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gov.uscourts.cacb.1906146/gov.uscourts.cacb.1906146.435.0_1.pdf
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EXCEPTIONAL REPORTING SERVICES, INC UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION IN RE: ) CASE NO: 2:20-bk-17433-VZ ) CHAPTER 11 ) JONG UK BYUN, ) Los Angeles, California ) ) Thursday, December 9, 2021 Debtor. ) ) 11:00 a.m. #4 - MOTION HEARING BEFORE THE HONORABLE VINCENT ZURZOLO, UNITED STATES BANKRUPTCY JUDGE CALENDARED MOTION: See page 2 APPEARANCES: See Pages 2, 3, 4 Court Recorder [ECRO]: Shemainee Carranza 855 460-9641 Transcribed by: Exceptional Reporting Services, Inc. P.O. Box 8365 Corpus Christi, TX 78468 361 949-2988 Proceedings recorded by electronic sound recording; transcript produced by transcription service. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 1 of 100 EXCEPTIONAL REPORTING SERVICES, INC 2 CALENDARED MOTION: #4 - MOTION FOR ORDER (1) APPROVING THE SALE OF THE REAL PROPERTY, SUBJECT TO OVERBIDDING PROCEDURES PURSUANT TO 11 USC SECTION 363; (2) AUTHORIZING THAT SUCH SALE BE FREE AND CLEAR OF LIENS, CLAIMS, INTERESTS, AND ENCUMBRANCES OF ANY NATURE WHATSOEVER PURSUANT TO 11 USC SECTION 363; (3) EXTINGUISHING EXISTING LEASE; (4) REJECTING ALL OTHER EXECUTORY CONTRACTS AND UNEXPIRED LEASES; (5) AUTHORIZING PAYMENT DIRECTLY OUT OF ESCROW OF THE CLAIM OF HYUNDAI STEEL COMPANY, ESCROW COSTS, BROKERS FEE AND LIENS SENIOR TO THE LIENS OF HYUNDAI STEEL COMPANY; (6) FINDING THAT BUYER IS A GOOD-FAITH BUYER ENTITLED TO THE PROTECTIONS OF SECTION 363(M) OF THE BANKRUPTCY CODE; (7) WAIVING THE FOURTEEN-DAY STAY PROVISION OF BANKRUPTCY RULE 6004; (8) APPROVING COMPROMISE AND CONTROVERSY WITH HYUNDAI STEEL COMPANY AND AUTHORIZING GENERAL MUTUAL RELEASES; AND, (9) GRANTING OTHER RELIEF IT DEEMS JUST AND APPROPRIATE [DKT.NO.379] APPEARANCES FOR: Debtor: GIOVANNI ORANTES, ESQ. Orantes Law Firm, PC 3435 Wilshire Blvd. Suite 2920 Los Angeles, CA 90010 888-619-8222 Hyundai Steel Company: EVAN M. JONES, ESQ. RICHARD HOLM, ESQ. O’Melveny & Myers, LLP 400 S. Hope Street Los Angeles, CA 90071 213-430-8313 Also present: AISLING MURRAY, ESQ. YOUNGWOOK SHIN, ESQ. BRIAN KENYAN Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 2 of 100 EXCEPTIONAL REPORTING SERVICES, INC 3 APPEARANCES FOR: (CONTINUED) Toni Ko: SHIRLEY CHO, ESQ. Pachulski Stang Ziehl & Jones, LLP 10100 Santa Monica Blvd. 13th Floor Los Angeles, CA 90067 310-277-6910 Packo Investments, DAVID W. MEADOWS, ESQ. et al.: 1801 Century Park East Suite 1235 Los Angeles, CA 90067 310-557-8490 Thor Acquisition West: MICHAEL S. GREGER, ESQ. Allen Matkins, LLP 1900 Main Street 5th Floor Irvine, CA 92614 949-553-1313 STEVEN A. COHEN, ESQ. Wachtell Lipton, et al. 51 West 52nd Street New York, NY 10019 212.403.1347 Also present: GREG BERMAN Senior VP Thor Equities Richard Marshack: ROBERT P. GOE, ESQ. Goe Forsythe & Hodges, LLP 18101 Von Karman Suite 1200 Irvine, CA 92612 North Palisade ERIC D. GOLDBERG, ESQ. Partners: DLA Piper LLP (US) 2000 Avenue of the Stars Suite 400 North Tower Los Angeles, California 310-595-3085 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 3 of 100 EXCEPTIONAL REPORTING SERVICES, INC 4 APPEARANCES FOR: (CONTINUED) Fleet Yards, Inc.: JULIAN GURULE, ESQ. Buchalter 18400 Von Karman Ave. Suite 800 Irvine, CA 92612 949-760-1121 8201 Santa Fe, LLC: SCOTT B. COHEN, ESQ. Engelman Berger, P.C. 2800 North Central Avenue Suite 1200 Phoenix, AZ 85004 602-271-9090 Also present: ERIC CROCKER JASON BERG WM Capital Partners: ROYE ZUR, ESQ. Elkins Kalt, et al. 10345 W. Olympic Blvd. Los Angeles, CA 90064 310-746-4400 Also present: SCOTT WHITWORTH ACI VI Santa Fe, LLC: JACQUELINE L. JAMES, ESQ. Cox Castle Nicholson 2029 Century Park East Suite 2100 Los Angeles, CA 90067 310-284-2214 Also present: JEFFREY GOLDBERGER Antonio Bernard Whitley: NOAH R. BALCH, ESQ. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 4 of 100 EXCEPTIONAL REPORTING SERVICES, INC 5 1 Los Angeles, California; Thursday, December 9, 2021; 11:00 a.m. 2 (Call to order) 3 THE COURT: This is a motion for an order approving a 4 sale and seeking approval of a compromise of controversy, and 5 other forms of relief in the Jong Uk Byun bankruptcy case. So 6 may I please first have an appearance on behalf of the moving 7 party? 8 MR. ORANTES: Good morning, Your Honor. This is 9 Giovanni Orantes of Orantes Law Firm on behalf of the Debtor 10 and debtor in possession. 11 THE COURT: Okay. Good morning. Next can I please 12 have -- 13 MR. SPEAKER: Can't hear anything. I wonder what's 14 going on. 15 THE COURT: -- the -- an appearance on behalf of 16 Hyundai Steel Company? 17 MR. SPEAKER: My speaker is not on. 18 MR. JONES: Good morning, Your Honor. Evan Jones and 19 Richard -- 20 MR. SPEAKER: Do you -- 21 MR. JONES: -- Holm in the courtroom from O'Melveny 22 and Myers. Your Honor, we also have on the phone -- 23 MR. SPEAKER: (Indisc.) earlier. 24 MR. JONES: -- with us my colleague Ms. Murray and -- 25 MR. SPEAKER: (Indisc.) anything. That's the funny Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 5 of 100 EXCEPTIONAL REPORTING SERVICES, INC 6 1 thing. 2 MR. JONES: -- my colleague Brian Kenyon who the -- 3 MR. SPEAKER: Something I haven't tested anyway. 4 THE COURT: Excuse me. Someone on the phone does not 5 have their mute button pushed. So please everyone who's on the 6 phone -- 7 MR. SPEAKER: Well, but the judge is sitting out 8 there. It should -- 9 THE COURT: Everyone who's on the phone, you need to 10 mute yourself before you -- 11 MR. SPEAKER: That's weird. 12 THE COURT: -- embarrass yourself -- 13 MR. SPEAKER: We should. 14 THE COURT: -- even further. 15 MR. SPEAKER: He's still speaking into the mic. 16 THE COURT: Life in the twenty-first century. 17 MR. SPEAKER: Oh, no. Hold on a second. Hello. 18 THE COURT: May I ask who's saying hello? 19 MR. SPEAKER: I don't hear anything. 20 THE COURT: Can you see who's talking, recorder? Who 21 is it? 22 MS. SPEAKER: Jeff. 23 THE COURT: Sorry? 24 MS. SPEAKER: It's Jeff. 25 THE COURT: It's in -- from chambers? Okay. All Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 6 of 100 EXCEPTIONAL REPORTING SERVICES, INC 7 1 right. I think we've controlled that problem. Okay. Let's 2 start over again. 3 MR. JONES: Thank you. 4 THE COURT: Okay. So you're about to tell me about 5 your colleague on the phone. 6 MR. JONES: Yes, Your Honor. On the phone I have 7 Ms. Murray as well as Mr. Kenyon, who's a real estate attorney 8 involved in this matter. I'd also note for the record, Your 9 Honor, my colleague Youngwook Shin, who is in Seoul, is sitting 10 in a conference room with our clients. And it's 4:00 a.m. in 11 Seoul so that's -- 12 THE COURT: I was just going to ask -- 13 MR. JONES: -- how important this is. 14 THE COURT: Yeah. Okay. 15 MR. JONES: It's -- 16 THE COURT: Thank you very much. 17 MR. JONES: Thank you, Your Honor. 18 THE COURT: You're welcome. Do we have an appearance 19 on behalf of Toni Ko? 20 (No audible response) 21 And I thank you all for spacing yourselves out. 22 MS. CHO: Good morning, Your Honor. Shirley Cho of 23 Pachulski, Stang, Ziehl, and Jones for Ms. Ko. 24 THE COURT: Good morning. Okay. Next, on behalf of 25 Packo Investments and related parties. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 7 of 100 EXCEPTIONAL REPORTING SERVICES, INC 8 1 MR. MEADOWS: Good morning, Your Honor, David Meadows 2 appearing on behalf of certain junior secured creditors, which 3 are Packo Investments, Mr. Allen Park, Mr. Mohamed Sanfaz, and 4 the BAE Family Trust. 5 THE COURT: Good morning. 6 MR. MEADOWS: Thank you. 7 THE COURT: Okay. Next, on behalf of Thor 8 Acquisitions, please. 9 MR. SPEAKER: On I think it's best -- 10 THE COURT: Let's -- 11 MR. SPEAKER: -- if we start -- 12 THE COURT: Let's pause. 13 MR. SPEAKER: -- your hosting -- 14 THE COURT: Stay on the record. 15 MR. SPEAKER: -- in January. 16 THE COURT: (Indisc.) 17 MR. SPEAKER: Not next week. That -- practice time 18 and also we can post the stuff on the website. We could set up 19 a recurring meeting where right now -- 20 (Recess taken from 11:03 a.m. to 11:04 a.m.) 21 THE CLERK: Court is one against -- once again in 22 session. 23 THE COURT: Okay. That proves you should never think 24 you're not being heard by someone somewhere in the world. 25 Okay. Thor Acquisition, please. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 8 of 100 EXCEPTIONAL REPORTING SERVICES, INC 9 1 MR. GREGER: Good morning, Your Honor, Michael Greger 2 of Allen Matkins of Allen, Matkins, Leck, Gamble, Mallory, and 3 Natsis on behalf of Thor Acquisition West, LLC. Your Honor, my 4 co-counsel Steven Cohen at the Wachtel Missry LLP firm is also 5 on the line. He has been admitted pro hac vice in this matter. 6 In addition, Mr. Greg Berman, a Senior Vice President of Thor, 7 is on the line as well for participation in the auction. 8 THE COURT: Okay. Thank you very much. 9 MR. GREGER: Thank you, Your Honor. 10 THE COURT: Next, on behalf of Richard Marshack. 11 MR. GOE: Yeah, Robert Goe of Goe, Forsythe, and 12 Hodges on behalf of Chapter 7 Trustee Richard Marshack, just 13 monitoring the hearing, Your Honor. 14 THE COURT: Okay. Good morning. And then we have 15 North Palisades Partners. 16 MR. GOLDBERG: Good morning, Your Honor, Eric 17 Goldberg of DLA Piper for North Palisade Partners. 18 THE COURT: Good morning. And then on behalf of 19 Fleet Yards, Incorporated. 20 MR. GURULE: Good morning, Your Honor, Julian Gurule 21 of Buchalter for Fleet Yards, Inc. 22 THE COURT: Good morning. 23 MR. GURULE: Good morning. 24 THE COURT: And then we have 8201 Santa Fe, LLC. 25 MR. SCOTT COHEN: Good morning, Your Honor, Scott Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 9 of 100 EXCEPTIONAL REPORTING SERVICES, INC 10 1 Cohen appearing on behalf of 8201 Santa Fe, LLC. I'm joined in 2 the courtroom by the member representative, Eric Crocker, and 3 by the indirect parent company's representative from Amerco, 4 Treasurer Jason Berg. 5 THE COURT: Good morning. 6 MR. SCOTT COHEN: B-E-R-G. Thank you. 7 THE COURT: You're welcome. And then we have other 8 parties, WM Capital Partners. 9 MR. ZUR: Good morning, Your Honor, Roye Zur of 10 Elkins Kalt on behalf of WM Capital Partners. We are hoping to 11 be qualified before this auction starts. We are still waiting 12 on that. I have -- 13 THE COURT: Have you talked to anyone about that? 14 MR. ZUR: We sure have, Your Honor. And I hope the 15 conversation continues and resolves itself -- 16 THE COURT: Okay. So just to save -- 17 MR. ZUR: -- before the auction begins. 18 THE COURT: -- a little tension, I'm going to 19 bifurcate obviously. First, if the motion's not granted, 20 there's no point in having an auction. So that will be 21 bifurcated so you can just -- we'll have a break in between to 22 make sure who the bidders are, if we get to that point. 23 MR. ZUR: I appreciate that very much. And, Your 24 Honor, one more thing. I believe that the managing member of 25 WM Capital Partners, Scott Whitworth, is on the line. But I Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 10 of 100 EXCEPTIONAL REPORTING SERVICES, INC 11 1 didn't hear him. 2 THE COURT: Okay. Thanks. 3 MR. ZUR: Thank you very much, Your Honor. 4 THE COURT: Sure. ACI 6 Santa Fe LLC. I presume 5 you're using the Roman numeral. 6 MS. JAMES: Yes, Your Honor. Good morning, Your 7 Honor, Jacqueline James, Cox, Castle, Nicholson, on behalf of 8 overbidder ACI Roman numeral six Santa Fe LLC. 9 THE COURT: Okay. Good morning. I believe you said 10 -- did you say Jacqueline James? 11 MS. JAMES: Yes, I did, Your Honor. 12 THE COURT: Okay. So again for future reference, 13 when you come back to the lectern, if you do, I am giving you 14 the option, not requiring, I'm saying you may take off your 15 mask if you'd like to make sure that we can make a record. 16 MS. JAMES: I understand, Your Honor. 17 THE COURT: Okay. 18 MS. JAMES: Thank you. 19 THE COURT: You're welcome. Okay. Next, we have 20 Antonio Whitley. 21 MR. BALCH: Good morning, Your Honor, Noah Balch on 22 behalf of Antonio Bernard Whitley. 23 THE COURT: Good morning. And then we have on behalf 24 of Daniel Park, Joan Park, and Jourdain DeWerd, do we have an 25 appearance? Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 11 of 100 EXCEPTIONAL REPORTING SERVICES, INC 12 1 THE CLERK: I didn't get (indisc.). 2 THE COURT: No one checked in on that matter. So 3 there's no one appearing on behalf of Daniel Park, Joan Park, 4 Jourdain DeWerd, correct? 5 (No audible response) 6 Okay. Mr. Orantes, would you like to add any oral 7 argument in support of your motion? 8 MR. ORANTES: Yes, Your Honor. Thank you very much. 9 And, Your Honor, I have to apologize for having to appear 10 telephonically. I was in front of Your Honor for the sales 11 procedures motion. Unfortunately, my wife tested positive for 12 COVID-19. And although the last time I checked I was negative, 13 that could change at any moment and I did not want to -- 14 obviously I did not want to infect anybody. So I'm limited to 15 doing this by telephone. 16 THE COURT: Well we thank you all for your caution. 17 MR. ORANTES: Thank you, Your Honor. Well, Your 18 Honor, we filed a motion to approve this transaction under 19 Section 363(b) and Section 363(f)(1), (4), and (5). 20 We believe that the Dolan (phonetic) case provides 21 support for this transaction, as well as for completing this 22 transaction free and clear of the lien of Fleet Yards, Inc. 23 under Spanish Peaks, because we have a very analogous situation 24 where if we don't complete a sale through the bankruptcy 25 process, Hyundai Steel Company, which has as we speak a Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 12 of 100 EXCEPTIONAL REPORTING SERVICES, INC 13 1 foreclosure scheduled for December 21st at 11:00 o'clock, can 2 foreclose on the property. And not only on this property but 3 on three other properties of the estate because they're all 4 cross-collateralized. 5 And that result would lead to no recovery for most of 6 the creditors of the estate, other than Hyundai. Hyundai 7 conducted a foreclosure sale earlier in the year. The highest 8 bid that it received I believe was $15.2 million, which is far 9 less than the $31 million starting bid that we have here for 10 Thor. And we have received three other bids. 11 But before we go on, Your Honor, I think just taking 12 the Court's marching orders as you said that you would 13 bifurcate the two matters, we did receive bids from -- three 14 bids, and there were certain statements that we do need them to 15 make on the record. But I will make those after everybody 16 argues the motion. 17 As the Court knows, we didn't receive an opposition 18 from the Packo creditors, and they have since withdrawn that in 19 part due to the stipulation by Hyundai to accept $24 million in 20 full satisfaction of its claim, plus 50 percent of any overbid 21 -- any net proceeds of the overbid, up to the amount of their 22 full claim. So based on that stipulation, all of the 23 objections have been withdrawn. 24 We did receive an opposition by Fleet Yards and which 25 alleged that it did not receive notice of this motion. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 13 of 100 EXCEPTIONAL REPORTING SERVICES, INC 14 1 However, since that time, we did file a reply and address that 2 declarations and address the issues set forth in the 3 opposition. But also Fleet Yards signed a stipulation 4 indicating that in fact it did have notice because I personally 5 provided notice and we did proofs of service of the motion to 6 show that Mr. Dan Otting of Fleet Yards, Inc. did receive 7 notice. 8 I believe, Your Honor, with respect to the motion 9 itself, it should be granted. It's in the best interest of the 10 creditors and is consistent with maximizing the recovery by 11 creditors of the estate, which is one of the pillars of the 12 bankruptcy process. 13 And after Your Honor rules on the motion, we would 14 like to take a moment to -- for the bidders to make their 15 representations, and if the Court would allow us at that point 16 to adjourn for a few minutes to consider the bidding packages 17 to qualify the bidders. And we would follow that with a sale 18 proceeding, Your Honor. 19 At this point, I don't have anything further unless 20 the Court has any questions. 21 THE COURT: NO questions, thank you very much. 22 MR. ORANTES: And any response to any other -- 23 THE COURT: No questions. 24 MR. ORANTES: Thank you, Your Honor. 25 THE COURT: Okay. So next I'm going to call for Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 14 of 100 EXCEPTIONAL REPORTING SERVICES, INC 15 1 parties in the order that I asked. For those who I perceive 2 either consent -- or let me put it this way. I'm going to call 3 for those who wish to be heard in support of the motion. So, 4 first, let's see, we'll go in order. So, Hyundai Steel, do you 5 wish to be heard in support of the motion? 6 MR. JONES: Yes, Your Honor, we do. 7 THE COURT: Please. 8 MR. JONES: Your Honor, Evan Jones on behalf of 9 Hyundai Steel. Your Honor, I'm going to take my mask off. 10 I've never been told I'm hard to hear, but I want to make sure. 11 THE COURT: It's clarity, not volume. 12 MR. JONES: Thank you. Your Honor, I'll start with 13 the Court's tentative ruling from the other day raising the 14 question of notice to CMI. I think that Mr. Byun's declaration 15 that was filed at ECF 427 amply addresses that. 16 And so, Your Honor, I turn to the objection filed on 17 Monday of this week by Fleet Yard, which asserts a sublease 18 from the Debtor's non-debtor affiliate CMI. Your Honor, the 19 objection is untimely, inadequate, and should be overruled. I 20 would make five points. And I apologize in advance for going 21 into detail. But since the objection was filed so late, we 22 haven't been able to respond in writing. 23 Point one, notice was properly given to Fleet Yard 24 when the motion was filed, and the objection is not timely. In 25 its opposition, Fleet Yard complains about a failure of notice. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 15 of 100 EXCEPTIONAL REPORTING SERVICES, INC 16 1 And certainly when I heard about that from Mr. Garfinkle 2 (phonetic), I was quite concerned because, as the Court has 3 said on many occasions, failure of notice is a reason to 4 continue a hearing. But it's simply not true. 5 As Mr. Orantes notices, the declaration of service on 6 the original motion at ECF 373, page 125, notes that Mr. Otting 7 as CEO of Fleet Yard received notice as a prospective buyer and 8 was given timely notice of the motion. I'd note, Your Honor, 9 until this week, Fleet Yard has never entered an appearance, 10 hasn't filed a proof of claim. That's the only address that 11 the Debtor had for Fleet Yard. 12 Your Honor will have noted that nowhere in 13 Mr. Otting's declaration does he say he didn't get notice. 14 Your Honor, I think -- 15 THE COURT: I'm thinking it's an echo. Go ahead. 16 MR. JONES: Very well, Your Honor. And, Your Honor, 17 in fact, as the Court is aware, on further investigation and 18 discussion with the parties, counsel for Fleet Yards has 19 acknowledged their mistake. They acknowledge that proper 20 service was made timely. And the failure of notice argument is 21 abandoned. 22 Your Honor, you've seen the stipulation of facts on 23 those that Fleet Yards' counsel entered with Hyundai. I 24 certainly commend counsel's professional candor and the honesty 25 of their client in admitting that fundamental error. But the Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 16 of 100 EXCEPTIONAL REPORTING SERVICES, INC 17 1 fact remains, notice was timely and the objection proceeds from 2 the fatal and false premise that notice was not timely given. 3 Fleet Yards' objection is almost two weeks late, Your 4 Honor, yet they got notice. The fact that Fleet Yards may have 5 decided or slept on its rights or whatever so that they didn't 6 get counsel up in time and they filed their objection 12 days 7 late under the local bankruptcy rules is not an excuse for the 8 fact that they filed the objection on Monday. The Court should 9 rule their pleadings untimely and stop there. 10 But, Your Honor, I'll continue to the four other 11 reasons why their pleadings are unavailing. 12 Point two, Fleet Yards does not even assert a lease 13 with the Debtor. This is another fatal flaw in all their 14 arguments. They are not in privity with the Debtor. Their 15 assertion is of a separate lease agreement with CMI, a 16 subsidiary of the Debtor. They've not asserted the lease with 17 the Debtor but they ask this Court, with no evidence, to simply 18 substantively consolidate those two entities and pretend that 19 they have a lease with the Debtor. There's no support for 20 that. 21 Your Honor, as CMI itself notes, apparently -- I'm 22 sorry, as Fleet itself notes, apparently CMI has an oral, 23 unrecorded lease with the Debtor. That lease itself is 24 certainly subject to being sold free and clear of under at 25 least three separate provisions of Section 363. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 17 of 100 EXCEPTIONAL REPORTING SERVICES, INC 18 1 First, CMI, which is the only party in privity with 2 the Debtor, has consented to the sale. That's Mr. Byun's 3 declaration. That's grounds for sale free and clear under 4 363(f)(2). 5 Second, even if CMI didn't consent, as the Ninth 6 Circuit ruled in Spanish Peaks, because there is a senior prior 7 lien in favor of Hyundai -- and by the way, Your Honor, I want 8 to thank Ms. Cho for teaching me to pronounce my client's name 9 correctly. Because there is a senior lien in favor of Hyundai, 10 363(f)(1) applies because a foreclosure of that lien would wipe 11 out any lease to CMI. And I'll talk about Spanish Peaks in 12 detail a little later. But that rule applies to the CMI lease. 13 Third, as Fleet Yards itself notes, CMI's lease is 14 avoidable as unwritten and unrecorded. So even if CMI didn't 15 consent to the sale, which it does, and even if Spanish Peaks 16 didn't apply to the sale, which it does, CMI's lease hold is 17 certainly subject to bona fide dispute. The Court can of 18 course order sale free and clear of an interest subject to bona 19 fide dispute under 363(f)(4). 20 It's well-established that voidability satisfies the 21 requirement of Section 363(f)(4). Your Honor, for that we cite 22 the Securities and Exchange Commission versus Capital Cove 23 Bancorp case from this district at 2015 WL 9701154 from 2015, 24 as well as the In Re Gaylord Grain LLC decision from the Eighth 25 Circuit BAP at 306 BR 624. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 18 of 100 EXCEPTIONAL REPORTING SERVICES, INC 19 1 And, Your Honor, I quote from Gaylord for the point 2 that the Trustee doesn't have to have commenced the avoidance 3 action to put the interest in bona fide dispute. And the quote 4 is as follows: "Although the trustee did not file an adversary 5 proceeding seeking to avoid the liens in question, he may 6 nevertheless sell free and clear of the bank's liens if he can 7 show, pursuant to 11 USC 544, an objective basis for avoiding 8 the liens, and thus establish a bona fide dispute for purposes 9 of 11 USC, 363(f)(4)." 10 THE COURT: Okay. Mr. Jones, please pause. Someone 11 on the line is not muting their phone. So please take the time 12 right now and look at your phone and make sure it's muted. 13 Thank you very much. Go ahead. Sorry, Mr. Jones. 14 MR. JONES: Thank you, Your Honor. Your Honor, if 15 the CMI lease from the Debtor fails, it is -- or can be sold 16 free and clear of, it is hornbook law that when the master 17 lease to CMI fails, any sublease to Fleet Yard likewise fails. 18 Your Honor, I cite the California Court of Appeals in 19 the Syufy Industry -- I'm sorry, Syufy Enterprises, LP versus 20 City of Oakland case, which actually involved at least 21 following bankruptcy. And in that case at 104 Cal. App. Fourth 22 869 in December 20, 2002, the Court stated, and I'll quote: 23 "Under California law, a subtenant's rights are," and then 24 there's an interior quote, "'dependent upon and subject to the 25 sublessor's rights. Rights under the sublease stand or fall Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 19 of 100 EXCEPTIONAL REPORTING SERVICES, INC 20 1 with those of the sublessor.'" Fleet Yards would like to 2 pretend they have a lease with the Debtor. But they don't. 3 They have a sublease from CMI, and CMI's lease fails for the 4 three reasons I've mentioned. 5 Your Honor, I'd also note that even if Fleet Yards 6 had the lease directly with the Debtor, it would be subject to 7 avoidance under Section 544 for the same reasons. It's a five8 year lease. It's not recorded. Such a lease is obviously 9 avoidable by a judgment lien creditor or BFP under California 10 law and is subject to bona fide dispute within the terms of 11 363(f)(4). 12 Again, I'd refer back to the cases I quoted on the 13 fact that a interest is avoidable or subject to avoidance 14 constitute a bona fide dispute. That's yet another reason the 15 CMI sublease is subject to -- I'm sorry, the Fleet Yards 16 sublease is subject to 363(f). 17 Point three, there are no enforceable holdover rights 18 under Section 365(h). And, Your Honor, I think apart from the 19 incorrect assertion that there was a failure of notice, this is 20 the fundamental argument that Fleet Yards makes. Your Honor, 21 of course the predicates for that section to apply are, one, a 22 lease under which the Debtor is the lessor. That's not Fleet 23 Yards lease. 24 The second predicate is that there is a rejection of 25 that lease. That's not the case here. The Debtor cannot Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 20 of 100 EXCEPTIONAL REPORTING SERVICES, INC 21 1 reject leases it is not a party to; 365(h) does not apply on 2 both of those reasons. 3 Your Honor, finally, as Fleet Yards admits in its 4 late-filed objection, the Ninth Circuit held in Spanish Peaks 5 that even if there were a valid lease with the Debtor, and even 6 if that lease were subject to rejection because it's a lease 7 with the Debtor, 365(h) rights do not survive sale free and 8 clear under 363(f). 9 Fleet Yards tries to distinguish Spanish Peaks as 10 involving an insider. But as my law professor used to say, 11 that's a fact of no importance. The Court doesn't use that as 12 the basis for its decision. It doesn't refer to that in its 13 analysis. 14 What the Court does say is because a foreclosure by 15 the senior lienholder under applicable law would wipe out the 16 holdover rights and the lease, that those rights are subject to 17 363(f)(1). 18 And by the way, Your Honor, in Spanish Peaks, the 19 Court went out of its way to indicate that no actual 20 foreclosure was required to implicate 363(f)(1). As the Court 21 will recall, the bankruptcy court made no findings on which 22 provision applied. There were -- of which provision of 363(f) 23 applied. 24 The circuit court, though, found that there was no 25 problem with concluding that 363(f)(1), which would apply in a Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 21 of 100 EXCEPTIONAL REPORTING SERVICES, INC 22 1 foreclosure by the senior lender applied. Your Honor, I would 2 quote from the Ninth Circuit opinion -- and by the way, Your 3 Honor, I'll note here, the only change I make, because I'm 4 going to substitute the name of the parties for clarity. 5 Indeed -- and I'm sorry, Your Honor, I apologize if I didn't 6 say the page. This is at page 900 of the circuit court's 7 decision. Indeed, had the debtor not declared bankruptcy, we 8 can confidently say that there would have been an actual 9 foreclosure sale. Such a sale would have terminated the 10 applicable leases. 11 Section 363(f)(1) does not require an actual or 12 anticipated foreclosure sale. It is satisfied if such a sale 13 would be legally permissible. 14 Now, Your Honor, the court does go on to say that it 15 seems clear there would be a foreclosure but for the sale. And 16 I don't think the Court needs stretch to make that conclusion 17 here. Hyundai has relief from the stay on its senior liens to 18 foreclose and expressly stipulated in a stipulation approved by 19 this Court to delay that foreclosure to permit this sale. 20 Your Honor, I'd also note that Spanish Peaks goes on 21 to say because that interest can be foreclosed out and sold 22 free of under 363(f)(1), no adequate protection is required. 23 But that's a peripheral matter. 24 Your Honor, the record is clear, Hyundai's lien was 25 recorded long before either the purported lease to CMI or the Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 22 of 100 EXCEPTIONAL REPORTING SERVICES, INC 23 1 sublease to Fleet Yard, which I remind the Court was entered 14 2 days before this third bankruptcy case was commenced. A 3 foreclosure by Hyundai would wipe out both of those interests 4 and thus permits a sale under 363(f)(1), even though the Debtor 5 is not a party to Fleet Yards' lease. 6 If there were a lease with the Debtor, and if that 7 lease were therefore subject to rejection, Spanish Peaks would 8 be directly on point. Of course there is no lease with the 9 Debtor and Fleet Yards' lease is not rejected because it's not 10 a lease with the Debtor. 11 But in the imaginary world that Fleet Yards wants the 12 Court to imagine, Spanish Peaks controls and this Court can and 13 should order sale free and clear of any holdover right. 14 Your Honor, point four, the asserted right of first 15 refusal does not interfere with the sale today. There is a 16 single sentence in the lease between CMI and Fleet Yards that 17 says tenant has right -- I'm sorry, tenant has first right to 18 purchase or refusal of the property. Now, Your Honor, I'm not 19 even sure that's sufficiently clear under California contract 20 law to impose obligations, but it doesn't matter. 21 And I apologize if I'm a broken record but this isn't 22 an agreement with the Debtor. CMI is not selling its rights. 23 If Fleet Yards has a cause of action against CMI under that 24 right of first refusal, they are free to pursue it. 25 But, Your Honor, more importantly, the evidence Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 23 of 100 EXCEPTIONAL REPORTING SERVICES, INC 24 1 demonstrates beyond dispute that if there were a direct right 2 of first refusal as against the Debtor, which there's not, the 3 Debtor has complied with it. Your Honor has seen the 4 stipulation that Fleet Yards counsel signed regarding 5 Mr. Otting's conversations. And it says exactly what we'd 6 hoped to get from Mr. Otting on cross examination today, if 7 need be, but again counsel has behaved responsibly and 8 acknowledged these points. 9 Mr. Otting has been aware of the bankruptcy of 10 Mr. Byun since it was filed. He was in active conversations 11 with Mr. Byun and his agents about possibly buying the 12 property. And he couldn't. He told the Debtor's agents that 13 he couldn't finance a bid to meet the other bids, including the 14 stalking horse. And he told them they should go ahead with an 15 alternative. 16 Now, Your Honor, if there were an enforceable right 17 of first refusal against this Debtor, that -- those actions 18 certainly fulfilled it. Mr. Otting had his chance and he 19 appropriately said and honestly said I can't do that. I don't 20 know what more this right of first refusal that the Debtor 21 asserts against CMI is supposed to encompass. Mr. Otting had 22 his chance. 23 And by the way, Your Honor, we encouraged Fleet Yard 24 to qualify and participate in the auction today. They didn't. 25 I think the reason's obvious: they don't have the funds. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 24 of 100 EXCEPTIONAL REPORTING SERVICES, INC 25 1 They'd like to have the funds, we would have liked to have them 2 bid. But they didn't. 3 And, Your Honor, that right of first refusal doesn't 4 lie against the estate. And if it did, it's been complied 5 with. 6 Your Honor, the last thing I'll say on the right of 7 first refusal is that even if this were a right of first 8 refusal against the estate, the law is not as Fleet Yard 9 suggests that such rights are necessarily enforceable in 10 bankruptcy. 11 In fact, the very case they cite, Northrop Grumman 12 from Delaware, says that such rights are enforceable within the 13 discretion of the Court if doing so does not, and I'll quote 14 from the Court, hamper the Debtor's ability to assign the 15 property or foreclose the estate from realizing the full value 16 of the Debtor's interest. But where it does interfere with 17 those processes, the Court has discretion to rule the right of 18 first refusal unenforceable. 19 On that point, Your Honor, Northrop Grumman is in 20 accord with numerous other courts, including the Adelphia 21 Communications decision, 359 Br 65, Bankruptcy Southern 22 District of New York 2007; In Re Chicago Investments, 470 BR 23 32, Bankruptcy D. Massachusetts, 2012; In Re Mr. Grocer -- and, 24 Your Honor, I have a personal soft spot for this case -- 77 BR 25 349, Bankruptcy D. New Hampshire 1987. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 25 of 100 EXCEPTIONAL REPORTING SERVICES, INC 26 1 Your Honor, that decision was by Judge Yacos, who I 2 had the pleasure to appear before actually in 1987. As Your 3 Honor will recall, he started the very first loose leaf 4 bankruptcy reporter service, The Broken Bank -- The Broken 5 Bench Review. 6 And, Your Honor, he got it right in that case because 7 every one of those cases says that if there were a right of 8 first refusal against the estate, and if it hadn't been 9 complied with, neither of which is true here, that this court 10 might nevertheless in its discretion order it not enforced 11 because it interfered with realizing the value of the estate 12 and its assets. 13 It's readily apparent, Your Honor, that enforcement 14 of this right of first refusal by delaying this auction will 15 materially interfere with this estate in realizing the value of 16 its assets. We are finally, literally after years, on the 17 verge of selling the estate's asset, primary asset. 18 Now, Your Honor, this case has finally gotten to the 19 point where I'm sure the Court would like to see all bankruptcy 20 cases. The prime litigants, Hyundai Steal -- apologize, 21 Ms. Cho -- and the Debtor are finally in accord. Mr. Orantes 22 and I have communicated extensively about this auction. 23 And by the way, Your Honor, as in any good bankruptcy 24 case, when peace breaks out, my appreciation of opposing 25 counsel has grown enormously. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 26 of 100 EXCEPTIONAL REPORTING SERVICES, INC 27 1 This Court should not delay the auction today because 2 of a late-filed assertion of a right of first refusal against 3 an affiliate which has been complied with. The standards for 4 enforcing that right of first refusal simply are not met. 5 Now, Your Honor, Mr. Orantes mentioned the objection 6 that Mr. Meadows filed on behalf of certain junior lienholders. 7 I understand that objection to have been withdrawn subject to 8 approval of the settlement with Hyundai, which certainly we -- 9 Hyundai, which certainly we support approval of. And, Your 10 Honor, we addressed that objection extensively in our papers. 11 Unless the Court has questions about that, I get to skip about 12 20 pages of my outline that I've put in purple because I think 13 we addressed clear channel in extensive detail, and it sounds 14 like it's simply not material today. 15 Your Honor, that brings me to point five. It is time 16 for the estate to sell this property. In some cases we might 17 say, okay, let's give Fleet Yard some more time. They were 18 late but people have time. Let them keep looking for more 19 financing. Let's see if other people can qualify today. 20 And as Mr. Orantes mentioned, if the Court rules that 21 it will enter an order approving sale today, we do need to 22 discuss qualification. And there are some commitments we need 23 from various bidders before they will be qualified. But we can 24 do that if the Court says it's appropriate to go forward after 25 we take a break and address those issues. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 27 of 100 EXCEPTIONAL REPORTING SERVICES, INC 28 1 But, Your Honor, this is not a case where further 2 delay is appropriate. The Debtor has been marketing this 3 property for years. Fleet Yard has been aware of those efforts 4 for years. They sought to buy the property but they couldn't, 5 and they said, go forward with someone else. They first 6 entered an appearance through counsel on Tuesday. 7 Your Honor, enough is enough. We have a generous 8 contract, almost double the price obtained in an adjourned 9 foreclosure sale last summer, for all of the estate's real 10 property assets. And that's a point I want to make sure is not 11 lost. The Debtor proposes to sell off one piece of property. 12 It is the most valuable one. But the estate will be left with 13 significant assets, and junior creditors can receive a 14 distribution. 15 Your Honor, we wish Mr. Byun well if the sale and 16 settlement are approved today. But I want to make sure the 17 Court is a well -- aware that at a regularly conducted 18 foreclosure sale for all of the estate's real property, the 19 highest bid obtained was $15.3 million. Now, Hyundai would 20 like to see these bids succeed. They're much higher. That's 21 what bankruptcy is for. 22 Your Honor, the sale agreement, the stalking horse 23 agreement we have before the Court requires closing by December 24 29th. That date is not accidental. The 30th and 31st are 25 holidays in Korea. Hyundai has waited a decade to receive a Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 28 of 100 EXCEPTIONAL REPORTING SERVICES, INC 29 1 penny of principal on this debt. This is the third bankruptcy 2 this Court has heard essentially over this debt. 3 There are approved procedures for this auction. They 4 were approved without objection. They are appropriate and they 5 are fair. 6 This last-minute objection is not well-founded and 7 should not delay this sale. 8 Similarly, the request that the Court's order be 9 stayed for 14 days is not well-founded. Again, as an initial 10 matter, it starts from the false premise that Fleet Yards 11 didn't get notice. That's just not true. Fleet Yards got 12 notice and for whatever reason didn't act until this week. 13 On the other hand, need to proceed promptly is amply 14 show. We are at yearend. Both companies and individuals like 15 to resolve things before yearend. 16 The purchase agreement requires closing as soon as 17 feasible, and in all events by December 29th. Further delay 18 because of Fleet Yards' sandbagging is not appropriate. 19 There is a time to object, there is a time to bid, 20 and Fleet Yards has missed both. 21 Your Honor, Fleet Yards' objection should not be 22 sustained for the five reasons I've mentioned. 23 Your Honor, the last thing I'd turn to -- I'm sorry, 24 did the Court have question? 25 THE COURT: No. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 29 of 100 EXCEPTIONAL REPORTING SERVICES, INC 30 1 MR. JONES: Thank you. Your Honor, the last thing 2 I'd turn to is the settlement with Hyundai, I got it right, 3 which is built into the sale motion. 4 As the record demonstrates, Hyundai asserts a senior 5 secured claim in excess of $28 million. This Court has already 6 rejected the Debtor's objection to the prepetition claim, 7 except for approximately $2 million in fees for which this 8 Court has permitted further briefing an evidence. Those fees 9 have of course continued to accrue post-petition, and they've 10 not yet been subject to review. So perhaps there are more fees 11 that might be disputed. 12 The Debtor in the settlement gives up counterclaims 13 against Hyundai. But of course those were dispositively 14 dismissed by the State Court in litigation with the Debtor. 15 So the calculus is simple. Hyundai gives up over $4 16 million in claims. Now, it might get some more if the bidding 17 today is successful. And maybe it'll come close to at some 18 point getting its full claim paid. And of course, Your Honor, 19 the stipulation says we'll never get more than our full claim. 20 But, Your Honor, the settlement which was entered 21 sets the possibility, perhaps the probability, that Hyundai 22 will walk away from over $4 million in claims. In return, 23 Hyundai receives a release of counterclaims that have been 24 denied by the State Court -- they could always file an 25 appeal -- and potential factual and legal disputes over legal Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 30 of 100 EXCEPTIONAL REPORTING SERVICES, INC 31 1 fees that are certainly subject to complexity, cost, 2 difficulty, and uncertainty. 3 Your Honor, I said there were five reasons why the 4 Fleet Yard objection should be rejected. I suggest that there 5 are over four million reasons why the settlement is fair. 6 Hyundai is taking a $4 million haircut in return for giving up 7 claims that at best are questionable -- counterclaims or 8 objections that are at best questionable. 9 The parties walk away from each other. And, again, I 10 would submit to the Court that's the best outcome to a 11 bankruptcy like this. Hyundai will walk away with a 12 significant haircut, the estate will sell a key asset. There 13 will be funds available for junior creditors. There will be 14 assets available for junior creditors. 15 Your Honor, that settlement is well within the range 16 of reasonable outcomes and should be approved by the Court. 17 And of course, Your Honor, in our paper, as 18 Mr. Orantes' paper, we address the standards for approval of a 19 settlement. But those are well-known to the Court. 20 And I'd submit that the calculus required here is not 21 difficult. It's a fair and reasonable settlement. The Court 22 should approve it. 23 Finally, Your Honor, the last point I make is if the 24 Court does not order payment of that settlement amount at 25 closing of a sale, and until such payments are made, Hyundai Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 31 of 100 EXCEPTIONAL REPORTING SERVICES, INC 32 1 requests an adequate protection lien on the proceeds in the 2 full amount of its claim. I don't think -- 3 THE COURT: Do you mean Hyundai? 4 MR. JONES: (No audible response) 5 THE COURT: I had -- I'm sorry, you just -- you 6 invited that so -- 7 MR. JONES: I did, Your Honor. And I'm happy to 8 admit that my Spanish is no better. And when I attempt to 9 imitate my son's statement of the city he spent a semester in 10 in Australia, I don't get Melbourne right either. 11 Your Honor, I thank you for your time. I'm happy to 12 answer any questions, but I have nothing else. 13 THE COURT: I have no questions. Thank you. 14 MR. JONES: Thank you, Your Honor. 15 THE COURT: All right. So at the risk of inventing a 16 word, trifurcate, before I hear arguments with regards to the 17 sale aspects of the motion, I want to see if there's anyone 18 that wishes to make oral argument in opposition to the 19 component of the motion with regards to the proposed compromise 20 of controversy. 21 I saw nothing in any opposition papers, be they be 22 withdrawn or not withdrawn, which opposed the compromise of 23 controversy. So that in and of itself would be deemed consent 24 to that granting of relief. But this is your opportunity if 25 there is any party opposing the compromise of controversy to Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 32 of 100 EXCEPTIONAL REPORTING SERVICES, INC 33 1 speak. I'll ask first if there's anyone on the phone. I don't 2 -- you don't have to -- don't say "no." If you wish to speak, 3 identify yourself. 4 (No audible response) 5 No, that's sufficient time to unmute. Okay. In the 6 courtroom is there anyone that wishes only to oppose -- and, 7 again, I saw nothing in anyone's papers, withdrawn or not 8 withdrawn, opposing the compromise of controversy. 9 (No audible response) 10 Okay. I reviewed the motion, all (indisc.) 11 obviously, as well as the component with regards to seeking 12 approval of the compromise if controversy. I find that each 13 and every element laid out by the Ninth Circuit in the ANC 14 (phonetic) decision has been met. It is a fair compromise. 15 It is a remarkable one. That's not a requirement. 16 But, frankly, having lived through these cases, it's amazing 17 that the parties have gotten to this. And that it would create 18 the opportunity for the best interest of if not every creditor, 19 nearly every creditor to have some satisfaction out of this 20 bankruptcy case. I can't imagine a better result. 21 So the compromise of controversy component of the 22 motion is approved. 23 Now I will call for other parties who wish to be 24 heard in support of the motion or at least non-objection to the 25 motion, if not outright consent. So let me start with Ms. Cho. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 33 of 100 EXCEPTIONAL REPORTING SERVICES, INC 34 1 MS. CHO: Good morning again, Your Honor. For the 2 record, Shirley Cho of Pachulski, Stang, Ziehl, and Jones for 3 Ms. Toni Ko. Ms. Ko is a secured creditor in a second lien 4 position behind Hyundai Steel. She's owed not less than $1.295 5 million. Your Honor, I lower my mask because you might not 6 have seen me smiling from ear to ear the first time -- 7 THE COURT: I observed the eyebrows. 8 MS. CHO: -- I appeared. You know, frankly, Your 9 Honor, we never thought this day would come. Like Hyundai, 10 Ms. Ko has been waiting over five years for payment on her 11 claim. And we are so pleased and thankful to the bidders for 12 their time this morning. Looking forward to robust bidding 13 this afternoon. We support the sale, Your Honor, and would 14 urge the Court to deny -- to overrule any objections, Your 15 Honor. 16 I rise only because Ms. Ko did file her statement and 17 reservation of rights at Docket Number 392. Your Honor, we 18 need to renew that reservation of rights. We have asked and 19 have still not seen the form of proposed sale order. Your 20 Honor, I understand that is being drafted, but as of this date 21 we've not seen it. 22 Like Mr. Jones, we do need to -- and I'm sure this 23 would not come as a surprise, Your Honor, we are looking for 24 comfort language. And Mr. Orantes, you know, even though he's 25 so busy this morning running around with the different bidders, Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 34 of 100 EXCEPTIONAL REPORTING SERVICES, INC 35 1 was able to assure me by phone that the proposed form of order 2 will have the necessary comfort language that a secured 3 creditor such as Ms. Ko would be looking for in the form of the 4 adequate protection language, either with the payment of 5 proceeds directed to her claim or the assurances that proceeds 6 will not be paid out of order, Your Honor, and that the secured 7 creditors' liens will attach to the same extent priority and 8 validity as existed immediately prior to the closing of the 9 sale, Your Honor. 10 So with respect to the continuing reservation of 11 rights to the form of sale order, Your Honor, we support the 12 sale. 13 THE COURT: Okay. So you didn't address my immediate 14 request which was with regards to compromise of controversy. 15 You -- 16 MS. CHO: The -- 17 THE COURT: -- do not oppose it, correct? 18 MS. CHO: We do not oppose it, Your Honor. 19 THE COURT: That component of the motion. 20 MS. CHO: We concur with Your Honor's assessment. It 21 is remarkable, and we do thank Hyundai. 22 THE COURT: Okay. Great, thanks. 23 MS. CHO: Thank you. 24 THE COURT: Is there anyone that wants to be heard 25 before I call on other parties that wants to oppose the Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 35 of 100 EXCEPTIONAL REPORTING SERVICES, INC 36 1 compromise of controversy? 2 (No audible response) 3 Okay. Because I want to be absolutely clear, so it's 4 approved. 5 There are other remaining aspects of the motion which 6 obviously I have not ruled on yet, including -- which you 7 should be aware, you may have, I'll give you a chance to think 8 about it -- extinguishing leases. I'm not aware of any such 9 provision in the Code to extinguish a lease so it's unlikely I 10 would sign an order that includes that provision, heads up. 11 But now let me turn to the other parties that wish to 12 be heard in support of the motion. Mr. Meadows, I presume. 13 MR. MEADOWS: Good morning, Your Honor, David Meadows 14 on behalf of the four secured creditors I've previously 15 identified for the record. Very briefly, Your Honor. 16 At this stage of the proceeding I have nothing 17 further to add, other than to confirm what is already made 18 clear by my filing that my clients have withdrawn their 19 objection. There were conditions on it. But since you have 20 just granted the settlement agreement, those conditions have 21 now been made mooted. 22 So to use the word that Ms. Cho used, we support the 23 sale and look forward to a robust auction. It's a far better 24 outcome than we thought we'd ever see. So thank you. 25 THE COURT: Okay, thank you. And then last call -- Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 36 of 100 EXCEPTIONAL REPORTING SERVICES, INC 37 1 MR. SPEAKER: Okay. 2 THE COURT: -- absolutely clear, no one wishes to be 3 heard in opposition to the compromise of controversy. Okay. 4 Last call on that. 5 Now let me hear from anyone else that wish to be 6 heard in support of the motion, all the components of the 7 motion. 8 (No audible response) 9 Anyone else? 10 (No audible response) 11 Okay. Now, -- 12 MR. STEVEN COHEN: Your Honor, just -- I'm sorry. 13 THE COURT: On the phone, go ahead. 14 MR. STEVEN COHEN: Yeah, Your Honor, Steven Cohen on 15 behalf of Thor, the stalking horse bidder. Just very briefly. 16 I thank Mr. Orantes, and particularly Mr. Jones, for 17 comprehensive and eloquent support of the motion and (indisc.) 18 why the objection by Fleet Yards should be rejected. 19 But just to add a fine point to it, my client, Thor, 20 the stalking horse bidder, would not have gone down this path 21 and signed the sale and purchase agreement without the 22 assurance as a condition that the Fleet, whatever interest it 23 had, lease, sublease, call it what you will, would be rejected 24 as part of the sale order. That's always been our position. 25 That's been the position made clear in the initial motion Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 37 of 100 EXCEPTIONAL REPORTING SERVICES, INC 38 1 seeking approval of the bid procedures order and the sale 2 motion. And Thor supports the application and the motion. 3 THE COURT: Okay. Before we have a flood of people 4 responding to that, I want to make clear since I -- I don't 5 want to make sure I didn't add something to the intellectual 6 tsunami that is going on in the courtroom right now. I 7 don't -- I have never seen any provision of the Bankruptcy Code 8 that authorizes extinguishing a lease. 9 Section 365 speaks to a limited power given to 10 trustees and debtors in possession to reject leases. Okay. 11 That's -- those are two -- that's the distinction I was 12 attempting to draw. I have now I think drawn it as clearly as 13 it can be drawn. 14 And now I'll -- finally, with regard to rejection, a 15 debtor in possession or a trustee can only reject a lease in 16 which the estate, i.e. the debtor or that the estate of the 17 debtor, is a party to with the party who is on the other side 18 of the lease. So if there is a sublease between party A and 19 party B, and party B has a lease with the Debtor, rejection 20 does not reach the lease between A and B. 21 MR. JONES: Your Honor, Evan Jones. If I may jump in 22 here. Mr. Orantes mentioned that we're going to need the 23 bidders, if we get to bidding, to clarify certain provisions of 24 their APAs. 25 And Your Honor has put your finger on exactly one Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 38 of 100 EXCEPTIONAL REPORTING SERVICES, INC 39 1 point we will ask them to clarify. The phrase "extinguish" I 2 agree with Your Honor is not found in the Bankruptcy Code. And 3 I also agree with Your Honor that the Debtor cannot reject a 4 lease that it's not a party to. That was part of my argument. 5 I don't think the Debtor sought to reject the Fleet Yards 6 lease. 7 But I think what this Court can order and what we 8 will ask the Court to order and what we will ask the bidders to 9 confirm is adequate is this Court can order under Section 10 363(f) that the sale is free and clear of any interest that 11 Fleet Yards holds under that sublease in the property. 12 THE COURT: Please full stop pause. This is reaching 13 ahead again. But -- and perhaps it's best for the second part 14 of the hearing if I grant the motion just to approve the sale. 15 But I am bound to follow the rulings of the Ninth 16 Circuit, including that in Spanish Peaks. I find Spanish 17 Peaks, it's not factually directly on point but legally it is. 18 So therefore within the context of this motion, a motion to 19 sell free and clear under 363(f) can be granted so that leases 20 are -- that the property is sold free and clear of any leases. 21 Anyone who has an interest with a sublease in that 22 lease only has whatever interest the lessee has. So therefore 23 it would be free and clear of that interest as well, but 24 through the lease, which is sold -- of which the property is 25 sold free and clear of. I don't think ending with a Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 39 of 100 EXCEPTIONAL REPORTING SERVICES, INC 40 1 preposition but that's the only way I can think of right now. 2 MR. JONES: Your Honor, I will note that when I was 3 preparing my arguments, when you talk about 363(f), you end up 4 with prepositions at the end far too often. But Your Honor has 5 put your finger -- 6 THE COURT: Yeah. 7 MR. JONES: -- on exactly the point. If the Court 8 decides to proceed with an auction, we will ask the bidders to 9 confirm that such an order would be adequate. 10 THE COURT: Yeah. 11 MR. JONES: We'd ask them to confirm on the record 12 that such an order would be adequate because we don't want to 13 enter an agreement that we can't deliver. And -- 14 THE COURT: Sure. And -- 15 MR. JONES: -- I thank the Court. 16 THE COURT: And, Mr. Cohen, I don't mind you raising 17 that issue right now, so you can think about it. And I'm sure 18 you're all talking about it and having associates research it 19 as we go. But that's -- if I grant the motion to approve the 20 sale, that is the conclusion of law I would reach with regards 21 to what I am authorized to do today pursuant to the law. 22 MR. JONES: Your Honor, I -- 23 MR. STEVEN COHEN: I understand, Your Honor. 24 MR. JONES: -- apologize. If I might -- 25 THE COURT: Let me first hear from Mr. Cohen. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 40 of 100 EXCEPTIONAL REPORTING SERVICES, INC 41 1 MR. JONES: I'm sorry, Your Honor. 2 THE COURT: Go ahead, Mr. Cohen. 3 MR. STEVEN COHEN: I understand, Your Honor. And 4 just I think part of the reason why Mr. Orantes and I, in 5 crafting the purchase and sale agreement, struggled in part and 6 tried to be as inclusive as possible in describing what had to 7 happen with this interest, whatever that interest may be that 8 Fleet has, we want it clear that there's no possessory 9 interest, no occupancy interest, no claims of any nature 10 remaining after the sale -- 11 THE COURT: I am -- 12 MR. STEVEN COHEN: -- as part of the sale -- 13 THE COURT: -- nodding my head yes. Mr. Cohen, I am 14 nodding my head yes. 15 MR. STEVEN COHEN: Okay. 16 THE COURT: Okay. That is -- 17 MR. STEVEN COHEN: And that's -- 18 THE COURT: -- how I read -- 19 MR. STEVEN COHEN: Okay. 20 THE COURT: -- 363(f). And since we're throwing 21 around historical -- 22 MR. STEVEN COHEN: Right. 23 THE COURT: -- footnotes, the interesting thing is 24 with the Queen Mary case, Queens Seaport Development, I 25 actually reached that conclusion I think about 15 years before Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 41 of 100 EXCEPTIONAL REPORTING SERVICES, INC 42 1 Spanish Peaks. It was nice to see the Ninth Circuit eventually 2 agreed. 3 But in any event, let's stop there -- 4 MR. STEVEN COHEN: Right. And, Your Honor, if I may 5 (indisc.) I would just, if I may, any rights of possession 6 under 365(h) that may exist, those also we would ask to be 7 included in -- 8 THE COURT: Hey. We're going to put -- 9 MR. STEVEN COHEN: -- the order and be -- 10 THE COURT: -- aside scrivening right now, and I'm 11 going to turn to the remainder of the parties who wish to be 12 heard with regards to the motion. Thank you very much. 13 MR. JONES: Thank you, Your Honor. 14 MR. STEVEN COHEN: Thank you, Your Honor. 15 THE COURT: Thank you, Mr. Jones. Thank you, 16 Mr. Cohen. All right. Does anyone else wish to be heard in 17 support of the motion? 18 (No audible response) 19 No. Does anyone wish to be heard in opposition to 20 the motion? 21 (Pause) 22 MR. GURULE: Good afternoon, Your Honor, Julian 23 Gurule of Buchalter for Fleet Yards, Inc, Your Honor. 24 THE COURT: Good morning. That clock is five minutes 25 fast. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 42 of 100 EXCEPTIONAL REPORTING SERVICES, INC 43 1 MR. GURULE: Yeah. It's -- oh, okay. 2 THE COURT: It's five minutes fast. 3 MR. GURULE: Good morning. Good morning -- 4 THE COURT: It's okay. 5 MR. GURULE: -- then, Your Honor. Your Honor, so 6 there are a couple of things I like to do when I show up in 7 bankruptcy cases and some things that I don't like to do when I 8 show up in bankruptcy cases. 9 THE COURT: Especially when you didn't sign the 10 papers, huh? 11 MR. GURULE: Yeah. One thing I like to do, which I 12 think I've successfully been able to do in large part thanks to 13 the professionalism of Mr. Jones and his colleagues, is narrow 14 the issues in dispute here. And I think Your Honor saw the 15 stipulation we entered into so I think we've narrowed the focus 16 of things that we're going to be talking about today. And I 17 appreciate that. 18 And there was a fair amount of back and forth by 19 email, and I think we resolved it to everyone's satisfaction. 20 Hopefully the Court was able to see that stipulation which I 21 know Your Honor approved. 22 The thing, Your Honor, that I do not like to do when 23 I show up in bankruptcy cases is be the fly in the ointment 24 standing in front of, to mix metaphors, a freight train that's 25 been going full steam ahead for years and be the last party Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 43 of 100 EXCEPTIONAL REPORTING SERVICES, INC 44 1 standing -- 2 THE COURT: Oh, I don't know if that's true but okay. 3 MR. GURULE: Standing on front of a sale that, you 4 know, but for me maybe would be everyone holding hands in 5 harmony, which is usually my goal in bankruptcy cases. 6 So, Your Honor, with that, I'll be brief, Your Honor. 7 Just for the sake of clarity, as I was saying before, I take 8 our stipulation with Hyundai to resolve the notice point raised 9 in our objection so I'm not going -- 10 THE COURT: So you don't want to ask you about the 11 sentence in the opposition which reads quote: "However, the 12 Debtor failed to provide Fleet Yards with notice of the sale 13 and requested relief until five days after the deadline to 14 object to the sale has passed." 15 MR. GURULE: Exactly. 16 THE COURT: That I -- 17 MR. GURULE: Exactly right, Your Honor. 18 THE COURT: I appreciate the courtesy and the 19 cooperation. But I have to tell you before we leave this 20 topic, -- 21 MR. GURULE: Yes, Your Honor. 22 THE COURT: -- that when I read that stipulation and 23 I went back and found and re-read -- I read the objection. 24 When I re-read the objection, that disturbed me. 25 MR. GURULE: Yes, Your Honor. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 44 of 100 EXCEPTIONAL REPORTING SERVICES, INC 45 1 THE COURT: I'll leave it at that. 2 MR. GURULE: Yes, Your Honor. I appreciate that, 3 Your Honor. 4 THE COURT: Okay. 5 MR. GURULE: And I appreciate like I said the 6 parties. 7 THE COURT: Yeah. 8 MR. GURULE: Yeah. Hopefully resolving -- 9 THE COURT: It's resolved. Go ahead. 10 MR. GURULE: Yeah. Your Honor, what I would like to 11 focus on today is the second aspect of our papers that we filed 12 this week. I get the notice point. I would ask Your Honor, 13 given the enormous detrimental effect that the requested relief 14 would have on Fleet Yards, to consider aside from the notice 15 point all aspects of our -- of the objection that we filed this 16 week. But, Your Honor, I'm not -- 17 THE COURT: Oh, I have. No, I -- 18 MR. GURULE: Yeah. And, Your Honor, I'm not -- 19 THE COURT: And you're welcome to address them. 20 MR. GURULE: Yes. And I'm not going to address them 21 today because I think that -- 22 THE COURT: Okay. 23 MR. GURULE: -- in some ways misses what our primary 24 argument is here, Your Honor, and that is the full second, what 25 I think of as a second, issue that we raised in the brief, Your Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 45 of 100 EXCEPTIONAL REPORTING SERVICES, INC 46 1 Honor, which was a request for adequate protection under 2 Section 363(e) and 361 of the Bankruptcy Code. Your Honor, 3 again, not to belabor the notice point, but as Your Honor 4 knows, a request for adequate protection can be made, according 5 to the statute, -- 6 THE COURT: At any time. 7 MR. GURULE: -- at any time. 8 THE COURT: Sure. 9 MR. GURULE: Your Honor, it could be made on the 10 podium today. It could be made you know, earlier this week. 11 It could have been made frankly, you know, much earlier in this 12 case. At the end of the day, it doesn't matter. 13 Your Honor, we operate transport -- excuse me. My 14 client operates a transport container business on the real 15 property. As I said, it would be substantially detrimental to 16 that -- those operations, of course, if we were to lose 17 possession of it. 18 Section 363 of the Bankruptcy Code, Your Honor, is 19 clear that adequate protection must be provided where there is 20 a proposed sale of real property, including under section -- 21 specifically under Section 363 where the sale's going to be 22 free and clear of interest in the property. And plainly here, 23 Your Honor, Fleet Yards has an interest in the property 24 proposed to be sold. 25 THE COURT: Which property? Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 46 of 100 EXCEPTIONAL REPORTING SERVICES, INC 47 1 MR. GURULE: The sale prop -- 8201 -- 2 THE COURT: Please be specific. What property does 3 your client have an interest in? 4 MR. GURULE: The real property. 5 THE COURT: Really? I think it's a sublease and a 6 lease. 7 MR. GURULE: It's a possessory interest, Your Honor, 8 I'd submit. 9 THE COURT: And the possessory interest flows through 10 a sublease with a lessor, correct? A lessee/lessee -- a 11 lessor/lessee. 12 MR. GURULE: Yes. One thing -- 13 THE COURT: Sublessor/lessee. 14 MR. GURULE: Yeah. Your Honor, one thing, as I was 15 thinking about this case and anticipating this point, Your 16 Honor, one thing that is not clear to me, and being, you know, 17 especially relative to all my colleagues here today new to the 18 case and the facts, it's not clear to me necessarily, I'd 19 submit, Your Honor, who the lease is with. I know what the 20 lease agreement says -- 21 THE COURT: Okay, let me -- 22 MR. GURULE: -- but Your Honor -- 23 THE COURT: I apologize for the interruption. When 24 you say "the lease agreement," are you speaking of the one that 25 your client has? Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 47 of 100 EXCEPTIONAL REPORTING SERVICES, INC 48 1 MR. GURULE: That my client has, Your Honor. But 2 Your Honor -- 3 THE COURT: Who is the -- what is the name on the 4 lease as the lessor? 5 MR. GURULE: Central Metals, Your Honor. 6 THE COURT: Okay. 7 MR. GURULE: Your Honor, I only say that -- 8 THE COURT: So it is clear. 9 MR. GURULE: -- I think it's -- I understand, Your 10 Honor. 11 THE COURT: Okay. 12 MR. GURULE: I only say that because, Your Honor, 13 it's not clear to us that Central Metals does anything, it's 14 not clear to us that there is a true lease at all, an implicit 15 lease, or whatever the Debtor cares to call it, between the 16 Debtor, the individual, and Central Metals, who I don't know if 17 it's a DBA or what. 18 Your Honor, I'd also point out that the Debtor's own 19 Schedules schedule as an unexpired lease of real property the 20 Fleet Yards lease. 21 So, Your Honor, I understand the Court's hesitation 22 and skepticism. I frankly share it. But being about less than 23 a week into the case I would be remiss not to preserve the 24 argument that we might have a direct lease under applicable 25 law -- Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 48 of 100 EXCEPTIONAL REPORTING SERVICES, INC 49 1 THE COURT: Of course, 2 MR. GURULE: -- with -- 3 THE COURT: Of course. 4 MR. GURULE: -- with the Debtor. I think that is I'd 5 say an issue in dispute and something that hasn't been fully 6 examined or briefed. I get sort of the hour, Your Honor, 7 literally and figuratively, we are in this case. 8 THE COURT: So, if your client had a lease with the 9 Debtor, which seems to be the logical inference to draw from 10 the argument you make -- 11 MR. GURULE: Yes, Your Honor. 12 THE COURT: -- so then it could be sold free and 13 clear under Spanish Peaks. 14 MR. GURULE: I think, Your Honor -- 15 THE COURT: The property could be sold -- 16 MR. GURULE: I think -- 17 THE COURT: -- free and clear of your lease. 18 MR. GURULE: I think, Your Honor, as Mr. Jones 19 outlined in his report, outlined earlier today, Spanish Peaks 20 says a number of things. I think one thing that it clearly 21 says is that in the Ninth Circuit we're going to apply the 22 minority view, which is fine, and -- 23 THE COURT: I have no choice. 24 MR. GURULE: -- and we have no choice and it's 25 sensible when you look at the statutory provisions that are in Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 49 of 100 EXCEPTIONAL REPORTING SERVICES, INC 50 1 dispute, that you can sell free and clear under 363(f) of 2 leasehold rights and that, unlike in other Circuits, or other 3 Districts I should say, Section 365(h) does not afford what I 4 think of as holdover rights to the tenant. 5 THE COURT: So even if -- 6 MR. GURULE: It is what it is, Your Honor. 7 THE COURT: -- your client had a lease because there 8 is an assertion in the Schedules that the lease is directly 9 with Fleet, or even if you had established, which you haven't 10 obviously, that there is a confusion of identities between -- 11 MR. GURULE: Yes, Your Honor. 12 THE COURT: -- the Debtor and Central Metals, you 13 still -- your client would still be subject to the power under 14 363(f)? 15 MR. GURULE: I think that's right, Your Honor. 16 THE COURT: Yeah -- 17 MR. GURULE: And that's why, Your Honor -- 18 THE COURT: -- I think so too. 19 MR. GURULE: Spanish Peaks says what it says, Your 20 Honor, but that is why I started my presentation today with the 21 focus on adequate protection, Your Honor, because Spanish Peaks 22 says what we just talked about in terms of how those two 23 statutory provisions work together, but in support of its 24 reasoning -- excuse me -- in support of its holding on the 25 363(f)/365(h) issue it lists reasons that a tenant, Your Honor, Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 50 of 100 EXCEPTIONAL REPORTING SERVICES, INC 51 1 is not without some protection in a situation where the 2 property that it has an interest in is going to be sold -- 3 THE COURT: Right -- 4 MR. GURULE: -- free and clear. 5 THE COURT: -- if 365 applied. 6 MR. GURULE: If -- 7 THE COURT: If it applied. 8 MR. GURULE: Your Honor, I would submit that there 9 are two things that a debtor with the, you know, support of its 10 secured lender can do when they're trying to liquidate a 11 property where there's a tenant in place. Your Honor, they 12 could sell the prop -- excuse me -- they could reject the 13 lease, like we've talked about, I don't know what extinguish a 14 lease means, either they could reject the lease, which clearly 15 under Spanish Peaks or otherwise the Bankruptcy Code provides 16 at 365(h) provides them with holdover rights, that is my 17 understanding is not what's happening here, or, Your Honor, the 18 debtor and the secured lender can sidestep the issue of 19 Section 365(h) in the Ninth Circuit and attempt to sell the 20 property free and clear of leasehold interests, Your Honor. 21 And that is fine. Under Spanish Peaks, 365(h) does not protect 22 a tenant like my client. That's binding authority. 23 THE COURT: Yeah. 24 MR. GURULE: We briefed, Your Honor, I know you read 25 the brief, I think we have facts that are distinct from it, I'm Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 51 of 100 EXCEPTIONAL REPORTING SERVICES, INC 52 1 not going to belabor that, in Spanish Peaks. 2 But what -- in that second option, where they're 3 attempting to sell free and clear under 363(f), what it does 4 afford under Spanish Peaks, what the Ninth Circuit Spanish 5 Peaks case does afford us are a right to adequate protection. 6 Our proposed form of adequate protection, Your Honor, you saw 7 in the papers, is continued possession in accordance with the 8 terms of the lease. That's what other Courts confronted with 9 somewhat similar facts have ordered as adequate protection. 10 But, Your Honor, it could be, as Your Honor knows, under 361 11 and the case law interpreting it, it's case-by-case and 12 fashioning a form of adequate protection that would protect the 13 value of that possessory interest, it could be provided in a 14 number of ways. Possession would be our preferred means of 15 protecting that interest, Your Honor. 16 THE COURT: Okay. Thank you very much. 17 MR. GURULE: Your Honor, the -- just consulting my 18 notes, Your Honor. 19 THE COURT: Sure. 20 MR. GURULE: Your Honor, I think one last point, 21 again to not belabor the freight train analogy here, I get that 22 everyone wants to close this by the end of the year. Your 23 Honor, I think given that we're certainly having divergent 24 views of what the final page of Spanish Peaks says with the 25 Secured Lender, and I think it's something of an open issue in Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 52 of 100 EXCEPTIONAL REPORTING SERVICES, INC 53 1 the Ninth Circuit, I would say waiver of the 14-day stay 2 provided for under the Bankruptcy Rules is not appropriate, 3 Your Honor. And that is on a standalone basis with the request 4 for adequate protection, which would be impacted by the sale. 5 THE COURT: So when did your client first know that 6 the Debtor wanted to sell the property and started engaging in 7 negotiations to sell the property and attempted to buy the 8 property? 9 MR. GURULE: Your Honor, I could not tell you with 10 confidence a date or something approaching -- 11 THE COURT: I see. 12 MR. GURULE: -- a firm date, Your Honor. 13 THE COURT: Months? Weeks? Years? 14 MR. GURULE: Your Honor, Debtor's counsel submitted a 15 declaration. I, Your Honor, candidly have no reason to dispute 16 the -- 17 THE COURT: Okay. 18 MR. GURULE: -- emails, for example, attached to it. 19 THE COURT: So for a very, very long time? 20 MR. GURULE: Certainly aware of the bankruptcy 21 case -- 22 THE COURT: Yeah. 23 MR. GURULE: -- yes, Your Honor. 24 THE COURT: And attempts to purchase the property. 25 MR. GURULE: Yes, Your Honor. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 53 of 100 EXCEPTIONAL REPORTING SERVICES, INC 54 1 THE COURT: Thanks. 2 MR. GURULE: Thank you, Your Honor. 3 THE COURT: You're welcome. 4 Okay, please be seated, Mr. Jones. 5 MR. JONES: Yes, Your Honor. 6 THE COURT: All right. Is there anybody else who 7 wishes to be heard in opposition to the motion? 8 (No audible response) 9 No. All right, Mr. Orantes, do you wish to make a 10 reply? 11 MR. ORANTES: Yes, Your Honor, if I may. I'll try 12 not to repeat the arguments in my written reply, but -- 13 THE COURT: Thank you. 14 MR. ORANTES: -- as counsel indicated, I think that 15 Fleet Yards is really at this point is focusing on the adequate 16 protection aspect, which, as the Court agreed, could be made at 17 any time. 18 With respect to Sections 363(e) and 365(h), with 19 respect to 365(h) they don't have a lease with the Debtor here 20 so, as I pointed out in my papers, it doesn't apply to the 21 facts at issue. And with respect to 363(e), Fleet Yards is 22 arguing that it should receive continued possession of the 23 property. If Fleet Yards is allowed to remain in possession of 24 this property, it would completely, you know, block this 25 transaction. This transaction is resulting in payment of the Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 54 of 100 EXCEPTIONAL REPORTING SERVICES, INC 55 1 major, of the biggest creditor of the estate, as well as 2 probably satisfaction of other junior liens, and is the biggest 3 opportunity for the estate for all the creditors in estate to 4 get paid, including even some unsecureds, although there aren't 5 many in this case, and it would just not be consistent with the 6 goals of bankruptcy to not allow this transaction to happen. 7 In terms of whether they are allowed to continue in 8 possession as some sort of adequate protection, as I indicated 9 in my papers they cite a case called Dishi & Sons v. Bay 10 Condos LLC at 510 B.R. 696, which stated that absent any 11 authority to the contrary the Court must follow the plain 12 language of the Code, which requires the Bankruptcy Court to 13 provide adequate protection, which may include the indubitable 14 equivalent of the interest, namely, continued possession. 15 However, the District Court is from the Second Circuit, it's 16 not a Ninth Circuit Court, and it does not have Spanish Peaks 17 as the binding authority. And Spanish Peaks is allowing the 18 sale of the property free and clear of liens on account of the 19 fact that a foreclosure would wipe them out and the Court that 20 they're citing does not have that binding authority as a 21 background or does not rule along those lines. 22 So, if the secured creditor here, Hyundai, was to 23 foreclose on the property, there's no question that, as I 24 indicated in my motion, that Fleet Yards would lose its lease 25 and it would just have to at that point fight its holdover Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 55 of 100 EXCEPTIONAL REPORTING SERVICES, INC 56 1 rights in a lawful detainer court and it would just be a matter 2 of time before it gets -- it gets vacated because the lien of 3 Hyundai is far ahead in priority, it was entered into in 2005, 4 whereas this lease was entered into right before the 5 foreclosure -- I'm sorry -- the bankruptcy was filed in this 6 case. The date of the lease is as of August 5th, which is nine 7 days prior to the filing of the petition in this case. This 8 lease would be avoidable if we filed an adversary proceeding to 9 avoid it under 547 as a preference or under 544 or any other 10 avoidance statute of the Bankruptcy Code. 11 In light of the power by the Debtor-in-Possession, I 12 think that the indubitable equivalent of whatever interest 13 Fleet Yards has, and again, as I pointed out, the interest that 14 Fleet Yards has is an interest in the lease of its lessor, 15 which is Central Metal Inc., and Fleet Yards has not denied 16 that its lessor is Central Metal Inc. Filed a Declaration by 17 Mr. Van Notting (phonetic), attaching the lease agreement and 18 that name is repeated numerous times. They never requested any 19 signature by Mr. Byun in his personal capacity. And if they 20 had any question with respect to the authority of Central Metal 21 Inc. to enter into a lease agreement, as California law 22 indicates, it is the duty of the person contracting for a 23 sublease to ascertain the positions of the original lease and a 24 subtenant is charged with notice of the existence of the 25 original lease and is bound by its terms and conditions. So Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 56 of 100 EXCEPTIONAL REPORTING SERVICES, INC 57 1 they should not now try to have rights superior to those to 2 which Fleet Yards contracted. 3 So to the extent that Fleet Yards would be put out of 4 possession by foreclosure, which is the predicate here largely 5 for the sale within the bankruptcy context. To the extent that 6 Fleet Yards only has an interest in the lease, not in the 7 property, I believe that the indubitable equivalent to its 8 interest is not possession for another four years. As 9 indicated in my papers, subject to the Court's approval and 10 other parties' approval, I think perhaps allowing Fleet Yards 11 time to move out orderly, as it would -- perhaps as it would 12 accomplish if a defendant in a lawful detainer lawsuit might be 13 adequate protection in this situation. But again, other 14 parties might differ. 15 The contract for sale of this property requires the 16 Debtor to have the approval of both Hyundai as well as the 17 purchaser, Thor, with respect to the points that it makes in 18 its motion, so I defer to their rights with respect to the 19 specific adequate protection. 20 In addition to that, I think after we adjourn we 21 might be able to reach some deal with Fleet Yards with respect 22 to any adequate protection it's entitled to. But under the law 23 as it stands I believe that the adequate protection they should 24 get is probably a couple of months to move out, subject to what 25 the Court might decide and other parties might say. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 57 of 100 EXCEPTIONAL REPORTING SERVICES, INC 58 1 THE COURT: Are you done, Mr. Orantes? 2 MR. ORANTES: Thank you, Your Honor. We are done, 3 thank you. 4 THE COURT: Okay. It's quite unusual to have anyone 5 but the moving party reply, Mr. Jones. Is it absolutely 6 necessary? 7 MR. JONES: Your Honor will tell me if it is, and 8 I'll be very brief. Your Honor, Evan Jones on behalf of 9 Hyundai. 10 Your Honor, as Justice Holmes observed, saying 11 someone is a fiduciary is just the start of the inquiry. 12 Saying that Fleet Yards is entitled to adequate protection is 13 the start of the inquiry. The question is what is adequate 14 protection for their interest. 15 And, Your Honor, frequently adequate protection is 16 nothing. Junior lienholders who are wiped out in a sale get 17 nothing. Similarly, the entire rationale of Spanish Peaks says 18 Fleet Yards gets nothing here. 19 Spanish Peaks turns on the undisputed point of law 20 that a foreclosure by Hyundai would wipe Fleet Yards out. They 21 would get nothing. There is no case, and I've read a lot of 22 them, Your Honor, where a Court finds that adequate protection 23 demands more than an interest holder would get outside of this 24 Court, outside of bankruptcy. Outside of this Court Fleet 25 Yards is wiped out. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 58 of 100 EXCEPTIONAL REPORTING SERVICES, INC 59 1 And therefore, and I hesitate to disagree with 2 Mr. Orantes, but Mr. Orantes is wrong, they're not entitled to 3 stay in possession for some time period. They need to leave as 4 soon as the order is entered. The order should say that it is 5 free and clear of their interest, and they're not entitled to 6 anything as adequate protection, because that's what they would 7 get outside of this Court. Their state law rights do not 8 entitle them to stay in possession. They should not receive 9 more than that. 10 And finally, Your Honor, I would note the argument 11 that their adequate protection should be they get to stay in 12 the property for the remainder of their lease would make a 13 mockery of Spanish Peaks. Are we really to believe that those 14 three Judges on the Ninth Circuit, who by the way, Your Honor, 15 include Professor Fletcher who taught me federal courts a long 16 time ago, he's a really smart judge, are we really to 17 believe -- 18 THE COURT: Oh, everyone in the Ninth Circuit is very 19 smart. 20 (Laughter) 21 MR. JONES: As are all the children in Lake Wobegon, 22 Your Honor. 23 (Laughter) 24 THE COURT: Oh, that's a bad, that's a bad reference 25 to make, I think. But in any event, why don't you come to the Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 59 of 100 EXCEPTIONAL REPORTING SERVICES, INC 60 1 conclusion. 2 MR. JONES: Yes, Your Honor. 3 If that panel really wanted to say that the 4 leaseholder there, who by the way had a direct lease from the 5 debtor, got to stay in possession for the remainder of its 6 lease as a matter of adequate protection, why in the world 7 didn't they hint at that? 8 Your Honor, the law is not an ass. They are not 9 entitled to anything by way of adequate protection. They have 10 a legal right to adequate protection, but what is adequate 11 protection should be determined by applicable non-bankruptcy 12 law and they're entitled to nothing. 13 Thank you, Your Honor. 14 THE COURT: Thank you very much. 15 Okay, that closes oral argument. 16 So let me begin first with this is a motion that is 17 brought within the procedural context of a prior motion setting 18 the parameters of sales procedures. I think it's important to 19 note for the record that the Debtor-in-Possession had filed a 20 motion before that to approve sales procedures which I 21 rejected. And as a result, the Debtor refashioned the motion, 22 dealt with its principal creditor and its other creditors to 23 come up with a reasonable and appropriate set of sales 24 procedures, which have been approved and no one objected and no 25 one's appealed. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 60 of 100 EXCEPTIONAL REPORTING SERVICES, INC 61 1 But I think it's important to note as a preliminary 2 or beginning finding that those have been complied with. The 3 sales procedures Motion and Order has been complied with. 4 Number one. 5 Number two, a fundamental aspect of the relief sought 6 by the Debtor-in-Possession is that the proposed property be 7 sold free and clear of claims and interest under 363(f). There 8 are various subsections under 363(f) which are available to the 9 Debtor-in-Possession to establish by -- has the burden of 10 establishing by admissible evidence by a preponderance of the 11 evidence. For all the creditors and parties-in-interest who 12 are entitled to protection under 363(f), that has been 13 established at least by consent, and also by way of bona fide 14 dispute as to some, and also with regards to what would happen 15 in a non-bankruptcy law setting. So 363(f) to every creditor 16 and party-in-interest to whom that would apply and who would be 17 entitled to the protections of the subsections under 363(f), 18 that's been met. 19 So now we come to the objection of Fleet. First, 20 Fleet does not have an interest in property of the estate. It 21 has an interest in a lease and the lessor under that lease is a 22 lessee with the Debtor, who is the master lessor. So I think 23 it is important to lay out that tenuousness because that 24 establishes that Fleet is not a party that would be entitled to 25 any form of protection vis-à -vis various provisions, and I'll Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 61 of 100 EXCEPTIONAL REPORTING SERVICES, INC 62 1 go through them one at a time. 2 So first of all with regards to protections under 3 365, Fleet doesn't have a lease with the Debtor. So that's -- 4 I think that's a slam dunk. That's it. There's nothing else 5 really to discuss. I've been given no evidence that there is 6 any -- that this is a disguised transaction and it's really a 7 lease with the Debtor. Nothing whatsoever. And this is a 8 party Fleet has known about, obviously knows about its 9 sublease, right, since the commencement of the sublease from 10 before, and also has known about the sale for a very long time 11 and it's pretty obvious to me that Fleet is just trying to 12 insert a wrench into the wheels of this motion. 13 There's nothing wrong with opposing a motion. I've 14 denied lots of motions. I denied the sales procedure motion 15 that preceded the one that set up the sale because it was 16 inappropriate, not reasonable. But sometimes parties throw 17 wrenches into wheels and sales to try to get something out of 18 the process. And to be frank, that's how this appears to me. 19 Returning to the law, under 363(f) I find that the -- 20 and this is pursuant to Spanish Peaks and I'm bound by the 21 ruling in Spanish Peaks, and frankly independent of that I 22 agreed with it before Spanish Peaks got decided, it is possible 23 under the language of the statute under 363(f), which as a 24 Trial Court I give even greater obeisance than the decisions of 25 the Ninth Circuit, or the Supreme Court for that matter. The Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 62 of 100 EXCEPTIONAL REPORTING SERVICES, INC 63 1 statute makes it available as a remedy to sell free and clear 2 of a lease interest or a sublease that is subsumed within a 3 lease interest because that's how broadly that language is 4 written. 5 So first of all, the Debtor has the power to sell 6 under 363(f) and free and clear of interests. With regards to 7 Fleet, clearly its interest is in, to the extent it asserts an 8 interest in the property of the estate, which it doesn't have, 9 it's in bona fide dispute. Next, it would be lost in a 10 foreclosure sale, that interest would disappear. So the one 11 party who does not consent to the sale, who I don't believe 12 even is entitled to assert an interest that would be protected 13 under 363(f), it would still lose under 363(f) even if it did 14 have such an interest. 15 Let's see, extinguishing leases. I have not 16 extinguished a lease because I don't know what that means. I 17 think it's pretty clear even if rejection were at issue here, 18 and I'm not aware of any -- there's sort of a blanket statement 19 made in the motion about rejecting any leases or executory 20 contracts that exist without listing any, which is not a good 21 way to accomplish rejection under 365. I'm not aware there are 22 any. If there are any, I still would -- it appears to me that 23 rejection would be appropriate because it would be within the 24 business judgment of the Debtor-in-Possession to do so. But 25 I'm not aware of any. If there were though, it would be Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 63 of 100 EXCEPTIONAL REPORTING SERVICES, INC 64 1 appropriate. 2 Let's see, with regards to authorizing payment 3 directly out of escrow, Mr. Gurule did not pursue this 4 argument, which was made in his client's preliminary objection, 5 but I frankly see no reason why payment should not go forward. 6 There's absolutely no conflict of interest. Just because the 7 broker was somehow involved in a transaction with Fleet and 8 Central, that doesn't mean that that creates a conflict of 9 interest which would have barred the broker's employment under 10 327 by the Debtor. So I think it's appropriate to grant that 11 relief. 12 I cannot see how anyone could reasonably dispute that 13 the buyer is acting in good faith under 363, and especially 14 when you have an open auction process. It is almost a 15 guarantee of the satisfaction of that requirement. 16 And then before I turn to the 14-stay provision, the 17 stay of the 14-day provision, 14-day stay provision, I just 18 want to address adequate protection quickly. 19 I don't see there's an interest here that's entitled 20 to it. If it were, I think something which Debtor's counsel 21 and Mr. Jones hit on, maybe Mr. Jones hit on it more precisely, 22 adequate's an adjective. So even if Fleet was entitled to some 23 kind of protection, it would have to be adequate protection. 24 What's adequate for a sublessee in a lease where the lease is 25 going to be sold free and clear of and would be if there were Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 64 of 100 EXCEPTIONAL REPORTING SERVICES, INC 65 1 no sale at all and there was a foreclosure sale would be out in 2 the street immediately after the foreclosure sale? I think 3 adequate is at that point zero. 4 Now with regards to the waiving of the stay, 5 bankruptcy proceedings have been pending with various debtors 6 in various cases with regards to this property for a very long 7 time. So independent of businesses liking to do things by the 8 end of the year, it seems they nevertheless seem to do 9 something the next year too, this is a process which needs to 10 be completed. If anyone wants to challenge it, they should be 11 ready to go and challenge it and go ask for a stay in the 12 appropriate Court if they think there's a basis. I don't see 13 any. But of course no Trial Court Judge does, or else they 14 wouldn't grant the motion in the first place. But I don't see 15 any basis for a stay. I don't think there's any issue here 16 that's difficult or likely to create an appealable, a 17 reasonably appealable issue, so I am going to waive that stay. 18 I have already found and concluded that all the 19 requirements with regards to approving a compromise of a 20 controversy have been met. I adopt them herein again. So when 21 a law clerk has to read it somewhere, that they can find it in 22 the same place, I'm making mine under findings of facts and 23 conclusions of law. 24 Based upon all that, I grant the motion. 25 So now we will turn to the second leg of the Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 65 of 100 EXCEPTIONAL REPORTING SERVICES, INC 66 1 trifurcate and I'm going to take a pause. I don't want to take 2 a long pause. I'll take a 15-minute pause, so we're talking 3 12:45, to get your bidding in order. And when you do, if we 4 have more than two bidders then I would ask you to set up shop 5 in front of a microphone in the counsel box over here, 6 colloquially known as a jury box, but it's never had a jury in 7 it, sit over there and have somebody sit over here on this 8 table and somebody over here, so you can be spaced and we can - 9 - if there is bidding. I mean the last auction I had went on 10 for an hour and it went up I think $23 million. So it might go 11 awhile. I don't know. 12 All right, so a brief recess, reconvene at 12:45. 13 (Counsel thank the Court) 14 (A recess was taken from 12:31 p.m. to 12:50 p.m.; parties 15 present) 16 THE CLERK: Please remain seated and come to order. 17 This United States Bankruptcy Court is now in session. 18 THE COURT: Okay, Mr. Orantes are you on the phone? 19 MR. ORANTES: I am, Your Honor. Thank you very much. 20 THE COURT: Okay. We're waiting for folks to return 21 to their seats. 22 UNIDENTIFIED SPEAKER: I apologize, Your Honor. 23 THE COURT: It's okay. I have a bad habit of being 24 timely. 25 (Pause) Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 66 of 100 EXCEPTIONAL REPORTING SERVICES, INC 67 1 Okay, I think everyone is back. 2 So, why don't you tell me please, Mr. Orantes, the 3 names of the bidders that you have qualified. All the bidders. 4 MR. ORANTES: Your Honor, if I may, we still have not 5 qualified any of the bidders. We emailed all of them last 6 night requiring that they make certain statements on the record 7 to achieve parody among the bidders before we would qualify 8 them. They haven't actually replied to my email confirming 9 that they would, that they would make those statements, except 10 for WM Capital, which said that verbally, so we first would 11 want them to confirm those statements, if the Court would allow 12 me to. 13 THE COURT: So are you asking for more time? Are you 14 asking to do this on the record? 15 MR. ORANTES: I'm asking to do this on the record, 16 Your Honor. 17 THE COURT: Okay. So, at the very least we have 18 Thor, correct? 19 MR. ORANTES: Correct. Yes, so in terms of their 20 identities, we have Thor, Thor, then we have ACI VI Santa Fe, 21 LLC, whose initial bid was $31,825,000. 22 THE COURT: So you have qualified ACI -- 23 MR. ORANTES: We also have -- 24 THE COURT: Wait, wait, wait. You have qualified 25 ACI? Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 67 of 100 EXCEPTIONAL REPORTING SERVICES, INC 68 1 MR. ORANTES: Not yet, Your Honor. It's subject to 2 their making the statements that we need them to make -- 3 THE COURT: Okay, let's do that one at a time. 4 MR. ORANTES: -- to -- 5 THE COURT: So let's do ACI. So we have Ms. James? 6 Is that correct? 7 MS. JAMES: Yes, Your Honor. 8 THE COURT: Thank you. 9 MS. JAMES: Yes, Your Honor, Jacqueline James. 10 THE COURT: Okay, Ms. James is at the lectern. 11 Go ahead, Ms. James. 12 MR. ORANTES: Thank you, Your Honor. 13 If I could say, Your Honor, consistent with the email 14 that I sent you last night, we need -- would your client 15 confirm that notwithstanding anything in your client's written 16 materials that all conditions to their bid other than the Sale 17 Order are waived? 18 MS. JAMES: Your Honor, we just have one issue, which 19 I think is global to all of the over bidders, and that is that 20 there has been -- as Your Honor probably knows, there's been an 21 overwhelming amount of real estate financing deals going on 22 lately and many delays with respect to title companies. 23 THE COURT: I am aware. 24 MS. JAMES: Yes. And as a result of that, it's been 25 very slow to get title companies to provide information. One Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 68 of 100 EXCEPTIONAL REPORTING SERVICES, INC 69 1 piece of information that we were provided with just literally 2 20 minutes ago is that apparently the Debtor's wife or ex-wife 3 is on the title with respect to Parcels 5 and 6 in connection 4 with this property, and Title has indicated that 5 notwithstanding a free and clear order that they would require 6 the wife or ex-wife to sign a quitclaim deed in order to 7 essentially issue a title policy with respect to this property. 8 THE COURT: Okay. 9 MS. JAMES: So, although my -- and, you know, our 10 client's PSA provided for that contingency and required that as 11 a condition to closing, yesterday Mr. Orantes sent around an 12 email and essentially indicated, as he indicated to you, Your 13 Honor, that he wanted all of the bidders to waive their 14 contingencies. What I would say is that on behalf of my client 15 our client is willing to waive contingencies and just of course 16 have the covenants under its PSA required to continue to be 17 abided by, but we would like the Debtor to be required to 18 produce the quitclaim deed. 19 Which, by the way, someone in the Debtor's camp 20 indicated to me a few moments ago that they believe that the 21 wife has already signed, the wife or ex-wife has already signed 22 the quitclaim deed but it hasn't been recorded. We have never 23 seen it. I don't know if Mr. Orantes has seen it or anyone 24 else. But although we're almost ready to waive all of the 25 conditions except for the covenants under the agreement, that Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 69 of 100 EXCEPTIONAL REPORTING SERVICES, INC 70 1 is one sticking point that I think Your Honor is going -- will 2 probably find is going to be common to all the bidders. 3 So with the exception of that issue, and obviously 4 receiving the free and clear order of this Court, that we would 5 waive all other conditions. 6 THE COURT: Okay. 7 MS. JAMES: There is no financing contingency or 8 anything like that. 9 THE COURT: Okay. So let me hear -- maybe what we do 10 need, so that would be -- that's your sticking point, 11 Ms. James. 12 MS. JAMES: Yes, Your Honor. 13 THE COURT: Let me hear from the other potential 14 bidders to find out what other objections you have. 15 MS. JAMES: Oh, Your Honor, I'm sorry. And one more 16 thing just raised in Mr. Orantes' email which I think was 17 directed to my client, he had some question about the language 18 and the timing that we put in our PSA with respect to the 19 Court's bidding procedures and deadlines. I will represent to 20 the Court that the language in our PSA is consistent with the 21 Court's Bidding Procedures Order. And even to the extent that 22 for any reason the conditions of the Bidding Procedures Order 23 should be different than that of the PSA, the Bidding 24 Procedures Order would govern. 25 THE COURT: Okay. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 70 of 100 EXCEPTIONAL REPORTING SERVICES, INC 71 1 MS. JAMES: Thank you. 2 THE COURT: Thank you very much. 3 Let me hear from 8201. 4 MR. JONES: Your Honor, I apologize. I think 5 Mr. Orantes had -- I'm sorry, Evan Jones on behalf of Hyundai. 6 If I could step back for a moment? The procedures require the 7 bidders to be substantially the same terms as Thor. 8 THE COURT: Right. 9 MR. JONES: As Mr. Orantes mentioned, one of the 10 critical elements of the Thor bid is yesterday by 11:00 a.m. 11 they had to send a notice that a condition had failed or they 12 were conclusively deemed to waive all conditions other than 13 entry of this Court's Order. That is the first point that we 14 want to make sure, because all of the bids we got still have 15 conditions. And frankly, given the time, we haven't been able 16 to say to them go off and revise your documents. So we're 17 trying to clean them up here. 18 THE COURT: Okay. So let me stop you there. 19 MR. JONES: Yes, Your Honor. 20 THE COURT: Okay. Mr. Orantes? 21 MR. ORANTES: Yes, Your Honor. 22 THE COURT: It's your job to, pursuant to the Order 23 establishing the sale procedures, to know and be able to tell 24 me definitively who the qualified bidders are, and it sounds 25 like you're not able to do that. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 71 of 100 EXCEPTIONAL REPORTING SERVICES, INC 72 1 MR. ORANTES: Not without achieving parody with Thor 2 first, Your Honor. 3 THE COURT: Okay, this is what I'm going to do. 4 MR. ORANTES: And -- 5 THE COURT: Well, let me finish. I'm going to give 6 you another half hour. When you come back at 1:30 p.m. I need 7 to know who's qualified as a bidder pursuant to the Order 8 establishing sales procedures. That can't be changed now. 9 MS. JAMES: Your Honor, may I make one point? 10 THE COURT: Not yet. 11 Do you understand, Mr. Orantes? 12 MR. ORANTES: I understand, Your Honor. 13 THE COURT: And I know it's difficult that you're not 14 here and you have a good reason why you're not here, but 15 everybody has phones and laptops and tablets. So you need to 16 get this straight by 1:30. 17 All right, so before we go, what would you like to 18 say, Ms. James? 19 MS. JAMES: Your Honor, I just wanted to say that my 20 client's bid conforms with the Bidding Procedures Order. We 21 did not have financing contingencies or the other type of 22 contingencies that the Bidding Procedures Order indicated that 23 we could not have. 24 THE COURT: Okay. 25 MS. JAMES: And -- Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 72 of 100 EXCEPTIONAL REPORTING SERVICES, INC 73 1 THE COURT: I'll address it at 1:30. 2 MS. JAMES: Okay. 3 THE COURT: Okay? 4 MS. JAMES: Thank you, Your Honor. 5 MR. JONES: Your Honor, just to make sure, we 6 disagree with counsel's statement, but I want to make sure if 7 bidders make this concession on the record that notwithstanding 8 various provisions in their agreement they will be bound by 9 that statement -- by the way, Your Honor, one of the most 10 important ones is we're going to ask each bidder to confirm 11 that as to the leases and the free and clear language they will 12 accept an order, as Your Honor has indicated you are prepared 13 to enter. Because we do have some of these bids that have the 14 word extinguish in them. 15 THE COURT: I understand. 16 MR. JONES: I gather the Court is saying we can come 17 back at 1:30 and we just need to be crisp about what we are 18 asking bidders to agree to. Because Your Honor doesn't want us 19 to go out and have oral conversations and then come back and 20 have litigation over what was said or wasn't. If we get it on 21 the record, it's binding under the Local Rules. 22 THE COURT: After I have now -- since I granted the 23 motion and I previously granted the sales procedure motion, the 24 sales procedure motion establishes what people need to do to 25 qualify. I'm not going to change that. If people -- if Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 73 of 100 EXCEPTIONAL REPORTING SERVICES, INC 74 1 everybody comes in and says that we have all agreed to this 2 minor little fillet as to the sales procedure motion, fine. If 3 not, the Debtor is bound by the Order establishing the sales 4 procedures and whoever is qualified will go forward. If you 5 can come to that conclusion before 1:30, great. But this isn't 6 the time to be changing the Sales Procedures Order. 7 MR. JONES: Your Honor, to be very clear, we're not 8 trying to change the Sales Procedure Order. The Sales 9 Procedure Order says that the bids have to be comparable. 10 THE COURT: Right. 11 MR. JONES: And by the way, Your Honor, the Sales 12 Procedure Order is very clear that it has to be in the judgment 13 of the Debtor and Hyundai -- 14 THE COURT: Exactly. 15 MR. JONES: -- that they are comparable. 16 THE COURT: That's what I'm saying. I'm not going to 17 adjudicate the parody of qualifications. All my job -- the 18 only job that I have left at this point is to take bids and 19 when it's done I'm going to bang the gavel and say you win and 20 you're the backup bidder. That's the only thing left for me to 21 do. I'm not going to adjudicate parody of qualifications. 22 MR. JONES: Your Honor, we're certainly not asking 23 the Court to adjudicate parody, but we -- 24 THE COURT: I don't think you are, but somebody else 25 may be thinking about it. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 74 of 100 EXCEPTIONAL REPORTING SERVICES, INC 75 1 MR. JONES: We would like to ask the Court to allow 2 us to use your courtroom to confirm -- 3 THE COURT: Oh, yes. 4 MR. JONES: -- what the bids are so that we can 5 determine whether to qualify people. 6 THE COURT: Okay. 7 MR. JONES: That's all I'm saying. 8 THE COURT: Sure. 9 MR. JONES: Thank you, Your Honor. 10 THE COURT: Okay, do you want another half an hour? 11 MR. JONES: Your Honor, I think it would probably be 12 helpful so we can -- 13 THE COURT: Okay. 14 MR. JONES: -- perhaps be a bit more crisp. 15 THE COURT: Okay. 16 MR. JONES: And Your Honor, if I may, what I will 17 suggest we do is we come back and Mr. Orantes reads a very 18 clear set of acknowledgments we'd ask all of the bidders to 19 make and then we ask each bidder to indicate if they agree to 20 those or not. I'm concerned, Your Honor, that if we do it 21 Mr. Orantes reads to each bidder he may not get it exactly the 22 same each time. And so the point is we're going to ask all of 23 them to agree to certain points. 24 THE COURT: Frankly, this should have been done 25 yesterday. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 75 of 100 EXCEPTIONAL REPORTING SERVICES, INC 76 1 MR. JONES: Your Honor, we didn't get the bids until 2 11:59 and -- 3 THE COURT: Okay. 4 MR. JONES: -- we've been working around the clock. 5 THE COURT: But in any event, you have a half an hour 6 to get it done. 7 MR. JONES: Thank you, Your Honor. 8 THE COURT: Okay? All right, Court's in recess until 9 then. 10 (A recess was taken from 1:02 p.m. to 1:40 p.m.; parties 11 present) 12 THE CLERK: Please remain seated and come to order, 13 this court is now in session. 14 THE COURT: Okay, let's see, Mr. Orantes, please be 15 seated. 16 MR. ORANTES: Yes Your Honor, thank you very much. 17 THE COURT: Are you ready to proceed -- are you ready 18 to proceed with the auction? 19 MR. ORANTES: Your Honor, I still need the parties to 20 make -- to confirm certain things on the record. I have spoken 21 with them about them and I think they're ready to talk about 22 them, Your Honor. 23 THE COURT: Okay, so we're going to have the bidders 24 come and confirm their understanding of the prerequisites. 25 MR. ORANTES: Correct, Your Honor. Yeah. So Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 76 of 100 EXCEPTIONAL REPORTING SERVICES, INC 77 1 basically we're not going to qualify the WM Capital Partners, 2 LLC. I understand that Roye Zur, its attorney, would like to 3 argue to the Court, but with respect to the WM Capital 4 Partners, LLC we would not -- we did not agree to qualify them 5 at this point, Your Honor, neither the Debtor nor Hyundai in 6 consultation with our financial broker (indisc.) Pack 7 (phonetic). 8 THE COURT: Okay, Mr. Orantes -- Mr. Orantes, I want 9 to be clear, it's unclear what you said. Is it WM Capital of 10 which you speak? 11 MR. ORANTES: Correct, Your Honor, WM Capital 12 Partners, LLC we will not qualify. 13 THE COURT: Okay, who is qualified? 14 MR. ORANTES: Subject to the making of an affirmative 15 confirmation of the statements we're dealing with Thor, which 16 is the original bidder, ACI VI Santa Fe, LLC and 8201 Santa Fe 17 (CA), LLC and we want each bidder to confirm, notwithstanding 18 anything in their written bid, four points, and if they do they 19 will qualify -- we will qualify them, Your Honor. 20 THE COURT: Okay, so just -- let's make sure the 21 record is clear because of telephonic transmission. 22 Thor, ACI and 8201 are the three qualified bidders. 23 We're going to have them come and say they agree and accept the 24 requirements, those three. Correct, Mr. Orantes? 25 MR. ORANTES: Yes, Your Honor. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 77 of 100 EXCEPTIONAL REPORTING SERVICES, INC 78 1 THE COURT: Okay, let's start with Thor. 2 MR. GREGER: Your Honor -- 3 MR. ORANTES: Thank you. If I could read all of the 4 requirements, and maybe all of them can -- 5 (Talkovers) 6 THE COURT: Okay, read all of the requirements and 7 then they can state -- I thought they would have been 8 acknowledged some already, but go ahead and state them on the 9 record. 10 MR. ORANTES: Thank you, Your Honor. 11 So Number 1, other than delivery of a quit claim deed 12 by Mrs. Byun, or the former Mrs. Byun, with regard to the 13 property at issue, their bid is not subject to any contingency 14 other than entry of the Order approving the Motion for Sale to 15 closing of their purchase. 16 Number 2, with regard to leases, including the 17 sublease with Fleet Yards, Inc., an Order as described on the 18 record by the Court is satisfactory. 19 Number 3, you will not require that the Order 20 provides sales free and clear of substantial liability. 21 And Number 4, notwithstanding anything in the written 22 bid, everyone agrees to be a backup bidder as described in the 23 procedures approved by the Court. 24 If the -- 25 THE COURT: Okay, so -- is there more, Mr. Orantes? Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 78 of 100 EXCEPTIONAL REPORTING SERVICES, INC 79 1 MR. ORANTES: No, Your Honor. 2 THE COURT: Okay. Which representative of Thor will 3 acknowledge on the record that those are acceptable? 4 MR. GREGER: Your Honor, Michael Greger of Allen 5 Matkins Leck Gamble Mallory and Natsis. 6 I'm still trying to get my co-counsel on the line. 7 THE COURT: Okay. 8 MR. GREGER: I can't say at this point, I think we 9 need a bit of additional time. 10 THE COURT: Is it just a technical inability? 11 MR. GREGER: Well, no. I mean, for example, the 12 statement was made that the bid will be subject to no 13 contingencies, other than the delivery of a quit claim deed of 14 Ms. Byun. 15 We have a Purchase and Sale Agreement, there's a 16 whole bunch of provisions that are applicable. If they're 17 asking us to waive the provisions of the Purchase and Sale 18 Agreement, I have no authority to do that, I need -- 19 THE COURT: Okay, so you do not accept those? 20 MR. GREGER: Well, I don't know that I do or don't. 21 I need to get the consent of my client. This just was sprung 22 on us at the last minute. 23 THE COURT: All right, let's put you to the side for 24 the moment. 25 Let's turn to -- let's see, we have ACI? Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 79 of 100 EXCEPTIONAL REPORTING SERVICES, INC 80 1 MS. JAMES: Your Honor, Jacqueline James for ACI VI 2 Santa Fe, LLC. 3 Your Honor, the language that Mr. Giovanni -- I'm 4 sorry, that Mr. Orantes is quoting is a little bit different 5 than what Mr. Jones and I discussed a few moments ago, but what 6 I will say is that I think we're very close. 7 The Debtor was supposed to confirm that the seller 8 held fee simple title to all of the real property and that no 9 one else had an interest in the property. And it -- our 10 agreement indicated that the title company would receive from 11 the seller any sort of affidavits or other documentation 12 required by the title company in order to provide such 13 confirmation and in order to issue title so -- 14 THE COURT: I apologize for the interruption. 15 MS. JAMES: Yes. 16 THE COURT: So you're not prepared to accept the 17 statement. 18 MS. JAMES: I -- we are -- 19 THE COURT: Just say that and then we can move on. 20 MS. JAMES: We are prepared to accept it just in a 21 slightly modified way that I think Mr. -- 22 THE COURT: Ma'am, you're not going to negotiate 23 language at the lectern, it's not going to happen. 24 MS. JAMES: All right. But, Your Honor, my 25 understanding with Mr. Jones was that we did have an agreement Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 80 of 100 EXCEPTIONAL REPORTING SERVICES, INC 81 1 with respect to this. 2 THE COURT: Apparently, as -- Mr. Orantes represents 3 the debtor-in-possession. 4 MS. JAMES: I understand. 5 THE COURT: So pursuant to the Sales Procedure Order, 6 the debtor-in-possession and Hyundai have been given the 7 delegation of the ability to qualify bidders. 8 MS. JAMES: I understand. 9 THE COURT: If you -- again, they have stated -- 10 MS. JAMES: May I -- 11 THE COURT: -- excuse me. 12 MS. JAMES: Yes. 13 THE COURT: They stated what the accepted conditions 14 or set asides are. If you can't say yes, that's okay. 15 MR. SPEAKER: These are hearings that -- 16 THE COURT: Okay, excuse me, we can't have 17 conversations in the courtroom right now. 18 MS. JAMES: Your Honor -- 19 THE COURT: So, ma'am, if you can't, it's okay, step 20 aside. 21 MS. JAMES: Your Honor, yes. May I be heard once we 22 get through the rest of the bidders? 23 THE COURT: I don't know. We're going to find out 24 who the qualified bidders are. There may not be any other 25 qualified bidders at this point. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 81 of 100 EXCEPTIONAL REPORTING SERVICES, INC 82 1 MS. JAMES: All right, Your Honor. Yes, Your Honor. 2 THE COURT: Is someone representing 8201? 3 MR. SCOTT COHEN: Your Honor, Scott Cohen appearing 4 on behalf of 8201 Santa Fe (CA), LLC. 5 We can agree to those requests by Debtor's counsel. 6 The comment was or representation was a quit claim as 7 to property at issue. We'd like a little clarification on the 8 record as to "property at issue." 9 THE COURT: I presume it's the property subject to 10 the Sales Motion. 11 MR. SCOTT COHEN: Subject to the PSA? 12 THE COURT: Is that correct, Mr. Orantes? 13 MR. ORANTES: Correct, Your Honor. 14 MR. SCOTT COHEN: Yeah. So as long as it's -- 15 incorporates all the property -- 16 THE COURT: Yeah. So that's what it means. 17 MR. SCOTT COHEN: -- of the PSA, then we're good and 18 we hereby make the representations Debtor's counsel has 19 requested, and we would ask that we be qualified. We met the 20 qualifications in the -- previously and we jumped through the 21 new hoops as well, Your Honor. 22 THE COURT: Okay, thank you. 23 So since there are two parties who are delegated the 24 responsibility of qualifying bidders, Mr. Orantes, in your mind 25 does that -- does Debtor -- does the debtor-in-possession see Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 82 of 100 EXCEPTIONAL REPORTING SERVICES, INC 83 1 8201 as a qualified bidder? 2 MR. ORANTES: Yes, Your Honor. 3 THE COURT: Mr. Jones? 4 MR. JONES: Yes, Your Honor, we do. 5 And, Your Honor, just for the record, Hyundai 6 completely agrees with the conditions as stated by Mr. Orantes. 7 If Atlas can agree to them, we would qualify them; if they 8 would not, I think we are in agreement they're not qualified. 9 THE COURT: Okay. So what we have left in our -- we 10 only have 8201 who is willing to accept the conditions stated 11 by the debtor-in-possession and Hyundai. 12 This is what I will do because it's December. I will 13 give you five minutes. Again, I am not going to negotiate 14 language at the lectern, understood? So I know you need to 15 talk to clients and they need to talk to co-counsel. Again, 16 this is the fun part of the 21st Century relying on 17 telecommunications to make these kinds of decisions. Sometimes 18 it works, sometimes it doesn't. 19 It's 1:49, I'll come back at 2:00 o'clock and at that 20 point we're going forward. 21 MR. STEVEN COHEN: Your Honor -- 22 THE COURT: Yes, Mr. Orantes? 23 MR. STEVEN COHEN: Cohen, Mr. Cohen, Your Honor. 24 THE COURT: Ah, Mr. Cohen. 25 MR. STEVEN COHEN: For Thor. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 83 of 100 EXCEPTIONAL REPORTING SERVICES, INC 84 1 We -- Thor is a qualified bidder pursuant to the Sale 2 Motion. So the suggestion that we have to satisfy additional 3 conditions to become a qualified bidder befuddles me and I 4 think it's contrary to the terms of the Motion and the 5 Order -- and the motion which Your Honor granted earlier today. 6 THE COURT: I'll be happy -- I'll be happy to hear 7 about that in 10 minutes. If you think that you're already 8 qualified and these conditions change that qualification or 9 attempt to change it, I'll be happy to hear from you and 10 Mr. Jones and Mr. Orantes. 11 MR. STEVEN COHEN: Okay, thank you. 12 MR. JONES: Your Honor, if I may? 13 Whether Thor is qualified or not, we need to know 14 whether they accept these conditions so that we can weigh their 15 bid. The goal here obviously is -- 16 (Talkovers) 17 MR. ORANTES: (indisc.) different calculus, I 18 understand. 19 MR. JONES: -- the highest and best bid. And we need 20 to know whether they agree to these. 21 THE COURT: I'm going to give you another 10 22 minutes -- 23 MR. JONES: Thank you, Your Honor -- 24 THE COURT: -- to get your minds on the same plain if 25 possible. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 84 of 100 EXCEPTIONAL REPORTING SERVICES, INC 85 1 MR. JONES: Thank you, Your Honor. 2 THE COURT: Including Ms. James' mind for ACI, okay? 3 MS. JAMES: We’re very close, Your Honor. 4 THE COURT: Because that's in the best interests of 5 the estate. 6 MR. JONES: Thank you, Your Honor. 7 MR. ZUR: Your Honor, at the risk of upsetting the 8 Court -- 9 THE COURT: Do you want to identify yourself for the 10 record? 11 MR. ZUR: Yes, yes, excuse me. Roye Zur of Elkins 12 Kalt on behalf of WM Capital. 13 THE COURT: On behalf of WM? 14 MR. ZUR: WM Capital. 15 THE COURT: Got you, okay. 16 MR. ZUR: Your Honor, at the risk of upsetting other 17 parties and the Court, I really just would like just a few 18 minutes to address the Court on the issue of the qualified 19 bidding. 20 THE COURT: No. 21 MR. ZUR: I will preface -- 22 THE COURT: No, no, thanks. Okay, see you at 23 2:00 p.m. 24 MR. ORANTES: Thank you, Your Honor. 25 (Recess taken from 1:51 to 2:00 p.m.) Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 85 of 100 EXCEPTIONAL REPORTING SERVICES, INC 86 1 THE CLERK: Please remain seated and come to order. 2 This court is now in session. 3 THE COURT: Okay, Mr. Orantes? 4 MR. ORANTES: Thank you, Your Honor. During the 5 recess I had an opportunity to speak or to otherwise 6 communicate with the other two representatives of the other 7 bidders. 8 And with respect to Item Number 1, I was asked and we 9 agreed to change the language of that item. And if would 10 confirm if the language is as we agreed. 11 May I state that on the record, Your Honor? 12 THE COURT: Please. 13 MR. ORANTES: Okay, thank you. 14 So other than delivery of a quit claim deed or any 15 other documentation required by the title company solely with 16 regard to Mrs. Byun with regards to the property subject to the 17 Sale Motion, their bid is not subject to any contingency to 18 closing of their purchase other than entry of the Order 19 approving the Motion for Sale. 20 THE COURT: Okay. 21 MR. ORANTES: I believe that that's -- yeah, that's 22 the change in the language, Your Honor. 23 THE COURT: Okay. 24 MR. ORANTES: I believe with that, that ACI might be 25 able to assent to the whole four points. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 86 of 100 EXCEPTIONAL REPORTING SERVICES, INC 87 1 THE COURT: Okay, so let's go back to our list. 2 Thor? 3 MR. STEVEN COHEN: Yes, Your Honor, it's Steven Cohen 4 for Thor. 5 Subject to the confirmation by Mr. Orantes that the 6 quit claim deed will be delivered by Mrs. Byun, that's no 7 longer an issue. 8 We -- the only conditions we have are -- they're not 9 conditions at all, that our contract is adhered to. And our 10 contract provides, in Section 14, that we get vacant possession 11 of the property at the closing. We'll stand on that. No -- 12 we're not required to change the terms of our contract to 13 become a qualified bidder, Your Honor, and we won't. 14 THE COURT: Okay. ACI? 15 MR. ORANTES: Your Honor, with that -- okay. 16 THE COURT: No, I'll hear from Mr. Orantes at the 17 end. 18 ACI? 19 MS. JAMES: Your Honor, Mr. Orantes incorporated the 20 additional words that we had requested and so ACI -- 21 THE COURT: I apologize, but I can't hear you. 22 MS. JAMES: I'm so sorry, Your Honor, it's been some 23 time since I've had to take it off. 24 THE COURT: I know. 25 MS. JAMES: Yes. ACI agrees to the additional Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 87 of 100 EXCEPTIONAL REPORTING SERVICES, INC 88 1 language that Mr. Orantes just wrote. 2 THE COURT: Just stated. 3 MS. JAMES: Yes. 4 THE COURT: Okay, thank you. 5 MS. JAMES: Thank you. 6 THE COURT: 8201? 7 MR. ORANTES: Your Honor, 8201 already was qualified. 8 Although the language of just the one, the first point is 9 slightly different. 10 THE COURT: It never hurts to have another 11 confirmation after what we've been through today, okay? 12 (Talkovers) 13 MR. ORANTES: Absolutely. 14 MR. SCOTT COHEN: Scott Cohen on behalf of 8201 Santa 15 Fe still confirms. Thank you, Your Honor. 16 THE COURT: Okay, thank you. 17 So do -- so there are two issues, right? 18 One is qualifying bidders, the other issue is whether 19 -- what is the value of the bid, right? And it isn't 20 necessarily a dollar amount that tells you the value. 21 So just to be clearer, the decision to qualify rests 22 with the Debtor and Hyundai based upon the Order establishing 23 sales procedures, and the determination of the winning bid 24 does, too, based upon the Sales Order. I'm just conducting an 25 auction, right? So I want everyone to understand that, that's Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 88 of 100 EXCEPTIONAL REPORTING SERVICES, INC 89 1 how we are proceeding right now. 2 MR. ORANTES: And, Your Honor, to be clear, with 3 respect to Thor, the Debtor agrees that Thor is a qualified 4 bidder but obviously with respect to the value of the bid, we 5 will take into consideration. 6 THE COURT: Okay, so all three bidders are 7 qualified -- 8 MR. ORANTES: Yes, Your Honor. 9 THE COURT: So I would like to have a representative, 10 whoever is going to make the bid, please come to -- once you 11 come to the table over here, as I indicated before, please do 12 so now. I guess it can be ACI? That would be -- thank you 13 very much, Ms. James. 14 And we have Thor already established at this table. 15 And 8201, you're going to be right there. Okay. 16 So we have Thor -- 17 MR. CROCKER: Your Honor, Thor is on the phone -- 18 THE COURT: Mr. Cohen, are you going to be doing the 19 bidding? 20 MR. STEVEN COHEN: Yes, Your Honor. 21 THE COURT: Mr. Cohen -- okay, all right. 22 MS. JAMES: Your Honor, is it okay if I have Mr. -- 23 THE COURT: Please take -- yeah, yeah. Come sit here 24 at a table, you'll be distanced. Yeah, you can have your -- of 25 course. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 89 of 100 EXCEPTIONAL REPORTING SERVICES, INC 90 1 MR. SPEAKER: Okay, thank you. 2 THE COURT: The one with the money, yeah, they get to 3 sit there, that's right. 4 (Laughter heard) 5 MS. JAMES: I wanted to be sure. 6 THE COURT: Oh, absolutely. 7 (Talkovers) 8 MS. JAMES: It's a little hard to communicate -- 9 THE COURT: I don't want anybody to say, No, we're 10 pulling out because she didn't understand what I said. 11 MS. JAMES: Okay. 12 THE COURT: Okay. Okay, is everyone ready to begin 13 the bidding? 14 This is how I'm going to conduct the auction. 15 We have the opening bid by Thor, and there is an 16 amount that has to be met above it. So my understanding is 17 that the very first bid has to be at least $31,775,000, 18 correct? 19 MR. CROCKER: Correct, Your Honor. 20 THE COURT: Correct. So what I'm going to do is 21 we're going to do it -- it's a little funny to think about with 22 a telephonic bidder, but I'm going to start with 8201 and then 23 go to ACI and then go to Thor so it's going to go around -- 24 it's going to be a round robin auction, it's just much more 25 orderly that way, okay? Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 90 of 100 EXCEPTIONAL REPORTING SERVICES, INC 91 1 So I'll call 8201, please state 8201 bids. 2 I'll call ACI, they'll state ACI bids. 3 And then Thor says Thor bids and that way we know who 4 it is on the record, okay? 5 Okay, 8201, do you wish to overbid? 6 MR. CROCKER: Eric Crocker on behalf of 8201, LLC. 7 THE COURT: I'm going to ask you to please take your 8 mask off. I apologize, sir, but -- 9 MR. CROCKER: No problem. Eric Crocker on behalf of 10 8201 Santa Fe Avenue, LLC. The bid's 32 million. 11 THE COURT: Sorry? 12 MR. CROCKER: Thirty-two million. 13 THE COURT: Thirty-two million. Thank you very much. 14 Okay, now I will go to ACI. 15 MR. GOLDBERGER: Thank you, Your Honor. Are there 16 increments to bid by? 17 THE COURT: Minimum increment is $50,000 I believe. 18 Is that correct? Yes. 19 MR. SPEAKER: Yes, Your Honor. 20 MR. SPEAKER: Yes, Your Honor. 21 THE COURT: $50,000 is the minimum increment. 22 MR. GOLDBERGER: ACI bids 32,100,000. 23 THE COURT: Thank you very much. 24 ECRO: May I have your name please? 25 MR. GOLDBERGER: Jeffrey Goldberger. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 91 of 100 EXCEPTIONAL REPORTING SERVICES, INC 92 1 ECRO: Thank you. 2 THE COURT: Okay, now we turn to Thor. 3 Do you wish to overbid? 4 MR. STEVEN COHEN: Your Honor, if I could have 5 60 seconds, please? 6 MR. SPEAKER: This is Jackson and Greg Berman from -- 7 MR. BERMAN: Yeah, this is Greg Berman from Thor. 8 Yeah, we wish to bid 32,150,000. 9 THE COURT: Thank you very much. 10 8201, do you wish to bid? 11 MR. CROCKER: Yes, Your Honor, Eric Crocker on behalf 12 of 8201, LLC. I'd like to bid 32-5. 13 THE COURT: Thank you very much, 32,500,000. 14 Okay, ACI? 15 MR. GOLDBERGER: 32,600,000. 16 THE COURT: 32,600,000? Okay, thank you very much. 17 Thor? 18 MR. BERMAN: We bid 32,650,000. 19 THE COURT: Thank you very much. 20 8201? 21 MR. CROCKER: Your Honor, Eric Crocker on behalf of 22 8201. 32,750,000. 23 THE COURT: Thank you very much. 24 ACI? 25 MR. GOLDBERGER: 32,850,000. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 92 of 100 EXCEPTIONAL REPORTING SERVICES, INC 93 1 THE COURT: Okay, thank you very much. 2 Thor? 3 MR. BERMAN: 32,900,000. 4 THE COURT: Thank you very much. 5 8201? 6 MR. CROCKER: 33,000,000, Your Honor. 7 THE COURT: Thank you very much, 33,000,000. 8 Okay, ACI? 9 MR. GOLDBERGER: 33,100,000. 10 THE COURT: Thank you very much. 11 Thor? 12 MR. BERMAN: 33,150,000. 13 THE COURT: $33,150,000. Okay. 14 8201? 15 MR. CROCKER: 33,500,000, sir. 16 THE COURT: 33,500,000 is the bid. Thank you very 17 much. 18 ACI? 19 MR. GOLDBERGER: 33,600,000. 20 THE COURT: 33,600,000 is the bid for ACI. Thank you 21 very much. 22 Thor? 23 MR. BERMAN: 33,650,000. 24 THE COURT: So confirming, 33,650,000. Thank you 25 very much. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 93 of 100 EXCEPTIONAL REPORTING SERVICES, INC 94 1 MR. BERMAN: Correct. 2 THE COURT: 82 -- is that correct? 3 MR. BERMAN: Correct. 4 THE COURT: Thank you. Okay. 5 8201? 6 MR. CROCKER: 34,000,000, Your Honor. 7 THE COURT: $34,000,000 is the bid. Thank you very 8 much. 9 ACI? 34,000,000 is the last bid. 10 MR. GOLDBERGER: Thank you. 11 THE COURT: Sure. 12 MR. GOLDBERGER: 34,100,000. 13 THE COURT: Okay, thank you very much. 14 Thor? 15 MR. BERMAN: Your Honor, are we able to skip this 16 round and still stay in for future? We're just trying to make 17 some decisions here? 18 THE COURT: No, that's not how a round robin works. 19 You will make a bid -- 20 MR. BERMAN: Okay. 21 THE COURT: -- or you're out. 22 MR. BERMAN: The last bid was 34.1 million? 23 THE COURT: 34,100,000 US dollars. 24 MR. BERMAN: Okay, we'll do 34,150,000. 25 THE COURT: No Bitcoin yet. Okay, 34 million, 150 is Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 94 of 100 EXCEPTIONAL REPORTING SERVICES, INC 95 1 the last bid. 2 8201? 3 MR. CROCKER: 34 million, 500, Your Honor. 4 THE COURT: 34 million -- 5 MR. CROCKER: Five hundred thousand. 6 THE COURT: -- 500,000. Thank you very much. 7 ACI? 8 MR. GOLDBERGER: No bid. 9 THE COURT: You are done? 10 MR. GOLDBERGER: Yes. 11 THE COURT: Okay. Turning to Thor. 12 34,500,000 is the highest bid made by 8201. Do you 13 wish to overbid? 14 MR. BERMAN: Give us -- yes, 34,550,000. 15 THE COURT: Okay, $34,550,000 is the highest bid by 16 Thor. Thank you very much. 17 So 8201? 18 MR. CROCKER: 34,750,000. 19 THE COURT: $34,750,000 is 8201's bid. Thank you 20 very much. 21 Thor? 22 MR. BERMAN: 34,850,000. 23 THE COURT: Okay, so to be clear, 24 $34,850,000. Okay, that is Thor's last bid. 25 8201? Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 95 of 100 EXCEPTIONAL REPORTING SERVICES, INC 96 1 MR. CROCKER: 35,000,000. 2 THE COURT: 35,000,000 is 8201's bid. 3 Thor, do you wish to overbid? 4 (Audio malfunction) 5 MR. BERMAN: Your Honor, can you give us 30 seconds? 6 THE COURT: I will give you 30 seconds. I’ll give 7 every -- the remaining bidders 30 seconds to make their 8 decisions. 9 MR. BERMAN: Thank you. 10 (Pause) 11 MR. BERMAN: Your Honor, we'll 35,050,000. 12 THE COURT: So we have 35,000,050 [sic] is the bid. 13 8201, do you wish to bid? 14 MR. CROCKER: I apologize, Your Honor, could you 15 repeat that last bid? 16 THE COURT: I can. 35,050,000, so 35,000,050 17 [sic] -- 18 MR. CROCKER: Got it. 19 THE COURT: -- I think that's right. 20 MR. CROCKER: So, Your Honor, 35,150,000. 21 THE COURT: Okay. 35,150,000. So I take that back. 22 It was 35 million, 050,000. I was a philosophy major. Okay. 23 (Chuckles) 24 So the last bid is $35,150,000. 25 Thor, do you wish to overbid? Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 96 of 100 EXCEPTIONAL REPORTING SERVICES, INC 97 1 MR. BERMAN: Your Honor, would you be willing to give 2 us three minutes to discuss this? 3 THE COURT: No. No, this is it, 30 seconds. 4 (Pause) 5 MR. BERMAN: Your Honor, we're not going to overbid. 6 THE COURT: Do you wish to be the backup bidder at 7 35,050,000? 8 (Counsel confers) 9 MR. BERMAN: Your Honor, give us -- 10 (Counsel confers) 11 THE COURT: Well, you were the winning -- 8201 is the 12 winning bidder, I'll make that clearer. All I'm now trying to 13 establish is the backup bidder. If Thor is unwilling to do 14 that, then I will ask ACI if it wishes to be the backup bidder 15 on its last bid? 16 (Counsel confers) 17 MR. BERMAN: We are willing to be the backup bidder. 18 THE COURT: They are willing? Okay. 19 Going once, going twice, (bangs gavel), sold for 20 35 million, 150. 21 MR. JONES: Your Honor, may I -- 22 THE COURT: Yes, Mr. Jones? 23 MR. JONES: Your Honor, just as a matter of 24 formality, I think that we need to consult with the Debtor's 25 representative to determine what the highest and best is, but I Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 97 of 100 EXCEPTIONAL REPORTING SERVICES, INC 98 1 don't think you'll be surprised after we -- 2 THE COURT: I didn't hear any other items of value 3 added to the bids besides dollars, so I don't know what would 4 change. 5 MR. JONES: Your Honor, as I say, I stand on 6 unnecessary ceremony. We agreed -- 7 (Talkovers) 8 THE COURT: Well, the next time do the auction in 9 your office instead of in the court. 10 MR. JONES: Yes, Your Honor, we agreed that that 11 is -- we certainly agree that that is the highest and best bid, 12 and we assume the Debtor does also. 13 THE COURT: Okay, Mr. Orantes? 14 MR. ORANTES: The Debtor agrees with that, as well, 15 Your Honor. 16 THE COURT: Okay, so the winning bidder 8201 -- 17 (Audio malfunction) 18 THE COURT: -- at $35,150,000. 19 Thor, speaking from (indisc.), 35,050,000. 20 Mr. Orantes, please submit -- 21 (Audio malfunction) 22 MR. ORANTES: Yes, Your Honor. 23 THE COURT: -- an accurate Order reflecting my ruling 24 today, share it with all the parties who were involved before 25 you submit it, and submit it timely. So you all are going to Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 98 of 100 EXCEPTIONAL REPORTING SERVICES, INC 99 1 have to maybe work a little quicker than we did today. 2 Thank you all very much. 3 MR. JONES: Thank you, Your Honor. 4 THE COURT: Court is adjourned. 5 MS. JAMES: Thank you, Your Honor. 6 (This proceeding was adjourned at 2:16 p.m.) 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 99 of 100 EXCEPTIONAL REPORTING SERVICES, INC 100 CERTIFICATION I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the above-entitled matter. December 14, 2021 Signed Dated TONI HUDSON, TRANSCRIBER Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 100 of 100
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EXCEPTIONAL REPORTING SERVICES, INC UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION IN RE: ) CASE NO: 2 : 20 - bk - 17 433 - VZ ) C HAPTER 11 ) JONG UK BYUN , ) Los Angeles, California ) ) Thursday, December 9 , 2021 Debtor. ) ) 1 1 : 0 0 a .m. #4 - MOTION HEARING BEFORE THE HONORABLE VINCENT ZURZOLO , UNITED STATES BANKRUPTCY JUDGE CALENDARED MOTION : See page 2 APPEARANCES : See Page s 2 , 3, 4 Court Recorder [ECRO]: Shemainee Carranza 855 460 - 9641 Transcribed by: Exceptional Reporting Services, Inc. P.O. Box 8365 Corpus Christi, TX 78468 361 949 - 2988 Proceedings recorded by electronic sound recording; transcript produced by transcription service. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 1 of 100EXCEPTIONAL REPORTING SERVICES, INC 2 CALENDARED MOTION : #4 - MOTION FOR ORDER (1) APPROVING THE SALE OF THE REAL PROPERTY, SUBJECT TO OVERBIDDING PROCEDURES PURSUANT TO 11 USC SECTION 363; (2) AUTHORIZING THAT SUCH SALE BE FREE AND CLEAR OF LIENS, CLAIMS, INTERESTS, AND ENCUMBRANCES OF ANY NATURE WHATSOEVER PURSUANT TO 11 USC SECTION 363; (3) EXTINGUISHING EXISTING LEASE; (4) REJECTING ALL OTHER EXECUTORY CONTRACTS AND UNEXPIRED LEASES; (5) AUTHORIZING PAYMENT DIRECTLY OUT OF ESCROW OF THE CLAIM OF HYUNDAI STEEL COMPANY, ESCROW COSTS, BRO KERS FEE AND LIENS SENIOR TO THE LIENS OF HYUNDAI STEEL COMPANY; (6) FINDING THAT BUYER IS A GOOD - FAITH BUYER ENTITLED TO THE PROTECTIONS OF SECTION 363(M) OF THE BANKRUPTCY CODE; (7) WAIVING THE FOURTEEN - DAY STAY PROVISION OF BANKRUPTCY RULE 6004; (8) APP ROVING COMPROMISE AND CONTROVERSY WITH HYUNDAI STEEL COMPANY AND AUTHORIZING GENERAL MUTUAL RELEASES; AND, (9) GRANTING OTHER RELIEF IT DEEMS JUST AND APPROPRIATE [DKT.NO.379] APPEARANCES FOR : Debtor: GIOVANNI ORANTES, ESQ. Orantes Law Firm, PC 343 5 Wilshire Blvd. Suite 2920 Los Angeles, CA 90010 888 - 619 - 8222 Hyundai Steel Company: EVAN M. JONES, ESQ. RICHARD HOLM, ESQ. O’Melveny & Myers, LLP 400 S. Hope Street Los Angeles, CA 90071 213 - 430 - 8313 Also present: AISLING MURRAY, ESQ. YOUNGWOOK SHIN, ESQ. BRIAN KENYAN Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 2 of 100EXCEPTIONAL REPORTING SERVICES, INC 3 APPEARANCES FOR : (CONTINUED) Toni Ko: SHIRLEY CHO, ESQ. Pachulski Stang Ziehl & Jones, LLP 10100 Santa Monica Blvd. 13th Floor Los Angeles, CA 90067 310 - 277 - 6910 Packo Investments, DAVID W. MEADOWS, ESQ. et al.: 1801 Century Park East Suite 1235 Los Angeles, CA 90067 310 - 557 - 8490 Thor Acquisition West: MICHAEL S. GREGER, ESQ. Allen Matkins, LLP 1900 Main Street 5th Floor Irvine, CA 92614 949 - 553 - 1313 STEVEN A. COHEN, ESQ. Wachtell Lipton, et al. 51 West 52nd Street New York, NY 10019 212.403.1347 Also present: GREG BERMAN Senior VP Thor Equities Richard Marsha c k: ROBERT P. GOE, ESQ. Goe Forsythe & Hodges, LLP 18101 Von Karman Suite 1200 Irvine, CA 92612 North Pal i sade ERIC D. GOLDBERG, ESQ. Partners: DLA Piper LLP (US) 2000 Avenue of the Stars Suite 400 North Tower Los Angeles, California 310 - 595 - 3085 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 3 of 100EXCEPTIONAL REPORTING SERVICES, INC 4 APPEARANCES FOR : (CONTINUED) Fleet Yards, Inc.: JULIAN GURULE, ESQ. Buchalter 18400 Von Karman Ave. Suite 800 Irvine, CA 92612 949 - 760 - 1121 8201 Santa Fe, LLC: SCOTT B. COHEN, ESQ. Engelman Berger, P.C. 2800 North Central Avenue Suite 1200 Phoenix, AZ 85004 602 - 271 - 9090 Also present: ERIC CROCKER JASON BERG WM Capital Partners: ROYE ZUR, ESQ. Elkins Kalt, et al. 10345 W. Olympic Blvd. Los Angeles, CA 90064 310 - 746 - 4400 Also present: SCOTT WHITWORTH ACI VI Santa Fe, LLC: JACQUELINE L. JAMES, ESQ. Cox Castle Nicholson 2029 Century Park East Suite 2100 Los Angeles, CA 90067 310 - 284 - 2214 A l so present : JEFF REY GOLDBERGER Antonio Bernard Whitley: NOAH R. BALCH, ESQ. Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 4 of 100EXCEPTIONAL REPORTING SERVICES, INC 5 Los Angeles, California ; Thursday, December 9, 2021 ; 11:00 a.m. 1 (Call to order) 2 THE COURT: This is a motion for an order approving a 3 sale and seeking approval of a compromise of controversy, and 4 other forms of relief in the Jong Uk Byun bankruptcy case. So 5 may I please first have an appearance on behalf of the moving 6 party? 7 MR. ORANTES: Good morning, Your Honor. This is 8 Giovanni Orantes of Orantes Law Firm on behalf of the Debtor 9 and debtor in possession. 10 THE COURT: Okay. Good mornin g. Next can I please 11 have -- 12 MR. SPEAKER: Can't hear anything. I wonder what's 13 going on. 14 THE COURT: -- the -- an appearance on behalf of 15 Hyundai Steel Company? 16 MR. SPEAKER: My speaker is not on. 17 MR. JONES: Good morning, Your Honor. Evan Jones and 18 R ichard -- 19 MR. SPEAKER: Do you -- 20 MR. JONES: -- Holm in the courtroom from O'Melveny 21 and Myers. Your Honor, we also have on the phone -- 22 MR. SPEAKER: ( Indisc. ) earlier. 23 MR. JONES: -- with us my colleague Ms. Murray and -- 24 MR. SPEAKER: ( Indisc. ) anything. That's the funny 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 5 of 100EXCEPTIONAL REPORTING SERVICES, INC 6 thing. 1 MR. JONES: -- my colleague Brian Kenyon who the -- 2 MR. SPEAKER: Something I haven't tested anyway. 3 THE COURT: Excuse me. Someone on the phone does not 4 have their mute button pushed. So please everyone who's on the 5 phone -- 6 MR. SPEAKER: Well, but the judge is sitting out 7 there. It should -- 8 THE COURT: Everyone who's on the phone, you need to 9 mute yourself before you -- 10 MR. SPEAKER: That's weird. 11 THE COURT: -- embarrass yourself -- 12 MR. SPEAKER: We should. 13 THE COURT: -- even further. 14 MR. SPEAKER: He's still speaking into the mic. 15 THE COURT: Life in the twenty - first century. 16 MR. SPEAKER: Oh, no. Hold on a second. Hello. 17 THE COURT: May I ask who's saying hello? 18 MR. SPEAKER: I don't hear anything. 19 THE COURT: Can you see who's talking, recorder? Who 20 is it? 21 MS. SPEAKER: Jeff. 22 THE COURT: Sorry? 23 MS. SPEAKER: It's Jeff. 24 THE COURT: It's in -- from chambers? Okay. All 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 6 of 100EXCEPTIONAL REPORTING SERVICES, INC 7 right. I think we've controlled that problem. Okay. L et's 1 start over again. 2 MR. JONES: Thank you. 3 THE COURT: Okay. So you're about to tell me about 4 your colleague on the phone. 5 MR. JONES: Yes, Your Honor. On the phone I have 6 Ms. Murray as well as Mr. Kenyon, who's a real estate attorney 7 involved in this matter. I'd also note for the record, Your 8 Honor, my colleague Youngwook Shin , who is in Seoul, is sitting 9 in a conference room with our clients. And it's 4:00 a.m. in 10 Seoul so that's -- 11 THE COURT: I was just going to ask -- 12 MR. JONES: -- how importan t this is. 13 THE COURT: Yeah. Okay. 14 MR. JONES: It's -- 15 THE COURT: Thank you very much. 16 MR. JONES: Thank you, Your Honor. 17 THE COURT: You're welcome. Do we have an appearance 18 on behalf of Toni Ko? 19 ( No audible response ) 20 And I thank you all for spacing y ourselves out. 21 MS. CHO: Good morning, Your Honor. Shirley Cho of 22 Pachulski, Stang, Ziehl, and Jones for Ms. Ko. 23 THE COURT: Good morning. Okay. Next, on behalf of 24 Packo Investments and related parties. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 7 of 100EXCEPTIONAL REPORTING SERVICES, INC 8 MR. MEADOWS: Good morning, Your Honor, David Mead ows 1 appearing on behalf of certain junior secured creditors, which 2 are Packo Investments, Mr. Allen Park, Mr. Mohamed Sanfaz, and 3 the BAE Family Trust. 4 THE COURT: Good morning. 5 MR. MEADOWS: Thank you. 6 THE COURT: Okay. Next, on behalf of Thor 7 Acquisitio ns, please. 8 MR. SPEAKER: On I think it's best -- 9 THE COURT: Let's -- 10 MR. SPEAKER: -- if we start -- 11 THE COURT: Let's pause. 12 MR. SPEAKER: -- your hosting -- 13 THE COURT: Stay on the record. 14 MR. SPEAKER: -- in January. 15 THE COURT: ( Indisc. ) 16 MR. SPEAKER: Not next week. That -- practice time 17 and also we can post the stuff on the website. We could set up 18 a recurring meeting where right now -- 19 (Recess taken from 11:03 a.m. to 11:04 a.m.) 20 THE CLERK: Court is one against -- once again in 21 session. 22 THE COUR T: Okay. That proves you should never think 23 you're not being heard by someone somewhere in the world. 24 Okay. Thor Acquisition, please. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 8 of 100EXCEPTIONAL REPORTING SERVICES, INC 9 MR. GREGER: Good morning, Your Honor, Michael Greger 1 of Allen Matkins of Allen, Matkins, Leck, Gamble, Mallory, and 2 Na tsis on behalf of Thor Acquisition West, LLC. Your Honor, my 3 co - counsel Steven Cohen at the Wachtel Missry LLP firm is also 4 on the line. He has been admitted pro hac vice in this matter. 5 In addition, Mr. Greg Berman, a Senior Vice President of Thor, 6 is on the line as well for participation in the auction. 7 THE COURT: Okay. Thank you very much. 8 MR. GREGER: Thank you, Your Honor. 9 THE COURT: Next, on behalf of Richard Marshack. 10 MR. GOE: Yeah, Robert Goe of Goe, Forsythe, and 11 Hodges on behalf of Chapter 7 Trustee Richard Marshack, just 12 monitoring the hearing, Your Honor. 13 THE COURT: Okay. Good morning. And then we have 14 North Palisades Partners. 15 MR. GOLDBERG: Good morning, Your Honor, Eric 16 Goldberg of DLA Piper for North Palisade Partners. 17 THE COURT: G ood morning. And then on behalf of 18 Fleet Yards , Incorporated. 19 MR. GURULE: Good morning, Your Honor, Julian Gurule 20 of Buchalter for Fleet Yards , Inc. 21 THE COURT: Good morning. 22 MR. GURULE: Good morning. 23 THE COURT: And then we have 8201 Santa Fe, LLC. 24 MR. SCOTT COHEN: Good morning, Your Honor, Scott 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 9 of 100EXCEPTIONAL REPORTING SERVICES, INC 10 Cohen appearing on behalf of 8201 Santa Fe, LLC. I'm joined in 1 the courtroom by the member representative, Eric Crocker , and 2 by the indirect parent company's representative from A m er co , 3 Treasurer Jason Berg. 4 THE COURT: Good morning. 5 MR. SCOTT COHEN: B - E - R - G. Thank you. 6 THE COURT: You're welcome. And then we have other 7 parties, WM Capital Partners. 8 MR. ZUR: Good morning, Your Honor, Roye Zur of 9 Elkins Kalt on behalf of WM Capital Partners. We are hoping to 10 be qualified before this auction starts. We are still waiting 11 on that. I have -- 12 THE COURT: Have you talked to anyone about that? 13 MR. ZUR: We sure have, Your Honor. And I hope the 14 conversation continues and resolves itself -- 15 THE COURT: Okay. So just to save -- 16 MR. ZUR: -- before the auction begins. 17 THE COURT: -- a little tension, I'm goi ng to 18 bifurcate obviously. First, if the motion's not granted, 19 there's no point in having an auction. So that will be 20 bifurcated so you can just -- we'll have a break in between to 21 make sure who the bidders are, if we get to that point. 22 MR. ZUR: I appre ciate that very much. And, Your 23 Honor, one more thing. I believe that the managing member of 24 WM Capital Partners, Scott Whitworth, is on the line. But I 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 10 of 100EXCEPTIONAL REPORTING SERVICES, INC 11 didn't hear him. 1 THE COURT: Okay. Thanks. 2 MR. ZUR: Thank you very much, Your Honor. 3 THE COURT: S ure. ACI 6 Santa Fe LLC. I presume 4 you're using the Roman numeral. 5 MS. JAMES: Yes, Your Honor. Good morning, Your 6 Honor, Jacqueline James, Cox, Castle, Nicholson, on behalf of 7 overbidder ACI Roman numeral six Santa Fe LLC. 8 THE COURT: Okay. Good morni ng. I believe you said 9 -- did you say Jacqueline James? 10 MS. JAMES: Yes, I did, Your Honor. 11 THE COURT: Okay. So again for future reference, 12 when you come back to the lectern, if you do, I am giving you 13 the option, not requiring, I'm saying you may take off your 14 mask if you'd like to make sure that we can make a record. 15 MS. JAMES: I understand, Your Honor. 16 THE COURT: Okay. 17 MS. JAMES: Thank you. 18 THE COURT: You're welcome. Okay. Next, we have 19 Antonio Whitley . 20 MR. BALCH: Good morning, Your Honor, Noah Balch on 21 behalf of Antonio Bernard Whitley. 22 THE COURT: Good morning. And then we have on behalf 23 of Daniel Park, Joan Park, and Jo u rdain DeWerd , do we have an 24 appearance? 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 11 of 100EXCEPTIONAL REPORTING SERVICES, INC 12 THE CLERK: I didn't get ( indisc. ). 1 THE COURT: No one checked in on that mat ter. So 2 there's no one appearing on behalf of Daniel Park, Joan Park, 3 Jourdain DeWerd , correct? 4 ( No audible response ) 5 Okay. Mr. Orantes, would you like to add any oral 6 argument in support of your motion? 7 MR. ORANTES: Yes, Your Honor. Thank you very mu ch. 8 And, Your Honor, I have to apologize for having to appear 9 telephonically. I was in front of Your Honor for the sales 10 procedures motion. Unfortunately, my wife tested positive for 11 COVID - 19. And although the last time I checked I was negative, 12 that could change at any moment and I did not want to -- 13 obviously I did not want to infect anybody. So I'm limited to 14 doing this by telephone. 15 THE COURT: Well we thank you all for your caution. 16 MR. ORANTES: Thank you, Your Honor. Well, Your 17 Honor, we filed a motion to ap prove this transaction under 18 Section 363(b) and Section 363(f)(1), (4), and (5). 19 We believe that the Dolan (phonetic) case provides 20 support for this transaction, as we ll as for completing this 21 transaction free and clear of the lien of Fleet Yards , Inc. 22 under Spanish Peaks , because we have a very analogous situation 23 where if we don't complete a sale through the bankruptcy 24 process, Hyundai Steel Company, which has as we s peak a 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 12 of 100EXCEPTIONAL REPORTING SERVICES, INC 13 foreclosure scheduled for December 21st at 11:00 o'clock, can 1 foreclose on the property. And not only on this property but 2 on three other properties of the estate because they're all 3 cross - collateralized. 4 And that result would lead to no recovery for most of 5 the creditors of the estate, other than Hyundai. Hyundai 6 conducted a foreclosure sale earlier in the year. The highest 7 bid that it received I believe was $15.2 million, which is far 8 less than the $31 million starting bid that we have here for 9 Thor. And we have received three other bids. 10 But before we go on, Your Honor, I think just taking 11 the Court 's marching orders as you said that you would 12 bifurcate the two matters, we did receive bids from -- three 13 bids, and there were certain st atements that we do need them to 14 make on the record . But I will make those after everybody 15 argues the motion. 16 As the Court knows, we didn't receive an opposition 17 from the Packo creditors, and they have since withdrawn that in 18 part due to the stipulation b y Hyundai to accept $24 million in 19 full satisfaction of its claim, plus 50 percent of any overbid 20 -- any net proceeds of the overbid, up to the amount of their 21 full claim. So based on that stipulation, all of the 22 objections have been withdrawn. 23 We did re ceive an opposition by Fleet Yards and which 24 alleged that it did not receive notice of this motion. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 13 of 100EXCEPTIONAL REPORTING SERVICES, INC 14 However, since that time, we did file a reply and address that 1 declarations and address the issues set forth in the 2 opposition. But also Fleet Yards signe d a stipulation 3 indicating that in fact it did have notice because I personally 4 provided notice and we did proofs of service of the motion to 5 show that Mr. Dan Otting of Fleet Yards , Inc. did receive 6 notice. 7 I believe, Your Honor, with respect to the motio n 8 itself, it should be granted. It's in the best interest of the 9 creditors and is consistent with maximizing the recovery by 10 creditors of the estate, which is one of the pillars of the 11 bankruptcy process. 12 And after Your Honor rules on the motion, we would 13 like to take a moment to -- for the bidders to make their 14 representations , a nd if the Court would allow us at that point 15 to adjourn for a few minutes to consider the bidding packages 16 to qualify the bidders. And we would follow that with a sale 17 proceeding , Your Honor. 18 At this point, I don't have anything further unless 19 the Court has any questions. 20 THE COURT: NO questions, thank you very much. 21 MR. ORANTES: And any response to any other -- 22 THE COURT: No questions. 23 MR. ORANTES: Thank you, Your Honor. 24 THE COURT: Okay. So next I'm going to call for 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 14 of 100EXCEPTIONAL REPORTING SERVICES, INC 15 parties in the order that I asked. For those who I perceive 1 either consent -- or let me put it this way. I'm going to call 2 for those who wish to be heard in support of the motion. So, 3 first, let's see, we'll go in order. So, Hyundai Steel, do you 4 wish to be heard in support of the motion? 5 MR. JONES: Yes, Your Honor, we do. 6 THE COURT: Please. 7 MR. JONES: Your Honor, Evan Jones on behalf of 8 Hyundai Steel. Your Honor, I'm going to take my mask off. 9 I've neve r been told I'm hard to hear, but I want to make sure. 10 THE COURT: It's clarity, not volume. 11 MR. JONES: Thank you. Your Honor, I'll start with 12 the Court's tentative ruling from the other day raising the 13 question of notice to CMI. I think that Mr. Byun's declaration 14 that was filed at ECF 427 amply addresses that. 15 And so, Your Honor, I turn to the objection filed on 16 Monday of this week by Fleet Y ard, which asserts a sublease 17 from the Debtor's non - debtor affiliate CMI. Your Honor, the 18 objection is untimely, inadequate, and should be overruled. I 19 would make five points. And I apologize in advance for going 20 into detail. But since the objection was filed so late, we 21 haven't been able to respond in writing. 22 Point one, notice was properly given to Fle et Y ard 23 when the motion was filed, and the objection is not timely. In 24 its opposition, Fleet Y ard complains about a failure of notice. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 15 of 100EXCEPTIONAL REPORTING SERVICES, INC 16 And certainly when I heard about that from Mr. Garfi nkle 1 (phonetic), I was quite concerned because, as the Court has 2 sa id on many occasions, failure of notice is a reason to 3 continue a hearing. But it's simply not true. 4 As Mr. Orantes notices, the declaration of service on 5 the original motion at ECF 373, page 125, notes that Mr. Otting 6 as CEO of Fleet Y ard received notice as a prospective buyer and 7 was given timely notice of the motion. I'd note, Your Honor, 8 until this week, Fleet Y ard has never entered an appearance, 9 hasn't filed a proof of claim. That's the only address that 10 the Debtor had for Fleet Y ard. 11 Your Honor wi ll have noted that nowhere in 12 Mr. Otting's declaration does he say he didn't get notice. 13 Your Honor, I think -- 14 THE COURT: I'm thinking it's an echo. Go ahead. 15 MR. JONES: Very well, Your Honor. And, Your Honor, 16 in fact, as the Court is aware, on furth er investigation and 17 discussion with the parties, counsel for Fleet Yards has 18 acknowledged their mistake. They acknowledge that proper 19 service was made timely. And the failure of notice argument is 20 abandoned. 21 Your Honor, you've seen the stipulation of fa cts on 22 those that Fleet Yards' counsel entered with Hyundai. I 23 certainly commend counsel's professional candor and the honesty 24 of their client in admitting that fundamental error. But the 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 16 of 100EXCEPTIONAL REPORTING SERVICES, INC 17 fact remains, notice was timely and the objection proceeds from 1 th e fata l and false premise that notice was not timely given. 2 Fleet Yards' objection is almost two weeks late, Your 3 Honor, yet they got notice. The fact that Fleet Yards may have 4 decided or slept on its rights or whatever so that they didn't 5 get counsel up in time and they filed their objection 12 days 6 late under the local bankruptcy rules is not an excuse for the 7 fact that they filed the objection on Monday. The Court should 8 rule their pleadings untimely and stop there. 9 But, Your Honor, I'll continue to th e four other 10 reasons why their pleadings are unavailing. 11 Point two, Fleet Yards does not even assert a lease 12 with the Debtor. This is another fatal flaw in all their 13 arguments. They are not in privity with the Debtor. Their 14 assertion is of a separate le ase agreement with CMI, a 15 subsidiary of the Debtor. They've not asserted the lease with 16 the Debtor but they ask this Court, with no evidence, to simply 17 substantively consolidate those two entities and pretend that 18 they have a lease with the Debtor. There 's no support for 19 that. 20 Your Honor, as CMI itself notes, apparently -- I'm 21 sorry, as Fleet itself notes, apparently CMI has an oral , 22 unrecorded lease with the Debtor. That lease itself is 23 certainly subject to being sold free and clear of under at 24 least three separate provisions of Section 363. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 17 of 100EXCEPTIONAL REPORTING SERVICES, INC 18 First, CMI, which is the only party in privity with 1 the Debtor, has consented to the sale. That's Mr. Byun' s 2 declaration. That's grounds for sale free and clear under 3 363(f)(2). 4 Second, even if CMI didn't consent, as the Ninth 5 Circuit ruled in Spanish Peaks , because there is a senior prior 6 lien in favor of Hyundai -- and by the way, Your Honor, I want 7 to thank Ms. Cho for teaching me to pronounce my client's name 8 correctly. Because there is a senior lien in favor of Hyundai, 9 363(f)(1) applies because a foreclosure of that lien would wipe 10 out any lease to CMI. And I'll talk about Spanish Peaks in 11 detail a little later. But that rule applies to the CMI lease. 12 Third, as Fleet Yards itself notes, CMI's lease is 13 avoidable as unwritten and unrecorded. So even if CMI didn't 14 consent to the sale, which it does, and even if Spanish Peaks 15 didn't apply t o the sale, which it does, CMI's lease hold is 16 certainly subject to bona fide dispute. The Court can of 17 course order sale free and clear of an interest subject to bona 18 fide dispute under 363(f)(4). 19 It's well - established that voidability satisfies the 20 requ irement of Section 363(f)(4). Your Honor, for that we cite 21 the Securities and Exchange Commission versus Capital Cove 22 Bancorp case from this district at 2015 WL 9701154 from 2015, 23 as well as the In Re Gaylord Grain LLC decision from the Eighth 24 Circuit BAP at 306 BR 624. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 18 of 100EXCEPTIONAL REPORTING SERVICES, INC 19 And, Your Honor, I quote from Gaylord for the point 1 that the Trustee doesn't have to have commenced the avoidance 2 action to put the interest in bona fide dispute. And the quote 3 is as follows: "Although the trustee did not file an adversar y 4 proceeding seeking to avoid the liens in question, he may 5 nevertheless sell free and clear of the bank's liens if he can 6 show, pursuant to 11 USC 544, an objective basis for avoiding 7 the liens, and thus establish a bona fide dispute for purposes 8 of 11 US C, 363(f)(4)." 9 THE COURT: Okay. Mr. Jones, please pause. Someone 10 on the line is not muting their phone. So please take the time 11 right now and look at your phone and make sure it's muted. 12 Thank you very much. Go ahead. Sorry, Mr. Jones. 13 MR. JONES: T hank you, Your Honor. Your Honor, if 14 the CMI lease from the Debtor fails, it is -- or can be sold 15 free and clear of, it is hornbook law that when the master 16 lease to CMI fails, any sublease to Fleet Yard likewise fails. 17 Your Honor, I cite the California C ourt of Appeals in 18 the Syufy Industry -- I'm sorry, Syufy Enterprises, LP versus 19 City of Oakland case, which actually involved at least 20 following bankruptcy. And in that case at 104 Cal. App. Fourth 21 869 in December 20, 2002, the Court stated, and I'll quo te: 22 "Under California law, a subtenant's rights are," and then 23 there's an interior quote, "'dependent upon and subject to the 24 sublessor's rights. Rights under the sublease stand or fall 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 19 of 100EXCEPTIONAL REPORTING SERVICES, INC 20 with those of the sublessor.'" Fleet Yards would like to 1 pretend th ey have a lease with the Debtor. But they don't. 2 They have a sublease from CMI, and CMI's lease fails for the 3 three reasons I've mentioned. 4 Your Honor, I'd also note that even if Fleet Yards 5 had the lease directly with the Debtor, it would be subject to 6 avoidance under Section 544 for the same reasons. It's a five 7 year lease. It's not recorded. Such a lease is obviously 8 avoidable by a judgment lien creditor or BFP under California 9 law and is subject to bona fide dispute within the terms of 10 363(f)(4). 11 A gain, I'd refer back to the cases I quoted on the 12 fact that a interest is avoidable or subject to avoidance 13 constitute a bona fide dispute. That's yet another reason the 14 CMI sublease is subject to -- I'm sorry, the Fleet Yards 15 sublease is subject to 363(f ). 16 Point three, there are no enforceable holdover rights 17 under Section 365(h) . And, Your Honor, I think apart from the 18 incorrect assertion that there was a failure of notice, this is 19 the fundamental argument that Fleet Yards makes. Your Honor, 20 of course the predicates for that section to apply are, one, a 21 lease under which the Debtor is the lessor. That's not Fleet 22 Yards lease. 23 The second predicate is that there is a rejection of 24 that lease. That's not the case here. The Debtor cannot 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 20 of 100EXCEPTIONAL REPORTING SERVICES, INC 21 reject leases it is not a party to; 365(h) does not apply on 1 both of those reasons. 2 Your Honor, finally, as Fleet Yards admits in its 3 late - filed objection, the Ninth Circuit held in Spanish Peaks 4 that even if there were a valid lease with the Debtor, and even 5 if that lease were subject to rejection because it's a lease 6 with the Debtor, 365(h) rights do not survive sale free and 7 clear under 363(f). 8 Fleet Yards tries to distinguish Spanish Peaks as 9 involving an insider. But as my law professor used to say, 10 that's a fact of n o importance. The Court doesn't use that as 11 the basis for its decision. It doesn't refer to that in its 12 analysis. 13 What the Court does say is because a foreclosure by 14 the senior lienholder under applicable law would wipe out the 15 holdover rights and the le ase, that those rights are subject to 16 363(f)(1). 17 And by the way, Your Honor, in Spanish Peaks , the 18 Court went out of its way to indicate that no actual 19 foreclosure was required to implicate 363(f)(1). As the Court 20 will recall, the bankruptcy court made n o findings on which 21 provision applied. There were -- of which provision of 363(f) 22 applied. 23 The circuit court, though, found that there was no 24 problem with concluding that 363(f)(1), which would apply in a 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 21 of 100EXCEPTIONAL REPORTING SERVICES, INC 22 foreclosure by the senior lender applied. Your Ho nor, I would 1 quote from the Ninth Circuit opinion -- and by the way, Your 2 Honor, I'll note here, the only change I make, because I'm 3 going to substitute the name of the parties for clarity. 4 Indeed -- and I'm sorry, Your Honor, I apologize if I didn't 5 say the page. This is at page 900 of the circuit court's 6 decision. Indeed , had the debtor not declared bankruptcy, we 7 can confidently say that there would have been an actual 8 foreclosure sale. Such a sale would have terminated the 9 applicable leases. 10 Section 363(f)(1) does not require an actual or 11 anticipated foreclosure sale. It is satisfied if such a sale 12 would be legally permissible. 13 Now, Your Honor, the court does go on to say that it 14 seems clear there would be a foreclosure but for the sale. And 15 I don' t think the Court needs stretch to make that conclusion 16 here. Hyundai has relief from the stay on its senior liens to 17 foreclose and expressly stipulated in a stipulation approved by 18 this Court to delay that foreclosure to permit this sale. 19 Your Honor, I'd also note that Spanish Peaks goes on 20 to say because that interest can be foreclosed out and sold 21 free of under 363(f)(1), no adequate protection is required. 22 But that's a peripheral matter. 23 Your Honor, the record is clear, Hyundai's lien was 24 recorded lon g before either the purported lease to CMI or the 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 22 of 100EXCEPTIONAL REPORTING SERVICES, INC 23 sublease to Fleet Yard, which I remind the Court was entered 14 1 days before this third bankruptcy case was commenced. A 2 foreclosure by Hyundai would wipe out both of those interests 3 and thus permits a sale under 363(f)(1), even though the Debtor 4 is not a party to Fleet Yards ' lease. 5 If there were a lease with the Debtor, and if that 6 lease were therefore subject to rejection, Spanish Peaks would 7 be directly on point. Of course there is no lease with the 8 Deb tor and Fleet Yards ' lease is not rejected because it's not 9 a lease with the Debtor. 10 But in the imaginary world that Fleet Yards wants the 11 Court to imagine, Spanish Peaks controls and this Court can and 12 should order sale free and clear of any holdover right. 13 Your Honor, point four , the asserted right of first 14 refusal does not interfere with the sale today. There is a 15 single sentence in the lease between CMI and Fleet Yard s that 16 says tenant has right -- I'm sorry, tenant has first right to 17 purchase or refusal of the property . Now, Your Honor, I'm not 18 even sure that's sufficiently clear under California contract 19 law to impose obligations, but it doesn't matter. 20 And I apolog ize if I'm a broken record but this isn't 21 an agreement with the Debtor. CMI is not selling its rights. 22 If Fleet Yards has a cause of action against CMI under that 23 right of first refusal, they are free to pursue it. 24 But, Your Honor, more importantly, the evidence 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 23 of 100EXCEPTIONAL REPORTING SERVICES, INC 24 demonstrates beyond dispute that if there were a direct right 1 of first refusal as against the Debtor, which there's not, the 2 Debtor has complied with it. Your Honor has seen the 3 stipulation that Fleet Yards counsel signed regarding 4 Mr. Otting's c onversations. And it says exactly what we'd 5 hoped to get from Mr. Otting on cross examination today, if 6 need be, but again counsel has behaved responsibly and 7 acknowledged these points. 8 Mr. Otting has been aware of the bankruptcy of 9 Mr. Byun since it was filed. He was in active conversations 10 with Mr. Byun and his agents about possibly buying the 11 property. And he couldn't. He told the Debtor's agents that 12 he couldn't finance a bid to meet the other bids, including the 13 stalking horse. And he told them th ey should go ahead with an 14 alternative. 15 Now, Your Honor, if there were an enforceable right 16 of first refusal against this Debtor, that -- those actions 17 certainly fulfilled it. Mr. Otting had his chance and he 18 appropriately said and honestly said I can't do that. I don't 19 know what more this right of first refusal that the Debtor 20 asserts against CMI is supposed to encompass. Mr. Otting had 21 his chance. 22 And by the way, Your Honor, we encouraged Fleet Yard 23 to qualify and participate in the auction toda y. They didn't. 24 I think the reason's obvious: they don't have the funds. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 24 of 100EXCEPTIONAL REPORTING SERVICES, INC 25 They'd like to have the funds, we would have liked to have them 1 bid. But they didn't. 2 And, Your Honor, that right of first refusal doesn't 3 lie against the estate. And if it did, it's been complied 4 with. 5 Your Honor, the last thing I'll say on the right of 6 first refusal is that even if this were a right of first 7 refusal against the estate, the law is not as Fleet Yard 8 suggests that such rights are necessarily enforceable in 9 bankrup tcy. 10 In fact, the very case they cite, Northr o p Grumman 11 from Delaware, says that such rights are enforceable within the 12 discretion of the Court if doing so does not, and I'll quote 13 from the Court, hamper the Debtor's ability to assign the 14 proper ty or foreclose the estate from realizing the full value 15 of the Debtor's interest. But where it does interfere with 16 those processes, the Court has discretion to rule the right of 17 first refusal unenforceable. 18 On that point, Your Honor, Northrop Grumman is in 19 accord with numerous other courts, including the Adelphia 20 Communications decision, 359 Br 65, Bankruptcy Southern 21 District of New York 2007; In Re Chicago Investments , 470 BR 22 32, Bankruptcy D. Massachusetts, 2012; In Re Mr. Grocer -- and, 23 Your Honor, I have a personal soft spot for this case -- 77 BR 24 349, Bankruptcy D. New Hampshire 1987. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 25 of 100EXCEPTIONAL REPORTING SERVICES, INC 26 Your Honor, that decision was by Judge Yacos, who I 1 had the pleasure to appear before actually in 1987. As Your 2 Honor will recall, he started the very first loose leaf 3 bankruptcy reporter service, The Broken Bank -- The Broken 4 Bench Review . 5 And, Your Honor, he got it right in that case because 6 every one of those cases says that if there were a right of 7 first refusal against the estate, and if it hadn't been 8 complied wit h, neither of which is true here, that this court 9 might nevertheless in its discretion order it not enforced 10 because it interfered with realizing the value of the estate 11 and its assets. 12 It's readily apparent, Your Honor, that enforcement 13 of this right of f irst refusal by delaying this auction will 14 materially interfere with this estate in realizing the value of 15 its assets. We are finally, literally after years, on the 16 verge of selling the estate's asset, primary asset. 17 Now, Your Honor, this case has finally gotten to the 18 point where I'm sure the Court would like to see all bankruptcy 19 cases. The prime litigants, Hyundai Steal -- apologize, 20 Ms. Cho -- and the Debtor are finally in accord. Mr. Orantes 21 and I have communicated extensively about this auction. 22 An d by the way, Your Honor, as in any good bankruptcy 23 case, when peace breaks out, my appreciation of opposing 24 counsel has grown enormously. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 26 of 100EXCEPTIONAL REPORTING SERVICES, INC 27 This Court should not delay the auction today because 1 of a late - filed assertion of a right of first refusal against 2 a n affiliate which has been complied with. The standards for 3 enforcing that right of first refusal simply are not met. 4 Now, Your Honor, Mr. Orantes mentioned the objection 5 that Mr. Meadows filed on behalf of certain junior lienholders. 6 I understand that o bjection to have been withdrawn subject to 7 approval of the settlement with Hyundai, which certainly we -- 8 Hyundai, which certainly we support approval of. And, Your 9 Honor, we addressed that objection extensively in our papers. 10 Unless the Court has questi ons about that, I get to skip about 11 20 pages of my outline that I've put in purple because I think 12 we addressed clear channel in extensive detail, and it sounds 13 like it's simply not material today. 14 Your Honor, that brings me to point five. It is time 15 for the estate to sell this property. In some cases we might 16 say, okay, let's give Fleet Yard some more time. They were 17 late but people have time. Let them keep looking for more 18 financing. Let's see if other people can qualify today. 19 And as Mr. Orantes men tioned, if the Court rules that 20 it will enter an order approving sale today, we do need to 21 discuss qualification. And there are some commitments we need 22 from various bidders before they will be qualified. But we can 23 do that if the Court says it's appropr iate to go forward after 24 we take a break and address those issues. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 27 of 100EXCEPTIONAL REPORTING SERVICES, INC 28 But, Your Honor, this is not a case where further 1 delay is appropriate. The Debtor has been marketing this 2 property for years. Fleet Yard has been aware of those efforts 3 for years. They sought to buy the property but they couldn't , 4 and they said, go forward with someone else. They first 5 entered an appearance through counsel on Tuesday. 6 Your Honor, enough is enough. We have a generous 7 contract, almost double the price obtained in an adjo urned 8 foreclosure sale last summer, for all of the estate's real 9 property assets. And that's a point I want to make sure is not 10 lost. The Debtor proposes to sell off one piece of property. 11 It is the most valuable one. But the estate will be left with 12 s ignificant assets , a nd junior creditors can receive a 13 distribution. 14 Your Honor, we wish Mr. Byun well if the sale and 15 settlement are approved today. But I want to make sure the 16 Court is a well -- aware that at a regularly conducted 17 foreclosure sale for al l of the estate's real property, the 18 highest bid obtained was $15.3 million. Now, Hyundai would 19 like to see these bids succeed. They're much higher. That's 20 what bankruptcy is for. 21 Your Honor, the sale agreement, the stalking horse 22 agreement we have befo re the Court requires closing by December 23 29th. That date is not accidental. The 30th and 31st are 24 holidays in Korea. Hyundai has waited a decade to receive a 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 28 of 100EXCEPTIONAL REPORTING SERVICES, INC 29 penny of principal on this debt. This is the third bankruptcy 1 this Court has heard essentiall y over this debt. 2 There are approved procedures for this auction. They 3 were approved without objection. They are appropriate and they 4 are fair. 5 This last - minute objection is not well - founded and 6 should not delay this sale. 7 Similarly, the request that t he Court's order be 8 stayed for 14 days is not well - founded. Again, as an initial 9 matter, it starts from the false premise that Fleet Yards 10 didn't get notice. That's just not true. Fleet Yards got 11 notice and for whatever reason didn't act until this week . 12 On the other hand, need to proceed promptly is amply 13 show. We are at yearend. Both companies and individuals like 14 to resolve things before yearend. 15 The purchase agreement requires closing as soon as 16 feasible, and in all events by December 29th. Furthe r delay 17 because of Fleet Yards ' sandbagging is not appropriate. 18 There is a time to object, there is a time to bid, 19 and Fleet Yards has missed both. 20 Your Honor, Fleet Yards ' objection should not be 21 sustained for the five reasons I've mentioned. 22 Your Honor, the last thing I'd turn to -- I'm sorry, 23 did the Court have question? 24 THE COURT: No. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 29 of 100EXCEPTIONAL REPORTING SERVICES, INC 30 MR. JONES: Thank you. Your Honor, the last thing 1 I'd turn to is the settlement with Hyundai, I got it right, 2 which is built into the sale motion. 3 As the record demonstrates, Hyundai asserts a senior 4 secured claim in excess of $28 million. This Court has already 5 rejected the Debtor's objection to the prepetition claim, 6 exc ept for approximately $2 million in fees for which this 7 Court has permitted further briefing an evidence. Those fees 8 have of course continued to accrue post - petition, and they've 9 not yet been subject to review. So perhaps there are more fees 10 that might b e disputed. 11 The Debtor in the settlement gives up counterclaims 12 against Hyundai. But of course those were dispositively 13 dismissed by the State Court in litigation with the Debtor. 14 So the calculus is simple. Hyundai gives up over $4 15 million in claims. No w, it might get some more if the bidding 16 today is successful. And maybe it'll come close to at some 17 point getting its full claim paid. And of course, Your Honor, 18 the stipulation says we'll never get more than our full claim. 19 But, Your Honor, the settleme nt which was entered 20 sets the possibility, perhaps the probability, that Hyundai 21 will walk away from over $4 million in claims. In return, 22 Hyundai receives a release of counterclaims that have been 23 denied by the State Court -- t hey could always file an 24 ap peal -- a nd potential factual and legal disputes over legal 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 30 of 100EXCEPTIONAL REPORTING SERVICES, INC 31 fees that are certainly subject to complexity, cost, 1 difficulty, and uncertainty. 2 Your Honor, I said there were five reasons why the 3 Fleet Yard objection should be rejected. I suggest that there 4 are over four million reasons why the settlement is fair. 5 Hyundai is taking a $4 million haircut in return for giving up 6 claims that at best are questionable -- counterclaims or 7 objections that are at best questionable. 8 The parties walk away from each oth er. And, again, I 9 would submit to the Court that's the best outcome to a 10 bankruptcy like this. Hyundai will walk away with a 11 significant haircut, the estate will sell a key asset. There 12 will be funds available for junior creditors. There will be 13 assets available for junior creditors. 14 Your Honor, that settlement is well within the range 15 of reasonable outcomes and should be approved by the Court. 16 And of course, Your Honor, in our paper, as 17 Mr. Orantes' paper, we address the standards for approval of a 18 se ttlement. But those are well - known to the Court. 19 And I'd submit that the calculus required here is not 20 difficult. It's a fair and reasonable settlement. The Court 21 should approve it. 22 Finally, Your Honor, the last point I make is if the 23 Court does not ord er payment of that settlement amount at 24 closing of a sale, and until such payments are made, Hyundai 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 31 of 100EXCEPTIONAL REPORTING SERVICES, INC 32 requests an adequate protection lien on the proceeds in the 1 full amount of its claim. I don't think -- 2 THE COURT: Do you mean Hyundai? 3 MR. JONES: (No au dible response) 4 THE COURT: I had -- I'm sorry, you just -- you 5 invited that so -- 6 MR. JONES: I did, Your Honor. And I'm happy to 7 admit that my Spanish is no better. And when I attempt to 8 imitate my son's statement of the city he spent a semester in 9 in Australia, I don't get Melbourne right either. 10 Your Honor, I thank you for your time. I'm happy to 11 answer any questions, but I have nothing else. 12 THE COURT: I have no questions. Thank you. 13 MR. JONES: Thank you, Your Honor. 14 THE COURT: All right. So at the risk of inventing a 15 word, trifurcate, before I hear arguments with regards to the 16 sale aspects of the motion, I want to see if there's anyone 17 that wishes to make oral argument in opposition to the 18 component of the motion with regards to the proposed c ompromise 19 of controversy. 20 I saw nothing in any opposition papers, be they be 21 withdrawn or not withdrawn, which opposed the compromise of 22 controversy. So that in and of itself would be deemed consent 23 to that granting of relief. But this is your opportunit y if 24 there is any party opposing the compromise of controversy to 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 32 of 100EXCEPTIONAL REPORTING SERVICES, INC 33 speak. I'll ask first if there's anyone on the phone. I don't 1 -- you don't have to -- don't say "no." If you wish to speak, 2 identify yourself. 3 ( No audible response ) 4 No, that's sufficient time to unmute. Okay. In the 5 courtroom is there anyone that wishes only to oppose -- and, 6 again, I saw nothing in anyone's papers, withdrawn or not 7 withdrawn, opposing the compromise of controversy. 8 ( No audible response ) 9 Okay. I reviewed the motion , a ll ( indisc. ) 10 obviously, as well as the component with regards to seeking 11 approval of the compromise if controversy. I find that each 12 and every element laid out by the Ninth Circuit in the ANC 13 (phonetic) decision has been met. It is a fair compromis e. 14 It is a remarkable one. That's not a requirement. 15 But, frankly, having lived through these cases, it's amazing 16 that the parties have gotten to this. And that it would create 17 the opportunity for the best interest of if not every creditor, 18 nearly every creditor to have some satisfaction out of this 19 bankruptcy case. I can't imagine a better result. 20 So the compromise of controversy component of the 21 motion is approved. 22 Now I will call for other parties who wish to be 23 heard in support of the motion or at l east non - objection to the 24 motion, if not outright consent. So let me start with Ms. Cho. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 33 of 100EXCEPTIONAL REPORTING SERVICES, INC 34 MS. CHO: Good morning again, Your Honor. For the 1 record, Shirley Cho of Pachulski, Stang, Ziehl, and Jones for 2 Ms. Toni Ko. Ms. Ko is a secured creditor in a second lien 3 position behind Hyundai Steel. She's owed not less than $1.295 4 million. Your Honor, I lower my mask because you might not 5 have seen me smiling from ear to ear the first time -- 6 THE COURT: I observed the eyebrows. 7 MS. CHO: -- I appeared. You know, frankly, Your 8 Honor, we never thought this day would come. Like Hyundai, 9 Ms. Ko has been waiting over five years for payment on her 10 claim. And we are so pleased and thankful to the bidders for 11 their time this morning. Looking forward to robust bidding 12 this afternoon. We support the sale, Your Honor, and would 13 urge the Court to deny -- to overrule any objections, Your 14 Honor. 15 I rise only because Ms. Ko did file her statement and 16 reservation of rights at Docket Number 392. Your Honor, we 17 need to renew that reservation of rights. We have asked and 18 have still not seen the form of proposed sale order. Your 19 Honor, I understand that is being drafted, but as of this date 20 we've not seen it. 21 Like Mr. Jones, we do need to -- and I'm su re this 22 would not come as a surprise, Your Honor, we are looking for 23 comfort language. And Mr. Orantes, you know, even though he's 24 so busy this morning running around with the different bidders, 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 34 of 100EXCEPTIONAL REPORTING SERVICES, INC 35 was able to assure me by phone that the proposed form of ord er 1 will have the necessary comfort language that a secured 2 creditor such as Ms. Ko would be looking for in the form of the 3 adequate protection language, either with the payment of 4 proceeds directed to her claim or the assurances that proceeds 5 will not be p aid out of order, Your Honor, and that the secured 6 creditors' liens will attach to the same extent priority and 7 validity as existed immediately prior to the closing of the 8 sale, Your Honor. 9 So with respect to the continuing reservation of 10 rights to the for m of sale order, Your Honor, we support the 11 sale. 12 THE COURT: Okay. So you didn't address my immediate 13 request which was with regards to compromise of controversy. 14 You -- 15 MS. CHO: The -- 16 THE COURT: -- do not oppose it, correct? 17 MS. CHO: We do not oppo se it, Your Honor. 18 THE COURT: That component of the motion. 19 MS. CHO: We concur with Your Honor's assessment. It 20 is remarkable, and we do thank Hyundai. 21 THE COURT: Okay. Great, thanks. 22 MS. CHO: Thank you. 23 THE COURT: Is there anyone that wants to be h eard 24 before I call on other parties that wants to oppose the 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 35 of 100EXCEPTIONAL REPORTING SERVICES, INC 36 compromise of controversy? 1 ( No audible response ) 2 Okay. Because I want to be absolutely clear, so it's 3 approved. 4 There are other remaining aspects of the motion which 5 obviously I have not ruled on yet, including -- which you 6 should be aware, you may have , I'll give you a chance to think 7 about it -- extinguishing leases. I'm not aware of any such 8 provision in the Code to extinguish a lease so it's unlikely I 9 would sign an order that includes that provision, heads up. 10 But now let me turn to the other parties that wish to 11 be heard in support of the motion. Mr. Meadows, I presume. 12 MR. MEADOWS: Good morning, Your Honor, David Meadows 13 on behalf of the four secured creditors I've previously 14 identified for the record. Very briefly, Your Honor. 15 At this stage of the proceeding I have nothing 16 further to add, other than to confirm what is already made 17 clear by my filing that my clients have withdrawn their 18 objection. There were conditions on it. But sinc e you have 19 just granted the settlement agreement, those conditions have 20 now been made mooted. 21 So to use the word that Ms. Cho used, we support the 22 sale and look forward to a robust auction. It's a far better 23 outcome than we thought we'd ever see. So than k you. 24 THE COURT: Okay, thank you. And then last call -- 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 36 of 100EXCEPTIONAL REPORTING SERVICES, INC 37 MR. SPEAKER: Okay. 1 THE COURT: -- absolutely clear, no one wishes to be 2 heard in opposition to the compromise of controversy. Okay. 3 Last call on that. 4 Now let me hear from anyone else that wish to be 5 heard in support of the motion, all the components of the 6 motion. 7 ( No audible response ) 8 Anyone else? 9 ( No audible response ) 10 Okay. Now, -- 11 MR. STEVEN COHEN: Your Honor, just -- I'm sorry. 12 THE COURT: O n the phone, go ahead. 13 MR. STEVEN COHEN: Yeah, Your Honor, Steven Cohen on 14 behalf of Thor, the stalking horse bidder. Just very briefly. 15 I thank Mr. Orantes, and particularly Mr. Jones, for 16 comprehensive and eloquent support of the motion and ( indisc. ) 17 why the objection by Fleet Yards sh ould be rejected. 18 But just to add a fine point to it, my client, Thor, 19 the stalking horse bidder, would not have gone down this path 20 and signed the sale and purchase agreement without the 21 assurance as a condition that the Fleet, whatever interest it 22 had, l ease, sublease, call it what you will, would be rejected 23 as part of the sale order. That's always been our position. 24 That's been the position made clear in the initial motion 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 37 of 100EXCEPTIONAL REPORTING SERVICES, INC 38 seeking approval of the bid procedures order and the sale 1 motion. And Thor sup ports the application and the motion. 2 THE COURT: Okay. Before we have a flood of people 3 responding to that, I want to make clear since I -- I don't 4 want to make sure I didn't add something to the intellectual 5 tsunami that is going on in the courtroom rig ht now. I 6 don't -- I have never seen any provision of the Bankruptcy Code 7 that authorizes extinguishing a lease. 8 Section 365 speaks to a limited power given to 9 trustees and debtors in possession to reject leases. Okay. 10 That's -- those are two -- that's the distinction I was 11 attempting to draw. I have now I think drawn it as clearly as 12 it can be drawn. 13 And now I'll -- finally, with regard to rejection, a 14 debtor in possession or a trustee can only reject a lease in 15 which the estate, i.e. the debtor or th at the estate of the 16 debtor, is a party to with the party who is on the other side 17 of the lease. So if there is a sublease between party A and 18 party B, and party B has a lease with the Debtor, rejection 19 does not reach the lease between A and B. 20 MR. JONES: Your Honor, Evan Jones. If I may jump in 21 here. Mr. Orantes mentioned that we're going to need the 22 bidders, if we get to bidding, to clarify certain provisions of 23 their APAs. 24 And Your Honor has put your finger on exactly one 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 38 of 100EXCEPTIONAL REPORTING SERVICES, INC 39 point we will ask them to clarify. The phrase "extinguish" I 1 agree with Your Honor is not found in the Bankruptcy Code. And 2 I also agree with Your Honor that the Debtor cannot reject a 3 lease that it's not a party to. That was part of my argument. 4 I don't think the Debtor so ught to reject the Fleet Yards 5 lease. 6 But I think what this Court can order and what we 7 will ask the Court to order and what we will ask the bidders to 8 confirm is adequate is this Court can order under Section 9 363(f) that the sale is free and clear of any interest that 10 Fleet Yards holds under that sublease in the property. 11 THE COURT: Please full stop pause. This is reaching 12 ahead again. But -- and perhaps it's best for the second part 13 of the hearing if I grant the motion just to approve the sale. 14 But I a m bound to follow the rulings of the Ninth 15 Circuit, including that in Spanish Peaks . I find Spanish 16 Peaks , it's not factually directly on point but legally it is. 17 So therefore within the context of this motion, a motion to 18 sell free and clear under 363(f ) can be granted so that leases 19 are -- that the property is sold free and clear of any leases. 20 Anyone who has an interest with a sublease in that 21 lease only has whatever interest the lessee has. So therefore 22 it would be free and clear of that interest as well, but 23 through the lease, which is sold -- of which the property is 24 sold free and clear of. I don't think ending with a 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 39 of 100EXCEPTIONAL REPORTING SERVICES, INC 40 preposition but that's the only way I can think of right now. 1 MR. JONES: Your Honor, I will note that when I was 2 preparing my argum ents, when you talk about 363(f), you end up 3 with prepositions at the end far too often. But Your Honor has 4 put your finger -- 5 THE COURT: Yeah. 6 MR. JONES: -- on exactly the point. If the Court 7 decides to proceed with an auction, we will ask the bidders to 8 confirm that such an order would be adequate. 9 THE COURT: Yeah. 10 MR. JONES: We'd ask them to confirm on the record 11 that such an order would be adequate because we don't want to 12 enter an agreement that we can't deliver. And -- 13 THE COURT: Sure. And -- 14 MR. JONES: -- I thank the Court. 15 THE COURT: And, Mr. Cohen, I don't mind you raising 16 that issue right now, so you can think about it. And I'm sure 17 you're all talking about it and having associates research it 18 as we go. But that's -- if I grant the mot ion to approve the 19 sale, that is the conclusion of law I would reach with regards 20 to what I am authorized to do today pursuant to the law. 21 MR. JONES: Your Honor, I -- 22 MR. STEVEN COHEN: I understand, Your Honor. 23 MR. JONES: -- apologize. If I might -- 24 TH E COURT: Let me first hear from Mr. Cohen. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 40 of 100EXCEPTIONAL REPORTING SERVICES, INC 41 MR. JONES: I'm sorry, Your Honor. 1 THE COURT: Go ahead, Mr. Cohen. 2 MR. STEVEN COHEN: I understand, Your Honor. And 3 just I think part of the reason why Mr. Orantes and I, in 4 crafting the purchase and sale agreement, struggled in part and 5 tried to be as inclusive as possible in describing what had to 6 happen with this interest, whatever that interest may be that 7 Fleet has, we want it clear that there's no possessory 8 interest, no occupancy interest, no claims of any nature 9 remaining after the sale -- 10 THE COURT: I am -- 11 MR. STEVEN COHEN: -- as part of the sale -- 12 THE COURT: -- nodding my head yes. Mr. Cohen, I am 13 nodding my head yes. 14 MR. STEVEN COHEN: Okay. 15 THE COURT: Okay. That is -- 16 MR. STEVEN COHEN: A nd that's -- 17 THE COURT: -- how I read -- 18 MR. STEVEN COHEN: Okay. 19 THE COURT: -- 363(f). And since we're throwing 20 around historical -- 21 MR. STEVEN COHEN: Right. 22 THE COURT: -- footnotes, the interesting thing is 23 with the Queen Mary case, Queens Seaport D evelopment, I 24 actually reached that conclusion I think about 15 years before 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 41 of 100EXCEPTIONAL REPORTING SERVICES, INC 42 Spanish Peaks . It was nice to see the Ninth Circuit eventually 1 agreed. 2 But in any event, let's stop there -- 3 MR. STEVEN COHEN: Right. And, Your Honor, if I may 4 ( indisc. ) I would just, if I may, any rights of possession 5 under 365(h) that may exist, those also we would ask to be 6 included in -- 7 THE COURT: Hey. We're going to put -- 8 MR. STEVEN COHEN: -- the order and be -- 9 THE COURT: -- aside scrivening rig ht now, and I'm 10 going to turn to the remainder of the parties who wish to be 11 heard with regards to the motion. Thank you very much. 12 MR. JONES: Thank you, Your Honor. 13 MR. STEVEN COHEN: Thank you, Your Honor. 14 THE COURT: Thank you, Mr. Jones. Thank you, 15 Mr. Cohen. All right. Does anyone else wish to be heard in 16 support of the motion? 17 ( No audible response ) 18 No. Does anyone wish to be heard in opposition to 19 the motion? 20 (Pause) 21 MR. GURULE: Good afternoon, Your Honor , Julian 22 Gurule of Buchalter for Fleet Yards, Inc, Your Honor. 23 THE COURT: Good morning. That clock is five minutes 24 fast. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 42 of 100EXCEPTIONAL REPORTING SERVICES, INC 43 MR. GURULE: Yeah. It's -- oh, okay. 1 THE COURT: It's five minutes fast. 2 MR. GURULE: Good morning. Good morning -- 3 THE COURT: It's okay. 4 MR. GURULE: -- then, Your Honor. Your Honor, so 5 there are a couple of things I like to do when I show up in 6 bankruptcy cases and some things that I don't like to do when I 7 show up in bankruptcy cases. 8 THE COURT: Especially when you didn't sign the 9 papers, huh? 10 MR . GURULE: Yeah. One thing I like to do, which I 11 think I've successfully been able to do in large part thanks to 12 the professionalism of Mr. Jones and his colleagues, is narrow 13 the issues in dispute here. And I think Your Honor saw the 14 stipulation we ente red into so I think we've narrowed the focus 15 of things that we're going to be talking about today. And I 16 appreciate that. 17 And there was a fair amount of back and forth by 18 email, and I think we resolved it to everyone's satisfaction. 19 Hopefully the Court w as able to see that stipulation which I 20 know Your Honor approved. 21 The thing, Your Honor, that I do not like to do when 22 I show up in bankruptcy cases is be the fly in the ointment 23 standing in front of, to mix metaphors, a freight train that's 24 been going ful l steam ahead for years and be the last party 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 43 of 100EXCEPTIONAL REPORTING SERVICES, INC 44 standing -- 1 THE COURT: Oh, I don't know if that's true but okay. 2 MR. GURULE: Standing on front of a sale that, you 3 know, but for me maybe would be everyone holding hands in 4 harmony, which is usually my goal i n bankruptcy cases. 5 So, Your Honor, with that, I'll be brief, Your Honor. 6 Just for the sake of clarity, as I was saying before, I take 7 our stipulation with Hyundai to resolve the notice point raised 8 in our objection so I'm not going -- 9 THE COURT: So you don't want to ask you about the 10 sentence in the opposition which reads quote: "However, the 11 Debtor failed to provide Fleet Yards with notice of the sale 12 and requested relief until five days after the deadline to 13 object to the sale has passed." 14 MR. GURULE: Exactly. 15 THE COURT: That I -- 16 MR. GURULE: Exactly right, Your Honor. 17 THE COURT: I appreciate the courtesy and the 18 cooperation. But I have to tell you before we leave this 19 topic, -- 20 MR. GURULE: Yes, Your Honor. 21 THE COURT: -- that when I read that stipulation and 22 I went back and found and re - read -- I read the objection. 23 When I re - read the objection, that disturbed me. 24 MR. GURULE: Yes, Your Honor. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 44 of 100EXCEPTIONAL REPORTING SERVICES, INC 45 THE COURT: I'll leave it at that. 1 MR. GURULE: Yes, Your Honor. I apprec iate that, 2 Your Honor. 3 THE COURT: Okay. 4 MR. GURULE: And I appreciate like I said the 5 parties. 6 THE COURT: Yeah. 7 MR. GURULE: Yeah. Hopefully resolving -- 8 THE COURT: It's resolved. Go ahead. 9 MR. GURULE: Yeah. Your Honor, what I would like to 10 focus on today is the second aspect of our papers that we filed 11 this week. I get the notice point. I would ask Your Honor, 12 given the enormous detrimental effect that the requested relief 13 would have on Fleet Yards, to consider aside from the notice 14 point all aspe cts of our -- of the objection that we filed this 15 week. But, Your Honor, I'm not -- 16 THE COURT: Oh, I have. No, I -- 17 MR. GURULE: Yeah. And, Your Honor, I'm not -- 18 THE COURT: And you're welcome to address them. 19 MR. GURULE: Yes. And I'm not going to address them 20 today because I think that -- 21 THE COURT: Okay. 22 MR. GURULE: -- in some ways misses what our primary 23 argument is here, Your Honor, and that is the full second, what 24 I think of as a second, issue that we raised in t he brief, Your 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 45 of 100EXCEPTIONAL REPORTING SERVICES, INC 46 Honor, which was a request for adequate protection under 1 Section 363(e) and 361 of the Bankruptcy Code. Your Honor, 2 again, not to belabor the notice point, but as Your Honor 3 knows, a request for adequate protection can be made, according 4 to the statute , -- 5 THE COURT: At any time. 6 MR. GURULE: -- at any time. 7 THE COURT: Sure. 8 MR. GURULE: Your Honor, it could be made on the 9 podium today. It could be made you know, earlier this week. 10 It could have been made frankly, you know, much earlier in this 11 case. At the end of the day, it doesn't matter. 12 Your Honor, we operate transport -- excuse me. My 13 client operates a transport container business on the real 14 property. As I said, it would be substantially detrimental to 15 that -- those operations, of course, if we were to lose 16 possession of it. 17 Section 363 of the Bankruptcy Code, Your Honor, is 18 clear that adequate protection must be provided where there is 19 a proposed sale of real property, including under section -- 20 specifically under Section 363 wh ere the sale's going to be 21 free and clear of interest in the property. And plainly here, 22 Your Honor, Fleet Yards has an interest in the property 23 proposed to be sold. 24 THE COURT: Which property? 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 46 of 100EXCEPTIONAL REPORTING SERVICES, INC 47 MR. GURULE: T h e s a l e p r o p - - 8 2 0 1 - - 1 THE COURT: P l e a s e b e s p e c i f i c . W h a t p r o p e r t y d o e s 2 y o u r c l i e n t h a v e a n i n t e r e s t i n ? 3 MR. GURULE: T h e r e a l p r o p e r t y . 4 THE COURT: R e a l l y ? I t h i n k i t ' s a s u b l e a s e a n d a 5 l e a s e . 6 MR. GURULE: I t ' s a p o s s e s s o r y i n t e r e s t , Your Honor , 7 I ' d s u b m i t . 8 THE COURT: A n d t h e p o s s e s s o r y i n t e r e s t f l o w s t h r o u g h 9 a s u b l e a s e w i t h a l e s s o r , correct ? A l e s s e e / l e s s e e - - a 10 l e s s o r / l e s s e e . 11 MR. GURULE: Y e s . O n e t h i n g - - 12 THE COURT: S u b l e s s o r / l e s s e e . 13 MR. GURULE: Y e a h . Y o u r H o n o r , o n e t h i n g , a s I w a s 14 t h i n k i n g a b o u t t h i s c a s e a n d a n t i c i p a t i n g t h i s p o i n t , Your 15 Honor , o n e t h i n g t h a t i s n o t c l e a r t o m e , a n d b e i n g , y o u k n o w , 16 e s p e c i a l l y r e l a t i v e t o a l l m y c o l l e a g u e s h e r e t o d a y n e w t o t h e 17 c a s e a n d t h e f a c t s , i t ' s n o t c l e a r t o m e n e c e s s a r i l y , I ' d 18 s u b m i t , Your Honor , w h o t h e l e a s e i s w i t h . I k n o w w h a t t h e 19 l e a s e a g r e e m e n t s a y s - - 20 THE COURT: O k a y , l e t m e - - 21 MR. GURULE: - - b u t Your Honor - - 22 THE COURT: I a p o l o g i z e f o r t h e i n t e r r u p t i o n . W h e n 23 y o u s a y " t h e l e a s e a g r e e m e n t , " a r e y o u s p e a k i n g o f t h e o n e t h a t 24 y o u r c l i e n t h a s ? 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 47 of 100EXCEPTIONAL REPORTING SERVICES, INC 48 MR. GURULE: T h a t m y c l i e n t h a s , Your Honor . B u t 1 Your Honor - - 2 THE COURT: W h o i s t h e - - w h a t i s t h e n a m e o n t h e 3 l e a s e a s t h e l e s s o r ? 4 MR. GURULE: C e n t r a l M e t a l s , Your Honor . 5 THE COURT: O k a y . 6 MR. GURULE: Y o u r H o n o r , I o n l y s a y t h a t - - 7 THE COURT: S o i t i s c l e a r . 8 MR. GURULE: - - I t h i n k i t ' s - - I u n d e r s t a n d , Your 9 Honor . 10 THE COURT: O k a y . 11 MR. GURU LE: I o n l y s a y t h a t b e c a u s e , Your Honor , 12 i t ' s n o t c l e a r t o u s t h a t C e n t r a l M e t a l s d o e s a n y t h i n g , i t ' s 13 n o t c l e a r t o u s t h a t t h e r e i s a t r u e l e a s e a t a l l , a n i m p l i c i t 14 l e a s e , o r w h a t e v e r t h e Debtor c a r e s t o c a l l i t , b e t w e e n t h e 15 Debtor , t h e i n d i v i d u a l , a n d C e n t r a l M e t a l s , w h o I d o n ' t k n o w i f 16 i t ' s a D B A o r w h a t . 17 Y o u r H o n o r , I ' d a l s o p o i n t o u t t h a t t h e Debtor ' s o w n 18 S c h e d u l e s s c h e d u l e a s a n u n e x p i r e d l e a s e o f r e a l p r o p e r t y t h e 19 F l e e t Y a r d s l e a s e . 20 S o , Your Honor , I u n d e r s t a n d t h e C o u r t ' s h e s i t a t i o n 21 a n d s k e p t i c i s m . I f r a n k l y s h a r e i t . B u t b e i n g a b o u t l e s s t h a n 22 a w e e k i n t o t h e c a s e I w o u l d b e r e m i s s not t o p r e s e r v e t h e 23 a r g u m e n t t h a t w e m i g h t h a v e a d i r e c t l e a s e u n d e r a p p l i c a b l e 24 l a w - - 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 48 of 100EXCEPTIONAL REPORTING SERVICES, INC 49 THE COURT: O f c o u r s e , 1 MR. GURULE: - - w i t h - - 2 THE COURT: O f c o u r s e . 3 MR. GURULE: - - w i t h t h e Debtor . I t h i n k t h a t i s I ' d 4 s a y a n i s s u e i n d i s p u t e a n d s o m e t h i n g t h a t h a s n ' t b e e n f u l l y 5 e x a m i n e d o r b r i e f e d . I g e t s o r t o f t h e h o u r , Your Honor , 6 l i t e r a l l y a n d f i g u r a t i v e l y , w e a r e i n t h i s c a s e . 7 THE COURT: S o , i f y o u r c l i e n t h a d a l e a s e w i t h t h e 8 Debtor , w h i c h s e e m s t o b e t h e l o g i c a l i n f e r e n c e t o d r a w f r o m 9 t h e a r g u m e n t y o u m a k e - - 10 MR. GURULE: Yes, Your Honor . 11 THE COURT: - - s o t h e n i t c o u l d b e s o l d f r e e a n d 12 c l e a r u n d e r S p a n i s h P e a k s . 13 MR. GURULE: I t h i n k , Your Honor - - 14 THE COURT: T h e p r o p e r t y c o u l d b e s o l d - - 15 MR. GURULE: I t h i n k - - 16 THE COURT: - - f r e e a n d c l e a r o f y o u r l e a s e . 17 MR. GURULE: I t h i n k , Your Honor , a s Mr. J o n e s 18 o u t l i n e d i n h i s r e p o r t , o u t l i n e d e a r l i e r t o d a y , S p a n i s h P e a k s 19 s a y s a n u m b e r o f things . I t h i n k o n e t h i n g t h a t i t c l e a r l y 20 s a y s i s t h a t i n t h e N i n t h C i r c u i t w e ' r e g o i n g t o a p p l y t h e 21 m i n o r i t y v i e w , w h i c h i s f i n e , a n d - - 22 THE COURT: I h a v e n o c h o i c e . 23 MR. GURULE: - - a n d w e h a v e n o c h o i c e a n d i t ' s 24 s e n s i b l e w h e n y o u l o o k a t t h e s t a t u t o r y p r o v i s i o n s t h a t a r e i n 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 49 of 100EXCEPTIONAL REPORTING SERVICES, INC 50 d i s p u t e , t h a t y o u c a n s e l l f r e e a n d c l e a r u n d e r 3 6 3 ( f ) o f 1 l e a s e h o l d r i g h t s a n d t h a t , u n l i k e i n o t h e r C i r c u i t s , o r o t h e r 2 D i s t r i c t s I s h o u l d s a y , S e c t i o n 3 6 5 ( h ) d o e s n o t a f f o r d w h a t I 3 t h i n k o f a s h o l d o v e r r i g h t s t o t h e t e n a n t . 4 TH E COURT: S o e v e n i f - - 5 MR. GURULE: I t i s w h a t i t i s , Your Honor . 6 THE COURT: - - y o u r c l i e n t h a d a l e a s e b e c a u s e t h e r e 7 i s a n a s s e r t i o n i n t h e S c h e d u l e s t h a t t h e l e a s e i s d i r e c t l y 8 w i t h F l e e t , o r e v e n i f y o u h a d e s t a b lis h e d , w h i c h y o u h a v e n ' t 9 o b v i o u s l y , t h a t t h e r e i s a c o n f u s i o n o f i d e n t i t i e s b e t w e e n - - 10 MR. GURULE: Yes, Your Honor . 11 THE COURT: - - t h e Debtor a n d C e n t r a l M e t a l s , y o u 12 s t i l l - - y o u r c l i e n t w o u l d s t i l l b e s u b j e c t t o t h e p o w e r u n d e r 13 3 6 3 ( f ) ? 14 MR. GURULE: I t h i n k t h a t ' s r i g h t , Your Honor . 15 THE COURT : Y e a h - - 16 MR. GURULE: A n d t h a t ' s w h y , Your Honor - - 17 THE COURT: - - I t h i n k s o t o o . 18 MR. GURULE: S p a n i s h P e a k s s a y s w h a t i t s a y s , Your 19 Honor , b u t t h a t i s w h y I s t a r t e d m y p r e s e n t a t i o n t o d a y w i t h t h e 20 f o c u s o n a d e q u a t e p r o t e c t i o n , Your Honor , b e c a u s e S p a n i s h P e a k s 21 s a y s w h a t w e j u s t t a l k e d a b o u t i n t e r m s o f h o w t h o s e t w o 22 s t a t u t o r y p r o v i s i o n s w o r k t o g e t h e r , b u t i n s u p p o r t o f i t s 23 r e a s o n i n g - - e x c u s e m e - - i n s u p p o r t o f i t s h o l d i n g o n t h e 24 3 6 3 ( f ) / 3 6 5 ( h ) i s s u e i t l i s t s r e a s o n s t h a t a t e n a n t , Your Honor , 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 50 of 100EXCEPTIONAL REPORTING SERVICES, INC 51 i s n o t w i t h o u t s o m e p r o t e c t i o n i n a s i t u a t i o n w h e r e t h e 1 p r o p e r t y t h a t i t h a s a n i n t e r e s t i n i s g o i n g t o b e s o l d - - 2 THE COURT: R i g h t - - 3 MR. GURULE: - - f r e e a n d c l e a r . 4 THE COURT: - - i f 3 6 5 a p p l i e d . 5 MR. GURULE: I f - - 6 THE COURT: I f i t applied . 7 MR. GURULE: Y o u r H o n o r , I w o u l d s u b m i t t h a t t h e r e 8 a r e t w o t h i n g s t h a t a d e b t o r w i t h t h e , y o u k n o w , s u p p o r t o f i t s 9 s e c u r e d l e n d e r c a n d o w h e n t h e y ' r e t r y i n g t o l i q u i d a t e a 10 p r o p e r t y w h e r e t h e r e ' s a tenant i n p l a c e . Y o u r H o n o r , t h e y 11 c o u l d s e l l t h e p r o p - - e x c u s e m e - - t h e y c o u l d r e j e c t t h e 12 l e a s e , l i k e w e ' v e t a l k e d a b o u t , I d o n ' t k n o w w h a t e x t i n g u i s h a 13 l e a s e m e a n s , either t h e y c o u l d r e j e c t t h e l e a s e , w h i c h c l e a r l y 14 u n d e r S p a n i s h P e a k s o r o t h e r w i s e t h e B ankruptcy C o d e p r o v i d e s 15 a t 3 6 5 ( h ) p r o v i d e s t h e m w i t h h o l d o v e r r i g h t s , t h a t i s m y 16 u n d e r s t a n d i n g i s n o t w h a t ' s h a p p e n i n g h e r e , o r , Your Honor , t h e 17 d ebtor a n d t h e s e c u r e d l e n d e r c a n s i d e s t e p t h e i s s u e o f 18 S e c t i o n 3 6 5 ( h ) i n t h e N i n t h C i r c u i t a n d a t t e m p t t o s e l l t h e 19 p r o p e r t y f r e e a n d c l e a r o f l e a s e h o l d interests , Your Honor . 20 A n d t h a t i s f i n e . U n d e r S p a n i s h P e a k s , 3 6 5 ( h ) d o e s n o t p r o t e c t 21 a t e n a n t l i k e m y c l i e n t . T h a t ' s b i n d i n g a u t h o r i t y . 22 THE COURT: Y e a h . 23 MR. GURULE: W e b r i e f e d , Your Honor , I k n o w y o u r e a d 24 t h e b r i e f , I t h i n k w e h a v e f a c t s t h a t a r e d i s t i n c t f r o m i t , I ' m 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 51 of 100EXCEPTIONAL REPORTING SERVICES, INC 52 n o t g o i n g t o b e l a b o r t h a t , i n S p a n i s h P e a k s . 1 B u t w h a t - - i n t h a t s e c o n d o p t i o n , w h e r e t h e y ' r e 2 a t t e m p t i n g t o s e l l f r e e a n d c l e a r u n d e r 3 6 3 ( f ) , w h a t i t d o e s 3 a f f o r d u n d e r S p a n i s h P e a k s , w h a t t h e N i n t h C i r c u i t S p a n i s h 4 P e a k s c a s e d o e s a f f o r d u s a r e a r i g h t t o a d e q u a t e p r o t e c t i o n . 5 O u r p r o p o s e d f o r m o f a d e q u a t e p r o t e c t i o n , Your Honor , y o u s a w 6 i n t h e p a p e r s , i s c o n t i n u e d p o s s e s s i o n i n a c c o r d a n c e w i t h t h e 7 t e r m s o f t h e l e a s e . T h a t ' s w h a t o t h e r C o u r t s c o n f r o n t e d w i t h 8 s o m e w h a t s i m i l a r f a c t s h a v e o r d e r e d a s a d e q u a t e p r o t e c t i o n . 9 B u t , Your Honor , i t c o u l d b e , a s Your Honor k n o w s , u n d e r 3 6 1 10 a n d t h e c a s e l a w i n t e r p r e t i n g i t , i t ' s c a s e - b y - c a s e a n d 11 f a s h i o n i n g a f o r m o f a d e q u a t e p r o t e c t i o n t h a t w o u l d p r o t e c t t h e 12 v a l u e o f t h a t p o s s e s s o r y i n t e r e s t , i t c o u l d b e p r o v i d e d i n a 13 n u m b e r o f w a y s . P o s s e s s i o n w o u l d b e o u r p r e f e r r e d m e a n s o f 14 p r o t e c t i n g t h a t i n t e r e s t , Your Honor . 15 THE COURT: O k a y . T h a n k y o u v e r y m u c h . 16 MR. GURULE: Y o u r H o n o r , t h e - - j u s t c o n s u l t i n g m y 17 n o t e s , Your Honor . 18 THE COURT: S u r e . 19 MR. GURULE: Y o u r H o n o r , I t h i n k o n e l a s t p o i n t , 20 a g a i n t o n o t b e l a b o r t h e f r e i g h t t r a i n a n a l o g y h e r e , I g e t t h a t 21 e v e r y o n e w a n t s t o c l o s e t h i s b y t h e e n d o f t h e y e a r . Y o u r 22 H o n o r , I t h i n k g i v e n t h a t w e ' r e c e r t a i n l y h a v i n g d i v e r g e n t 23 v i e w s o f w h a t t h e f i n a l p a g e o f S p a n i s h P e a k s s a y s w i t h t h e 24 S e c u r e d L e n d e r , a n d I t h i n k i t ' s s o m e t h i n g o f a n o p e n i s s u e i n 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 52 of 100EXCEPTIONAL REPORTING SERVICES, INC 53 t h e N i n t h C i r c u i t , I w o u l d s a y w a i v e r o f t h e 1 4 - d a y s t a y 1 p r o v i d e d f o r u n d e r t h e B ankruptcy R u l e s i s n o t a p p r o p r i a t e , 2 Your Honor . A n d t h a t i s o n a s t a n d a l o n e b a s i s w i t h t h e r e q u e s t 3 f o r a d e q u a t e p r o t e c t i o n , w h i c h would b e i m p a c t e d b y t h e s a l e . 4 THE COURT: S o w h e n d i d y o u r c l i e n t f i r s t k n o w t h a t 5 t h e Debtor w a n t e d t o s e l l t h e p r o p e r t y a n d s t a r t e d e n g a g i n g i n 6 n e g o t i a t i o n s t o s e l l t h e p r o p e r t y a n d a t t e m p t e d t o b u y t h e 7 p r o p er t y ? 8 MR. GURULE: Y o u r H o n o r , I c o u l d n o t t e l l y o u w i t h 9 c o n f i d e n c e a d a t e o r s o m e t h i n g a p p r o a c h i n g - - 10 THE COURT: I s e e . 11 MR. GURULE: - - a f i r m d a t e , Your Honor . 12 THE COURT: M o n t h s ? W e e k s ? Y e a r s ? 13 MR. GURULE: Y o u r H o n o r , Debtor ' s c o u n s e l s u b m i t t e d a 14 d e c l a r a t i o n . I , Your Honor , c a n d i d l y h a v e n o r e a s o n t o d i s p u t e 15 t h e - - 16 THE COURT: O k a y . 17 MR. GURULE: - - e m a i l s , f o r e x a m p l e , a t t a c h e d t o i t . 18 THE COURT: S o f o r a v e r y , v e r y l o n g t i m e ? 19 MR. GURULE: C e r t a i n l y a w a r e o f t h e bankruptcy 20 c a s e - - 21 THE COURT: Y e a h . 22 MR. GURULE: - - y e s , Your Honor . 23 THE COURT: A n d a t t e m p t s t o p u r c h a s e t h e p r o p e r t y . 24 MR. GURULE: Yes, Your Honor . 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 53 of 100EXCEPTIONAL REPORTING SERVICES, INC 54 THE CO URT: T h a n k s . 1 MR. GURULE: T h a n k y o u , Your Honor . 2 THE COURT: Y o u ' r e w e l c o m e . 3 O k a y , p l e a s e b e s e a t e d , Mr. J o n e s . 4 MR. JONES: Yes, Your Honor . 5 THE COURT: A l l r i g h t . I s t h e r e a n y b o d y e l s e w h o 6 w i s h e s t o b e h e a r d i n o p p o s i t i o n t o t h e m o t i o n ? 7 ( N o a u d i b l e r e s p o n s e ) 8 N o . A l l r i g h t , Mr. Orantes , d o y o u w i s h t o m a k e a 9 r e p l y ? 10 MR. ORA NTES: Yes, Your Honor , i f I m a y . I ' l l t r y 11 n o t t o r e p e a t t h e a r g u m e n t s i n m y w r i t t e n r e p l y , b u t - - 12 THE COURT: T h a n k y o u . 13 MR. ORANTES: - - a s c o u n s e l i n d i c a t e d , I t h i n k t h a t 14 F l e e t Y a r d s i s r e a l l y a t t h i s p o i n t i s f o c u s i n g o n t h e a d e q u a t e 15 p r o t e c t i o n a s p e c t , w h i c h , a s t h e C o u r t a g r e e d , c o u l d b e m a d e a t 16 a n y t i m e . 17 W i t h r e s p e c t t o S e c t i o n s 3 6 3 ( e ) a n d 3 6 5 ( h ) , w i t h 18 r e s p e c t t o 3 6 5 ( h ) t h e y d o n ' t h a v e a l e a s e w i t h t h e Debtor h e r e 19 s o , a s I p o i n t e d o u t i n m y p a p e r s , i t d o e s n ' t a p p l y t o t h e 20 f a c t s a t i s s u e . A n d w i t h r e s p e c t t o 3 6 3 ( e ) , F l e e t Y a r d s i s 21 a r g u i n g t h a t i t s h o u l d r e c e i v e c o n t i n u e d p o s s e s s i o n o f t h e 22 p r o p e r t y . I f F l e e t Y a r d s i s a l l o w e d t o r e m a i n i n p o s s e s s i o n o f 23 t h i s p r o p e r t y , i t w o u l d c o m p l e t e l y , y o u k n o w , b l o c k t h i s 24 t r a n s a c t i o n . T h i s t r a n s a c t i o n i s r e s u l t i n g i n p a y m e n t o f t h e 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 54 of 100EXCEPTIONAL REPORTING SERVICES, INC 55 m a j o r , o f t h e b i g g e s t c r e d i t o r o f t h e e s t a t e , a s w e l l a s 1 p r o b a b l y s a t i s f a c t i o n o f o t h e r j u n i o r l i e n s , a n d i s t h e b i g g e s t 2 o p p o r t u n i t y f o r t h e e s t a t e f o r a l l t h e c r e d i t o r s i n e s t a t e t o 3 g e t p a i d , i n c l u d i n g e v e n s o m e u n s e c u r e d s , a l t h o u g h t h e r e a r e n ' t 4 m a n y i n t h i s c a s e , a n d i t w o u l d j u s t n o t b e c o n s i s t e n t w i t h t h e 5 g o a l s o f bankruptcy t o n o t a l l o w t h i s t r a n s a c t i o n t o h a p p e n . 6 I n t e r m s o f w h e t h e r t h e y a r e a l l o w e d t o c o n t i n u e i n 7 p o s s e s s i o n a s s o m e s o r t o f a d e q u a t e p r o t e c t i o n , a s I i n d i c a t e d 8 i n m y p a p e r s t h e y c i t e a c a s e c a l l e d D i s h i & S o n s v . B a y 9 C o n d o s L L C a t 5 1 0 B . R . 6 9 6 , w h i c h s t a t e d t h a t a b s e n t a n y 10 a u t h o r i t y t o t h e c o n t r a r y t h e C o u r t m u s t f o l l o w t h e p l a i n 11 l a n g u a g e o f t h e C o d e , w h i c h r e q u i r e s t h e B ankruptcy C o u r t t o 12 p r o v i d e a d e q u a t e p r o t e c t i o n , w h i c h m a y i n c l u d e t h e i n d u b i t a b l e 13 e q u i v a l e n t o f t h e i n t e r e s t , n a m e l y , c o n t i n u e d p o s s e s s i o n . 14 H o w e v e r , t h e D i s t r i c t C o u r t i s from t h e S e c o n d C i r c u i t , i t ' s 15 n o t a N i n t h C i r c u i t C o u r t , a n d i t d o e s n o t h a v e S p a n i s h P e a k s 16 a s t h e b i n d i n g a u t h o r i t y . A n d S p a n i s h P e a k s i s a l l o w i n g the 17 s a l e o f t h e p r o p e r t y f r e e a n d c l e a r o f l i e n s o n a c c o u n t o f t h e 18 f a c t t h a t a f o r e c l o s u r e w o u l d w i p e t h e m o u t a n d t h e C o u r t t h a t 19 t h e y ' r e c i t i n g d o e s n o t h a v e t h a t b i n d i n g a u t h o r i t y a s a 20 b a c k g r o u n d o r d o e s n o t r u l e a l o n g t h o s e l i n e s . 21 S o , i f t h e s e c u r e d c r e d i t o r h e r e , H y u n d a i , w a s t o 22 f o r e c l o s e o n t h e p r o p e r t y , t h e r e ' s n o q u e s t i o n t h a t , a s I 23 i n d i c a t e d i n m y m o t i o n , t h a t F l e e t Y a r d s w o u l d l o s e i t s l e a s e 24 a n d i t w o u l d j u s t h a v e t o a t t h a t p o i n t f i g h t i t s h o l d o v e r 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 55 of 100EXCEPTIONAL REPORTING SERVICES, INC 56 r i g h t s i n a l a w f u l d e t a i n e r c o u r t a n d i t w o u l d j u s t b e a m a t t e r 1 o f t i m e b e f o r e i t g e t s - - i t g e t s v a c a t e d b e c a u s e t h e l i e n o f 2 H y u n d a i i s f a r a h e a d i n p r i o r i t y , i t w a s e n t e r e d i n t o i n 2 0 0 5 , 3 w h e r e a s t h i s l e a s e w a s e n t e r e d i n t o r i g h t b e f o r e t h e 4 f o r e c l o s u r e - - I ' m s o r r y - - t h e bankruptcy w a s f i l e d i n t h i s 5 c a s e . T h e d a t e o f t h e l e a s e i s a s o f A u g u s t 5 t h , w h i c h i s n i n e 6 d a y s p r i o r t o t h e f i l i n g o f t h e p e t i t i o n i n t h i s c a s e . T h i s 7 l e a s e w o u l d b e a v o i d a b l e i f w e f i l e d a n a d v e r s a r y p r o c e e d i n g t o 8 a v o i d i t u n d e r 5 4 7 a s a p r e f e r e n c e o r u n d e r 5 4 4 o r a n y o t h e r 9 a v o i d a n c e s t a t u t e o f t h e B ankruptcy C o d e . 10 I n l i g h t o f t h e p o w e r b y t h e Debtor - in - Possession , I 11 t h i n k t h a t t h e i n d u b i t a b l e e q u i v a l e n t o f w h a t e v e r i n t e r e s t 12 F l e e t Y a r d s h a s , a n d a g a i n , a s I p o i n t e d o u t , t h e i n t e r e s t t h a t 13 F l e e t Y a r d s h a s i s a n i n t e r e s t i n t h e l e a s e o f i t s l e s s o r , 14 w h i c h i s C e n t r a l M e t a l I n c . , a n d F l e e t Y a r d s h a s n o t d e n i e d 15 t h a t i t s l e s s o r i s C e n t r a l M e t a l I n c . F i l e d a D e c l a r a t i o n b y 16 Mr. V a n N o t t i n g (phonetic) , a t t a c h i n g t h e l e a s e a g r e e m e n t a n d 17 t h a t n a m e i s r e p e a t e d n u m e r o u s t i m e s . T h e y n e v e r r e q u e s t e d a n y 18 s i g n a t u r e b y Mr. B y u n i n h i s p e r s o n a l c a p a c i t y . A n d i f t h e y 19 h a d a n y q u e s t i o n w i t h r e s p e c t t o t h e a u t h o r i t y o f C e n t r a l M e t a l 20 I n c . t o e n t e r i n t o a l e a s e a g r e e m e n t , a s C a l i f o r n i a l a w 21 i n d i c a t e s , i t i s t h e d u t y o f t h e p e r s o n c o n t r a c t i n g f o r a 22 s u b l e a s e t o a s c e r t a i n t h e p o s i t i o n s o f t h e o r i g i n a l l e a s e a n d a 23 s u b t e n a n t i s c h a r g e d w i t h n o t i c e o f t h e e x i s t e n c e o f t h e 24 o r i g i n a l l e a s e a n d i s b o u n d b y i t s t e r m s a n d c o n d i t i o n s . S o 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 56 of 100EXCEPTIONAL REPORTING SERVICES, INC 57 t h e y s h o u l d n o t n o w t r y t o h a v e r i g h t s s u p e r i o r t o t h o s e t o 1 w h i c h F l e e t Y a r d s c o n t r a c t e d . 2 S o t o t h e e x t e n t t h a t F l e e t Y a r d s w o u l d b e p u t o u t o f 3 p o s s e s s i o n b y f o r e c l o s u r e , w h i c h i s t h e p r e d i c a t e h e r e l a r g e l y 4 f o r t h e s a l e w i t h i n t h e bankruptcy c o n t e x t . T o t h e e x t e n t t h a t 5 F l e e t Y a r d s o n l y h a s a n i n t e r e s t i n t h e l e a s e , n o t i n t h e 6 p r o p e r t y , I b e l i e v e t h a t t h e i n d u b i t a b l e e q u i v a l e n t t o i t s 7 i n t e r e s t i s n o t p o s s e s s i o n f o r a n o t h e r f o u r y e a r s . A s 8 i n d i c a t e d i n m y p a p e r s , s u b j e c t t o t h e C o u r t ' s a p p r o v a l a n d 9 o t h e r p a r t i e s ' a p p r o v a l , I t h i n k p e r h a p s a l l o w i n g F l e e t Y a r d s 10 t i m e t o m o v e o u t o r d e r l y , a s i t w o u l d - - p e r h a p s a s i t w o u l d 11 a c c o m p l i s h i f a d e f e n d a n t i n a l a w f u l d e t a i n e r l a w s u i t m i g h t b e 12 a d e q u a t e p r o t e c t i o n i n t h i s s i t u a t i o n . B u t a g a i n , o t h e r 13 p a r t i e s m i g h t d i f f e r . 14 T h e c o n t r a c t f o r s a l e o f t h i s p r o p e r t y r e q u i r e s t h e 15 Debtor t o h a v e t h e a p p r o v a l o f b o t h H y u n d a i a s w e l l a s t h e 16 p u r c h a s e r , T h o r , w i t h r e s p e c t t o t h e p o i n t s t h a t i t m a k e s i n 17 i t s m o t i o n , s o I d e f e r t o t h e i r r i g h t s w i t h r e s p e c t t o t h e 18 s p e c i f i c a d e q u a t e p r o t e c t i o n . 19 I n a d d i t i o n t o t h a t , I t h i n k a f t e r w e a d j o u r n w e 20 m i g h t b e a b l e t o r e a c h s o m e d e a l w i t h F l e e t Y a r d s w i t h r e s p e c t 21 t o a n y a d e q u a t e p r o t e c t i o n i t ' s e n t i t l e d t o . B u t u n d e r t h e l a w 22 a s i t s t a n d s I b e l i e v e t h a t t h e a d e q u a t e p r o t e c t i o n t h e y s h o u l d 23 g e t i s pro bably a c o u p l e o f m o n t h s t o m o v e o u t , s u b j e c t t o w h a t 24 t h e C o u r t m i g h t d e c i d e a n d o t h e r p a r t i e s m i g h t s a y . 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 57 of 100EXCEPTIONAL REPORTING SERVICES, INC 58 THE COURT: A r e y o u d o n e , Mr. Orantes ? 1 MR. ORANTES: T h a n k y o u , Your Honor . W e a r e d o n e , 2 t h a n k you . 3 THE COURT: O k a y . I t ' s q u i t e u n u s u a l t o h a v e a n y o n e 4 b u t t h e m o v i n g p a r t y r e p l y , Mr. J o n e s . I s i t a b s o l u t e l y 5 n e c e s s a r y ? 6 MR. JONES: Y o u r H o n o r w i l l t e l l m e i f i t i s , a n d 7 I ' l l b e v e r y b r i e f . Y o u r H o n o r , E v a n J o n e s o n b e h a l f o f 8 H y u n d a i . 9 Y o u r H o n o r , a s J u s t i c e H o l m e s o b s e r v e d , s a y i n g 10 s o m e o n e i s a f i d u c i a r y i s j u s t t h e s t a r t o f t h e i n q u i r y . 11 S a y i n g t h a t F l e e t Y a r d s i s e n t i t l e d t o a d e q u a t e p r o t e c t i o n i s 12 t h e s t a r t o f t h e i n q u i r y . T h e q u e s t i o n i s w h a t i s a d e q u a t e 13 p r o t e c t i o n f o r t h e i r i n t e r e s t . 14 A n d , Your Honor , f r e q u e n t l y a d e q u a t e p r o t e c t i o n i s 15 n o t h i n g . J u n i o r l i e n h o l d e r s w h o a r e w i p e d o u t i n a s a l e g e t 16 n o t h i n g . S i m i l a r l y , t h e e n t i r e r a t i o n a l e o f S p a n i s h P e a k s s a y s 17 F l e e t Y a r d s g e t s n o t h i n g h e r e . 18 S p a n i s h P e a k s t u r n s o n t h e u n d i s p u t e d p o i n t o f l a w 19 t h a t a f o r e c l o s u r e b y H y u n d a i w o u l d w i p e Fleet Yar ds o u t . T h e y 20 w o u l d g e t n o t h i n g . T h e r e i s n o c a s e , a n d I ' v e r e a d a l o t o f 21 t h e m , Your Honor , w h e r e a C o u r t f i n d s t h a t a d e q u a t e p r o t e c t i o n 22 d e m a n d s m o r e t h a n a n i n t e r e s t h o l d e r w o u l d g e t o u t s i d e o f t h i s 23 C o u r t , o u t s i d e o f bankruptcy . O u t s i d e o f t h i s C o u r t Fl eet 24 Yards i s w i p e d o u t . 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 58 of 100EXCEPTIONAL REPORTING SERVICES, INC 59 A n d t h e r e f o r e , a n d I h e s i t a t e t o d i s a g r e e w i t h 1 Mr. Orantes , b u t Mr. Orantes i s w r o n g , t h e y ' r e n o t e n t i t l e d t o 2 s t a y i n p o s s e s s i o n f o r s o m e t i m e p e r i o d . T h e y n e e d t o l e a v e a s 3 s o o n a s t h e o r d e r i s e n t e r e d . T h e o r d e r s h o u l d s a y t h a t i t i s 4 f r e e a n d c l e a r o f t h e i r i n t e r e s t , a n d t h e y ' r e n o t e n t i t l e d t o 5 a n y t h i n g a s a d e q u a t e p r o t e c t i o n , b e c a u s e t h a t ' s w h a t t h e y w o u l d 6 g e t o u t s i d e o f t h i s C o u r t . T h e i r s t a t e l a w r i g h t s d o n o t 7 entitle t h e m t o s t a y i n p o s s e s s i o n . T h e y s h o u l d n o t r e c e i v e 8 m o r e t h a n t h a t . 9 A n d f i n a l l y , Your Honor , I w o u l d n o t e t h e a r g u m e n t 10 t h a t t h e i r a d e q u a t e p r o t e c t i o n s h o u l d b e t h e y g e t t o s t a y i n 11 t h e p r o p e r t y f o r t h e r e m a i n d e r o f t h e i r l e a s e w o u l d m a k e a 12 m o c k e r y o f S p a n i s h P e a k s . A r e w e r e a l l y t o b e l i e v e t h a t t h o s e 13 t h r e e J u d g e s o n t h e N i n t h C i r c u i t , w h o b y t h e w a y , Your H onor , 14 i n c l u d e P r o f e s s o r F l e t c h e r w h o t a u g h t m e f e d e r a l c o u r t s a l o n g 15 t i m e a g o , h e ' s a r e a l l y s m a r t j u d g e , a r e w e r e a l l y t o 16 b e l i e v e - - 17 THE COURT: O h , e v e r y o n e i n t h e N i n t h C i r c u i t i s v e r y 18 s m a r t . 19 ( L a u g h t e r ) 20 MR. JONES: A s a r e a l l t h e c h i l d r e n i n L a k e W o b e g o n , 21 Your Honor . 22 ( L a u g h t e r ) 23 THE COURT: O h , t h a t ' s a b a d , t h a t ' s a b a d r e f e r e n c e 24 t o m a k e , I t h i n k . B u t i n a n y e v e n t , w h y d o n ' t y o u c o m e t o t h e 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 59 of 100EXCEPTIONAL REPORTING SERVICES, INC 60 c o n c l u s i o n . 1 MR. JONES: Yes, Your Honor . 2 I f t h a t p a n e l r e a l l y w a n t e d t o s a y t h a t t h e 3 l e a s e h o l d e r t h e r e , w h o b y t h e w a y h a d a d i r e c t l e a s e f r o m t h e 4 d e b t o r , g o t t o s t a y i n p o s s e s s i o n f o r t h e r e m a i n d e r o f i t s 5 l e a s e a s a m a t t e r o f a d e q u a t e p r o t e c t i o n , w h y i n t h e w o r l d 6 d i d n ' t t h e y h i n t a t t h a t ? 7 Y o u r H o n o r , t h e l a w i s n o t a n a s s . T h e y a r e n o t 8 e n t i t l e d t o a n y t h i n g b y w a y o f a d e q u a t e p r o t e c t i o n . T h e y h a v e 9 a l e g a l r i g h t t o a d e q u a t e p r o t e c t i o n , b u t w h a t i s a d e q u a t e 10 p r o t e c t i o n s h o u l d b e d e t e r m i n e d b y a p p l i c a b l e n o n - b a n k r u p t c y 11 l a w a n d t h e y ' r e e n t i t l e d t o n o t h i n g . 12 T h a n k y o u , Your Honor . 13 THE COURT: T h a n k y o u v e r y m u c h . 14 O k a y , t h a t c l o s e s o r a l a r g u m e n t . 15 S o l e t m e b e g i n f i r s t w i t h t h i s i s a m o t i o n t h a t i s 16 b r o u g h t w i t h i n t h e p r o c e d u r a l c o n t e x t o f a prior m o t i o n s e t t i n g 17 t h e p a r a m e t e r s o f s a l e s p r o c e d u r e s . I t h i n k i t ' s i m p o r t a n t t o 18 n o t e f o r t h e r e c o r d t h a t t h e Debtor - in - Possession h a d f i l e d a 19 m o t i o n b e f o r e t h a t t o a p p r o v e s a l e s p r o c e d u r e s w h i c h I 20 r e j e c t e d . A n d a s a r e s u l t , t h e Debtor r e f a s h i o n e d t h e m o t i o n , 21 d e a l t w i t h i t s p r i n c i p a l c r e d i t o r a n d i t s o t h e r c r e d i t o r s t o 22 c o m e u p w i t h a r e a s o n a b l e a n d a p p r o p r i a t e s e t o f s a l e s 23 p r o c e d u r e s , w h i c h h a v e b e e n a p p r o v e d a n d n o o n e o b j e c t e d a n d n o 24 o n e ' s a p p e a l e d . 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 60 of 100EXCEPTIONAL REPORTING SERVICES, INC 61 B u t I t h i n k i t ' s i m p o r t a n t t o n o t e a s a p r e l i m i n a r y 1 o r b e g i n n i n g f i n d i n g t h a t t h o s e h a v e b e e n c o m p l i e d w i t h . T h e 2 s a l e s p r o c e d u r e s M o t i o n a n d O r d e r h a s b e e n c o m p l i e d w i t h . 3 N u m b e r o n e . 4 N u m b e r t w o , a f u n d a m e n t a l a s p e c t o f t h e r e l i e f s o u g h t 5 b y t h e Debtor - in - Possession i s t h a t t h e p r o p o s e d p r o p e r t y b e 6 s o l d f r e e a n d c l e a r o f c l a i m s a n d i n t e r e s t u n d e r 3 6 3 ( f ) . T h e r e 7 a r e v a r i o u s s u b s e c t i o n s u n d e r 3 6 3 ( f ) w h i c h a r e a v a i l a b l e t o t h e 8 Debtor - in - Possession t o e s t a b l i s h b y - - h a s t h e b u r d e n o f 9 e s t a b l i s h i n g b y a d m i s s i b l e e v i d e n c e b y a p r e p o n d e r a n c e o f t h e 10 e v i d e n c e . F o r a l l t h e c r e d i t o r s a n d p a r t i e s - i n - i n t e r e s t w h o 11 a r e e n t i t l e d t o p r o t e c t i o n u n d e r 3 6 3 ( f ) , t h a t h a s b e e n 12 e s t a b l i s h e d a t l e a s t b y c o n s e n t , a n d a l s o b y w a y o f b o n a f i d e 13 d i s p u t e a s t o s o m e , a n d a l s o w i t h r e g a r d s t o w h a t w o u l d h a p p e n 14 i n a n o n - b a n k r u p t c y l a w s e t t i n g . S o 3 6 3 ( f ) t o e v e r y c r e d i t o r 15 a n d p a r t y - i n - i n t e r e s t t o w h o m t h a t w o u l d a p p l y a n d w h o w o u l d b e 16 e n t i t l e d t o t h e p r o t e c t i o n s o f t h e s u b s e c t i o n s u n d e r 3 6 3 ( f ) , 17 t h a t ' s b e e n m e t . 18 S o n o w w e c o m e t o t h e o b j e c t i o n o f F l e e t . F i r s t , 19 F l e e t d o e s n o t h a v e a n i n t e r e s t i n p r o p e r t y o f t h e e s t a t e . I t 20 h a s a n i n t e r e s t i n a l e a s e a n d t h e l e s s o r u n d e r t h a t l e a s e i s a 21 l e s s e e w i t h t h e Debtor , w h o i s t h e m a s t e r l e s s o r . S o I t h i n k 22 i t i s i m p o r t a n t t o l a y o u t t h a t t e n u o u s n e s s b e c a u s e t h a t 23 e s t a b l i s h e s t h a t F l e e t i s n o t a p a r t y t h a t w o u l d b e e n t i t l e d t o 24 a n y f o r m o f p r o t e c t i o n vis - à - vis v a r i o u s p r o v i s i o n s , a n d I ' l l 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 61 of 100EXCEPTIONAL REPORTING SERVICES, INC 62 g o t h r o u g h t h e m o n e a t a t i m e . 1 S o f i r s t o f a l l w i t h r e g a r d s t o p r o t e c t i o n s u n d e r 2 3 6 5 , F l e e t d o e s n ' t h a v e a l e a s e w i t h t h e Debtor . S o t h a t ' s - - 3 I t h i n k t h a t ' s a s l a m d u n k . T h a t ' s i t . T h e r e ' s n o t h i n g e l s e 4 r e a l l y t o d i s c u s s . I ' v e b e e n g i v e n n o e v i d e n c e t h a t t h e r e i s 5 a n y - - t h a t t h i s i s a d i s g u i s e d t r a n s a c t i o n a n d i t ' s r e a l l y a 6 l e a s e w i t h t h e Debtor . N o t h i n g w h a t s o e v e r . A n d t h i s i s a 7 p a r t y F l e e t h a s k n o w n a b o u t , o b v i o u s l y k n o w s a b o u t its 8 s u b l e a s e , r i g h t , s i n c e t h e c o m m e n c e m e n t o f t h e s u b l e a s e f r o m 9 b e f o r e , a n d a l s o h a s k n o w n a b o u t t h e s a l e f o r a v e r y l o n g t i m e 10 a n d i t ' s p r e t t y o b v i o u s t o m e t h a t F l e e t i s j u s t t r y i n g t o 11 i n s e r t a w r e n c h i n t o t h e w h e e l s o f t h i s m o t i o n . 12 T h e r e ' s n o t h i n g w r o n g w i t h o p p o s i n g a m o t i o n . I ' v e 13 de nied l o t s o f m o t i o n s . I d e n i e d t h e s a l e s p r o c e d u r e m o t i o n 14 t h a t p r e c e d e d t h e o n e t h a t s e t u p t h e s a l e b e c a u s e i t w a s 15 i n a p p r o p r i a t e , n o t r e a s o n a b l e . B u t s o m e t i m e s p a r t i e s t h r o w 16 w r e n c h e s i n t o w h e e l s a n d s a l e s t o t r y t o g e t s o m e t h i n g o u t o f 17 t h e p r o c e s s . A n d t o b e f r a n k , t h a t ' s h o w t h i s a p p e a r s t o m e . 18 R e t u r n i n g t o t h e l a w , u n d e r 3 6 3 ( f ) I f i n d t h a t t h e - - 19 a n d t h i s i s p u r s u a n t t o S p a n i s h P e a k s a n d I ' m b o u n d b y t h e 20 r u l i n g i n S p a n i s h P e a k s , a n d f r a n k l y i n d e p e n d e n t o f t h a t I 21 a g r e e d w i t h i t b e f o r e S p a n i s h P e a k s g o t d e c i d e d , i t i s p o s s i b l e 22 u n d e r t h e l a n g u a g e o f t h e s t a t u t e u n d e r 3 6 3 ( f ) , w h i c h a s a 23 T r i a l C o u r t I g i v e e v e n g r e a t e r o b e i s a n c e t h a n t h e d e c i s i o n s o f 24 t h e N i n t h C i r c u i t , o r t h e S u p r e m e C o u r t f o r t h a t m a t t e r . T h e 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 62 of 100EXCEPTIONAL REPORTING SERVICES, INC 63 s t a t u t e m a k e s i t available a s a r e m e d y t o s e l l f r e e a n d c l e a r 1 o f a l e a s e i n t e r e s t o r a s u b l e a s e t h a t i s s u b s u m e d w i t h i n a 2 l e a s e i n t e r e s t b e c a u s e t h a t ' s h o w b r o a d l y t h a t l a n g u a g e i s 3 w r i t t e n . 4 S o f i r s t o f a l l , t h e Debtor h a s t h e p o w e r t o s e l l 5 u n d e r 3 6 3 ( f ) a n d f r e e a n d c l e a r o f i n t e r e s t s . W i t h r e g a r d s t o 6 F l e e t , c l e a r l y i t s i n t e r e s t i s i n , t o t h e e x t e n t i t a s s e r t s a n 7 i n t e r e s t i n t h e p r o p e r t y o f t h e e s t a t e , w h i c h i t d o e s n ' t h a v e , 8 i t ' s i n b o n a f i d e d i s p u t e . N e x t , i t w o u l d b e l o s t i n a 9 f o r e c l o s u r e s a l e , t h a t i n t e r e s t w o u l d d i s a p p e a r . S o t h e o n e 10 p a r t y w h o d o e s n o t c o n s e n t t o t h e s a l e , w h o I d o n ' t b e l i e v e 11 e v e n i s e n t i t l e d t o a s s e r t a n i n t e r e s t t h a t w o u l d b e p r o t e c t e d 12 u n d e r 3 6 3 ( f ) , i t w o u l d s t i l l l o s e u n d e r 3 6 3 ( f ) e v e n i f i t d i d 13 h a v e s u c h a n i n t e r e s t . 14 L e t ' s s e e , e x t i n g u i s h i n g l e a s e s . I h a v e n o t 15 e x t i n g u i s h e d a l e a s e b e c a u s e I d o n ' t k n o w w h a t t h a t m e a n s . I 16 t h i n k i t ' s p r e t t y c l e a r e v e n i f r e j e c t i o n w e r e a t i s s u e h e r e , 17 a n d I ' m n o t a w a r e o f a n y - - t h e r e ' s s o r t o f a b l a n k e t s t a t e m e n t 18 m a d e i n t h e m o t i o n a b o u t r e j e c t i n g a n y l e a s e s o r e x e c u t o r y 19 c o n t r a c t s t h a t e x i s t w i t h o u t l i s t i n g a n y , w h i c h i s n o t a g o o d 20 w a y t o a c c o m p l i s h r e j e c t i o n u n d e r 3 6 5 . I ' m n o t a w a r e t h e r e a r e 21 a n y . I f there are a n y , I s t i l l w o u l d - - i t a p p e a r s t o m e t h a t 22 r e j e c t i o n w o u l d b e a p p r o p r i a t e b e c a u s e i t w o u l d b e w i t h i n t h e 23 b u s i n e s s j u d g m e n t o f t h e Debtor - in - Possession t o d o s o . B u t 24 I ' m n o t a w a r e o f a n y . I f t h e r e w e r e t h o u g h , i t w o u l d b e 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 63 of 100EXCEPTIONAL REPORTING SERVICES, INC 64 a p p r o p r i a t e . 1 L e t ' s s e e , w i t h r e g a r d s t o a u t h o r i z i n g p a y m e n t 2 d i r e c t l y o u t o f e s c r o w , Mr. Gurule d i d n o t p u r s u e t h i s 3 a r g u m e n t , w h i c h w a s m a d e i n h i s c l i e n t ' s p r e l i m i n a r y o b j e c t i o n , 4 b u t I f r a n k l y s e e n o r e a s o n w h y p a y m e n t s h o u l d n o t g o f o r w a r d . 5 T h e r e ' s a b s o l u t e l y n o c o n f l i c t o f i n t e r e s t . J u s t b e c a u s e t h e 6 b r o k e r w a s s o m e h o w i n v o l v e d i n a t r a n s a c t i o n w i t h F l e e t a n d 7 C e n t r a l , t h a t d o e s n ' t m e a n t h a t t h a t c r e a t e s a c o n f l i c t o f 8 i n t e r e s t w h i c h w o u l d h a v e b a r r e d t h e b r o k e r ' s e m p l o y m e n t u n d e r 9 3 2 7 b y t h e Debtor . S o I t h i n k i t ' s a p p r o p r i a t e t o g r a n t t h a t 10 r e l i e f . 11 I c a n n o t s e e h o w a n y o n e c o u l d r e a s o n a b l y d i s p u t e t h a t 12 t h e b u y e r i s a c t i n g i n g o o d f a i t h u n d e r 3 6 3 , a n d e s p e c i a l l y 13 w h e n y o u h a v e a n o p e n a u c t i o n p r o c e s s . I t i s a l m o s t a 14 g u a r a n t e e o f t h e s a t i s f a c t i o n o f t h a t r e q u i r e m e n t . 15 A n d t h e n b e f o r e I t u r n t o t h e 1 4 - s t a y p r o v i s i o n , t h e 16 s t a y o f t h e 1 4 - d a y p r o v i s i o n , 1 4 - d a y s t a y p r o v i s i o n , I j u s t 17 w a n t t o a d d r e s s a d e q u a t e p r o t e c t i o n q u i c k l y . 18 I d o n ' t s e e t h e r e ' s a n i n t e r e s t h e r e t h a t ' s e n t i t l e d 19 t o i t . I f i t w e r e , I t h i n k s o m e t h i n g w h i c h Debtor ' s c o u n s e l 20 a n d Mr. J o n e s h i t o n , m a y b e Mr. J o n e s h i t o n i t m o r e p r e c i s e l y , 21 a d e q u a t e ' s a n a d j e c t i v e . S o e v e n i f F l e e t w a s e n t i t l e d t o s o m e 22 k i n d o f p r o t e c t i o n , i t w o u l d h a v e t o b e a d e q u a t e p r o t e c t i o n . 23 W h a t ' s a d e q u a t e f o r a s u b l e s s e e i n a l e a s e w h e r e t h e l e a s e i s 24 g o i n g t o b e s o l d f r e e a n d c l e a r o f a n d w o u l d b e i f t h e r e w e r e 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 64 of 100EXCEPTIONAL REPORTING SERVICES, INC 65 n o s a l e a t a l l a n d t h e r e w a s a f o r e c l o s u r e s a l e w o u l d b e o u t i n 1 t h e s t r e e t i m m e d i a t e l y a f t e r t h e f o r e c l o s u r e s a l e ? I t h i n k 2 a d e q u a t e i s a t t h a t p o i n t z e r o . 3 N o w w i t h r e g a r d s t o t h e w a i v i n g o f t h e s t a y , 4 bankruptcy p r o c e e d i n g s h a v e b e e n p e n d i n g w i t h v a r i o u s d e b t o r s 5 i n v a r i o u s c a s e s w i t h r e g a r d s t o t h i s p r o p e r t y f o r a v e r y l o n g 6 t i m e . S o i n d e p e n d e n t o f b u s i n e s s e s l i k i n g t o d o t h i n g s b y t h e 7 e n d o f t h e y e a r , i t s e e m s t h e y n e v e r t h e l e s s s e e m t o d o 8 s o m e t h i n g t h e n e x t y e a r t o o , t h i s i s a p r o c e s s w h i c h n e e d s t o 9 b e c o m p l e t e d . I f a n y o n e w a n t s t o c h a l l e n g e i t , t h e y s h o u l d b e 10 r e a d y t o g o a n d c h a l l e n g e i t a n d g o a s k f o r a s t a y i n t h e 11 a p p r o p r i a t e C o u r t i f t h e y t h i n k t h e r e ' s a b a s i s . I d o n ' t s e e 12 a n y . B u t o f c o u r s e n o T r i a l C o u r t J u d g e d o e s , o r e l s e t h e y 13 w o u l d n ' t g r a n t t h e m o t i o n i n t h e f i r s t p l a c e . B u t I d o n ' t s e e 14 a n y b a s i s f o r a s t a y . I d o n ' t t h i n k t h e r e ' s a n y i s s u e h e r e 15 t h a t ' s d i f f i c u l t o r l i k e l y t o c r e a t e a n a p p e a l a b l e , a 16 r e a s o n a b l y a p p e a l a b l e i s s u e , s o I a m g o i n g t o w a i v e t h a t s t a y . 17 I h a v e a l r e a d y f o u n d a n d c o n c l u d e d t h a t a l l t h e 18 r e q u i r e m e n t s w i t h r e g a r d s t o a p p r o v i n g a c ompromise o f a 19 controversy h a v e b e e n m e t . I a d o p t t h e m h e r e i n a g a i n . S o w h e n 20 a l a w c l e r k h a s t o r e a d i t s o m e w h e r e , t h a t t h e y c a n f i n d i t i n 21 t h e s a m e p l a c e , I ' m making m i n e u n d e r f i n d i n g s o f f a c t s a n d 22 c o n c l u s i o n s o f l a w . 23 B a s e d u p o n a l l t h a t , I g r a n t t h e m o t i o n . 24 S o n o w w e w i l l t u r n t o t h e s e c o n d l e g o f t h e 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 65 of 100EXCEPTIONAL REPORTING SERVICES, INC 66 t r i f u r c a t e a n d I ' m g o i n g t o t a k e a p a u s e . I d o n ' t w a n t t o t a k e 1 a l o n g p a u s e . I ' l l t a k e a 1 5 - m i n u t e p a u s e , s o w e ' r e t a l k i n g 2 1 2 : 4 5 , t o g e t y o u r b i d d i n g i n o r d e r . A nd w h e n y o u d o , i f w e 3 h a v e m o r e t h a n t w o b i d d e r s t h e n I w o u l d a s k y o u t o s e t u p s h o p 4 i n f r o n t o f a m i c r o p h o n e i n t h e c o u n s e l b o x o v e r h e r e , 5 colloquially k n o w n a s a j u r y b o x , b u t i t ' s n e v e r h a d a j u r y i n 6 i t , s i t o v e r t h e r e a n d h a v e s o m e b o d y s i t o v e r h e r e o n t h i s 7 t a b l e a n d s o m e b o d y o v e r h e r e , s o y o u c a n b e s p a c e d a n d w e can - 8 - i f t h e r e i s b i d d i n g . I m e a n t h e l a s t a u c t i o n I h a d w e n t o n 9 f o r a n h o u r a n d i t w e n t u p I t h i n k $ 2 3 m i l l i o n . S o i t m i g h t g o 10 a w h i l e . I d o n ' t k n o w . 11 A l l r i g h t , s o a b r i e f r e c e s s , r e c o n v e n e a t 1 2 : 4 5 . 12 ( C o u n s e l t h a n k t h e C o u r t ) 13 ( A r e c e s s w a s t a k e n f r o m 1 2 : 3 1 p . m . t o 1 2 : 5 0 p . m . ; p a r t i e s 14 p r e s e n t ) 15 T H E C L E R K : P l e a s e r e m a i n s e a t e d a n d c o m e t o o r d e r . 16 T h i s United States B ankruptcy C o u r t i s n o w i n s e s s i o n . 17 THE COURT: O k a y , Mr. Orantes a r e y o u o n t h e p h o n e ? 18 MR. ORA NTES: I a m , Your Honor . T h a n k you v e r y m u c h . 19 THE COURT: O k a y . W e ' r e w a i t i n g f o r f o l k s t o r e t u r n 20 t o t h e i r s e a t s . 21 U N I D E N T I F I E D S P E A K E R : I a p o l o g i z e , Your Honor . 22 THE COURT: I t ' s o k a y . I h a v e a b a d h a b i t o f b e i n g 23 t i m e l y . 24 ( P a u s e ) 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 66 of 100EXCEPTIONAL REPORTING SERVICES, INC 67 O k a y , I t h i n k e v e r y o n e i s b a c k . 1 S o , w h y d o n ' t y o u t e l l m e p l e a s e , Mr. Orantes , t h e 2 n a m e s o f t h e b i d d e r s t h a t y o u h a v e q u a l i f i e d . A l l t h e b i d d e r s . 3 MR. ORANTES: Y o u r H o n o r , i f I m a y , w e s t i l l h a v e n o t 4 q u a l i f i e d a n y o f t h e b i d d e r s . W e e m a i l e d a l l o f t h e m l a s t 5 n i g h t r e q u i r i n g t h a t t h e y m a k e c e r t a i n s t a t e m e n t s o n t h e r e c o r d 6 t o a c h i e v e p a r o d y a m o n g t h e b i d d e r s b e f o r e w e w o u l d q u a l i f y 7 t h e m . T h e y h a v e n ' t a c t u a l l y r e p l i e d t o m y e m a i l c o n f i r m i n g 8 t h a t t h e y w o u l d , t h a t t h e y w o u l d m a k e t h o s e s t a t e m e n t s , e x c e p t 9 f o r W M C a p i t a l , w h i c h s a i d t h a t v e r b a l l y , s o w e f i r s t w o u l d 10 w a n t t h e m t o c o n f i r m t h o s e s t a t e m e n t s , i f t h e C o u r t w o u l d a l l o w 11 m e t o . 12 THE COURT: S o a r e y o u a s k i n g f o r m o r e t i m e ? A r e y o u 13 a s k i n g t o d o t h i s o n t h e r e c o r d ? 14 MR. ORANTES: I ' m a s k i n g t o d o t h i s o n t h e r e c o r d , 15 Your Honor . 16 THE COURT: O k a y . S o , a t t h e v e r y l e a s t w e h a v e 17 T h o r , correct ? 18 MR. ORANTES: C orrect . Y e s , s o i n t e r m s o f t h e i r 19 i d e n t i t i e s , w e h a v e T h o r , T h o r , t h e n w e h a v e A C I V I S a n t a F e , 20 L L C , w h o s e i n i t i a l b i d w a s $ 3 1 , 8 2 5 , 0 0 0 . 21 THE COURT: S o y o u h a v e q u a l i f i e d A C I - - 22 MR. ORANTES: W e a l s o h a v e - - 23 THE COURT: W a i t , w a i t , w a i t . Y o u h a v e q u a l i f i e d 24 A C I ? 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 67 of 100EXCEPTIONAL REPORTING SERVICES, INC 68 MR. ORANTES: N o t y e t , Your Honor . I t ' s s u b j e c t t o 1 t h e i r m a k i n g t h e s t a t e m e n t s t h a t w e n e e d t h e m t o m a k e - - 2 THE COURT: O k a y , l e t ' s d o t h a t o n e a t a t i m e . 3 MR. ORANTES: - - t o - - 4 THE COURT: S o l e t ' s d o A C I . S o w e h a v e Ms. J a m e s ? 5 I s t h a t correct ? 6 MS. JAMES: Yes, Your Honor . 7 THE COURT: T h a n k y o u . 8 MS. JAMES: Yes, Your Honor , J a c q u e l i n e J a m e s . 9 THE COUR T: O k a y , Ms. J a m e s i s a t t h e l e c t e r n . 10 G o a h e a d , Ms. J a m e s . 11 MR. ORANTES: T h a n k y o u , Your Honor . 12 I f I c o u l d s a y , Your Honor , c o n s i s t e n t w i t h t h e e m a i l 13 t h a t I s e n t y o u l a s t n i g h t , w e n e e d - - w o u l d y o u r c l i e n t 14 c o n f i r m t h a t n o t w i t h s t a n d i n g a n y t h i n g i n y o u r c l i e n t ' s w r i t t e n 15 m a t e r i a l s t h a t a l l c o n d i t i o n s t o t h e i r b i d o t h e r t h a n t h e S a l e 16 O r d e r a r e w a i v e d ? 17 MS. JAMES: Y o u r H o n o r , w e j u s t h a v e o n e i s s u e , w h i c h 18 I t h i n k i s g l o b a l t o a l l o f t h e o v e r b i d d e r s , a n d t h a t i s t h a t 19 there ha s b e e n - - a s Your Honor p r o b a b l y k n o w s , t h e r e ' s b e e n a n 20 o v e r w h e l m i n g a m o u n t o f r e a l e s t a t e f i n a n c i n g d e a l s g o i n g o n 21 l a t e l y a n d m a n y d e l a y s w i t h r e s p e c t t o t i t l e c o m p a n i e s . 22 THE COURT: I a m a w a r e . 23 MS. JAMES: Y e s . A n d a s a r e s u l t o f t h a t , i t ' s b e e n 24 v e r y s l o w t o g e t t i t l e c o m p a n i e s t o p r o v i d e i n f o r m a t i o n . O n e 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 68 of 100EXCEPTIONAL REPORTING SERVICES, INC 69 p i e c e o f i n f o r m a t i o n t h a t w e w e r e p r o v i d e d w i t h j u s t l i t e r a l l y 1 2 0 m i n u t e s a g o i s t h a t a p p a r e n t l y t h e Debtor ' s w i f e o r e x - w i f e 2 i s o n t h e t i t l e w i t h r e s p e c t t o P a r c e l s 5 a n d 6 i n c o n n e c t i o n 3 w i t h t h i s p r o p e r t y , a n d T i t l e h a s i n d i c a t e d t h a t 4 n o t w i t h s t a n d i n g a f r e e a n d c l e a r o r d e r t h a t t h e y w o u l d r e q u i r e 5 t h e w i f e o r e x - w i f e t o s i g n a q u i t c l a i m d e e d i n o r d e r t o 6 e s s e n t i a l l y i s s u e a t i t l e p o l i c y w i t h r e s p e c t t o t h i s p r o p e r t y . 7 THE COURT: O k a y . 8 MS. JAMES: S o , a l t h o u g h m y - - a n d , y o u k n o w , o u r 9 c l i e n t ' s P S A p r o v i d e d f o r t h a t c o n t i n g e n c y a n d r e q u i r e d t h a t a s 10 a c o n d i t i o n t o c l o s i n g , y e s t e r d a y Mr. Orantes s e n t a r o u n d a n 11 e m a i l a n d e s s e n t i a l l y i n d i c a t e d , a s h e i n d i c a t e d t o y o u , Your 12 Honor , t h a t h e w a n t e d a l l o f t h e b i d d e r s t o w a i v e t h e i r 13 c o n t i n g e n c i e s . W h a t I w o u l d s a y i s t h a t o n b e h a l f o f m y c l i e n t 14 o u r c l i e n t i s w i l l i n g t o w a i v e c o n t i n g e n c i e s a n d j u s t o f c o u r s e 15 h a v e t h e c o v e n a n t s u n d e r i t s P S A r e q u i r e d t o c o n t i n u e t o b e 16 a b i d e d b y , b u t w e w o u l d l i k e t h e Debtor t o b e r e q u i r e d t o 17 p r o d u c e t h e q u i t c l a i m d e e d . 18 W h i c h , b y t h e w a y , s o m e o n e i n t h e Debtor ' s c a m p 19 i n d i c a t e d t o m e a f e w m o m e n t s a g o t h a t t h e y b e l i e v e t h a t t h e 20 w i f e h a s a l r e a d y s i g n e d , t h e w i f e o r e x - w i f e h a s a l r e a d y s i g n e d 21 t h e q u i t c l a i m d e e d b u t i t h a s n ' t b e e n r e c o r d e d . W e h a v e n e v e r 22 s e e n i t . I d o n ' t k n o w i f Mr. Orantes h a s s e e n i t o r a n y o n e 23 e l s e . B u t a l t h o u g h w e ' r e a l m o s t r e a d y t o w a i v e a l l o f t h e 24 c o n d i t i o n s e x c e p t f o r t h e c o v e n a n t s u n d e r t h e a g r e emen t , t h a t 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 69 of 100EXCEPTIONAL REPORTING SERVICES, INC 70 i s o n e s t i c k i n g p o i n t t h a t I t h i n k Your Honor i s g o i n g - - w i l l 1 p r o b a b l y f i n d i s g o i n g t o b e c o m m o n t o a l l t h e b i d d e r s . 2 S o w i t h t h e e x c e p t i o n o f t h a t i s s u e , a n d o b v i o u s l y 3 r e c e i v i n g t h e f r e e a n d c l e a r o r d e r o f t h i s C o u r t , t h a t w e w o u l d 4 w a i v e a l l o t h e r c o n d i t i o n s . 5 THE COURT: O k a y . 6 MS. JAMES: T h e r e i s n o f i n a n c i n g c o n t i n g e n c y o r 7 a n y t h i n g l i k e t h a t . 8 THE COURT: O k a y . S o l e t m e h e a r - - m a y b e w h a t w e d o 9 n e e d , s o t h a t w o u l d b e - - t h a t ' s y o u r s t i c k i n g p o i n t , 10 Ms. J a m e s . 11 MS. JAMES: Y e s , Your Honor . 12 THE COURT: L e t m e h e a r f r o m t h e o t h e r p o t e n t i a l 13 b i d d e r s t o f i n d o u t w h a t o t h e r o b j e c t i o n s y o u h a v e . 14 MS. JAMES: O h , Your Honor , I ' m s o r r y . A n d o n e m o r e 15 t h i n g j u s t r a i s e d i n Mr. Orantes ' e m a i l w h i c h I t h i n k w a s 16 d i r e c t e d t o m y c l i e n t , h e h a d s o m e q u e s t i o n a b o u t t h e l a n g u a g e 17 a n d t h e t i m i n g t h a t w e p u t i n o u r P S A w i t h r e s p e c t t o t h e 18 C o u r t ' s b i d d i n g p r o c e d u r e s a n d d e a d l i n e s . I w i l l r e p r e s e n t t o 19 t h e C o u r t t h a t t h e l a n g u a g e i n o u r P S A i s c o n s i s t e n t w i t h t h e 20 C o u r t ' s B i d d i n g P r o c e d u r e s O r d e r . A n d e v e n t o t h e e x t e n t t h a t 21 f o r a n y r e a s o n t h e c o n d i t i o n s o f t h e B i d d i n g P r o c e d u r e s O r d e r 22 s h o u l d b e d i f f e r e n t t h a n t h a t o f t h e P S A , t h e B i d d i n g 23 P r o c e d u r e s O r d e r w o u l d g o v e r n . 24 THE COURT: O k a y . 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 70 of 100EXCEPTIONAL REPORTING SERVICES, INC 71 MS. JAMES: T h a n k y o u . 1 THE COURT: T h a n k y o u v e r y m u c h . 2 L e t m e h e a r f r o m 8 2 0 1 . 3 MR. JONES: Y o u r H o n o r , I a p o l o g ize. I t h i n k 4 Mr. Orantes h a d - - I ' m s o r r y , E v a n J o n e s o n b e h a l f o f H y u n d a i . 5 I f I c o u l d s t e p b a c k f o r a m o m e n t ? T h e p r o c e d u r e s r e q u i r e t h e 6 b i d d e r s t o b e s u b s t a n t i a l l y t h e s a m e t e r m s a s T h o r . 7 THE COURT: R i g h t . 8 MR. JONES: A s Mr. Orantes m e n t i o n e d , o n e o f t h e 9 c r i t i c a l e l e m e n t s o f t h e T h o r b i d i s y e s t e r d a y b y 1 1 : 0 0 a . m . 10 t h e y h a d t o s e n d a n o t i c e t h a t a c o n d i t i o n h a d f a i l e d o r t h e y 11 w e r e c o n c l u s i v e l y d e e m e d t o w a i v e a l l c o n d i t i o n s o t h e r t h a n 12 e n t r y o f t h i s C o u r t ' s O r d e r . T h a t i s t h e f i r s t p o i n t t h a t w e 13 w a n t t o m a k e s u r e , b e c a u s e a l l o f t h e b i d s w e g o t s t i l l h a v e 14 c o n d i t i o n s . A n d f r a n k l y , g i v e n t h e t i m e , w e h a v e n ' t b e e n a b l e 15 t o s a y t o t h e m g o o f f a n d r e v i s e y o u r d o c u m e n t s . S o w e ' r e 16 t r y i n g t o c l e a n t h e m u p h e r e . 17 THE COURT: O k a y . S o l e t m e s t o p y o u t h e r e . 18 MR. JONES: Yes, Your Honor . 19 THE COURT: O k a y . Mr. Orantes ? 20 MR. ORANTES: Yes, Your Honor . 21 THE COURT: I t ' s y o u r j o b t o , p u r s u a n t t o t h e O r d e r 22 e s t a b l i s h i n g t h e s a l e p r o c e d u r e s , t o k n o w a n d b e a b l e t o t e l l 23 m e d e f i n i t i v e l y w h o t h e q u a l i f i e d b i d d e r s a r e , a n d i t s o u n d s 24 l i k e y o u ' r e n o t a b l e t o d o t h a t . 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 71 of 100EXCEPTIONAL REPORTING SERVICES, INC 72 MR. ORANTES: N o t w i t h o u t a c h i e v i n g p a r o d y w i t h T h o r 1 f i r s t , Your Honor . 2 THE COURT: O k a y , t h i s i s w h a t I ' m g o i n g t o d o . 3 MR. ORANTES: A n d - - 4 THE COURT: W e l l , l e t m e f i n i s h . I ' m g o i n g t o g i v e 5 y o u a n o t h e r h a l f h o u r . W h e n y o u c o m e b a c k a t 1 : 3 0 p . m . I n e e d 6 t o k n o w w h o ' s q u a l i f i e d a s a b i d d e r p u r s u a n t t o t h e O r d e r 7 e s t a b l i s h i n g s a l e s p r o c e d u r e s . T h a t c a n ' t b e c h a n g e d n o w . 8 MS. JAMES: Y our Honor , m a y I m a k e o n e p o i n t ? 9 THE COURT: N o t y e t . 10 D o y o u u n d e r s t a n d , Mr. Orantes ? 11 MR. ORANTES: I u n d e r s t a n d , Your Honor . 12 THE COURT: A n d I k n o w i t ' s d i f f i c u l t t h a t y o u ' r e n o t 13 h e r e a n d y o u h a v e a g o o d r e a s o n w h y y o u ' r e n o t h e r e , b u t 14 e v e r y b o d y h a s p h o n e s a n d l a p t o p s a n d t a b l e t s . S o y o u n e e d t o 15 g e t t h i s s t r a i g h t b y 1 : 3 0 . 16 A ll r i g h t , s o before w e g o , w h a t w o u l d y o u l i k e t o 17 s a y , Ms. J a m e s ? 18 MS. JAMES: Y o u r H o n o r , I j u s t w a n t e d t o s a y t h a t m y 19 c l i e n t ' s b i d c o n f o r m s w i t h t h e B i d d i n g P r o c e d u r e s O r d e r . W e 20 d i d n o t h a v e f i n a n c i n g c o n t i n g e n c i e s o r t h e o t h e r t y p e o f 21 c o n t i n g e n c i e s t h a t t h e B i d d i n g P r o c e d u r e s O r d e r i n d i c a t e d t h a t 22 w e c o u l d n o t h a v e . 23 THE COURT: O k a y . 24 MS. JAMES: A n d - - 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 72 of 100EXCEPTIONAL REPORTING SERVICES, INC 73 THE COURT: I ' l l a d d r e s s i t a t 1 : 3 0 . 1 MS. JAMES: O k a y . 2 THE COURT: O k a y ? 3 MS. JAMES: T h a n k y o u , Your Honor . 4 MR. JONES: Y o u r H o n o r , j u s t t o m a k e s u r e , w e 5 d i s a g r e e w i t h c o u n s e l ' s s t a t e m e n t , b u t I w a n t t o m a k e s u r e i f 6 b i d d e r s m a k e t h i s c o n c e s s i o n o n t h e r e c o r d t h a t n o t w i t h s t a n d i n g 7 v a r i o u s p r o v i s i o n s i n t h e i r a g r e e m e n t t h e y w i l l b e b o u n d b y 8 t h a t s t a t e m e n t - - b y t h e w a y , Your Honor , o n e o f t h e m o s t 9 i m p o r t a n t o n e s i s w e ' r e g o i n g t o a s k e a c h b i d d e r t o c o n f i r m 10 t h a t a s t o t h e l e a s e s a n d t h e f r e e a n d c l e a r l a n g u a g e t h e y w i l l 11 a c c e p t a n o r d e r , a s Your Honor h a s i n d i c a t e d y o u a r e p r e p a r e d 12 t o e n t e r . B e c a u s e w e d o h a v e s o m e o f t h e s e b i d s t h a t h a v e t h e 13 w o r d e x t i n g u i s h i n t h e m . 14 THE COURT: I u n d e r s t a n d . 15 MR. JONES: I g a t h e r t h e C o u r t i s s a y i n g w e c a n c o m e 16 b a c k a t 1 : 3 0 a n d w e j u s t n e e d t o b e c r i s p a b o u t w h a t w e a r e 17 a s k i n g b i d d e r s t o a g r e e t o . B e c a u s e Your Honor d o e s n ' t w a n t u s 18 t o g o o u t a n d h a v e o r a l c o n v e r s a t i o n s a n d t h e n c o m e b a c k a n d 19 h a v e l i t i g a t i o n o v e r w h a t w a s s a i d o r w a s n ' t . I f w e g e t i t o n 20 t h e r e c o r d , i t ' s b i n d i n g u n d e r t h e L o c a l R u l e s . 21 THE COURT: A f t e r I have n o w - - s i n c e I g r a n t e d t h e 22 m o t i o n a n d I p r e v i o u s l y g r a n t e d t h e s a l e s p r o c e d u r e m o t i o n , t h e 23 s a l e s p r o c e d u r e m o t i o n e s t a b l i s h e s w h a t p e o p l e n e e d t o d o t o 24 q u a l i f y . I ' m n o t g o i n g t o change t h a t . I f p e o p l e - - i f 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 73 of 100EXCEPTIONAL REPORTING SERVICES, INC 74 e v e r y b o d y c o m e s i n a n d s a y s t h a t w e h a v e a l l a g r e e d t o t h i s 1 m i n o r l i t t l e f i l l e t a s t o t h e s a l e s p r o c e d u r e m o t i o n , f i n e . I f 2 n o t , t h e D ebtor i s b o u n d b y t h e O r d e r e s t a b l i s h i n g t h e s a l e s 3 p r o c e d u r e s a n d w h o e v e r i s q u a l i f i e d w i l l g o f o r w a r d . I f y o u 4 c a n c o m e t o t h a t c o n c l u s i o n b e f o r e 1 : 3 0 , g r e a t . B u t t h i s i s n ' t 5 t h e t i m e t o b e c h a n g i n g t h e S a l e s P r o c e d u r e s O r d e r . 6 MR. JONES: Y o u r H o n o r , t o b e v e r y c l e a r , w e ' r e n o t 7 t r y i n g t o c h a n g e t h e S a l e s P r o c e d u r e O r d e r . T h e S a l e s 8 P r o c e d u r e O r d e r s a y s t h a t t h e b i d s h a v e t o b e c o m p a r a b l e . 9 THE COURT: R i g h t . 10 MR. JONES: A n d b y t h e w a y , Your Honor , t h e S a l e s 11 P r o c e d u r e O r d e r i s v e r y c l e a r t h a t i t h a s t o b e i n t h e j u d g m e n t 12 o f t h e Debtor a n d H y u n d a i - - 13 THE COURT: E x a c t l y . 14 MR. JONES: - - t h a t t h e y a r e c o m p a r a b l e . 15 THE COURT: T h a t ' s w h a t I ' m s a y i n g . I ' m n o t g o i n g t o 16 a d j u d i c a t e t h e p a r o d y o f q u a l i f i c a t i o n s . A l l m y j o b - - t h e 17 o n l y j o b t h a t I h a v e l e f t a t t h i s p o i n t i s t o t a k e b i d s a n d 18 w h e n i t ' s d o n e I ' m g o i n g t o b a n g t h e g a v e l a n d s a y y o u w i n a n d 19 y o u ' r e t h e b a c k u p b i d d e r . T h a t ' s t h e o nly t h i n g l e f t f o r m e t o 20 d o . I ' m n o t g o i n g t o a d j u d i c a t e p a r o d y o f q u a l i f i c a t i o n s . 21 MR. JONES: Y o u r H o n o r , w e ' r e c e r t a i n l y n o t a s k i n g 22 t h e C o u r t t o a d j u d i c a t e p a r o d y , b u t w e - - 23 THE COURT: I d o n ' t t h i n k y o u a r e , b u t s o m e b o d y e l s e 24 m a y b e t h i n k i n g a b o u t i t . 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 74 of 100EXCEPTIONAL REPORTING SERVICES, INC 75 MR. JONES: W e w o u l d l i k e t o a s k t h e C o u r t t o a l l o w 1 u s t o u s e y o u r c o u r t r o o m t o c o n f i r m - - 2 THE COURT: O h , y e s . 3 MR. JONES: - - w h a t t h e b i d s a r e s o t h a t w e c a n 4 d e t e r m i n e w h e t h e r t o q u a l i f y p e o p l e . 5 THE COURT: O k a y . 6 MR. JONES: T h a t ' s a l l I ' m s a y i n g . 7 THE COURT: S u r e . 8 MR. JONES: T h a n k y o u , Yo ur Honor . 9 THE COURT: O k a y , d o y o u w a n t a n o t h e r h a l f a n h o u r ? 10 MR. JONES: Y o u r H o n o r , I t h i n k i t w o u l d p r o b a b l y b e 11 h e l p f u l s o w e c a n - - 12 THE COURT: O k a y . 13 MR. JONES: - - p e r h a p s b e a b i t m o r e c r i s p . 14 THE COURT: O k a y . 15 MR. JONES: A n d Your Honor , i f I m a y , w h a t I w i l l 16 s u g g e s t w e d o i s w e c o m e b a c k a n d Mr. Oran tes r e a d s a v e r y 17 c l e a r s e t o f a c k n o w l e d g m e n t s w e ' d a s k a l l o f t h e b i d d e r s t o 18 m a k e a n d t h e n w e a s k e a c h b i d d e r t o i n d i c a t e i f t h e y a g r e e t o 19 t h o s e o r n o t . I ' m co n c e r n e d , Your Honor , t h a t i f w e d o i t 20 Mr. Orantes r e a d s t o e a c h b i d d e r h e m a y n o t g e t i t e x a c t l y t h e 21 s a m e e a c h t i m e . A n d s o t h e p o i n t i s w e ' r e g o i n g t o a s k a l l o f 22 t h e m t o a g r e e t o c e r t a i n p o i n t s . 23 THE COURT: F r a n k l y , t h i s s h o u l d h a v e b e e n d o n e 24 y e s t e r d a y . 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 75 of 100EXCEPTIONAL REPORTING SERVICES, INC 76 MR. JONES: Y o u r H o n o r , w e d i d n ' t g e t t h e b i d s u n t i l 1 1 1 : 5 9 a n d - - 2 THE COURT: O k a y . 3 MR. JONES: - - w e ' v e b e e n w o r k i n g a r o u n d t h e c l o c k . 4 THE COURT: B u t i n a n y e v e n t , y o u h a v e a h a l f a n h o u r 5 t o g e t i t d o n e . 6 MR. JONES: T h a n k y o u , Your Honor . 7 THE COURT: O k a y ? A l l r i g h t , C o u r t ' s i n r e c e s s u n t i l 8 t h e n . 9 ( A r e c e s s w a s t a k e n f r o m 1 : 0 2 p . m . t o 1 : 4 0 p . m . ; p a r t i e s 10 p r e s e n t ) 11 THE CLERK: Please remain seated and come to order, 12 this court is now in session. 13 THE COURT: Okay, let's see, Mr. Orantes, please be 14 seated. 15 MR. ORANTES: Yes Your Honor , thank you very much. 16 THE COURT: Are you ready to proceed -- are you ready 17 to proceed with the auction? 18 MR. ORANTES: Your Honor, I still need the parties to 19 make -- to confirm certain things on the record. I have spoken 20 with them abou t them and I think they're ready to talk about 21 them, Your Honor . 22 THE COURT: Okay, so we're going to have the bidders 23 come and confirm their understanding of the prerequisites. 24 MR. ORANTES: Correct, Your Honor . Yeah. So 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 76 of 100EXCEPTIONAL REPORTING SERVICES, INC 77 basically we're not going to qualify the WM Capital Partners, 1 LLC. I understand that Roye Zur, its attorney, would like to 2 argue to the Court, but with respect to the WM Capital 3 Partners, LLC we would not -- we did not agree to qualify them 4 at this point, Your Honor , neither the Debt or nor Hyundai in 5 consultation with our financial broker (indisc.) Pack 6 (phonetic) . 7 THE COURT: Okay, Mr. Orantes -- Mr. Orantes, I want 8 to be clear, it's unclear what you said. Is it WM C apital of 9 which you speak? 10 MR. ORANTES: Correct, Your Honor , WM Capital 11 Partners, LLC we will not qualify. 12 THE COURT: Okay, who is qualified? 13 MR. ORANTES: Subject to the making of an affirmative 14 confirmation of the statements we're dealing with Thor, which 15 is the original b i d d e r , ACI V I Santa Fe, LLC and 8201 San ta Fe 16 (CA), LLC and we want each b i d d e r to confirm, notwithstanding 17 anything in their written bid , four points, and if they do they 18 will qualify -- we will qualify them, Your Honor . 19 THE COURT: Okay, so just -- let's make sure the 20 record is clear because of telephonic transmission . 21 Thor, ACI and 8201 are the three qualified bidders. 22 We're going to have them come and say they agree and accept the 23 requirements, those three . C orrect, Mr. Orantes? 24 MR. ORANTES: Yes, Your Honor . 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 77 of 100EXCEPTIONAL REPORTING SERVICES, INC 78 THE COURT: Okay, let's sta rt with Thor. 1 MR. GREGER: Your Honor -- 2 MR. ORANTES: Thank you. If I could read all of the 3 requirements, and maybe all of them can -- 4 (Talkovers) 5 THE COURT: Okay, read all of the requirements and 6 then they can state -- I thought they would have been 7 acknowledged some already, but go ahead and state them on the 8 record. 9 MR. ORANTES: Thank you, Your Honor . 10 So Number 1, other than delivery of a quit claim deed 11 by M r s. Byun, or the former Mrs. Byun , with regard to the 12 property at issue, their bid is not subject to any contingency 13 other than entry of the Order approving the Motion for Sale to 14 closing of their purchase. 15 Number 2, with regard to leases, including the 16 sublease with Fleet Yards, Inc. , an O rder as described on the 17 record by the Court i s satisfactory. 18 Number 3, you will not require that the Order 19 provides sales free and clear of substantial liability. 20 And Number 4, notwithstanding anything in the written 21 bid , everyone agrees to be a backup bidder as described in the 22 procedures approved by the Court. 23 I f t h e - - 24 THE COURT: Okay, so -- is there more, Mr. Orantes? 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 78 of 100EXCEPTIONAL REPORTING SERVICES, INC 79 MR. ORANTES: No, Your Honor . 1 THE COURT: Okay. Which representative of Thor will 2 acknowledge on the record that those are acceptable? 3 MR. GREGER: Your Honor, Michael Greger of Al len 4 Matkins Leck Gamble Mallory and Natsis. 5 I'm still trying to get my co - counsel on the line. 6 THE COURT: Okay. 7 MR. GREGER: I can't say at this point, I think we 8 need a bit of additional time. 9 THE COURT: Is it just a technical i n ability? 10 MR. GRE GER: W e l l , n o . I mean, for example, the 11 statement was made that the bid will be subject to no 12 contingenc ies , other than the delivery of a quit claim deed of 13 Ms. Byun. 14 We have a Purchase and Sale Agreement, there's a 15 whole bunch of provisions that are applicabl e. If they're 16 asking us to waive the provisions of the Purchase and Sale 17 Agreement , I have no authority to do that, I need -- 18 THE COURT: Okay, so you do not accept those? 19 MR. GREGER: Well, I don't know that I do or don't. 20 I need to get the consent o f my client . T his just was sprung 21 on us at the last minute. 22 THE COURT: All right, let's put you t o the side for 23 the moment. 24 Let's turn to -- let's see, we have ACI? 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 79 of 100EXCEPTIONAL REPORTING SERVICES, INC 80 MS. JAMES: Your Honor, Jacqueline James for ACI V I 1 Santa Fe, LLC. 2 Your Honor, the language t h a t Mr. Giovanni -- I'm 3 sorry, that Mr. Orantes is quoting is a little bit different 4 than what Mr. Jones and I discussed a few moments ago, but what 5 I will say is that I think w e 're very close. 6 The Debtor was supposed to confirm that the seller 7 held f e e simple title to all of the real property and that no 8 one else had an interest in the property . A nd it -- our 9 agreement indicated that the title company would receive from 10 the seller any sort of affidavits or other documentation 11 required by th e title company in order to provide such 12 confirmation and in order to issue title s o - - 13 THE COURT: I apologize for the interruption. 14 MS. JAMES: Yes. 15 THE COURT: So you're not prepared to accept the 16 statement . 17 MS. JAMES: I - - w e a r e - - 18 THE COURT : Just say that and then we can move on. 19 MS. JAMES: W e are prepared to accept it just in a 20 slightly modified way that I t h i n k Mr. - - 21 THE COURT: Ma'am, you're not going to negotiate 22 language at the lectern, it's not going to happen. 23 MS. JAMES: All right . B ut, Your Honor , my 24 understanding with Mr. Jones was that we did have an agreement 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 80 of 100EXCEPTIONAL REPORTING SERVICES, INC 81 with respect to this. 1 THE COURT: Apparently, as -- Mr. Orantes represents 2 the debtor - in - possession. 3 MS. JAMES: I understand. 4 THE COURT: So p ursuant to the Sales Procedure Order , 5 the debtor - in - possession and Hyundai have been given the 6 delegation of the ability to qualify bidders . 7 MS. JAMES: I understand. 8 THE COURT: If you -- a gain , they have stated -- 9 MS. JAMES: May I -- 10 THE COURT: -- excuse me . 11 MS. JAMES: Yes. 12 THE COURT: T hey stated what the accepted conditions 13 or set asides are. If you can't say yes , that's okay. 14 MR. SPEAKER: T h e s e a r e h e a r i n g s t h a t - - 15 THE COURT: Okay, excuse me, we can't have 16 conversations in the courtroom right now. 17 MS. JAMES: Your Honor -- 18 THE COURT: So, ma'am, if you can't , it's okay, step 19 aside. 20 MS. JAMES: Your Honor, yes . M ay I be heard once we 21 get through the rest of the bidders? 22 THE COURT: I don't know . W e ' r e g o i n g t o f i n d o u t 23 w ho the qualified bidders are . T here may not be any other 24 qualified bidders at this point . 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 81 of 100EXCEPTIONAL REPORTING SERVICES, INC 82 MS. JAMES: A l l r i g h t , Your Honor . Y e s , Your Honor . 1 THE COURT: I s someone representing 8201? 2 MR. SCOTT COHEN: Your Honor, Scott Cohen appearing 3 on behalf of 8201 Santa Fe (CA), LLC. 4 We can agree to those requests by Debtor's counsel. 5 The comment was or representation was a quit claim as 6 to property at issue. We'd like a little clarification on the 7 record as to "property at issue." 8 THE COURT: I presume it's the p roperty subject to 9 the Sales Motion. 10 MR. SCOTT COHEN: Subject to the PSA? 11 THE COURT: Is that correct, Mr. Orantes? 12 MR. ORANTES: Correct, Your Honor . 13 MR. SCOTT COHEN: Yeah. So as long as it's -- 14 incorporates all the property -- 15 THE COURT: Ye a h . S o that's what it means. 16 MR. SCOTT COHEN: -- of the P S A , then we're good and 17 we hereby m a k e the representations Debtor's counsel has 18 requested, and we would ask that we be qualified. We met the 19 qualifications in the -- previously and we jumped through the 20 new hoops as well, Your Honor . 21 THE COURT: Okay, thank you. 22 So since there are two parties who are delegated the 23 responsibility of qualifying bidders , Mr. Orantes, in your mind 24 does that -- does Debtor -- does t he debtor - in - possession see 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 82 of 100EXCEPTIONAL REPORTING SERVICES, INC 83 8201 as a qualified bidder? 1 MR. ORANTES: Yes, Your Honor . 2 THE COURT: Mr. Jones? 3 MR. JONES: Yes, Your Honor , we do. 4 And, Your Honor , just for the record , Hyundai 5 completely agrees with the conditions as stated by Mr. Or antes. 6 If Atlas can agree to them , we would qualify them; if they 7 would not , I think we are in agreement they're not qualified. 8 THE COURT: Okay. So what we have left in our -- we 9 only have 8201 who is willing to accept the conditions stated 10 by t he d ebtor - in - possession and Hyundai. 11 This is what I will do because it's December . I will 12 give you five minutes . A gain, I a m not going to negotiate 13 language at the lectern, understood? So I know you need to 14 talk to clients and they need to talk to co - c ounsel. Again, 15 this is the fun part of the 21st Century relying on 16 telecommunications to make these kinds of decisions. Sometimes 17 it works, sometimes it doesn't. 18 It's 1:49, I'll come back at 2:00 o'clock and at that 19 point we're going forward. 20 MR. STE VEN COHEN: Your Honor -- 21 THE COURT: Yes, Mr. Orantes ? 22 MR. STEVEN COHEN: Cohen, Mr. Cohen, Your Honor . 23 THE COURT: Ah, Mr. Cohen. 24 MR. STEVEN COHEN: For Thor. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 83 of 100EXCEPTIONAL REPORTING SERVICES, INC 84 We -- Thor is a qualified bidder pursuant to the Sale 1 Motion . S o the suggestion that we have to satisfy additional 2 conditions to become a qualified bidder befuddles me a n d I 3 think it's contrary to the terms of the Motion and the 4 Order - - and the m otion which Your Honor granted earlier today. 5 THE COURT: I'll be happy -- I'll be happy to hear 6 about that in 10 minutes. If you think that you're already 7 qualified and these conditions change that qualification or 8 attempt to change it , I'll be happy to hear from you and 9 Mr. Jones and Mr. Orantes. 10 MR. STEVEN COHEN: Okay, thank you. 11 MR. JONES: Y our Honor, if I may ? 12 W hether Thor is qualified or not , we need to know 13 whether they accept these conditions so t h a t we can weigh their 14 bid. The goal here obviously is -- 15 (Talkovers) 16 MR. ORANTES: ( indisc. ) different calculus, I 17 understand. 18 MR. JONES: - - t he h i g h e s t and best b i d . And we need 19 to know whether they agree to th e s e . 20 THE COURT: I'm going to give you another 10 21 minutes -- 22 MR. JONES: Thank you, Your Honor -- 23 THE COURT: -- to get your minds on the same plain if 24 possible. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 84 of 100EXCEPTIONAL REPORTING SERVICES, INC 85 MR. JONES: T h ank you, Your Honor . 1 THE COURT: Including Ms. James' mind f o r A C I , okay? 2 MS. JAMES: W e ’ r e v e r y c l o s e , Your Honor . 3 THE COURT: Because that's in the best interests of 4 the estate. 5 MR. JONES: Thank you, Your Honor . 6 MR. ZUR: Your Honor, at the risk of u p s e t t i n g t h e 7 C o u r t -- 8 THE COURT: Do you want to identify yourself for the 9 record? 10 MR. ZUR: Yes, yes, excuse me . Roye Zur of Elkins 11 Kalt on behalf of WM Capital. 12 THE COURT: On behalf of WM? 13 MR. ZUR: WM Capital. 14 THE COURT: Got you, okay. 15 MR. ZU R: Your Honor, at the risk of upsetting other 16 parties and the Court, I really just would like just a few 17 minutes to address the Court on the issue of the qualified 18 bidding. 19 THE COURT: No. 20 MR. ZUR: I will preface -- 21 THE COURT: No, no, thanks. Oka y, see you at 22 2:00 p.m. 23 MR. ORANTES: Thank you, Your Honor . 24 (Recess taken from 1:5 1 to 2:00 p.m. ) 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 85 of 100EXCEPTIONAL REPORTING SERVICES, INC 86 THE CLERK: Please remain seated and come to order. 1 This c ourt is now in session. 2 THE COURT: Okay, Mr. Orantes? 3 MR. ORANTES: Thank you, Your Honor . During the 4 recess I had an opportunity to speak or to otherwise 5 communicate with the o t h e r two representatives of the other 6 bidders. 7 And with respect to Item Number 1, I was asked and we 8 agreed to change the language of that item . A nd if would 9 confirm if the language is as we agreed. 10 May I state that on the record, Your Honor ? 11 THE COURT: Please. 12 MR. ORANTES: Okay, thank you. 13 So other than delivery of a quit claim deed or any 14 other documentation required by the title company solely wit h 15 regard to Mrs. Byun with regards to the property subject to the 16 Sale Motion , their bid is not subject to any contingency t o 17 closing of their purchase other than entry of the Order 18 approving the Motion for Sale. 19 THE COURT: Okay. 20 MR. ORANTES: I belie ve that that's -- yeah, that's 21 the change in the language, Your Honor . 22 THE COURT: Okay. 23 MR. ORANTES: I believe with that , that ACI might be 24 able to assent to the whole four points. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 86 of 100EXCEPTIONAL REPORTING SERVICES, INC 87 THE COURT: Okay, so let's go back to our list. 1 Thor? 2 MR. STEVEN COHEN: Yes, Your Honor , it's Steven Cohen 3 for Thor. 4 Subject to the confirmation by Mr. Orantes that the 5 quit claim deed will be delivered by Mrs. Byun , that's no 6 longer an issue . 7 W e -- the only conditions we have are -- they're not 8 conditions at all, t hat our contract is adhered to. And our 9 contract provides, in Section 14, that we get vacant possession 10 of the property at the closing . W e'll stand on that. No -- 11 we're not required to change the terms of our contract to 12 become a qualified bidder, Your Honor , and we won't. 13 THE COURT: Okay. ACI? 14 MR. ORANTES: Your Honor, with that -- okay. 15 THE COURT: No, I'll hear from Mr. Orantes at the 16 end. 17 ACI? 18 MS. JAMES: Your Honor, Mr. Orantes incorporated the 19 additional words that we had requested and s o ACI -- 20 THE COURT: I apologize, but I can't hear you. 21 MS. JAMES: I'm so sorry, Your Honor , it's been some 22 time since I've had t o t a k e i t o f f . 23 THE COURT: I know. 24 MS. JAMES: Yes. ACI agrees to the additional 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 87 of 100EXCEPTIONAL REPORTING SERVICES, INC 88 language that Mr. Orantes just wrote . 1 THE COURT: Just stated. 2 MS. JAMES: Yes. 3 THE COURT: Okay, thank you. 4 MS. JAMES: Thank you. 5 THE COURT: 8201? 6 MR. ORANTES: Your Honor, 8201 already was qualified. 7 Although the language of just the one , t h e f i r s t p o i n t i s 8 s l i g h t l y different . 9 THE COURT: It never hurts to ha ve another 10 confirmation after what we've been through today, okay? 11 (Talkovers) 12 MR. ORANTES: Absolutely. 13 MR. SCOTT COHEN: Scott Cohen on behalf of 8201 Santa 14 Fe still confirms. Thank you, Your Honor . 15 THE COURT: Okay, thank you. 16 So do -- so ther e are two issues, right? 17 One is qualifying bidders, the other issue is whether 18 -- what is the value of the bid, right? And it isn't 19 necessarily a dollar amount that tells you the value. 20 So just to be clear er , the decision to qualify rests 21 with th e Debtor and Hyundai based upon the Order establishing 22 sales procedures, and the determination of the winning bid 23 does, too, based upon the Sales Order. I'm just conducting an 24 auction, r i g h t ? S o I want everyone to understand that, that's 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 88 of 100EXCEPTIONAL REPORTING SERVICES, INC 89 how we are pr oceeding right now. 1 MR. ORANTES: And, Your Honor , to be clear, with 2 respect to Thor , the Debtor agrees that Thor is a qualified 3 bidder but obviously with respect to the value of the bid , we 4 will take into consideration. 5 THE COURT: Okay, so all t hree bidders are 6 qualified - - 7 MR. ORANTES: Yes, Your Honor . 8 THE COURT: S o I would like to have a representative, 9 whoever is going to make the bid, please come to -- once you 10 come to the table over here, as I indicated before, please do 11 so now. I guess it can be ACI? That would be -- thank you 12 very much, Ms. James. 13 And we have Thor already established at this table. 14 And 8201, you're going to be right there. Okay. 15 So we have Thor -- 16 MR. CROCKER: Your Honor, Thor is on the phone -- 17 THE COURT: Mr. Cohen, are you going to be doing the 18 bidding? 19 MR. STEVEN COHEN: Yes, Your Honor . 20 THE COURT: Mr. Cohen -- okay, all right. 21 M S . J A M E S : Y our Honor , i s i t o k a y i f I have Mr. - - 22 THE COURT: Please take -- yeah, yeah. Come sit here 23 at a table, you'll be distanced. Y e a h , y ou can have your -- of 24 course. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 89 of 100EXCEPTIONAL REPORTING SERVICES, INC 90 MR. SPEAKER: Okay, thank you. 1 THE COURT: The one with the money, yeah, they get to 2 sit there, that's right. 3 ( L a u g h t e r h e a r d ) 4 MS. JAMES: I wanted to be sure. 5 THE COURT: Oh, absolutely. 6 (Talkovers) 7 MS. J A M E S : It's a littl e hard to c o m m u n i c a t e - - 8 THE COURT: I don't want anybody to say , No, we're 9 pulling out because s he didn't understand what I said. 10 M S . J A M E S : O k a y . 11 T H E C O U R T : Okay . Okay , is everyone ready to begin 12 the bidding? 13 This is how I'm going to conduct the auction. 14 We have the o pening bid by Thor, and there is an 15 amount that has to be met above it . S o my understanding is 16 that the very first bid has to be at least $ 31 , 775,000 , 17 correct? 18 MR. CROCKER: Correct, Your Honor . 19 THE COURT: Correct. So what I'm going t o do is 20 we're going to do it -- it's a little funny to think about with 21 a telephonic bidder, but I'm going to start with 8201 and then 22 go to ACI and then go to Thor so it's going to go around -- 23 it's going to be a round robin auction, it's just much more 24 o rderly that way, okay? 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 90 of 100EXCEPTIONAL REPORTING SERVICES, INC 91 So I'll call 8201, please state 8201 bids. 1 I'll call ACI, they'll state ACI bids. 2 And then Thor says Thor bids and that w a y w e know who 3 it is on the record, okay? 4 Okay, 8201, do you wish to overbid? 5 MR. CROCKER: Eric Crocker o n behalf of 8201, LLC. 6 THE COURT: I'm going to ask you to please take your 7 mask off. I apologize , s i r , b u t - - 8 MR. CROCKER: No problem. Eric Crocker on behalf of 9 8201 Santa Fe Avenue, LLC. T h e b i d 's 32 million. 10 THE COURT: Sorry? 11 MR. CROCKER : Thirty - two million. 12 THE COURT: Thirty - two million. Thank you very much. 13 Okay, now I will go to ACI. 14 MR. GOLDBERGER: Thank you, Your Honor . Are there 15 increments to bid by? 16 THE COURT: Minimum increment is $50,000 I believe. 17 Is that correct? Yes. 18 MR. SPEAKER: Yes , Your Honor . 19 MR. SPEAKER: Yes, Your Honor . 20 THE COURT: $50,000 is the minimum increment. 21 MR. GOLDBERGER: ACI bids 32 , 100,000. 22 THE COURT: Thank you very much. 23 E C R O : May I have your name p l e a s e ? 24 MR. GOLDBERGER: Jeffrey Goldberger. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 91 of 100EXCEPTIONAL REPORTING SERVICES, INC 92 E C R O : Thank you. 1 THE COURT: Okay, now we turn to Thor. 2 Do you wish to overbid? 3 MR. S T E V E N COHEN: Your Honor, if I could have 4 60 seconds, please? 5 M R . S P E A K E R : This is J a c k s o n and Greg Berman from -- 6 MR. BERMAN : Ye a h , t his is Greg Berman from Thor. 7 Yeah, we wish to bid 32 , 150,000. 8 THE COURT: Thank you very much. 9 8201, do you wish to bid? 10 MR. CROCKER: Yes, Your Honor , Eric Crocker on behalf 11 of 8201 , LLC. I'd like to bid 32 - 5. 12 THE COURT: Thank you very much, 32 , 500,000. 13 Okay, ACI? 14 MR. GOLDBERGER: 3 2 , 600,000. 15 THE COURT: 3 2 , 600,000 ? O kay, thank you very much. 16 Thor? 17 MR. BERMAN: We bid 32 , 650,000. 18 THE CO URT: Thank you very much. 19 8201? 20 MR. CROCKER: Your Honor, Eric Crocker on behalf of 21 8201 . 32 , 750 , 0 0 0 . 22 THE COURT: Thank you very much. 23 ACI? 24 MR. GOLDBERGER: 3 2 , 850,000. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 92 of 100EXCEPTIONAL REPORTING SERVICES, INC 93 THE COURT: Okay, thank you very much. 1 Thor? 2 MR. BERMAN: 3 2 , 900,000. 3 THE COURT: Thank you very much. 4 8201? 5 MR. CROCKER: 3 3 , 0 0 0 , 0 0 0 , Your Honor . 6 THE COURT: Thank you very much, 33 , 0 0 0 , 0 0 0 . 7 Okay, ACI? 8 MR. GOLDBERGER: 3 3 , 100,000. 9 THE COURT: Thank you very much. 10 Thor? 11 MR. BERMAN: 3 3 , 150 , 0 0 0 . 12 THE COURT: $ 3 3 , 1 5 0 ,000 . O k a y . 13 8201? 14 MR. CROCKER: 3 3 , 5 0 0 , 0 0 0 , sir. 15 THE COURT: 3 3 , 5 0 0 ,000 is the bid. Thank you ver y 16 much. 17 ACI? 18 MR. GOLDBERGER: 3 3 , 600,000. 19 THE COURT: 3 3 , 600,000 is the bid for ACI. Thank you 20 very much. 21 Thor? 22 MR. BERMAN: 3 3 , 650,000. 23 THE COURT: So confirming , 33 , 650,000. T hank you 24 very much. 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 93 of 100EXCEPTIONAL REPORTING SERVICES, INC 94 M R . B E R M A N : C orrect . 1 T H E C O U R T : 82 -- is that correct? 2 MR. BERMAN: Correct. 3 THE COURT: Thank you. Okay . 4 8201? 5 MR. CROCKER: 3 4 , 0 0 0 , 0 0 0 , Your Honor . 6 THE COURT: $ 3 4 , 0 0 0 , 0 0 0 is the bid. Thank you very 7 much. 8 ACI? 3 4 , 0 0 0 , 0 0 0 is the last bid. 9 MR. GOLDBERGER: Thank you. 10 THE COURT: Sure. 11 MR. GOLDBERGER: 3 4 , 1 00,000. 12 THE COURT: Okay, thank you very much. 13 Thor? 14 MR. BERMAN: Your Honor, are we able to skip this 15 round and still stay in for future ? W e're just trying to make 16 s ome decisions here? 17 THE COURT: No, that's not how a round robin works . 18 Y ou will make a bid - - 19 M R . B E R M A N : O k a y . 20 T H E C O U R T : - - or you're out. 21 MR. BERMAN: T he last bid was 34.1 million? 22 THE COURT: 3 4 , 100,000 US dollars. 23 MR. BERMAN : Okay, we'll do 34 , 150,000. 24 THE COURT: No B itcoin yet. Okay, 34 m i l l i o n , 150 is 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 94 of 100EXCEPTIONAL REPORTING SERVICES, INC 95 the last bid. 1 8201? 2 MR. CROCKER: 3 4 million , 500, Your Honor . 3 THE COURT: 3 4 m i l l i o n -- 4 MR. CROCKER: Five hundred thousand. 5 THE COURT: -- 500,000. Thank you very much. 6 ACI? 7 MR. GOLDBERGER: No bid. 8 THE COURT: You are done? 9 MR. GOLDBERGER: Yes. 10 THE COURT: Okay. Turning to Thor . 11 34 , 500,000 is the highest bid made by 8201. Do you 12 wish to overbid? 13 MR. BE RMAN: Give us -- yes, 34 , 550,000. 14 THE COURT: Okay, $ 34 , 550,000 is the highest bid by 15 Thor. Thank you very much. 16 So 8201? 17 MR. CROCKER: 3 4 , 750,000. 18 THE COURT: $ 3 4 , 750,000 is 8201's bid. Thank you 19 very much. 20 Thor? 21 MR. BERMAN: 3 4 , 850,000. 22 THE COURT: Okay, so to be clear, 23 $ 34 , 850,000 . Okay, that is Thor's last bid. 24 8201? 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 95 of 100EXCEPTIONAL REPORTING SERVICES, INC 96 MR. CROCKER: 3 5 , 0 0 0 , 0 0 0 . 1 THE COURT: 3 5 , 0 0 0 , 0 0 0 is 8201's bid. 2 Thor, do you wish to overbid? 3 (Audio malfunction ) 4 MR. BERMAN: Your Honor, can you give us 30 seconds? 5 THE COURT: I will give you 30 seconds. I ’ ll give 6 every -- the remaining bidders 30 seconds to make their 7 decisions. 8 MR. B E R M A N : Thank you. 9 (Pause) 10 MR. BERMAN: Your Honor, we'll 35 , 0 50,000. 11 THE COURT: So we have 35 , 0 0 0 , 0 5 0 [ s i c ] is the bid. 12 8201, do you wish to bid? 13 MR. CROCKER: I apologize, Your Honor , could you 14 repeat that last bid ? 15 THE COURT: I can . 35 , 0 5 0 , 000, so 35,000,050 16 [ s i c ] - - 17 M R . C R O C K E R : Got i t . 18 T H E C O U R T : - - I think that's right. 19 MR. CROCKER: So, Your Honor , 35 , 150 , 0 0 0 . 20 THE COURT: Okay . 35 , 150,000. So I take that back . 21 I t was 35 million, 050,000. I was a philosophy major. Okay. 22 ( C h u c k l e s ) 23 So the last bid is $ 35 , 150,000 . 24 Thor, do you wish to overbid? 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 96 of 100EXCEPTIONAL REPORTING SERVICES, INC 97 MR. BERMAN: Your Honor, would you be willing to give 1 us three minutes to discuss this? 2 THE COURT: No. No, this is it, 30 seconds. 3 (P ause) 4 MR. BERMAN: Your Honor, we're not going to overbid. 5 THE COURT: Do you wish to be the backup bidder at 6 35 , 0 50,000? 7 (Counsel confer s ) 8 MR. BERMAN: Your Honor, give us -- 9 (Counsel confer s ) 10 THE COURT: Well, you wer e the winning -- 8201 is the 11 winning bidder, I'll make that clearer. All I'm now trying to 12 establish is the backup bidder. If Thor is unwilling to do 13 that , then I will ask ACI if it wishes to be the backup bidder 14 on its last bid? 15 (Counsel confer s ) 16 MR. BERMAN: W e are willing to be the backup bidder. 17 THE COURT: They are willing? Okay. 18 Going once, going twice, (bangs gavel) , sold for 19 35 million, 150. 20 MR. JONES: Your Honor, may I -- 21 THE COURT: Yes, Mr. Jones? 22 MR. JONES: Your Honor, jus t as a matter of 23 formality , I think that we need to consult with the Debtor's 24 representative t o determine what the highest and best is, but I 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 97 of 100EXCEPTIONAL REPORTING SERVICES, INC 98 don't think you'll be surprised a f t e r w e - - 1 THE COURT: I didn't hear any other items of value 2 added to the bid s besides dol lars, so I don't know what would 3 change. 4 MR. JONES: Your Honor, as I sa y , I stand on 5 unnecessary ceremony . W e agreed -- 6 (Talkovers) 7 THE COURT: Well, the next time do the auction in 8 your office instead of in the court. 9 MR. JONES: Yes, Your Honor , w e agreed that that 10 is - - w e certainly agree that that is the highest and best bid, 11 and we assume the Debtor does also. 12 THE COURT: Okay, Mr. Orantes? 13 MR. ORANTES: The Debtor agrees with that, as well, 14 Your Honor . 15 THE COURT: Okay, so the winning bi dder 8201 -- 16 (Audio malfunction) 17 THE COURT: -- at $ 35 , 150,000 . 18 Thor, speaking from (indisc.) , 35 , 050,000. 19 Mr. Orantes, please submit -- 20 (Audio malfunction) 21 MR. ORANTES: Yes, Your Honor . 22 THE COURT: -- an accurate Order reflecting my ruling 23 today, share it with all the parties who were involved before 24 you submit it, and submit it timely . S o you all are going to 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 98 of 100EXCEPTIONAL REPORTING SERVICES, INC 99 have to maybe work a little quicker than we did today. 1 Thank you all very much. 2 MR. JONES: Thank you, Your Honor . 3 THE COURT: Court is adjourned. 4 MS. JAMES: Thank you, Your Honor . 5 (This proceeding was adjourned at 2:16 p.m. ) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 99 of 100EXCEPTIONAL REPORTING SERVICES, INC 100 CERTIFICATION I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the above - entitled matter. D e cember 14 , 20 21 Signed Dated TONI HUDSON, TRANSCRIBER Case 2:20-bk-17433-VZ Doc 435 Filed 12/14/21 Entered 12/14/21 16:28:21 Desc Main Document Page 100 of 100