American court hearing recordings and interviews - Village Roadshow Entertainment Group USA Inc. - audio of April 22, 2025 hearing before the US Bankruptcy Court for the District of Delaware in case number 25-10475

Episode Date: May 4, 2025

This MP3 audio file is extracted from the PDF filed as docket number 239 in the Village Roadshow Entertainment Group bankruptcy proceedings. This filing and others are accessible on the free bankruptcy court docket: https://www.veritaglobal.net/vreg/document/list/6281

aye. Thank you. Please appreciate it. Good afternoon. Good afternoon. Good afternoon, Your Honor. Justin Bernbach of Shepard Mullen, Richard, and Hampton Council of Debtors in Degers in Possession.

Thank you, Your Honor, for permitting us a one-hour delay. Sure. I assure you that we used it quite wisely, and I'm most pleased to say that he has resolved all open issues in respect to the matters that are set for today's hearing. Okay. believe that we've resolved all open issues for the matter of separate hearing. And so what I'd propose to do is just walk through a few of the items on an agenda, take care of some housekeeping items.

Okay. I do note item 10, which is the first item was the agenda is going forward is the debtor's cash management order. We filed COC just prior to the hearing, and so if there are no questions from the I think we would simply ask that it would be injured. Okay. If it's just filed, I haven't seen it. Let me pull it up. Okay, I'll tell you what.

To make it more entertaining for the crowd, why don't you walk me through the changes? Yes. Do we have a copy of then? They're on their way over. Okay. So the changes in the initial paragraph I think just pertain to and my team might will correct me that these came from off the United States trustee counsel to

Warner Brothers counsel to Sony counsel to Magnum and the committee are our friends from the Petrolski firm on behalf of the committee I should have mentioned I should acknowledge them yet, and I apologize. Oh, their present speaks for itself. Thank you, Your Honor. I think. So the first change is about notice of the final hearing being sufficient. Okay.

Mr. Brumbrough, I'm going to ask you a favor. The microphone to your left, could you pull it up closer? There we go. How's this? Yeah, and maybe the other one, too, if you bring it in. Yeah, I just want to make sure we get a good record. We're not picking you up too well. How about that?

Is that better? Is that good? Yeah. Okay. Yeah, much better. Thanks so much. I'll try to project. Yeah.

Centurian tones. Okay. This case, given its proximity to show business, I've been listening to the smartless podcast so that I could feel like I'm actually in show business. So I'm trying all these things, which are new for me. This is all in performances. Indeed. So the next change in the cash management order is that,

the debtors are required to maintain accurate books and records, and we will provide those to the committee. Do we need an order to make sure that you maintain accurate books and records? I'm sorry, I'm kidding. I'm all for the changes, so that's fine. Very good. There's another provision in the same paragraph that does require disclosure to Warner Brothers in the event that there are any intercompany transactions that are greater than $250,000, where one of the quote-unquote library debtors is a transferor. And then we're providing on a confidential basis, information to the advisors of the committee,

Council of Warner Brothers, providing journal entries of all intercompany activity, month-end post-petition intercompany balances and month-end cash bank balances and any reporting the debtors otherwise provide to the dip lenders. So committee and Warner Brothers are getting the same reporting. The next change is in new paragraph 6. It states that the debtors shall not make payments on account of intercompany transactions involving debtors and non-debtors absent further of the court. There's an additional proviso that says the debtor shall maintain accurate and timely documentation of any post-petition intercompany transactions,

which we shall adequately record in and readily in a readily ascertainable form in our books and records. Paragraph 7 provides that all ordinary course intercompany claims arising after the petition date shall be accorded administrative expense priority to the extent that they provided an actual and necessary benefit. to the respective debtors of estates. New paragraph 8, we've got additional language regarding, I believe this is protection for the ABS lenders, and what it does is it lists a whole host of debtor entities that are subject to the pre-petition ABS notes documents, and simply, I think it just makes clear that these are all still in force.

And I've been reading ahead of you. I think I understand the remaining changes, and I don't have any questions. I'll grant the motion. Great. Thank you, Your Honor. So that was cash management. The additional two items that we have on the calendar today are the debtor's dip motion, as well as the debtor's motion for entry to the bid procedures order and associated bidding procedures.

But before getting to those, as Your Honor, have seen. We did file a supplement to our bidding procedures motion wherein we announced for the first time a new stocking horse bidder. We did tender a declaration by Mr. Reed Snellenbarger, who is in the courtroom today. Where's Reed? There's Reed? And he's available in case that there any questions concerning his declaration. It's certainly something that we as debtor professionals had not seen much of, but we did have something of a mini-auction leading up to this hearing on April 7th, and what I'm going to say now is all set forth in Mr. Snellenberger's declaration. On April 7th, we received a binding bid from Alcon Media Group for a purchase of

the library assets on substantially the same terms as the original stocking horse bid from content partners. We then notified content partners of that increased bid, and on April 11th, content partners... You've finally broken loose from work. Three friends, one tea time. and then the text. Honey, there's water in the basement. Not exactly how you pictured your Saturday. That's when you call us, Cincinnati Insurance. We always answer the call, because real protection means showing up,

even when things are in the rough. Cincinnati Insurance, let us make your bad day better. Find an agent at CINFIN.com. I subsequently raised its bid in reaction to the alcon. bin. Wanting to try to get to both parties' highest and best bid and in an efficient manner, the Board of Directors, the debtors instructed the advisors to go back to each of Alcon and content partners, notifying them on a date certain that they had to provide their best and final bid by 5 p.m. Eastern.

the debtors board of directors would then compare those bids and determine which was the highest and best solely for purposes of the bidding procedures hearing and the stocking horse on the library assets. By that process, it was determined that the highest and best bid was from Alcon Media Group in the amount of $417.5 million, which represents a $50.5 million increase since the original stocking horse bid. And so stocking horse that we are seeking approval of at this hearing is that higher revised Alcon bid.

They are seeking a $2 million expense reimbursement as a component of their bid, but they are not seeking any break fee in connection therewith. So again, that was Mr. Snowmanberger's declaration at docket 198, which I would

move into evidence at this time. Okay. Does anybody object to the admission of Mr. Snellenbarger's declaration in support of the bidding procedure? Okay. I hear no response that is admitted. Is there anybody who would like to cross-examine Mr. Snellenbarger? Okay. Again, I hear no response. So without your honor, perhaps it does make sense to go to item 12 on the agenda, which is the debtor's original stocking, excuse me, the original bidding procedures motion. there has been significant and substantial revisions to that document. We did file, approximately, an hour or so before the hearing, a red line of that. I'm not sure if we have any hard copies of it, or they might still be in transit.

The red line's at docket 236. I'll bring it up on screen. The changes set forth in the bidding procedure. order and corresponding bidding procedures and the related attachments and notices in many respects are to address objections raised by Warner Brothers. They also address issues raised by the Office of the United States trustee by the committee and I think a handful of other folks who supplied comments on an informal basis. I have the red line up.

Would you like to walk through the changes made to the order that was filed a little earlier? I'm happy to. I don't have a red line, unfortunately. I think Mr. Molde Hill is going to do you know. Okay. Sir Your Honor, I'm told that yesterday's red line, which looks like docket 224, might be a better place to go through. because today's red line only reflects comments from the Office of United States

trustee. Again, that's docket 24. Okay, I'm there. I'm scrolling to the red line. Okay, so, Your Honor, are you at docket 224, redline? Yes, I am. Okay.

So we made reference to the supplement, supplemental motion. made conforming changes throughout the document to swap out C.P. Ventura with Alcon Media Group. Let's see. We removed at the request of, I think, several parties, the good faith finding, which had appeared in paragraph C as in Charlie. So in paragraph G as in golf, there begins, you start to see for the first time that we've got a paragraph, set of procedures. And in the debtor's business judgment, this was appropriate, given the scope, size, and scale of Warner Brothers' related agreements and essentially the interdependence of the two entities.

It made sense to create a separate process that would apply to the Warner Brothers. agreements and so what you see starting to emerge in the red line is this parallel track. I'm going now to, let's see. So paragraph, let's see, six of the order does grant authority or the right in the debtor's reasonable business judgment judgment. and in a manner consistent with their fiduciary duties and applicable law, in consultation with the consultation parties, to do a number of things in connection with the bid procedures, but most notably is appoint additional stocking horse bidders

for the derivative rights or the studio business. That would be subject to filing with the court an incremental notice of that action to which parties would have an opportunity to object. There's some reservations regarding distribution of sale proceeds, and this order are making clear that nothing under this order permits distribution of sale proceeds. Warner Brothers has reserved rights in many places. That also shows up in the red line. There's also reservations in favor of a few of the other parties that I mentioned at the outset. paragraph 13, for example,

preserve certain rights of Magnum. And again, these were all, all of these additions were negotiated at arm's length with representatives for the various parties. So the paragraph 14 is

this additional stocking horse concept for the derivative rights and the studio business. This sets out the parameters under which the debtors are seeking authority to do that. The dates and deadlines that originally were set out in connection with the sale process, they moved a little bit, one on account of our having moved this hearing multiple times,

for which we are grateful for the court's patience. There were a few dates keyed to that, particularly with respect to publishing the sale notice, deadline to file, and serve pure notices, that just had to track along with those modifications of the hearing date. But the actual substantive dates for the sale process, save for the last date, have all remained constant. So the bid deadline remains May 16th. The auction, if necessary, will be held on May 21st. The deadline for the debtors to file a proposed sale order, which is a new addition, is May 27th, and then there was an extension of time on the back end for the hearing date,

and that was done to permit parties to object to the extent that they had objections to the sale, and time for us to work out any of those objections and try and present on a consensual basis. And then you see the box on PDF page 15, which actually sets out the separate Warner Brothers track for their objections to any sale. It's called out separately. And then a few of these paragraphs, 1718, I believe, yeah, 1718 set out really a robust reservation of rights in favor of Warren. brothers in respect of what they may object to in connection with the sale. Some changes regarding, I'm looking now at, see, this is a new Power F-21, and this is just service on counterparties of any adequate assurance information in the event that the successful

bidder is not the stocking horse bidder, just more language on. when objections may be raised and on whom they must be served. There were some additional limitations put on credit bidding rights, and this was raised by a number of parties, and so the language that's included essentially provides that any better who seeks to present a credit bid on the library assets. They've got to, for example, include a cash component that's adequate to pay off the ABS in full. They've got to pay the stocking horse bid protections with cash. They've got to identify any business segment or portions of the assets on which the secured party is bidding.

Because as you'll recall from our discussion at the first day hearing, some of the pre-petitioned secure parties did not have liens across the entire enterprise. So that's essentially what's going on there. And there are other enumerated limitations on credit bidding rights set forth in the order. I think a number of the – I'm all the way down, Your Honor, on, let's see, paragraph 30. A lot of these are just sort of conforming in cleanup changes, non-substantive ones. Then we get into – on paragraph 32, these are one of others' assumption and assignment procedures. which in many respects mirror the procedures for non-Whorner Brothers contracts, but are unique to Warner Brothers, and that was the debtors, believe, justified just on the basis of the scope and scale of agreements that are in place.

And I think Your Honor, that. And just double check. There's nothing additional that's substantive after that. There are not. There are no additional substantive changes to the order. The changes set forth in the bidding procedures, the notices, and other items simply conform to what's set forth in the order. And then docket 236, that's the further revised order, which picks up provisions and language offered from the United States Trustees Office earlier today. So I think that is the sum of the changes to the bidding procedures order.

I'm happy to answer any questions about it. No, I have no questions. I'd like to see if there's anybody else. I'd like to be heard regarding the case. Mrs. Sandler, welcome. Thank you, Your Honor. Pleasure to be here for the record, Brad Samlett, Patilson, Stang, Zillan Jones, on behalf of the committee. Your Honor, the committee supports the bidding procedures.

When we've been involved in the case for a few weeks at this point, We've been working cooperatively with the parties. As you know, there's kind of the elephant in the room. It's our friends from Warner Brothers. Hopefully the committee will be a positive force and help to resolve the issues among the parties. But focusing on the bid procedures several weeks ago when I received a call from Mr. Rubenstein and his team that Alcon was interested in being the stalking horse bid. Of course, it was music to our ears. We worked with them extensively.

We worked, and when I say we, it's really the estates. It was the committee, as well as Mr. Bernbrock and his team, working extensively with Alcon to get them to the table. We ended up with a significant increase in value in these estates, and it's really a fantastic result. So these are, as Your Honor, I think knows from the first day. These are wonderful assets. We expect that there will be active bidding. We're looking forward to a spirited and robust bidding process here. And Your Honor, we support the bidding procedures.

Thank you. Thank you, Mr. Sandler. Mr. Merchant, good afternoon. Good afternoon, Your Honor. Michael Merchant, and Bridges Clayton a Finger on behalf of the content partners on their Delaware Council. I rise simply to introduce, Your Honor, to my co-counsel, David Hammerman from Latham and Lachins. I'd like to see the voting to him. I think his Pro-Honk was entered earlier today.

Excellent. Thank you. Okay. Mr. Hammerman. Welcome. Good to see you. Good to see you. Good afternoon, Your Honor.

for the record, David Hammerman of Lathman-Walkins, counsel to content partners. As counsel for the debtors noted, content partners was the designated stocking horse bidder when the debtors filed these cases on March 17th. For all practical purposes, my client served as a stalking horse bidder throughout the bidding process that occurred prior to today's hearing, which resulted in the current bid by Alcon Media Group for $417.5 million. While my client does not object to the debtor's request to designate Alcon as a stalking horse bidder, we did want to appear and reserve our rights on the record, including with

respect to our right to recover our bid protections, which are set forth in our Stocking Horse APA, which is located on the docket at docket number 11, I believe. While we intend to assert those claims in due course and recognize that's not a today issue, we wanted to briefly provide some background on our stalking horse bid in the events leading up to today's hearing. The marketing process for the library assets began well before these cases were filed. The debtors first approached content partners back on around January 2024 regarding their interest in the film library. Early in those discussions, it became clear that any sale of the library would require significant investment from a buyer

to diligence to the underlying contracts and negotiate an APA that accounted for the various rights and liabilities related to those assets. My client also understood at the time that the debtors were engaged in an active dispute with Warner Brothers regarding certain derivative rights, which, although not included in the library assets, introduced additional complexity and risks to the process. After a period of extensive discussions, we began an extensive diligence process that started in earnest in October 2024

and continued through the execution of our Stocking Horse APA in March 2025. That process involved reviewing thousands of contracts related to the film library to identify the relevant rights that would need to be assigned from a buyer to take ownership of the assets. This was a significant and costly undertaking

that was necessary to fairly, these assets and negotiate the APA. We understand that the debtors marketed their assets broadly all throughout 2024, but failed to attract an acceptable offer from a buyer with the financing and experience necessary to close a deal. Content partners obtained exclusivity with the debtors in December 2024 when the debtors, facing further uncertainty in financial distress, asked if content partners would commit to supporting them through a potential in-court sales process.

Well, that was not something my client had contemplated or desired. my client ultimately agreed to support the debtors by negotiating in parallel two forms of an APA, one in court, one out of court. On February 16th, content partners signed an agreement with the debtors to provide a binding commitment to acquire the library assets along this parallel path. While the parallel approach was a costly and uncertain path for my client, it was one made in support of assisting the debtors in finding a path forward to the benefit of all parties and a reliance on the bid protection set forth in our stocking horse APA. Prior to the commencement of these cases, the debtors informed my client that they elected to proceed with the in-court path. My client honored its commitments and promptly signed the stalking force APA to support the debtors Chapter 11 process.

After the first day hearing, on April 7th, my client was informed by the debtors that they had received an offer from Alcon to acquire the library assets. To our knowledge, Alcon had been involved in the debtor's pre-petition marketing process, but had never submitted a binding offer for the assets. We were informed that Alcon had signed our form stalking horse APA with limited modifications and offered a purchase price that included incremental monetary value to our client's bid after taking to account our bid protection. While my client did not expect to have an auction before the actual auction contemplated by the bid procedures, they understood that Alcon conditions its bid, sorry, on serving as the stalking horse. On Friday, April 11th, my client then negotiated and submitted a renewed Stocking Horse APA

with an increased purchase price and access of Alcon's bid. The following Monday on April 13th, we were informed that Alcon had submitted a further revised bid, which accounted for the value of our bid protections and an initial minimum overbid of $500,000. Later that same day, as Mr. Bramrock noted, the debtors asked for final bids by the close of business. We understand Alcon ultimately submitted a bid in the amount of 417.5 million, and that is where we are today. As I mentioned, my client does not object to Alcon serving as the stalking horse bidder. It's a good result for all constituents in the money. involved. That said, we felt it was important to explain the background leading up to this point

since content partners has been heavily invested in this process for more than a year. The currently proposed purchase price of $417.5 million is a reflection of the significant amount of value that content partners has contributed to the debtor's sale process, all of which has been borne out by the unusual post-petition bidding process. Until our bid was publicly filed, the debtor's marketing process had failed to result in an actionable offer. As a reputable participant in the industry, and partners bid established the floor for the library assets and provided the form of APA that facilitated the bidding process leading up to today's hearing. As reflected in the red line filed at docket number 197, our APA clearly served as the form for outcomes bid. The current

purchase price represents $52.5 million in incremental value to the debtor's estates. As noted, this price reflects multiple rounds of bidding and increments above our bid protections and exceeds our bid protections by approximately $40.5 million. We believe the record supports the value we provided to the debtors of states and all parties and interests, and therefore notwithstanding the relief being granted today, we reserve all of our rights for granting any claims my client may have, administrative, or otherwise. Thank you for your time. Thank you, very briefly, Your Honor, for the record, Brad Sallon, Petulsi, Stang, Stang,

and Jones, just before any memories get so cold, I think we just heard a draft motion for a substantial contribution by content partners. to many reserves all rights. Thank you, Judge. Scott Drake, on behalf of Warner Brothers. Didn't necessarily plan to make any remarks, but in light of debtors' comments just about the robustness of the Warner Brothers changes and then the committee's reference to us.

Just wanted to provide a little more context from the first day. By the way, again, thank you for letting us appear virtually on the first day. Glad to be here in person today. Judge, our role, Warner Brothers' role in this case is a little different because not only are we the largest general unsecured creditor, we also obviously have this contractual relationship, the robust sale everybody has described, the library assets. 91 of those 108 films in the library were created by Warner Brothers.

And with the derivative rights, those are Warner Brothers films as well. And so on the bid procedures, largely non-economic, but it is one to protect the arbitration award, but also really because you've heard in the evidence in the first day declaration, right, about the village Warner relationship over the years. When it was good, it was good for everybody. And then once it wasn't, it's obviously led to protracted litigation. And in fact, according to their first day, one of the reasons they had to file. So Warner Brothers is very focused on making sure whatever relationship there is go forward. board with a potential winning better is one that is healthy and for Warner Brothers.

And so that was the reason we appreciate the debtor's work and also the help of the committee to reach resolution on the procedures. Some of the issues were resolved. Largely, we were able to preserve all of Warner Brothers' rights for the sale hearing. So I just wanted to provide a little context in light of comments from the council. Thank you, Judge. Mr. Adonnell, good to see it. Good afternoon, Judge Ryan. Dennis O'Donnell, VLA Piper for Magnum Films, SPC.

And just very briefly, Your Honor, we support approval of the bidding procedures in their current form as well. I advise simply because we did file a limited objection to reserve our rights with respect to one issue. Magnum, too, is in sort of a unique position here. It owns, has a 50% undivided interest in the library and the various components of the library that result in it getting paid. certain amounts on a quarterly basis. Everyone acknowledges that we own that interest, that we've been carved out of the purchase assets, we've been carved out of the gift collateral,

we've been carved out of the cash collateral, which is all good. The problem is that there are a few contracts that are relevant to our continuing ownership interest that have yet to be assumed or assigned, which we hope will be, but we filed the limited objection simply to reserve our rights,

that to the extent those are not assumed and assigned, we may be back here at the time of the salary. Thank you, Your Honor. Thank you very much, Mr. Reubenstein. Mr. Rubenstein, welcome. Thank you, Your Honor. Good afternoon, but in Rubenstein of the Loeb Council for Alcon Media Group. I just rise to echo what Mr. Burnbrock has said and Mr. Sandler has said.

We told you on the first day of the case that you're probably going to be hearing from Alcon. And we did reach out fairly early to make our interests known. And through that process, we were able to work cooperatively with the debtors and with the committee, who, as you saw from the red-line version, beat us up a decent amount on various provisions of the stocking horse APA. And we've made substantial concessions, not only on the purchase price, but on other provisions, including not purchasing avoidance actions, not purchasing insider claims, things of that nature. And so I just want to commend the both parties for their efforts. And thank your honor for the accommodations you've made with the scheduling. We are signed off on the bidding procedures. And we'll be here really briefly on the dip order.

So thank you. Okay. Thank you, Mr. Rubinsey. Ms. Kaufman. Good afternoon. Good afternoon, Your Honor. Susan Kaufman for the guilds, their affiliated funds in the motion picture, industry pension, and health plans. The guilds, as your honor, may have seen, also filed a reservation of rights with respect to what the dip and the bid procedures motion. On the Zoom, my colleague, David Adut, and with the court's permission, he has been admitted Prohawk Beach A, and I would ask that he'd be permitted to simply put a reservation of rights on the record. Oh, certainly. Thank you, Your Honor.

Okay. Mr. Richard, good to see you. Welcome. Good to see, Your Honor. Thank you again for allowing me to participate by Zoom. It's very, very much appreciated. David Adieu to Bushfali, on behalf of the Entertainment Gills,

we rise merely to provide a little bit of context of our role in this case, which is really to try and avoid any unintended consequences. The motion pictures in this film library are subject to a variety of complicated different agreements of which the Gilds are parties, some with the debtor, but often with third parties. And it's our goal here, through cooperation with the debtors, to ensure that those structures remain unprejudiced by these proceedings. And so far so good.

No issues. However, Your Honor, I'm just thought it would stand up and just say that we reserve all those credits. Very good. Thank you, Mr. Adieu. And thank you, Ms. Conner. Is there anybody else would like to be heard? Okay.

Mr. Burnbrock. Thank you, Your Honor. And many thanks to the other parties as well. I think that at this point we'd simply seek entry of the bidding procedures order, as well as approval of the supplemental motion regarding the new stocking orders of bidder in the form of Alcon Media Group. Okay. Yeah, based upon the record before me, I do approve the bidding procedures and the supplemental motion to appoint Alcon. as the stalking horse. And I'll look after those in my inbox, and we'll enter the orders.

We do file them, or we have to file it? We'll submit. Back to me and your honor, for the record, Joseph Mulvedill, Young Conaway, behalf of the debtors. We did file the most recent order at docket number 236. You filed that under a notice of filing

because objections were technically due at the hearing. If it would be okay with Your Honor, we can just upload that same. order. Is that would work? Yes, please. Thank you, Your Honor. Thank you, Mr. Malmah.

And, Your Honor, that takes us then to, I think, the main event today, which is the debtor's motion for approval of its post-petition financing, and this is number 11 on the agenda. Before we get into the meet of the dip order, there was, as you'll call, Your Honor, the discussion of the first day hearing regarding. the evidentiary support of the, I think we're calling it the transaction support agreement, which is a document that we negotiated with the ABS trustee prior to the petition date and then attached a agreed form of, which wasn't yet fully agreed because the note holders themselves had not yet been contacted and the issues hadn't been discussed with them.

They are here now, and counsel is, I think, in the courtroom, and they are represented by the Waukettel firm. Will they represent an ad hoc group of greater than 50.1% of the note holders. They did provide, and I think that they've filed a 2019 statement to that effect. They did provide substantial input on the transaction support agreement. In support thereof, we did file an additional declaration from the debtor's chief restructuring officer. This is Mr. Keith May, who's in the courtroom, and is available to testify as needed. That declaration appears at docket 211, and it provides a bit more substance as to the necessity and

import of having that transaction support agreement in place. Unless Your Honor has questions, I've moved that declaration in evidence at this time. Okay. Is there any objection to the admission of Mr. Mabe's declaration in support of the DIP? Okay, I hear no response that is admitted. Is there anyone who would like to cross-examine Mr. Mave? Okay, I have no response. Thank you, Your Honor.

And attached to Mr. Mabe's declaration is the revised transaction support agreement, as well as a red line indicating the input from counsel to the ABS note holders. It was heavily negotiated at arm's length, and our understanding is that upon approval of the dip, which also approves the debtor's entry into the transaction support agreement, that the direction has been given to the ABS trustee to counter sign the transaction support agreement, which is a critical component of the case insofar as the ABS, the securitization entities, are the primary owners of the library assets that we're seeking to sell in the case. And so having this support agreement in place does benefit the debtor's significant. as all was more fully set out in Mr. Mabe's declaration. On the dip itself, minutes, minutes before the hearing did come to final resolution of all the

outstanding objections, largely from counsel to Warner Brothers, who had raised a number of objections, as Your Honor will recall from the objection that they filed. I think that, you know, I'm certainly going to want counsel of the dip lenders to speak on certain of these issues as well as counsel to Warner Brothers. But what I'd like to do, at least in broad strokes, is identify the concepts. And we're going to need some time following the hearing to ensure that there aren't multiple periods at the end of a sentence or duplications of words because we were working pretty fast in the lead-up to the hearing.

So at sort of broad levels, what was being agreed here is that the facility, the dip is being agreed by Warner Brothers. That's a new money component of $7 million, along with a roll-up component of approximately $5.7 million in change. The roll-up component will not be an obligation of what we're calling the WB arbitration debtors. These are the entities at which the parties to the arbitration with Warner Brothers, and so the roll-up will not encumber those states. It will, however, encumber other library debtors.

because there's a distinction between the full suite of library debtors and the smaller subset of Warner Brothers arbitration debtors. There's also been an agreement, and I should have mentioned just at the outset, that we did agree with the committee on a number of provisions in the debt border issues that the committee had raised concerning the propriety of encumbrances on adequate or on, avoidance actions and the proceeds thereof. There was an agreement regarding an enhancement of the professional budget for the committee and a number of other points that we went back and forth with the committee on for a period of time. The other, I think, very significant component, and I don't know if we've got the red line, Well, can we, is this the red line we can put on the screen, put on the A screen? The other component which I will, I'll just briefly describe, is the concept of a reserve established, and really two reserves, established at the library debtors, and most specifically the WB arbitration debtors,

whereby upon payment of the ABS obligations and upon payment of the new money component of the dip, after those amounts have been paid, we shall then establish a reserve in a segregated debtor account in the amount of $110 million. And that amount will sit there until there is a further determination from the amount. the court about the distribution of that money to Warner Brothers or to the debtors. However, that dispute shakes out concerning those amounts. There is language in the order that Warner Brothers has preserved the right to seek a cure claim in connection with the assignment of its contracts. That amount also serves as a form of adequate that the debtors will have sufficient funds, assuming sale closing, and if the court

determines that the debtors owe that amount in cure costs, we have that reserved for to pay to Warner Brothers. Now, there are other claims, or at least we're aware of at least one other claim at these entities, and so what is also created, and you can scroll down, I believe paragraph 34. Nope. Yes, 34. So this paragraph 34 creates a secondary

reserve. And again, what really is happening here is just an acknowledgement of the structural seniority of claims at the library debtor boxes before money is upstream out

of those boxes into other entities throughout the structure. And so what this, what this provision does is it says that the debtors and creditors committee will meet and confer regarding an appropriate amount to reserve, to address other claims aside from Warner Brothers that are at those library debtor entities. Again, before any money goes anywhere, we've got reserves established. And then if we want money to go anywhere, we have to seek for the order of the court. So the red line, that we have here is probably not, is it the red line run against the last filed version?

Okay, so this red line was to the last filed version. So this sets out the primary agreement with Warner Brothers. This order also picks up agreement with Selmy, with Magnum, with the entertainment guilds. I understand from Mr. Rubinstein that we've got to make one change to a schedule just to reflect Alcon's commensurate interest in the Wonka. You'll tell me exactly what it is, but okay. Mr. Rubin will clarify. There is an additional change we need to make to just. There's liens that are seeing priority and what the, the, the, schedule, you can scroll down to Schedule C, I believe it is.

Yeah, what this schedule does, just in graphical representation, Your Honor, is sort of show the relative priorities of both the dip liens, the specified Warner Brother liens. There's the Wonka lien in row one last column, and we need to add Alcon to that reservation as well. So this chart essentially shows what has been agreed as far as the priority of various liens at various entities and on certain the collateral listed in the columns. So that, I mean, from the debtor's perspective, we're very grateful to the diplenders, Dipplenders, to Warner Brothers and their council, committee and its council, Alcon,

and all the other parties that spent a lot of time working on what is a very complicated dip order so that we could come to, Your Honor, on a fully consensual basis today. I don't have anything further to say, but I'm sure others are going to want to explain their portions of things. Maybe Mr. Newton. Mr. Newton, great to have you here. Thank you. Great to see you, Your Honor. James Newton of Morrison and Forster on behalf of the dip lenders.

echo Mr. Burnbrock's comments that we appreciate working with UCC and with Warner Brothers over the past couple of weeks. As Mr. Burnbrock suggested, this is a bit of a thicket, and I think you've seen that from magnums and the Alcons and the other parties that have showed up. So we've spent a lot of time over the last several weeks working with each of those parties to make sure that this chart in the dip order reflects the respective rights and priorities of parties' liens in the various silos within the organization. And I'm happy that we've reached an agreement on that front. As Mr. Burbank mentioned, we did reach a couple of agreements with the UCC, or a fair number of agreements with the UCC, in particular relating to the avoidance actions and pro-success. seats of the avoidance actions, but also relating to some concessions on adequate protection,

liens, and super priority claims in favor of the pre-petition note holders who are being primed. They're, in fact, I think their liens are the exception to the general rule that the, that liens here are not being primed. So we appreciate the UCC working with us to get that done. And as Mr. Burrock mentioned, the revised. order reflects a number of additional changes that were agreed to with the Warner Brothers, with Warner Brothers Council and with Board of Brothers to address their concerns, and really to try to silo the value attributable to those arbitration entities within the arbitration entities for now, but to allow the dip lenders to make sure that they're funding this case in a way

that's going to allow them to have the dip loans repaid from the proceeds of the sale as well. Okay. Thank you, Mr. Newton. Mr. Sandler. Good afternoon, Your Honor. For the record, Brad Sandler-Petowski-Sang, Zan Jones, on behalf of the committee. Your Honor, fortunately, value and a lot of value, can help solve a lot of problems in a case. Here, there's a lot of value.

I want to thank Mr. Newton and his team. When we got involved, there were allegations. some pre-petition transfers of value, including the derivative rights access and whatnot. It was critical to the committee to preserve and protect the unencumbered assets. We believe we've done that. In this case, also, the dip is not that large here, Your Honor. So we appreciate all of the parties working cooperatively to get the committee on board. And we support the dip, Your Honor.

Thank you. Thank you, Mr. Sam. Thank you, Your Honor. Again, Scott, Dr. McGrach of Melvaney and Myers, on behalf of Warner Brothers. echo everybody's comments, spent a lot of time over the last couple weeks working with everybody, did not look like yesterday we were going to get there, so we appreciate the court.

I know you've moved the hearing multiple times, including giving us more time today, so thank you for that. I do want to, again, I think this was a creative solution that either solves or at least preserves some of the issues we raised in our objection. And, you know, yesterday if you saw the debtor's reply, again, it was filed on the eve of what looked like it or the morning before what looked like it would be a very contested hearing.

But there was a characterization that everybody else in the case stood behind the dip except for this aggrieved general unsecured creditor. And I think, again, Judge, given the position we have in this case, our concerns were justified. again, we're grateful that everybody got to a result. But as we filed our objection, if you look at the very first paragraph line one, we cited to Mr. Burmrock's comment to the court at the first day hearing about the $130 to $140 million cushion. That was on the original stocking horse bid. And then in paragraph two, we talked about these transfers of the derivative rights,

which the committee just referenced. And so we had other concerns, as Mr. Newton and Mr. Burnbrock discussed. But our primary focus, again, was preserving rights relative to these transactions, but more importantly, protecting that structural seniority that we have. There is this issue that is kind of hanging over this case with the Warner Brothers arbitration, not yet the liability being finalized, but not the amount. I won't get into it, Judge. But I would just point the first day declaration, the sealed declaration at paragraph 14, or excuse me,

docket 14, paragraph 28, Mr. Maid's declaration, it is sealed. It sort of characterizes the arbitration from village's perspective. We at Mr. Wayne Smith's declaration, who was going to be offered on our evidence, if we had a contested hearing today, we filed his sealed declaration at 1.4.4.4.4.5. seven on the docket. Paragraphs 20 to 28 are either redacted or partially redacted, but that is sort of a response to that. I say all that, again, just to provide context, that that is a major issue, one of the major issues from the Warner Brothers perspective. It's already came out from Mr. Warren at the first day. That's in the neighborhood of a little over

$100 billion. So a significant issue. So this, solution that everybody creatively worked on very hard over the last few days especially, I think at least preserves that until the arbitration is dealt with. And as Mr. Burmrock mentioned, I think the solution provides flexibility as to whether it is a cure claim or whether it is something else like just an allowed claim. And so I think the order allows all of those issues to be dealt with. And we, I think as evidence from Mr. Warren's comments on the first day, we had issues with the interim, but we're able to solve them. We had issues with these orders, and at least we're able to solve or preserve. And we'll continue to do that. We're committed to that.

We prefer reaching resolution. And if not, obviously, we'll be back, and we think we've preserved our rights. And as a result, again, thank everybody on the court and would ask you to approve this order. Thank you, Mr. Drake. Is there anybody else? Mr. Rubenstein. Hello again, Your Honor. Vinduvency, Lodin-Love, Council for Al-Conn-Groop.

Desrised for a couple of issues, Al-Qaeda sort of wears two hats in this case. Pre-petition, as I believe Mr. Burbank noted in his presentation in the first day, Al-Con purchased, Billy Farad Shows 50% interest. the Wonka film. And so there are provisions in the dip order that recognize that those rights that were purchased by Alcon do not constitute dip collateral or cash collateral. We are including a provision that recognizes liens that Alcon received in connection with

that purchase. And that's what Mr. Burbank was discussing on exhibit C. Also Alcon, is the stocking horse bidder, and we've received bid protections. In that regard, we've agreed in the pit protections that to the extent we're entitled to our bid protections and our expense reimbursement, those will only come out from the sale proceeds. However, in the unlikely event, for some reason, the sale proceeds are received and we do not have payment, we did reserve for ourselves a super priority administrative claim. That does not reflect it in the dip order. The parties agree, as I understand it, to recognize that we do have our super priority administrative claim in our by virtual or bid procedures order.

And the fact that it is not referenced in the dip order would not impact our rights to the extent we're entitled to assert that super priority administrative claim. Understood. Good afternoon, Your Honor, Erin Gavent from Barnes & Thorberg on behalf of the ABS Trustee. And just briefly, I just wanted to confirm what Mr. Burmaud said about the TSA. We do understand that we will have a direction to enter into it. Again, in terms of that TSA provide that the ABS trustee will not object to the dip and to the bid procedures. In terms of the dip order sounds great, we haven't actually seen the language. So just reserved rights actually see that language, but does seem like that.

could create a solution and echo everyone else's appreciation of the parties work so hard, and generally we are supporting. Okay. Thank you very much. Thank you. Sorry, Judge, just real quick, I forgot to mention the Wonka Lean. This is not a criticism at all. We, Mr. Rubenstein approached just right before the hearing saying he had just seen the Warner

Brothers Wonka Lean on Exhibit C to the Dip Order. Again, that is not a criticism. I'm just saying we just talked to him about it. I don't think there's going to be an issue resolving it. kind of at a high level. So Warner Brothers also has a lien related to Wonka. And I think we basically reserved our rights under the proposed dip order. And we would propose something that Alcon reserves its rights.

And the relative positions to the extent there are of the Alcon lien versus the Warner lien would just carry over from whatever they were before the pre-petition. Understood. Thank you. Okay, thank you. Okay. Is there anybody else that would like to be heard? I think Mr. Blank is trying to come on screen, so let's give him a moment.

No, he's gone away. Go ahead, Mr. Martin. Yes, I can hear your fine. Thanks, Your Honor. Stephen Blen from Malston-Burde on behalf of Sony. I want to thank the debtor is in the parties. My understanding is the language that my client negotiated should be in the final form of dip order. As long as it's still in there and hasn't been impacted, we're still good.

Thank you, Mr. Blank. Thank you, Judge. Thank you, Your Honor. and Dr. Shepherd Rollin, Victor, and Hampton, Counsel of the Debtors. With respect to the, sorry, I didn't grab my minute too, with respect to the second reserve, while the language in the order provides that the debtors and creditors committee will work in good faith to set an amount,

the debtors commit that that amount shall not be less than $11.4 million. Okay. And with that, Your Honor, we will ask that the court approve the motion, and once we can get the order agreed among all the parties, we'll tender it under certification of counsel. Okay, I think there's one issue that was raised in your reply brief that's not addressed through the comments I've heard today.

And that's were I to, and the issue is rendered mood at this point, but if I were to have sustained one, Brother's objection, would I have taken the blue pill or the red pill? Because I really wasn't too clear on that. We will find out at the sale hearing. Well, you probably don't want to try to red pill you're a judge. You hope a little bit more stability from the court. Okay.

No, I have certainly had an opportunity to review the documents that have been before me. I'll note I have not yet seen the final form of the order, but based upon the record before me and the representations of the parties. I will grant the motion subject to my final review of the form of order, which I understand the parties just need to prove-free, double-check and submit under certification of counsel. So I'll look forward to receiving that and having the opportunity to enter the order. Thank you, Your Honor. Okay.

I don't think we have anything further on the agenda. Thank you for entering the retention orders. Certainly. Much appreciated. Is there anything else? I think we're done. owner. Okay, very good. Well, safe travel, it's all. And, uh...