Professional Documents
Culture Documents
Veritext Reporting Company 212-267-6868 516-608-2400
Veritext Reporting Company 212-267-6868 516-608-2400
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK Case No. 10-13800-scc - - - - - - - - - - - - - - - - - - - - -x In the Matter of:
Debtors.
- - - - - - - - - - - - - - - - - - - - -x
U.S. Bankruptcy Court One Bowling Green New York, New York
212-267-6868
516-608-2400
Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Transcribed by: Dena Page Debtors' Motion for Entry of an Order (I) Authorizing the Debtors to Enter Into the Commitment Letter With Five Mile Capital II Pooling REIT LLC, Lehman ALI Inc., and Midland Loan Services, (II) Approving the New Party/Midland Commitment Between the Debtors and Midland Loan Services, (III) Approving Bidding Procedures, (IV) Approving Bid Protections, (V) Authorizing an Expense Reimbursement to "Bidder D", and (VI) Modifying the Cash Collateral Order to Increase Expense Reserve
212-267-6868
516-608-2400
A P P E A R A N C E S : KIRKLAND & ELLIS LLP Attorneys for Debtors 655 Fifteenth Street, N.W. Washington, DC 20005
BY:
KIRKLAND & ELLIS LLP Attorneys for Debtors 601 Lexington Avenue New York, NY 10022
BY:
MORRISON & FOERSTER LLP Attorneys for Official Creditors' Committee 1290 Avenue of the Americas New York, NY 10104
212-267-6868
516-608-2400
Page 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
VERITEXT REPORTING COMPANY www.veritext.com
HAYNES AND BOONE LLP Attorneys for Midland Loan Services 30 Rockefeller Plaza 26th Floor New York, NY 10112
BY:
HAYNES AND BOONE LLP Attorneys for Midland Loan Services 201 Main Street Suite 2200 Fort Worth, TX 76102
BY:
212-267-6868
516-608-2400
Page 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
VERITEXT REPORTING COMPANY www.veritext.com
BRYAN CAVE LLP Attorneys for LNR 1290 Avenue of the Americas New York, NY 10104
BY:
SIDLEY AUSTIN LLP Attorneys for Appaloosa Funds 787 Seventh Avenue New York, NY 10019
BY:
212-267-6868
516-608-2400
WACHTELL, LIPTON, ROSEN & KATZ Attorneys for Chatham Realty Trust 51 West 52nd Street New York, NY 10019
BY:
DECHERT LLP Attorneys for Lehman 1095 Avenue of the Americas New York, NY 10036
BY:
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP Attorneys for Apollo Investment Corporation 1285 Avenue of the Americas New York, NY 10019
212-267-6868
516-608-2400
Page 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
VERITEXT REPORTING COMPANY www.veritext.com
KILPATRICK TOWNSEND & STOCKTON LLP Attorneys for Trimont 1100 Peachtree Street, NE Suite 2800 Atlanta, GA 30309
BY:
KASOWITZ, BENSON, TORRES & FRIEDMAN LLP Attorneys for Five Mile Capital 1633 Broadway New York, NY 10019
BY:
212-267-6868
516-608-2400
Page 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
VERITEXT REPORTING COMPANY www.veritext.com
ROPES & GRAY LLP Attorneys for Ropes & Gray 800 Boylston Street Boston, MA 02199
BY:
(TELEPHONIC)
PERKINS COIE LLP Attorneys for CWCapital Asset Management and C-III Asset Management, LLC 131 South Dearborn Street Suite 1700 Chicago, IL 60603
BY:
ALSO PRESENT: JOSEPH S. CRISCIONE, Esopus Creek Advisors LLC ANDREW L. SOLE, Esopus Creek Advisors LLC AARON K. BRYSON, Spring Hill Capital Partners
212-267-6868
516-608-2400
in some really nice seats in the overflow courtroom? Okay. All right, Mr. Donovan. MR. DONOVAN: THE COURT: MR. DONOVAN: apologies. Good afternoon, Your Honor. Good afternoon.
suggested before is that we start with the standing motion. THE COURT: MR. DONOVAN: go from there. THE COURT: All right. Let's find out who's on the Okay. And then maybe we can take a break and
behalf of CWCapital Asset Management and C-III Asset Management, LLC. THE COURT: All right, thank you, Mr. Neff. Good afternoon, this is Joe Criscione,
MR. CRISCIONE:
212-267-6868
516-608-2400
from Esopus Creek Advisors, we're a member of the ad hoc of preferred holders represented by Sidley. THE COURT: All right, anyone else? Your Honor, we have Patricia
THE COURTCALL OPERATOR: Chen; her line is also live. THE COURT:
THE COURTCALL OPERATOR: Her line is open. THE COURT: MS. CHEN: THE COURT: MS. CHEN: All right.
Oh, Patricia Chen. Ms. Chen, who do you represent? Patricia Chen, I'm with Ropes & Gray. We
represent an interested party. THE COURT: represent. MS. CHEN: I wanted mainly to be on as a courtroom Ms. Chen, I need you to identify who you
that you may have to be cut from the proceedings because certain of the proceedings may become closed. Is there anyone else on the phone? Mr. Bryson?
212-267-6868
516-608-2400
Spring Hill Capital Partners? MR. BRYSON: THE COURT: to you, Mr. Bryson. Right, an observer. All right, the same applies with respect At a certain point, we may go into closed
session and you may have to drop off the line. All right, Operator, are there any other parties on
Criscione, and Andrew Sole. THE COURT: All right, thank you very much. Thank you.
to ask someone to turn on the air conditioning back there, and if some of the parties who are standing over by the door want to go over to the other side. Mr. Bienenstock, if you don't
mind moving furniture, you're welcome to go in the back room, here, and bring a chair out. MR. BIENENSTOCK: Thank you.
212-267-6868
516-608-2400
Ms. Attanasio, I think we're ready for you. Thank you, Your Honor. For the
MS. ATTANASIO:
record, Lee Attanasio, Sidley Austin, on behalf of Appaloosa Investment LP I, Palomino Fund, LTD, Thoroughbred Fund LP, and Thoroughbred Master, LTD, who I will refer to generically as Appaloosa -THE COURT: Appaloosa, okay. -- from here on out.
MS. ATTANASIO:
Your Honor, we're here to determine Appaloosa's rights as a party-in-interest with standing to be heard and be heard in connection with the stalking horse motion. thing is absolutely clear: Your Honor, one
Appaloosa funds are, in fact, statutorily defined parties-ininterest in this case. and the end of it. That, frankly, should be the beginning
212-267-6868
516-608-2400
certainly, if anything, encompasses a party with the multiple holdings that Appaloosa has through its preferred shares, its participation in the DIP loan, and its holdings of more than 200 million in certificates in the fixed-rate mortgage loan trusts. There's very little law, Your Honor, on a case like this in which a party is wearing more than one hat. What law
there is, and we have cited to it in our briefs, really comes up in the context of plan proponency. The standard under
Section 1121 is identical to that under 1109, and where this has come up, and we cited in our brief to first Humanix and REC (ph.) Broadcasting -- do you want me to provide cites, Your Honor? THE COURT: No, it's okay. Courts have looked at circumstances
MS. ATTANASIO:
where a party wanted to propose a plan, needed to be a partyin-interest to do so, and purchased what are typically de minimis claims to ensure or confer the standing to do so. And
while the courts' analyses in those cases recognized that they were wearing two hats or acting in different roles, the courts did not in any way limit the parties' right simply to protecting its interest in a creditor but recognized that that right also gave it -- that position also gave it the right to
212-267-6868
516-608-2400
MS. ATTANASIO:
a different case, and I was going to get to it -THE COURT: Okay. -- throughout, but I think the
MS. ATTANASIO:
difference with Quigley, Your Honor, which dealt with an insurer -THE COURT: Right. -- the court said you can't muck
MS. ATTANASIO:
around in provisions of the plan that did not affect your rights as an insurer. is trying to do, here. But that's certainly not what Appaloosa We are trying to address provisions of Our interest
as a certificate holder, for sure, but it's not a Quigley situation. We're not trying to deal with provisions that have
no impact on our rights or our financial statement. THE COURT: Okay. And really, that is the issue, Your
MS. ATTANASIO:
212-267-6868
516-608-2400
are not a creditor, and the debtors and Midland both made note of the fact that no proof of claim was filed as if that creates some big "a-ha" moment. It doesn't. We're not a creditor and
that's consistent with the position we have taken throughout. But it doesn't impact whether we are a party-in-interest. The law clearly doesn't limit standing to creditors of the debtor. Your Honor, the Grand Union case was very explicit
on this point and said, "To obtain an opportunity to appear and be heard, the bondholders" in that case "need not show that they are a creditor or equityholder of the debtor or that they have some direct stake to the debtor's assets." Instead, Your
Honor, what courts have looked at is the extent to which -- and the Southern District has articulated this in Stone Barn which the debtors correctly cite in paragraph 28 of their reply, what courts have required is a party's direct financial interest, pecuniary interest, or sufficient interest to require representation. That is sufficient to confer standing.
So even without considering Appaloosa's role as a DIP lender -- and I do think it's worth noting, Your Honor, that given the bifurcation that currently exists under the revised bid, a portion of the Five Mile DIP loan is not being paid in
212-267-6868
516-608-2400
and perhaps uncertain position as a DIP lender. THE COURT: Right, I hear you. But now we have this
wonderful situation where by virtue of everything that's happened over the past week, everyone else has gotten what they wanted. MS. ATTANASIO: THE COURT: Indeed.
Seven Sisters are off the table for today. That's correct.
that you're worried about the DIP being paid. MS. ATTANASIO: THE COURT: Your Honor -I
mean, if not in full today because we're only dealing with the fixed and the floating rate pool, the rest of it's going to be paid another day. MS. ATTANASIO: Your Honor. THE COURT: Right, okay. And as I say, even without considering We certainly hope so and believe so,
MS. ATTANASIO:
that position or our position as a holder of preferred shares which also, in some sense, have moved, if not off -THE COURT: Right. -- slightly away from the table,
MS. ATTANASIO:
212-267-6868
516-608-2400
mortgage note is an asset in which Appaloosa has a beneficial interest through the trust, period. under this plan. value maximized. THE COURT: But so is Midland's, is it not? You know, Your Honor, I'd like to And that asset is impaired
MS. ATTANASIO:
believe it is, and certainly, we are not here today, I think, to evaluate Midland's conduct or servicing standard or anything else. But the fact of the matter is that Midland is in a And I'm sure
it did not go unnoticed by the Court that at the PSA hearing, Appaloosa's role was restrained, to say the least. examine witnesses; we didn't make argument. We didn't
We, in fact,
allowed Midland to take the lead because our interests were exactly aligned. And that has, in fact, changed. It is simply not
possible for Midland to represent the interest of Appaloosa, of certificate holders who are not bidders, in light of what it has committed under the deal documents to do. It cannot be in
both positions, and that goes directly, Your Honor, I think, to the adequate representation issue. At this stage, not only
does Appaloosa have a direct financial stake in the outcome; they don't otherwise have adequate representation. Midland's
212-267-6868
516-608-2400
Appaloosa bought its certificates, and I would note, continued to buy its certificates -MS. ATTANASIO: THE COURT: Indeed.
February in significant dollar amounts -MS. ATTANASIO: THE COURT: And beyond, Your Honor, yes. And I haven't asked you to But the point
-- and beyond.
is that Appaloosa has determined to continue to buy, as is its right, notwithstanding the lack of certainty, around the standing issue. MS. ATTANASIO: Well, that's correct, Your Honor,
although I will say we certainly believe, not only based on the law, and you certainly -- you alluded to the contract; I'm happy to address that, as well -- the terms of the no action provisions that were cited by Midland and the debtors, they clearly don't preclude what's going on here. THE COURT: Well, but if that were the case, we
212-267-6868
516-608-2400
MS. ATTANASIO:
apologize for interrupting Your Honor -THE COURT: Okay. -- we haven't instituted an action.
MS. ATTANASIO:
There is an action before the Court as to which we are both voicing our very substantial concerns, and we have done that in the past, as has Five Mile when it was, at the time, a DIP lender and certificate holder but not bidder and continued to participate in these proceedings, clearly wearing a certificate-holder hat. And frankly, Your Honor, I'm not sure
we believe there's any reason to believe that we should not appear before this Court as a party-in-interest. decide that issue today or in the near term. THE COURT: But how do I get around the problem of You will
there's a document, a really thick, detailed document, pooling and service agreement, the intent of which and I think other -and you might tell me there's a question, but clearly, it's a collective action document, it's a document in which the parties who buy in delegate authority to, under these circumstances, a special servicer. If I say to you, I hear
you, you're right, your interests are -- need to be protected, you need to speak up for yourself, there's no limit on that.
212-267-6868
516-608-2400
language in the pooling and servicing agreement or the language in the pooling and servicing agreement is not going to be interpreted to preclude party-in-interest standing in a Chapter 11 case, what happens? I mean, somebody with -- you told me,
wearing your other hat, that buying, I think it's .02 percent of the preferred shares, that I shouldn't look at the amount that you bought, the amount that you bought it for. So the
same pertains with a certificate holder who might buy in at amounts substantially less than Appaloosa is holding, isn't that the case? MS. ATTANASIO: THE COURT: They certainly could, Your Honor.
MS. ATTANASIO:
contract just as Appaloosa is and Appaloosa, I think, recognizes that what it can't do under the contract is institute an action or a proceeding, an enforcement action, a lift stay motion. trust. THE COURT: But that's where my problem is because I It cannot put itself in the shoes of the
understand the way you're reading the no action provision, but the point is, in substance, you are saying don't listen to what Midland's telling you, Your Honor, because they're conflicted.
212-267-6868
516-608-2400
of course, true that you make the decision. that; I'm sure Midland recognizes that.
party-in-interest standing is to make sure that the voices are heard. And Appaloosa's voice is not going to be heard through This is a pretty unique
parties have aligned in a particular way for a bidding transaction in which the controlling certificate holder is the bidder. And other certificate holders who are not the bidder
do not have a voice other than through party-in-interest standing. And Your Honor, I just think there are -- there's,
first of all, no suggestion that this is a floodgates issue. These cases have been pretty highly publicized; there's lots of people here. But as it turns out, I am the only one arguing as So I don't think that's a real issue,
a certificate holder.
and I don't think it should preclude what is the important policy of Section 1109, which is, in fact, to make sure that these different perspectives where a party has a substantial stake in the case, is heard. THE COURT: Couldn't you say the same thing about Silent second
212-267-6868
516-608-2400
servicing agreement had said that we needed to be silent in the context of a Chapter 11 proceeding, this would be a very different debate. It simply doesn't say that. And Your Honor,
I think it's interesting because in fact, the co-lender agreement, which Midland's paper also cited, has much more extensive provisions on what you can and can't do in a bankruptcy. holders. So Your Honor, I don't believe that the language of the contract at all precludes our participation here in this context for this purpose. I think bankruptcy standing is This case Those provisions aren't binding on certificate
and the fact that the players have moved all around, even in the last forty-eight hours -THE COURT: Right. -- leaving just one is, that's
The fact that the debtors have been able to narrow the issues so that the other people in this room no longer need to protect their pecuniary interests doesn't at all suggest that we should be silent with respect to ours. THE COURT: Okay, tell me -- let's talk about the
212-267-6868
516-608-2400
it's a certificate holder case so -THE COURT: Right. -- it's interesting in that sense, but
MS. ATTANASIO:
what was going on there was that the certificate holder wanted to vote. THE COURT: Yeah, that's a big thing in bankruptcy.
I've heard about that. MS. ATTANASIO: It is. They wanted to vote, and by
doing so, they would have stood in the shoes of the trust, the creditor. doing. That isn't us. That is exactly what we're not We are not a
-- that you can't willy-nilly take voting It's a biggie. Sure. And yet, in that case, when the
Right?
debtor said oh, look, CRIIMI MAE has to reject the plan, surely you're going to let these people vote whose interests are at stake, and Judge Perris said no. MS. ATTANASIO: Said no to voting. I don't know if
212-267-6868
516-608-2400
Examining witnesses?
has been cited by all of you, but let's talk about what really happened in Extended Stay, right? filing. MS. ATTANASIO: THE COURT: Sure. And the debtor wanted someone to And the reason that the It was disorganized before
Okay?
certificate holders got to speak was because a special servicer had not been appointed. MS. ATTANASIO: THE COURT: distinction. MS. ATTANASIO: -- Your Honor, for what it's worth, we Well --
did not cite Extended Stay for having granted some broad ruling on certificate holder standing. THE COURT: Okay. I don't think it does one way or It doesn't. I recognize that.
MS. ATTANASIO:
however, is that Judge Peck was struggling with exactly this issue, which is what do you do about a certificate holder who
212-267-6868
516-608-2400
point, there was a special servicer, and maybe that special servicer provided the adequate representation. all of the details of what went on there. We don't know
here, today, we have the substantial financial stake that I think Judge Peck was quite rightly concerned about, and we believe the only way to assert and protect that interest is to assert our party-in-interest standing. THE COURT: And --
Have you -- I'm sorry, go ahead. I was only going to say, Your Honor, I
MS. ATTANASIO:
also think it is relevant, and it distinguishes, I think, virtually all of the cases cited by the debtors and Midland, that our goal, here, is unlike that of, for example, a competitor. In Martin Paint, Your Honor, there was an attempt
by a debtor to assume and assign a lease, and a third party wanted to object to that assumption and assignment because it was going to muck up their sales in the mall. They were
worried about precluding the debtor from getting value there. Similarly, in Refco, the investors in the segregated portfolio company, they were trying to object to a settlement which everyone agreed provided value to the debtor in a way that would have provided, and by definition, taken away from the debtor, value to the SPC. The cases all have a context.
And the context of these cases is where the participation, however direct or indirect some of them are -- I mean, some of
212-267-6868
516-608-2400
MS. ATTANASIO:
was, in some sense, directly adverse. that's what we have here, Your Honor. standing here objecting. THE COURT:
MS. ATTANASIO:
serious concerns about the way the procedures will play out in the next forty-five days that I hope you will hear, shortly. But what we are here for is to maximize value. stop. Period. Full
not to try and extract some little kernel just for us. here to make sure the process works to maximize value. THE COURT:
dialogue with Midland about your substantive position as to what you think is wrong with the deal? MS. ATTANASIO: I have had conversations with the
debtors' counsel; I have not had conversations with Midland's counsel. THE COURT: Have you put Midland on any kind of notice
that you think that they're acting in violation of the servicing standard? MS. ATTANASIO: Not in a formal notice, no, Your
212-267-6868
516-608-2400
For your planning purposes, Your Honor, I'm splitting And we hope not to overlap in our
detail, the pooling and servicing agreement issues you've raised. But Judge, when you step back, the issues in the briefs and the arguments fall to two questions. First is, do
the certificate holders have standing as certificate holders to challenge this motion? context does matter. Because I agree with Ms. Attanasio that So the question is, do these certificate
holders have standing to object to this motion? Second, does Appaloosa's ownership of preferred shares or an interest in the DIP permit them to assert objections related to the fixed-rate loan for this motion? Those are
the -- when you distill it all down, that's what it comes to. THE COURT: MR. DONOVAN: Right. And I want to address each in turn. And
212-267-6868
516-608-2400
microphone or near a telephone, please turn the receiver off. MR. DONOVAN: So judge, before we get into those two
questions, page one of slides -- actually the second page -Appaloosa's interest, just to break them down so we can visualize them. First, Appaloosa, as a whole, has one hundred shares that they purchased of preferred stock. you recognized, .02 percent. they own ten million. One hundred shares, as
holder in the fixed-rate loan and they have 247 million which has been bought both before and post-petition. THE COURT: MR. DONOVAN: Right. So that's what we're looking at. Now,
the first is, do they have standing as a certificate holder. And the starting point, even in bankruptcy court, for standing is constitutional and judicial limitations on standing. goes back to kind of bedrock principles. grievances or claims of a third party. own. This
So even apart from our rules, here, in bankruptcy court, That's the starting point.
We then go to Section 1109(b), which is on the next page of the slides, and that provides, as we all know, a partyin-interest, and then it provides enumerated parties may raise
212-267-6868
516-608-2400
no dispute that the certificate holders are not an enumerated party. They're not. So the next step we have to take is, are certificate holders in the context of this motion somehow an undefined party-in-interest that the law permits standing here? But
there's no dispute they are not one of those many parties Congress identified as an enumerated party that would have interest here. So then the context becomes very important. And the
case law teaches us that party-in-interest under 1109(b) must have a direct financial interest. Direct. And there's not
dispute, here, that the certificate holders do not have a direct financial interest. steps away. What they have is kind of three
That's then owned by REMIC, and they're then certificate holders in the REMIC. interest. Okay? There's no direct financial
their own interests, but they don't have a direct financial interest in the loan that the debtors -- that relates to this motion. They're not creditors, they don't have claims, and
they admit that they're not creditors and they don't have claims. And Your Honor, this -THE COURT: But they have a beneficial interest in the
212-267-6868
516-608-2400
interest in the REMIC that owns this loan. THE COURT: MR. DONOVAN: In the REMIC, right. So they're three steps removed because They're our
creditors who are owned by REMIC; they have a certificate in that REMIC along with -- a certificate that owns also a bunch of other mortgages and loans. THE COURT: MR. DONOVAN: Right. And if we look at where is this
analogous, we rely and submit that it's quite analogous as the Refco case, which I handed up. In that case, Your Honor, there
was a special -- excuse me, a segregated portfolio company. And in that, they entered into a settlement with the creditors' committee, and investors in that segregated portfolio company objected. So I submit, quite similar here, certificate holder
in an entity that was objecting. So then if you turn to the printout, Your Honor, of Refco, and I turn to page 8, and I have a number 3 next to it, really walks through the analysis. So if we're looking at
someone who doesn't have a direct financial interest but they own an interest in another party that could object, and the court -- again, this is the Second Circuit from 2007 -- says to the extent that rights of a party-in-interest are asserted,
212-267-6868
516-608-2400
discusses, "By investing in" -- there, it's called Sphinx; here, we'd say in the REMIC -- "the investors placed control of their funds entirely within the hands of the Sphinx directors. Only Sphinx, not individual investors, or even investors as a group could assert a claim against the Refco estate, and only Sphinx was permitted to negotiate a settlement with the committee. Investors maintain a financial interest in Sphinx,
but they are not a party-in-interest within the meaning of the Bankruptcy Code." position here. Your Honor, this is quite analogous to the
the REMIC that owns the loan, but Midland, who has been designated by contract, is here. And the same thing -- if you
turn the page -- in the Refco case. THE COURT: MR. DONOVAN: THE COURT: Are there any -- let me stop you. Sure. Are there any -- if we assume that to be What if Ms. Attanasio
stood up and said, Your Honor, I'm going to put on evidence that Midland is taking bribes. MR. DONOVAN: This is where I come back to -- and First of all,
I don't think that would be enough because the Second Circuit, what they were arguing in Sphinx, said they were committing
212-267-6868
516-608-2400
She just has disputes with the motion. that's not enough.
or here, sue Midland, because that is an internal dispute. what the Second Circuit says is "One cannot avoid the conclusion that the bankruptcy court is not the appropriate
forum in which to involve the investors disputes" -- here, we'd say certificate holders' disputes -- "with the board. It may
be that the Sphinx directors violated their fiduciary duties by entering a settlement that was not in the best interest of the investors. court." That issue, however, is not for the bankruptcy
point is, it's not against the debtors; that's what it's here for. that. This court is for the debtors and creditors to resolve If we start going down the line, a creditor's creditor,
or as I submit, a creditor's owned by REMIC, then a certificate holder, that goes beyond the statute, and it goes beyond what this Court wants, especially for a motion hearing. This is why context matters that I'll get to is what Appaloosa wants to assert is claims related to its certificate holder standing. And she said well, I don't want to argue
anything about the shoes -- or, I don't want to stand in the shoes of the fixed-rate loan. But that proves my point. Then
212-267-6868
516-608-2400
about the fixed-rate loan and what their position is related to the debtors' current motion. THE COURT: No, I think by that, she meant that she's She just
not seeking to say that to usurp Midland's role. wants Appaloosa's views to be heard as well. MR. DONOVAN:
really for Midland to argue, but it is usurping their role, and it is expanding the litigation that the debtors have to go through, which is why one of the purposes is for the debtors to be able to negotiate with Midland, knowing that when Midland makes a representation, signs the agreement, we know that we don't have to negotiate with anyone else. Now, we have to kind
of litigate, at least, against someone else, and we believe we're protected by the statute. policy. And we're not saying -- I want to be clear -- we're not saying a certificate holder under all circumstances can never have standing. That's why I believe context is For this motion, where Appaloosa And we think it makes good
is raising objections to the fixed-rate loan, not related to their preferred shares, not related to the DIP, they don't have standing. You may come across a case someday where a We're not
asking you to rule they never have it today, but we are asking
212-267-6868
516-608-2400
them in the commercial part or wherever their contract calls for that, or negotiate with Midland, whatever it is, give input so they can negotiate with us. Midland. But we've negotiated with
actually the special servicer in this case. Your Honor, I think you've covered this. Stay, I think it's kind of a one-off case. Extended
facts that Judge Peck was dealing with the situation and certificate holder with standing wasn't briefed, wasn't argued. Judge Peck was trying to deal with a case at the beginning. So that takes us, then, Judge, to the second question, which is can Appaloosa have preferred shares or an ownership in the DIP that then gives them rights to argue related to the fixed-rate loan. And I come back to the same point as that as
a constitutional and judicial matter, they can't assert rights of third parties. They can assert rights based on their
hundred shares of preferred shares here, but no one's objecting on that. They're not being affected here, so we know that's And we know she's not objecting
212-267-6868
516-608-2400
DIP and no one's objecting for the preferred shares. So on these facts, Your Honor, and the law, for this motion, we submit certificate holders do not have standing as certificate holders. And then number two, on this motion, a
preferred shareholder and a DIP lender cannot kind of take that and get derivative standing as a certificate holder because of that. THE COURT: Let me ask you a question, though. If I'm
not deciding -- and this goes to the scope of what I should be deciding, if I limit it to this motion today, then I assume we're going to do this all over again at plan confirmation. MR. DONOVAN: THE COURT: MR. DONOVAN: Well, that will depend -I mean -It depends, Your Honor. And this is
212-267-6868
516-608-2400
concerned about the bankruptcy" -THE COURT: MR. DONOVAN: Right. -- "proceeding since the debtor's
ability to pay its creditor may affect the creditor's ability, in turn, its creditor." And that's where I get the line a So I do think
that these facts will control a lot of the motions in this case. I'm only submitting to you what I think Ms. Attanasio
was trying to say that it can't be that certificate holders never have standing. What I'm saying is, if you rule on these
facts, you're going to begin to develop a body of law on certificate holder standing, and I think at the end of the day -THE COURT: opportunity. And I'm so appreciative of having that
212-267-6868
516-608-2400
you today to rule that in all instances, that they are. certainly, in the context of this motion, they don't have standing.
represented by Midland, whether or not they agree, but if they don't, you talk about additional litigation, that's why we're here today, at least at this point, is they are the objector. So without that, this goes back to the 2018(a) permissive intervention, well, I think -THE COURT: Well, I don't think -- I think LNR asked
for intervention, but Appaloosa I don't think did ask for intervention. Is that right, Ms. Attanasio? It's sort of right.
Or did you mean to ask for intervention. We actually included a footnote in our
MS. ATTANASIO:
initial brief that indicated that we would file a motion if that became necessary not realizing that we were going to end up in a situation -THE COURT: Being here by yourself. -- or that we were collapsed on time.
MS. ATTANASIO:
212-267-6868
516-608-2400
was an LNR issue, but I did see the footnote, as well. THE COURT: MR. DONOVAN: Yeah, okay. All right, thanks.
This is in your discretion. THE COURT: MR. DONOVAN: Right. And the two questions are, are they I know they don't think correctly,
Absolutely.
But then number two, would it add additional Yes, that's why we're here.
So I'm happy to answer any questions, but I cede the rest of the time to Mr. Parkins. THE COURT: No, I think I'd like to talk to Mr.
I'll try not to duplicate much of what debtors' counsel has argued. I do think that Refco is, being a Second Circuit case, pretty dispositive of the issue here. Let me just point out
also that in the reply papers filed by Appaloosa, they said that the Refco case was distinguishable. They said it was
212-267-6868
516-608-2400
reliance on Refco overlooks a critical difference between the case and this: Refco investors in a segregated portfolio
sought to intervene, be recognized as parties-in-interest in an adversary proceeding." That's not correct. What happened was
it's not an issue of intervention in the adversary proceeding that was not what the case in Refco was about. What Refco was
about was a 9019 compromise where the investors sought to oppose the 9019 case. There was an adversary proceeding, The
committee brought a case against Sphinx, and it was being settled. The investors objected to the 9019 in the context --
just starting reading the beginning of the case will show that its investors had no standing in the context of the 9019 compromise. And that 9019 compromise is in the case. It's not
in the context of their reply papers. The other thing about Refco, you asked the question, how far does this go, and I think Mr. Donovan clearly stated in the court in Refco said where the investors claimed, I think that they had a financial interest, they claimed that there was abuse of the relationship, there was insider relationship, the
212-267-6868
516-608-2400
talks about the fact that the certificate holders claimed that the resolution was worse than losing, I think was the phrase that the court picked up on. And the answer is, if you are an
investor and a creditor, you don't have standing to appear in the case because the creditor is the party that has the standing to appear in the case. And they had -- they alleged
in Refco that they were going to lose tens of millions of dollars, relatively speaking, a big issue for them, they were going to lose tens of millions of dollars by virtue of the settlement, but the court clearly, throughout the case, said creditors have standing; investors or creditors of creditors have no standing to appear in the case. THE COURT: servicing agreement. MR. PARKINS: THE COURT: Okay. Ms. Attanasio tells me that the no action So let me segue to the pooling and
clause, when it uses the word action, it's referring to an action, similar to what happened in Stuy Town, for ease of reference. So are you saying that under Refco, even without
regard to the no action clause, Appaloosa has no standing? MR. PARKINS: THE COURT: I -In other words, I could read the no action
212-267-6868
516-608-2400
preparing this by starting with the Second Circuit law as controlling law that a creditor and investor in a creditor has no standing. And as my argument progressed, I wanted to go on, "Next let's overlay the Refco
decision, the controlling Second Circuit law, with the CMBS structure we have here, today." asked, the answer is yes. So I concluded, as you just
of a creditor, an investor -- and these people were investors in the Sphinx entity -- an investor in a creditor has no standing. ten times. Now, the question, going to the pooling and servicing agreement, is interesting that -- remember, the certificate holders are not owners of the fixed-rate mortgage. nor do they own an interest in the mortgage. They are -That's black-letter law in Refco repeated probably
interest in the owners of the loan, the C6 and C7 trusts. are investors of a creditor, just like Refco. There is no
distinguishing the parallel and the precedent Refco sets. The issue of the pooling and servicing agreement and the no action clause, interestingly enough, one only has to go to the amicus papers filed by LNR in that case. the party there. Appaloosa was
212-267-6868
516-608-2400
special servicers in the country took. the action of the special servicer.
they can get enough people together, other certificate holders, they have actions to bring, set certain time limits in action to bring claims to ask the special servicer to take one action or another. But the bottom line is, the policy, here -- and
this is a very important issue, here -- the policy is that certificate holders can't come in and second guess. represented. They are
holders, but they don't have enough under the documents they signed under which they participated, under which they read, under which all the agreements and all the notices and all the solicitations went out, said special servicer, designated as Midland in 2007, will have the total discretion to operate and run the loan. And they have taken no action -- you asked -They haven't even called. They've
taken no action under the existing documents, the contracts. Contracts mean something. contracts to proceed. Now, the co-lender agreement is between the trustees of the C6 and C7. They hold C6 and the hold C7 certificates. They have taken no action under the
212-267-6868
516-608-2400
agreement specifically grants the right to Midland as special servicer, as the agent, as the agent for the C7 trust, an irrevocable power of attorney coupled with an interest and their proxy for the purpose of exercising any and all rights and taking any and all actions available to the trust in connection with any case by or against the borrower under the Bankruptcy Code. Then it lists some specifics. So the C7
trust where they hold some certificates has granted to Midland the right to act in all matters of the bankruptcy case until Midland is forced or compelled by the documentation to take other action. Midland is a special servicer. Until it is no longer The
special servicer works for its constituents, the certificate holders, for the benefit of the trust. The Refco case and
other cases speak to you can't have multiple people who don't have a direct interest in the case, who have no direct claim in the case, standing up when you have a structure. structure, and you have Refco. I want to speak one moment on intervention. been asked for, but it's been raised in the footnote. It hasn't My point You have a
212-267-6868
516-608-2400
respect to intervention, and it's interesting, is that to intervene, you have to have -- and we cited the cases in paragraph 52 of our reply -- you must have a direct noncontingent claim. They do not have a direct claim; they do
not have a direct legally-protectable interest against the debtors. They have no privity with the debtors, they're not a They are a holder of an interest in
the REMIC that is a creditor of the debtor. I think they have no standing, the CMBS documents say they have no standing. standing under Refco. law in the circuit. You can stop at Refco; they have no They can't get around the black-letter They are a creditor or an interest holder
in a creditor, and that party has no standing. Thank you. THE COURT: All right, thank you. Can I?
MS. ATTANASIO:
Well, I think, Your Honor, one thing we appear to agree on, here, is that context matters. And it does. And I
think to the extent that we improperly made a reference to intervention, Your Honor, in Refco, the focus there is that, in fact, in Refco, what you had was something in the nature of a
212-267-6868
516-608-2400
is the fact that there is a higher standard when what you are trying to do is muscle your way in, if you will, on what is essentially that type of two-party dispute. the language was misleading. That's not what we have here. What we have here is a And apologies if
motion for bidding procedures that will affect the larger case, that will affect the path of the case, and that will clearly affect the fixed-rate mortgage loan which I think, frankly, Your Honor accurately described much more so than either Mr. Donovan or Mr. Parkins, as the fact that what Appaloosa has is a beneficial interest in that asset, that asset which is being affected here. Again, Your Honor, we recognize that we are not a direct creditor. The law does not require it. Refco aside,
there are cases upon cases in this district -THE COURT: Well, what do you mean, "Refco aside"?
It's a pretty big aside. MS. ATTANASIO: Fair enough, Your Honor, but again, I Refco was looking
at a particular situation, a settlement agreement, an attempt by investors, effectively, to upset in a way that would have potentially taken value away from the debtor to the third party, I mean, that was the goal, ultimately, not a motion in which our goal here, as I said before, is to try to maximize
212-267-6868
516-608-2400
whatever gripes we may ultimately have with Midland. for another time, another place.
whether or not a financial stake is otherwise given voice, and it's not being given voice here. I think it is, to some
extent, remarkable, Your Honor, the length to which people are going to quiet this voice. I mean, it's not about, Your Honor,
having a fully consensual hearing because frankly, they thought they had other objectors until probably 2 o'clock this morning. There is a, obviously, a desire not to have this voice heard, and there is -THE COURT: But you're suggesting -- you're creating a I'm not quite sure what that
specter of something going on. would be. MS. ATTANASIO: THE COURT:
I mean, Appaloosa obviously has a very We can all agree on that. That's
212-267-6868
516-608-2400
believe that -- I was not trying to imply that there was something going on. THE COURT: Let me come back to the slippery slope
because if I were to agree with you, then the word will go out from One Bowling Green that in this kind of a situation, good news, certificate holders have standing. Don't worry about You have And that strikes
that 600-page pooling and servicing agreement. standing, and they're going to listen to you.
me as being not what the pooling and servicing agreement was intended to accomplish, not what was the reasonable expectations of the parties in entering into it and delegating their authority to a special servicer, and frankly, it strikes me as being an invitation for a free-for-all that would be value-destructive. Even if you assume -- even if you assume
that everybody is properly acting to protect their own pecuniary interest, and that's where the special servicer comes in, because the pool is kind of like a scrum. It's got all
these tranches and levels and layers, and somebody's got to be the adult, and that's where the special servicer comes in. And
what you're telling me is Appaloosa's (sic) really not properly being the adult. You should hear me. Midland.
212-267-6868
516-608-2400
ones here.
of a bankruptcy policy level. MS. ATTANASIO: I guess I would say two things, Your
MS. ATTANASIO:
servicing agreement was intended to accomplish, and what parties' expectations may have been. expectations were. I don't know what their I do think the
words of the contract, however, are crystal clear, and they don't preclude this type of participation. THE COURT: interrupt you. MS. ATTANASIO: THE COURT: That's all right. But despite those words -- I'm sorry to
Despite those words, you tried to That was an action, was it not? It was, Your Honor.
And in fact, Your Honor said, if we have this kind of a situation again, Innkeepers, this kind of a situation, you know, the floodgates, and everybody will think they can speak.
212-267-6868
516-608-2400
I will put to one side, but they are aligned with the bidder. The fact of the matter is, as we sit here today, there's this ninety percent of the creditors' support and everybody's on board. The support is coming from the bidders. THE COURT: holder, right? And --
situation in which the controlling certificate holder, et cetera, et cetera. It doesn't provide for a failsafe It just --
mechanism, if you will, in that scenario. MS. ATTANASIO: ability to bid. THE COURT: Right. I understand that.
MS. ATTANASIO:
But in this
situation, what has happened is not just that Five Mile is bidding but that Five Mile and Midland have teamed up -- I don't know all the details of their discussions or relationships; that was off-limits. But in point of fact the
reality of where we sit today is that Midland is aligned with Five Mile as a bidder, not a certificate holder.
212-267-6868
516-608-2400
think the bidding procedures, if I get there, frankly, evidence some really troubling aspects that should be addressed and as to which voice should be had. And I think ruling that
Appaloosa has party-in-interest standing here, whether it be because it has multiple roles in this case, including as a preferred -- and we certainly know that the preferred have been speaking on this motion for some time -- or as a DIP lender, regardless of whether we will, at some point in time, be paid in full, or as a certificate holder, I don't believe that that necessarily has ramifications to every certificate holder case that may come across this or any other bench. As Mr. Donovan
said, there may well be, to flip it around, situations where a certificate holder does not have standing. them. THE COURT: One more question, and then we'll move on. This is not one of
There was an adversary proceeding that's actually still pending between LNR and CRES, C-R-E-S. way to talk about them. I don't know which is the right
following that, so I don't want to put you at a disadvantage. MS. ATTANASIO: Not as closely as what I have in front
of me right now, Your Honor. THE COURT: Okay. I denied the preliminary injunction
212-267-6868
516-608-2400
the day, there's a notional amount of the fixed-rate pool, and if they're damaged, you'd have a trial on what the damages are. If Midland has, in fact, violated servicing standards -- self-dealt, self-enriched, you describe it a number of different ways -- they're money-good when you go to sue them, are they not? MS. ATTANASIO: Well, Your Honor, frankly, I'm glad
you raised this, although I can't speak to the underlying preliminary injunction motion. But what it does do is
highlight what I fear is one of the real problems, here, and that is if we go down this road, and Appaloosa does not have the opportunity to highlight some of the concerns with the procedures and, therefore, the procedures are approved, we will never know what the values of these assets as a whole, or more particularly, by component is because, again, in the context of arguments on the motion, I believe fairly strongly your argument, Your Honor, that the way the procedures are set up does not allow for a meaningful market test particularly of the separate pool pits. And so, in terms of whether they're moneyIn terms of whether this case will
have provided the opportunity to understand just what the damages are and how the fixed-rate mortgage loan might have been harmed, I think the ship sails.
212-267-6868
516-608-2400
MS. ATTANASIO: MR. DONOVAN: THE COURT: MR. DONOVAN: reshuffle -THE COURT: MR. DONOVAN:
See where everybody is. -- chairs? And I can then give you an
think you need, Mr. Donovan? MR. DONOVAN: I can report back? THE COURT: 3:30 since -MR. DONOVAN: THE COURT: fifteen minutes. MR. DONOVAN: THE COURT: Thank you. All right, thank you, folks. Thank you. -- you're likely to take more time than Should we say fifteen minutes, and then
(Recess from 3:08 p.m. until 3:52 p.m.) THE COURT: good news? MR. DONOVAN: I've been nominated, Your Honor. All right, who's going to tell me it's
212-267-6868
516-608-2400
the past twenty-four hours, there have been many moving parts including the board and independent committee having several meetings. At this point, I know we started the hearing, but we And if that
would request an adjournment just until tomorrow. would fit with your calendar -THE COURT: MR. SHIFF: THE COURT: Does everyone agree with that?
Your Honor, we'd like to be heard. Okay, Mr. Shiff. Before you continue, So
let's be mindful of the fact that this is an open session. if you need to say something that shouldn't be said in open session, let me know. MR. SHIFF: THE COURT: MR. SHIFF: No, Your Honor, I think we can be -Okay. -- very open, here.
quite frankly, we are completely dumbfounded by this request. We had a motion, as the Court pointed out, in the prior hearing. I'm not sure if this hearing has started or if
counsel is trying to get to some nuance that this hearing started; it sounds like it hasn't started yet. But whatever The Court
heard it was completely consensual; the Court understood it was completely consensual. That was the discussion in the earlier
212-267-6868
516-608-2400
THE COURT: MR. SHIFF: THE COURT: MR. SHIFF: THE COURT: MR. SHIFF: to be decided -THE COURT: MR. SHIFF: apologize.
Your Honor has seen over the last few days, at all hours of the night, the papers that have been coming in. THE COURT: MR. SHIFF: Right. Sunday morning, you received a reply from
the company on the bid procedures motion that made it clear that the Five Mile/Lehman bid is the best available stalking horse bid proposal for the debtors at this time. You got
affidavits from all of their people saying similar types of things including -- I don't want to cite them all -- including one from the independent committee that said the Five Mile/Lehman proposal is the best deal. And they point out,
even if the motion is approved, the company has a broad fiduciary out. You heard from Mr. Derrough recognizing, in
212-267-6868
516-608-2400
And -THE COURT: MR. SHIFF: THE COURT: MR. SHIFF: THE COURT: MR. SHIFF: Well, but it's not "simply". It's --
It's an important bid procedure. This is big. It's a large bid procedure motion -Right. -- that, at this point, because of
concessions that have made over the last few days that the Court is aware of, there is but one objector. And Your Honor,
at 3 o'clock this morning, just ten hours ago or twelve hours ago, this company filed an amended agreement that set forth their agreement to move forward with this transaction, at least the hearing, and to move forward today. Now you're hearing, for some undisclosed reason, which we can only begin to imagine what that might be, that all of a sudden, they're not ready to go away (sic). the fact, Your Honor -- to go forward. This is despite
fact, Your Honor, that two hours ago, we signed and signed off on a final form of the order that cleaned up a few remaining
212-267-6868
516-608-2400
this; if there are other things that happen, they happen prior to that. Now -THE COURT: Well, I mean, I know what I said, and I And to the extent that what's behind
the debtors' request is something that is -- could be a positive development for the case, that's something that -MR. SHIFF: Well, Your Honor, I think that brings up What is a positive
Mr. Sathy said to you, Your Honor, there comes a time; we've come to the time. The music's got to stop. We've got to know
what we have, we've got to move forward with it, and then we move forward, and we have a process. Now, it's just -- it strains any level of believability that at 3 o'clock this morning, they were prepared to move forward with an agreement that they specifically signed and filed, and now come to this Court on this, eh, we're not really ready right now; we don't feel like going forward. THE COURT: Well, that's not what he -- that's not
212-267-6868
516-608-2400
don't know what I can say I know about or not. THE COURT: Well, I think he was being purposefully
oblique, but I can certainly -- I'm going to infer, and you can correct me if I'm going in the wrong direction, but I suspect that the reason that he's asking to come back in sixteen hours or whenever it might be is that there's a potentially positive development, positive in the sense of bringing additional value to the stakeholders, and that's what their fiduciary duty requires that they pursue that. case. I obviously haven't -MR. SHIFF: THE COURT: Your Honor --- been privy to any of the discussions. I don't know that to be the
I think we were speculating about why the artifice or the device of saying the hearing's been continued, I think there still is a condition, somewhere, that we start the hearing today. And the hearing has been started. So I hope that
nobody's going to hold a gun to anyone's head based on that. MR. SHIFF: Certainly not, Your Honor. No one's going
to, certainly, never do that. THE COURT: MR. SHIFF: THE COURT: Not to me. Certainly not to you, Your Honor. No, I understand. But if somebody's going
212-267-6868
516-608-2400
obviously, the Court is free, whether they asked for it or didn't ask for it, or if the Court just felt like, you know what, I'd rather start tomorrow anyway, obviously, you are free to do that. THE COURT: MR. SHIFF: I'm -- I was really ready to start today. So were we, Your Honor, and I think the
problem is -- and the Court did point to a fiduciary obligation and the like -- there's a difference -- there's an ob -- an obligation to be a fiduciary is not a license to lie. really believe, I really believe, Your Honor -THE COURT: Well, that's a very -- Mr. Shiff, that's And I
3 a.m. signed deal, completely done -THE COURT: You know what? If you've been -- if
you've been waiting, as I have, for all of you today, been watching Blockbuster in the corridors, and I can tell you, since early this morning, they've all been in the corridors, and now --
212-267-6868
516-608-2400
think in the course of a number of hours fewer than twelve, there can be substantial movement -MR. SHIFF: THE COURT: MR. SHIFF: There are, but --- in a case. -- the Court -- there was statements by
everyone, including this Court, as well as by the movants, that the music had to come to a stop. Your Honor, listen. I can't -- the Court's going to
move to tomorrow, the Court's going to move to tomorrow. Obviously, you can do that. I understand that. I want to
express what we believe has been a complete misrepresentation by the company on these issues for which -- and the Court doesn't have to do anything about this, now; we're not asking the Court to do anything about it now -- for which, obviously, we will reserve all our rights, and we do believe that we believe, you know, significant -- we believe there were significant claims there, as a result. going to move the hearing, that's fine. And if the Court's I think the Court
really should take a step back and really just look at how this process has been run because the fact that we're now doing this, yet again, on a bid procedures motion that was filed sixty days ago, I think, from people who said the music's got to stop, and now it's not going to stop again, maybe -- and
212-267-6868
516-608-2400
forward, certainly, and we certainly wanted you to hear, at least, that we didn't consider what's happening today or maybe being asked maybe to do in the hallways and the like to be in any way a company moving towards its fiduciary duties. THE COURT: All right. Mr. Sage, did you want to be
that you have the discretion to move the hearing to tomorrow, of course. I just want to express for Lehman our dismay and We're baffled. We heard Mr.
Sathy be very articulate on Friday and on Monday about how this case needs to move forward, how we need to resolve the objections. They've done that; we've helped them quite a bit.
We've been a big contributor to resolving objections so that what was once a very contested hearing is now a very consensual
212-267-6868
516-608-2400
overwhelming support in the creditor body. Why they would want to get more time when they could be prosecuting that, moving forward to the market -- the market needs a process, Mr. Sathy said -- moving forward with everything, to us is baffling and troubling. long, long hours every night. We have spent
not a big surprise, and no one's asking for anyone to feel sorry for us. But we have spent a great deal of time. We
didn't get any real inkling other than some rumors that this might happen until today. We were not requested to move the
hearing until the hearing started. I just find this all troubling. leads after today. they ask for. an adjournment. I don't know where it
It would normal for the Court to give a debtor But we're very troubled. We think it's the
this way, come to us now, after we've cut a deal that has everyone but one person's support, one creditor's support -or, one entity's support -- excuse me -- and do this. I don't
know whether it's lying, bad faith, good faith, I don't know what it is because I haven't heard the deal that they're working on, apparently. But I do think it's inappropriate.
And I do think the Court should be mindful of how they've conducted themselves and what they've done this time
212-267-6868
516-608-2400
something the Court has to take a look at because I just think it's inappropriate what they've done. THE COURT: All right, thank you.
Let me hear from Mr. Donovan or Mr. Sathy, whoever wants to speak. UNIDENTIFIED SPEAKER: indulgence. THE COURT: MR. SATHY: Of course. Good afternoon, Your Honor. Mr. Sage, Mr. Your Honor, I'd ask your
Shiff, their respective partners and associates and partners and associates at my firm have been working around the clock for about seven days, and it really is, basically, around the clock. THE COURT: that that's the case. MR. SATHY: here, today. THE COURT: MR. SATHY: Right. And that really is the product of what I And I think you see a lot of tired faces I know by the timestamps on the e-mails
think was a very detailed, organized process that was contentious, as it has always been with this group. resolved objections. We
212-267-6868
516-608-2400
help and all of the progress that's been made in the case. But Your Honor, there is another side of it. There is
and has been additional activity in the cases separate and apart from the bid that we filed. And the board and the
independent committee have been on hourly notice, basically, updated on the progress of activity that is going on as well. I don't think it's appropriate to talk about it on the record, but Your Honor, we were late here today because the board was meeting, the independent committee was meeting. We had a
number of discussions this morning and it's our view that the additional few hours -- and that's really all we're talking about -- for us to make sure we know exactly which path the debtors choose to take these cases is going to be useful. We do support all of the efforts and appreciate all of the work that people have done. I remember what I said on And we filed all
the board has determined that we need to, in essence, as we've in essence said in various depositions, there's a marketing process that's going, and if we need to take a time-out, that we would take a time-out to make sure that we're making the right call. And the board and independent committee have
determined this afternoon that taking some additional time so that we can make sure what we're doing is appropriate is the
212-267-6868
516-608-2400
few of you as you can agree upon to come talk to me off the record, and I think you know what I mean by that. fit so many people. I can only
Frank, and for this purpose, although I have not ruled on standing, I'd like Ms. Attanasio to join, as well. (Recess from 4:06 p.m. until 4:34 p.m.) THE COURT: record, now. All right, we're going to go back on the
light of what's been said, we're going to adjourn this hearing now. It's 4:35. We're going to resume this hearing tomorrow
morning at 10 a.m. So I thank the parties, and I'll see you tomorrow. We're adjourned. UNIDENTIFIED SPEAKER: Thank you, Your Honor.
212-267-6868
516-608-2400
Page 65 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Date: March 11, 2011 Veritext 200 Old Country Road Suite 580 Mineola, NY 11501
Digitally signed by Dena Page DN: cn=Dena Page, o, ou, email=digital1@veritext.com, c=US Date: 2011.03.14 10:20:47 -04'00' ______________________________________
C E R T I F I C A T I O N
I, Dena Page, certify that the foregoing transcript is a true and accurate record of the proceedings.
Dena Page
DENA PAGE
212-267-6868
516-608-2400