American court hearing recordings and interviews - Village Roadshow Entertainment Group USA Inc. - audio of March 18, 2025 hearing before the US Bankruptcy Court for the District of Delaware in case number 25-10475

Episode Date: April 11, 2025

This MP3 audio file is extracted from the PDF filed as docket number 66 in the Village Roadshow Entertainment Group bankruptcy proceedings. This filing and others are accessible on the free bankruptcy court docket: https://www.veritaglobal.net/

All rise. Good morning. Please be seen. Good morning, Mr. Mulvahill. Good morning, Your Honor. For the record, Joseph Mulva Hill, Young Conaway, Stargit, and Taylor, proposed counsel to Village, Roadshow Entertainment Group, USA, Inc., and its affiliated debtors. At the outset of today's hearing, Your Honor, we'd like to thank you for making a time to hear us for our first state pleadings. I'd like to introduce with me at Inc.

Today as my colleague, Christopher Lamb, and I'm also joined by the Shepard Mullen team. After I make a few introductory remarks, Your Honor, I'll turn it over to Mr. Bern-Brocko, introduce the rest of the team and give, Your Honor, brief presentation on the company. Great. Your Honor, just as a housekeeping matter, we were able to schedule a second-day hearing with your chambers prior today. I'd like to put that on the record. It will be April 11th at 1.30 p.m. Yes. And that would be for our second-day hearing, and also our bid procedures will be scheduled for that.

We filed our agenda today, Your Honor, at the docket number 21. There have been a few updates since then, as Your Honor might expect. Most importantly, a revised budget was filed at topic number 47 with respect to the dip. I wanted to make sure Your Honor had that. If not, I can hand up a copy at the appropriate time when we get to the dip motion. Okay. We'd also like to thank Ms. Sierra Fox for working cooperatively with us in advance of the hearing. We've been able to resolve, I believe, almost everything for the routine first days, Your Honor.

I will say we're completely resolved. there'll be a couple revisions that we're going to put on the record as we move through, I believe, with respect to cash management. And we are 95% of the way there on the dip, Your Honor, still incorporating comments from various parties, which we will get to. I believe there's one open issue with the U.S. trustee. And those will be addressed in due course as we move through the hearing. Finally, Your Honor, we have two declarations in support of our hearing today.

The first is from Keith May, he is our chief restructural. officer, that is our first day declaration, filed a docket number two. At this time, Your Honor, I would move that into evidence. Does anybody object to the admission of Mr. Maeve's declaration purely for the purposes of today's hearing? Okay, I hear no response. Mr. Mave's declaration is admitted. Is there anybody I'd like to cross-examine Mr. Mave? I hear no response. Thank you, Your Honor. The second declaration is from Mr. Kutzo-Nichl, who is our investment banker. that's in support of the DIP file that topic number 10.

At this time, Your Honor, we would also like to move that into evidence. Okay. Does anybody object to the omission of Mr. Coutso? I want to say Cutsone Colis, but it's Cutsone Nicholas. Ron, I spent a lot of time this morning practicing that as well. I appreciate that. I think I still might have gotten it wrong. I got it right for the first time.

Thank you. It's important to get it right. Is there anybody objects to the admission of Mr. Couttson Nicholas's declaration for the purposes of today's hearing. I hear no response. It is admitted. Is there anybody you'd like to cross-examine Mr. Kutz and Nicholas? I hear no response. Thank you, Your Honor. Unless you have any questions for me at this time, I'll see the podium to my co-counsel, Justin Bernbrock. Hi, no questions. Mr. Burrock, good morning. Welcome. Thank you. Good morning, Your Honor. Justin Bernbrock of Shepard, Mullen, Victor, and Hampton

proposed counsel to the debtors and debtors in possession. Your Honor, I'd like to echo Mr. Moldahill's thanks to Your Honor and Your Honor's staff for accommodating the hearing today. Also, to Ms. Sierra Fox for working with us over the weekend, late hours, and we're very appreciative for those efforts. On the walk over to the courtroom this morning, it occurred to me with three first-day hearings in this courthouse that the great obsession of every debtor lawyer at the first-day hearing is to make a splash. and given that these debtors are in the entertainment business, I thought that I might try to reenact the great scene from Willie and the Wallie Wonka in the Chocolate Factory where Gene Wilder appears frail and fragile as he's leaving the chocolate factory only to plant his cane and do a somersault.

And I thought that might work, although I'm no Gene Wilder, and the last time I did a somersault, I have a broken leg on account of it. Your Honor, I do want to make some additional introductions. My partner, Jennifer Nassiri, is with us in the courtroom, our colleague, Alyssa Patic and Matthew Benz. We've also got, as Mr. Moldehill said, Mr. Keith May, who's the chief restructuring office to the debtors, Mr. George Kutza-Nichlis, proposed investment banker to the debtors. We've also got a number of folks on the Zoom line, notably, the company's chief operating officer, Mr. Louis Santor,

and the company's general counsel and secretary, Mr. Kevin Berg. They're also members of the board on the Zoom as well. Also in the courtroom, the other great aspect of being a debtor lawyer is that when you have a new case, you make all sorts of new friends and some folks who we hope will become friends. We've got counsel to the diplenders, Mr. Newton, and his Delaware counsel in the courtroom. Back of the courtroom is Mr. Hammerman from the Latham firm.

They represent the buyer of the assets or proposed buyer. Mr. Gavant from Barnes and Thornburg. To my left is ABS Trustee Council. We've got Ms. Kaufman here who's on account or represents the various guilds. And her co-counsel, a very dear friend Mr. Adduke is on the Zoom. And then, of course, the folks from Morris Nichols, Mr. Harvey is here. and then I believe his co-counsel from the El Melvinay firm, and they represent Warner Brothers.

All that said, Your Honor, I would like to briefly go through a presentation, if I may, and just to give Your Honor a sense of the company, how we got here, what we anticipate or hope to do in the context of Chapter 11, what that timeline might look like, and then we'll talk a little bit about the proposed financing. So go ahead and show the screen, please. As Your Honor may have seen in the filings, Village Roadshow Entertainment Group is an independent motion picture and TV financier and production house

and has been operating since the late 90s in 1997, in fact, they've released and been involved with over 100 motion pictures. Some really interesting and critically acclaimed pictures. pictures indeed. And the overall box office receipts on account of the projects is a little over $19 billion. 34 number one box office openings in connection with the project's 19 Academy awards were issued in six Golden Globes. Some of the projects include the Joker, the Great Gatsby, the Ocean series, movie Sully, the Lego movie, and the Matrix trilogy. I want to put a marker here, the Matrix, or at least one of the Matrix movies in connection that the company

has been involved with is the subject of some disputes with Warner Brothers. Next slide. So when Village was created back in 1997, the idea was it would be an independent house that would partner with major studios to co-finance projects and also share in the upside. of those, and you see here the various dates when movies and other projects were released. In 2017, the company was acquired by buying alternative investments and several of its affiliated funds, and then the company continued thereafter. After that acquisition, we'll talk a little more later, but the company did explore

some ventures, most notably an independent studio venture. And that's who you see at the top, the motion picture, cinnamon, was one of the projects to emerge from that process. Next slide. So it's a complicated company. There's multinational components to the company. There's entities in Australia and the BVI in the United States, and those are really the main jurisdictions for the company's entities. There are two principal-funded death silos, what we commonly call the senior secured notes, and the ABS or SFX securities facility.

We think about the business and the company on an asset basis, you know, in really three categories. There's the film library, certain derivative rights, and the independent studio business. Next slide. So this is the broad overview. of the debtor's enterprise structure. And we'll get more granular in the next slide. We will get more granular in the next slide. Ah, perfect.

So, Your Honor, what we are attempting to do here is show the entities in the structure that make up the film library. These are the owners of the library assets. These entities are also sellers under the property. proposed stocking horse purchase agreement. They are also entities that are obligors under the ABS facility. And I do want to be very candid and clear, as you'll see, the boxes that are outlined in the red, those are entities that are involved in the Warner Brothers arbitration. So there are claims by Warner Brothers at entities that own library assets.

Beyond those claims, and I should say any related claims to that proceeding, our broad understanding is that these special purpose vehicles own the library and otherwise don't owe funded or unfunded debt, aside from the ABS, of course. So the next category of value across the enterprise are what we call it the derivative rights. and these are independent intellectual property rights to make derivative works from the underlying copyright or the underlying project in which we own an interest. These rights were moved out of other entities in the structure, particularly the library entities, as the product of a transaction within the last, I believe 18 months, if memory starts, serves. Again, I'll flag that questions about that transaction have been and likely will be raised. We believe that there are justifications for it, but I certainly don't want to hide the ball on anything. And that transition of these rights to these assets is something I suspect we're going to hear about in the case. Next slide.

So finally, is the independent studio business. And this was an event. This was a venture that the company pursued to create and produce independent works. Everything up until the creation of this studio business always depended on a partnership with a major studio, most notably Warner Brothers. But there are others, Sony, Paramount, et cetera. But these entities represent the... 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. the claims, a fair number of claims

set forth in the debtor's top 20 list of unsecured creditors arise from this business activity. Next slide. So there are a host of factors

despite the media's focus on the dispute with Warner Brothers, is a factor, but is one among many. The company has suffered financial distress on account of disruptions from the COVID pandemic, the 2023 writers and directors strike, the, I should say, growing prevalence of streaming companies in the entertainment industry generally, and other general macroeconomic headwinds. So despite what may have been reported, this is not, we are here solely because we have a dispute with Warner Brothers. The liquidity crisis,

you know, really at the end of the, in the final analysis, arises from the independent studio business is failure to really catch any altitude on the projects that it produced and made, and the loss of our largest studio partner. The relationship with the largest studio partner coupled with the inability to, or I should say inability, I should say that the projects just did not take off as it were. So ultimately, that's what set the company on a collision course with Chapter 11. The good news about the company's entrance into Chapter 11, and to be clear, I don't minimize at all the fact that there are hundreds of millions of dollars that have been invested in this enterprise, there have been trade claims and other investments, some of which may not be repaid.

We do enter Chapter 11 with a Stock and Horse purchase agreement with content partners, which I'm certainly not a show business expert, but as we understand and our firm certainly has entertainment lawyers, this is a very, very highly regarded, well-capitalized. well-financed entertainment company that owns several libraries. The headline purchase price for that library asset sale is $365 million less than deductions and calculations. So it's a significant sum of money. Next slide.

Here is our just at a very, very high level, our proposed or projected case timeline. Of course, yesterday March 17th was the petition date. We, as Mr. Moldingell said, have established April 11th for the second day hearing and entry of the bid procedures order. I will note April 11th is the day before Passover. And if Your Honor doesn't mind, I would ask on behalf of our friends in the Jewish community that anyone can appear via Zoom if there's not going to be meaningful argument. Absolutely. Thank you, Your Honor. We do have a milestone deadline to have the final dip order entered on it before April 21st.

We've got a bid deadline of May 16th, proposed auction if necessary, of May 21st, sale hearing on May 29th, and hopefully a sale closing on or about June 17th. Next slide. To accomplish that, the company does require debtor in possession financing. The headline amount on that facility is just shy of $13 million. Of that, there's a $7 million new money component, the balance of which is proposed to be a roll-up from certain bridge notes that were issued in the last several weeks. We're not seeking to roll up anything today. Indeed, the only thing that we're seeking to do today is to draw $500,000

on an interim basis and subject to entry the interim order. The company simply does not have adequate cash flow, as is shown in the budget, to fund the cases absent this facility. Your Honor, that really winds up my presentation, and I'm going to turn it over to Mr. Benz next to walk through some of the motions. I'll come back up and talk with you about the DIP facility itself. When we get to that motion in the agenda, I will say that, and thanks is due to the parties that I introduced and those that are on Zoom. I believe that we have a substantially consensual for stay hearing. And I really do want to thank the parties because I guess the final obsession of debtor lawyers is to get past the first day hearing. And so I think that we can present, Your Honor, with a consensual first day calendar.

Thank you, Your Honor. Any questions? With the films in which the debtor's own rights, do they have any merchandising rights that go along with that? I do not know that answer, Your Honor. I'm going to look to see if we... They do not. No, Your Honor, they do not. Okay.

Okay, thank you. Thank you, Your Honor. I'll see the point in to Mr. Benz. Good morning, Mr. Bess. Good morning, Your Honor. Matthew Benz of Shepard Mullen, Richter, and Hampton, proposed counsel to the debtors and debtors in possession. Your Honor, I will start with the debtor's joint administration motion,

which is filed a docket number three. There are 34 entities that have filed petitions all of whom are affiliates within the meaning of Section 101 of the Bankruptcy Code. Pursuant to the motion, the debtors seek joint administration of these cases for procedural purposes only under case number 25-10475, which is the proposed lead debtor case of Village Roadshow Entertainment Group USA, Inc. The debtors view this request for relief as routine and submit that it will facilitate the court's administration of these cases. We have shared drafts of the motion with the United States trustee prior to the petition date and have incorporated any comments received. Unless Your Honor has any questions, the debtor's request entry of the order that is attached to the motion as Exhibit A.

Okay. Is there anybody you'd like to be heard regarding joint administration? Okay. I hear no response. It's, of course, difficult first-day relief that's warranted in a multi-debtor case like this one, so I'm happy to grant the motion. Thank you, Your Honor. Next up on the agenda is the debtor's application to retain Kurtzman-Carsing Consultants LLC, GBA, Verita Global.

As the claims in noticing agent in these Chapter 11 cases, and that application is filed the stock at number four. The application is supported by the declaration of Evan Gershbein, which is attached as Exhibit B to the application. At this time, we would request that the Gershbine declaration in support of the Verita retention application be moved into evidence. Does anybody object to the admission of Mr. Gershbein's declaration? I hear no response and it is admitted. Is there anybody you'd like to cross-examine, Mr. Gershine?

Okay, hear no response. Thank you, Your Honor. The appointment of Verita, as claims a noticing agent in these Chapter 11 cases, will expedite the distribution of notices, the processing of claims, facilitate other administrative aspects of these Chapter 11 cases, and it will relieve the clerk of the court of the court of the court. the administrative burden of processing what may be an overwhelming number of claims. The debtors submit that Verita has the necessary qualifications and more than enough experience

to serve as the claims and noticing agent in these cases, and indeed Verita has served as claims and noticing agent in numerous large Chapter 11 cases. The debtors have shared drafts with the application with the United States trustee prior to the petition date and incorporated any comments received. specifically the debtors have filed at docket number 49 in engagement agreement with Verita, which attaches a rate sheet in response to one of the United States trustees' requests, and we believe that that has resolved all outstanding concerns. Unless Your Honor has any questions, the debtor's request that Your Honor enter the order

attached as Exhibit A to the application. Does anybody wish to be heard regarding Verita's engagement here? Okay, I hear no response. Based upon the record before me, I do find that the relief is warranted and will grant the motion. Thank you, Your Honor. Next, on the agenda is the debtor's PII redaction motion, which is filed at docket number five. Pursuant to the motion, the debtor seek authority or entry of interim and final orders authorizing the redaction of certain. personally identifiable information of individuals contained within the debtors consolidated list

of creditors and certain other filings within these Chapter 11 cases that may contain similarly personally identifiable or otherwise sensitive information of individuals. The debtors submit that cause exists to redact PII from the debtor's filings due to concerns of identity theft, harassment, stalking, fishing scams, and other similar concerns. The debtors proposed to provide unredacted or to file, excuse me, unredacted copies of all redacted filings under seal and to provide the courts in the United States trustee and other parties in interest upon requests with copies of those unredacted filings. We have shared copies of the motion, drafts of the motion with the United States trustee prior to the petition dates and incorporated

any comments received unless your honor has any questions, the debtors respectfully request that Your Honor enter the interim order attached as a given a motion. Does anybody wish to be heard regarding the PII motion? Okay. I hear no response. Based upon the evidence performing the Fort Mr. Mayves' declaration, I do find that the relief requested is necessary to avoid the immediate and irrefable harm to the debtor, and therefore I'll grant the motion on an interim basis.

Thank you, Your Honor. Next on the agenda is the debtor's taxes motion, which appears at docket number six. Pursuant to the taxes motion, the debtors request entry of interim and final orders authorizing the debtors to pay certain pre-petition taxes and fees due and owing to taxing authorities and these taxes arise in the ordinary course. The debtors remit the taxes and fees to various foreign, federal, and state, and indeed local government taxing authorities, and these taxes and fees relate to certain property, income, sales and use, GST, i.e. goods and services taxes that are incurred in these jurisdictions in the ordinary

course of business. The debtors believe that the relief requested is appropriate because the failure to pay such taxes and fees could subject the debtors to penalties and fees imposed by the various taxing authorities, and incurring these penalties and fees could jeopardize the debtors' operations in a material manner, and also jeopardize the debtors for structuring efforts more broadly. Pursuant to the motion, the debtors are requesting authority, but not direction, to pay $2,700 in taxes and fees on an interim basis. 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. $16,700 on a final basis. We have shared drafts of the motion with the United States trustee prior to the petition date and incorporated any comments received.

And unless your honor has any questions, you have responded. respectfully request that your honor enter the order the interim order attached to the taxes motion as a did it a does anybody wish to be heard regarding the taxes motion okay I hear no response based upon the evidence before me in the form of mr. Meigs declaration I do find that immediate irreparable harm would come to the debtor if the debtors if I did not grant this relief on an interim basis debtor simply need to pay its taxes and avoid the sorts of consequences that you described

I also note that the amounts at stake here are minimal, but the consequences of not paying those amounts could be quite outsized. So I'm certainly satisfied that the debtors have shown why it's appropriate, and I will grant the motion on an interim basis. Thank you very much, Your Honor. I will now cede the podium to my colleague. It's Patty. Okay.

Welcome, Ms. Patton. Thank you. Good morning, Your Honor. For the record, Alyssa Patic, Shepard Mullen, Richter, and Hampton, opposed counsel to Village Roadshow Entertainment Group, USA, and its affiliated debtors. Your Honor, first we'll turn to the debtors cash management motion, which is agenda number seven and filed at docket number seven. This motion has been previewed with the U.S. trustee,

and last night we received a couple comments at clarifying language the proposed interim order from Alcon and Warner Brothers. both of those comments have been incorporated and again shown to the U.S. trustee. We actually have a new red line that's fresher than the one that was sent to the court this morning. If I could bring it up to you. Yes, please. May I approach? Yes, you may.

Thank you, Mr. Chairman. Your Honor, this motion seeks authority for the debtors to continue operating their existing cash management system and the organic course. Honor pre-petition obligations relating to bank fees and to continue. to honor intercompany transactions and then ordinary course as well as seek administrative expense priority for post-petition intercompany claims the debtors cash management system like most is designed to collect transfer and disperse funds through the debtors operations and to accurately record such collections transfers and disbursements continued use of this cash management system is

critical to supporting the debtor's current operations and I can provide your honor with a quick overview of the schematic attached to the motion as exhibit D. Certainly. Your Honor, as you will see here, while the debtors technically have 21 bank counts, they only operate in control six. The bottom 14 counts are all restricted and operate of the direction of the ABS trustee and to present to various transaction agreements. Historically, the debtors only received money from those accounts on a quarterly basis for a servicing fee that's calculated every quarter and differs from quarter to quarter.

The debtors do not have direct control of those accounts, and similarly, the siloed account to the left of the page is more of a pass-through account due to a cash flow arrangement based on a transaction for the sale of distribution proceeds with Alcon. relates to one of the comments to the order. So the debtors do not operate that account. It's controlled by Alcon employees and they also do not have a right to any of the proceeds within that account. So the main accounts and the only accounts they operate are the six in the middle, the four of the U.S. operating accounts, the top one being the main operating account, where they disperse checks and issue payments and receive payments generally. Right below it is

payroll, which is swept daily, and over on the right side are the two Australian accounts. Those cover the processing fees and operation expenses for the Australian employees. We have six there, which I'll get to next. Generally, those amounts are covered by intercompany transactions from the main U.S. operating account to Australia, converted in that middle one, and then paid out of the amount. the second one. Those accounts can at times bring in cash. It's much more rare, but they are connected to various payables based on old transactions. Your Honor, the debtors submit that all of these accounts in the U.S. are authorized depositories in accordance with the U.S. guidelines.

The Australian accounts are international or not, but the debtors submit that they're in substantial compliance with 345B. They are maintained at banks that are well-capitalized and insured in accordance with Australian law. However, though, with those two accounts in Australia, the debtors are seeking an interim suspension of the requirements of Section 345B for an initial period of 45 days as that forth in the motion and will continue to work with the U.S. trustee going forward. So, with all that background.

As set forth in the motion, the debtors are seeking authority to continue to engage in routine intercompany transactions and honor intercompanied claims in the ordinary course. The debtors maintain all of their records of their transactions and record them as receivables and payables. And importantly, the debtors will not be transferring any amounts to non-debtor affiliates during these cases. Debtors are also seeking administrative expense priority. for intercompany claims post-petition. There's a bit of clarifying language regarding that in the proposed order, which I can walk through at the end,

that has also been agreed to with the US trustee. Next, the debtors are seeking to pay pre-petition bank fees, which are of course necessary in order to maintain these bank accounts. They accrue about $1,000 in bank fees per month, which is paid quarterly, just since January 1st through the petition date, there is about 2,670 outstanding on account of pre-petition bank fees that need paid and will become due on March 31st. Finally, from a substantive standpoint, the debtors are seeking to utilize their current

business forms, as changing forms would be unnecessarily undue to leave burdensome and expensive for the estate. All of the requested relief in this motion, Your Honor, is standard with the precedent in this court, and the debtor submit that any distrust of the court. The disruption to the current cash management system would substantially diminish and impair the debtors' efforts in these Chapter 11 cases. As that fourth in the motion, bankruptcy rule 6,003 is implied, and the relief requested the debtors believe is integral to the operations, and without it the debtors would suffer immediate and irreparable harm to their estate. If your honor would like, I can walk through the changes in the order.

Right, it looks like paragraph 8 of the language that you just mentioned about the ordinary course intercompany. Yep, and that was agreed to with Warner Brothers and the U.S. trustee, and then paragraph 9 just adds the clarifying language from Alcon with respect to those accounts that the debtors have but do not operate. Okay. So unless there's any other questions, I would request entry of the interim order as previewed in the red line to your honor. Okay. Let me first ask if there's anyone in the courtroom who would like to be heard regarding the cash management. Mr. Harvey, good morning. Good morning. Excuse me.

Good morning, Your Honor. And for the record, Matthew Harvey from Morris Nichols-Arstonsonnell. I rise to simply thank the debtors for resolving this comment with us and also to introduce my co-counsel, Mr. Stephen Warren from Olvenny Myers. We represent together Warner Brothers Entertainment Inc. and certain of its affiliates. And I know Mr. Warren wanted, had a few comments. He wanted to provide the court, and whether it's appropriate to do that now or in connection with a dip, I just wanted to introduce him and offer that to Your Honor now. Okay, I'm happy to hear from Mr. Warren now.

Okay, thank you, Mr. Harvey. Mr. Warren, good morning. Good morning, Your Honor. Thank you very much. Stephen Warren and Bill Nellee Myers, appearing on behalf of Warner Brothers Entertainment, and its affiliates, I'll refer to those as Warner. Also appearing remotely with me, Mark Scott, great, and Emma Jones, will not be miners.

I want to thank the court initially for allowing us to appear remotely. I'm in California and my colleagues are in Texas. We'd be there physically put out. So I appreciate the kindness that your opposite show us and allow us to appear remotely. I'd probably save most of my comments, perhaps when we get to the depth, that's probably the media section,

so perhaps we can talk again then. I do want to thank the others for adding the language here and clarifying that the intercompany transfers will only be ordinary course and will be subject to the rules in terms of value being received to these things. So thank you very much for that clarification. And we'll be back at the different stage at stage. Okay, thank you, Mr. Warren.

Is there anybody else in the courtroom who would like to be heard regarding the cash management motion. Okay, I hear nobody in the courtroom. Mr. Rubenstein, good morning. Good morning, Your Honor. The new room is being able to low-loved. Counsel to Alcon Entertainment and its affiliated companies, including

politicians. First, Your Honor, thank you again for allowing us to appear remotely at the hearing, like, such short notice. It's greatly appreciated. Certainly. I want to introduce my question. from a council of Beverly Brown from Landis-Rawkes-Off,

who's in the courtroom this morning, and she's been interacting with the debtors in my status. I will also say some comments for the DIP border. For purposes of this particular motion, I will say first that as I relate to the debtors, we do question whether the entity DRED, WONCA IT, Global, LLC, is before your honor, and should be before your honor, is the offer debtor under the bankruptcy code.

We are considering that issue, but the debtors have been gracious in their, in their negotiations regarding the cash management order, and they certainly have relieved some of our concerns, and we thank the debtors for that and for including the language and the first day order and we appreciate that. With respect to the other matters in the case, I will just leave it for now and I'll take you on the dip. Okay. Thank you, Robert. Thank you, Mr. Rubinstein. Is there anybody else would like to be heard regarding cash management? Okay, I hear no response. Based on the evidence performing the form Mr. MAPE's declaration and finding that the routine that this is relief that is

routinely requested in the first day and if I did not enter this order immediate and irreparable harm would come to the debtors and therefore I'm happy to grant the motion on an interim basis thank you your honor next up we will turn to the wages motion which is agenda number eight and filed at docket number eight this motion too has been previewed with the U.S. trustee and thankfully no comments are received so we are seeking relief from your honor to enter the interim court as filed. Your Honor, as you've likely seen in the first aid declaration and in this motion, the debtors have really tapered

their workforce significantly over the last several months as part of cost-cutting measures. And the result of that is that the employees that the debtors do have remaining are an absolutely critical workforce, and each employee is vital for the company's operations to continue through these Chapter 11 cases. The Debtors workforce consists of five U.S. employees, two executives and three administrative professionals, and six employees in Australia, all of which who are members of the Debtors' accounting team. Like almost every other Chapter 11 case, and even more so here, the Debtors' employees are essential to their operation. In this particular case. These employees have a history with the company, have been integral to its business

for many years, and like all employees, rely on this employment for themselves and their families. During these cases, it is imperative that the debtors retain these employees in order to continue uninterrupted operations through these cases and through the proposed sale of the debtor's assets. I can walk your honor through a few of the main points set forth in the motion. The debtors offer a standard suite of employee benefits. And as you'll see in the motion, the amount that the debtors are seeking to pay for outstanding pre-petition amounts is actually quite low. This is an account of a payroll that went out on Friday the 14th. So the only amount of wages that have accrued since are over the weekend.

I do want to bring your honor's attention to one thing in the chart that is in the motion. The chart conflicts with the body of the motion a little bit and does not request amounts for reimbursable expenses, which are things like business expenses, credit card payments. As you'll see in the motion, Your Honor, we are seeking $1,000 in that bucket on an interim and final basis to pay any possible outstanding pre-petition reimbursable expenses that are owed to the employees.

As Your Honor, we'll see the kind of main buckets that have outstanding amounts are the employee leave benefits, which are generally comprised of accruing PTO in accordance with company policy, both in the U.S. and Australia. And the really large amount comparatively requested through this motion is what is called the Australia employee employee termination. pay bucket. This is an account of two different concepts that are required under statutory law in Australia, which is the Australia employee termination pay and then the redundancy pay. Those are both required under Australian law, and I think it is important to note here that while we are seeking authority but not direction to pay this on an interim basis, we do not currently anticipate a cash payment will go out. This is a amount that is a crude pre-petition and it could become due at any time and that is why we are seeking Your Honor's authority

to pay it at any time when it becomes due in accordance with Australian law. I would again note that Rule 6003 is implicated and for the reasons set forth in the motion and stated here the ability to pay the employees that we do have and maintain their benefit programs. through these Chapter 11 cases is absolutely critical to prevent irreparable harm. Unless Your Honor has any questions, I would request, Your Honor enter the interim order as attached the motion. Is there anybody who'd like to be heard regarding the wage motion? Okay, I hear no response. Based upon the evidence performing the former Mr. Mab's declaration,

I do find that immediate irreparable harm would come to the debtors if I did not grant this relief. It's unthinkable that the employees should have to continue to work while there's uncertainty about whether they can even be paid timely for the work that they performed for the debtor's pre-petition and receive the benefits that they've, that they count on and they bargained for in connection with their employment. So I'm happy to grant this motion on an interim basis. Thank you very much, Your Honor, and I will now see the podium back to Justin Blumbrough. Okay, thank you. Mr. Burnbrock.

Thank you, Your Honor. Thank you, Your Honor. Again, for the record, Your Honor, of Justin Bernbrock of Shepard Mullen, Richter, and Hampton proposed counsel to the debtors and debtors in possession. Your Honor, the final item on today's agenda is item 9, docket 9, the debtor's motion for authorization to enter into and borrow under the proposed debtor and possession. financing facility. Your Honor, as is common in cases of this type, the pleadings set forth the basis for the relief requested. We also have the evidentiary support of the declarations

provided by Mr. Mabe and Mr. Clucson-Nicholas from Solic Capital. I want to highlight a couple of headline components is just to reiterate from the overview presentation that I gave. The facility size is just shy of $13 million, of which $7 million is proposed to be new money financing.

And then there is a proposed roll-up component of $5,786,105 and we are proposing to roll that up pari-fussu with the dip liens. There's a standard carve-out in the proposed dip order and other packages or, I would say,

a broader package of components afforded for the benefit of the dip lenders and certain other parties, most notably adequate protection for certain pre-petition secured parties. the ABS trustee and their counsel as well as the senior security note holders as well. I want to flag what I think is probably one of the more controversial components of the proposed financing, which is the pre-petition financing is in separate silos, and the chief reason for that is that the ABS silo, where substantially all of the library asset value sits,

has highly restrictive covenants and components in both the base indenture and amendments and supplements there too, as well as even the organizational documents restrict the incurrence of debt at those entities. The proposed debtor in possession financing would be at all entities throughout the debtor's structure. The exception or the limitation is that at the ABS entities, the DIP would go in subordinate to the ABS collateral and liens and so on. everywhere else in the structure is proposed to be supersed your first priority. But it is different than what is pre-petition.

We've done some research on this point. I think that the leading case is Henry Vanguard diversified, 31B.R. 364, which comes from the Eastern District of New York. I think a Judge Duberstein decision, if I have my facts right. there was a four-factor test established by that court, and those factors are that the court should consider whether absent the proposed financing, the debtor's business operations will not survive. Two, the debtor is unable to obtain alternative financing on acceptable terms.

Three, the proposed lender will not accede to less preferential terms. And four, the proposed financing is in the best interest of the general creditor body. We believe that we satisfy and we set out more fully in the papers how we satisfy those factors. It's plain from the evidence in Mr. Mab's declaration that the debtors do have a cash need to operate and ultimately get to a consummation of the library sale. The, you know, what I think is at least interesting to note is the proposed library sale, we just take the $365 million number, and we less the ABS obligations, which are approximately $223 million, we have a net result of $142 million. dollars. And then the dip would be immediately junior to that to that ABS obligation.

So at those ABS entities where we believe the only material potential creditor is Warner Brothers, we have excess proceeds of approximately $140 million and more $130 million if you were to assume that the dip were to be fully funded and repaid. The Warner Brothers claim we believe at present is unliquidated, and there are certain confidentiality provisions that govern what we can say about that particular arbitration proceeding, but there are significant excess proceeds, and I'm sure, and I'm certainly not representing that Warner Brothers believes that those are sufficient. sufficient to satisfy its claim or that they're insufficient or that the debtors assert otherwise.

The point is that is a significant sum of money that creates a cushion at those ABS entities, again, where no other material unsecured creditors sit. The Vanguard decision, Your Honor, just to button that up, was recognized by Judge Stickles in this court in the Inry-Blink-Holings case. as well as the Inri Mondi Holdings case. And I believe those are cited in our papers. If not, we have the case numbers we can provide. So I do want to talk about a couple of other components here with respect to Mr. Rubenstein and our friends at Alcon.

the broader arrangement or business deal and transaction between the parties is that we, on a pre-petition basis, sold to Alcon, the stream of payments

in connection with the Wonka film. Not with Mr. Wilder. This is the newer one with the Chalame fellow. The way that that operates, or at least the stream of cash operates is that the money comes into a debtor, effectively a lockbox account.

It is then automatically, and without any action by the debtors, swept and paid to Alcon. Some of the language that we have put into the proposed dip order addresses that any liens granted in connection with the dip order and the super party administer. claims, et cetera, do not and shall not encumber that which the debtors don't own. And I think it's fair to say that's a very reasonable ask by Mr. Rubinstein, and we were happy to incorporate it, and it accords with our understanding of the law. We, in a moment, I'll hand up a proposed order. we did receive a proposed paragraph from the Warner Brothers entities and claimants.

And let me first say to each of Mr. Rubenstein and Mr. Warren, I'm very, very grateful for your reasonableness, your willingness to work with us. And we hope that it spells good vibes, I guess, for the future. And because we may have to call upon those. The point, I think, of the Warner Brothers language, and it will and it shall speak for itself, and of course Mr. Warren will speak to it as well. It is to preserve the status quo as between the parties. There is permission to make the initial funding.

However, to the extent that it is subsequently determined by this court or other court of competent jurisdiction that there are infirmities or other limitations with respect to what's proposed in connection with this facility. There will be another opportunity, particularly in connection with the final order, to revisit that and certainly our sincere hope and my commitment to Mr. Warren, his colleagues, and his client is that the debtors are prepared to do whatever possible to resolve that in advance of that final order hearing. Mr. Adute, my dear, dear friend, it warms my heart to see him on the Zoom screen.

He represents several of the guilds. So this is the Screen Actors Guild of America, the Writers Guild of America, as well as the Directors Guild of America, and I'll say other, because I know that there are other related union types in connection with the company. So these creative people and members of these guilds as part of their agreements to participate in motion pictures and television in other entertainment projects have very robust and quite notable rights and claims, some of which become secured claims at various entities. and they attach to certain projects. We, you know, in the very short time between petition date and this hearing had not had, and it would be unfair to Mr. Adieu to say that we have had nearly enough time to go through and make sure in each and every instance, whether there's a valid or lien claim or

whether amounts are due and owing. My representation to Mr. Adute when we spoke yesterday was that we will work between now and the final order to determine what those claims are, if any, and treat them as the bankruptcy code requires, whether that's adequate protection payments, whether that's through additional lien, whatever, the law provides, they will get. I think, as I understand some email traffic that's been going on during the hearing, the best way that we might address this is to have a paragraph that mirrors, at least in many respects, the paragraph supplied by Warner Brothers for Mr. Adute's clients as well. Lastly, we are doing something, or at least proposing to do something, novel with respect to this motion. have a proposed transaction support agreement that was a fix to the motion. And this is, I will

claim credit if it goes badly, if it goes well, it was the, my partner's idea. The idea here is we have a facility, we have a securitization facility where while we know the holders and we know who the trustee is, were we to have had substantive engagement with those holders in a very limited pre-petition window, we would have infected them with material non-public information, restricting their ability to trade. And so after having many discussions with my new friend, Mr. Gavant, the Barnes and Thornburg firm, we ultimately concluded that it would be best to wait until the petition date, the cases had been filed, to engage with the holders under that ABS facility.

That, of course, puts Mr. Gavant and his client, U.S. Bank, in an uncomfortable position as an indenture trustee who knows something and is not able to engage with its holders, while at the same time very graciously seeking to help the debtors in what we're trying to accomplish with respect to these bankruptcy cases generally. And to his credit, the farthest that I could push Mr. Gavant was that we would agree to a form of transaction support agreement, very similar to a restructuring support agreement, whereby we have made various commitments to, the ABS trustee and the holders they're under. They have made or proposing to make commitments to the debtors. The trustee cannot, shall not, will not sign that document unless and until 50.1% of the holders

under that facility give the direction for the trustee to do so. And again, I really want to thank Mr. Gavent because there could have been many other reactions to this idea of attaching a proposed agreed as to form agreement. But it's unique here and critical, and I would say that the relief requesting could, if denied, give rise to immediate and irreparable harm because, and I'll give a specific example in a second, There are components of the indenture that purport to operate automatically without any further action by the trustee. The most notable example is the debtor active servicer under the ABS facility, and this is largely the operations conducted in Australia. So in a world where we don't have the benefits and protections of this proposed transaction support agreement,

we may have to scramble to find a replacement servicer to step in and do the collection of money in connection with that facility. There are a number of other components. I won't go into all of them. But the overarching theme of what we're trying to accomplish with that transaction support, agreement is that so long as we hold good on our end of the bargain, which is the first $223 million and then some that come from our sale of their collateral, we're going to pay to them, retire that facility in full and defeasibly. And in the meantime, we ask them to sort of ride along with us and not oppose that which we're trying to do. So that's the transaction support agreement. I will note

for, because I don't want it to be not noted, that the United States Trustee's Office I think does have some concern with that document, and our request that it be, that there's be authorized but not directed to enter into that. If and only if the ABS note holders give the direction to U.S. Bank, what we want to have the ability to do is then countersign that document immediately. It's a post-petition agreement outside the ordinary course of business. We've cited Section 363 to seek that relief. I've got a, at least whatever the current draft of the order was that when we click to print.

But before I tick through that, perhaps, Your Honor, well, first let me ask, does Your Honor have any questions about the debtor's motion and the relief requested? No, I think I understand what you're trying to do. Thank you, Your Honor. And then I would propose subject to Your Honor's concurrence. Perhaps Mr. Warren, Mr. Rubenstein, Mr. Adute, if they want to speak now and then I can go into the order itself. Yeah, let me first ask if there's anyone in the courtroom who would like to be heard regarding the dim motion. Ms. Sierra Fox.

Good morning. Good morning, Your Honor. Rosa Sierra Fox on behalf of the U.S. Justice. Your Honor, I think our objection is, simple. I think generally we don't believe the U.S. trustee does not believe that entry into the transaction support agreement is necessary under Rule 6,003 to avoid immediate and irreparable harm, and I can explain why we believe that. But Your Honor, in the alternative, I think another potentially satisfactory way to resolve this, if Your Honor is inclined to allow the debtors

that authority on a first-day basis is to supplement the record as to the necessity for this relief. I think Mr. Bainbrick's introduction and argument, was certainly helpful. But I do think that as far as evidence on the record on this point, the best guy I think that's been addressed here is the Chief Restructuring Officers' declaration at about paragraph 21. Perhaps there's more of a proffer that the debtors can offer. So this court and the public can be rest assured that there is,

you know, there is a potential here for immediate and irreparable harm if the transaction support agreement. The debtors are not authorized to enter into that once the trustee has the authority from the requisite note holders. But, Your Honor, looking at the substance of the transaction agreement, I think, and I discussed this with debtors' counsel, I see it as an agreement that agrees to preserve the status quo in a certain sense. The parties continue to act how they were acting under the respective agreements. However, I do see potential implications for Rule 6003. The debtors are incurring

an opposed petition indemnification obligation at Section 64 of the Transaction Support Agreement. The issue about the servicer also implicates a potential assumption or of an executory contract. And like I said, Your Honor, as I referenced, Rule 6003 does not allow the debtor to incur those types of obligations within the first 21 days of the case

unless it's necessary to avoid an immediate and irreparable harm. And, Your Honor, if the parties have agreed in here, meaning the ABS trustee and the debtors have agreed to abide by a certain set of contact conduct up through the interim hearing. I think the parties are certainly going to be well served by proceeding in that way, and they can certainly continue to act in that way up until the final hearing when hopefully this agreement and notice of this motion and this agreement has gone out on notice

as required by the rules. Simply put, Your Honor, I don't know. I guess what I don't know and parties don't know what they don't know so I'm not sure if this implicates the rights of other parties that have yet to appear and even if those parties

have appeared whether they've had enough time to fully understand the implications of entering the debtor having authority to enter into this transaction support agreement so for those reasons your honor we don't believe the U.S. Justice does not believe that

the debtor should be authorized to do that at least on an interim basis. And that's addressed, the relevant part of the order that addresses this, Your Honor, is paragraph 24. So to the extent there are, Your Honor, is inclined to agree with the U.S. trustee in any way. I believe that's where we'd need to make changes to the order. And, Your Honor, like I previewed at the outset, alternatively, perhaps if Your Honor is inclined to allow the debtors to enter into this agreement on an interim basis, perhaps the parties and the debtors can do, offer some further, more robust evidentiary support as to why, what harm would result if they don't have the support.

Okay. Thank you. Thank you for someone here. Yes, Mr. Gravon. Welcome. Thank you, Your Honor. Aaron DeVant from Farns and Thornburg on behalf of the ABS trustee, and I'm here with my colleague, Amy Trion, also from the Delaware office. I was going to take the opportunity to introduce who my client is.

Mr. Vermeruct, it's a phenomenal job, but obviously we are a primary stakeholder in this case, certainly in one of the silos that we've been discussing. We are just the trustee. I don't put trust. I know we have an important role, but as has been explained, we are the legal titleholder of the interests here, and we want to make sure we're acting for the beneficial interest holders who we have not yet had the opportunity to speak to. We do think this proposed sale, which is not up before your honor today, of the library assets is sort of the key component of the case. And so we have tried to work cooperatively with the debtors to repeat what was set in the papers and what's set from the podium today.

The debtors have been forthright with us. We believe we've been engaged in good faith negotiations. We understand what they're trying to do with the debt. We understand what they're trying to do with the sale. And it's really just due to timing that we have not yet been able to sign. the transaction support agreement that is before your honor today. We worked on a structure

that we think could get there. Would we, in other circumstances, potentially have been able to sign that pre-petition? Yes. May we be, will we potentially be in a situation to sign that shortly? Also potentially, yes. Also potentially, no, we don't know yet.

Subject of all, we filed a reservation of rights on these points. We don't know what our holders will say. But all of that is the same. that we think there's real value for the debtors obviously in the case to make but in keeping this case moving and we're trying to be a helpful partner in that and so again we have to speak to our holders but we do think there is value and giving the debtors the authority to enter that agreement today even if not the direction

but also wanted to answer any questions your honors might have on that structure I think it creates an interesting issue right if if If you're not yet authorized to enter into the agreement, the debtor is asking me to approve something without it actually being, for one of a better term, right to be adjudicated. You may get there. You may not. You may get there on different terms. So if there is no actual agreement among the parties to enter into this transaction, then should I be approving it at all right now? So I understand what your honor is saying

I might take some issue with saying that we're not willing to enter into the agreement. There are two parties. Not that you're not willing. It's just that you're not there yet. I think the point that you made and I read your written submission as well is that you need to talk to the holders. So you're

you're kind of in an in-between position right now. You know what you're recommending to them, I suppose, but you don't know yet if you have the consent of the client to do it. And that's right. To speak really just in practical terms rather than legal terms, this is probably the most efficient way to do it. If holders do support this agreement, we will be in a position to move quickly, and I know

there's time pressures here. And so, again, we're trying to be good partners. And so, yes, to your point, Your Honor, if we get approval on this form, which the trustee is willing to sign, this is the best way to move quickly. But it confirmed that we do not yet know how holders will react. Under sleep. Okay. Thank you, Mr. Bill. Thank you. I appreciate it. Is there anybody else in the courtroom I'd like to be heard? Okay. Let me start. Mr. Warren, please.

Thank you very much, Your Honor. Again, Stephen Warren and we'll help lead buyers on behalf of the Warner. I always like to start with good news. The good news is I can confirm what Mr. Burmaert said that he made tremendous progress in terms of the language that we preserve Warner's rights with respect to him to the eye protection. the leads the whole suite of rights that's motion. I think we made it down to a word or two. We understand there'll be some discussion after the hearing just to resolve those last little cleanup items. But the gist of it is that all of the warner's objections

that it would otherwise be presenting today can be heard at the final. They're all preserving the respect to the liens, the adequate protection. We do consent to the $500,000 coming out and the point battling over that sum of money given the numbers here otherwise in terms of claims but there are protections for our rights under contracts and that's granted in rights with contracts but that's our subject as contract rights

and the rights with respect to IP are subject to don't alter we would say don't supersede any of our IP rights. And so we've bridged ourselves, I think, to another day. And in some circumstances, I might now just sit down or, I guess, turn my mic off. But with the court's indulgent, I'd like to spend a little bit on addressing who Mr. Birn-Frock with his initial presentation. In part, table setting, but I always think it's a lot, but parties reserve rights and then don't explain at all what it is that they're preserving and why it's well. And I'd like to, of course,

you'd spend a couple. Your Honor, the party's relationship covered a sudden extent on the main declaration, but it really goes back to 1998, and it covers a huge suite, I think, it's over 90 theatrical films

that you would recognize, The Matrix, Oceans, 11, Sherlock Holmes. Warner is the creative spark in all of these franchises. It has the exclusive writing to create the content, decide whether a film will be produced and what the film will be and what it's contulogy. That's exclusively worth. What Village has happened in the

party's agreement is a financial interest. It can finance, co-finance those pictures, and if it does, it gets a participation, it shares the revenue stream. And so when we hear about the library assets, we're talking about those films that have already been produced, and he's, and he's, you money coming in and it's getting split. That's at the library. But there's also a right in certain circumstances the derivative assets for new motion features. Order and with respect to these existing franchises

decides to create a new film in that event and village can go find it. As a beginning of our relationship, our village was a family, most frailty company. It's since, you know, owned by a, high-power, private equity for a new bird, a decision was made to fundamentally alter their business model. They met from financing motion pictures or created by others to creating their own

content, and they can't really admit that that effort resulted in failure. Unfortunately, from our perspective, when that failed, Village failed to live up to its contractual obligations with respect to co-financing. The dispute between the party broke about the matrix, franchise, matrix, resurrection. That was a co-financing arrangement, but we had understood that Village had committed the co-finance,

based on that reliance on that commitment. Of course, that $200 million to produce the film, $100 million to market it, and then Village to step forward and provide co-financing. That's led a near as long arbitration that's gone on for quite a bit. I know there were some redacted sections and just a confidential arbitration. And some items can only be shared with the work through redactions and camera, clearing the corridor.

However, however, however one might do that. But there's something I can share with you. The first thing is we very much contest, I think, and we won't be surprised here, some of the characterizations in the redacted section regarding what happened in the arbitration. And I can share some other facts with you because they're not confidential. They do their bedist clause or we have the right to do so. My ability has already been determined. The arbitrators have already decided that village breach its obligations.

That's done. All this left is to determine the damages. And again, with respect to the public record, I can tell you, Warner took the position at the inception of the dispute, that it was owed approximately $100 million, a million more, and that number had gone down. So that, I think, sets kind of the goalposts of the dispute. I really did appreciate the presentation and the candor to the court, to the court that there's some real concerns about transactions with the price here.

After Warner Brothers succeeded in establishing liability character, the derivative assets were moved out of the entities that were obloidors, auto-bligators, Warner Brothers, and the newly created special purpose entities for a dollar, for a dollar apiece. These are rights that Billings should take them in the position of her work. were quite a lot of money. And for a dollar, they transferred them out, and then we subsequently found out that those new entities guaranteed and pledged those derivatives rights,

which could not have been pledged under agreements with order, up to the parent's death. And we figured that the transaction were a fraudulent transfer, we can't think the position that pledges were, fraudulent intentional or constructively fund transfers and super Brockage flag that accordingly with respect to the assets your honor I could just spend a moment the schematic that was provided looks really very helpful to us I'm sure it was to the court too the last page of a declaration

that schematic showing kind of broad outline the debtors also I think it's very aggressive in that declaration If you look at the library act, that's what's being sold here over $300 billion. If you look over a right lower section of the schematic, you see those entities, there are four entities that have red boxes around them. Those are the ones that Warner has sued or is pursuing the arbitration. They own the library rights, the income screen that comes in from the films. And you'll see there's, you know, there's no, the side level, I think, is what I called it,

of the notes, senior notes. They're not there, no rain, they don't have claims, they don't have . But it's important because under the dip motion, it's not just the debtor of the best of financing that would invade those. invade those assets they're not subject to crimes that be a roll-up of their preposition debt for which those entities are obligated and there would be equity protection or what is in our view and equity interest right because ultimately what those no holders have is a claim on the equity of the equity of the equity

and we don't think you can scrap equity into a super priority claim by adequate protection and going ahead of the progress And the derivative rates we already talked about, that you see that in the schematic those green entities out of the lot of dollars. Those were the beneficiaries of the local transfer. Whereas rights under its agreements, again we think they prevented those transactions, we think it was like the law, prevented those transactions. And there are a handful of things, you know, I'm kind of winding up here, Your Honor, that concern us a lot about

It's the validation of the liens and transfers that took place with those shell entities of the rip of their rents. It's a challenge period, but we're going to be the only parties who were really hurt by this. We would say we were the target. There may be no other predator that was potentially injured as we were because values escaped from entities that are obligated to us, but they're also, they are also, they are also rights related to our content. So we may be the ones who are really most concerned about that.

Also, the grant of the rights with respect the library assets. Again, we're talking about the grants being given by the rollout and protection of entities that are claimants presently at that level. It also grants the note holders, proceeds or agency. should say the dip lenders, but sort of those holders,

proceeds of avoidance action, but as he said, our concern is, they may be the target of those. That doesn't seem to be able. There are many other concerns. Those are the most pressing I wanted to raise with the court, and hopefully we'll be able to make progress. I don't know whether we'll be able to get all the way there.

These are serious concerns, and they go to a number of different parts of this proposal. But we're open to having those conversations. We're cheered by the fact that we got through today. This may be the first consensual thing amongst the parties that happened with respect to the perpetration in these disputes for some time.

And we're open to having some conversation. Last little flip that up, Your Honor, and I know this is more of a second day issue, but we do want to make sure with respect to the sale process there's sufficient time to analyze this and think about it. We don't think this is a developing ice queue. The debtor is a holding company and as 11 employees, we're going to want to think about the timing to make sure that we understand all the transactions. Where the money is going?

Is it going to be protected and preserved for the creditors who have claims directly at the level where the assets are owned? With that, Your Honor, I'll hold myself open the questions. Thank you very much for your patience. Thank you very much for the comments, Mr. Warren. and I appreciate that helpful background. Let me hear from Mr. Rubenstein, please. Good morning, Jeter Runner. The Brutoneman, Logan, low,

counsel to out how another team in and its convenience. First, I wanted to echo Mr. Warren as indicated regarding the debtor's cooperation on the NICWR, they haven't been quite cooperative, and we thank the debtors in that regard. But in terms of, in terms of, I only rise for the one issue of setting the stage and issues that Alconn you may be bringing to your ownership pension down the road one of which does

relate to the sale process that Mr. Ward has just discussed with you in that Alcon has always viewed itself as one of the likely parties that would be interested in a purchase of the debtors assets and while the senators may have a different view of things it's certainly Alcon's belief that it was not afforded the opportunity to make a bit in this process despite its efforts leading up to this file and so you will be hearing about this I suspect down the road but I just wanted to be aware of the fact that it shouldn't be a surprise that Alcon is an interested party here and an outcome of effects to be earned with respect to the procedure's motion from the

government. Thank you, Mr. Robenstein. Mr. Adieu, good morning. Welcome. Good morning, Your Honor. It's nice to see you again. Good to see you, I'll be on behalf of the entertaining children. Your Honor, I rise very briefly, primarily to give thanks first to the Court for allowing

us to appear by you today as well as on April 11th. I am in Los Angeles, and it is very much appreciated. My colleague Susan Kaufman is in the courtroom today as well. Yes, yes. Mr. Bernrock accurately presented the situation with the guilt. We want to sort of endorse his commentary with respect to the fact that our interests in cash collateral as they release with a div have not really been fully vetted. We proposed in language just this morning to be an email during this hearing, which we presume will be accepted.

but we still need to sort of finalize that. I'm assuming that it is accepted or something similarly is accepted, gills are caught hold in forward. I guess the only other point I have is that I'm also pleased to be able to reaffirm my friendship with Mr. Verbrock on the record. Since he opened that door, I thought I might as well validate his comment. I'm in that, Your Honor. Again, thank you for taking time.

Thank you, Mr. I do. Is there anybody else would like to be heard? concerning the dip. Mr. Sammis. Good, Your Honor. Chris Sammis here, Mr. Campaar Anderson today on behalf of the note holders, along with my co-counsel. Mr. Newton from Lofo.

Mr. Newton would like to make a couple of comments surrounding the difference. Certainly. Thank you, Your Honor. Mr. Newton, great to have you here. I have the pleasure of admitting you to practice pro-hugged each year this morning. Yeah, thank you very much, and thanks for the time. I rise similarly, you know, with the, just a short set of comments, having heard Mr. Warren comment on his concerns about the dip.

And to briefly state, you know, the dip lenders, also pre-petition lenders to the enterprise, have been working with the company to provide some bridge financing over the course of the first quarter to allow the debtors to enter this process with a sale in place, which was signed. up in February and to allow for a smooth transition into the bankruptcy case and to allow for a sale down the road. They, in connection with providing that pre-petition funding, they did not obtain liens on the ABS collateral in part because that would have been a default under the ABS facilities. But, you know, we'll work with Warner Brothers during the course of the next few weeks here

to address their concerns. As they mentioned, they included some reservation of rights language in the order, and we'll continue to work with them ahead of the final hearing, and as Mr. Warren said, hopefully we can resolve a number of those issues. But I just wanted to comment on that aspect of the presentation, and, you know, given that Mr. Warner was commenting on the lack of liens there. There's a reason for it.

It's not a massive amount. There's a lot more pre-petition debt, and the diploenders are not looking to roll up a lot of the pre-petition debt. But we wanted to make this process as smooth and hopefully as efficient and economical as possible, and hence the reason for the roll-up. I will defer on some of the other issues that Mr. Warren mentioned. You know, the transfer of derivative rights is certainly before my time, and I'm sure we'll have time to discuss that in due course and address it. But I'm just wanted to stand it for that purpose.

Thank you, Mr. Noon. Thank you. Okay, Mr. Burnbrock, before you make your comments, I'm going to ask you to think about one thing. I do have an 1130 hearing, and I have people waiting for it. Before you begin your comments, would it be productive at all for you to have, well, I guess, discussion some of your colleagues, or perhaps with Ms. Sierra thoughts about how you'd like to proceed to address the objective? that Ms. Sierra Fox raised. Where do you see yourself with all that

at the moment? Thank you, Your Honor. Justin Bern, Brockett of Shepard Mullen, Richard New Hampshire, Post-Council of the debtors. For a minute that I was worried, you were going to ask me to tap dance, which is I'm unable to do with Ms. Sierra Fox. Certainly happy to meet and confer

and discuss potential work around. Your Honor raised a couple of questions in connection with the transaction support agreement, but I do want to try to address. In the event that this document changes, my understanding, at least how we built this, the authority then falls away. We're only seeking the authority for this proposed document. And so while we did think about if there were, you know, scrivener's errors or minor modifications,

but where we sort of landed was if it changes at all, we have to come back to the court. With respect to the exculpation set forth that Ms. Sarah Fox raised, we bear the same obligations under the indenture. Those are secured, you know, capital A, BS, capital O obligations, and so this isn't doing anything new that isn't already in existence. And by that, do you mean the indentification of paragraph 6.94? Yes, indemnification and exclamation. And, Your Honor, it's not with respect to the servicing, it's not an assumption or proposed assumption because this is a funded debt facility that we cannot, under the bankruptcy code, assume or seek to assume. These are our obligations under the transaction documents.

At the risk of putting Mr.R. Fox on the spot, what the debtors could be comfortable with might be adding some incremental language into the order that gives parties the right to, that grants the authority, but preserves the rights of parties to object. connection with the final hearing. And really what I'm trying to do here so that it's very, very clear, because we are speaking to note holders quite soon, is if we get the authority and we execute the document and trustee countersigns, then I know at least that we have done as much as we can to ensure that our ongoing operations, our proposed sale process, et cetera, can remain on track.

there could still be, because the indenture only requires a simple majority of 50.1% of the holders to give the direction, a holder who says, I'm going to pursue my own rights, and the language I'm proposing would preserve the right of that non-consenting holder, non-directing holder to come in and raise whatever issues they might have. Is that acceptable? I mean, if we want to go talk about it, I don't want to. Yeah, let's hear our thoughts. Your Honor, and I'm also going to be monitoring the 1130 hearing. I appreciate the proposal.

I don't have authority for that at this time. I'd have to take a break and call my client. Your Honor, I think not to seem like I don't want to resolve the U.S. trustee doesn't want to resolve the issue. I think we view this to be sufficiently out of the ordinary work. I mean, it would be our preference for presidential purposes and just for the reasons I reiterated on the record that, Your Honor, rule on this. And we get – it might end up my client be directed in that way. So if Your Honor does want us, but believes that Mr. Debtors Council's proposal is what the preferred route, then my client will have to live with that.

But at this point, I think I just don't have authority to go that way up. I understand. Okay. Mr. Brimbach. Your Honor, in light of Your Honor, in light of Your Honor's hearing at 1130, I am happy to briefly conclude or if you're on a, if you need to step away, looking to take direction from you. I wanted to make a couple of overarching comments in response to some of what we heard. But let me pause.

On the record before me as it stands, okay, I'm not certain that I have a certain that I have a evidence to support a finding that entry into the transaction support agreement is necessary to avoid immediate irreparable harm. So to Ms. Sierra Fox's comment that it may require more of an evidentiary record, I think I agree with that. So it may make sense to come back. at about, my day is rough. I would anticipate my next hearing is approximately an hour.

Maybe we came back at 1 o'clock and I could, I time until 2. I think that would be enough to probably handle the issues. But it might give you an opportunity to think further about what sort of record you need to build and what testimony might require. But it is an unusual transaction. And there is nothing wrong with unusual transactions. Frankly, it's one of the things that makes, like, being a judge in Delaware, a lot of fun, is that we get unusual transactions, and it's great to see them develop.

So I have no problem conceptually with the idea that this is new. But I do think that there is an evidentiary record that has to be built to support the request really before I can rule on it. Does that make sense? Absolutely. And to Ms. Vera Fox's point, it's the right one. She is correct. And, of course, as is Your Honor.

Perhaps we could work with Ms. Sierra Fox. I know this isn't her evidence, but that which would satisfy her concern as to the threshold, understanding that doesn't satisfy Your Honor, but we could prepare a proper submission that we may tender to the court perhaps by filing that. And because there are a number of other, I think, components in the order that we want to work through with a number of parties. So what I'm suggesting that is we'll work with Ms. Sierra Fox as to that form of proper.

We'll tender it to that we'll file it with the court. and then after we resolved the language with the parties, perhaps submit two versions of the order, one which authorizes that if Your Honor were to find that that additional proper was sufficient for the record, and then one order that does not have that authorization in the order. I'm trying to preserve your calendar and trying to, I know some folks have flights out as well, but there's an idea. I understand.

Now, Ms. Sierra Fox is going to be with me for the next hour or more. But conceptually it's fine. Look, I'm certainly satisfied that upon the record that the debtor is presented in the form of the two declarations, that there is a need for the financing. We are not going to be here on April 11th if we don't get financing in place. So I think that the issue is about the transaction support agreement and whether that's appropriate, appropriately supported by the evidence so as to be approved on an interim basis.

And I view that as the sole issue, and I'll make clear, in every other respect, I do find that the debtor is sustained its burden of showing why it's an appropriate exercise of their business judgment to enter into the lending facility. putting a parentheses around the restructuring support or transaction support agreement for the moment. I should have thought of this initially and I apologize, Your Honor. Perhaps we just make this a final order issue on a normal notice. We'll supplement the record appropriately. If trustee gets direction, then I've got a signature page from U.S. Bank that says they're not going to do anything.

and Mr. Devant has been eminently reasonable in all respects. I would be shocked to see that he would take action without at least first calling me. And so I feel reasonably comfortable. We'll just make this a final hearing issue, normal notice, and we can then supplement the record. I think that makes a lot of sense. You know, with first state hearings, one of the things that I think a judge always has to think about is who is not in the room simply because they don't know yet. They're pretty close to being ex parte hearings, right?

And so I certainly appreciate that considered approach to dealing with this, and it would make a great deal of sense to me. Well, then, Your Honor, what I propose is we will make that modification to the order. We've got a number of comments to work through with the parties. And I would propose that we would then tender the revised order under a certification of counsel. And I will, with respect to Mr. Warren, I'll only say, I'll reiterate something that I said to him over email at very early hours. As a younger lawyer than Mr. Warren, I look forward to actually learning quite a bit because I think that this is going to be an interesting experience.

There's no question that there are disputes among these parties. I think that that is quite clear. And I should have mentioned my law for our partners are not counsel to the debtors with respect to that ongoing arbitration. This is Kirkland and Ellis that is representing them in that proceeding. I should have mentioned my former partners

and friends that may be frustrated, but they have been on the line as well. But I say all of that to say, thus far in very limited interaction with Mr. Warren, I have a lot of hope that we're going to collectively be able to come to a good resolution for the benefit of all parties. Mr. Rubenstein, the marketing period is open. We look forward to your bid and any bid of any party,

including Mr. Warren, and the Warner Brothers Studio. Was it certainly happy to entertain any and all competing bids to the proposed transaction? That does conclude the presentation. As I said, we would... Let me just ask one thing. I didn't ask Ms. Sierra Fox if that proposed resolution addresses her comments. Yes, Your Honor.

Okay. It was a Sierra Fox. I may have to the U.S. trustee. That addresses our comments. Okay. Okay. Just want to make sure. Yeah.

Okay. Well, look, thank you for... I'm sorry, Mr. Molda Hill. Sorry, before you make your final time, it's just one housekeeping matter on the orders. All of the orders have been uploaded, except obviously for the dip and the cash management order. I just wanted to ask, Your Honor, would you like the cash management order with those changes under certification of counsel in the docket? Yes, please. Okay, so we will upload that, and then once we have signed-off from all the parties, we will upload the dip after the hearing.

Okay, and to be clear that April 11th is the, will be the final hearing on the motions for which interim relief is off today. That's correct, Your Honor. Okay, okay, very good. Okay, I appreciate the presentations very much. This was really well done, and look forward to seeing you back in the 11th. If anything comes up in the course of getting all the final comments on the dip order and you need anything, certainly tomorrow I can hear you, and certainly any party that would want to appear by Zoom would be just fine. but otherwise I'll look after your certification of counsel on the final tip order.

I'm sorry, the interim tip order. Thank you, Your Honor. Okay. If I may end up one final piece. I raise this only to the extent that we have to come back to Your Honor on an emergency basis. And I want to make very clear that there is a separate and distinct, although we share a common ancestry, a separate and distinct enterprise that operates under the development. Roadshow name in Australia, and they operate theaters, they operate theme parks.

While the two at one time were related and connected, there's a very small de minimis equity holding the top co by some of those legacy entities. This is a different, this case is not that case. We have not filed bankruptcy for those companies and operations that is a separate and distinct enterprise. However, somewhat unfortunately, we were served

a notice dated today that on its face, Your Honor, is a violation of the automatic study. I tell you that that's our read, our interpretation of the action that's been taken. We are going to

apprise that entity or those entities of the obligations under the automatic stay. I'm very, very hopeful that we will be able to make clear what the automatic stay requires. If those conversations are unsuccessful, we may bring a motion to enforce the automatic stay before your honor on an expedited basis. Understood. We just want to flag that. Okay.

Otherwise, Your Honor, thank you. Thank you very much. We are adjourned.