab 4 is a demonstrative in your binder that reflects the credits and debits to that PES account during those months I just talked about. And, Your Honor, lastly, with respect to the sanctions notice, that, and if you, the sanctions notice, Your Honor, is tab 3 the debtors will seek to admit that into evidence and your honor tab 3 itself also has tabs a through F which as reflected on the notice are the the breakdowns of

the various professionals that have worked performed work on behalf of the debtors of states in terms of enforcing the court's orders as well as the automatic state violations actions taken to combat mr. Albers Is there any objection to the admission? I hear none it's admitted. Mr. Waxseth would testify that he along the invoices and or summaries of fees incurred, and that based upon his involvement and understanding of the work performed on behalf of the debtors, that the amounts of the work reflected in the invoices was appropriate in scope and necessary

to combat Mr. Outwears' actions. I think your honor with that, unless you have any questions for any evidence. me from an evidentiary perspective I'll turn it back over to mr. preacher exhibit or tab four is a demonstrative and tab two is the email two that's the email we'd seek to admit as a admission by mr. alborr any objection I hear none it's admitted thank you your honor your honor once again we're here before your honor seeking enforcement of fundamental protections of the bankruptcy code specifically the automatic stay and to compel compliance with the court's prior orders, the turnover and the stay enforcement order as a result of the ongoing non-compliance.

We're also here seeking a determination of liability for the direct cost borne by the state as a result of the willful violations that the court found in connection with the prior orders. Your Honor, as you heard from the testimony and you saw on the pleadings, Mr. Albor continues to obstruct the debtor's access to critical business records and assets, has engaged in conduct that directly undermine the administration of these estate. Mr. Albor has not complied the factor in spirit. In fact, the declaration that Mr. Wagstaff filed provides a laundry list of ongoing violations and efforts to undermine Mr. Strong's and Mr. Wagstaff's proper operation of the business. This introduces unnecessary cost and risk to the operations.

It puts into jeopardy the debtors' ongoing ability in 26th. It's with the stay or your order. Interference with assets and financial information. As we noted last month, Mr. Albor attempted to assign assets and rights of the debtors away from the debtors. the debtors funneled them through a company called Projectos EHEA puttivles, PES for short. Mr. Albor apparently directed the company's legal counsel, Ms. Esteban, to create a backdated agreement between Controllator Adolphin and PES, whereby Control Adora would essentially hand over operations of the Mexican parks and all Mexican park revenues to PES, and PES would,

in addition, receive some additional consideration from Control Adelphan. that correspondence and that backdated agreements attached to Mr. Wagstaff's declaration in Exhibit A. Similarly, Mr. Albor directed Dolphin Management to circumvent the debtor's bank accounts with respect to Caribbean affiliate funds and deposit them into an account held by Elysium Properties of Investment, which we learned through deposition testimony that is a company, Mr. Alborr incorporated in Delaware about 10 years ago to be a family-owned entity of which he is the only member. The records show over $263,000 transferred from just two of the company's Caribbean affiliates to Elysium in the month of May. Further, the records we've been able to retrieve also show that these Caribbean bank accounts where Dolphin Company funds were diverted were used to pay Mr. Albor's personal legal counsel in Mexico. So what we know is that Mr. Albor has orchestrated these schemes to divert estate revenues into the non-debtor entities, PES and Elysium,

after originally claiming that no estate funds were dissipated on account of non-debtor obligations. I want to be clear about this. Mr. Albor did not tell you the truth under oath when he was asked about estate revenues. If you look at Pager's 149 to 150 of the transcript of that May 21st hearing, where he was on the stand, Mr. Al-Bore's counsel asked him point blank, why the estate balances, bank balances were so low in the reports that his counsel produced to the debtors. The truthful answer, I have been diverting estate revenues to non-debtor accounts that I control. at PES and Elysium.

Mr. Elbord did not come clean. He provided the debtors with partial misleading information prior to that hearing and fabricated a story that just the day before the company had lots of cash, but that had to pay all of that money on account of various estate obligations and that the debtor's bank accounts were on the verge of being replenished by revenues that were due to come in.

His representations in his, quote, certification of compliance, particularly based on Mr. Wagstaff's testimony, should be viewed in that light. In that light, they're just simply not credible. And Mr. Albor, as you noted, shows not to come here today to sit under penalty of perjury to try to justify those statements.

Mr. Wagstaff's declaration also includes two documents that evidence some of Mr. Albor's misconduct. Again, to justify the story that PS had some rightful claim to those revenues, there was this contract that was fabricated. And second, despite the testimony, that no estate funds were used to pay personal obligations. Exhibit C of Mr. Wagstaff's declaration shows the bank records indicating that payments that should have gone to the estate were used to pay personal counsel. PES, they were paid to CDA, they were paid to Mr. Casten, and they

were paid to a company called Enverziones Garophone. Mr. Wagstaff has demanded all the records and information related to these transfers. Our team continues to uncover further details each day, and it appears that these schemes go even deeper than just the activities that we indicated in the declaration may have begun even pre-petition. It's critical, Your Honor, that the debtors be provided with access to the full and accurate records and documents, both the physical records, contracts and corporate documents, and the records related to the diversion of assets, particularly the diversion of these funds into the PES and Elysium accounts that were done in an effort to circumvent the impact of Mr. Albor has simply failed to provide us with access.

Going to the issue of the company books and records, Mr. Albor and Ms. Estevan have repeatedly refused to turn over those books and records, despite the multiple orders requiring them to do so. Rather than cooperating with the transition of these documents, Mr. Albor actively has interfered. We provided correspondence from Mr. Albor indicating that he would direct debtor employees with access to information, regarding these schemes to provide it. He conditioned that, though, on those parties being released. Promising to personally accompany the debtors' advisors to the headquarters to complete the process of documenting and retrieving the records,

and as well as promising to appear and discuss with Mr. Waxstaff and his team, all the information regarding these PES and Elysium, he decided the day before the planned meeting he would not appear. Employees who were appointed at the directors of PES, appointing himself alone as the director of PES. Thereby further obscuring and making it more difficult to understand being familiar. He sent his driver to change locks at the building. He was unsuccessful in a process of accessing documents

while Mr. Albor personally disrupted the process of collecting those legal documents, threatened the better staff, and demanded that they turn over their keys to the building. And now recall, Mr. Albor testified, again, untruthfully, that there weren't any paper records in the Cancun headquarters in the first place. Again, the May 21st hearing transcript, page 162, he says all the paper records were in the parks. It's not true, Your Honor. Mr. Abor has concocted a news story that instead of the debtor's records being readily available

and not commingled with any other non-debtor property, which is what he testified to prior to the hearing on the stay enforcement, the records were now apparently held in a portion of the building that he no longer had any control over. He instead advised that he has leased that portion of the building to his personal attorney, Ms. Estevan, who was also acting as general counsel to the company. And therefore, Mr. Al-Bohr suggests that he can't do anything more to comply with the court's order. That's Exhibit H to Mr. Wagsdorf's declaration. And, of course, this is inconsistent with his verified response on April 28th. It's inconsistent with his deposition testimony when he asked who was in physical control of the debtor records located in headquarters.

It's inconsistent with his testimony, and his supplemental response. Mr. Albor remains willing to grant Mr. Wagstaff and his team supervised access to any physical record. located in his office that cannot be shared electronically. When he testified here, he insisted only that the debtors need to simply agree to a respectful protocol with him. And him alone, not Ms. Esteban, to access all the debtor records. After the court codified that protocol in the order, Mr. Al-Bur took every single possible step he could to disrupt and interfere the debtor's operation and management. And whether Mr. Al-Bore has put Ms. Mestepon up to conspiring with him to continue to stonewall the debtors from accessing these records,

or if she's acting on her own record. Ms. Estefan has similarly not complied with the debtor's demand for cooperation and access. What notice has Ms. Estefan got of anything? Well, so we've out, she is an employee. What notice is she got? She's received electronic mail. We sent her a physical mail, but I would have to.

Has she been served with the notice of motion? Yes, she's been served with. I believe we have. You can continue. I'm really, I really, I really have some basic procedural questions about what's in front of me and what I can do. The notice of, at the previous hearing I said we would go forward with the damages hearing today. The, as I understand it, that's Exhibit, now Exhibit F, the notice of submission of costs is what the,

the debtors filed in response to that. I didn't get any legal authority for what it is that I can order under 362K which I take it, or maybe I should ask you, what provision of the code do you think

I'm ordering sanctions under or damages? So you're all right. We think it is under 362K and we think it's under your prior sanctions order. I think your prior sanctions order indicated that sanctions would be imposed. Sanctions are different than damages.

So talk to me. I have no authority in front of me on 362K or, quite frankly, on sanctions. But, and I've requested it before, okay, is what do you want and what authority is there for me to grant what you want? And so I don't have anything in front of me that tells me how I apply 362K and what the standards are and how I should view the evidence. So, Your Honor, I would suggest that I'll go back to our briefing and our argument in connection with the prior hearing. I believe that we submitted a handful of cases, and I believe, make sure that I have that right.

But I think we spoke about these cases in connection with the follow-up hearing. Well, the follow-up hearing was for sanctions, and I entered a sanctions order, and I did a $10,000 a day order on sanctions. Now you want damages. Yes. Those are different. At least I think they're different.

maybe I'm wrong, but I don't have a briefing in front of me on 362K if that is the provision that you're relying on. And, you know, I think we did raise this in connection with the hearing. It was not the, it was not the, it was the hearing where your honor asked us to come back and argue with respect to the evidence. It was the hearing after the evidentiary hearing, we came back, and Your Honor asked us to provide you with a discussion of what the appropriate remedies were. What we had indicated was that there were two paths. One is Section 362K indicates that the sanctions are appropriate to a corporate debtor.

We also cited Judge Dorsey's opinion in the Triple N-400 case where he said that under Section 105, any type of order is, you know, whether it's injunctive, compensative, or punitive, as long as it's necessary or appropriate to carry out the provisions of the code are authorized. So you're coming to me under 105 and that's it? Well, no, I think the 362K gives you the right. I think if you look at the Atlantic business case, the Atlantic business case indicated, and Judge Goldblatt acknowledged this in the health care real estate partner's case, that 362K is applicable to corporate debtors.

What I'm saying is that even if 362K weren't applicable, Judge Dorsey under the Triple N-400 case has imposed sanctions under . I'm talking about sanctions. There's two things going on in this hearing today. One is you filed another motion to enforce, okay? That's one thing. Then we're supposed to have a hearing on damages. Okay?

Damages to me, at least I think that's what my order said. Let me just double check. An evidentiary hearing is scheduled for July 23 to 10 for determination of the damages, if any, Mr. Albor is liable for based on cost to the estate of responding to Mr. Albor's actions. Yes. Okay. So that's what was requested. I said that's what I ordered.

362K it's not apparent to me exactly how one applies that in every situation. It just says. It just says that you recover actual damages, including costs and

attorney's fees, and in appropriate circumstances may recover punitive damages. And, Your Honor, we're not, all we're asking for today and all the notice asked for today is the costs and attorneys fees. That was the notice that was filed. And so, Your Honor, that's all we're asking for today.

We believe that there are other types of damages that could be sought. But today, all we're asking for are the costs and attorney's fees which are reflected in the notice. So you're not asking anything with respect to the notice of motion and the motion that was filed at docket 332? Not with respect to further costs and attorneys fees. What are you requesting on that? On that one, we do have a form of order. It's attached. The requests are, again, for the parties to provide us with the records.

The records related to the debtors and the debtors of states, the documents related to PES and Elysium, and the return of the funds that were diverted. So if you look at paragraphs 5, 6, and 7 of that form of order, those are the requests from the additional motion. Like a written submission discussing the authority in a previous hearing. I want to ensure, and I think with respect to how I see in the Young Conaway submission, prepare for and participate in meeting with Young Conaway Ray first day hearing issues. Well, I don't know that first day hearing issues get charged to Mr. Albor. I saw, and maybe they do, but I need some written, a written submission look like some of this, like some of the submissions were broad.

I think Riveron had some as well, but that was in fact something done in response to Mr. Albor. and then I think I need authority for why Baker and McKinsey's fees can be assessed as damages. Maybe they can, I don't know, but I have no authority that tells me that I can assess the lender's fees, attorney's fees and costs, to Mr. Albor. Okay, well, so, Your Honor, we're happy to put together a written submission, you know, and just for the avoidance of doubt. It sounds like the question is not that, whether or not the costs are,

whether or not costs are accessible. Give me authority. Just give me authority on everything you want. Don't make an assumption that I know how to apply 362K. Because I think maybe I've done it once. Okay. And it doesn't, it's not just, that apparent to me? The first question you

already talked about was can you even do it in a corporate case? Well, yes, there's authority for that. I understand that, okay? I haven't looked at it, but I understand that. That's an issue. The other issues are, how do I interpret and apply this section?

And, for example, can the lender's fees and expenses be charged to Mr. Albor? Or assessed as damages and costs? Maybe they can. don't know. I just want the authority on how I apply this section. I understand, John. So I think that that relates to the fees and costs point, and we will

endeavor to provide additional briefing. I also want in that submission and the service that was done, both Mr. Albor and Ms. Esteban, but in particular Mr. Ms. Esteban, who's not appear before me. That's on the, that's on the motion, on the costs. I guess you're not asking to charge these costs against her, are you? No. Okay. So that's fine. I'm now confusing the two things. On the motion, I want, I want evidence of the service. Very well, I guess just a couple of other points if I could, is whether Your Honor is prepared to enter an order with respect to the further violations of Mr. Albor? I'll review the evidence, and I will enter an order that I think that is appropriate.

And again, apologies, Your Honor, if I'm missing something. I thought the evidence you were looking for with respect to the assessment of the costs. I will review the evidence that was just presented to me, Mr. Wattstaff's declaration and the submissions, for example, I heard in your argument, though, I don't. know that it's in the evidence I heard argument about pre-petition actions I don't think those could be a violation of the stay so I need to I am going to consider the evidence that was presented and I will issue an appropriate order I don't know if it will be exactly the order that has been submitted but I will consider that evidence

submitted on the motion and the proposed form of order and make a decision on that okay okay I understand your honor if I if I could though a couple of other remarks with respect to some of the additional filings. And one would be the declaration that was filed by Mr. Duenas. Yes. So, and again, I'll note first of all Mr. Duenas is not here. Well, is that part of the evidence? Was that submitted?

Is that? That was, yeah. Is that attached to the declaration? So Mr. Duenas's declaration was filed. It's at docket number 305, and it's tab D to the agenda. Well, that's not evidence. I have an evidentiary record. Correct.

I'd like to make it. This was filed by Mr. Albor's attorney. Okay, but it's not part of the evidence, is it? I have an evidentiary record. People file stuff all the time. I have an evidentiary record, and I don't know that that declaration was submitted. in the evidence, that's what I'm asking. Did Mr. Nyberg today submit that declaration into evidence?

I don't think he did. I could be wrong if it could be attachment to Mr. Waxstaff's declaration. No, no, it's not. This is Mr. Albor's attorney in Mexico. Yes, so why are I considering that? I have an evidentiary record. Okay. If Your Honor is disregarding that declaration in its entirety,

then I don't have any problem, but I just wanted to make it clear. that we it's not part of the evidentiary record okay um very good your honor um all right well so I think that we have our marching orders will prepare um you know a further submission with respect to the damages your honor will review that we'll review the record this before you today in our further motion very good thank you honor I don't believe we have anything else for the court today thank you very much then we're adjourned