American court hearing recordings and interviews - Spanish Broadcasting System (SBS bankruptcy)-Listen to the May 12 bankruptcy hearing, #MegaTV #Radio

Episode Date: May 29, 2026

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Hi, I'm John Green, co-owner and unpaid intern for Good Store. Good Store is a different kind of business. We make everyday essentials and then send 100% of our profit to charity. Not some of our profit or most of it, all of it, every month. So we make the world's best coffee and tea and socks and soap and household cleaning supplies. And then we send them to your home and invest the profits in solving big problems. from coral reef restoration to tuberculosis eradication efforts. It's just a better way to purchase high-quality everyday essentials

while also feeling good about where your money goes. And somehow together, we've already raised over $12 million for critical causes. So join us by shopping with intention at good. That's www.good.com. Because everyone deserves a little good. Please be seated. Buenos Aires indeed, Your Honor. Good afternoon, Your Honor, and may it please the Court.

Matthew Harvey from Morris, Nichols-Archton Tunnel on behalf of Spanish Broadcasting System, Inc. And it's affiliated debtors and debtors in possession. Good to see you. Welcome. Thank you, Your Honor. And I wanted to start at first by thanking the Court for giving us time on the calendar today, and a special thank you to the Court's staff as well for accommodating us. Timing is important because, Your Honor, we'll hear today. We do have some obligations coming due this week that we need to start processing today or tomorrow,

and so it's important that we get in particular our financing and cash collateral order, our wages order, and our cash-endipal order entered today. Very good. So we do appreciate everybody accommodating us today. Also wanted to start my thinking Ms. Leamy from the U.S. Justice's Office for working with us, starting last week and through the weekend and even through today, to address her office's issues in advance in the hearing. I think we resolve all outstanding issues except for one issue on the wages motion that we'll discuss when we get to that motion.

Okay. So again, I do want to thank Ms. Leamy for working with us and working with the lenders to resolve those comments. Next year on, I want to make some introductions. I'll start with the company itself. We're joined today from the company by Richard Lara, who's the company's chief operating officer and general counsel. I see him on the screen there. We also have Jesse York from Riveron, who is the company. Chief Restructuring Officer, Mr. York's also our first date of clearing.

He is. Joining me today in the courtroom, my colleagues, Mr. Denny, Daniel Bucks, Casey Sawyer, Hashim L. Wazier, and Alexis Sullivan, oh, I'm sorry, John Mark Gladstone as well. Perfect. I think you'll hear from most of them today, Your Honor, other than Mr. Denny. They'll be helping with the presentation of the first days. On the Zoom line from our co-counsel at Freed Frank is Jennifer Rodberg and our colleagues Robert Bickford and Thomas Dunn. Very good.

Welcome. Also on Zoom is Mr. Hagamon from GLC advisors. And he's our declarant with respect to the DIP. Correct, Your Honor. He's the DIP Declant and he's the company's investment banker. He's with GLC, which is the company's investment banker. In addition to Mr. Hagamon, we also have Roya Imani from Kroll, who's the debtor's noticing and soliciting. and solicitation agent.

The minor note here is that Mr. Steele from Cole was the declarant for their application it's up for today. He was unavailable at this time, so this Roy Omanis taking over there. I'm sure that would be fine. And of course, Your Honor, from the US Trustee, Ms. Leamy, who I mentioned before. We're also joined by counsel to the add-up committee

of the pre-petition note holders, Ms. Steele from Richards-Lateman Fingers in the courtroom, of course. Good to see you. And I believe we, I see Michael Price from, the mill bank firm on the line and I believe his colleague Zachary Singer is also in the line. Everybody works hard on that team your honor but I think I would call out Mr. Singer as an especially hard worker helping us get this case of the finish line to be here today. I hope I haven't missed anybody your honor but of course if I did they'll speak at the appropriate

time. Of course. With and I should actually pause here and say I think Mr. Price has a brief comment when I'm done with my initial remarks today. If you wish I'm happy to hear from Mr. Mr. Price now or I think what I'm when I'm through with my remarks Mr. Price that's that's right to you happy to and I would note just as is my practice with respect to first-day motions and first-day hearings I will hear from anybody that wishes to be heard in connection with today's proceedings I'm certainly not going to stand on ceremony as it relates to affiliating with Delaware Council or anything else or prohawks and the status of those motions I'll hear from anybody that wishes

to be heard mr. Harvey you may proceed thank you your honor So I know Your Honor has probably had an opportunity to read the first-state declaration in the first-day papers, so I won't belabor the company's background and why we're here, but I'll just hit some of the highlights. Sure. As Your Honor probably saw, the debtors are a premier cross-platform media company, connecting U.S. Hispanics across the United States through radio, television, and digital platforms. They were founded in 1983 in Miami, and they own and operate radio stations in top U.S. Hispanic markets,

including New York, Los Angeles, Miami, Houston, Chicago, San Francisco, Orlando, Tampa, and Puerto Rico. In total, Your Honor, they have 17 radio stations. Three of the top six Spanish-language stations in the United States are among those 17 radio stations, including W-S-K-Q, which is the number one-ranked U.S. station in New York City. They also offer that, I think I'm going to say this right, Your Honor, IRAE radio networks, which is over 250 U.S. Spanish language affiliate radio stations in 79 Hispanic markets. They cover 94% of the U.S. Hispanic market and reach 21 million listeners monthly. The company also operates a television brand of television broadcast stations under the mega TV brand.

They broadcast via owned and operated stations in South Florida and improved programming and other distribution agreements nationally on subscriber basis. In addition to their terrestrial radio and TV, Your Honor, They also, the debtors also operate Spanish language and bilingual websites, including LaMusica. And Your Honor, I know you like to see what the company does at the first day. Sure. Of course, we can't show you radio. I guess we could have done a broadcast clip of Mega TV, but I'm not sure how many of us would have understood that in the courtroom.

But we did get some of the company swag. I was told Mr. Denny was going to wear it, but he chickened out at the left thing. So we do have some of the companies. if you have a lot of music a hat and a Ritmo 95.7 t-shirt, amongst other things. So try to give some visual representation. Very good. I appreciate it.

So in addition to music, or sorry, addition to radio, TV, digital, the company also has digital marketing solutions through its Dig Idea platform. And it also operates, also coordinates, operates live events, or produces live events. Over 40 live concerts, events,

and live activations throughout the contiguous US and Puerto Rico, attracting over 130,000 attendees. Marquis events include Cali Bash, I'll try to say these right again, Cuba, Tonazzo, mega bash, Miami Bash, and Mega Miscout, Miskla, sorry. I took Spanish in high school for years, and then in college I switched to Italian and it's erased all the Spanish in my mind. So someone on the phone, Mr. Warrer will tell me I'm speaking Spanish with an Italian accent, So as you'd expect, Your Honor, being broadcast media station, the debtor's revenue derives primarily from the sale of advertising for local, national, and network advertisers. We also derive revenue from live events, of course.

And I'll touch on why we're here and it relates to the where we derive our revenue. SPS derives, like I said, the majority of its revenue from radio advertising, from its operations across the United States. But as Your Honor is probably aware, the rise of on-demand streaming and podcasting has shifted consumption patterns of audio content. Younger audience members are spread across multiple ecosystems, and the changes have been mirrored across both local

and national platforms and advertisers, which has lessened radio's position as the primary advertisement space and makes a challenge and should drive consistent top-end growth in radio. The company obviously, is addressing that with its digital platforms. But of course, that's a process. The company also historically has generated significant revenue

from political cycles. The company operates historically in key swing states. And so during the political cycle in elections, the company has historically generated a lot of revenue from advertisements, political advertisements. With some of these states like Florida, not being swing states in most recent elections, that's had an impact on revenue.

So that reduces. the advertising spend in those places because there's not as much for folks to be right around it with less competitive races or states that are now considered solidly for one party or the other there's less spending but of course with the political climate being what it is the company is of course hopeful that in the upcoming election cycle that trend will reverse and return to historical norms company also suffered some issues with the Los Angeles fires that were last year to dampen some of its operating results in the Los Angeles market, which is one of the company's largest markets.

And then, of course, Your Honor, the headline is the company has $310 million principal amount of pre-petition secured notes. Those notes matured, plus accrued interest, Your Honor, as well. Those notes matured on March 1st of this year, and the company was unable to pay that debt when it matured. Plus, you know, Your Honor, the interest burden on the $310 million was too high for the company to sustain. bank. The company, as you saw in the first date declaration, has been in forbearance with an ad hoc committee of those pre-petition note holders represented by Milbank since, I believe, April, sorry, the forbearance was signed on March 6th. If I understood the math, the $310 million in senior secured notes that are represented by the ad hoc group that will, on confirmation under the

RSA, turn into about 70. That's correct, Your Honor. It's 70. It's 70s. maximum take-back paper, which is the, at the option of the dip lenders, and Mr. Price can speak to this as well, the option of the dip-lenders they can convert and take take-back paper, in which case the amount of take-back paper for the existing secured notes, the pre-position notes, would be less. Less, I understand. So it's a maximum of $70 million. There is an option for a possible Perry exit facility or ABL facility, but as to the take-back paper on the pre-condition note.

It's capped at 70 subjects. Hi, I'm John Green, co-owner and unpaid intern for Good Store. Good Store is a different kind of business. We make everyday essentials and then send 100% of our profit to charity. Not some of our profit or most of it, all of it, every month. So we make the world's best coffee and tea and socks and soap and household cleaning supplies. and then we send them to your home and invest the profits in solving big problems, from coral reef restoration to tuberculosis eradication efforts.

It's just a better way to purchase high-quality everyday essentials while also feeling good about where your money goes. And somehow together, we've already raised over $12 million for critical causes. So join us by shopping with intention at good. dot store. That's www. www. dot good store because everyone

deserves a little good. Right, and the 70 is independent, as you just said, of any exit facility or any financing for the emerged entity. Right, right. Okay, I understand. Can we circle back? You were describing the scope of the

company's business and the markets that it plays, and obviously I saw on the declaration references to FCC approval. As I understand, as I understand, understand that that is a subsequent step, and you've got in your milestones a longer stretch than we would typically see for this enterprise to go effective because you need that approval. Do I have that right?

Yeah, that's correct. That's exactly correct. We – and this is if you see other broadcast media, the companies in bankruptcy, the cumulus company – Yeah, I've seen – no, I've seen this dynamic. I just – I've seen this dynamic before I just wanted to make sure I understood sort of where your game plan was. Yes, and we can talk about dates,

and we can talk about them now if you'd like or towards the end of this presentation because it closed through many of the documents. But under the milestones, under the restructure and support agreement, we are targeting a confirmation. We have a deadline for a milestone for a confirmation hearing,

confirmation order entered by 55 days after the petition date, which actually puts you on July 2nd. I don't like your odds for that way. No, we penciled in the June 9th, 25th is a target date, which is the prior week. That's approximately 45 days from the condition date by pre-pack standards, a fairly leisurely base. We're anything that week of the June 22nd, I think would work for the parties. I'm confident that we can accommodate the date in that week. I don't think we'll have the problem with that. I'd like to hear from the U.S.

trustee at the appropriate time and anybody else on the scheduling. But in that week of the 22nd, I don't think I'll have any problem getting the schedule. Okay. And we can we can talk now or, or again, towards the end of the presentation. We also would request a second day hearing on either June 4th or June 5th which is a little more than about 25 days from the petition date or 25 days we're doing um fourth and fifth don't work but I could give you the 8th check with mr. York on whether in getting the final dip approval works on that date and I know mr. York's on the line but June 8th work for the final dip hearing mr. York good afternoon and welcome good afternoon your honor thanks for

Yes, June 8th should work. Okay, let's do June 8th at 11 a.m. Thank you, Your Honor. I'll just pause for a second, see if any other parties in interests have an issue with that. And that's for a second day hearing. That'll be your retention, anything else, finals on your first days, and anything else is coming up? Correct, Your Honor. Okay.

And then in terms of plain confirmation, again, we'll circle back to that after I have a chance to hear from the U.S. Trustee and your ad hoc committee and anybody else. But again, I don't think we'll have any problem with getting you a date that keeps you within your milestone. and on the track that you're on, subject to whatever may happen, and whoever we may hear from is this plays out. Okay? Thank you, Your Honor. So that's June 8th at 11 a.m.

At 11 a.m.? Thank you, Your Honor. And the objection deadlines will just roll out however the local rules require. Great, thank you. Okay. You sort of cut to the chase, Your Honor, and why we're here and what we're hoping to achieve. Of course, it's the comprehensive restructuring of the funded indebtedness, reducing the debt by over 75% from 310 million to 70 million.

It's, it, it, it, the consideration to the existing no holders is the pro rata share of 100% of the equity of the reorganized debtor subject to a management incentive plan, as well as the portion of the $70 million will take back paper we discuss. The, the RSA, I believe now, Mr. Price will correct me if I have this wrong, has now been executed by holders of over 90% of the principal amount of the pre-petition notes. And of course, Your Honor, we filed a prepackaged plan consistent with that RSA, and we began soliciting that plan prior to the petition date. So we expect to have the votes required to confirm that plan.

Our only impaired voting class is the pre-petition note. So this is functionally a straddle. You started, but you don't necessarily have all of your balloting in, and again, you're reporting at least a matter of confidence on the folks that are signed on. Correct. High level competence given the RSA or the 90% of the RSA. Okay, all right. And I buried the lead here a little bit, Your Honor.

This is what we call full pay repack. And so the plan... Yeah, you should have started with that. You should have started with that. You're right, Your Honor. The plan unimpares general unsecured claims, and that fact will flow through some of the legal request today. We have what is common in full pay free packs and all trade motion that we'll address

with the appropriate time. So we're pleased to have that support, Your Honor, pleased to be able to pay our trade creditors and other ordinary course creditors in full. So, Your Honor, I think that really sums it up on sort of the background of why we're here. We've talked about scheduling the second day and we'll get to scheduling the confirmation at the appropriate time. I wanted to have a couple housekeeping matters out of the way, and then I'll turn it over to Mr. Price and then I'll walk, Your Honor, to the Order of Presentation Day, if that's okay.

I think that's fine. I will hear from the United States trustee before we turn to... Actually, I'll hear from Ms. Leamy now. Sure. Good afternoon, Ms. Leamy. Good to see you as always. To see you also, Your Honor. Good afternoon, Jane Leamy for the U.S. trustee.

I know Your Honor usually asked about a creditors committee. Sometimes at the first day hearing, I just wanted to report that we will solicit for a creditors committee. There'll be a notice on our website. Doesn't mean that we will necessarily be able to form or form one in this case, given that it's a full pay. But the opportunity will be there for creditors

that are interested. Okay. just wanted to report agreement with Mr. Harvey that our issues are resolved for today except for the one item on the employee with respect to wages but otherwise with respect to the timing and the mechanics and the dip you're okay with the current versions yes I think there will be red lines for the dip and the solicitation procedures okay Ms. Leamy can I ask you before as always I would thank you and your colleagues for engaging with the debtor and obviously doing a huge amount of

legwork for the court leading up to today. You heard the colloquy between Mr. Harvey and me with respect to timing for a confirmation hearing and we're looking in the week of June 22nd. I assume your office has no issues with respect to that scheduling. You've seen the milestones. That's fine. All right. Okay, we may as well then plug that date in and we'll go ahead and we'll go ahead and we will schedule a plan confirmation for the 25th of June at 10 a.m. And again, I assume if that's consistent with what you were looking for, then you've probably got those dates at least notionally plugged in for your solicitation and mechanics.

That's correct, Your Honor. Okay. And Mr. Butts, my colleague, will address the solicitation procedures, but the dates will all flow backwards from that. That's not fine. and they solicitor, sorry, the procedures motion. So, Your Honor, a couple of housekeeping matters. Sure.

And one relates to one thing that Mislemy just said. There is a change to, there was a provision in the first-day payment orders that you see sometimes that the U.S. Justice Office will sometimes take issue with that related to the interaction between the dip motion and the payments being authorized under the orders. And the language essentially said that nothing here trumps the dip order. Going back and forth of the lenders in the US trustee, we've come up with some alternative language because the US trustee took issue with the way it was drafted. We did not, we just resolved that shortly before the hearing, and we did not have a chance to file red lines. I have the easiest way rather than walking through the U.S. 7 is just to read the, and I have a copy I can hand to Your Honor, if I may approach.

Sure. So, Your Honor, this will flow through any of the orders that had the comparable provision in there that referenced the dip motion and the dip order. So it's essentially all the first-day payment orders. And what it provides, Your Honor, is nothing herein is intended to modify, alter, or waive in any way, any terms, provisions, requirements, or restrictions, open-per-end, including any budget or cash flow forecasts, post-per-end, set forth in the debtor's motion for entry of an interim order, authorizing the debtors to obtain post-petition financing, use of cash collateral, and grant liens in super-priority administrative expense claims, granting out of a protection.

to certain pre-petition secured parties, modifying the automatic say, scheduling a final hearing, granting related relief. I see we actually looks like you're under, there's a term in there that carried over, the adequate is repeated twice, so we'll clean that up before we put it in the orders. But again, nothing will, sorry,

filed substantially contemporaneously here with defined as the dip orders, the orders entered there under defined as the dip orders. To extent there's any inconsistency between the terms between the terms of the dip orders and the terms of interim order or any action taken or proposed to be taken here under the terms of the dip orders shall control in all circumstances.

Your Honor, that's the language we'll add to the first day. Just rolls right off the tongue, doesn't it? I realize that as your honor is reading, I probably should have just said the dip motion. Well, actually, look, it's fine. I just assume the proposition that we're wrestling with is this concern that if I authorize you to pay five million, $5 million in wages, but I don't approve your dip motion, that order authorizing wages doesn't

give the debtor $5 million or something like that. I think that's a pretty basic proposition. I've had this discussion many times. I will say that I don't really care if you keep this, that's fine. But I think there is a risk of confusion because I... Hi, I'm John Green, co-owner and unpaid intern for Good Store. Good Store is a different kind of business, we make everyday essentials and then send 100% of our profit to charity. Not some of our profit or most of it. All of it. Every month.

So we make the world's best coffee and tea and socks and soap and household cleaning supplies. And then we send them to your home and invest the profits in solving big problems, from coral reef restoration to tuberculosis eradication efforts. It's just a better way to purchase high quality, everyday essentials while also feeling good about where your money goes. And somehow together, we've already raised over $12 million for critical causes. So join us by shopping with intention at good.store. That's www.good.com. Because everyone deserves a little good. I think you're in the common parlance as I listen to this, I think that you are defining everything but the dip order as the dip orders, right?

Collectively such interim and final, is that the financing orders? Are they the financing orders? That's meant to refer to the financing orders, Your Honor, so we can clean that language up. I see your point. Oh, okay. So I think we need to say any order entered granting the dip motion. I'm fine with it. We'll clean it on your honor.

Yeah, I don't. I'm fine with it. I mean, I think the proposition, and I've had this discussion a number of times, and I'm certainly not faulting anybody either for being particularly careful, but it seems to me, again, a pretty uncontroversial proposition that a debtor needs a financing order authorized by the court or authority to use cash collateral before they have any money to do anything. And separately, we're doing a whole bunch of orders that authorize them to spend money. and that's fine.

But I think everybody knows, as a matter of practice, at least in my court, it is rare for me to allow a debtor to do the dip motion first at a first day hearing because it just takes up all this time and we go through all these exercise and then we get to the end of it and then we've got 10 here, 10 motions left. So we do a series of motions on the expectation that the dip order or the cash collateral is going to get approved. But again, the fact that I've authorized utilities or taxes or something else doesn't necessarily give the debt or financing.

So I'm okay as long as everybody's on the same page and I think I understand where you're headed. We are, Your Honor, and we will make sure that the cleaned up version of this is in the orders we submit. Okay. Was this a Sanchi thing? It was originally a Sanchi thing. So I got a hearing. I had a hearing one time where he got assigned up first day and he had a scheduling issue or some emergency. So literally an hour before the hearing, they called counsel and said, you don't have Sanchi at Judge Shannon.

And I saw things in the orders that I had never seen before. And apparently he had all kinds of different peccadillos. Those words I was searching for as well. Better me than you. So, okay, I don't have an issue with this. I think I understand where the parties landed on it. And again, I'm not minimizing the significance of it, but it seems to me an uncontroversial proposition. Okay?

Great, Your Honor. Thank you. And the other housekeeping matter I have is I thought this was as good as time any to move for the admission or remove the admission in evidence subject to cross-examination the declarations of Mr. York and Mr. Hoverman. Yeah, let's do Mr. York's first. I would ask if there are any objections to the admission of Mr. York's declaration as part of the debtor's case in chief strictly and exclusively for the relief, at today's hearing. Hearing no response, Mr. York's declaration is admitted. Is there any party that wishes or intends to cross-examine Mr. York

regarding the contents of his declaration? Very well. Mr. York's declaration is admitted without contradiction. That brings us then to Mr. Hageman's declaration with respect to the DIP financing, and I would ask if there are any objections to Mr. Hagan's declaration coming into evidence again for the same purposes as described. Very well. hearing no objection, Mr. Hagenman's declaration is admitted.

Is there any party that intends or expects to cross-examine Mr. Hageman regarding the contents of his declaration? Well, that declaration likewise is admitted. Thank you, Your Honor. So that concludes my preliminary remarks other than just to set up the table for the presentation, so I'll turn it over to Mr. Price. Very good. Mr. Price, good afternoon. Welcome. Good afternoon, Your Honor. Can you hear me?

I sure can. Great. Michael Price of Millbank, LLP, on behalf of the AdHod Committee of Spanish Broadcasting's existing note holders. I'm here in a conference room with my partners Andrew Harmeier and Brian Kinney. And of course, my colleague, Zach Singer, who's thankfully here as well. And as my friends, my friend Mr. Harvey said, has done a ton of work on this case over the last few days. Just wanted to thank Your Honor and your staff for facilitating this hybrid first day hearing so that we could join you from here this afternoon and save the estate at least a little bit of expense in connection with

What we're hoping will be a smooth hearing Your Honor with your indulgence. I have just a few minutes of remarks. I promise I'll keep them brief Mr. Harvey has already given you most of the background But as I mentioned, we are counseled to an ad hoc group. It's comprised of nine institutions that hold over 90% of the company's pre-petition notes in the aggregate. We do have a 2019 statement that will be put on file hopefully today. We're just waiting on one more sign-off on the, on one amount on the statement. We did work with the three-member steering committee that has led the effort over the last summer.

months along with the company and its advisors and formulating and negotiating and ultimately reaching agreement on an RSA in early April that contemplates the comprehensive restructuring that is embodied in the plan and don't want to rehash all the specifics of the plan that were described a couple of moments ago but we are pleased about the plan and that it will result in a a strengthened and sustainable balance sheet with the company with an eye towards positioning it for enduring success, hopefully for many, many years to come.

And so, of course, looking forward to confirmation and ultimately consummation of the plan, but for present purposes, just wanted to indicate that the committee is pleased that we're here today on a consensual basis on seeking approval as the debtor-seed approval of the DIP, the other first day relief because it was very important to us to ensure a smooth landing into chapter 11 and that the company has the resources and flexibility that it needs during this process

to ensure operational continuity and build on its strengths as was mentioned this is indeed a full pay case as the future owners of the business it was very important to the Adda committee to ensure that even in the context of what we hope is a efficient and swift case that the company have what it needs from a liquidity and flexibility purpose to continue operating without disruption to listeners. So before I see the podium back, I did want to mention one topic that you raised, which was the need for regulatory approvals. We are in the process and have been working for several weeks with the note holders and the company to collect and aggregate the relevant data and other information that is necessary for submitting

a change of control application, which we would seek to do as promptly as practical, as we do think that that really will be the longest pull in the tent in terms of the emergence timeline. But we have started that process, and my hope is that we'll be able to get those applications on file very, very soon so that we don't hold this up any longer than we need to. So really, unless Your Honor has any questions, that was all I had. I did just want to introduce the ad hoc committee and give you a little bit of the background on the negotiation. Very good. Thank you, Mr. Price. I do not have questions at this point. Unless there are other parties that wish to be heard, I'd be happy to turn to the first day applications.

Thank you, Your Honor. Again, for the record, Matthew Harvey from Morris. on behalf of the debtors the we're going to follow the agenda roughly your honor if that's okay with you because I'm going to try to avoid having people get up multiple times sure my colleague Alexis Sullivan will handle the joint administration motion and the coal 156 application which are items four and five on the agenda she'll also handle the utilities motion which is item seven on the agenda. My colleague, Hesham, Elizier, and will handle the motion to seal the creditor matrix, which is for the first to identify all information on the creditor matrix, that's ID6

on the agenda. And I'll also handle the trading restrictions motion, what we call the NOL motion in many cases, Your Honor, which is... I have it. My colleague, Casey Sawyer, will handle the insurance motion and the customer programs and as well as the cash management motion. My colleague, Mr. Bucks, will handle the solicit procedures at the end of the hearing and I will handle the remaining motions which are the taxes the all trade the wages and the debt. Very good. Thank you, Your Honor. But that I'll see the podium to Ms. Sullivan. Thank you. Ms. Sullivan? Good afternoon. Welcome. With the record, Alexis Sullivan with Morris Nichols-Artschen tunnel proposed co-counsel to the debtors.

The first item today, Your Honor, is the debtor's joint administration motion, which is docket number two. I've prepared a short presentation on that, but if you prefer, I'm also just having to take a presentation, please. There are 55 filing entities, of which, I'm sorry, all of which are affiliated within the meeting of the term under Section 101 of the Bankruptcy Code. The debtors are seeking to have these cases jointly administered for procedural purposes only. Under the lead case Spanish Broadcasting System, Inc. Hi, I'm John Green. co-owner and unpaid intern for Good Store. Good Store is a different kind of business.

We make everyday essentials and then send 100% of our profit to charity. Not some of our profit or most of it. All of it. Every month. So we make the world's best coffee and tea and socks and soap and household cleaning supplies. And then we send them to your home and invest the profits in solving big problems from coral reef restoration to tuberculosis eradication efforts. It's just a better way to purchase high-quality everyday essentials

while also feeling good about where your money goes. And somehow together, we've already raised over $12 million for critical causes. So join us by shopping with intention at good. That's www.good.com. Because everyone deserves a little good. No parties' rights are being affected or determined by the relief requested in the motion. The debtors view the relief as routine to facilitate the court's administration of these cases. And unless Your Honor has any questions, the debtors respectfully request entry of the proposed order, which is attached to the motion as a good.

Very good. I do not have any questions. I would ask if anyone wishes to be heard with respect to the motion for joint administration. Very well. I'm going to grant this motion. I do find that the relief requested is both. routine but also necessary and appropriate in these cases. As Ms. Sullivan noted, there are many, many debtors, and I believe that joint administration will benefit both the clerk's office as well as all interested parties in this case by providing a single point on the docket to look for activity in these proceedings. This motion is granted, and the order will issue. MS.

Next up on the agenda is docket number six, which is the application to retain co-restructuring administration LLC as the debtors claims a noticing agent. We have not received any comments from the United States trustee or any other parties in interests. Attached to the motion is the declaration of Mr. Benjamin Steele. Unfortunately due to scheduling conflicts, Mr. Steele is not able to attend by zoo today. I've been informed by a cruel representative that Mr. Adam Adler is here and available by Zoom and willing to adopt the declaration as his own, if required. Alternatively, we can kick it down the line if I'm not. No, no, I wouldn't kick it in the absence of objection, and I will confirm whether there's an objection, but I certainly will take Mr. Steele's declaration as part of the case, as part of the debtor's case in chief, and I appreciate,

you're all scrambling to make sure that there was a cruel representative. But I would ask, are there any objections to the relief requested? Very well. Given that there's no objection, I don't believe it's necessary to admit Mr. Steele's declaration into evidence. It is part of the court's record, and it is filed in compliance with this court's local rules. I note also that our local rules do require, in a case of this size, that a debtor moved promptly to engage the services of a claims and noticing agent. The court is certainly familiar with Kroll, and I am satisfied that they have both the necessary resources and requisite experience to provide the services that are required in this case, particularly in the context of a prepackaged bankruptcy case.

So, and again, as noted, I find that the application itself likewise is compliant with our applicable local rules. The motion is granted, and the order will issue. Next item is the debtor's utilities motion, which is docket number eight. Okay. The debtor submit that the motion seeks standard first day relief to prohibit the utility providers from discontinuing or modifying the debtor's utility services. It also seeks to deem the providers adequately assured of future payments based on the debtor's proposed deposit of adequate assurance and also establishes additional assurance procedures as needed. The debtor submit that the motion seeks customary first day relief consistent with Section 266 of the code. The debtors believe that there are 12 utility providers which are all listed on exhibit C to the motion.

And the relief requested is critical to the smooth transition into and out of these chapter 11 cases and to prevent any operational disruptions. The debtors asked that the court approved the adequate assurance amount of $50,096, which is roughly equal to about two weeks of utility services based on a 12-month average. and also to approve the proposed additional insurance procedures that you're described in the motion. Yes. Unless your honor has any questions for me, we respectfully request the entry of the interim order subject to some comments from the AdW Committee on paragraph 11, which will submit later today.

Very good. I have no questions. I would ask for anyone wishes to be heard with respect to the utilities motion. Okay. Okay, I'm going to grant this motion, as Ms. Sullivan noted, this is a relatively routine relief, and I'm satisfied that the structure that's proposed in the motion is consistent with what I and my colleagues have approved on countless prior occasions. I also find that that structure strikes an appropriate balance between the debtors' need for uninterrupted utility services and a utility service provider's entitlement to adequate assurance under Bankruptcy Code Section 366.

The motion is granted and the order will issue. Thank you, Your Honor. Thank you, Ms. Sol. And with that, I'll pass along to my colleague, Mr. Elvisu. Very good. Mr. Elbezir. Welcome. It's good to see you again.

Likewise. Good afternoon. I've got two motions, the motion to seal the Predator Matrix and the NOL motion. I'll make the same offer. Collegovine, I can want your presentation or we can answer questions as you have them. I would like to hear your presentation. Great. So we'll start with the motion to seal the predator matrix.

You can find that agenda item six, docket item number seven. I have it. By this motion, the debtor seek authorization to seal redact the addresses of certain individual predators as in the appear on the predator matrix. Motion to seal obviously for cause, but we take the position that there is cause on the account of negative confidence. negative consequences of publishing someone's home address online in search of the database. While we appreciate that bankruptcy court is to be an open fishbowl, we think that this narrow relief requested here strikes a sufficient balance.

And so unless your honor has any questions, we would respect to the request. I do not have any questions. I would ask if anyone wishes to be heard with respect to the debtor's motion to seal certain PII in their creditors list. Okay. I'm going to grant this motion as council. noted this is again relatively routine relief and it derives from concerns with respect to publication or providing general access to the name address and

personal information of folks that are creditors or stakeholders in these proceedings this is relatively again routine relief I'm satisfied under section 107 of the code as well as the courts established precedents that the relief for question is appropriate warranted, the motion is granted, and this order will issue. Thank you, Your Honor. Moving now to Agenda 14, docket 15. Okay. By this motion, the debtor seeks approval of certain procedures to preserve about $300 million in tax attributes.

That $300 million is made up of 192 million of net operating losses, and $108 million of 163J-carried formulas. which are essentially business expenses that roll over the tax year's cap to the next tax year. And as I'm sure your honors are well aware, not only do these tax attributes and there are a significant benefit to the debtors' estate, but they are also subject to loss if there's a change in ownership. And so these procedures are fundamentally intended to give the debtors some visibility into trading of its shares. We did receive one comment from the United States trustee as to the objection period.

So currently as it stands, if you're going to effectuate a transaction that would either take you over 4.5% or take you out of a 4.5% ownership limit as to the debtors' outstanding shares or declare, or you own 50% of shares and you're going to declare them as worthless, you know, you need to file a notice on the docket to notice parties. parties, the order that we filed had a 20-day objection period for the debtors in the United States trustee requested that we short enough to 14 days, which I believe we landed at 14 days and that's what's not. That sounds fine.

Again, you know, this order, this motion was a result of good fake dialogue, pre-edition with Adhoff meeting the United States trustee, and so we take the position that this is a this kind of relief in cases of this sort and size is relatively customary unless Ryan has any questions? I do not have questions. I would ask if anyone wish it to be heard with respect to the notification and procedures motion with respect to the debtor's tax attributes. Okay.

I'm going to grant the motion. It is not an unusual application. The court is certainly aware that in this case, as in many cases, the debtor may be in possession. possession of highly valuable tax attributes, net operating losses that could be applied to future profits or future income. And I note that, again, the debtor is structured this in order to guard against the potential implications of Revenue Code Section 382 . I also am satisfied that the relief request is consistent with an established practice in this jurisdiction.

The motion is granted and the order will issue. Thank you, Your Honor. Thank you. With that, I will see to Mr. Sawyer. Very good, Mr. Sir? Welcome, good to see you again. Good afternoon, Your Honor. Casey Sawyer of Morris Nichols

on behalf of the proposed debtors. I'm here with three motions, Your Honor. The insurance motion, which is agenda item eight at docket number nine. The customer programs motion, which is agenda item nine at document number 10, and then the cash management motion at agenda item 13, document number 14. If it's okay,

you're your honor, I'll take them in that way. That sounds fine. Hi, I'm John Green, co-owner and unpaid intern for GoodStore. Good Store is a different kind of business. We make everyday essentials and then send 100% of our profit to charity. Not some of our profit or most of it, all of it, every month. So we make the world's best coffee and tea and socks and soap and household cleaning supplies. and then we send them to your home and invest the profits in solving big problems, from coral reef restoration to tuberculosis eradication efforts. It's just a better way to purchase high-quality everyday essentials while also feeling good about where your money goes. And somehow together, we've already raised over $12 million for critical causes.

So join us by shopping with intention at good.com. That's www.good. Because everyone deserves a little good. So, Your Honor, starting off with the insurance motion, I just wanted to ask again briefly. I'm happy to give a brief overview or just go directly to any questions you may have. I know. I'll take your overview.

Thank you, Your Honor. The insurance motion is a general insurance motion that's typical in these Chapter 11 cases. We are seeking authority to maintain our insurance policies, which consists primarily of a premium of, policy subject to premium financing agreements, although we do have various insurance policies that are not financed and are paid directly by the company. We are seeking approval on a final basis at the final order to make payments on account

of all these obligations, which are approximately $3 million per year annually. However, as a petition date, we have approximately $270,000 in outstanding obligations owed under these insurance policies, and we estimate that that approximately 202,000 of those will come due in the next 21 days. And here on an interim basis, we are requesting permission to make those payments up to $202,000. On account of general policy fees, premiums, and broker fees. And the debtors submit that those policies are acquired in some cases and are vital to the continued operation of this business, which is going to continue to operate through these prepackaged cases.

As my colleague Mr. Harvey said at the beginning, this is a full-paid prepack. So on account of these obligations, it is not a question of if they would be paid, but when we submit that the payment at this time is appropriate to prevent any adverse actions. I'm happy to run through the insurance policies themselves, but they are listed as an exhibit to the motion, and I've had an opportunity to review them. I appreciate your offer, but I don't need that. Thank you, Your Honor. So unless you have any questions on the insurance motion, we would respect to the request that it's granted.

I'm happy to go to the next motion. Very well. I would ask panel in wishes to be heard with respect to the utility, with respect to the insurance motion. Okay. I'm going to grant the motion as Mr. Sodor noted, this is relatively routine relief. It is a basic proposition that a better operating under the supervision of this court needs to maintain. appropriate and necessary insurance and I would note that the operating guidelines for the office of the United States trustee actually mandate that a better maintain

appropriate insurance I'm satisfied that this motion does accomplish that I've had an opportunity to review the application as well as the schedule of insurance and it is consistent with what I would expect for a company in this in this type of business I also note that the application implicates bankruptcy rule 6,003 and that it contemplates a payment of certain pre-trial obligations in the first few weeks of the case. Nevertheless, I'm satisfied that the debtor's reorganization effort would suffer the risk of immediate and irreparable harm in the absence of the relief requested, and therefore I will grant the motion. I would make a further

admonition that I had made many, many times in connection, particularly with insurance motions, and that is you've asked for authority to pay up to $202,000, which is through client's calculation of the amounts that are likely to come due over the course of the next few weeks. long experience teaches that invoices may show up that might not necessarily have been anticipated. To the extent that they are consistent with the debtor's established practice and you confer with both the United States trustee and the ad hoc group, if it's necessary to go modestly over the $202,000 number, you should expect that I'd be okay with that occurring by a consensus between and among the parties. The last thing I'd want to do is see motion practice

for a $10,000 bill or something like that. So that's just an admonition and obviously if there's a need for further motion practice in connection with this where I need the other motions of similar relief, then obviously I'm available for that. Okay? But this motion is granted. Thank you very much, Your Honor. And I should have also assessed that this is also subject to that DIP provision that is being carried on. Yeah. Okay. Next, Your Honor, I'd like to move to the Customer Programs Motion, which is agenda item 9, docket number 10. This customer programs motion generally seeks relief for the debtors to continue and make payments

on any pre-petition obligations for two primary customer obligations, which are core to the debtor's business. As Mr. Harvey mentioned in his opening remarks and in Mr. York's declaration, advertisement revenue is the key model of this business. And advertisement, as you are likely well aware, derives from the audience which the debtors serve. So we have two customer programs here. We have what are called volume discounts, and then we have the prizes and sweepstakes. The volume discounts represent an annual-based discount we offer to certain purchasers or

advertisements, and that does, and is based on a yearly accrued portion, which is then remitted sometime after the year end. And then the sweepstakes in general contests, if you're familiar with radio contests, of sort of dialing in or being the 10th caller, those are de minimis amounts of prizes that we frequently give out. But we would just like to request authority to continue those. The goal of these cases is for the company to remain in operation and is undisturbed by this bankruptcy as possible.

And we do not want to affect our customers on either of the other. advertisement side or the audience side any more than we have to. That's fine. Can I ask, with respect to volume discounts, so when a advertising customer is entitled to a volume discount, that's actually, it's not simply credited to future business, or do they actually get a check cut to them? Yes, Your Honor. So my understanding of how it works is that we accumulate the data throughout the year

of the advertisements they purchase. At the end of the year, they take a look and it's based on a percentage calculation. If you purchased, and these aren't the exact numbers, but if you purchased a million dollars, you may be entitled to a 10% discount. Because it's based on the accrued year end, that discount is given out essentially in the form of a rebate after the year end. All right. Thank you. I appreciate the clarification.

Because initially when I read this, it wasn't really clear to me that a volume discount arrangement would actually need to be the subject of its own motion. practice and I understand you know being careful and wanting to make sure that there's no hiccup or or anybody accused of an unauthorized post-petition transfer but if the debtor is cutting checks based upon an entitlement that's actually it's like a refund program and I think it certainly falls squarely within the relief requested and I certainly understand the prices and sweepstakes I would ask anyone wishes to be heard with respect to the customer practices motion okay I'm gonna grant this motion and so ruling I rely

upon the declaration of Mr. York, as well as, frankly, the Court's long experience with similar structures. I would also emphasize Mr. Sawyer's observation that this case is postured to the Court as a pre-packed bankruptcy, and of the purpose of these motions in large measures to minimize disruption through the debtor's day-to-day operation in order to facilitate the financial restructuring that's embodied in the RSA. So I do find that the relief requested appropriate warranted I also find that the relief implicates bankruptcy rule 6,003 again because it does contemplate the payment of certain pre-petition obligations in the first few weeks of the case nevertheless for the reason stated

I'm satisfied the debtor's reorganization effort would suffer the risk of immediate and irreparable harm in the absence of the relief requested the motion is granted and the order will issue thank you your honor next I will move to the cash management motion which is agenda 113 document 14 okay your honor cash management motion this is again a routine motion in these sorts of cases, but we are requesting permission to continue operating our cash management system

and pay all fees associated with that. I do want to raise that we received comments prior to the filing of this motion from the United States Trustee and the lenders, and we have incorporated those comments, and I believe we are resolved in all of those. The debtors cash management system runs out of 10 bank accounts, and I'm happy to run this through with you,

if you'd like me to. No, that's not necessary. Again, the motion certainly describes more than adequately the debtor's cash management system and the use of the bank accounts. And Your Honor, there is, as I mentioned in the motion, certain are subject to a DACA agreement, which is with Williamton Trust. And then we are requesting a limited waiver of Section 345A. In our agreement of the United States trustee, we have agreed to just an interim waiver at this

point. We may be back here on a final basis with respect to, so there's two accounts that are not subject to the UDA, the Benesco Bank account, which is used in connection with our PayPal account for the sweepstakes that I previously mentioned. And then City National Bank of Florida is on the Region 21 UDA list in Florida is not on the Region 3 UDA list in Delaware. We have engaged in, we've already reached out to City National Bank of Florida and are hopeful that that will be able to sort out a UDA with them. Benesco, we will make, we have agreed to the United States trustee will make a good faith effort to have them sign a UDA. I'm just wanted to raise that we may be here on a final basis asking for a waiver of 345A with respect to that Benesco bank account, which contains a generally limited amount of funds, primarily just for the sweepstakes. and the number listed in the motion is $29,000.

I've been informed that $25,000 of that, I believe, the required amount to have in the account for the DACA amount. So, Your Honor, do any other questions? I'm happy to answer any questions you have. We'd submit that this relief is necessary, and without it, we'd avoid irreparable harm to the company. I have no questions.

I would ask if anyone wishes to be heard with respect to the case. cash management and bank account motion. Okay. I'm going to grant this motion again. As I said, the application is certainly comprehensive in its description of the debtor's cash management system. And the structure that is laid out in the application is, again, largely consistent with what I would expect for a company in this line of business.

And likewise, to my comments a few moments ago, the purpose of the most of the applications presented to the court today are to minimize disruption and obviously this application falls squarely within within that principle so based upon the record before me I'm satisfied the relief requested is appropriate warranted the motion is granted and the orderable issue thank you honor we'll pass it back to mr. Harvey very good good afternoon again your honor and for the record Matthew Harvey from Morris Nichols on behalf of the debtors I'll turn next on the agenda to item 10 on the agenda which is

docket item 11 which is the debtors motion to pay prepetition taxes. Okay. I'll ask as my colleagues did, Your Honor, whether you like a presentation or if you'd like me to just answer any questions you may. Take your presentation. Thank you, Your Honor.

I'm glad to give it. So, Your Honor, again, as with many other motions, this is a fairly routine motion. The additional wrinkle here is we also have a full pay prepack. So the additional basis, in addition to the doctrine of necessity, the priority basis to pay taxes, and the fact that many of them are trust fund taxes.

It's also the fact that this is just a matter timing model for the taxes. The total amount we seek to pay on a final basis, Your Honor, is 2.25 million, 1.166 million of which we believe will come due in the first 21 days of the case. Including that, Your Honor, just for full disclosures, at $1.2 million federal income tax liability for 2025 that the company's been paying on a payment schedule. We submit that this relief is customary and necessary, and particularly in a full-paid prepact case.

we respectfully requested the motion be granted. Very good. I would ask if anyone wishes to be heard with respect to the taxes motion. Okay. As counsel noted, again, this is a relatively common relief, and I think, again, in the context of what is presented to the court as a prepackaged bankruptcy, the minimization of disruption and the maintenance of relationships

with the taxing authorities is certainly a priority for the debtor. I'm satisfied that the relief requested is appropriate and warranted. that again the issue here is primarily one of timing but again based upon the record before me I'm satisfied the relief requested is appropriate warranted likewise I'm satisfied that the better's reorganization effort will suffer the risk of immediate and irreparable harm in the absence of the relief requested the motion is granted the order will issue thank you your honor next up on the agenda is the all trade motion that's item 11 on the agenda docket item 12 I believe okay your

honor this motion not customary in every chapter 11 days but fairly customary in pretty bad cases that are a full paid case this motion seeks authority but not direction to honor the debtors trade obligations in the ordinary course of business we estimate in the aggregate there's about 15 million of pre-petition trade obligations on an interim basis we're seeking only authority to pay up the two million of those in the next until the entry of the final order which we expect will happen for the next 30 days Again, Your Honor, the basis for this motion set out in the motion itself, consistent with practice and prepackaged cases, with a plan with adequate support filed on the first aid, if the creditors are full, we believe it's customary, and we respectfully request that the court grant for motion. Very good. I would ask panel who wishes to be heard with respect to the application to pay pre-petition trade claims.

Very well. As counsel noted, this is a relief that is commonly associated with pre-packaged bankruptcy cases, and particularly those that proposed to pay all unsecured creditors in full, thereby minimizing, again, the disruption to the debtor's operations while I can pursue their financial restructuring. Again, for the reasons that I've stated before, I'm satisfied that the debtor's reorganization effort will suffer the risk of immediate and irreparable harm in the absence of the relief requested and again this is relief that is appropriate given the peculiar

procedural context of a pre-packed bankruptcy case so I am satisfied the relief requested is appropriate and warranted the motion is granted and this order will issue thank you your honor that brings up next the the debtors motion to pay pre-petition wages salaries other accrued compensation and maintain benefit programs yeah what's the issue we have yes your honor and just for the record that's item 12 on the agenda and I believe it's item 13 or sorry docket 13 on the docket there's the open issue with this motion your honor is that as we disclose in the motion there are four employees that we know of

that are over the statutory cap of 17,150 that forth in bankruptcy code sections 507 a 4 and 85 I actually have a course we're sensitive to disclosing individuals um compensation on the record, but I do have that the U.S. Justeanee is seen. I have a hand up. I can handle this. Please. Thank you. So, Your Honor, just to better frame this issue, there were four individuals in fact here. Two of them are on-air talents, or on-air talent, or radio host. I understand the U.S. trustee is not pressing an objection to of the debtors obtaining authority to pay those individuals over the statutory cap on an interim basis. The other two individuals, as you see, Your Honor, from their titles are insiders if we don't

dispute that. And the U.S. trustee is pressing an objection to honor in our ordinary course paywall to them in the interim period over this statutory act. We believe, Your Honor, that that relief is appropriate in this case, again, consistent with the full-paid prepack nature. These are two individuals who are working very hard, worked extremely hard pre-positioned to help position the company to get here with a fully consensual deal with their note holders and an unimpaired plan for creditors. They will continue to work very hard. They're also individuals who are instrumental. If you look at the RSA, Your Honor, they're both mentioned by name as key goal for employees of the company. And the debtors to lead it would be anomalous and inconsistent

of the full-paid prepack nature of this case to pay, have authority to pay trade creditors in the ordinary course, pay all other unsecured creditors in the ordinary course, have a full-pay pre-pack and the only people that we are not going to pay are asked to have weight to get authority to pay are the two of the key individuals of the company so your honor we would not be making this request in an ordinary case if we did not have a full pay prepack we do think under the unique circumstances case honoring the obligations to all employees including the two highly competent executives is appropriate is Jane Leamy for the US trustee your honor as you're aware in the wage motions is typical

amounts over the statutory cap of 17,150 that are owed to employees to be deferred until the final hearing as those portions are unsecured claims. So we're seeking the same relief here. I believe that the amounts payroll to the two executives should be deferred until the June, like June 8th hearing. We understand this is full pay prepact, but, you know, the other orders that are authorizing payment of petition amounts are also in our own. They're also authorizing amounts to be paid in the first, or that come due in the first 21 days.

They're authorizing, but not directing. So, you know, the debtors have the ability to hold back payments if needed. So, you know, our position would be that these amounts should be deferred to allow parties and interests to review it and have the opportunity to reject it necessary. Okay. All right. Based upon the record before me, I will overrule the U.S. trustee's objection. And I'll give you my reasons. And it really relates to the, you could say, it's kind of a leap of faith that the debtor has a game plan that's going to play itself out.

I agree with Mr. Harvey that it is, it would be kind of anomalous to single out a couple employees and senior, obviously senior managers of the company for not to hold off on being paid when the court is authorizing the payment. And you make a good point that the court is authorizing but not directing the payment, and this is an interim order. But given, again, a full pay prepack, it may be actually more of an administrative headache to hold off on paying these folks and deal with the payroll system than to simply have it paid in the ordinary course. I would note again that this is an issue that I think is squarely within the U.S. trustees' wheelhouse in terms of issues to raise to the court. I appreciate the point being raised. it is not a request that I would entertain in a more typical case or a typically

postured chapter 11 and I could even imagine in a pre-package case that I would find it would be appropriate to direct that senior folks wait I have directed that on many many prior occasions but I'm satisfied based upon the record before me and again given the context of the RSA Hi I'm John Green co-owner and unpaid intern for Good Store. Good store is a different kind of business. We make everyday essentials and then send 100% of our profit to charity. Not some of our profit or most of it, all of it, every month. So we make the world's best coffee and tea and socks and soap and household cleaning supplies. And then we send them to your home and invest the profits in solving big problems from coral reef restoration to tuberculosis eradication efforts. It's just a better way to purchase high-quality everyday essentials while also feeling good about where your money goes. And somehow together, we've already raised over $12 million for critical causes. So join us by shopping with intention at good.store.

That's www.good.com. Because everyone deserves a little good. with the relief that I've already approved, and I don't really think that it does violence to the pretty well-established proposition that, as a general proposition, a wages motion is subject to the Section 507 caps.

So I will overrule the U.S. Trustee's objection, and I will authorize the relief requested by the debtor. I would ask if there are any other questions with respect to the wages motion. Having dealt with the U.S. trustees issue, again, I note that the relief requested here is to pay the, the employee wages and benefits.

I had noted on many, many prior occasions that there is no constituency that I'm more concerned for at the outset of bankruptcy proceeding than those employees that look to the company for payment of their wages and their benefits. I'm satisfied that the relief here is appropriate. I've had an opportunity to review the application, and again, the proposed payments,

including the payments that were the subject of the colloquy just a few moments ago, are, again, largely consistent with what I would expect for a company of this size. and consistent with the proposition that we are minimizing disruption to creditors and stakeholders in order to facilitate a financial restructuring here. I'm satisfied that the relief requested is appropriate and warranted. I also note that in the absence of this relief, I'm certainly satisfied the debtor's reorganization effort

would suffer the risk of immediate and irreparable harm so the debtors have carried their burden on the record CUL-6-03. The motion is granted. Your order will issue. Thank you, Your Honor. And that leads for me today, except with Mr. Bucks having the solicitation procedures at the end here, the debtors dip financing

and cash collateral motion. It actually is, I believe, item 16 on the court's agenda today. I didn't talk to item 17. Your Honor, we previewed some of the this is an overall financial restructuring with the support of over 90% of the

free petition note holders. The dip is part of that package, Your Honor. It provides for access to cash collateral and access to financing of up to $30 million, $7 million of which would be available upon entry at the beginning. We've had a chance to read the motion,

based on Your Honor's experience, and Mr. Hadden certainly testifies to this in its declaration. The terms of this dip are well within market, if not below market, there's no roll-up. Some of the other terms you see, There's no non-prorata treatment of anybody. All, in fact, there's a, the members of the ad hoc committee are backstopping the dip.

But it's open prorata to all holders of pre-petition notes. Their interest rate is the same as the non-default rate under the pre-petition notes. Right, 9.75% with a 2% default rate. For deferred default. And the fees are at or below the fees that we see in many dips. I believe, if I'm going to do the backstop fees, two and a half percent, other fees are in a 2 percent range. We did, Your Honor, and this is a housekeeping matter,

we did file under seal. The fee letters, and there were fee letters for the funding lender and the agent, and we have the sealing motion on notice, but the U.S. trustee did ask that we disclose the aggregate of those fees has been done in other cases, and we can disclose that those fees in the aggregate are less than $200,000. Okay.

Otherwise, Your Honor, I think everything, we've resolved all the comments of the USSD, and I do have a red line. We resolve those short-door hearings, we'd have a chance to file on, and I can hand that up. I think that'd be great, and we'll do a page time. Thank you, Your Honor. Sure. Have you had an approach? Of course. Thanks.

Do you have one for me, clerk, please? Your Honor, I've handed you two documents. One is the full red line of the interim order and the other's a change pages redline, which might be easier to follow. I think we'll, let's work from the shorter one. I've had an opportunity to review the full application, so I think we start with. changes on paragraph eight yes your honor so paragraph eight at least on the red line which is page 32 on paragraph eight there the order previously provide there's a paragraph there title limitation on charges expense charging expenses against

collateral essentially the section 506 waiver there's always the debtor's intent and the lender's intent your honor to make that that subject to entry the final order the language previously the middle of paragraph was drawing a distinction between the dip lender and the dip lender and the brief addition lender because, of course, the pre-edition lender is the one that could be subject to 506C. So we took a comment of the U.S. just a year to just make the entire provision subject entry of order obviously reserved for another day whether you can actually charge it to plunder's collateral under 506C.

Yeah, I don't think I've seen that language before, and I don't know the answer to that question. I don't think I've had that. I mean, 506C motions are like a white whale of bankruptcy. We never see them. but I think it's again an elegant resolution just to make the whole thing subject because I think that's consistent with everyone's expectation and we'll go from there and again in the context of this case my my observation is probably an academic discussion I agree your honor okay thank you the next comment your honor was in page 38 which is

paragraph 15 we take out and directed okay this is the provision that your honor we see asking filing offices and recording offices to take a copy of the gift order as an official record in lieu of financing statements mortgages etc and the previous language said that those offices are authorized and directed to accept a certified copy we accepted a US truth see comment to just say authorized so that's at least being directed okay your honor the next comment appears on page 39 and it's in subparagraph green and this is dealing with retention of jurisdiction yes your honor

and we struck which is stricken correct we struck the paragraph C at the end of that okay and then your honor at the end of the challenge provision which is paragraph 18 and on the change page of the red line appears a paragraph 38 we changed language here that the language

originally said that if there was an appeal of challenge it wouldn't stay or otherwise delay confirmation of a plan of reorganization these cases, we added language clarifying that unless the order is otherwise, of course, Your Honor would enter the State Pemian appeal. That would, of course, have the effect of the statement. And then the last change, Your Honor, which appears on the final two pages, were not a

substantive change. The USRC just added that we asked that we add email addresses to the notice provisions. Great. Ms. Lamy, did you have any additional comments or observations with respect to the Ivey of answer? I didn't hear the last two words, Your Honor. I'm sorry. respect to the DIP financing.

Your Honor, no, and we appreciate the council and the changes. Okay. All right, I would ask if anyone wishes to be heard with respect to debtor's request for an order authorizing post-petition financing and use of cash collateral. Okay, I'm going to grant the application on an general basis consistent with the modifications that council has just walked through. I would again express my appreciation to the Office of the United States trustee. I've done this long enough that I can recognize because leave me's handwriting in the order.

And I'm satisfied that, again, the relief requested here is consistent with the overall theme that the debtor needs to be financed in order to implement the restructuring that is embodied in the RSA and the proposed plan, and again, minimize the, have sufficient liquidity to minimize disruption to the day-to-day business operations. I have had an opportunity to review the application in the absence of objection. I would simply note that the court has already admitted Mr. Hagenman's declaration, and I need not make extensive findings on the relief request. I'm prepared to find that the debtors have carried their burden on the bankruptcy code section 361, 363, and 364, and bankruptcy rule 4,001 for purposes of obtaining secured post-petition financing, and the use of cash collateral on a post-petition basis consistent with the terms of the budget and the terms of the proposed order. This motion is granted, and the order will issue.

Thank you, Your Honor. the podium to my colleague Mr. Buss. Let me ask you a question. You at the outset noted a concern about making sure that we got that you got a hearing in front of me because you've got payments that you need to make. Do you have wires or payments that are occurring today? We can get orders entered, but I think you're making some changes because you've got that. Correct, we need to fill in dates for the final hearing and objection deadlines and then the orders

and we did make the change that we addressed in the top of the hearing. I'm going to ask Mr. York to just confirm whether we, I believe we need the wages, the financing, and the cash management because of the key pieces to get the payroll out. But I'll ask Mr. York to confirm whether that is okay to slip to tomorrow. We need those tonight. Mr. York, this is Judge Shannon. I assume you could hear Mr. Harvey. Yes. Yes, Your Honor.

Yes, that's fine if it goes out tomorrow morning. Okay. The wire from the payroll. So we get the wages, cash management. and sorry go ahead no that that sounds fine if again if they are uploaded tonight then there's a decent chance that I'll have an opportunity to review and enter them otherwise you can be confident that they'll be entered first thing tomorrow and certainly understand the sense of urgency yes sir honor thank you

your honor thank you thank you mr. York I think what we'll plan to do is immediately after this hearing we'll head back we'll fill in the blanks that you be filling at the paragraph that we discussed at the beginning and we'll get those as early as possible this afternoon this evening and would your honor like a certification council no no I don't think we need that we've gone through the applications themselves I don't need a further certification thank you that'll make things easier and then we will notify chambers when they've been uploaded that'd be great thank you honor now I'll see the podium from mr. Butz very good

good to see you good to be seen for the record Daniel Butz from Morris Nichols-Arson-Tuttle on behalf of the debtors I have the I'd the honor of bringing up the rear here with the motion to set the solicitation procedures. So you've just entered orders transitioning us into bankruptcy and now here's the first motion that will lead us on the path to get out. The motion, as I'm sure you've reviewed, had basically three purposes. One, to set schedules. Two, to at least tentatively or conditionally approved notices.

and then third to pause with eventual waivers of various reporting or meeting requirements under the code because as this has been explained quite a bit that this is a full paid prep. With that, Your Honor, I would probably make the most sense if I approach with a red line. That would be great. That would be great. Of the former border. Sure. This red line order does not include the exhibits because no changes were made to the exhibits. Okay. When we upload it, of course, it will have.

the exhibits and unless your honor has any questions about anything that was in the motion or in the order just generally I wanted to go through and Describe basically what what we've done so far okay about repeating anything and where we're going We began this is as you pointed out as a straddle plan Solicitation has not completed solicitation began the morning of May 11th we filed a the afternoon of May 11. There were approximately 40, give or take,

nominees that were served with ballots, the plan, and the disclosure statement, that morning. Then we filed. So the nominees and now the beneficiaries should have those ballots and the plan and disclosure statement in its exhibits and are making their determinations

as to whether or not the vote in the plan. Of course, as has been pointed out, well over 92, even maybe up to 95% of the existing note holders have signed on to the RSA. So their votes are essentially locked up. So we don't expect any surprise is not going to worry. But, you know, being life, you never know. But with that, Your Honor, we are seeking a relatively calm schedule here, where Your Honor has already given us June 25th as we requested for the confirmation and

and confirmation hearing date as well as final approval of the disclosure statement. A week before would be the date that we set aside for objections to the plan of disclosure statement, as well as the voting deadline. So that would be June 18th. The objection deadline would be 4 p.m. on June 18th, where the voting deadline would be 5 p.m. just because the clerk's office closes before. Okay. And then we would file the plan supplement with whatever various documents need to be to

to go with the plan and the confirmation would be filed on June 11th as is standard in this district seven days before the objection deadline. And so that's the general gist of what we're trying to do here. We have also approval of various notices here, and that's where you see the first substantive comments from, I guess, the OSRST Office,

which you can find, first, the OSROTE's office in paragraph 4 simply made it clear that your honor can do whatever your honor wishes. Conditional approvals. Yes, and then condition, yes, and then for the notices conditional, making it clear that there were conditional approvals. It was always the intent that they would be, of course, subject to final approval at the disclosure statement here.

But the first two notices are just simply a combined confirmation hearing notice, so we won't be sending out your standard notice of commencement along with a 341 meeting notice. It is combined along with various. description of the plan and the disclosure statement in what's happening, as well as all sorts of various dates. That's what, and then a publication notice variation of that, that's what's being approved in paragraph eight.

Paragraph nine, it's the, it's an opt-in release form as well as the balance, and a non-voting notice. These are pretty common in most plan solicitation context, both pre-packaged and not. So we're seeking to have a relatively substantial non-voting notice sent out in lieu of sending out a disclosure statement to the non-voting parties, as well as an opt-in release form that's going to everybody. The note holders received an opt-in form as part of their ballots, but everyone else will receiving an opt-in form for third-party releases along with the non-voting notice. And it is completely optional, it's completely voluntary, it is opt-in.

So there should be no, I believe, issues from anyone, and if people do not wish to grant the releases, nothing happens to them vis-a-vis the plan. Sorry, excuse me. And then also, the other notice that's being approved by this that doesn't have any language changes is the notice of assumption and assignment of releases, which we'll be sending out not necessarily with the first few notices. We give ourselves up to 21 days before confirmation to serve that out. So the timing is a little looser on that, or a little tighter for, prior to the confirmation hearing. But we hope to get it out earlier than that.

We just wanted to give ourselves time to make sure that we had the full list of contracts and leases that we wanted to notice. So we wanted to give ourselves a little extra time because all of the other notices need to go out within three days of this order. The notice of assumption giving ourselves another week or so, essentially. And we think this is all still in. keeping with the rules and time and practice here in the history and then the only other two things that I wanted to point out to your honor are paragraph 15 and 16 and you will see we the yes respect to the creditors meeting and the schedules and statements that's right what we had it we originally had it so that

they would be waived if we confirmed within a certain period of time the Eust trustees office asked that well we want to make sure you're confirmed and go effective so what we have is a mechanism by where We have 90 days to confirm and go effective, and then if it's waived. If we're not there yet, which we probably won't be because of the SEC approvals that we discussed earlier, we will talk with Ms. Lee's office, and if they agree, we will submit a notice with a form of order for a further extension of time. And if not, then we've got that motion to practice. You got it, Your Honor.

That's exactly right. And that's where we are. Unless Your Honor has any questions, I think it's pretty straightforward. and pretty self-explanatory. I would ask you that you enter this order. I do not have any questions. I would just check in with Ms. Leany. Did you, I see obviously plenty of modifications

that you've requested that have been baked into this, but I wanted to know if you had anything to add. Your Honor, the only thing I would note is, you know, we made the date a little bit later than you might typically see in 15 and 16, but knowing that this may not go effective right away, we thought it made more sense to do that. And of course, we'll be amenable to further extensions I've needed.

Sure. Okay. Does anyone else wish to be heard with respect to the better's request for an order setting that combined disclosure statement and confirmation hearing and related relief? Okay. I'm going to grant the motion. I very much appreciate counsel walking the court through the revisions. And again, I appreciate the United States trustee requesting and obtaining appropriate modifications

to the relief requested. The primary issue that we're doing here is giving the debtor authorization and conditional approval of the disclosure statement as well as the notices in order to start a process that, again, in your phrase, is how we get out of bankruptcy.

And again, we have discussed the timing. The court is satisfied that the timelines are appropriate. They are consistent with the bankruptcy rules as well as our local rules and established practice. And I believe that the relief requested is appropriate and warranted, I would be happy to enter this order once it's uploaded, and that will again provide the debtor with the framework to get us to a confirmation hearing and a little bit over a moment. Very much appreciate you, John.

Very well, the motion is granted, then the order will issue. Mr. Harvey, do we have anything else this afternoon? I believe that concludes our agenda, Your Honor. Very well. I'll just pause to see if anyone else hasn't yet the business before the court, if not. Very well, with that, we are adjourned. Thank you very much, counsel. We stand in recess.

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