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

Good morning,

mister Mulvihill.

Good morning, your honor. For the record, Joseph Mulvihill, Young Conway, Stargate and Taylor proposed counsel to Village Roadshow Entertainment Group USA Inc. And its affiliated debtors. At the outset of today's hearing, we'd like to thank you for making time to hear us for our first state pleadings. I'd like to introduce with me at Incorp today is my colleague, Christopher Lam.

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. Verne Brock who will introduce the rest of the team, and give Your Honor a brief presentation on the company. 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 11 at 01:30PM.

Yes.

And that will be for our second day hearing and also our bid procedures will be scheduled for that. We filed our agenda today, your honor, at docket number 21. There have been a few updates since then as your honor might expect. Most importantly, a revised budget was filed at docket number 47 with respect to 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. 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 stage, 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. Trust State.

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 Mabbe, he is our Chief Restructuring Officer. That is our first day declaration filed at docket number two. At this time, your honor, I would move that into evidence.

Does anybody object to the admission of Mr. Mabbe's declaration, purely for the purposes of today's hearing? Okay. I hear no response. Mr.

Mabves declaration is admitted. Is there anybody you'd like to cross examine Mr. Mabves? I hear no response.

Thank you, your Honor. The second declaration is from Mr. Cuzzo Nicholas, who is our investment banker. That's in support of the debt filed at Topic Number 10. At this time, your Honor, we would also like to move that into evidence.

Okay. Does anybody object to the admission of Mr. I want to say Koutsanecolas, but it's

Koutsanecolas. 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'm going to look 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 mister Coutts and Nicholas's declaration, for the purposes of today's hearing? I hear no response. It is admitted. Is there anybody who would like to cross examine mister Coutts and Nicholas?

I hear no response.

Thank you, your honor. Unless you have any questions for me at this time, I'll cede the podium to my co counsel, Justin Burmbrock.

Hi.

No questions. Mr. Burmbrock, good morning. Welcome.

Good morning, Your Honor. Justin Bernbach of Shepherd, Mullen, Victor and Hampton proposed counsel to the debtors and debtors in possession. Your Honor, I'd like to echo Mr. Mulvihill'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 Willy Wonka and 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 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 Nasseri is with us in the courtroom, our colleague, Alyssa Patek and Matthew Benz. We've also got as Mr. Mulvihill said, Mr. Keith May, who is the Chief Restructuring Officer of the Debtors. Mr.

George Kudson Nicholas, 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 debt lenders, 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 Counsel. We've got Ms. Hoffman here who's account represents the various guilds and her co counsel a very dear friend Mr.

Adut 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 old Melvaney 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 share the screen please. Next

Next slide.

As runners 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, '19 '90 '7 in fact. They've released and been involved with over 100 motion pictures. Some really interesting and critically acclaimed pictures indeed and the overall box office receipts on account of the projects is a little over $19,000,000,000.34 number one box office openings, in connection with the projects 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 or 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 states 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 and 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 the, 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 BBI in The United States. And those are the really the main jurisdictions for the company's entities. There are two principal funded debt silos, what we commonly call the senior secured notes and the ABS or asset backed securities facility. We think about the business and the company on an asset basis 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 debtors enterprise structure, the and we'll get more granular in the next slide. We will get more granular in the next slide. Perfect. So, Your Honor, what we are attempting to do here is show the entities in the structure that make up the film library or these are the owners of the library assets.

These entities are also sellers under the 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 or what we call 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 a product of a transaction within the last I believe eighteen months if memory 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 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, etcetera. But these entities represent the independent studio venture, the claims, fair number of claims set forth in the debtors 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, which is a factor, but is one among many. The company has suffered financial distress on account of disruptions from the COVID pandemic, the twenty twenty three 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 really at the end of the in the final analysis arises from the independent studio businesses 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 shouldn't 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 that there have been trade planes and other investments, some of which may not be repaid. We do enter Chapter 11 with a Stockton Force purchase agreement with content partners, which I'm not 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 $365,000,000 less some 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 17 was the petition date.

We as Mr. Moldenhall said have established April 11 for the second day hearing and entry of the bid procedures order. I will note April 11 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, Jonas. We do have a milestone deadline to have the final dip order entered on or before April 21. We've got a bid deadline of May 16, proposed auction if necessary of May 21, sale hearing on May 29 and hopefully a sale closing on or about June 17. Next slide. To accomplish that, the company does require a debtor in possession financing.

The headline amount on that facility is just shy of $13,000,000 Of that there's a $7,000,000 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. We 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 gonna 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 first aid 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 podium to Mr. Bens.

Good morning, Mr. Benz.

Good morning, Your Honor.

Matthew Benz of Shepherd, Mullen, Richter and Hampton, proposed counsel to the debtors and debtors in possession. Your Honor, I will start with the debtors joint administration motion, which is filed at 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 debtor seek joint administration of these cases for procedural purposes only under case number 20Five-ten475, 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 dates and have incorporated any comments received. Unless Your Honor has any questions, the debtors request entry of the order as attached to the motion as Exhibit A.

Okay.

Is there anybody who'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 them up.

Thank you, Your Honor. Next up on the agenda is the debtor's application to retain Kurtzman Carlson Consultants LLC, DBA Verita Global as the claims and noticing agent in these Chapter 11 cases. And that application is filed with docket 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 Gershbein declaration in support of the Verinta 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. Gershbein?

Okay. I hear no response.

Thank you, your honor. The appointment of Verita has claims and 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 will relieve the clerk of the courts of the administrative burden of processing what may be an overwhelming number of claims. The debtors submit the Verita as 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 dates and incorporate any comments received.

Specifically, the debtors have filed at docket number 49 an 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 debtors request that your Honor enter the order attached as a dividend A to the application.

Does anybody wish to be heard regarding Veritas 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 debtors PII redaction motion, which is filed at Docket Number five. Pursuant to the motion, the debtors 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 debtors filings due to concerns of identity theft, harassment, stalking, phishing scams and other similar concerns. The debtors proposed to provide unredacted or to file unredacted copies of all redacted filings under seal and to provide the courts and The United States Trustee and other parties an interest upon request with copies of those unredacted filings.

We have shared copies of the motion, drafts 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 Exhibit A to the motion.

Does anybody wish to be heard regarding the PII motion? Okay. I hear no response. Based upon the evidence performing the former Mr. Mabes declaration, I do find that the relief requested is necessary to avoid the immediate and irreparable 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 debtors 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 restructuring 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 and $16,700 on a final basis. We have shared drafts of the motion with the United States trustee prior to the petition date and and incorporated any comments received.

And unless Your Honor has any questions, we would respectfully request that Your Honor enter the order, the interim order attached to the taxes motion as Exhibit 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. Mabe's declaration, I do find that immediate ripple of harm would come to the debtor if to the debtors if I did not grant this relief on an interim basis.

Debtors simply need to pay its taxes and avoid the sorts of consequences that you described. 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, Adam.

Okay.

Welcome, Ms. Paddock.

Thank you. Good morning, Your Honor. For the record, Elisa Paddock, Shepherd, 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 of 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 fresh from 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, miss.

Your Honor, this motion seeks, authority for the debtors to continue operating their existing cash management system and the ordinary course, honor pre petition obligations relating to bank fees and to continue to honor intercompany transactions in an 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 debtors' 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 accounts, they only operate in Control six. The bottom 14 accounts are all restricted, and operate at the direction of the ABS trustee and to present it to various transaction agreements. Historically, the debtors only receive 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.

That relates to one of the comments, to the order. So the debtors do not operate that, 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 US operating accounts, the top one being the the main operating account, where they disperse checks and, issue payments and receive payments generally.

Right below it is payroll, which is sort of daily. And over on the right side are two, 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 second one. Those accounts can at times bring in cash. It's much more rare, but they are connected to various payables based on all transactions. Your Honor, the debtors submit that all of these accounts in The U.

S. Are authorized depositories in accordance with the UST guidelines. The Australian accounts are international or not, but the debtors submitted there, in substantial compliance with three forty five. They are maintained at banks that are well capitalized and insured in accordance with Australian law. However, though, the debtors with those two accounts in Australia, the debtors are seeking an interim suspension of the requirements of Section three forty five for an initial period of forty five days as set forth in the motion, and we'll continue to work with the US 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 intercompany 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 petitioned 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 1. 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 31.

Finally, from a substantive standpoint, the doc the debtors are seeking to utilize their current business forms as changing forms would be unnecessarily and due to leak burdensome and expensive for the estate. All the requested relief in this motion, your honor, is standard with the precedent in this court, and the debtors submit that any disruption to the current cash management system would substantially diminish and impair the debtors' efforts in these Chapter 11 cases. As set forth in the motion, bankruptcy rule 6,003 is implied, and the relief requested, the debtors believe is integral to their operations. And without it, the debtors would, suffer immediate and irreparable harm to their estates. If your if your honor would like, I can walk through the changes, in the order.

Right. It looks like,

the paragraph eight have the language that you, just mentioned about the ordinary course, intercompany claims. Yep.

And that was, agreed to with Warner Brothers and US Trustee. And then, paragraph nine 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 today.

Let me first ask if there's anyone in the courtroom who would like to be heard regarding the cash management question. Mr. Hardy, good morning.

Good morning, your honor. And for the record, Matthew Harvey from Morris, Nichols, Arch and McDonnell. I rise to simply thank the debtors for resolving this comment with us and also to introduce my co counsel, Mr. Stephen Warren from O'Melveny Myers. We represent together, Warner Brothers Entertainment Inc.

In 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 DIF, I just want 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 of O'Melveny Myers appearing on behalf of Warner Brothers Entertainment Inc. And its affiliates, I'll refer to those as Warner. Also appearing remotely with me, Scott Brake, Kevin Jones, who love the new managers.

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 if we physically could have. So I appreciate the kindness that your office instructs us and allows you to hear remotely. I'd probably say most of my comments perhaps when we get to the depth, that's probably the meatier section, so perhaps we can talk again then.

I do want to thank the vendors for adding the language here and clarifying that the intercompany transfers will only be ordinary course

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. Rubinstein, good morning.

Good morning, and she's been interacting with the debtors in my stead. I will also say some comments for the quarter. For purposes of this particular motion, I will say first that as I relate to the debtors, we do question whether the entity, DRG, Wonka, IT Global, LLC is in their negotiations regarding the cash management order and they certainly have released some of our concerns that we thank the debtors for that and for including the leverage in the first day order and we appreciate that. With respect to the other matters in the case, I will leave it for now and I'll take it over to Jeff. Okay.

Thank you, Roderick.

Thank you, Mr. Rubenstein. Is there anybody else who'd like to be heard regarding cash management? Okay. I hear no response.

Based on the evidence performing in the form of Mr. Mabes' 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 step, 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 US Trustee, and thankfully, no comments were received. So we are seeking relief, from your honor to enter the interim court as an interim order as filed. Your honor, as you've likely seen in the first 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 debtors' assets.

I

can walk Your Honor through a few of the main points set forth in the motion. 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 fourteenth. So the only amount of wages, that have accrued since are over the weekend.

I do want to bring your own 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 did not request amounts for reimbursable expenses, which are things like business expenses, credit card payments. As you'll see in the motion, Your Honor, the 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 you're on, we'll see the kind of main buckets that have outstanding amounts are the employee lead 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 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 an amount that is accrued 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 6,003 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 irrevocable harm. Unless Your Honor has any questions, I would request, the Honor enter the interim order as attached to the motion.

Is there anybody who'd like to be heard regarding the wage motion? Okay. I hear no response. Based upon, the evidence before me in the form of Mr. Mabes' declaration, I do find any immediate and reprehensible harm that comes to the debtors if I do not grant this relief.

It's unthinkable that the employees should have to continue to work while there is uncertainty about whether they can even be paid timely for the work that they performed with the debtors pre petition and receive the benefits that they've that they count on and they've 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 seat the podium back to Justin Bembrock.

Okay. Thank you. Mr. Bernbruch.

Thank you, Your Honor.

Again, for the record, your Honor, Justin Bernbrook of Shepherd, Mullen, Richter and Hampton, Proposed Counsel to the Debtors and Debtors in Possession. Your Honor, the final item on today's agenda is item nine, docket nine, the debtor's motion for authorization to enter into and borrow under the proposed debtor in possession financing facility. You're under the as is common in case of this type, the pleading set forth the basis for the relief requested. We also have the evidentiary support of the declarations provided by Mr. Mabe and Mr.

Klutze Nicholas from Solit 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 $13,000,000 of which $7,000,000 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 passu with the dip liens. There's a standard carve out in the proposed dip order, and other packages or let's say a broader package of components afforded for the benefit of the DIP lenders and certain other parties, most notably adequate protection or 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 debtors 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 super senior 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 31BR364, which comes from the Eastern District Of New York to get 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 see the 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. Mabes' declaration that the debtors do have a cash need to operate and ultimately get to a consummation of the library sale. The what's I think is at least interesting to note is the proposed library sale, we just take the $365,000,000 number, and we less the ABS obligations, which are approximately $223,000,000 we have a net result of $142,000,000 And then the dip would be immediately junior 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 $140,000,000 and more $130,000,000 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 then certainly not representing that Warner Brothers believes, that those are 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 Enri Blink Holdings case, as well as the Enri Monde Holdings case. And I believe those are cited in our papers. If not, we have the case numbers that 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 Chalamet 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, any super party administrative claims etcetera, 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. Rubenstein and we were happy to incorporate it in 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, 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 a 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.

Adud, 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 companies. So these creative people and members of these guilds, as part of their agreements to participate in motion pictures and television and 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 in the very short time between petition date and this hearing have 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 knowing. My representation to Mr. Adut 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 by 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. Adut's clients as well.

Lastly, we are doing something or at least proposing to do something novel with respect to this motion. We have a proposed transaction support agreement that was affixed 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 indentured 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 the farthest 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.

Gavant because, there could have been many other reactions to this idea of attaching a proposed agreed as to form agreement. But this is it's unique here and critical and I would say that the relief we're 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 debtors act as 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 two twenty three million dollars and then some that come from our sale of their collateral, we're going to pay to them to 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. I will note for, because I don't want it to be not noted that, United States Trustee's Office, I think does have some concern with that document. And our request that it be, there's the 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 three sixty three to seek that relief. I've got a, at least whatever the current draft of the order was that when we clicked print. But before I tick through that, perhaps Your Honor, well, first let me ask, does Your Honor have any questions about the debtors 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. Rubinstein, Mr. Adut, 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 here regarding the motion. Miss Sierra Fox. Good morning.

Good morning.

Good morning, your honor. Rosa Sierra Fox on behalf of the US trustee. 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. Bambridge's introduction and argument was certainly helpful. But I do think that as far as evidence on the record on this point, the best I think that that's been addressed here is, the chief restructuring officer's 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, it is you know, there is there is, a potential here for immediate 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 a, as a agreement that agrees to preserve the status quo in a certain in certain sense. The parties continue to act how they were acting under the respective agreements. However, I do see potential implications for rule 6,003.

The debtors are incurring an indent a post petition indemnification obligation at six section six four of the transaction support agreement. The issue about the servicer also, implicates a potential, assumption or or of an executory contract. And like I said, your honor, rule and as I referenced, rule 6,003, does not allow the debtor to incur those types of obligations within the first twenty one days of the case, unless it's immediate 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 of conduct, up through the interim hearing. I think it's the parties will are certainly going to be well served by by 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 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 US trustee does not believe that, the debtor should be authorized to do that at least on an interim basis.

And I 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's inclined to agree with the US 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 offers 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 so much, Mr. Aracats.

Yes, Mr.

Gavant, welcome.

Thank you, R. Aaron Gavant from Barnes and Thornburg on behalf of the ABS Trustee and I'm here with my colleague, Amy Tryon, also from the Delaware office. I was going to take the opportunity to introduce who my client is. Mr. Burak did 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 title holder of the interest here. 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 said in the papers and what has been set in the podium today.

There has been forthright with us. We believe we've been engaged in good faith negotiations. We understand what they're trying to do with the dip. 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 the reservation of rights on these points. We don't know what our holders will say. But all of that is to say that we think there's real value, for the debtors obviously.

And they have case to make but

and 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, in 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 you're not yet authorized to enter into the agreement, the debtors asking me to approve something without it actually being, I guess for one of the better term, right to be adjudicated. It's 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 would make might take some issue with saying that we're not willing to enter into the agreement. There is one 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 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 confirms that we do not yet know how holders will react.

Yes, understood. Okay.

Thank you, Mr. Ward. Thank you.

I appreciate it. Is there anybody else in the courtroom who'd like to be here? Okay. Let me start with Mr. Warren, please.

Thank you very much, Your Honor. Again, Stephen Warren with Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealthy Wealth with respect to them, the act of protection, the whole suite of rights for the combat motion. I think we may be down to a word or two. We understand there will be some discussion after the hearing just to resolve those last little cleanup items. But the gist of it is that all of Werner's objections that it would otherwise be presenting today can be earned in the final.

They're all preserved in respect to the liens, the adequate protection. We do consent to the $500,000 going out and no 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 that's granted in rights with contracts, but that's your subject to those contract rights. And the rights with respect to IP are subject to don't alter, we would they 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 just turn my, you know, mic off. But with the court's indulgence, I'd like to spend a little bit of time addressing leads such as deferred progress raising his additional presentation. In part, table setting, but I always think it's odd, but Your Honor, the party's relationship covered to some extent by the big declaration, but it really goes back to 1998 and it covers the 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 right to create the content, decide whether a film will be produced and what the film will be and what it's contributing.

That's exclusively one. What village test that 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 in shares, the revenue stream. And so when we hear about the library assets, we're talking about those buildings that have already been produced, there's money coming in and it's getting split, that's the library. But there's also a right in certain circumstances, the driven assets for new motion pictures in order and with respect to these existing franchises, decides to create a new film in that event and village and we'll find it.

At the beginning of our relationship, our village was a family owned company It's since owned by a high power private equity firm in Newbern, a decision was made to fundamentally alter their business model. They've met from financing motion pictures or created by others to creating their own content and they can't believe that that effort resulted in failure. Unfortunately, from our perspective, when that failed, Village failed to lift up to its contractual obligations with respect to co financing. The dispute between the party is where the matrix franchise, matrix resurrection, that was a co financing arrangement. We had understood that Village had that was a co financing arrangement.

We had understood that Village had committed to co finance based on that reliance on that commitment. We're expecting $200,000,000 to produce the bill, dollars 100,000,000 to market it and then Village did step forward and provide financing. That's led a year's long arbitration that's gone on for quite a bit. I know there were some redacted sections that is confidential arbitration and some items can only be shared through redactions and camera, clearing the corridor, however, or one might do that. But there's some things I can share with you.

The first thing is

we very much confessed, and you won't be surprised to hear, some of the characterizations of 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 best clause or we have the right to do so. Liabilities already been determined. The arbitrators have already decided that we're going to breach its obligations to respect Matrix projects.

That's done. All that's left is determined the damages. Again, with respect to the public record, I can tell you. Warner took the position at the inception of the dispute that it was approximately $100,000,000 maybe before and that number had a run down. So that I think sets the kind of the goalpost of the dispute.

I really did appreciate the presentation and the candor to the court that there are some real concerns about transactions that took place here. After Warner Brothers succeeded in establishing liability arbitration, the derivative assets were moved out of entities that were obligors, auto obligors And for a dollar, they transferred them out and then we subsequently found the offset. Those new entities guaranteed and pledged those derivative rights, which could not have been planning under the agreement with order I'm sure it was to the court too. The last page of the date declaration is that the matter showed the precedent for all outlined in the debt is also I think it's very aggressive in that declaration. If you look library, that's what's being sold here over $300,000,000 If you look over on right lower section of this community, you see those entities, there are four entities that have red boxes around them.

Those are the ones that, Warner has sued who is pursuing in the arbitration. They owe the library rights, the income stream that comes in from the films. And you'll see there's no, the side level, I think is, as Fernrock called it, of the notes, seeing notes, invade those assets. They're not subject to the claims. There will be a roll up of their pre petitioned debt, which those are obvious.

And there would be equity protection or what is in our view in equity interest, right? Because ultimately what those non holders have is a claim on the equity of the equity of the equity of those entities. And we don't think we can move scrap equity into a super priority claim by actual protection going ahead of the creditors. And the derivative rights we already talked about, you see that in this demand of those three entities that are the last balance. Those were the beneficiaries of the one And there are handful of things that I'm kind of pointing the up here, Your Honor, that concern us a lot.

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

Also, grant of the rights with respect to the library assets. Again, we're talking about the grants being given rollout and protection of entities that aren't claimants presently at that level. It also grants the note holders proceeds or I should say say, the dip lenders, but note holders proceeds of avoidant action. But as we said, our concern is we may be the target of those actions. That doesn't seem stable.

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 have got through today. This may be the first consensual thing amongst the parties that happened with respect to the arbitration in these disputes for some time. And we're open to having further conversations. Last little footnote, 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 SKU. That the debtors are holding company and have 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 to questions. Thank you very much for your patience.

Thank you very much for the comments, Mr. Warren. I appreciate that helpful background. Let me hear from Mr. Rubenstein, please.

I only rise for the one issue of setting the stage and issues that Alcon may be bringing to your attention 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 used itself as one of the likely parties that would be interested in debtors assets. And while the debtors may have a different view of things, it's certainly our product belief that it does not afford it, the opportunity to make a bid in this process despite its efforts leading up to this bottleneck.

And so you will be hearing about this, I suspect down the road, but I just wanted the court to be aware of that it should be a surprise that Alcon is an interested party here, and Alcon expects to be heard with respect to the procedure's motion.

Thank you, Mr. Rubenstein. Mr. Adiud, good morning. Welcome.

Good morning, Your Honor. It's nice to see you again, David. Good morning, Your Honor, I rise very briefly, primarily to give thanks first to the court for allowing us to appear by Susan today as well as on April 11. I am in Los Angeles and it is very much appreciated. My colleague Susan Cosman is in the courtroom today as well.

Yes, she is.

Mr. Bernrock accurately presented the situation with the guilt. We want to sort of endorse his commentary with respect to the fact that our interest in cash collateral as they relate to the state have not really been fully vetted. We proposed some language just this morning via e mail 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, deals are comfortable moving forward.

I guess the only other point I have is that I'm also pleased to be able to reaffirm my friendship

with Mr. Hermbra on the record. Since he opened that door,

I thought I might as well validate. That's it, your Honor. Again, thank you for taking the time.

I'd appreciate it.

Thank you, Mr. Adid. Is there anybody else who'd like to be heard concerning the dip?

Mr. Sammis?

Good morning,

Your Honor. Chris Sammis here from Potter Anderson today on behalf of the noteholders along with my co counsel, Mr. Newton from Movo. Mr. Newton would like to make a couple of comments surrounding the day.

Certainly.

Thank you, Alan.

Mr. Newton, great to have you here. I had the pleasure of admitting you to practice ProHawk Beach here this morning.

Yes. Thank you very much and thanks for the time. I rise similarly with a just a short set of comments having heard Mr. Warren comment on his concerns about the dip. And to briefly state, 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 we'll work with Warner Brothers during the course of the next few weeks here to address their concerns. As I mentioned, they included some reservation of rice 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 just wanted to comment on that aspect of the presentation and 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 dip lenders 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 I'll defer on some of the other issues that Mr. Warren mentioned. 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 just want to

stand up for that purpose.

Thank you, Mr. Noonan.

Thank you.

Okay. Mr. Bernbach.

Well, before you make your comments, I'm going to ask you to think about one thing. I do have an 11:30 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 Fox about how you'd like to proceed to address the objections that Ms. Sierra Fox raised?

Where do you see yourself with all that at the moment?

Thank you, your Honor. Justin Bernrock of Shepherd Mullen, Richard New Hampshire, Post Counsel of the Debtors. For a minute there, I was worried you're 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 transaction support agreement.

I do want to try to address, in the event that this document changes, my understanding or 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 scrivener's errors or minor modifications, but where we sort of landed was it changes at all, we have to come back to the court. With respect to the exculpations set forth that Ms. Sarah Fox raised, we bear the same obligations under the indenture.

Those are secured 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 indemnification of paragraph 6.04?

Yes, indemnification of escaporation. 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. The risk of putting the CR Fox on the spot, what there is 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 in 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 counter signs, then I know at least that we have done as much as we can to ensure that our ongoing operations, our proposed sale process etcetera 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 what I'm 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? With I mean, if we want to go talk about it, I don't want to.

Yes, let

me see

our thoughts.

Your Honor, and I'm also going to be monitoring the 11:30 hearing. I 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 wanna resolve the, one the US justice doesn't want to resolve the issue.

I think our I think we view this to be sufficiently out of the ordinary where I mean, if it it would be our preference for precedent presidential purposes and just for the reasons I reiterated on the record that your honor rule on this. And, we get it might and that 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 that my client will have to live with that. But, at this point, I think I just don't have authority to go that route.

I understand. Okay. Mr. Burbank?

Your Honor, in light of your Honor's hearing at 11:30, I am happy to briefly conclude or if you're Honor, 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 enough 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 I would anticipate my next hearing is is approximately an hour. Maybe if we came back at 01:00 and I could, I time until two. 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 you 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. Firafox's point, it's the right one. She is correct.

And of course, this 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 then is we'll work with Ms. Sierra Fox as to that form of proper, we'll tender it

to the we'll file it with the court.

And then after we've resolved the language with the parties, perhaps submit two versions of the order, one which authorizes that if you're unaware to find that that additional proper was sufficient for the record. And then one order that does not have that authorization, in in the order. I'm I'm trying to preserve your calendar and and trying to I know some folks have flights out as well.

But Yeah. Here'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 debtors 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 11, 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 debtors, sustained its burden of showing why it's an appropriate exercise of their business judgment to enter into the lending facility, putting a parenthesis 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 normal notice will 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. Gervantes 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 just 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. With first aid 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.

Okay. 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 e mail at very early hours. I 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's quite clear.

And I should have mentioned, my law firm, our partners are not counsel to the debtors in 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 there maybe frustrated, but they are they've been on the line as well. But the 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. Certainly happy to entertain any and all competing bids to the proposed transaction.

With that, your honor, 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. I'm

sorry, Ms.

Sierra Fox on behalf of The U. S. Trustee that addresses our comments.

Okay. Just want

to make sure.

Yes.

Okay. Well, thank you for I'm sorry, Mr. Moldenhill.

Sorry, Adam, before you make your final comments, 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, Ronald, 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 up from all the parties, we will upload the dip after the year.

Okay. And to be clear that April 11 is the will be the final hearing on the motions for which Intramural Relief is off today?

That's correct, Your

Honor.

Okay, very good. Okay. I appreciate the presentations very much. This was really well done and look forward to seeing you back on the eleventh.

If anything comes up

in the course of getting all the final comments and 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 to cancel

on the final tip order

or I'm sorry, the interim tip order.

Thank you, Your Honor.

Okay.

If I may indulge one final piece. I raised 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 Village Roadshow name in Australia. And they operate theaters, they operate theme parks, while the two at one time were related and connected and there's a very small de minimis equity holding the TopCo 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, 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. And 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 you're on an

expedited basis. Understood.

I want to

flag back. Okay. Otherwise, thank you.

Thank you very much. We are adjourned.