Hooters - audio of April 2, 2025 hearing before the U.S. Bankruptcy Court for the Northern District of Texas in case number 25-80078

Alright.

Thank you. Please be seated. Alright. Good afternoon. We're here on the 03:00 docket.

We have first day matters set in the Hooters of America case, case number 25Dash80078. I'll go ahead and take appearances. I'm gonna start in the courtroom. This was noticed as a Webex only hearing. Miss O'Neil was here all day in another matter and is, asked for permission to walk over from the conference room where she was dealing with her other case to to attend the first day.

So I'll start with miss O'Neil.

Thank you, your honor. Holly O'Neil, with the law firm of Foley and Lardner on behalf of the debtors. And with me today, your honor, is my colleague, mister Jones, who's also probably worn at our welcome with the court today. And also on, Webex is our colleague, Zach Zahn, with Foley and Lardner. Additionally, your honor, I'd like to, introduce the court to our co counsel with Ropes and Gray.

Specific there are quite a few folks today, and, hopefully, they will most will have an opportunity to present some motions for the court today. We've got mister Chris Dickerson, mister Ryan Dahl, Ramon Brown, Michael Wheat, Heso Park, Alexis Overek, Maggie Toms, Regina Castilla, Laura Knight, and Ben Wagner, all with the law firm of Robes and Greg. Additionally, your honor, with, Accordion Partners LLC, we have our proposed chief restructuring officer, mister Keith Mabe, who is a senior managing director with Accordion. We also have our proposed, investment banker with Solich Capital Advisors LLC, mister George Kootson Nicholas. Pardon me.

Let me say that again. Kootson Nicholas, who's a managing director with Solich. We also have various members of the, management team of the debtors, that are also joining us today. We appreciate the court's time. Thank you.

Alright. Welcome. Alright. And for the rest of the appearances, I'm gonna start by going down the electronic appearances that have made that that have been made other than those that have already been announced. And I'll either go by party or firm.

So why don't I start with the US Trustee?

Good afternoon, your honor. Asher Republic for The United States Trustee.

Alright. Province? Mister Rosen, are you with us? Alright. I'll go to, Drivetrain Agency Services, folks from Seward and Kissel.

Yes. Good afternoon, your honor. John Ashby of Seward. Yes. On behalf of the control party drivetrain agency services.

Good after good afternoon. Alright. How about the folks at, Kramer Levin? You might be on mute. I don't hear, anything yet from the crime crime eleven folks.

Alright. We'll come back to them. Hoot Al restaurants.

Good afternoon. Ken Butterfield.

Ken Butterfield.

Thank you.

Alright. Sorry. Somebody was talking over each other. So let me let me try again for Hoot Al restaurants.

Good afternoon, your honor. Marcus Helps or Ben Butterfield for Hoot Owl restaurants.

Alright. Good afternoon. And let me try again. Was somebody, just speaking from the Kramer Levin firm?

No, your honor. This this is Ben Butterfield of Morrison and Forrester, representing Fruit Owl and Hooters Inc. They are the two members of the buyer group.

Alright. Thank you. BPH Investments. Mister, Bednaz from b BPH Investments. Alright.

We'll go on. Stanley Schwartz Alabama LLC.

Yes. This is Lee Schwartz of Schwarzenegger.

Alright. MGBL Properties. Miss Prenergast, are you with us?

Apologies, your honor. I think we were muted.

Alright. Thank you.

Apologies, your honor.

I think we were muted. Leanne on behalf of NGDL Properties. With me is my colleague Dan McGuire of Pearson Ferdinand. Thank you.

Alright. Welcome. Bank of America.

Good afternoon, your honor. Kyle Hirsch, the law firm of Ryan Keith, Leighton, Pfizer representing Bank of America as depository institution.

Good afternoon. Alright. How about the folks at, Sidley?

Good afternoon, your honor. Can you hear me, your honor?

Yes.

Juliana Hoffman from Sedley Austin on behalf of Salt Lake Master Fund LP as pre petition lender and proposed dip limiter today. Also, today on behalf of XYQ Cayman Ltd or limited, in its capacity as pre petition term loan lender and FFI Fund Limited, FYI Limited, and Elephant Fund Limited as consenting net holders. And with me, your honor, is my colleague, Genevieve Weiner. And she is on video but was having some, audio issues. She's also dialed in by phone.

Alright. Good afternoon.

Good afternoon.

Alright. How about the the White and Case folks?

Good afternoon, your honor. Brian Pfeiffer from White and Case, joined with by my partner, Amanda Paracris, and we are representing the secure the ad hoc group of secured note holders in the case.

Alright. Good afternoon. Yeah. Gray Reid.

Good afternoon, your honor. Lydia Webb of

Gray Reed on also on behalf of the ad hoc group.

Alright. Welcome. Alright. I'm going down the list. How about, the folks at Ballard Spar?

Good afternoon, Howard. Joel I'm sorry. Go ahead, Good afternoon, Howard. Joel Newell with Ballard Spar, appearing on behalf of landlords, Beltline and Grande LP Realty Income Corporation and Store Capital. As, miss Highland just noted, she's also appearing telephonically.

Alright. Good afternoon. Alright. I'm gonna go ahead and open it up. Have I missed any appearances on Webex?

Good afternoon, your honor. Michael Reardon from Bradley Ranch on behalf of Bags Unlimited LLC.

Good afternoon. Good afternoon,

your honor. This is Duane Brescia of Clark Hill representing Westchester Fire Insurance Company, federal insurance company, the, surety bond providers in this case.

Good afternoon, your honor. Michelle Schiro, and I'm here with my colleague, Will Dorward, and we represent, Kemco Realty Corporation.

Good afternoon, your honor. Good afternoon, your honor. Jeffrey Gutman, here with Douglas Danella representing Palmer South Boulevard LLC.

Good afternoon, your honor. Bruce Ackerley of Ackerley Law, of creditor and PACA trust beneficiary, Benny Key. Benny Key. Benny Key. Appearing with my colleague, Robert Lawton.

Good afternoon, your honor. This is Nathan Coco from the law firm of Mintz Levin. I'm joined by my colleague, Keith Kollmeier, and we represent Citibank NA as trustee and securities intermediaries with respect to the pre petition secured notes in the aggregate amount of $350,000,000.

Good afternoon.

Good afternoon, your honor. Vicky Driver here on behalf of a group of landlords, Four Corners Limited, Four Corners Limited four, Four Corners Limited nine, Four Corners Limited fifteen, Four Corners Limited sixteen, Winglord Limited, Drumlord Limited, and the Audelia Group Partnership Limited.

Afternoon.

Good afternoon, your honor.

Go ahead.

This is Sharon Knighton. I'm with the law firm of Blindbarger, Gog and Blair and Sampson. I'm here representing several, Avaloran property taxing entities in Texas. We are still researching our clients in this case, but so far, I'm appearing on behalf of Bexar County, Cameron County, Dallas County, Ectracad, Fort Bend County, City Of Frisco, Harris County Emergency Services District Number 11, Harris County Emergency Services District Number 20 8, City Of Houston, Houston Community College System, Houston ISD, City Of Humble, Irving ISD, Katy ISD, Lewisville ISD, Lone Star College System, Nueces County, City Of Pasadena, San Marcos Consolidated Independent School District, City Of Cedar Brook, and Tarrant County.

Welcome.

Good afternoon, your honor. This is Mark Stout with Alvin Mountain Stout, and I'm here representing Regions Facility Services.

Afternoon. Good

afternoon, your honor. This is Ashlyn Bernard appearing on behalf of FTI Consulting. I am with Kramer Levin of Tolleson Frankel. I understand that you called us earlier. I apologize.

I was having some technical difficulties.

No worries. Thank you.

Thank you.

Good afternoon, your honor. Catherine Dunn from Chase and Freeman representing MCL Properties LLC.

Alright. Welcome. Alright. Last call for appearances. Alright.

Before I turn it over to the debtors, I'll just let everybody know I've I've signed a lot of, Pearl Hog VC orders. If you have filed an application or motion and I haven't signed the order yet, not to worry. Everybody's welcome. The orders will be signed either today or tomorrow. So with that, I'll turn it over to the debtors.

Thank you, your honor. Again, Holly O'Neil on behalf of the debtors. Your honor, as the court is aware, on March 31, Hooters of America LLC, filed along with 15, of of its, affiliated entities have filed, bankruptcy. And we've got approx I'm sorry. We have 30 affiliated entities.

And we've got fifteen first day pleadings, to go through today. For the sake of simplicity, we'll go through the motions, effectively one at a time, and all of the first day motions will be handled by our our colleagues at Ropes and Gray. The donors have worked with our noticing agent, Kroll, to do our level best to get as much notice out as possible, recognizing, this is a shortened notice period, but it is for first day motions, which are obviously critical to the operation of the business. In conjunction with Kroll, the the debtor served the voluntary petition. The first day motions, agendas, and notice of hearing were served out, yesterday on April 1, to the office of the United States trustee, the top 30 unsecured creditors, the, secured creditors, as well as ad hoc group of note holders, etcetera, a myriad of folks, in that the certificate of service for that, for that notice is at docket number 72.

Since filing the motions, the debtors have been in open and ongoing, discussions with the DIP lender in the United States Trustee's office and other parties regarding the first day matters. The debtors believe that with the extensive service provided by the claims agent, the limited interim relief requested today is warranted and that and that the notice was adequate. And with all rights reserved for final relief, of course, and we believe that, good and sufficient cause, has been established to proceed today with the relief requested. Additionally, your honor, just for the record, we wanna Kroll, our noticing agent, has set up a website, in that, and so that parties can, retrieve pleadings and other information related to the case. That website is at cases.ra.kroll, k r 0 l l, Com, backslash hooters, h 0 0 t e r s.

Obviously, pleadings, can be, downloaded from that site free of charge. Before moving to the agenda, and by the way, your honor, in fact, as we started the the hearing, an updated amended agenda was filed, at docket number 84. And before we start moving through the agenda and the first day motions, we'd like to get a little housekeeping out of the way, in terms of, presenting some of the declarations and and support of the various motions that are set for today. For, the we we we did file a witness in exhibit list. That's at docket number 45.

Your honor, exhibit one is the declaration of Keith Mabe, our chief restructuring officer of the debtors in support of the debtors chapter 11 petitions and first day motions. That is at docket number 19. Exhibit number two is another declaration of mister Mabe in support of the debtor's emergency motion for interim and final orders authorizing the debtors to obtain post petition financing and use cash collateral, granting lanes, and providing claims in super priority administrative expense status, modifying the automatic stay, scheduling a final hearing, and granting related relief. That declaration is at docket number 17. The next declaration that was filed is the declaration of George Coutts and Nicholas in support of the debtors emergency motion for interim and final orders authorizing to the debtors to obtain post petition financing and use cash collateral, granting liens and providing claims with super priority administrative expense status, modifying the automatic stay, scheduling a final hearing, and granting related relief.

And that declaration is at docket number 18. Additionally, we have the declaration of mister Benjamin Steele in support of the debtor's application for appointment of Kroll Restructuring Administration LLC as the debtor's claims noticing and solicitation agent. And I believe that is filed at docket number five dash two. The first day declaration as as our first exhibit today contains a detailed description of the debtors, their operations, the nature of the current financial distress that the debtors find themselves in, the need to follow these cases, and the specific support, for each of the first day motions. I will mention your honor, mister Chris Dickerson with Robeson Gray does have a presentation.

I'll I'll hand off to him shortly, but to give the court a better, overview of of the case of the debtors and the in the cases. Your honor, at this time, we would ask just as a as as a, precursor and support of, the various motions that the those declarations be admitted into the record.

Alright. So my practice is to swear the declarance in. It it won't take long. If mister Mabe is handy, I'll just start with him. Mister Mabe, can you hear the court?

I can, your honor.

Alright. Alright. I see you. If you'll raise your right hand, do you swear or affirm that the testimony you're about to give through your declaration or otherwise is the truth, the whole truth, and nothing but the truth, so help you god. If so, please say I do.

I do.

Alright. And I've seen your declarations. Do you have anything to add or change about them?

I do not, your honor.

Alright. And then, any objections to the admission of exhibits one and two, the declarations of mister Mabe? Alright. Those are admitted. And I'll switch to mister, Coop Senecolas.

I hope I haven't, butchered your name. You can hear me?

Yes. I can, your honor.

Alright. If you can raise your right hand, I'll swear you in. Do you swear or affirm that the testimony that you're about to give through your declaration or otherwise is the truth, the whole truth, and nothing but the truth? So help you, God. If so, please say I do.

Yes, sir.

Alright. Any changes or additions to your declaration?

No, your honor. No, your honor.

Alright. Thank you. Alright. Any objections to admission of exhibit number three? Alright.

So three is also admitted together with one and two. And then mister Steele, are you with us?

Yes, sir.

Alright. If you'll raise your right hand, do you swear or affirm that the testimony that you're about to give through your declaration or otherwise is the truth, the whole truth, and nothing but the truth, so help you God. If so, please say I do. I do. Alright.

Any changes or additions to your declaration? No, your honor. Alright. Thank you. Anybody object to, admitting exhibit number five?

Alright. 5 is admitted.

Thank you, your honor. The the debtors otherwise filed a witness and exhibit list at docket number 45. And those have a myriad of exhibits. Mister Jones just showed me that an additional revised proposed interim dip order has been filed at docket number 83 dash one as well. We would move to have those exhibits admitted, for purposes of proceeding with the, motions.

They also support are supported by the declarations.

So that's exhibits four and then six through 18. We'll start with those. Any objections to four or six through 18? Alright. Those are admitted.

And the the red line, this is the only eight docket 85?

It appears to be docket 83 dash one, your honor.

I'm sorry.

That's oh, no problem. And that is the revised proposed interim dip order.

And then eight 80 five okay. 85 is the red line?

That's correct.

Okay. So we can just admit 83? You're offering, the the document docket 83?

Within document number 83, your honor, is the and just just so all parties, it's a it's a lengthy document. So a docket number 83 to revise proposed dip order, you can find the dip budget at page number 267 of four twenty seven. So there's a placeholder on the witness and exhibit list for the dip budget. That's where it's located.

Alright. Any objections to admission of that document? Alright. That's admitted as well.

Thank you, your honor. And with that, I see mister Dickerson, and I will hand off to, my co counsel at Robeson and Rick Gray, mister Chris Dickerson.

Alright. Thank you.

Thank you, your honor.

Chris Dickerson, from Robeson Gray on behalf of the debtors. Can you hear me okay?

Yes. I can.

Thank you. I'm getting a little bit of an echo. I think someone may not be muted, but, I'll I'll proceed if you can hear me okay.

Yeah. I can hear you, and there's no I I don't hear any echoes on my end.

Great.

Thank thank you. As miss O'Neil described, your honor, I have a very short PowerPoint that will hopefully provide you and other interested parties some information about the company, how it got here, and where we hope that it will be going. We have filed this, presentation as a demonstrative on the docket. It's docket number 74.

Alright. Thank you.

If we could go to the next page. Is that me? If I can do this. Your honor, as, indicated, we are here on behalf of Hooters, who's been in business since 1983 and operates, a number of restaurants that provide world class chicken wings, beer, and sports entertainment among other things. As I said, founded in 1983, there are a 51 company owned stores, a 54 franchises outside of the company, and then they have three franchises or what are known as Hoots, which are primarily to go chicken wing restaurants that compete with Wingstop and and other similar ideas.

Their headquarters in Atlanta, Georgia, although we do have amongst the debtors, there are three Texas entities. They have approximately 5,957 employees, a hundred and 1,945 of which are full time and then the remainder part time. As you can see there, the performance revenue for the the the debtors is, 381 and a half million dollars with an EBITDA last year of 15,300,000.0. Your honor, the primary reason we're here is the need to reconfigure the company to balance its, to to address its balance sheet and address the increased costs and, as compared to its revenue so that it can continue to operate on a go forward basis. You could see the breakdown here on the slide of the of the revenue from each side.

And and as you will see that while it makes significant franchise and license agreement revenue, approximately 23,000,000, the majority of its revenue is through the operation of those 154 company owned restaurants. Just a quick overview in The United States. You can see the red. I'm not sure how what to call that symbol, but, the red dots are where a company owned stores are located, and the orange ones are where the franchise owned stores are located. So it really is a coast to coast, operation.

It's also a global operation. These are the locations of franchisees. They're all our franchisees, outside of The United States. Quickly, your honor, as I mentioned previously, these are the debtor entities, those 30 of them. The ones that are colored in orange are non securitization entities in which will you'll find will be called the manager entities throughout this, these proceedings.

And then the ones in blue are the securitization entities. This is an important aspect of the cases, your honor. The, securitization is a whole company securitization, and it pledges all of the debtor's assets essentially to the securitization. The manager entities simply provide management services to the restaurants and to the securitization itself, while those restaurants are being operated. So the only collateral assets that are owned by the non securitization entities, those manager entities, would be the the right to payments from the services that they provide.

Garner, this is a quick overview, which will be discussed in a little more detail as we go through some of the motions, specifically the dip, that that shows what, the debt structure of the, of the debtors are. You'll see there's a manager advance loan, another amendment loan, term loans, and then those indentures that were have been described before. That's that number of three zero six does not include interest, so it's likely a little bit larger. As to how we got here, your honor, I'm I'm I described that briefly before, but here's a a little more detail. Obviously, COVID was a very difficult event for all kinds of retail operations, especially dining operations, and and Hooters is no exception.

In addition to that, given the current economic situation in The United States and abroad, the the debtors were, faced with rising labor costs, cost of food and other and other items, consumer demand for casual dining in general because, as the economy had had softened, there was less free liquidity for families or others to go out to to to casual dining restaurants. In addition, I think as everyone is aware and your honor is undoubtedly aware, the lease obligations that were entered into pre COVID have now become a little bit out of market and difficult to maintain. In addition, the, the costs associated with the debt that was described on the previous slide has become a significant drain on the ability of the company, the company's liquidity position. As I said, approximately 376,000,000 in funded debt. They have 19,000,000 in debt service obligations coming due in 2025, including interest payments coming to that were coming due here in May of 3,900,000.0.

In addition, there is another obligation, that undoubtedly will be described in more detail as these cases proceed, which is a LAGS royalty obligation. As the company began to recognize that it needed to, restructure its balance sheet and if it wanted to be able to continue to operate on a go forward basis, it did take a number of steps to try to deal with, that situation both outside of court and then ultimately led to the decision to, restructure inside of a chapter 11 proceeding. Highlighted on this, slide are some improvements or excuse me. Operational improvements that were undertaken, in the last year in 2024, primarily the closing of 48 underperforming stores. And then they entered into a new line of business in which they, manufactured, supplied, and distributed Hooters branded frozen meals to grocery stores around the country.

As the debtors are realize that those steps alone weren't going to be sufficient to address its, balance sheet issues, It did engage, other advisers, including my firm, Robson Gray, Accordion, who you've heard is the, proposed chief restructuring officer and financial adviser to to the company. And then, the proposed investment banker, Solik, was retained, engaged by the company in 2024. In addition to that, the board appointed, an independent experienced fiduciary to the the board of managers, mister Adam Paul. Mister Paul is on the Webex today, and they formed a special committee at the parent, company, on the board of managers in order to facilitate an independent review of the strategic alternatives that the the companies were exploring, and they delegated all authority regarding those transactions to that special committee. That special committee is a committee of one, mister Paul.

The in in conjunction with mister Paul and the advisers, the company then entered into discussions regarding its liquidity position and in an attempt to try to deal that on an out of court basis, arranged to have certain funds which are described here at the at the bottom released and provided to the company for liquidity purposes. That that totals of approximately $15,000,000. That did provide some runway and allow the company to, negotiate with other stakeholders to try to reach an out of court resolution. But, as described previously, that was only, a band aid, with respect to being able to get the the issues addressed in a more holistic manner. As I said, the the company and its advisers entered into, discussions with various stakeholders and potential transaction parties.

Solik leading that charge, and they engaged with more than 95 parties. 38 NDAs were executed. They had held extensive diligence calls and and, explored the market in a very fulsome manner. In March of this year, they successfully drove a consensus among the pre petition lenders, those term loan lenders, the ad hoc group of note holders, and potential buyer. That buyer, as mentioned before, is two current franchisees, including the, a group that is, made up of the original owners and founders of of Hooters who have been involved in the business since 1983.

The process led to what I would say is somewhat remarkable success. The company is entering into chapter 11 with a restructuring support agreement that has a % of the tone term loan lender support, 100% of the manager advanced loan, party support, and holders of approximately 94% of securitization note holders. The RSA has been filed. It's a an exhibit to the the dip credit agreement, which was filed as part of the dip order. So that is available for parties to, to review as well.

That's how we got here, your honor. Where we're trying to go is that we are we would like to emerge on a fairly rapid timeline, and currently, that's expected to be about three months. As I said, we have the support of all of the Dutta's major constituencies. And what that process will entail will be a planned process that will transition the company from company owned stores to purely franchise model. They will, in fact, through the plan, selling those 54 stores well, hopefully, all 154 stores, but a significant portion in excess of a hundred of them are already, contemplated to be transitioned and and operated by franchisees, as part of the new, the the new company.

In order to allow that, the the term loan the pre petition term loan lenders have agreed to provide a dip in the amount of $35,000,000 of new money. A small portion of the the previous, expended or provided term loan, the amount of 5,000,000 is being rolled up under that, facility, but that will be described in more detail when we present the debt motion. The the RSA also includes customary plans for covenants and also a customary fiduciary out. To the extent that there are other parties there that we hadn't identified previously who would like to come participate in a in a process that's more value maximizing for the debtors, We are more than willing to entertain those, those interest that interest and the other parties in interest here recognize that that fiduciary out is a very important part of this process. With more specificity, your honor, the the RSA does include milestones.

Here's a a quick overview of them, but as you'll see that we're we're looking to try to have the plan effective by the June. That obviously puts a lot of, pressure on us to make sure that we get our work done. And, also, it's, obviously subject to the, the requirements of the bankruptcy code and the availability of of the court in order to allow us to to meet all these milestones. They are aspirational, but we do intend to keep to them as much as we possibly can. And, we hope to not be in bankruptcy any longer than we have to because that's everyone knows is a very expensive proposition, and we would like to get the balance sheet fixed and get the, Hooters restaurants back, on into out of bankruptcy and and operating as a successful enterprise.

A little more detail on the dip financing, which again will be described in even more detail, with the presentation of the dip motion. As I said, the pre petition the lender is a pre petition manager advance under. And I I think I'll stop for just a second because I'd I've been using a word and then a phrase that is very important to these cases, but I think sometimes needs a little bit of explanation. The first is manager. As I said, the non securitization entities, are, are in effect the manager of all the company owned stores.

They provide the the contracts for the food. They make sure that the the stores are stocked correctly. They make sure that employee wages and, insurance and all the things that overall manager of a restaurant operation would provide. And so that is they they receive a management fee for those services. As I said as well, it does not those entities do not have any other assets, other than goodwill and, their overall expertise.

The other, important phrase that I've been using is the manager advance. The pre pre petition loans were, conducted as manager advances, and a manager advance is a creature or a function of, most securitizations that are dealing with, businesses of this type. In short, manager advancement as a safety measure, which is put in place in the securitization indenture to address any liquidity shortfalls that the securitization entities might have. The expectation originally is always that the amount of the management fee and other liquidity that the manager has, has been provided by the securitization entities is sufficient to pay for those costs incurred by the securitization entities, but that is not always the case.

The

in order to cover that shortfall, the manager will undertake what is called the manager advance and use its own funds to pay for the outstanding securitization expenses. The indenture then allows for repayment of those advances to be play placed at the top of the payment waterfall, the use of the of the of the funds that are received by, the manager on behalf of both the company owned stores and

the

franchise fees and in effect primes all other amounts until those advances are repaid. This structure and the waterfall that existed pre petition will continue during the bankruptcy proceedings. And as you will hear shortly when the dip motion is presented is the basis upon which the dip credit agreement is founded. In other words, the dip is being treated as a manager advance and will move to the top of the waterfall per the the indenture, as a permitted current pre petition by the indenture, and we'll keep that structure in place. Back to the dip financing, your honor.

I'll I'll leave most of this to, my colleague, mister Brown, who will be presenting the dip it later. But I just wanna emphasize the the the last note there is that that without the dip facility, the company will not possess sufficient liquidity to administer these chapter 11 cases and would be forced to, likely convert to chapter seven without without that relief. Lastly, your honor, I know this was, we spent a fair amount of time at the beginning of the, the case to identify the various parties. I thought I would do that quickly just so that you can be understand who's talking at what time and who they represent as there are a number of parties that as you already saw when we went through appearances. The company management team, the CEO is Mr.

Salmelli. The CFO is mister miss campaign. And, as mentioned previously, the CRO in our first data client is mister Mabe mister Keith Mabe. Debtors professionals, my firm Robson Gray, our co counsel, Follain Lardner. Accordion is the financial adviser.

Kroll is the proposed claims and noticing agent. Solik is the investment banker proposed investment banker, and c Street Advisory is our PR firm. The independent managers of securitization debtors, those entities that were not part of the manager is the law firm of Goldberg Cohen. The pre petition term lender, the manager advance lender, and the dip lender is represented by Sidley and Houlihan Lokey as their financial adviser. The 94% of the security nation certification note holders is represented by White and Case and m three Partners as their financial adviser.

The securitization control party is Seward and Kissel, and the buyer group is represented by Morrison and Forster. Omitted here inadvertently was the trustee under the notes, and that's Citibank, and they are represented by Mince Levin. With that, your honor, I'll I'll stop talking for a bit and see if there are any questions that I can answer. And then, if not, we will move to the, agenda and start going through the motions.

Alright. No no questions at this time. The PowerPoint was very helpful, and I also appreciate that you filed it on the docket so everybody else can see it. So thank you.

You're welcome, your honor. With that, I think I will cede the podium to my colleague, mister Wagner. I'll note that as mentioned previously, we do have a number of different, Ruppes and Gray lawyers presenting, today, and I would just, let the I would like to let the court know that there's some of them are presenting for the first time in court. So it's a momentous day for them and, and, I look forward to their presentations.

Thank you, your honor.

And, I will now turn it over to mister Wagner.

Just, just a quick note. I did I was in court most of the day, but I did see the the red lines that were filed. That's very helpful. I got through all of the red lines except the dip red line. I think I refreshed and saw it when I was sitting up on the bench.

So I will go through that, of course, when we get to the dip motion. But otherwise, I've seen, I think I'm up to speed on everything on the docket other than the the dip dip water red line. I think

Oh, can you hear your

Yeah. Now I can hear. I think you had actually only been muted, so I can hear you now.

Okay. I'm sorry, your honor. I I I was simply thanking you and your chambers for working with us to, to have the hearing today, and also the office of the US trustee, who we've been working with to try to resolve any issues that they might have that I think we've made some very productive steps with them. And I I don't think we have too many open items, if any. And then lastly, I would like to thank all the other parties.

We've been working very hard over the last few months, especially over the last week, to try to get the these cases to a place where we could file. And so I deeply appreciate all of the hard work from all the parties. So thank you, your honor. I hope that that our that congeniality and, continues with, us as we work through the cases. So thank you.

Alright. Now it over to mister Wagner.

Alright. Thank you.

Good afternoon, your honor. For the record, Ben Wagner from Rokes and Gray on behalf of the debtors. Your honor, if it's alright with you, we would like to present the motions in a slightly different order than what is on the revised agenda.

That's fine.

Thank you, your honor.

Your

honor, the first item that I'll be covering is agenda item number one. This is the debtor's motion for joint administration filed at docket number two. As the court is aware, bankruptcy rule ten fifteen b provides that if a joint petition of two or more or two or more petitions are pending in the same court by or against a debtor and affiliate, the court may order a joint administration of the estates. Your honor, that is what we have here. All 30 of the debtors in these cases are affiliates, and joint administration will provide a significant administrative convenience without harming the substantive rights of any parties in interest.

We've provided a copy of the motion and the proposed order to the United States Trustee and received no comments. Accordingly, we respectfully request that the proposed form of order at docket number two be entered by the court.

Alright. Any comments, questions, or concerns about the joint administration motion, mister Bublik?

Thank you, your honor. Nothing, to add from US Trustee.

Alright. The the proposed and by the way, my my normal practice for first days since I've reviewed all the proposed orders is to just adopt the findings and conclusions that are in the orders rather than do my own mini ruling for each for each matter. So if I approve it, I'm adopting the findings and conclusions. The the only, I guess, potential ask on the on this one, because I did share this with the clerk's office as well. Paragraph nine asked that the court put a docket entry that refers to the joint administration.

The only request on that one potentially is to just shorten it up rather than list them all out individually. Maybe just refer to the first debtor at all. It would just shorten up that docket entry, but that's that's not a huge not a huge issue. Otherwise, I didn't have any, comments or concerns about the the joint administration motion. So, mister Bubwick?

Your honor, we will submit a revised form of order incorporating that change.

Alright. I think mister Bublick's good to go. Is that right?

Yes, your honor. Oh, I'm sorry. Can you hear me, your honor?

Yes. I can now.

Okay. Yes. US trustee is fine with that. Thank you, your honor.

Alright. So that motion is granted.

Thank you, your honor. The next item on the agenda that I'll be covering is agenda item number five. This is the debtor's creditor matrix motion filed at docket number six, and the revised order is filed at docket number 76. By this motion, the debtors are seeking entry of an order authorizing the debtors to file a consolidated creditor matrix in lieu of submitting a separate mailing matrix for each debtor, file the consolidated top 30 creditors list in lieu of submitting a separate list for each debtor. Serve certain parties and interest by email except when a party to be served by both has a mailing address, the debtor's books, records, and files or has, or and files or has designated a mailing address, and has requested hard copy US First class mail service.

Redact certain personally identifiable information, including the home addresses and email addresses of the debtor's current former employees and creditors who are individual persons from the consolidated creditor matrix, the consolidated top 30 list, the debtor schedules and statements, and affidavits of service filed with the court in these chapter 11 cases. The debtors are also requesting the court approve the form and manner of notifying creditors in these chapter 11 cases and also approve the bar date for filing proofs of claim. The debtor's proposed bar dates include the general claims bar date for filing proofs of claim for pre petition claims, at 06/15/2025, which should be seventy six days after the petition date. The governmental bar date, it's 09/29/2025, a hundred and '80 '2 days after the petition date, and the rejection bar date, by which proofs of claim arising from the rejection of secretary contracts or an expired leases must be filed at the later of the general claims bar date, at the governmental bar date as applicable, any date this court may fix in a rejection order, or if no date is set in such order, thirty five days after the date of entry of such order.

Your honor, the motion and proposed form of order have been shared with the United States trustee. At the request, the United States Trustee, the unredacted version of the matrix will include a header with language putting the party in interest on notice of this court of this court's order and the redacted nature of the publicly filed order. We've also made minor changes with respect to the noticing procedures after conferring with our proposed claims agent. We submitted revised form of order at docket number 76, but we further submitting a revised form of order reflecting the change of the general claims bar date from 05/15/2025 to 06/15/2025. Unless your honor has questions, respectfully requests that the revised form of order will be submitting reflecting these changes be entered by the court.

So June 15 falls on a Sunday. Do you wanna

Your honor, may I confirm with counsel real

quick? Yeah.

Your honor, we proposed 06/16/2025.

Alright. I think June 16 makes sense.

Thank you, your honor. We will make that change in the revised proposed order.

And then, for the governmental bar date, I didn't I didn't check that one just to make sure it doesn't fall, on a weekend. Anybody else have any comments, questions, or concerns about this motion? Mister Bublick, are you good?

Yes. Thank you, your honor. USOC appreciates that debtors council worked with us to, reach an agreeable, bar dates.

Alright. Well, thank you. Other than that date change, I didn't have any other Harper items, so that motion is approved.

Thank you, your honor. The final item on the agenda that I will be covering is agenda item number eight. This is the debtor's taxes motion filed at docket number nine, and the revised order is filed at docket number 79. By this motion, the debtors are seeking entry of an order authorizing the debtors to remit and pay certain taxes fee taxes and fees accrued prior to the petition date that are payable or will become payable during the pendency of these chapter 11 cases, including any penalties and interest there on to various federal state, county, and city taxing and licensing authorities, and to remit and pay any audit amounts that may become payable in the ordinary course of business. Your honor, the debtor's proposed order submitted as an exhibit to the taxes motion, omitted language, requesting authority to pay taxes and fees accrued prior to the petition date that, quote, are payable as of the petition date.

The debtors have submitted a revised form of order, including language requesting the authority to pay taxes and fees that are payable as of the petition date, in addition to the authority to pay those pre petition taxes and fees that will become payable during the pendency of these cases. As of the petition date, the debtors had a portion of their property taxes due, which they've been unable to pay due to liquidity issues. This is the reason for the proposed language addition. Your honor, the motion and the proposed form of order have been shared with the United States Trustee, and we received no comments. As of the petition date, the debtors are in the process of disputing of disputing a completed audit with respect to their sales and use taxes with the state of Florida.

The debtors maintain an audit reserve in the current amount of that, audit, but it is subject to possible reduction. The debtors have also received notice of potential audit with respect to their sales and use taxes with the state of Texas from the period of 04/01/2021 to 12/31/2024, but no date for the audit's initiation has been declared. The debtor seek to pay any audit amounts on a final basis as they may arise in the ordinary course. Unless your honor has any questions, we respectfully request that the revised form of order at docket number 79 be entered by the court.

Alright. Let me start with no. I'll start with let me start with mister Bublik. Mister Bublik, any concerns about this one?

No concerns from the interest of your honor. Thank you.

Alright. Any other party have any comments or concerns about this motion?

Yes, judge. Jeffrey Gutman on behalf of, Palmer Palmer's House. We are a we're a landlord of one facility that's that's being a, operated by by the Hooters by the Hooters better. I have not seen this this order, and we are owed real estate taxes, and it's not clear to us whether our debt is covered by this order or not. They didn't share this order with us, and I think, it should be shared with us so we can review and comment.

So it's it was filed on the docket. Admittedly, it was filed today, but there's an a proposed form of order that was, attached to the original motion that was filed. Do you do you have ECF access by chance?

Not not not handy, judge. Okay. Maybe counsel could address how he's dealing with landlord property tax

issues. Mister Janelle, your honor, we are, your honor may confer with counsel for a second.

Sure.

Your honor, this motion is not seeking to reimburse landlords for property tax obligations or other tax obligations. This motion is simply seeking authority to pay taxing authorities directly. We'll be working with landlords, with respect to any assumption, assignment, and or rejection of real property leases, to handle contractual issues with respect to reimbursement of property taxes.

Alright. That that makes sense to me, mister Danoa. The, I don't I don't think your your client's prejudiced by the entry of this order.

I I I agree, Jake.

And then,

We'll

deal we'll deal with it at a later time on our issue.

Alright. Very good. Any, anybody else have any concerns about this motion? Alright. Well, that one's granted as well.

Thank you, your honor. I will now cede the podium to my colleague, miss Knight.

Alright. Thank you.

Good afternoon, your honor. Laura Knight of Ropes and Garrett on behalf of the debtors. The first matter I will be presenting is agenda item number four that is at docket number five, the debtor's application to retain Kroll as claims and noticing agent. I'll note that we filed a revised form of order at docket number 77. Additional support for the application is set forth in the declaration of Benjamin Steele, a managing director at Kroll, which is attached as exhibit b to the application.

Mister Steele is on the Webex and available to testify if you or any of their party has any questions. Your honor, pursuant to 28 USC section one fifty six c, the debtor seek authority to retain and employ Kroll Restructuring Administration LLC as claims, noticing, and solicitation agent in these chapter 11 cases. Your honor, the debtors chose Kroll as their proposed claims and noticing agent based on Kroll's capabilities, experience handling cases of this size and complexity, it's acceptable pricing terms, and it's disinterestedness. Thousands of likely claimants and entities to be noticed in these cases. It would be administratively burdensome to perform the services that Kroll has proposed to provide absent Kroll's retention.

Your honor, we are also seeking authorization to replenish Kroll's seventy five thousand dollar retainer, which was applied to all pre petition invoices to hold the retainer under the engagement agreement as a security for the payment of fees and expenses. Your honor, we previewed the application with the US Trustee and resolved all of their open issues. Unless your honor has any other questions, we respectfully request that you enter the revised form of order at docket number 77.

Alright. Thank you. I I did not have any questions for mister Steele, after reading his declaration, and I don't have any concerns about the application. The red line looks good to me. So let me ask mister Public.

US trustees good to go on this one?

Yes, your honor. No concern with with this any any longer. Thank you, your honor.

Alright. Anybody else have any comments or concerns about the the Kroll retention application? Alright. That one's approved.

Thank you, your honor. The next and final matter that I will be presenting on is agenda number item number seven. That is at docket number eight, the debtor's insurance motion. By this motion, the debtor seek authority, but not direction to maintain their existing insurance policies and pay all obligations arising there under or in connection therewith to renew supplement, modify, or purchase insurance coverage, and to continue to honor their obligations under the surety bond program. The coverage provided for under the insurance policies is essential to preserving the value of the debtor's assets, and in many instances, required by various regulations, laws, and the United States trustees operating guidelines.

Your honor, as an overview, the debtors maintain 26 insurance policies that provide coverage for, among other things, property, general liability, workers' compensation, excess liability, directors' and officers' liability, and crime protection. And your honor, exhibit b to the order includes a summary of all of the policies. In sum, the total amount of annual premiums on account of those policies is approximately $6,200,000. Most of these premiums are financed pursuant to premium financing agreements, the aggregate amount of remaining monthly payments under the premium financing agreements is approximately 2,100,000.0. Finally, your honor, the debtors maintain a 14 surety bonds with an average face amount of $9,000.

Pursuant to the surety bond program, the debtors remit payments when the bonds are issued or renewed on an annual basis. The surety premiums total approximately $18,000 per year. Currently, the debtors are not aware of any outstanding amounts owed on account of the surety bonds, but seek relief to pay any should they arise. To continue their business operations post petition, the debtors must maintain their surety bonds to provide financial assurance to the various agencies that regulate the debtor's operations. As such, the debtors seek authority to pay surety bond premiums as they come due and renew as needed in the ordinary course.

Pending any questions from your honor, the US Trustee, or any other parties in interest, I would request entry of the order.

Alright. Thank you. Why don't I start with mister Bublik again? Any concerns about this one?

No concerns from the associate, your honor. Thank you.

Alright. Any other party?

Good afternoon, your honor. This is Dwayne Brescia, for the surety companies, Westchester Fire Insurance Company, and Federal Insurance Company. Easier just to call them the Chubb Surety Group. No objections to the entry of the order. I just have been retained this morning, on this matter.

I'm not able to confirm or deny many of the allegations in the motion or stated today. I have no reason to oppose them. Just reserve our rights to clarify the record if needed at a later date. Otherwise, no objections to the to the order.

Alright. Thank you. Alright. Any other party? Alright.

That motion is also granted.

Thank you, your honor. I will now cede the podium to my colleague, mag Maggie Thoms.

Alright. Thank you.

Good afternoon, your honor. Maggie Toms of Ropes and Gray on behalf of the debtors. I'll be presenting three motions. The first will be the sofa extension motion, filed a docket number seven listed on the agenda as number six. By this motion, the debtors are seeking entry of an order extending the time to file sofas by thirty days for a total of forty four days.

These are complex cases, your honor, comprising of 30 debtors. And as explained in the motion, the debtors operate a global chain of restaurants. Due to the nature of the debtors businesses, they routinely engage with a considerable number of suppliers across the country. As such, the debtors anticipate that it may require forty four days to complete the sofas. For the reason set forth in the motion and in the absence of any questions from the court, we respectfully ask entry of the order at docket number seven.

Alright. I'll start with mister Bublik. Any concerns about this one?

No concerns, your honor. Thank you.

Alright. Any other party? Alright. Now I don't have any heartburn with this one either. I've looked at the order, and that one's also granted.

Thank you, your honor. Next, I'll be presenting the utility motion filed at docket docket number 10 listed on the agenda as number nine. The debtors are requesting entry of an order approving the debtor's proposed adequate assurance of payment for future utility services. Approving the debtor's proposed procedures for resolving requests for adequate assurance, prohibiting utility providers from altering, refusing, or discontinuing services, and authorizing but not directing payment of undisputed invoices for utility services, including the debtor's utility consolidator in accordance with pre petition practice. The debtors obtain electric, natural gas, sewage, among other similar utility services from a number of utility providers.

Without these services, the debtor's operations will be severely disrupted, and it would undermine these reorganization efforts. The debtors and the debtors intend to satisfy post petition obligations owed to utility providers with cash on hand, cash generated from the ordinary course of business, and cash available to the debtors under the debt facility. But in addition, the debtors are proposing additional adequate assurance of payment, and the debtors proposed to deposit approximately 419,000 into a segregated account for the benefit of the utility providers. In addition, the debtors seek approval approval of the adequate assurance procedures. If a utility provider believes additional adequate assurance is required, they must serve written a written request on the notice parties.

If this request is not served, the utility provider shall be deemed to have received satisfactory adequate assurance and are forbidden for altering or discontinuing the utility services. Unless your honor has any questions, we respectfully request that the proposed form of order, a doc number 10, be entered by the court.

Alright. I don't have any questions on this one. Any party have any comments, questions, or concerns? Alright. That motion is granted.

Thank you, your honor. The final motion that I'll be presenting is the wages motion filed at docket number 11 listed on the agenda as number 10. By this motion, the debtors are requesting the authority but not direction to pay pre petition workforce obligations and to continue to honor their compensation and benefits programs and to pay related expenses. The debtor's work workforce consists of about 6,000 employees, about 2,000 of Wedger full time. Of those employees, 559 are salaried and the rest are paid hourly.

In addition, the debtors utilize eight independent contractors to provide marketing, IT, and learning and development functions for various projects. The debtors are requesting approximately $4,040,000 of relief on account of the debtors' compensation and benefits programs and pre petition workforce obligations. Although the debtors believe all compensation and benefits programs are vital to the debtors businesses, pursuant to the order, the debtors are only seeking authority to the extent that they believe it necessary to prevent immediate and irreparable harm. Importantly, the debtors are not requesting relief to pay any amounts on account of compensation obligations that are in excess of the cap statutory cap set forth in section five zero seven a four of the bankruptcy code except for amounts paid pursuant to the EEOC proceedings. Your honor, the employees provide the debtors with services necessary to conduct the debtors businesses, and the debtors believe that absent the payment of pre petition compensation obligations, the debtors may experience employee turnover and instability at this critical time.

For the reason set excusing. Additionally, the debtors, have worked with the UST and have agreed to kick the expense reimbursement for senior level management to the second day. For the reason set forth in the motion and in the absence of any additional questions, your honor, we respectfully ask entry of the revised form of order, which we will be filing, which will include the, expense reimbursement language.

Alright. Mister Bublik, anything else on that one?

Well, the associate appreciates, that are working with us to resolve our concerns. We also had, some concerns regarding the independent contractors. So, to the extent, that better is able to, we would, like to hear evidence that the contractors that independent contractors they do seem to be paid, do qualify under five zero seven, a four b. Thank you, your honor.

Is this evidence to be supplied, after the hearing, or are you looking for that now, mister Bublik?

Your honor, we were, awaiting a list of the independent contractors that they did seem to get paid, and, we have not received that yet. So to the extent that our is able to put on that evidence now or commit to provide that later, the US trustee would appreciate that to resolve its concern, as to these independent contractors that are sought to be paid.

I'm fine either way if if, if the debtors wanna commit to providing that information to the US trustee after the hearing. I don't have any problems with that. But,

Yes. We'll do that, your honor.

Alright. So I guess that one that one will be granted with the, the first modification, which I understand is coming in a a red line, and then I'll let you work with mister Bublik after the hearing. I'll just assume that if the order's uploaded, all remaining issues have been resolved. But with with those caveats, the that motion's approved.

Thank you, your honor. I'll now cede the podium to mister Park.

Alright. Thank you.

Good afternoon, your honor. For the record, he's at Park from Robson Gray on behalf of the debtors. The motion that I'll be presenting today is a debtors cash management motion. This is valid document number 12. It's agenda item number 11 on today's agenda list.

Alright. Thank you.

Your honor, the this motion, the debtors are seeking to, one, continue the debtors, cash management system, to honor any pre and post obligations on account of bank fees, three, to maintain existing business forms, and four, to, continue the debtor's cash management system in the ordinary course. There's maintained a total of 27 bank accounts. Those are maintained at US Bank and Bank of America. Both of those, institutions are, approved by by the US Trustee as depositories, and all of the debtors bank accounts are FDIC insured. In order to assist the court's understanding of the debtors cash management system, I think it's best to view the cash management system in two different categories.

The first category is what we call the non secreitization entities. And as mister Dickerson alluded to earlier, these are the, manager entities that are involved or associated with the corporate activities of the company. The main operating account at this entity is the main corporate account. This is maintained at Hooters of America l LLC, bank account number ending in 0215 at US Bank. And this account is the main operating account where it makes any disbursements on a kind of corporate activities in collections to the extent that there are any.

Importantly, the in the ordinary course of business, your honor, the, the manager the Tudors of America LLC as the manager of the securitization entities make certain advancements to these accreditation entities in cases where there are insufficient funds to operate these accretion entities. And once the funds are made, the right to reimbursement of these entities sit at the top of the waterfall for repayment of the secreitization, entities under the indenture. The other half of the debtors, cash management system are these secreitization entities. These entities are involved with the debtors' operations of the restaurants, and also the franchise activities. With regards to the franchise activities, the debtors collect certain fees on account of in the form of franchise fees and royalty fees under the franchise agreements that debtors have with certain franchisees.

The once the proceeds come in on account of these, restaurant activities and the franchise activities, they are funneled into what do we call the main collection account in the motion. And this is where all the proceeds from the restaurant activities and the franchise activities are gathered after accounting for any of the disbursements that need to be made. Once it hits that account, it's then transferred to a bank account maintained by The US, indentured trustee. And the trustee then for the purpose of making the payments under the waterfall that we, that we described. Your honor, the debtors believe that the ability to continue the debtors cash management system, is imperative for purposes of, operating in the ordinary course of business.

The failure to do so would tremendously impair the debtors, business in the ordinary the debtors believe that that we have circulated copies of the motion beforehand with the US Trustee. I believe that we have, resolved all of the comments, but we have not have had the chance to upload a revised order. So subject to by your review, your honor, there's respectfully request the order be entered, by this court.

Alright. Thank you. We're gonna we're gonna mute that person first, and then, we'll go to mister Bublik. Mister Bublik, any other thoughts or comments on this one?

No, your honor. USDC, again, appreciates that are working with us to, on a form of order that would be accepted to the US trustee and, appreciates the the resolution that we reached on that. Thank you, your honor.

Alright. Any other party?

Good afternoon, your honor. Kyle Hirsch, for Brian Cave, Leighton Paesner representing Bank of America. We have not, had a chance to confer with debtors counsel. There is a modest provision that we would be requesting of debtors counsel. So to the extent there is a proposed order that is being amended for uploading, I think we can get that addressed.

I don't expect it to be controversial. It relates to authorization for the bank, to charge back to accounts for returned items. That's an important provision for the bank to include its cash management provisions. But I do expect that to be a noncontroversial discussion, with debtors counsel. And with that, additional revision, we don't have objections to the proposed order.

Alright. That that sounds like something that should be able to get worked out in fairly short order after the hearing before the order's uploaded. Yep. You're

right. I would agree. Thank you.

We'll come forward with mister Hershey and make sure it's addressed in the order.

Alright. Alright. Thank you. Any other parties? Alright.

Well, that motion's granted with the understanding that that little tweak will be, made before the order's uploaded. Otherwise, everything else looks good to go. So that motion is granted.

Thank you. Now we yield the floor to my colleague, miss, Regina Casilla.

Alright. Thank you.

Good afternoon, your honor. For the record, Regina Castillo from Ropes and Gray on behalf of the debtors. I will be presenting the next two matters. The first matter I'll be presenting is agenda number 12. This is the debtor's critical vendor motion filed at docket number 13.

By this motion, the debtors are seeking entry of an order authorizing the debtors to pay certain pre petition claims of vendors whose goods and services are essential to the debtor's continued operations. Claimants whose claims are entitled to administrative expense priority under section five zero three b nine of the bankruptcy code, and claims that give rise to statutory constructive trust under APACHA and PASA. In this order, the debtors are seeking this relief on an interim basis up to an amount of approximately $4,700,000. Your honor, the debtors along with their advisors have engaged in

a thorough review of the

books and records and reviewed diligently to identify the vendors out of the debtors entire vendor population that are truly critical to their operations and without whose goods and services the debtors of states would be significantly and irreparably harmed. We worked with the United States Trustee in advance of filing to address any questions and concerns and believe that the proposed interim order attached to the motion and submitted in advance of the hearing is acceptable to the United States Trustee. Unless your honor has any questions, we respectfully request that the proposed form of order at DACA number 13 be entered by the court.

Alright. I'll start again with mister Bubley.

No concerns, your honor. Thank you.

Alright. Thank you. Any other party?

Your honor, this is Mark.

Bruce Ackerley, on behalf of, as I stated earlier, Betty Keith Company, a significant creditor, in this action out of Fort Worth, Texas. My client is a food service provider to Hooters restaurants in the Texas and outlying areas. My only concern I don't necessarily object to, the critical vendor, but I wanted to comment that, we are working with

the

debtors to, try to resolve our status as a critical vendor. We are owed, over $2,000,000 for pre petition debts, from the the restaurants that we service or supply. We in addition to that, we are a preferred creditor under the Perishable Agricultural Monodities Act trust provisions, which give us priority over all creditors secured, unsecured, or otherwise in connection with the debtor's bankruptcy case. Again, I emphasize that we are working very closely with the debtors to resolve our status in the bankruptcy case. But I wanted to make just at least some statement that we reserve our rights with respect to the treatment of our claim under the critical vendor motion and also more particularly under the debtor in possession motion, or which is going to be, hurt in a minute.

We are like I said, we are owed quite a significant amount of money. The motion currently before the court does not identify any creditors per se. We have been advised that we are deemed by the debtor

to be a critical creditor.

However, we have not had a resolution, and I'm concerned only that with our claim at 2,200,000.0 on pre petition debt and other creditors, that they may consider critical vendors that the amount that is being sought set aside for treatment of critical vendors is adequately, sufficient to, maintain the goal of the that the debtors, seek to achieve by this motion. And that's that's all I would have at this time. Thank you, Aaron.

Alright. Well, I think the entry of the order won't prejudice your client's rights to continue to work with the debtor to try to convince them that they're that they're critical. So, so I I understand the comment. So thank you for that. Any, any other parties?

Your honor, Mark Stout here on behalf of Regions Facility Services Inc. Your honor, shortly before the hearing today, I had an opportunity to call debtors counsel. And to their credit, I sent them an email just a couple hours before the hearing, and they immediately responded. My understanding is that my client will be listed in a revised order that they are submitting to the court. Listening to counselor's presentation, it's unclear to me if the order that has previously been presented to the court is the one that they intend to upload or if there's going to be a revised one.

But my understanding is that my client is in the revised order for $321,206 on a claim amount of $726,000. I reserve all rights to object to the treatment. I have not had an adequate time to dig through it with my client, but I did wanna make sure that my understanding that we were gonna be listed as a critical vendor is correct and that the court was aware of that. Thank you.

Alright. Well, I guess I'll I'll hear from the debtors and whether the agreement was to list you or whether they just consider you critical. It it doesn't really matter to me. However,

however, your debtor The

the debtors would like

to confirm that mister Staudt's clients are critical vendors. However, we will not be, submitting a revised order.

Alright. Very good.

Your honor, if I beg Thank

you, your honor.

Will the debtor confirm that my client, Betty Keith Company, is a critical vendor and will be treated, respectfully under the court's order?

Your honor, the debtors confirm.

Thank you.

Alright. Well, that motion, is also granted no matter what standard applies, whether it's, co serve or some other standard. I think the debtors have satisfied it with with the evidence and the declaration. So that motion is granted.

Thank you, your honor. The next item on the agenda that I'll be covering is agenda number 13. This is the debtor's customer programs motion filed at docket number 14. By this motion, the debtors are seeking entry of an order authorizing the debtors to maintain and administer their existing customer programs and to honor their pre petition obligations related thereto. Your honor, the continuance of these customer programs is critical to the debtor's business.

In particular, it's essential that the debtors maintain their valuable customer relationships, goodwill, and continue maximizing the debtor's reputation and customer satisfaction. The debtors run a variety of customer programs and rewards that are designed to drive brand excitement, attract customers, and maintain positive customer relationships at each of its restaurants. This includes certain promotions and a loyalty program maintained by the debtors. The loyalty program is structured as a tiered membership system where guests accrue points with each visit for amount spent at the debtors restaurants. Additionally, the debtors provide rewards for non purchasing activities such as birthdays, holidays, or other qualifying events for participants of the loyalty program.

There are no pre petition amounts due under the debtors loyalty program beyond the non purchasing rewards, but the debtors request authority to continue honoring these promotions. Additionally, the debtors seek authority to continue its gift card programs, which is administered by a third party stored value solutions. The third party administrators paid a monthly processing fee of $3,200. As of the petition date, there are approximately $10,600,000 in gift cards outstanding. However, in the three months prior to the petition date, approximately $670,000 were redeemed pursuant to the program.

The debtors seek authorization to honor any accrued obligations, including incurred on account of the processing fee, and to continue to honor all customer obligations on a post petition basis consistent with past practices. Finally, the debtors seek authority to continue its partnership with its third party delivery services and first party delivery providers who facilitate direct ordering and delivery services. The third party delivery partnerships collect payments from customers and remit payments to debtors net of commissions and fees, where the first party delivery providers collect monthly fees as well as a transaction fee of approximately $49,000 a month. As of the petition date, the debtors do not owe any outstanding obligations under the delivery partnerships, but seek authority to continue the partnerships and ordinary course on a post petition basis. Your honor, maintaining these critical relationships will benefit all the debtors, creditors, and stakeholders.

And the debtors believe that the damages from disregarding these obligations under the customer programs would far exceed the costs associated with honoring them as canceling any of these programs would result in brand damage, loss of goodwill, as well as loss of returning customers. Unless your honor has any questions, we respectfully request that the proposed form of order at docket number 14 be entered by the court.

Alright. Mister Bublik, any concerns on this one?

No concerns with this motion. Thank you, your honor.

Alright. Any other party? Alright. The the order on this would look fine to me. So just as with the others, I'll adopt it, and that motion is granted.

Thank you,

your honor.

With that, I'll say the podium to my colleague, miss Bogorick.

Alright. Thank you.

Good morning, your honor. For the record, Alexis O'Gorek from Ropes and Gray. I'll be presenting two two motions. The first of which is the debtor's lease rejection motion, which is found at docket number 15 and agenda number 14 on the proposed revised agenda. We have spoken with certain counsel to the landlords, and we are continuing, to work with those landlords on a revised form of, revised proposed form of order.

Pardon me. And we will upload that order, when after this hearing when it's agreed to. In terms of the relief, the debtors are requesting authorization to reject certain nonresidential real property leases and abandon certain personal property at such lease locations. The debtors have ceased operations at 36 of its restaurant locations prior to the petition date. The debtors have either surrendered possession of the premises and provided notice to the landlords or the debtors have been locked out by the landlords.

The debtors are requesting the rejection of leases as of the petition date as well as abandonment abandoning de minimis property assets included or abandoning, property personal property assets therein. The debtors do not believe, there is personal or there is valuable property remaining at the locations that they have surrendered to the landlords. And the debtors are requesting relief effective as of the petition date to minimize post petition administrative expenses. We've provided a copy of the motion to counsel to The US Trustee. And accordingly, if there are no questions, we respectfully request that this court enter the lease rejection, order, which, again, there will be a revised proposed form of after.

Alright. So when I read this one, I think last night, the the original certificate of services said that it was served on the court's PACER system. But at some point, I think over lunch, I saw there's a revised affidavit of service, and it looks I didn't have time to go through and look at the details, but it looked, I think, towards the end. Was it I n I n j? You were able to get service on the affected counterparties either either by email or overnight service.

Is that right?

Your honor, I believe that's correct.

Were were there any, counterparties that you didn't have good at that you didn't have addresses for for overnight service, whether it was like a post office for a post office box or no. Nothing stuck out. So

Your honor, I do not believe so, but I can confirm.

Alright. So I'll I'll just trust that the the service is good. If there was if there was a problem serving anybody, you you can follow-up after the hearing. So let me let me start and ask, are there any any parties have any questions or concerns about this motion?

Your honor, this is Joel Newell with Ballard Spahr. There were a couple of questions related to this, and I will echo counsel's comment, that we have had some dialogue with, council as to some perspective language to be included in the order. The first being since this is a first day motion, one of the concerns is why this needs to be done on such an expedited basis given the no proton relief, as to these properties that it wouldn't incur any additional administrative cost. The second being, as counsel noted, these 36 properties, one of particular interest to our client, has left the essentially, the restaurant equipment and everything there in getting clarifying language in the proposed order that the landlord can dispose of that property once the order's entered, similar to what we may see in a later motion on the rejection procedure, that is, you know, not necessarily compounded, but expanded upon from the standpoint of some of that property on site on these closed businesses may be third party and the, difficulty of then the landlord being in the position of having to determine whose property that is. We did get a list of the third party holders of that property and and trying to work with the debtor on coordinating that, but some of those concerns are still outstanding in place into the respective motion and the immediate relief asked by the debtors today.

So tell me you've floated some proposed language or or not. Have you had a chance to do that?

Yes. I apologize, your honor. Yes. To to clarify or reaffirm, yes. We have sent some proposed language to debtors counsel to be considered.

The comment that I believe we received in response was that they needed to confer with the secured lender, or lender in general on those, proposed changes. And we, at this point, don't have the affirmation whether that's been accepted or not. But we'll continue to work with debtors counsel and whomever on continue to discuss that proposed order itself.

Alright. So from the debtor's perspective, I don't I don't know if you can give me an update if you've had a chance to confer with the, I guess, the the lenders that would have the concern, I guess, would be the lenders that have a lien in the stuff that the landlords are proposing to go dispose of.

Your honor, sorry. Apologies for that. I'm not sure if I was on mute there or not. We are continuing to work with the landlords, council to continue working on a revised, revised form of order. In terms of the specific comments by, counsel that was just raised, actually, I'm sorry.

May I have a moment to confer with my colleagues?

Sure.

Thank you. Your honor, can you hear me?

Yes. I can.

Sorry. Thank you so much, for that. So we have notified the third parties who have, interest in the property that is left behind at the locations, and we are not directing one way or the other what the landlord should or should not do with that. We have provided the contact information, and we will continue to provide it if any more is needed, so that the landlords and those third parties can, continue working that out amongst themselves. As for the specific comments by this landlord that were raised and to which we responded that we were working with our secured lenders, we are still working with our secured lenders on that.

Obviously, there are multiple parties of interest in this case. So, I cannot confirm those specific comments at this time, but we will continue dialogue with the landlord council and with the other parties in interest.

Alright. So just as a heads up, because this this has come up in other cases, giving a little bit of a preview for the next motion with the abandonment procedures. I've I've never quite gotten comfortable with the concept that the the language in in again, that's we're not calling that motion yet, but the that the abandonment would be free and clear of liens, claims, and encumbrances abandoned to the landlord, free and clear of liens, claims, and encumbrances. I haven't quite got comfortable with language like that. Is is that what the proposed language that's being discussed for the current rejection motion?

Is is that the type of language that you're looking for for your landlord client?

Right. Your honor, are you referring to the rejection motion that, we're discussing now or the rejection procedures motion?

Well, I'm I'm I'm asking if the type of language that this particular landlord is asking for to resolve his concerns about this motion, Is he asking for that type of language, the type of language that's in the procedures for abandonment? Because I'm is that what you're asking for, to be able to go get it free and clear of liens, claims, and encumbrances? Or is it just that the stays lifted free to exercise whatever rights and remedies you might have? I think from my perspective, that's the type of language that I would be comfortable with.

Your honor,

I apologize. Sorry. Go ahead.

Go ahead.

Thank you, counsel. Yes. To answer the court's question, the language that we would be proposing or have proposed would include that the property that is abandoned by the debtor is free and clear of those interests of the creditors, to otherwise dispose of as provided in the abandonment of the property in those rejected leases.

So you'll have to help you'll have to convince me that that's appropriate because I've in prior cases, I haven't approved language like that because the why would the abandonment be free and clear of liens, claims, and encumbrances? I know that that would be helpful to the landlord, but, wouldn't it be sufficient if the landlord is just free to exercise whatever rights and remedies it may have under applicable law to dispose of whatever's left?

Well, in similar cases, this language has been utilized, and part of the issue is the cost or the storage of trying to, then determine whose property it is or the lienholder rights. And the the language provides that and maybe it's a clarification to my prior comment, and I apologize, your honor, that the there's no free and clear language, but the language, that the property will be abandoned in consultation with the lenders. So the landlords need further clarity

that

the lenders have been consulted and are waiving their liens. And I think that addresses the court's issue because it wouldn't be so much as the court's determining that the landlords can dispose of free and clear is that they're waiving their liens as to that. So I think it would be at that point a mutual per se release of the lien for that once the order is entered for then the landlord to dispose of the property that's abandoned by the debtor. So that's where I believe the secondary comment that counsel raised that they're still conferring with lenders comes into play with with regards to the language and the proposed order.

So I wouldn't have any problem if if the lenders who are represented here agree to language that say once it's abandoned, they're waiving or releasing their liens so that you can do with it what you want, without having to worry about those lenders that are expressly releasing their what whatever interest they might have in the equipment. If that's what you're talking about, I don't I have a problem with that. I guess I'll just have to I'll have to rely on the debtors to let me know if the order's uploaded, who who all has blessed that language in the order.

Thank you, RDS. And I apologize for any confusion I may have created with my prior comments, but I believe at the end of the day, with conference with the lenders, it will be a waiver and inclusive in the order itself. So we'll we'll work with debtors council post hearing to address that.

Alright. Did does that work for the debtors to try and wrap up that particular concern with language that's agreed to by the debtors, this this landlord, and whichever lenders wanna expressly release their liens?

Yes, your honor. That works for

us. Alright. Any other any other parties?

Yes, your honor. Cheryl Knighton on behalf of several, Avaloran property taxing entities in Texas. Going back to the comments that were just discussed about abandonment free and clear of liens, under pursuant to Texas law, the liens held by the Avalon taxing entities are the senior liens on any tangible personal property. So they would object to any abandonment free and clear of liens, at this juncture.

Alright. So it sounds like for this particular motion, I don't think anybody's trying to get that language in there. But so I understand your concern. So if the debtors wanna try to resolve the issues for these landlords after the hearing, I don't have any problem with that. I I will grant the motion and allow the debtors the opportunity to tweak the order to resolve the concerns of particular lenders about particular liens, but I'm not anticipating that this order will be uploaded with just general language that says that the abandonment's free and clear.

And I think that would address miss Knighton's concerns. Correct?

Yes, dear. That would address the technical bereaved concerns.

Alright. Alright. Does that work for the debtors also

then? Yes, your honor. That works for us.

Alright. Very good. Well, that that motion is granted then, and I'll keep an eye out for some some form of agreed order.

Thank you, your honor. The next motion I'd like to present as you previewed is, the leak or the rejection procedures, motion. And similarly, we continue to speak and work with landlords, to address their concerns, and we'll we'll upload a revised proposed form of order after this hearing. Apologies. I keep having trouble saying that.

As previewed in this as in the previous discussion, the debtor seek entry of an order authorizing and approving procedures to reject certain executory contracts and nonresidential real

property leases.

And while the debtors have also requested authority to reject certain leases effective as the petition date, this one creates, procedures for future rejections of contracts and leases. The proposed procedures require that the debtors file a rejection notice, which sets requirements regarding abandonment of personal property, objection procedures, deadlines for filing claims, unresolved objections, and treatment of security deposits. We have provided a copy of this motion with counsel to the US trustee. And if there are no questions, we respectfully request that this court enter the, rejection procedures rejection procedures order, which we will upload after this hearing.

So we're not

warm up after this hearing.

Alright. So what I mean my concern about the abandonment language, what do what do the debtors propose to do with that? So that's the it's the it's the language in the order that says after the debtors specify that they're going to abandon it, absent a timely objection, it's abandoned free and clear to the landlord.

Your honor, we are comfortable removing that language.

Alright. So I'm I'm fine with the abandonment and to the extent that the if any particular lender wants to agree to procedures where they're releasing their particular liens, that's great. But, with that change, I don't have any other concerns about that motion. Does any party have any comments or concerns about the motion of docket 16?

Judge, if I may be maybe heard just on on this one. Counsel have said she's going to be, submitting a revised order. I don't know what the changes are anticipated in the revised order. I'd like her to address that.

Sorry. I don't know if I'm off mute yet.

Are we Alright. Now now I can hear you. Go ahead.

You, your honor. We can share the revised the revised proposed form of order, with such counsel. We have not, decided on all of the changes yet, so I can't walk through them at the moment. But happy to share it.

I mean, how could we approve an order without even knowing it's not even been shared with anyone?

So I understand she's gonna propose any proposed order will be sent to you. I guess, from my perspective, as long as the abandonment language is tweaked, I don't have a problem with the order. Tell me what your particular concern is with this order.

Well, just just as an example, if she changes the amount of I mean, on behalf of, mister mister Danella, the sooner we know whether or not this this scooter's location is going to be sold or taken over or operated, it's important to us to know where where we stand. So if for example, they're changing the the time of their rejection, that affects us dramatically.

When you say the time of the objection, do you mean the time you have to respond to to a proposed notice?

Either either way, the the time that they're gonna give the notice or the time for us to respond to it.

So I don't think this sets a deadline for them to give you a notice. I didn't I don't recall seeing that. Is that in the order somewhere that I missed?

No, your

honor. It just it just generally provides that the debtors I mean, they have a lot on their plate. At the appropriate time, they decide which proposed leases they want to reject after and there's no deadline for that. After that decision is made, they would then serve the the proposed rejection notice on the affected counterparty, which would include your client. At that time, your client would then have the opportunity to object.

There's an objection period.

The objection period is fourteen days, your honor.

Fourteen. Alright. Thank you. So fourteen days. So I I don't think you're prejudiced by the entry of this order and the types of changes that I think that the debtors are talking about making are nonmaterial changes, not not something that would wildly change the proposed procedure.

And then if, that would give your client the opportunity to look at the proposed rejection, and if you have an objection, you'll have fourteen days to file it. So I I think the proposed order fully preserves your client's rights. It's it's not doing anything now other than setting a process in motion for the debtors to then file Moses as and when they seem as and when they see fit.

Alright. Thank you, judge.

Your honor, Vicky Driver, on behalf of a litany of landlords, I won't repeat. I just would like to see a copy of the order before it's uploaded. I don't think we'll have any issues with it at all, but, would just like to see the final copy.

Alright. I think that's a fair request. I don't think the debtors don't have any problems with that.

And and I don't have my official, no entry of appearance on file. I just spoke with the clients this afternoon. But, I will get my contact information over to counsel for the debtor today so that they know who they're talking to and who they're talking on behalf of.

Alright. Thank you. Thank you, mister Stryburner. Alright. Any other parties have any, concerns about this motion?

Alright. Well, it's it's granted other than with the with the one tweak on the abandonment language that I raised. Otherwise, I think you're good to go. So, thank you.

Thank you, your honor. I will now be seating the podium to my colleague, mister Brown.

Alright. Thank you.

Good afternoon, your honor. Ramon Brown, Robeson Gray on behalf of the debtors.

Good afternoon.

I'll be presenting I'll be presenting the debtors' dip motion filed at doctor number four, agenda item number three. Gunner, as noted previously, the revised form of order was recently filed just before the hearing at docket number 83 with the, red line filed at docket number 85. Also, as previously noted, the in support of the debt motion, the debtors filed the declaration of mister Keith Mabe at docket number 17, the debtor CRO, and the declaration of George Koutsen Nicholas, of Solik, the debtor's investment banker. That's filed at doctor number 18. Your honor, by this motion, the debtors are seeking approval of what is a $40,000,000 dip facility provided by the debtors, pre petition lender.

This dip facility includes $35,000,000 of new money, and a roll up of $5,000,000 of the pre petition manager advanced credit agreement claims. As noted by my colleague, mister Dickerson, these funds used the funds will be provided to the debtors, for the purpose of funding manager advances solely for the purpose of benefiting the, securitization claims, which are the I mean, securitization entities, which are the restaurant and franchise operations. Of the $35,000,000 of new money requested, 5,000,000 will be made available, in the interim period with the ability to request an additional up to $1,000,000 each week, through entry of the final order. As your honor, we'll expect the the dip is requesting super priority priming liens, subject to generally the carve out and, any permitted liens. During the first four weeks of these cases, the debtors expect and as referenced in the or as noted in the in the budget filed with the, mentor, the the debtors anticipate spending just under $10,000,000 in the first four weeks, with a significant portion of these amounts going on account of vendor claims, much of which with respect to, certain of the critical vendors mentioned just, earlier.

Your honor, without access to these funds under the dip facility, the debtors would not have sufficient liquidity to pay their ordinary course operating expenses, nor would they be able to fund the administrative cost these estates. Obtaining the financing at the outset of these cases is critical and necessary to maintaining the debtor's operations as a growing concern. As described in mister Koutsen Nicholas' declaration, the debtors undertook a pre petition marketing process seeking to obtain proposals, for, among other things, post petition financing. At the conclusion of that marketing process, the debtors, the proposed debt facility was the only viable, post petition financing option available to the debtors. I would also note, your honor, one clarification and with respect to the declaration and as reflected in the revised papers that with respect to the DIP facility, there are no fees contemplated as negotiated, between the parties.

I would like to emphasize, your honor, that the dip facility is a key aspect of the overall restructuring contemplated in the RSA that was, recently filed this morning in connection with the interim order. I do not have the docket number, but it was it should be just after the, revised form of order about it, doctor eighty five.

Alright.

The debtors, your honor, require access to the facility immediately to avoid, irreparable harm and to continue operating in the ordinary course as contemplated in these cases. For these reasons, your honor, the debt of cement that prove of the debt facility is in the best interest of the estates. Finally, your honor, we worked with a number of parties, including the UST, to try to resolve a number of issues leading up to the hearing. We were able to resolve a significant amount of the issues as reflected in a revised form of order, Though we continue to discuss with parties, additional comments. So we expect that at the conclusion of this hearing, we'll still be resolving issues and we'll follow a revised order post hearing.

Your honor, with that, your honor, I'm happy to address any questions or if helpful, walk through the revised form of order.

Why don't we go through, we can go through the revised order and then I'll open it up for any comments after that. Yes, your honor.

Thank you.

This is the this is the one right line that I I didn't quite have time to get through. So I'll, I'll start looking at it in real time here.

Your honor, I'll note in most of these changes here, I I would describe as non substantive. If if helpful in just given the size of this, dip most I mean, dip water, I can flag what I think are the highlights or more substantive, changes here.

Yeah. That's that'd be perfect.

Thank you, your honor. First, I would note on page 10 of the red line, and this is paragraph f, romanette I b. Your honor, I just wanna know if the change here is just, correcting the pre petitioned term loan amount.

Alright. I see it.

Your honor, the next change I would flag is on page 14 of the red line, sub paragraph c. Just want to note that the parties agreed to move this language, regarding, certain pre petition reporting that was included.

Alright. I got it.

The next one I would note is on page 32 of the red line. It's paragraph two two b, romanette four. Your honor, this is just authorization for for the debtors to make certain payments, to secure parties on account of any, fees, indemnification, or expense reimbursements to the, no holder parties.

Alright. I got it.

Your honor, the next one I would flag is, page 47 of the red line. It's paragraph 11 a. Like, at the top of the page, your honor, I would just flag that the, professional fee carve out is no longer, subject to the budget.

Alright.

Your honor, the next change is on page 74 of the red line. That'll be paragraph 26 a at the bottom of that paragraph. Your honor, this change is just authorization for relevant third parties to enter into, account control agreements. And and I'm I'm sure other parties, can speak in more detail about this. But, generally, your honor, this is providing, for a Citibank and I believe the pre petition, or the dip agent to, enter into account agreements account control agreements with each other.

Alright. For

the record, the Citibank would be the, securitization trustee.

Alright. Thank you.

Then the final, I would say material change I would like to note is paragraph 58 of the interim order. Gunner, this is a reservation of rights from, LAGS Equipment LLC that we received early this morning with respect to, any rights they would have with respect to the LAGS royalty obligations. Your honor, I'd I'd say the balance of the changes are, I'd say, mostly related to diplender and note holder, the ad hoc group consent rights, and other clarifying changes. And with that, I'd open up to any questions from your honor or comments from other counsel.

Alright. Well, thanks for walking through the order, the material provisions for changes. So let me open it up. Why don't I start with, I I did see the reservation of rights that was filed by Citibank. So why don't I start with Citibank?

Thank you, your honor. This is Nathan Coco from Mintz Levin, on behalf of Citibank, which is the trustee for the pre petition secured notes. As we noted in our reservation of rights, your honor, the pre petition notes trustee has not been involved in negotiations among the debtors, the dip lenders, and other stakeholders regarding the terms and conditions of this dip financing and cash collateral arrangement. Norv, we had discussions over the last couple days, with the debtors regarding their proposed use of the trustees cash collateral. And I understand that this case, as is often the case, was filed perhaps under exigent circumstances.

But we have undertaken to quickly analyze the dip motion and the proposed form of order, including, some of the revisions and red lines that have come across the transom. There are other materials in connection with the dip that we haven't had yet had an opportunity to review, including the credit agreement. And although the trustee is not objecting to the interim relief that's being sought by the debtors today, we filed a reservation rights to make clear to the court and to other parties in interest that the trustee is not in a position at this stage to consent to final relief, being sought under the dip motion, particularly with respect to the priming of the trustees' liens. And because of that, the trustee expressly reserves its rights, claims, objections for purposes of the final hearing to the extent that it has objections. All this having been said, you know, we hope to continue to engage with other stakeholders in the case, most particularly the debtors, on on any issues, we may have as we continue our review.

We understand that this is an important motion, mission critical to to the debtors, but we want to make the court aware that we have not yet had an opportunity to fully review all the materials, and we have not had meaningful discussions at this point with with the debtors and other key stakeholders. So we are reserving our rights.

Alright. Alright. Thank you. I I understand your comments, and I appreciate the heads up. Any other party on there?

Yes.

Yes. Hi, your honor. Brian Brian Pfeiffer from White and Case, and we represent the ad hoc group of securitization note holders. And I I think it just give you a little bit of background. So Citibank is our our trustee, and I'll get to it in a moment, but we intend to work with them between the interim and the final to address any concerns.

But just from our perspective, from the bondholder perspective, let me start by saying, you know, our ad hoc group, we have seven institutional investors, who own 72% of the class a notes and a % all of the class b notes. And just for reference, there's 266,000,000 of class a notes and there's plus plus some interest and 40,000,000 plus interest of the class b notes. Together with some note holders that are affiliated with the dip lender and that are also party to the RSA, the collective note holders that are supporting this this agreement, the SDRSA, and, and the dip are well over 94%. I think we're about 94% according to mister Dickerson's, speech earlier today. And so, you know, there is a a large amount of the bonds that city represents that are covered here.

We fully appreciate their perspective and appreciate their reservation of rights. You know, I think as everyone you know, the last month or so has been a sprint for everybody. We are we are happy that we're at this place with a RSA, with the buyer group, with the dip blender, and with the note holders. And we know that there's a lot of work to still be that needs to be done, but, I think we've that that serious progress has been made. And and I guess the point that I would make is given this level of of note holder support, we we do look forward to working with Citibank.

And, you know, the way that these securitizations, they do add some complexity. There is a control party that is represented by mister Ashmeade, who's on on the line for drive train. We'll work with both Citi and drive train to make sure that any and all of their concerns, on this score are addressed. And I'm sure the debtor and other parts in it just will as well. But I think given that we are their, you know, their chief constituency, I just wanted to raise that, you know, that that's how we see this unfolding and we appreciate that, you know, what would the reservation of rights and that we're really just talking about the final, and and our hope is that we'll be able to come back to you between now and the final and and have resolved any of their concerns.

Alright. Alright. Appreciate that.

Your honor, if I may, it's, John John asked you to have Seward and Kiesl Okay. Counsel to drive train agency services, the control party under the securitization. You know, given that the holders have a strong super majority of the notes as stated by Mr. Dickerson earlier today, approximately 94% of the outstanding amounts are party to the restructuring support agreement and support this filing and this dip motion. We believe at this juncture, or they believe that the restructuring transaction set out in the restructuring support agreement will lead to the maximization of the recovery on the notes.

And for those reasons, the control party is not objecting, to the interim relief sought today, and we look forward to working, with mister Pfeiffer and his constituency and Citibank and the debtors to do whatever's necessary to be done, by the time of the final year.

Alright. Alright. Thank you.

Good afternoon, your honor. Bruce Ackerley, again, on behalf of Ben Keith company out of Fort Worth. As I mentioned earlier, we have, over $300,000 in Parish Hawaii or Cultural Commodity Debt trust claims. These claims prime all claims against the debtor, including secured, unsecured, and otherwise. And while we're working with the debtor to make sure that our claims are properly treated and we're having a conference again on Friday to discuss the matters with respect to critical vendor status and payment of pre petition debts, which will completely resolve all the issues, I wanna make sure that the instant order is going to be interim in nature to allow, the parties to weigh in, prior to a final hearing on the cash collateral.

We don't necessarily object to the order per se, except to the extent that we are not able to work something out, which I I think is pretty low in the scheme of things. But, I just wanna make sure we preserve all rights. Thank you, your honor. Alright.

It's definitely an interim order, so I think that should satisfy your concerns.

Thank you. Thank you. For the record, your honor, Michael Reardon on behalf of Lax Equipment LLC. It's a holder of royalty interest that the debtor has been referring to as the legacy royalty obligations in their filings. And when I made my appearance at the outset of the hearing, I admitted to mention that I'm also joined on Webex by my colleagues from Bradley, Brian Bates, and Jared Martin.

So when we start first start reviewing the debtors first aid filings, we were actually pretty surprised to find that, our client had been singled out by the debtors in both the first day declaration and the dev motion, with reservation of rights language that we're essentially called into question of validity of of our client's royalty rights. And I believe if I heard debtors counsel correctly earlier earlier on in the slide presentation, he did confirm that debtors do intend to challenge lags royalty interest. So it does look like we're gonna be front and center in this case and and look forward to appearing before your honor to tech lags in the right. As the interim debt order, we did reach out to debtor's council yesterday asking if they'd be amenable to inserting some reservation of rights language that mirrored theirs. Just to make it abundantly clear that whatever dispute is gonna happen in the future, it's not being dealt with now, and no one's being prejudiced at this point.

And, I can confirm that language has been added to the tip order at paragraph 58, and I just wanna express my appreciation, for the professionalism of the debtor's attorneys engaging with us on that.

Alright. Alright. Thank you. And I I did see that language when I was when it was pointed out to me. So it looks like you should be squared away for purposes of the interim order.

Yes. Thank you, your honor.

Alright. Any other party?

Your honor, Juliana Hoffman from Sidley Austin on behalf of the proposed DIP lenders. Your honor, my colleague, Genevieve Weiner, is trying to unmute her line, line, but I think we're having trouble. Is there is there a trick to unmuting a telecom line?

For telephones, it would be 6, I believe. Okay. 6 to unmute if, if the audio is on

You're on now?

Yes. I can hear you.

Okay. Great. Thank you. And apologies about that. I was having issues with my computer audio.

But, again, for record, Genevieve Weiner with Sylvie Austin on behalf of the proposed DIP lender. And and thank you, miss Hoffman for jumping in. I want to reiterate the comments of Mr. Pfeiffer, and Mr. Ashmead and, you know, Assurant City Council that this was the first that we had heard from them in terms of the filing right, right before the hearing, but they just, of course, feel free to reach out to us.

As I understand it though, there's nobody objecting here as to the error of the, and, you know, the order as proposed with potential changes, that will be negotiated afterwards will be entered. But, again, as I understand, no one is objecting to the interim

repair.

Alright. Thank you.

Your honor, Vicky Driver. I just had a question on the budget. But if we're just on the order right now, I can reserve that for if we're going through the budget separately.

I don't care. We can, if you have a question about the budget, why don't we knock it out now, I guess?

Oh, and I'm happy for debtor's counsel to address this. I don't necessarily need a witness to to, attest to this. But, in looking at the budget, there is a line item referring to, occupancy

cost.

I believe it's approximately 1,891,000.000 for the first week. My question is, is that referring to lease costs? And if so, has the debtor made any, decisions as to whom those payments are to be made?

Yes. I I believe those are with respect to, lease obligations, particularly rent and, in some instances, including tax and other lease obligations. I I will say that for any, and I I believe the debtors for any locations that are not being rejected to as of the petition date, we we we do expect to honor our, lease obligations.

Thank you. And I'll just, I'll be in contact in a little bit more detail with you guys as I've, been brought on board. So I appreciate you addressing that on the fly. Thank you.

Thank you.

Alright. Any other parties? Any concerns about the debt motion?

Your honor, this is Joel Noel of Ballard Spire. We had provided some additional proposed language that I don't see in the red line, but we'll continue to work with debtors counsel presumably to be addressed in the final order, specifically in relation to paragraphs five and six and paragraph 28 of the interim order. But just made that note, but we'll continue to work with them and presumably be addressed prior to the next hearing.

Alright. Alright. Very good. That's right, your honor. Any other parties?

Last call for comments on the dip motion. Alright. Well, that motion is approved. After the hearing, I am gonna go through just quickly and go through the rest of the red lines, the the rest of the comments on the red lines. I didn't see anything that stuck out to me.

And, so I fully expect I'll sign that order once it's uploaded with all the revisions that are made. So that that motion is approved on an interim basis for mister Aikenley's benefit.

Thank you,

your honor. With with that, I'll pass the podium back to my colleague, Steven Jones. I'll see him at the podium from holding a loaner.

Alright. Good afternoon, your honor. Steven Jones on behalf of the debtors. I think the the last item we'd like to address the court today is doctor number three, and that is the notice of complex case. So, essentially, your honor, we're asking for complex case treatment under the complex case procedures in the district for equipments Bergreen to, secure omnibus hearing dates.

Otherwise, the, complex case procedures would control. No comments on these, on the proposed order as filed with the US trustee or anyone else.

Alright. Mister Bubwick, are you good with this one?

Yes, your honor. No concerns.

Alright. Anybody else have any comments on, the notice at docket number three? Alright. So in that order, I didn't have any problems with it.

Thank you, your honor. I think that concludes the debtor's presentation for the day. We certainly appreciate the court's time both in this matter or earlier matter. And unless,

Actually, your honor, I think we have one other housekeeping matter. Okay. I think we do need to schedule the second day hearing. My apologies. It's Chris Dickerson for the record for

Alright. So I don't know, since I've been in court all day, I haven't had a chance to check with my well, my courtroom deputies out, but we have we have some stand ins that are helping with the scheduling. I don't know. Have you reached out, or have you gotten a proposed list of dates, or have you do you have any idea when you might wanna come back?

I think the only one that we've, are I think we can work around primarily the the final dip hearing, your honor, in which would need to be at least twenty eight days. So, anything that you would have available a month out, I think, would be, hopeful and acceptable, obviously, subject to your calendar. I think twenty eight days out takes us to the thirtieth.

Alright. Give me just a minute.

In in honor, I didn't mean to surprise you. I know you've been in court all day. If if you would like us to take this offline with your scheduling clerk, we're happy to do that as well.

I'm happy to knock it out now. I'm just I'm looking.

Thank you.

My my normal court of deputy is out, and so I I think it's probably just as well to look at the calendar now. So on the thirtieth, There's a case that's listed as set for all day, but I'm familiar with the case, and I don't I think it's at most an hour hearing, and that's at 09:30. I have some preliminary lift hearings at 01:30. I don't know. Do you prefer mornings or afternoons?

I I think for those that would be traveling, your honor, make would make it a little bit easier to do in the afternoon.

How about 02:30 central? Would that work? Is that too late? That works, your honor.

No. I think that's acceptable. I, obviously, allow others to speak up if there's an issue, but that works for the debtors.

Alright. Anybody else have any problems with the the thirtieth at what did I say? Two or 02:30?

Two thirty.

Two thirty. You're right.

02:30?

Yes, your honor.

Alright. Why don't we go with that then?

Thank you, your honor. And I think as mister Jones indicated, that is all we have for you today unless there's anything else you would like to cover with us.

I don't think

so. Again for the time.

Sure. I I will say the the the papers were excellent. The the presentations were excellent by everybody who presented today. So I look forward to seeing you all in court again for the second days and the other hearings. And I appreciate the efforts of all the parties on reaching agreements on on the matters that are set today.

So thank thank you all. Unless you unless anybody else have any has anything else for this afternoon, court will be in recess. Thank you.

Thank you. Alright.