Veritext Reporting Company 212-267-6868 516-608-2400

Page 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ECR OPERATOR: LESLIE MURIN VERITEXT REPORTING COMPANY www.veritext.com B E F O R E : HON CHRISTOPHER S. SONTCHI U.S.
BANKRUPTCY JUDGE June 12, 2012 12:12 PM United States Bankruptcy Court 824 North Market Street Wilmington, Delaware - - - - - - - - - - - - - - - - - - - - - - - - - - - - x Debtors. ALLIED SYSTEMS HOLDINGS, INC., ET AL., UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE Case No. 12-11564(CSS) - - - - - - - - - - - - - - - - - - - - - - - - - - - - x In the Matter of:
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Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HEARING re Allied Freight Brokers LLC [12-11769]

VERITEXT REPORTING COMPANY www.veritext.com
HEARING re Allied Systems Holdings, Inc. [12-11564]
HEARING re Allied Systems, LTD (L.P.) [12-11565]
HEARING re Allied Automotive Group, Inc. [12-11768]
HEARING re Axis Group, Inc. [12-11770]
HEARING re F.J. Boutell Driveaway LLC [12-11767]
HEARING re Allied systems (Canada) Company [12-11773]
HEARING re Commercial Carriers, Inc. [12]11775]
HEARING re GACS Incorporated [12-11777]
HEARING re Cordin Transport LLC [12-11781]
HEARING re CT Services, Inc. [12-11782]
HEARING re Axis Canada Company [12-11783]
HEARING re Terminal Services LLC [12-11780]
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Page 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HEARING re Motion for Order (A) Deeming Utilities Adequately Assured of Payment, (B) Prohibiting Utilities from Altering, Refusing, or Discontinuing Services, and (C) Establishing HEARING re Motion to Authorize Allied Systems, Holdings, Inc. to Act as Foreign Representative of the Debtors [Docket No. 71 - filed June 10, 2012] HEARING re Application for Order Appointing Rust Consulting/Omni Bankruptcy as Claims and Noticing Agent Pursuant to 28 U.S.C. 156(c) and Section 105(a) of the Bankruptcy Code Nunc Pro Tunc to the Petition Date [Docket No. 70 - filed June 10, 2011] HEARING re QAT, Inc. [12-11779] HEARING re RMX LLC [12-11778] HEARING re Transport Support LLC [12-11776] HEARING re Axis Areta, LLC [12-11774] HEARING re Logistic systems, LLC [12-11772] HEARING re Logistic Technology, LLC [12-11771]
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Page 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HEARING re Motion for Authority to (A) Maintain Existing HEARING re Motion of the Debtors for Orders Authorizing the Debtors to Pay Prepetition Sales, Use, and Other Taxes and Related Obligations [Docket No. 76 - filed June 11, 2012] HEARING re Motion of the Debtors for Order Pursuant to U.S.C. 105(a) and 363(b) Authorizing Payment of Prepetition Customs Duties and Claims of Common Carriers and Warehousemen and Authorizing the Debtors to Honor Certain Prepetition Cargo Claims and Authorizing Financial Institutions to Honor and Process Checks and Transfers Related to Such Claims [Docket No. 75 - filed June 11, 2011] HEARING re Debtors' Motion for entry of Interim and Final Orders Authorizing, But Not Directing, the Debtors to Pay Certain Prepetition Claims of Critical Vendors and Granting Certain Related Relief [Docket No. 74 - filed June 11, 2012] HEARING re Motion for Order authorizing Debtors to Continue Their Insurance Programs [Docket No. 73 - filed June 11, 2011] Procedures for Resolving Requests for Additional Assurance [Docket No. 72 - filed June 11, 2011]
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Page 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HEARING re Declaration of Scott D. Macaulay in Support of HEARING re Motion Pursuant to 11 U.S.C. 105, 361, 362, 363(c), 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1), 364(e), 503(b) and 507(a), Fed. R. Bankr. P. 2002, 4001 and 9014 and Del. Bankr. L.R. 4001-2: (I) Authorizing Debtors to (A) Obtain Postpetition Secured DIP Financing and (B) Use Cash Collateral; (II) Granting Superpriority Liens and Providing for Superpriority Administrative Expense Status; (III) Granting Adequate Protection to Prepetition Secured Lenders; (IV) Modifying Automatic Stay; and (V) Scheduling a Final Hearing Pursuant to Bankruptcy Rules 4001(b) and (c)[Docket No. 79 - filed June 11, 2012] HEARING re Motion of Debtors for Interim and Final Orders Authorizing Payment of Pre-Petition Wages, Payroll, Taxes, Certain Employee Benefits and Related Expenses, and Other Compensation to Employees and Independent Contractors [Docket No. 78 - filed June 11, 2012] Cash Management System and Bank Accounts, (B) Continue Use of Existing Checks and Business Forms, (C) Obtain Limited Waiver of 345(b) and (D) Continue to Make Intercompany Advances with 364(c)1) Administrative Priority [Docket No. 77 - filed June 11, 2012]
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Page 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Transcribed by: Dawn South Chapter 11 Petitions and First Day Motions [Docket No. 80 filed June 11, 2011]
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Page 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY: DAVID L. BUCHBINDER, ESQ. VERITEXT REPORTING COMPANY www.veritext.com OFFICE OF THE UNITED STATES TRUSTEE Attorney for the United States Trustee 844 King Street, Suite 2207 Lockbox 35 Wilmington, DE 19801 BY: CHRISTOPHER M. SAMIS, ESQ. MARK COLLINS, ESQ. RICHARDS, LAYTON & FINGER, P.A. Attorneys for Allied Systems Holdings, Inc., Debtors One Rodney Square 920 North King Street Wilmington, DE 19081 BY: JEFFREY W. KELLEY, ESQ. CAROLYN RICHTER, ESQ. A P P E A R A N C E S : TROUTMAN SANDERS, LLP Attorneys for Allied Systems Holdings, Inc., Debtor 600 Peachtree Street, NE, Suite 5200 Atlanta, GA 30308
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Page 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 VERITEXT REPORTING COMPANY www.veritext.com BY: ROBERT A. KLYMAN, ESQ. MELINDA C. FRANEK, ESQ. LATHAM & WATKINS, LLP Attorneys for Yucaipa, Interested Party 355 South Grand Avenue Los Angeles, CA 90071 BY: MICHAEL R. NESTOR, ESQ. YOUNG CONAWAY STARGATT & TAYLOR, LLP Attorney for Yucaipa, Interested Party Rodney Square 1000 North King Street Wilmington, DE 19801 BY: ADAM C. HARRIS, ESQ. VICTORIA A. LEPORE, ESQ. ERIK SCHNEIDER, ESQ. SCHULTE, ROTH & ZABEL, LLP Attorneys for BDCM Opportunity Fund II, LP, Creditor 919 Third Avenue New York, NY 10022
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Page 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
LANDIS RATH & COBB Attorney for BDCM Opportunity Fund 919 N. Market Street, #1800 Wilmington, DE 19801
BY:
ADAM G. LANDIS, ESQ.
DUANE MORRIS LLP Attorney for CIT Group/Business Credit Inc. 30 South 17th Street Philadelphia, PA 19103
BY:
SOMMER L. ROSS, ESQ.
FRIED FRANK HARRIS SHRIVER & JACOBSON LLP Attorney for CIT Group/Business Credit Inc. 375 Park Avenue, #3708 New York, NY 10152
BY:
GARY L. KAPLAN, ESQ.
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Page 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 proceed. MR. KELLEY: Good afternoon, Your Honor. Jeff P R O C E E D I N G S THE CLERK: THE COURT: All rise. Please be seated. All right, you may
Kelley from Troutman Sanders representing the debtors. Proposed counsel I should say for the debtors. Your Honor, the U.S. Trustee did want me to announce that the Georgia cases that have been referred to have been closed, they were closed on June 5th. THE COURT: MR. KELLEY: Thank you. Your Honor, the -- what I propose to
do is go through the first day's in the order that they appear on the agenda, with one exception, and that is we'd like to move the cash management motion one position down, put everybody ahead of the DIP motion with the Court's indulgence. THE COURT: MR. KELLEY: That's fine. My partner, Carolyn Richter, who's
with me in the courtroom will be handling those last two motions, and I'll be attempting to handle the ones that come before that. THE COURT: MR. KELLEY: All right. I would like to inform the Court that
we have had extensive discussions with the U.S. Trustee,
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Page 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Yucaipa, and the petitioning creditors. We think we have
resolved many of the issues, if not most or all of the issues, I think there are a few remaining items that are open. Mr. Samis does have a folder of the first day orders that were proposed with redlines of a hue where changes have been proposed. to you if that's acceptable. THE COURT: MR. KELLEY: All right. I would mention that the DIP order He would like to hand those up
that's in there, the DIP loan order is still subject to some further discussion. (Pause) THE COURT: MR. KELLEY: Go ahead. So again, with the Court's indulgence
when we get to the DIP loan motion, which is the last item on the agenda, we propose to go ahead and make the proffer and make the case, and then if still needed request that the Court give us a 10- or a 15-minute break to go and resolve a few remaining open issues with the petitioning creditors and maybe the U.S. Trustee. THE COURT: MR. KELLEY: Okay. Your Honor, the first order of
business I would like to tender into evidence the first day declaration of Scott Macaulay, which is Docket No. 80.
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Page 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. KELLEY: Any objection? Oh, I'm sorry.
Well, I'll just -- I think Mr. Landis The declaration does contain a It does set
is going to say something.
history of what happened in the first case.
forth some litigation that's going on concerning the -between Black Diamond and Spectrum on the one hand and Yucaipa on the other. There's no intention in
Mr. Macaulay's declaration to say anything other than that litigation is pending. We realize that Black Diamond and
Spectrum don't necessarily agree that Yucaipa is a requisite lender. With that I will yield to Mr. Harris. THE COURT: MR. HARRIS: Mr. Harris? Good morning. This
Good afternoon, Your Honor.
issue sort of came up at yesterday's emergency hearing on Mr. Macaulay's affidavit. I mean there's a lot in there,
Your Honor, which is typical in affidavits in support of first day applications where the declaration seeks to give the Court some background as to how they got here and what's happened historically and what's going on in the business, and with all -- which is informative for the Court and in some respects helpful in cases where the judge has no familiarity, here you've got a little bit more history than most judges would have in connection with first day hearings.
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Page 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 right? MR. KELLEY: THE COURT: Yes, Your Honor. Okay. I'm very cognizant of the We don't want to waste a lot of the Court's time. We do have issues with some of the recitations and their views on issues like how they got here in the litigation and who is requisite lender, et cetera. None of frankly is
particularly relevant for the relief that's sought by most of the first day pleadings today. It may be in some respect
relevant to cash collateral in use -- in DIP financing, but we've come a long way on that and I'm not sure there's going to be a lot of controversy there either. So I would simply rise and say that with respect to the admissibility of the declaration I have no objection to that today; however, I don't want my non-objection on this basis to be taken as an agreement that the statements in there are somehow truthful or can't be challenged at some point in the future and that they are forever written in stone. At an appropriate time in the future we may need to challenge certain of the statements that are in there, but we really don't want to waste the Court's time with that today because it would be unnecessary. THE COURT: All right. I'm sure that's okay,
requisite lender issue, and just to be clear, at this point
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Page 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I'm not trying -- any order I enter today is not going to have collateral estoppel, judicial estoppel, issue preclusions, fact conclusion on this limited record, and I'm not in any way trying to -- and I'm going to -- I want to make it clear to everybody I'm not in any way going to make a ruling on who a requisite lender is today. It's -- I
don't think fairly in front of me on what will happen at this time. MR. KELLEY: Yes, Your Honor. With that I would
like to proceed just directly to the -THE COURT: I'm sorry, just for the record the
declaration is admitted. MR. KELLEY: Thank you, Your Honor.
Turning to agenda item 20, which is Docket No. 70, this is the application for an order appointing Rust/Consulting Omni. By this application the debtors request the entry of an order appointing Rust Omni as claims agent for the Court pursuant to the terms of the engagement letter which is attached to the motion. Prior to selecting Rust Omni the debtor did obtain proposals from two other court-appointed claims and noticing agents to insure that we had a competitive process. Rust
Omni's proposal was the good proposal based on comparative situations that were presented, and we believe that our
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Page 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 proceed. MR. KELLEY: I was having the same problem in the one? Okay, I hear none, and I had no issues or questions in connection with that order. as presented. I'm sorry, I'm having trouble getting organized, so give me a minute. (Pause) THE COURT: That's better. Okay. You may So I will sign it selection of Rust Omni satisfies the Court's protocol for employment under 28 U.S.C. 156(c). The scope of the engagement is laid out in the application. Also set forth in the application is the fact
-- their qualifications and the fact that they are disinterested. So we respectfully request that that particular application be granted. THE COURT: Okay. Anyone wish to be heard on that
hotel last night, Your Honor, believe me. The next one is agenda item 21 which is Docket No. 71, the motion to authorize debtor, Allied Systems Holdings, Inc. to act as foreign representative of the debtors. Your Honor, as set forth in the Macaulay
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Page 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 declaration the -- Allied does have operations in Canada, it's about 35 percent of their business on a gross basis I believe, via the two Canadian subsidiaries, which are also debtors, they're identified in footnote one as Access Systems Canada Company, and access Canada Company. By this motion Allied Holdings seeks authorization pursuant to Section 1505 of the Bankruptcy Code to take the following actions. To act as the foreign representative of
the debtors, to seek recognition by the Ontario Superior Court of Justice commercial list of these Chapter 11 cases and of certain orders made by this Court from time to time, including most prominently the DIP order that we hope to obtain and others that we're hoping to obtain today, the wages motion and so on and so forth. I would note for the Court that there is a hearing scheduled -- not trying to be presumptive at all -- but there is a hearing scheduled in Toronto at 2:30 this afternoon, Allied's Canadian counsel, Gowlings, is in fact listening into this hearing on the phone. Timing -- and
we're not trying to rush the Court at all -- timing is of the essence in terms of getting some orders entered if we can -- or if we're successful in getting them entered and then having them recognized in Canada so that the funds can flow freely and the operations can continue uninterrupted. This was also done, Your Honor, in Allied's first
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Page 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 action? MR. KELLEY: THE COURT: MR. KELLEY: mangling his title. THE COURT: MR. KELLEY: Okay. I'm sorry. Your Honor, the purpose I think it's Judge Morowitz. Justice Morowitz. Justice Morowitz. I apologize for Chapter 11 case, I think the laws were slightly different then, we didn't have Chapter 15 at the time, but basically the same procedure was carried forth in Allied's first Chapter 11 case and when if I may say fairly smoothly. Your Honor, the -THE COURT: Who's the judge in the Canadian
Thank you.
of 1505 is to allow a debtor to petition a foreign court for recognition of its cases and to request that the foreign court cooperate and lend assistance to the debtor and to the United States Bankruptcy Court in meeting the objectives of chapter 15 of the Code and the model law on cross border insolvency. Absent a Court order appointing it as a foreign representative a Chapter 11 debtor may find itself in a position where it's difficult to satisfy the requirements for a petition of recognition, specifically Section 46 of the CCWA provides that an application for recognition of a foreign proceeding made by a foreign representative shall be
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Page 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 accompanied by a certified copy of the instrument authorizing the foreign representative to act in that capacity or a certificate from the foreign court affirming the foreign representative's authority to act. The relief sought here is therefore the first in a two-step process to -- as stated. If this order is -- if
this motion is granted by the Court we do intend to go before the Justice Morowitz this afternoon to seek recognition. With that, Your Honor, I would respectfully request that the -- this particular motion be granted. THE COURT: Anyone wish to be heard?
All right, I had no issues with this. (Court confers with clerk) THE COURT: immediately. MR. KELLEY: Thank you, Your Honor. I'll have the order docketed
Your Honor, the next motion is agenda item 22, which is Docket No. 72, this is the utilities motion. I
will point out that there's a redline of this order in the Court's folder reflecting comments made by the -Mr. Buchbinder, the U.S. Trustee. By this motion the debtors seek entry of an order determining adequate assurance of payment for future utility services prohibiting utility providers from altering or
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Page 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 discontinuing service on account of outstanding prepetition invoices, establishing procedures for determining adequate protection, a payment for future utility services, and scheduling a final hearing. In connection with the operation of their businesses the debtors obtain electricity, natural gas, water, sewer, and utilities from the various utilities listed on Exhibit A to the motion. In the ordinary course of business the debtors incur these types of expenses from utility service companies numbering some 170. On average prior to the petition date
the debtor spent approximately $300,000 each month on utility services. The debtors had a satisfactory payment of prepetition utility services. To the best of debtors'
knowledge there are no defaults or arrearages with respect to undisputed amounts claimed to be due for utility services. Your Honor, any interruption of the utility services to the debtors' business would be severely disruptive and would diminish the going concern value, but because both the Automotive Group debtor's businesses and the Access Group debtors are coordinated and operated out of many terminals across the United States and Canada it's essential that their utility services be -- continue
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Page 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 interrupted and not -- and not be disrupted. In addition it's essential that the utility services be continued and provided to the debtors' corporate headquarters in Atlanta, which is where of course the whole thing is organized and operated out of. Your Honor, to provide adequate assurance of payment for future services the debtors submit they will be able to continue to pay for all post-petition utility services from the proceeds of operations. As additional adequate assurance, however, the debtors will deposit $150,000, which is 50 percent of the average monthly bill, they'll deposit this $150,000 into a newly created segregated interest bearing account within 20 days after the entry of this interim order should it be -should this motion be granted. The debtors submit that adequate assurance deposit that will constitute sufficient adequate assurance of future payment; however, if any utility should find that the adequate assurance deposit is unsatisfactory and they request additional adequate assurance pursuant to 366(c) of the Bankruptcy Code and the debtors propose that such requests be addressed in procedures that are outlined in the motion. Your Honor, as you I'm sure are well aware in a Chapter 11 case following the 30-day period after
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Page 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 commencement of the case utilities may discontinue service if the debtor does not provide adequate assurance of future performance in a form satisfactory to the utility subject to the Court's ability to modify the amount of adequate assurance. The debtors thus believe it's prudent to require utility companies to raise any objections to the additional adequate assurance procedures so that the objections may be heard by the Court within the 30-day period after the petition date. The debtors' proposed objection procedures for this are also set forth in the motion. And the debtors
submit that the proposed adequate assurance and adequate assurance deposit account and the adequate assurance procedures provide more than adequate assurance of future payment under 366(c). The debtors expect that they will --
as I said -- will have no problem paying these bills. Moreover, the debtors have an incentive obviously to pay these bills because of their reliance on utility services for the operation of their businesses, and we submit that this if all taken together justifies the finding that the proposed adequate assurance, the deposit account, and the procedures that are set forth in the motion are more than sufficient to certify this particular requirement. We think that the requirements of the Bankruptcy
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Page 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor? THE COURT: (Pause) MR. KELLEY: I'm informed, Your Honor, that Yes. agreement. Rule 6003 are satisfied because of the necessity of maintaining our operations without interruption within the 21 days after the petition date, and we further submit that waiver of the 14-day stay period provided under the Bankruptcy Rule 6004(h) is appropriate. And the with that, Your Honor, we would ask for the reasons I have stated and set forth in the motion and under the authorities cited in the motion that this particular motion be granted. THE COURT: Can you -- I have a question, and But the
simply one of not understanding the mechanism. agreement with CC Pace -MR. KELLEY: THE COURT: Yes.
-- from the energy trustee program And (b), is the
What -- (a), what is that?
mechanism such that Pace is collecting property of the estate, is in possession of property of the estate? simply didn't understand the mechanism. MR. KELLEY: May I confer with Mr. Macaulay, Your I just
they're an aggregator, they try to get the bills reduced and negotiate to get the bills reduced. Allied pays them and
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Page 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 them. then they pay the utilities, the ones that they're handling. THE COURT: Okay. And they get paid out of a
percentage I take it of -- how do they get paid? MR. KELLEY: their services. you would like. THE COURT: some large amount. So you've got what, 150 locations, They take responsibility For 100 They get paid a fee, Your Honor, for
I can find out exactly what that fee is if
locations, leaving the debtor busy -- leaving the debtor with time to do what the debtor does well, they do their business well, they negotiate with the utility companies, and we -- when a bill comes in for Duke Power how does it get paid? Does it get paid through them? Does it funnel
through them?
I just don't understand how the cash flows. Yes, Your Honor, it funnels through
THE COURT:
The debtor pays CC Pace and CC Pace then pays the
utility bill for the ones they're handling. THE COURT: So what's the mechanism for the
resolution of issues, for example, if CC Pace doesn't pay the utility bill? How does that work? I should have been -And maybe we can circle back on this
MR. KELLEY: THE COURT:
after a break or something, but I'd like to know -- you know, if CC Pace is the inner acting party with the utility company, that could affect what is appropriate adequate
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Page 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 assurance under the statute and what isn't adequate assurance under this statute. deposit. escrow? Whose going to hold the
Is it CC Pace that's holding the deposit or Is it the debtor? Whose in privity. I mean I just
-- this third-party system is new to me, and I'm not quite sure how it interacts with the statute. MR. KELLEY: I understand your questions, Your
Honor, and I will -- what I propose to do is circle back after -- I think we will be -- as I mentioned, I think asked to be taking a short break on the DIP any way, and when we do that I can circle back with Your Honor on that particular issue. THE COURT: MR. KELLEY: Okay. I neglected to introduce to the
Court, Your Honor, Mr. Scott Macaulay who is the CFO of the debtors. THE COURT: MR. KELLEY: Welcome. And John Blount who was here at the
last hearing is the genera counsel and chief administrative officer. THE COURT: Welcome. All right, well, subject --
and I looked at the blackline, subject to getting a resolution of this issue or questions with CC Pace I don't have any problem with the order, obviously at some point we'll need to set up a final hearing date, but I think we
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Page 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 can -- I think we're best off doing that at the end in connection with the DIP and then we can just fill in the dates. MR. KELLEY: THE COURT: MR. KELLEY: Thank you, Your Honor. So I'll hold that one aside for now. Okay, thank you.
Your Honor, the next one on the agenda is agenda item 23, which is Docket No. 73. This is a motion for an
order authorizing the debtors to continue their insurance programs. Now, this is a particularly detailed motion describing, you know, Allied's somewhat complicated insurance program. With all candor not written by me, but studies by me, what I would propose to do is simplify and summarize this motion and see where that -- where that particular procedure may get me. THE COURT: Frankly that's not necessary unless
you feel particularly moved to do it. MR. KELLEY: THE COURT: No, I don't. It's a pretty routine matter, and I
just -- I had, and I see that there's no blackline, so I only had one comment to the order, and this is going to be a global comment for the six orders in total. If you go to paragraph 4.
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Page 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. KELLEY: THE COURT: Paragraph 4 of the interim order? Yes. The second sentence.
"And further, all payments made pursuant to this order are subject at all times that certain budget as may be amended from time to time with the consent of the agent under the debtors, debtor in possession delay draw term loan facility." The problem I have with that is that it links the debtors' authority to act under this motion to the debtors' ability to have funds available to act under the motion, and as a result it puts the debtor in a position of -- and the Court in a position of not being able to act if -- if required to do so under the motion unless the DIP agreement says it's okay, or the DIP agent says it's okay. not articulating this very well. This is a comment that I have for the DIP loan as well and I often make, which is, the DIP doesn't -- can't tie the hands of the debtor or the Court, the debtor to act in its fiduciary obligation, the Court to act as the Court. So, for example, if the debtor were to file a motion seeking to prime the DIP lender but not pay the DIP lender in full, as proposed under the DIP order, that is impermissible, it simply cannot be done. As opposed to the And I'm
debtor being authorized to do it, but obviously it would -breach of contract, breach of covenant, and would have
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Page 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 issue. THE COURT: MR. KELLEY: THE COURT: All right. So that is the -consequences. And my concern here is that theirs may wish to do X under this order that's perhaps a violation of the budget, and as a result they simply can't do that. I need to keep separate or want to keep separate the question of source of cash and use of cash. All these
motions until we get to the DIP are use motions, the DIP is a source motion. other. Long winded way of saying that I have a problem with that sentence. MR. KELLEY: What I would suggest, Your Honor, is They're related, but one can't control the
that during this break that we talked about a couple of times and I will address that with counsel or the proposed DIP lender and I'm sure we'll come up with a solution. THE COURT: MR. KELLEY: Okay. Now that we understand the Court's
It's insurance. -- insurance. So subject to that one
comment I had no issues with the order, and I'll hold that aside as well. Yeah, I can tell you I can give you the paragraphs when we go through it, but that's going to be an issue with
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Page 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is -THE COURT: So I'll hold that -- I'll hold that the critical vendor order, the customs order, the sales tax order, the cash management order, and the wage order. MR. KELLEY: Okay.
Well, Your Honor, since we sailed
through the insurance motion I'll offer the opportunity to do similar with -- similar procedures with the next one and several others until we get to a stopping point that Your Honor dictates, which would be -- the next one up would be agenda item 24 and Docket No. 74, that's the motion to pay prepetition claims of certain critical vendors. I will mention that a spreadsheet of the proposed critical vendors containing payment information has been provided to Mr. Buchbinder at his request, and I'm not aware of any -THE COURT: I have no issues with the order as
presented except for the last clause of paragraph 3, which deals with the previous comment. MR. KELLEY: Okay. The next one up, Your Honor,
aside on both the find hearing date and also resolving that issue. MR. KELLEY: Yes, Your Honor.
The next one is agenda item 25, Docket No. 75, which is the customs duties, common carriers, warehousemen, and cargo claims motion.
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Page 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 We've not received any comments from any petitioning creditors or Mr. Buchbinder on this one either. Subject to any questions or comments the Judge might have I would tender that one subject to your comment about the sources -- separating sources and uses. I would mention the cargo claims things, Your Honor, in particular is very -- a very crucial part of this car haul business is what they're -- of course doing is delivering brand new automobiles -THE COURT: MR. KELLEY: Sure. -- to the dealers, and a big issue,
and Allied is historically very good at this, and this is why they've been in business as long as they have, the big issue is scratching them up and dinging them up. If you do
that it has to be a very smooth running procedure to make sure that these cargo claims, for example, paying forward for any damage that Allied might -- might inflict on a brand new Ford vehicle gets paid and gets paid smoothly. that's the cargo claims part of it. THE COURT: Okay. I had no questions or comments So
other than the sentence -- or actually in this case it's a clause in the middle of paragraph three that starts -- third line starts, "and subject at all times" and goes onto the fifth line. MR. KELLEY: Yes, Your Honor.
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Page 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Other than that I'll hold it in
abeyance, but I'll approve the motion. MR. KELLEY: The next one, Your Honor, is agenda
item 26, Docket No. 76, this is the -- authorizing the debtors to pay prepetition sales and use taxes and other taxes that they incur in their operations such as highway taxes. Again, we've had no questions or comments from any of the interested parties to date. Subject to your Court's comment about separating sources versus uses we would tender this -THE COURT: MR. KELLEY: THE COURT: Okay. -- motion to the Court. Yeah, I had two questions with this.
The first is, the clause we discussed, which in this case is in the end of paragraph 2. The other thing is, this is not styled as an interim order, and I didn't know if that was on purpose or -MR. SAMIS: Your Honor, Chris Samis from Richards,
Layton & Finger here on behalf of the debtors. Your Honor, based on recent experience given the amount is so low in the aggregate, it's only about $180,000, we thought that it would be appropriate here to seek final relief at the first day hearing. It can certainly be
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Page 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 converted into an interim order if Your Honor has a problem with that, that was the rationale, and we didn't receive any comments from the U.S. Trustee Office or otherwise that would -- that would have suggested that we should pursue a different course of action. THE COURT: Mr. Buchbinder, any issue? I have no comment, Your Honor. Okay, I'll approve it as a
MR. BUCHBINDER: THE COURT:
All right.
regular order subject to the -- the clause issue. MR. KELLEY: THE COURT: MR. KELLEY: Your Honor, the final -Skip over cash management, right. Yes, Ms. -- I will skip over cash
management and leave that to Ms. Richter in just a moment. The final one that I'll handle will be the prepetition wages motion, which is agenda item 29 -- I'm sorry -- yeah, 28, and it's Docket No. 78. Your Honor, there has been a subject -- there's been quite a bit of information provided to Mr. Buchbinder at his request answering certain questions. I would also like to report to the Court that the amount of the -- that is sought on an interim basis has been increased from $9,070,000 to $10,500,000 to account for a $1,300,000 union pension fund payment that is coming due and some how didn't find its way onto the original analysis. have provided a breakdown of that amount to Mr. -- of all We
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Page 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 those amounts going to that number to Mr. Buchbinder. That
would also have the effect of increasing, though it's not before the Court today, the amount that will be sought on a final basis, it will increase it to $15,500,000. There's a pretty detailed breakdown of these -- of the various elements, Your Honor; however, subject to Your Honor's comments on the separating sources from uses and any other questions that Your Honor might have I would tender this motion to the Court. THE COURT: (Pause) THE COURT: On the sources and use issue the Just give me a second.
clause is at the end of paragraph 3, but it actually follows through a couple other times in the -- in the order using the defined terms. For example, it's the last clause in
paragraph 5, I'm not sure I caught them all, but -MR. KELLEY: Yes, I recall those things, Your
Honor, being inserted, and I realize they do in some of the orders appear more than once. THE COURT: MR. KELLEY: THE COURT: Yeah. We'll be on the lookout for that. Okay. The other issue slash question
I had, and this really -- this sort of plays out in -- in this -- the wage, the cash management, and the DIP, is I'm concerned that this order would somehow be construed as
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Page 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 trumping or violating Canadian law. So, for example, dealing with the payment of wages, employee benefits, et cetera, I'm not trying to, and I won't, enter an order that says, you know, the debtor need not apply with the Canadian workers' compensation order or something -- statute or something like that, and I don't -I don't know quite how to deal with it. I prefer some sort
-- a paragraph along the lines of, and I'm not going to try to draft it, I won't be as careful as you would be. I'm trying to find my note. (Pause) MR. KELLEY: While you're looking, Your Honor, I Sorry,
will report that we had extensive input from our Canadian counsel in Gowlings on this, so we're all very -- made very cognizant of them I can assure you of requirements of Canadian law. THE COURT: Okay. Well, that's helpful.
Again, I just -- and one of -- the thing I'm going to read is actually the note I made in connection with cash management order, but I just scribbled something along the lines of the provision of this order relating to funds held in Canadian banks are expressly subject to applicable Canadian law whether federal, prevential, territorial, et cetera, was basically the kind of language I'm looking for, and I think it would be appropriate in the cash management
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Page 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and in the wage order and in the DIP order. MR. KELLEY: THE COURT: Thank you. Thank you, Your Honor.
But other than that -- other than that
and the previous comment I'm fine with the order as presented and I will take the blackline. MR. KELLEY: Thank you, Your Honor.
Your Honor, I'd like to yield the podium to Ms. Carolyn Richter, my colleague. MR. SAMIS: Your Honor, Chris Samis from Richards,
Layton & Finger, I'm going to switch it for Ms. Richter on the cash management motion. Your Honor, what we have is a fairly routine cash management motion seeking to maintain the existing cash management system, seeking to use the existing checks and forms, requesting a limited waiver of 345(b), and is requesting administrative priority for intercompany claims. Your Honor, we got a couple of comments from the United States Trustee, but we're not fully resolved. There
is a blackline associated with the -- the -- with the form of order on this motion. Your Honor, if you -- if you'd like we can skip right to the order and go over the UST changes and then address any questions that Your Honor might have. THE COURT: MR. SAMIS: That's fine. Your Honor, skipping to the form of
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Page 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. THE COURT: MR. SAMIS: Okay. That was one change that was requested order then at paragraph 8, we've confirmed that the debtors will reach out to banks that are subject to UDAs with the United States Trustee's Office, to provide EINs and identify associated accounts of the debtor as debtor in possession bank accounts. THE COURT: MR. SAMIS: To provide what? Employee identification numbers, Your
by Mr. Buchbinder, and frankly it was just an oversight on our part, that language is pretty standard. THE COURT: MR. SAMIS: paragraph 13. All right. Your Honor, and then moving on to
In paragraph 13 we've actually edited the
language regarding the waiver of the requirement to permit the debtor in possession designation on our checks. As Your Honor probably saw in the motion we have a -- and as we discussed a little bit yesterday at the bridge hearing -- the debtors do print their own -- their own checks, including their own payroll checks, and using a software system called People Soft, and it is the debtors' position that it might be unduly cumbersome to try to basically change the programming of the People Soft software to account for the debtor in possession designation.
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Page 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So the accommodation that we've agreed to with the United States Trustee for now is to simply allow for a 45-day period to discuss the issue with the United States Trustee, we'll be able to continue using existing checks and forms during that time, and at the conclusion of the 45-day period if we reach consensual resolution with the United States Trustee we'll submit a form of order to the Court under certification of counsel for approval, and if we -- if we don't have a resolution at the end of that period we would -- we would file a motion seeking a -- seeking a waiver that would be heard at the next available omnibus hearing. THE COURT: MR. SAMIS: Okay. Dave, did you -- sorry --
Mr. Buchbinder, did you want to add anything? MR. BUCHBINDER: Good afternoon, Your Honor, Dave
Buchbinder on behalf of U.S. Trustee. Mr. Samis has correctly stated our agreement. We're going to take a look at their allegation and see if we can't resolve the matter. THE COURT: I had the same comment. It's like if
you print your own checks how hard can it be to add debtor in possession, but I'll let you look into it. MR. SAMIS: a concern right now. Very well, Your Honor. I think it is
We very well may find at the end of
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Page 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to put it. MR. SAMIS: We'll make sure whatever language we the day that we're able to accommodate the rules, but we'll learn that I guess over the next 45-day period. THE COURT: MR. SAMIS: THE COURT: Right. Your Honor -The -- the issue with the source use
issue as we sort of described it is in paragraph 6 -MR. SAMIS: THE COURT: MR. SAMIS: THE COURT: Uh-huh. -- first clause of the first sentence. Your Honor -I've also made -- and I also would
make the comment about the Canadian law limitation. MR. SAMIS: THE COURT: Understood, Your Honor. Or request I suppose is a better way
work out in the interim on that point, Your Honor, makes its way into the order. THE COURT: MR. SAMIS: Okay. Your Honor, obviously, you know, the
debtors would submit that we've satisfied 6003 here, we think a disruption to the cash management system would do immediate and irreparable harm within the first 21 days of the case. So with that representation, Your Honor, the two changes that I discussed with you that were from the United
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Page 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 States Trustee's Office and the points that Your Honor has made in connection with the motion, with those addressed we'd ask that the order be approved. THE COURT: All right. Subject to resolution of
my two open issues I'll approve the order. MR. SAMIS: MS. RICHTER: THE COURT: MS. RICHTER: Thank you, Your Honor. Good afternoon, Your Honor. Good afternoon. I am Carolyn Richter, I practice
with Jeff Kelley in Atlanta in the Troutman Sanders law firm and I'm going to present the final item on the agenda today, it's a significant motion, the motion to approve the financing for this case on an interim basis. I'm going to make a short argument and establish by proffer what I think the Court would find for the debtor to have satisfied its burden. Your Honor, Allied is requesting approval to enter into a $20 million delay draw credit facility with priming liens and claims that would take priority over the prepetition lender groups evidenced by the first lien credit agreement and the second lien credit agreement. Draws would
be available to be advanced where the debtors' cash collections were not sufficient to pay the expenses on hand and to give Allied $5 million of cash on hand or minimum liquidity.
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Page 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now, I think the terms of the loan are clearly set forth in the motion, so I won't go through those at all, but what I would like to do is address the issue of consent, and Your Honor has indicated you're not making any findings today on the issue of consent, and I respect clearly what you're saying. The issue of requisite lender consent is the subject of litigation. A lawsuit was filed by the
petitioning creditors as you know in the Southern District of New York seeking a declaration, a declaratory judgment that Yucaipa are not the requisite lenders. THE COURT: I -- just to interrupt. It's not that
I won't make a finding, because I think I would need to make a finding on the priming issue, because otherwise you'd have to prove -- put on a case of adequate protection. MS. RICHTER: THE COURT: Adequate protection. Okay.
It's just that I want to make sure
that (a), that factual finding is not interpreted as having preclusive effect for the lawsuit, and (b), and I'll have some comments and Mr. Harris is more than capable of taking care of himself, but I think we're going to need, and my comment would be some sort of claw-back provision to the extent -- it really cuts to the priming -- to the extent that it ultimately is determined that the requisite lenders aren't --
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Page 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. RICHTER: THE COURT: Aren't --- aren't -- have the ability to bind,
that there be some way to revisit the priming issue to the extent that could involve Mr. Harris. MR. HARRIS: I just want to let the Court know,
because I may be able to short circuit this a little bit. Whether Yucaipa is the requisite lender really need not be addressed here today. Frankly if they are they
are, and if they're not then my clients are given the holdings that they have in the first lien credit facility. The fact of the matter is there's no objection being interposed by any first lien lender here today to the priming that's being proposed by this financing. THE COURT: MR. HARRIS: Including your client. Including my clients. We have some
issues with some of the terms, we've -THE COURT: MR. HARRIS: Right. -- raised a lot of them, we've
resolved a lot of them -THE COURT: MR. HARRIS: Okay. -- I'd like to see what the changes
are in the proposed form of order and the credit agreement just so I can confirm what's still open. But I just want to
make the Court aware that there is nobody here today who is contesting or otherwise objecting to the proposed plan for
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Page 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 purposes of the interim order. THE COURT: All right. That's helpful. Like I
said, you're more than capable of taking care of yourself and your client, so I'm happy to yield to the parties that have the economic interest in the matter. MS. RICHTER: So, Your Honor, what we are prepared
to do is to offer into evidence or proffer, if you would, what the Court would require to make the minimum findings. That would involve two facts -- establishing two facts. One is what does the credit agreement say? have the senior and first lien and second lien credit agreements, binders of those, and the intercreditor agreement between those creditor groups. Section 10.5 of the agreements -- and by the way, they really mirror each other. The first lien and the The We
second lien are practically mirrors of the other.
section that deals with what requires the consent of simply the requisite lenders and what requires the consent of all the lenders is in these credit agreements set forth in the amendment section, which is Section 10.5. And under that section clause (A) it makes it clear like any syndicated credit facility, voting rights are given to a requisite minimum group of power, those who hold the minimum exposure needed to make voting decisions. So we would direct Your Honor to Section 10.5 of
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Page 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the credit agreement to set forth who has the power. And we
have a notebook, Mr. Samis will provide you with one here. Scott Macaulay, who's here, who's the chief financial officer, can testify that these are true and correct copies of the credit agreement. THE COURT: MS. RICHTER: the -- in the courtroom. MR. HARRIS: Your Honor, I apologize to Okay. Let me get organized.
And we have copies for everyone in
interrupting Ms. Richter again, but I guess the question I have is we don't really -- if Ms. Richter wants to get into a debate about what provisions of the credit agreements apply as a predicate for the consent that she says she needs we can do that, but I think Yucaipa is here, they own 53 percent of this purportedly, I'm here, we own a big piece of this as well, nobody else is here objecting. I'm not sure why the Court can't take the representations of the lenders who are present to say we can -- we are consenting to the priming for purposes of today's hearing and dispose with any potential argument or need to argue over what provisions of the credit agreements may or may not apply here. Because you won't be shocked to hear that we disagree with their legal analysis, and I think that putting in the testimony is kind of irrelevant and an unnecessary
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Page 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this. MS. RICHTER: THE COURT: No, I understand. Okay. So I think actually Mr. Harris' side show here when we have the principal parties in interest with the economics who are standing before you saying the priming is fine subject to working out some issues on the terms. THE COURT: notebook, Ms. Richter. MS. RICHTER: Your Honor, I was not attempting to All right. Well, let me see the
do anything more than just introduce or provide to the Court the -- the document. We are in agreement that this DIP loan is either consented to by Yucaipa -(Pause) THE COURT: All right. Now I haven't read any of
comments are in line with practice, which is for the factual findings unless you want to take about a 20-hour recess -MS. RICHTER: THE COURT: No. -- I'll accept the representations of
counsel, and the DIP order acknowledges that in the way the findings are set forth, so. MS. RICHTER: THE COURT: MS. RICHTER: Your Honor, that's correct. But you can -This motion is either consented to
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Page 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 by the requisite lenders or unopposed by all the principal lenders in the first lien facility. THE COURT: MS. RICHTER: Uh-huh. They are here today. Even if you
were not to include Yucaipa, because they don't count for purposes of the requisite lender, Black Diamond and Spectrum, along with CIT would hold 35 percent of the first lien debt, which is greater than the remaining first lien lenders who hold very small percentages that aggregate 8.5 percent, much less than the 35 percent held by Black Diamond, Spectrum, and CIT. So regardless how you present it, as consented to or unopposed, this is no objection to the DIP -- the priming DIP liens and superpriority claims on an interim basis. THE COURT: MS. RICHTER: Okay. Your Honor, we would propose to take
a break to discuss perhaps the terms of the proposed consensual order, unless you would like to hear any further proffer from the investment banker. THE COURT: No. No, I don't need it. Well --
yeah, I would like to hear about how the loan was shopped. MS. RICHTER: Okay. Your Honor, we have with us
today Todd Snyder who is an investment banker with Rothschild. Rothschild is the debtors proposed financial If
advisor, and he's sitting right here in the courtroom.
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Page 45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 he were to testify, I have his proffer. THE COURT: MR. HARRIS: THE COURT: MS. RICHTER: Any objection to the use of a proffer? No, Your Honor. Okay. He would recommend to the board of
this company that they approve this DIP loan. Mr. Snyder, just by way of background is, co-chairman of Rothschild restructuring and reorganization group and vice president of the firm, and we have an application for employ the firm, that's going to be filed in the next few days. He's been with Rothschild for 12 years. BA from Wesleyan and a JB from the University of Pennsylvania, and he's been involved in reorganizations about 24 years and handles the representation as a financial advisor for the debtors in a number of large cases. airlines, and I could go on. United He has a
He's very familiar with the
terms of DIP financings in large debtor cases. Your Honor, if called to testify Mr. Snyder would say that he's reviewed both the term sheet and the credit agreement, that overall the proposed loan is not inconsistent with the market. He's reviewed the economic or financial terms in particular, which is the interest rate, the fees to the agent and the lenders, the financial covenants, and the
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Page 46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 budget covenants, and taken together with the other terms of the DIP of the loan he would determine that these are well within market parameters. He would testify that on behalf of Allied, Rothschild did try to find alternative sources of financing for this case, but given the challenges of the company's capital structure they weren't able to find any other institutional hedge fund or other lender what they approached who was willing to provide an offer. They
approached approximately ten lenders, none of them would agree to provide a DIP loan for this company unless it was done on a consensual priming basis. But the significant
holders of this first lien debt will not agree to being primed by a third-party lender. These lenders also indicated that they would not make a DIP loan on a pari passu basis with the first lien lender group or secured by a junior lien or certainly on an unsecured basis. So his testimony in sum would be that in his view that this financing presents the best terms available, it's not inconsistent with the market, and it would be an appropriate exercise of the debtor's business judgment to approve it. And in that regard he testified or he's consulted and advised an independent board, committee of the board of
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Page 47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Allied, because Yucaipa I and Fund I is an affiliate of the proposed DIP learned, Fund II. Allied formed a committee of
independent board members to consider the DIP loan, and Mr. Snyder was on the phone with them at that meeting and gave them his advice. And after hearing his advice and his
opinion this special committee passed resolutions approving the DIP loan. THE COURT: MS. RICHTER: two directors. Okay. Who's on the special committee?
The special committee is composed of
Brian Cullen (ph) and Mark Jendursky (ph)
both of whom who have been on the board of Allied for many years. THE COURT: MS. RICHTER: No affiliation with Yucaipa? No affiliate with Yucaipa.
Your Honor, the only final point that we would make here is -- would be a proffer that the DIP loan is necessary and that the $10 million cap is appropriate if you would be interested in hearing that proffer. THE COURT: No, that's -- that's not necessary.
If you can help me though, show me where on the budget the drawdown is reflected. (Pause) THE COURT: I'll show you where I think it is and
maybe you can tell me if I'm right. (Pause)
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Page 48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 correct. THE COURT: MS. RICHTER: THE COURT: Okay. So -THE COURT: Looking at the budget about -- well,
the -- a little bit up from the bottom there's something called revolver availability commitment less borrowings total availability. MS. RICHTER: THE COURT: Right. Is that the drawdown DIP loan?
Because it says the commitment is 20 million, so I assume that was -MS. RICHTER: The commit is 20 million; that is
I can --- it doesn't -- basically it's
approximately five to six million for the first four or five weeks. I guess four weeks and then it starts to go up. MS. RICHTER: THE COURT: MS. RICHTER: Right. Okay. I can tell you that in terms of the
immediate need for cash this week there are payments due to health, welfare, and pension obligations, those are due Friday and they aggregate 2.3 million. Payroll is paid
weekly for this company, and it aggregates one million, that will be due on Friday. And in terms of timing there is a
cyclical nature to this business, this car haul business, because as we move into July and we get close to a model
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Page 49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reduction? (Pause) MS. RICHTER: Your Honor, in terms of the budget, year change over -THE COURT: MS. RICHTER: Uh-huh. -- Ford and the other auto
manufacturers shut down their plants -THE COURT: MS. RICHTER: Yeah. -- to get ready for those changes,
so there is a -- there's a drop in demand for car haul services, and precipitous drop in cash. So the company's cash flow is excepted to be negative by 14 million over the next 30 days, and it's the company's position -- Scott Macaulay's position as chief financial officer that it's imperative that the customers of Allied have confidence to stick with this company for -THE COURT: Where's the cash flow number
if you look under the revolver section that we were discussing. THE COURT: MS. RICHTER: Yes. Above revolver availability, just
under the revolver, and look at the ending balance, the third line under revolver, if you move over into the weeks of this case the company is going to be needing up to 10- to $11 million under the revolver.
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Page 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I'm lost. THE COURT: Well, you said -- wait a minute. You
said something about cash negative $14 million. MS. RICHTER: THE COURT: MS. RICHTER: Right. What -- what did you say? Mr. Macaulay advised me that the
cash -- the company's cash flow is expected to be negative over the next 30 days by about 14 million, but I believe his view is that the number is actually the 10 to 11 million reflects here. THE COURT: I'm lost. MR. HARRIS: Your Honor, I think the differential Well, you never get to 12 million.
is the starting cash balance and you add that to the 10 million borrowings over the course of that period of time and you end up with effectively a zero balance so you show 14 million of negative cash. (Pause) MS. RICHTER: I would also like to say that
Mr. Macaulay's proffer would state that it's important for Allied to have interim availability in excess of the minimum amount needed just to show the customers that Allied has sufficient liquidity on day one to pay all vendor claims, to pay employees, and to continue to basically reassure the marketplace that there's enough financing to fully pay all post-petition trade claims.
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Page 51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. KELLEY: Your Honor, if you would care to hear
from Mr. Macaulay we could bring Mr. Macaulay to the podium to walk Your Honor through it. THE COURT: Yeah, I don't understand your budget
and can't make -- I don't -- I don't understand it. MR. HARRIS: Your Honor, before we move on to
Mr. Macaulay can I just get two clarification from the proffer so we'll be done with Mr. Snyder? THE COURT: MR. HARRIS: Yes. The first is Ms. Richter made a
comment that Mr. Snyder would testify that significant holders of the first lien debt would not agree to be primed, and I'd just like to understand who those significant holders were who refused to give that consent. THE COURT: MS. RICHTER: I assume it was Yucaipa. Your Honor, Yucaipa indicated that
they would not agree to be primed. THE COURT: Well, I don't see how that helps you
on an independent good faith finding, but any way, go ahead. MR. HARRIS: And the other question I had, Your
Honor, was -- and I understand Your Honor's question about Mr. Cullen and Mr. Jendursky -- whose name I will continue to butcher throughout this case, and I apologize in advance -- not being affiliated with Yucaipa, but I would like some clarification from the company as to how they came to either
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Page 52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be on the board or be the CEO of the company. Were they
appointed by Yucaipa or a board that was effectively composed of Yucaipa representatives? THE COURT: Are you challenging -- are you
challenging the loan on that basis? MR. HARRIS: No, Your Honor, just the
representation to the Court that there's an independent committee, I wanted to make sure that the Court understood that the independence of the committee depends on how they got there in the first place, both Mr. -- my understanding is both Mr. Cullen and Mr. Jendursky came to be affiliated with this company as a result of somebody -- some person or a group of people associated with Yucaipa asking them to fulfill those roles. MR. KELLEY: This is Jeff Kelley, I can provide a
proffer of Mr. Blount or Mr. Macaulay on this. Brian Cullen is with Duff & Phelps, back during the first case he was with Channon (ph), Channon was the financial advisor to the creditors' committee in the first case, and he came to be on the board not through an affiliation with Yucaipa but because of his familiarity with the company as an advisor to the creditors' committee, which was somewhat adverse at times to Yucaipa frankly in the first case. So that's who Mr. Cullen is.
Mark Jendursky is the CEO of Allied, and he is on
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Page 53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the board and he was -- he was hired by the new board. guess you could say he was hired by a Yucaipa controlled board, but he had no affiliation with Yucaipa before. think he came from Chrysler. Mr. Jendursky. And those two people are the independent board members that were referred to as the ones that approved the DIP loan. MR. HARRIS: That's fine, Your Honor, that's the So that's is story on I I
only clarification I was looking for. THE COURT: I don't know if we need Mr. Macaulay.
Where you threw me off and continue to throw me off is this comment that -- and I just don't understand -- cash flow negative, $14 million. If you're talking about the less borrowings line which indicates the weekly deficit I understand, but that doesn't get to 14 million, that never gets over -- well, it never gets over 12-, and it doesn't do that until much later in the case. But I'm just trying to figure out with the source of the representation to the Court that there's a necessary $14 million cash flow. MS. RICHTER: Your Honor, we withdraw that It's 10 to 11 million. All right, I
representation negative 14 million. THE COURT:
Okay, I understand.
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Page 54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 don't need anything else on the budget. At this point I think it would make sense -- I mean to move on to going through the order, et cetera, but I guess you don't have a final order you want to go through yet. You want to meet first or -MS. RICHTER: Your Honor. We would request a short recess,
There were changes to the order and I think the
parties want to review those changes. THE COURT: MR. KLYMAN: Okay. Your Honor, if I may, Robert Klyman
of Latham & Watkins on behalf of Yucaipa. We received e-mail comments from Mr. Buchbinder and from Mr. Harris last night and this morning, we were on calls particularly with Mr. Harris until the time we came to court. We now have a blackline version of the order, we're
waiting for a final blackline of the credit agreement. What I propose, subject to Your Honor's timing, is that we take a short recess to work through the order, hopefully we'll have the credit agreement delivered in time, and we've got a couple of issues that we still have to talk to Mr. Harris about, and then we come back and tell you where we are and maybe that we just toss some issues up for you to decide. THE COURT: MR. KLYMAN: All right. As opposed to working them out
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Page 55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 consensually. But we've made I think surprisingly good
progress this morning, we just ran out of time. THE COURT: Okay. Well, of course I'll have some
comments too, but we'll deal with those at the appropriate time. Mr. Buchbinder? MR. BUCHBINDER: behalf of the U.S. Trustee. I just have one comment to make in connection with the proffer, and I will ask counsel if they'll confirm what I'm about to say and it will simplify things. A representation that's contained in the first day declaration of Mr. Macaulay, but that I could not locate in the DIP motion, is the important disclosure that Yucaipa owns 70 percent of the debtors common stock, and I think we need to act that fact to the proffer. And if counsel will Your Honor, Dave Buchbinder on
agree to that I'm fine with the proffer. THE COURT: MR. KELLEY: Okay. Yes, Your Honor, that's correct,
we'll add that for the proffer. THE COURT: MR. KELLEY: THE COURT: Okay. Jeff Kelley speaking. Okay. As to timing, I have a very
short -- well, I have to leave the office at 2:10, should be back my 3:00, 3:10 at the latest I would think, so I'm happy to work around that as appropriate.
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Page 56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 speed -MR. SAMIS: THE COURT: (Laughter) THE COURT: MR. SAMIS: THE COURT: MR. SAMIS: -- this could get ugly. Times two, Your Honor. I have 45-year old ears, so go ahead. Understood. Yes. -- so this -MR. KELLEY: Thank you, Your Honor. We will try
and move more quickly than 2:10 only because we've got to get our DIP order recognized in Canada to the extent you're prepared to enter it. THE COURT: Yep. Okay. Let's take a break then.
Just let me know when you're ready. MR. KELLEY: Thank you, Your Honor.
(A chorus of thank you) (Recess at 1:19 a.m.) THE CLERK: THE COURT: MR. SAMIS: All rise. Please be seated. Yeah, how are you? Mr. Samis. I'm going to do
this at lightning speed because I'm aware that you're -your schedule is tight. THE COURT: On a slow day you're at lightning
Speaking broadly in terms of the resolutions of the issues that Your Honor raised. First with respect to
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Page 57 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the Canadian language that we're going to be adding to the three orders, the DIP, the cash management order, and the employee wage order, it's going to read as follows. "Nothing herein shall be deemed to alter, modify, or waive the debtor's obligations under applicable Canadian law." We think that's broad enough to encompass anything that Your Honor would be concerned with, and I think -THE COURT: MR. SAMIS: That's fine. Okay. That that's, Your Honor.
With respect to the DIP lender qualification language that you -- that you had an issue with that was throughout the orders authorizing the prepetition payments of various claims -- payment of prepetition claims, we're just going strike that language completely, and we've drawn lines through it in all of the orders. THE COURT: MR. SAMIS: Very good. Your Honor, that leaves the only other
open issue with respect to the -- to the non-DIP first day motions was the CC payment issue that Your Honor raised in connection with the utility motion. We think that there's no real cause for concern there, because as a third-party provider we're still going to be reserving on account of the -- of the amounts that would get paid by CC payment in the utility escrow account.
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Page 58 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Moreover -THE COURT: MR. SAMIS: It'll be your account. It'll be our account. We'll still be
holding the monies in there in reserve, so there'll be adequate assurance funds as provided for by the motion available for those utility providers that are paid by CC, and at the same time, you know, the liability is still our liability under the agreement that we had with CC. So I don't think that there's any outstanding issue in connection with -- with that arrangement. Vis--vis the provision of adequate assurance. THE COURT: Okay. We may have to revisit that in
the final order if somebody raises the issue, but for today's purposes I'm satisfied. MR. SAMIS: Fair enough.
Your Honor, the only other thing that I would request is a final hearing date. THE COURT: MR. SAMIS: Yeah. If we can do that. I'll interlineate
that while people are discussing the DIP with you. THE COURT: What are you looking for? Let's see,
how about the week of July 9th? MR. SAMIS: I don't see any objections, Your
Honor, so that'll work. THE COURT: No objections. You're amazing. You
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Page 59 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the 12th? correct? MR. SAMIS: THE COURT: MR. SAMIS: THE COURT: Yes. That's fine. Okay. Objection deadline on the 5th? What time on 12th -THE COURT: Remain the 12th, which is Thursday, want to borrow my robe? (Laughter) THE COURT: (Laughter) THE COURT: week, whatever works. MR. SAMIS: Okay. Your Honor, I believe the Really, I'll fit you in any day that It's kind of fun to wear.
Hang on, wait a minute.
Coming from New York? MR. HARRIS: Your Honor, if we could do 11 o'clock
that would be great. THE COURT: MR. SAMIS: THE COURT: All right, let's do 11 a.m. then. Okay. All right, so July 12th, 11 a.m., and
the 5th is -- let's make the objection deadline the 6th because of the -MR. SAMIS: THE COURT: MR. SAMIS: Holiday? -- holiday, yeah, at 4 o'clock. Understood.
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Page 60 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 podium. THE COURT: MR. KLYMAN: Mr. Klyman? Good afternoon, Your Honor, for the file. MR. BUCHBINDER: Your Honor, David Buchbinder for THE COURT: the first day orders. MR. SAMIS: THE COURT: Very good. As well as any second day orders you Okay. And that can apply to all of
the U.S. Trustee, this might be a good time for me to announce on the record that the United States Trustee will hold a creditor committee formation meeting on June 19th at 1 p.m. in our Room 5209 in the Federal Courthouse at 824 -at 824 King Street. THE COURT: (Pause) MR. SAMIS: Your Honor, I am just going to Very good. Thank you.
handwrite in these dates very quickly, I will walk them up if Your Honor is okay with it while you -- while the DIP discussion is going on, and then if we -- you know, because of the Canadian hearing which has been pushed to 3 o'clock luckily I think we'll have enough time to probably get them entered. THE COURT: MR. SAMIS: All right. Your Honor, with that I cede the
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Page 61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 record Robert Klyman on behalf of Yucaipa. Your Honor, over the past couple of days we received about 30 points from -- to consider in connection with the DIP from Mr. Harris and his clients, some big, some small, plus some additional comments on the creditor agreement. We also received a handful of comments from
Mr. Buchbinder. We've resolved almost all of them, and we've given to your chambers I believe before the break or at the break a redline version of the DIP order. version of the credit agreement. We've got some additional changes based on our huddling after the -- during the break that we can describe to you or we can just move to the open issues and we can hand up whatever the redline is. I'm just trying to be sensitive to moving it at a quick speed. (Pause) THE COURT: blackline changes. MR. KLYMAN: THE COURT: current blackline. (Pause) THE COURT: I think page 5 is the first change. Okay. And for that purposes I'll look at the Why don't you run through your We also have a redline
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Page 62 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 amount. Unless there have been others. MR. KLYMAN: There have been, Your Honor.
At paragraph 3 on -- as finding (d) on page 3 we've agreed with Black Diamond to put in that these -- "the debtors' stipulations are subject to the rights of nondebtor parties as set forth in the provisions of paragraph 12." THE COURT: MR. KLYMAN: Okay. Page 5 was just to clarify the
These are approximate amounts. THE COURT: MR. KLYMAN: Okay. Going to page 6, Your Honor. This
was just a clean up.
In sub 4, for example, we had "subject
to the provisions of paragraph 12", that was moved up to the beginning of the Section D. THE COURT: Uh-huh. There's something in the -"Subject to
at the end of Romanette iii there.
subordination under contract, the code, or otherwise applicable law" -MR. KLYMAN: I think we were defining that these
would be permitted liens. Your Honor, as a result of negotiations with the U.S. Trustee we agreed that the DIP loan would be senior to the first -- the liens associated with the first lien creditor in the second credit agreement and any other liens
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Page 63 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that by contract or operation of law were subordinate. just clarifies that point. There were a number of other This
lien holders who may not have gotten notice, but we're not trying to prime them. THE COURT: second lien. MR. KLYMAN: contract or -THE COURT: MR. KLYMAN: there's just a typo. Honor. At the bottom of page 8 we just filled in the date and we also took out -- identified that the debtors were authorized to enter into the agreement, but not directed to. THE COURT: MR. KLYMAN: Okay. All right. Have agreed to be subordinate. Correct. And on page7 in (f) Yes, and any other parties who by So you are only priming the first and
I'll just skip over the typos, Your
You're -- page 9 we just referenced
that the notwithstanding provision would apply to the interim order and not just the approved budget, because the budget is an exhibit to the order. And this is just
clarifying that it won't be paid by any of the debtors, to clarify that this applies to both Canada and the U.S. This
is a Canadian law provision that we got from our brethren due to certain severance and termination obligations that may be due and owing in Canada.
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Page 64 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. KLYMAN: Uh-huh. In the footnote on page 9 we deleted
the reference to cash collateral and just referenced this order. On page 10 Mr. Harris requested, and we agreed, that when we were submitting -- when professionals for the DIP agent or the DIP lenders were submitting fees and expenses that that would be accompanied with a certification that the fees and expenses relate to the DIP loan, enforcement of remedies, or this interim order. On page 11 in the middle of the top paragraph we added "that unless this Court otherwise orders the DIP expenses won't be subject to Court approval or be required to be maintained in compliance with the U.S. Trustee guidelines." In subparagraph (b), which is (4)(4), we had inadvertently included that amounts payable under Section 10.2 of the creditor agreement would be included in this section. In fact what we meant to limit this to was 10.3
which deals with fees and expenses associated with indemnification rights. On page 12, paragraph 8 we added that these postpetition lean liens would be subject to the provisions of paragraph 10, which in paragraph 10 deals with the priority of liens.
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Page 65 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Pause) MR. KLYMAN: On paragraph 14 -- I mean on page 14,
Your Honor, we have deleted Section B that beginnings, "Subject to paragraph 10 and 12," as duplicative and understand necessary. In paragraph C that follows we've changed the tense of the first line and that's in a hand mark up that we'll hand up to Your Honor. It'll say the prepetition
secured lenders have consented or are deemed to have consented to the adequate protections that are -- we also provided that the final order needs to be entered by July 12th. THE COURT: MR. KLYMAN: Uh-huh. Provided that the day could be
extended to the extent it didn't comply with Your Honor's calendar. On paragraph 10 this is a pick up of the earlier point that I had mentioned about who the DIP loan would be senior to and the adequate protection liens, and we've identified an X, Y, and Z of parties to whom we would not be seeing. Paragraph 17 we just used the wrong term in paragraph C and cleaned it up. THE COURT: MR. KLYMAN: All right. Page 17.
Yes, I'm sorry, Your Honor, page 17.
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Page 66 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 On page 19, which is 10(h) this will now read, "The DIP agent for and on behalf of the DIP lenders" and then there would be a strike out of "and subject to paragraph 12 below." This just clarifies that the DIP agent on behalf of the lenders has the right to credit bid just so there's no ambiguity that if there's a situation where they could credit bid they could, they thought of a power to do so. And original it was to spell out as well that the prepetition first lien agent could credit bid as well, at Mr. Harris' request we just struck that and left that for whatever the rights are of the parties. On paragraph 11(a), which is at page 19 to 20 we made clear Mr. Buchbinder's request that the amounts payable to the U.S. Trustee would not be subject to any of the caps set forth in this paragraph. We also built in, subject to Your Honor's approval of Rothschild engagement as investment banker to the debtors, that their monthly fee and their completion fee would not be subject to a limitation of the carveout. In the middle of that paragraph on page 20 we cross-referenced 12(c) for the allowed or unpaid fees to committee professionals. And on 21 at paragraph B again we cross-reference, you know, other than expressly set forth in paragraph 10(a).
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Page 67 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there. On page 25 at paragraph 14 we built in that a waiver of Section 552(b) and the equities of the case provisions will be subject to entry of a final order. On page 26 this was a provision that deals with rights versus third-party landlords and licensors, and at Mr. Buchbinder's request we added that this would be subject to entry of a final order. On page 27 in paragraph B, at Mr. Harris' request, we added that the debtor would deliver to the petition creditor whatever financial reporting information the DIP lenders got, and that the counsel for CIT is here as well, they'd asked to be add to do that, which we've done in a mark up, subject to execution of a reasonable non-disclosure agreement. On page 32 we eliminated paragraph 24 to subject entry of a final order. At paragraph 32 we're going to have to build in the dates for the final order that Your Honor just gave us. THE COURT: Uh-huh. On page 23, which is in paragraph B of that page, this references the bringing of a committee challenge action. We just changed "properly" to "timely" so that -THE COURT: MR. KLYMAN: Uh-huh. -- we specified what was at issue
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Page 68 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 changes. MR. KLYMAN: date there. And I think the only other addition, Your Honor, is to add a sentence at the end which says, "Nothing herein shall be deemed to alter or modify or waive the debtor's obligations under applicable Canadian law." THE COURT: MR. KLYMAN: Okay. We also would be adding expressly to We had At page 33 we'll have to fill in the
this order that the credit agreement is an exhibit. some language changes that we worked through with
Mr. Harris, they are a couple of open issues which we can address. I will take Your Honor's questions. THE COURT: eight minute late. MR. KLYMAN: THE COURT: changes you just said. MR. KLYMAN: THE COURT: Okay. We still need to turn it to have my Okay. I have no problem with any of the No, I don't have time, I'm already
Some of them have been addressed, not all of them
have been addressed, and obviously go through the credit agreement, and I'm sorry I cannot get out of this appointment, we'll have to reconvene at 3:15. MR. KLYMAN: THE COURT: Okay. Thank you, Your Honor.
That's the only thing I can do about
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Page 69 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it. All right? (Recess at 2:22 p.m.) THE CLERK: THE COURT: All rise. Please be seated. My apologies and
thank you for your patience. MR. KLYMAN: Your Honor, for the record Robert
Klyman on behalf of Yucaipa. I think where we left off was where you said I have some questions, but we'll have to take them up after the break. THE COURT: Okay. And I'm going to try to page
turn together because I'm working off the -- the interim order from yesterday as to the changes you made today, and hopefully -- I know that some of my comments have already been taken care of. (Pause) MR. SAMIS: Your Honor, I didn't want to interrupt
you, this is Chris Samis from Richards, Layton & Finger, I didn't want to interrupt Mr. Klyman either, but I just wanted to ask as to the status of the other orders, especially the cash management. THE COURT: Yeah, I apologize, meant to have those They are being docketed as
signed before I left, I didn't. we speak. I apologize. MR. SAMIS: Terrific.
Thank you, Your Honor.
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Page 70 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Pause) THE COURT: We may have dealt with this earlier,
but on page 9, the middle of the severance or termination benefits. Could you explain what that was again for me? I
know you made some changes. MR. KLYMAN: THE COURT: Yes, Your Honor. They shall first use -- provided
further that notwithstanding anything to the contrary, et cetera, et cetera, no -- under no circumstances any claim, et cetera, shall be paid. MR. KLYMAN: Your Honor, this was a provision that
was put in to be coincidental with what's going on in Canada. There are certain severance obligations, some of which have matured, some of which are in a gray area, some of which haven't matured, and we didn't want and the debtor didn't want a run on the DIP financing because of certain priorities and charges that are associated with severance and termination payments in Canada. So we and the debtor have agreed that we will work out a reasonable accommodation on that, but it's subject to our additional approval. (Pause) THE COURT: So I'm sorry, page 10, paragraph 4(a) Other fees and costs, et cetera,
sort of midway through it.
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Page 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. THE COURT: Okay. So just -- yeah. But you're et cetera, regardless of whether or not the DIP loan or any other financing is consummated. if there's no DIP loan? MR. KLYMAN: I think we can modify that, Your So how do I pay your fees
going to have a loan by the end of the day, so. MR. KLYMAN: Bear with me for one second, Your
Honor, I'm just trying to track the version that -THE COURT: MR. KLYMAN: THE COURT: (Pause) MR. KLYMAN: THE COURT: MR. KLYMAN: Okay. Six slash seven lines down. Your Honor, I guess that would be in Yeah, it's --- that's been marked up. It's right before the markups.
the unlikely situation where this order was entered and had they found another DIP lender right away, but I think we can take risk. THE COURT: et cetera, et cetera. MR. KLYMAN: THE COURT: Yeah. Okay. Okay, I've got that. Very good. Paragraph -- page 11, The debtors are So just strike regardless of,
paragraph 5, the very first sentence.
authorized and directed to, et cetera, et cetera, I'd like
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Page 72 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to strike "and directed." MR. KLYMAN: (Pause) THE COURT: Page 12, paragraph 6, I just -- oh, On -- on modifications I'd Okay.
I'm sorry, yeah, paragraph 6.
like those to be done on notice to whatever statutory committee may be in place. well. I don't know, Mr. Buchbinder as
I'm not saying I need to approve non-material
amendments, but I want to keep the committee in the loop. And obviously on the material amendments that are subject to Court order that would be on notice. (Pause) MR. KLYMAN: THE COURT: Okay, thank you. I hesitate to say this because the
problem kind of arises because it's a short, declarative, uncomplicated sentence, but paragraph 7, I'm not exactly sure what -- what the import of this is. This -- I take it
this means that you're getting a superpriority admin claim for the actual loan that you make. MR. KLYMAN: THE COURT: permitted liens. (Pause) THE COURT: All right. Are all secured -- are all Correct, Your Honor. And we've solved the issue with
prepetition secured lenders receiving adequate protection or
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Page 73 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 dicey. The comments here go to the concept that -- I don't want to -- I want to prove sort of tying the debtor's hands or tying the Court's hands in the event that there are issues -- or a set of facts that arise that would require them to take certain action that at least as its put here would be prohibited. So, for example, paragraph A has -- says that the post-petition liens and except as otherwise set forth in this interim order, the adequate protection liens shall not at any time be made subject to or subordinate to or pari passu with any other lien, et cetera. And my issue with only the first and second lien? MR. KLYMAN: Well, as this is set up, Your Honor,
the first and second lien holders are being primed pursuant to this DIP arrangement, plus whatever lenders, and I don't know if there are any, but to the extent they're contractually or otherwise subordinated. that are covered by this order. Those are the ones
Any other secured creditor
who is not being primed has whatever rights it has. THE COURT: (Pause) THE COURT: All right. Paragraph 10 is a little Okay.
that is shall not at any time be made subject to et cetera, et cetera.
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Page 74 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. KLYMAN: Your Honor, one fix as opposed to
working through all these at various points, I think there's a provision in the order which says that if the order is amended or modified it's an event of default. fall back on that. If you'd like we can go through the order between now and the final hearing date or now over the course of the next week and try and fix those. I just think that standing at the podium it may be awkward in terms of drafting, but as long as we have that provision in the order that an amendment or a modification would be an event of default if you modified this provision and granted the debtor a lien that was senior to ours or somehow violated by this provision then we would fall back on there was an amendment and therefore it's an event of a default. THE COURT: Yeah, I mean I have no problem with it So we can
being an event -- I've given this speech 100 times and I know everybody is aware of it -- I don't have any problem with it being an event of default, but if the debtor feels that in context with its fiduciary duties it needs to ask me to do something I'm not going to be constrained by the fact that I'd be violating this order, but you'd have an event of default, which I -- which I don't have a problem with and we'd come in and we'd go through the whole event of default
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Page 75 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 dance. MR. KLYMAN: THE COURT: Can I have just a minute, Your Honor? I mean we -- I understand how anxious
you are to get this done, but -MR. KLYMAN: THE COURT: I'm sorry, Your Honor. It's okay. I understand how anxious
you are to get this done and it's getting later and later, but -MR. KLYMAN: Can we for the moment, and I don't
know if my solution gets us over the hump at least for a moment, but to put on the record that these source of provisions if this Court -- this Court retains jurisdiction to modify them, and if the Court does then it'll be an event of default under the DIP loan? The alternative is we go back to Mr. Mester's (ph) office or Richard Slayden (ph) and try and, you know, rework all the language and circulate it around and them submit an order tomorrow. That doesn't work as well only because my
understanding is, is that we've missed at least a window today to get the DIP financing recognized in Canada, but that the Court may have a short window tomorrow morning, around 9 o'clock in the morning, to actually approve the DIP financing. My understanding further is that the debtor can survive without getting the cash -- without getting the DIP
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Page 76 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 financing approved today, but starting tomorrow it may be much more of a problem. So just in terms of the logistics we're willing to be flexible and submit a follow on -- an amended order that tracks those sorts of issues that you've just identified, but for the moment if we could fall back on what I'm -- what we're putting on the record and following up with an order that may be better for the debtor, if that works for Your Honor. (Pause) THE COURT: How about we do this, how about we
start paragraph 10 with the subject to entry of a final order, comma. THE COURT: THE COURT: all the way through. (Pause) THE COURT: And those are my -- and that's helpful Okay. And then you can go A, B, C, D, F, G
in that most of my major comments were in paragraph 10. MR. KLYMAN: Your Honor, may I ask a question Is that I understand
about the comment that you just made?
that the comment that these liens shall not be -- shall not be made subject to or subordinate to any other lien security; however, in B it provides that -- I just want to make sure that the --
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Page 77 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: You're killing me here, Mr. Klyman. I
mean we can either crawl through the order on not, I mean -MR. KLYMAN: I just want to make sure, Your Honor,
that we have superpriority claims between now and entry of a final order. THE COURT: Well, you've got -- there's a --
there's a -- this has nothing to do with the granting. MR. KLYMAN: THE COURT: Okay. That's elsewhere, I'm 99 percent sure. Well, 9 and -- 9 and 8 and 7
Isn't that all in paragraph 9? are the actual grantings.
This deals -- this deals more
with priority and I'd say more with priority protection. MR. KLYMAN: Well, I mean for example, I'm not
trying to fall into the category of you're killing me, Mr. Klyman, but in paragraph 10(d), for example, there is first state -- the first sentence says -THE COURT: MR. KLYMAN: THE COURT: with 10(d). MR. KLYMAN: THE COURT: Okay. So is it just 10(a) -10 what? 10(d). Yeah, I didn't actually have a problem
The issues I had were with A, B, C --
or actually my comment here was D-F, okay, but subject to final order, so. fine. Oh, I see. No -- yeah, D, E, and F, are
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Page 78 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 B, and C. THE COURT: I apologize. So let's -- if we could -- for A, B, C -- for A, B, and C just say subject to entry of a final order, the rest is all right. Reluctant to approve H because I generally prefer to limit it to the actual language of the statute instead of restating it, but that's fine. My only point with H is you Yeah, and G and H. No, G is fine too, MR. KLYMAN: Okay. So we can put that in for A,
have the ability to credit bit under K, but the Court also has the ability under K not to allow you to credit bid upon further order of the Court for cause. bad. (Laughter) THE COURT: MR. KLYMAN: second, Your Honor. THE COURT: (Pause) MR. KLYMAN: A, B, and C. THE COURT: (Pause) MR. KLYMAN: And Your Honor, along that line we Okay, great. Okay, so I've made those changes to Sure. All right? Let me just catch up to you for one So don't do anything
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Page 79 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 order. will add a provision at the end which expressly says that any amendment, modification of the order is a -- constitutes an event of a default. THE COURT: MR. KLYMAN: THE COURT: Any further. Any further, yeah. I'll leave paragraph 12 for the final
There -- that's really the challenged period issues.
(Pause) THE COURT: Paragraph 15(a), page 26, third line,
just strike "and directed to" -- or "and directed." MR. KLYMAN: (Pause) THE COURT: "exclusive." jurisdiction. MR. KLYMAN: THE COURT: I'm sorry, Your Honor, what -Oh, I'm sorry, paragraph 18(d), which On page 29, 18(d), just strike All right, have that.
Instead of shall retain exclusive
is on my page 29 begins, the Court shall retain exclusive jurisdiction. I'd like to strike out "exclusive," please. All right, I have that. Thank you.
MR. KLYMAN: (Pause) THE COURT:
Let me get how you dealt with the
landlord rights, the lender's right to enter landlord premise, et cetera. MR. KLYMAN: Let's see. I think we provided
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Page 80 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 subject to entry of a final order, but I just need to confirm that. (Pause) MR. KLYMAN: Your Honor, it's in paragraph 16 and
we made that subject to entry of a final order. THE COURT: Okay. Here's -- jumping up to
paragraph 20, page 30, right in the middle there's a sentence that says: "The provisions of this interim order shall also be binding on all of the debtors' creditors, equity holders, and other parties in interest." Well, it's an order of the Court, so it's binding, but to the extent you're trying to put some injunction on people that never got notice that's obviously problematic. It's a Court order, I don't think you need anything more, and I'm troubled by -- that's kind of expansive. strike that sentence? MR. KLYMAN: THE COURT: MR. KLYMAN: Yes. Thank you. (Indiscernible - 3:54:17) we don't Can you
expect there to be a negative implication from that for any creditor, but it's not binding because it was struck, but -THE COURT: Okay. No, it's -- I don't think it's
-- I'm not trying to say that, I just want to avoid the -- I don't know, it's superfluous and it troubles me, so let's
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Page 81 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 just get rid of it. (Pause) THE COURT: All right. Those are my issues.
Obviously the whole thing gets revisited at the final order, but we'll deal with that in July. MR. KLYMAN: Your Honor, there are a couple of
issues in the credit agreement that we've worked out as resolutions with Mr. Harris on behalf of his clients. I can
just describe them to you generally, and there were -- in Section 5.1 of the credit agreement there were covenants to the debtors to provide the DIP lenders and the agents certain reports on a weekly, monthly, quarterly, and annual basis. We've built in time periods between three and ten
business days so that if they're not delivered there's not an automatic foot fall, we'll give them notice and they'll have some time to cure. (Pause) MR. KLYMAN: And I think -- I think that just
leaves a couple of issues that are left with Mr. Buchbinder and Mr. Harris. THE COURT: MR. KLYMAN: Mr. Buchbinder. THE COURT: Okay. Okay. Good afternoon, Your Honor, Dave Okay. And I'm happy to cede the podium to
MR. BUCHBINDER:
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Page 82 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Buchbinder again on behalf of the U.S. Trustee. We have some concerns about the default provisions in the credit agreement, and I'm well aware of the Court's thinking on this from time to time. The concerns that we have in this case are because of the facts and circumstances of the case where we have the DIP lender who is also the largest prepetition creditor and the holder of 70 percent of equity. And with that short
preface in mind they're certainly entitled to their protections in their capacity as a DIP lender, but they shouldn't be allowed to use those protections as a means of stealing a march on all their other creditors to jump over them in their capacity as the equity holder in the case. With that in mind there are several provisions in the default provisions that concerned us and that we suggested some minor changes to tidy them up in that regard. They are provision Q on page 87. THE COURT: Which -- okay, I'm sorry. It's Section 8.1. I'm looking at Do you know
MR. BUCHBINDER:
a redline, it begins on page 84 of the redline. in the Court has a clean copy? Honor, is where it begins. THE COURT: Looking at Q? Yes.
It's Section 8.1, Your
MR. BUCHBINDER: THE COURT: Okay.
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Page 83 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BUCHBINDER: The first of those is Q. This
provision would create a default by any party bringing a motion for additional financing, could be a committee, it could be any -- any party at all, and it seems to me under the circumstances of this case the provisions should be limited to a default if any credit party brings a motion, because the credit parties are the debtors who are entered into this agreement, but the committee hasn't entered -- the committee doesn't exist yet and hasn't entered into this agreement and nobody else has either. It seems that this
again goes along with the Court's earlier arguments about tying the hands of the debtor in and Court. I don't have any problem with limiting this to a credit party, but it seems overly expansive limiting it to all parties. Similarly with respect to provision S, action against the first lien facility, again, that should be limited to an action by a credit party. Subsection V, subtitle committee seeks subsequent debtor in possession financing. I'm cognizant of the
Court's comments in earlier cases that if the financing is approved it could be an event of default then, but to prevent someone other than the credit party from bringing an application seems to be jumping over the rights of the other creditors and parties in interest in this case.
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Page 84 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Some relate with W, relief from stay. That
essentially chills any other party in this case whose a creditor who has collateral from bringing a relief from stay motion. Perhaps that should be eliminated completely or the
amount should be higher or some other remedy should be granted so that other creditors who haven't had notice about being here today aren't hamstrung by the terms of the credit agreement, et cetera. And finally subsection Z challenge to liens. The
commencement of a suit or action to disallow any claim of any lender, et cetera, et cetera. I don't have any problem limiting this to the entry of a judgment against the lenders, but if this is approved as an event of default the rights that are given to the committee to investigate and bring an action against the lender are nugatory, because all that this order does is give them a right to investigate, but if they do anything the DIP loan is immediately in default. This provision
should be limited to a party other than a credit party from obtaining a judgment because we've taken care of the credit party initiating the action. With those minor changes to those provisions we could live with this, but under these facts and circumstances where the lender is wearing the hat of the largest equity holder as well tempering these provisions
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Page 85 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 seems only fair and reasonable to all the other creditors and parties in interest in this case. THE COURT: MR. KELLEY: Okay, thank you. Your Honor, it's not at all unusual
for a lender to say we'll make a loan, but if we get sued we don't have to continue to lend to the company. And the
provisions that are in here that Mr. Buchbinder identified, you know, for example, if somebody wants to bring a motion to have new financing we don't have a problem with them bringing that motion so long as the additional financing takes out the DIP. That's not at all surprising or unusual.
If someone wants to come in with a different DIP or to modify our DIP in some way that's an event of default, and there's -- from the lender's perspective everyone is on notice about this. If they want to take action with respect to the DIP loan it's not binding them from doing it as Your Honor had requested that we not put in our DIP order -THE COURT: I'm okay with it. I may revisit it if
the committee raises these issues, but for present purposes I'm okay with those provisions, I'll overrule the objection. MR. KELLEY: THE COURT: MR. HARRIS: Thank you, Your Honor. Mr. Harris, you have something? Your Honor, we just have two other
minor issues -- somewhat minor issues.
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Page 86 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 One is we had asked Mr. Klyman to have his client confirm that there's a definition of eligible assignee in the credit agreement, and we asked Mr. Klyman to have Yucaipa confirm that they would not seek to transfer all or any portion of this DIP loan to any party that was a competitor to Allied, because obviously we don't want competitors owning any -- or any portion of the DIP loan. So we had asked for that clarification. And the other -- the other issue that we had raised with him, Your Honor, is given that there's a -would be a $10 million limit on the interim borrowing capability that the two and a half percent fee that is being requested as part of the DIP loan be earned and payable only as a -- on the interim closing dates only as to the amounts that are available under the interim DIP with the balance being payable upon closing on a final DIP if a final DIP is ultimately approved so the estate isn't burdened with a $500,000 fee on a $10 million draw application. Those -- we've resolved all the other issues, Your Honor, those are the two that were really still remaining. MR. KELLEY: Thank you, Your Honor.
With respect to the non-transferring of the DIP loan to a competitor, I think what we've worked out with Mr. Harris, and we didn't confirm this absolutely before the hearing started, but that -- that the issue of who can be an
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Page 87 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 eligible assignee with respect to that particular issue will be subject to entry of a final order and we can see what we can work out in the interim. THE COURT: MR. KELLEY: All right. With respect to the fee, Your Honor, The debtors have asked for a
this is a new money loan.
commitment of $20 million, not a commitment of $10 million. Yucaipa as a new money lender here is making $20 million available, and the fee is well within market. You heard uncontradicted and undisputed testimony earlier that the terms of the loan were not inconsistent with the marketplace. And if Mr. Harris' clients were
concerned about the size of the fee, which we think is within market, Yucaipa offered to Mr. Harris' clients to participate in the DIP on a pro rata basis and Mr. Harris' clients declined. So we think for those reasons that fee is earned, when the commitment is made the money is going to be available subject to entry of a final order, and we think that that fee is appropriate and should be approved. THE COURT: Well, I was troubled by the fees You can have
frankly, given the many hats Yucaipa wears.
insider loans, DIP loans, but frankly, they need to be better than average for a debtor, because it raises a specter of self-dealing.
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Page 88 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 then? MR. KELLEY: THE COURT: MR. KELLEY: Yes, Your Honor. Okay. So how late will you be here today? That said, I really -- I really view my job on fees in this kind of context, is to leave it to the committee to see what they have to say and we can -- and I will revisit those issues. If there's a fee in the interim
order that I decide is inappropriate in the final order then that fee doesn't exist, I mean that's the way it operates. So for today's purposes I'll allow the fee, but you know, I'll look at it de novo if necessary at the final order stage. And on the commitment -- oh, that's subject to The commitment not to sell to a
the final order, correct? competitor. MR. KELLEY: THE COURT:
That's correct, Your Honor. Okay. All right. Anything else? So I'll allow the
fee for present purposes. MR. KELLEY: THE COURT:
Nothing from Yucaipa's perspective. All right. I will sign an order as And we have the
soon as somebody puts it in front of me. credit agreement as an exhibit? MR. KELLEY:
Yes, Your Honor, we'll interlineate
that it will be an exhibit, and you'll get a total package. THE COURT: Okay. You're going to send that over
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Page 89 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 P.M.) THE COURT: MR. KELLEY: THE COURT: MR. KELLEY: 5:00, 5:30, I mean -Okay. Thank you.
Can we hit that? Yeah, I expect that we'll just sit
here and finish it and then -THE COURT: That's probably better frankly. Why
don't you use the courtroom -MR. KELLEY: THE COURT: chambers -MR. KELLEY: THE COURT: Okay. -- instead of going back to -- by the Okay. -- finish it, and then just knock on
time you go back to the firm and everybody gets a drink of water and sits down and calls in and you can't get everybody in the conference room it's 6 o'clock. We're adjourned. MR. KELLEY: Thank you. So let's do it here.
(Whereupon these proceedings were concluded at 4:07
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Page 90 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HEARING re Debtors' Motion for entry of Interim and Final Orders Authorizing, HEARING re Motion for Order authorizing Debtors to Continue Their Insurance Programs 27 22 HEARING re Motion for Order (A) Deeming Utilities Adequately Assured of Payment, (B) Prohibiting Utilities from Altering, Refusing, or Discontinuing Services, and (C) Establishing Procedures for Resolving Requests for Additional Assurance 25 5 HEARING re Motion to Authorize Allied Systems, Holdings, Inc. to Act as Foreign Representative of the Debtors 18 15 DESCRIPTION Application for Order Appointing Rust Consulting/Omni Bankruptcy as Claims and Noticing 15 12 RULINGS PAGE LINE I N D E X
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Page 91 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HEARING re Motion for Authority to (A) Maintain Existing Cash Management System and Bank Accounts, (B) Continue Use of Existing Checks and Business Forms, (C) Obtain Limited Waiver of 345(b) VERITEXT REPORTING COMPANY www.veritext.com HEARING re Motion of the Debtors for Orders Authorizing the Debtors to Pay Prepetition Sales, Use, and Other Taxes and Related Obligations 31 6 HEARING re Motion of the Debtors for Order Pursuant to U.S.C. 105(a) and 363(b) Authorizing Payment of Prepetition Customs Duties and Claims of Common Carriers and Warehousemen and Authorizing the Debtors to Honor Certain Prepetition Cargo Claims and Authorizing Financial Institutions to Honor and Process Checks and Transfers Related to Such Claims 30 2 But Not Directing, the Debtors to Pay Certain Prepetition Claims of Critical Vendors and Granting Certain Related Relief 27 15
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Page 92 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HEARING re Motion Pursuant to 11 U.S.C. 105, 361, 362, 363(c), 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1), 364(e), 503(b) and 507(a), Fed. R. Bankr. P. 2002, 4001 and 9014 and Del. Bankr. L.R. 4001-2: (I) Authorizing Debtors to (A) Obtain Postpetition Secured DIP Financing and (B) Use Cash Collateral; (II) Granting Superpriority Liens and Providing for Superpriority Administrative Expense Status; (III) Granting Adequate Protection to Prepetition Secured Lenders; (IV) Modifying Automatic Stay; and (V) Scheduling a Final Hearing Pursuant to VERITEXT REPORTING COMPANY www.veritext.com HEARING re Motion of Debtors for Interim and Final Orders Authorizing Payment of Pre-Petition Wages, Payroll, Taxes, Certain Employee Benefits and Related Expenses, and Other Compensation to Employees and Independent 34 4 and (D) Continue to Make Intercompany Advances with 364(c)1) Administrative Priority 38 5
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Page 93 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 VERITEXT REPORTING COMPANY www.veritext.com HEARING re Declaration of Scott D. Macaulay in Support of Chapter 11 Petitions and First Day Motions 14 12 Bankruptcy Rules 4001(b) and (c) 88 14
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Page 94 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 VERITEXT REPORTING COMPANY www.veritext.com Date: June 14, 2012 Veritext 200 Old Country Road Suite 580 Mineola, NY 11501 I, Dawn South, certify that the foregoing transcript is a true and accurate record of the proceedings. C E R T I F I C A T I O N
Dawn South
Digitally signed by Dawn South DN: cn=Dawn South, o, ou, email=digital1@veritext.com, c=US Date: 2012.06.14 14:53:20 -04'00'
AAERT Certified Electronic Transcriber CET**D-408
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UNITED STATES BANKRUPTCY COURT District of Delaware

In Re: Allied Systems Holdings, Inc. 2711 Centerville Road Suite 400 Wilmington, DE 19808 EIN: 580360550
Chapter: 11
Case No.: 1211564CSS
NOTICE OF FILING OF TRANSCRIPT AND OF DEADLINES RELATED TO RESTRICTION AND REDACTION A transcript of the proceeding held on 6/12/12 was filed on 6/14/12 . The following deadlines apply: The parties have 7 days to file with the court a Notice of Intent to Request Redaction of this transcript. The deadline for filing a request for redaction is 7/5/12 . If a request for redaction is filed, the redacted transcript is due 7/16/12 . If no such notice is filed, the transcript may be made available for remote electronic access upon expiration of the restriction period, which is 9/12/12 unless extended by court order. To review the transcript for redaction purposes, you may purchase a copy from the transcriber (see docket for Transcriber's information) or you may view the document at the clerk's office public terminal.
Clerk of Court Date: 6/14/12
(ntc)
Notice Recipients
District/Off: 03111 Case: 1211564CSS User: Leslie Form ID: ntcBK Date Created: 6/14/2012 Total: 11
Recipients of Notice of Electronic Filing: ust United States Trustee USTPREGION03.WL.ECF@USDOJ.GOV ust David L. Buchbinder david.l.buchbinder@usdoj.gov aty Christopher M. Samis samis@rlf.com aty Christopher M. Samis samis@rlf.com aty Christopher M. Samis samis@rlf.com aty Marisa A. Terranova terranova@rlf.com aty Mark D. Collins collins@rlf.com TOTAL: 7 Recipients submitted to the BNC (Bankruptcy Noticing Center): db Allied Systems Holdings, Inc. 2711 Centerville Road Suite 400 Wilmington, DE 19808 aty Carolyn Peterson Richter Troutman Sanders LLP Bank of America Plaza 600 Peachtree Street Suite 5200 Atlanta, GA 303082216 aty Ezra H. Cohen Troutman Sanders LLP Bank of America Plaza 600 Peachtree Street Suite 5200 Atlanta, GA 303082216 aty Jeffrey W. Kelley Troutman Sanders LLP 600 Peachtree St. NE, Suite 5200 Atlanta, GA 30308 TOTAL: 4

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Page 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ECR OPERATOR: LESLIE MURIN VERITEXT REPORTING COMPANY www.veritext.com B E F O R E : HON CHRISTOPHER S. SONTCHI U.S.

Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HEARING re Allied Freight Brokers LLC [12-11769]

HEARING re Allied Systems Holdings, Inc. [12-11564]

HEARING re Allied Systems, LTD (L.P.) [12-11565]

HEARING re Allied Automotive Group, Inc. [12-11768]

HEARING re Axis Group, Inc. [12-11770]

HEARING re F.J. Boutell Driveaway LLC [12-11767]

HEARING re Allied systems (Canada) Company [12-11773]

HEARING re Commercial Carriers, Inc. [12]11775]

HEARING re GACS Incorporated [12-11777]

HEARING re Cordin Transport LLC [12-11781]

HEARING re CT Services, Inc. [12-11782]

HEARING re Axis Canada Company [12-11783]

HEARING re Terminal Services LLC [12-11780]

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ADAM G. LANDIS, ESQ.

SOMMER L. ROSS, ESQ.

GARY L. KAPLAN, ESQ.

we have had extensive discussions with the U.S. Trustee,

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Page 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Yucaipa, and the petitioning creditors. We think we have

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is going to say something.

history of what happened in the first case.

Good afternoon, Your Honor.

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requisite lender issue, and just to be clear, at this point

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declaration is admitted. MR. KELLEY: Thank you, Your Honor.

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-- from the energy trustee program And (b), is the

What -- (a), what is that?

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I can find out exactly what that fee is if

The debtor pays CC Pace and CC Pace then pays the

MR. KELLEY: THE COURT:

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It's insurance. -- insurance. So subject to that one

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Well, Your Honor, since we sailed

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Page 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Other than that I'll hold it in

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MR. BUCHBINDER: THE COURT:

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