Untitled Document

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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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w o u l d g e t n o t h i n g

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t h e m , Your Honor

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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

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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

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entitle t h e m t o s t a y i n p o s s e s s i o n

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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

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c o n c l u s i o n

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MR. JONES: Yes, Your Honor

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g o t h r o u g h t h e m o n e a t a t i m e

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de nied l o t s o f m o t i o n s

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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

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a p p r o p r i a t e

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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