UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE …media.syracuse.com/news/other/PennTraffic010810.pdf · 12 Attorneys for Hudson Capital Partners and RCS Real Estate 13 Advisors

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UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE

Case No. 09-14078-PJW

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In the Matter of:

THE PENN TRAFFIC COMPANY, et al.,

Debtors.

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U.S. Bankruptcy Court

824 North Market Street

Wilmington, Delaware

January 8, 2010

2:07 PM

B E F O R E:

HON. PETER J. WALSH

U.S. BANKRUPTCY JUDGE

ECR OPERATOR: NICKITA BARKSDALE


2

1

2 HEARING re Debtors' Emergency Motion for Orders: (i)(A)

3 Approving Bid Procedures, Stalking Horse Agent and Agency

4 Agreement Relating to Sale of Substantially All of the Debtors'

5 Assets, (B) Approving Breakup Fee and Expense Reimbursement to

6 Stalking Horse Agent, (C) Scheduling a Hearing to Consider the

7 Sale, (D) Approving the Form and Manner of Notice of Sale by

8 Auction, (E) Establishing Procedures for Noticing and

9 Determining Cure Amounts for Executory Contracts, and (F)

10 Granting Related Relief; and (ii)(A) Approving Agency Agreement

11 for the Sale of Substantially All of the Debtors' Assets and

12 Authorizing the Sale of Substantially All of the Debtors'

13 Assets Outside the Ordinary Course of Business, (B) Authorizing

14 the Sale of Assets Free and Clear of All Liens, Claims,

15 Encumbrances and Interests, (C) Authorizing the Assumption and

16 Sale and Assignment of Certain Executory Contracts and

17 Unexpired Leases, and (D) Granting Related Relief

18

19 HEARING re Motion Under Bankruptcy Code Section 363 and 365 for

20 Authority to (i) Sell the Debtors' Interests in Twenty-Two

21 Supermarkets, Free and Clear of Liens, Claims, Encumbrances and

22 Interests; and (ii) Assume and Assign Certain Executory

23 Contracts and Unexpired Leases Associated with the Supermarkets

24

25


3

1 HEARING re Debtors' Motion under Bankruptcy Code Section 363

2 for Order (i) Approving Agency Agreement for the Sale of

3 Merchandise of Twenty-Two of the Debtors' Supermarkets, Free

4 and Clear of Liens, Claims, Encumbrances and Interests; and

5 (ii) Authorizing Going Out of Business Sales at Twenty-Two of

6 the Debtors' Supermarkets

7

8 HEARING re Debtors' Emergency Motion for Orders: (I)(A)

9 Approving Bid Procedures, Soliciting Bids for Substantially All

10 or Portions of the Debtors' Assets, and/or Agent and Agency

11 Agreement Relating to Sale of Substantially All of the Debtors'

12 Assets, (B) Approving Breakup Fee and Expense Reimbursement to

13 Stalking Horse Agent, (C) Scheduling a Hearing to Consider the

14 Sale of Substantially All of the Debtors' Assets and/or Agent

15 and Agreement, (D) Approving the Form and Manner of Notice of

16 Auction, (E) Establishing Procedures for Noticing and

17 Determining Cure Amounts for Executory Contracts, and (F)

18 Granting Related Relief; and (II)(A) Approving Agency Agreement

19 for the Sale of Substantially All of the Debtors' Assets and/or

20 Authorizing the Sale of Substantially All of the Debtors'

21 Assets Outside the Ordinary Course of Business, (B) Authorizing

22 the Sale of Assets Free and Clear of All Liens, Encumbrances

23 and Interests, (C) Authorizing the Assumption and Sale and

24 Assignment of Certain Executory Contracts and Unexpired Leases,

25 and (D) Granting Related Relief


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1

2 HEARING re Debtors' Motion for an Order Authorizing the Debtors

3 to File Under Seal Exhibit 3.3(i) to the Agency Agreement

4 Between the Stalking Horse Agent and the Debtors

5

6 HEARING re Debtors' Motion for an Order Shortening Notice

7 Relating to Debtors' Motion for an Order Authorizing the

8 Debtors to (A) File Under Seal Schedules A, 2(C)-3, and 3(A) to

9 the C&S Agreement, and (B) Redact Certain Portions of the C&S

10 Agreement

11

12 HEARING re Debtors' Motion for an Order Authorizing the Debtors

13 to (A) File Under Seal Schedules A, 2(C)-3, and 3(A) to the C&S

14 Agreement and (B) Redact Certain Portions of the C&S Agreement

15

16 HEARING re Debtors' Motion for an Order Under 11 U.S.C. Section

17 102(1) Shortening Notice Relating to Debtors' Emergency Motion

18 for Orders Approving a Global Sale Transaction with Tops

19 Markets, LLC and Other Related Relief

20

21 HEARING re Debtors' Emergency Motion for Orders Approving a

22 Global Sale Transaction with Tops Markets, LLC and Other

23 Related Relief

24

25 Transcribed By: Clara Rubin


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1

2 A P P E A R A N C E S:

3 MORRIS, NICHOLS, ARSHT & TUNNELL LLP

4 Attorneys for Debtors and Debtors-in-Possession

5 1201 North Market Street

6 Wilmington, DE 19899

7

8 BY: ANN C. CORDO, ESQ.

9 GREGORY W. WERKHEISER, ESQ.

10

11 HAYNES AND BOONE, LLP


13 1221 Avenue Of the Americas, 26th Floor

14 New York, NY 10020

15

16 BY: MICHAEL E. FOREMAN, ESQ.

17 LENARD M. PARKINS, ESQ.

18 DAVID LIEBENSTEIN, ESQ.

19



22 2323 Victory Avenue, Suite 700

23 Dallas, TX 75219

24

25 BY: JASON B. BINFORD, ESQ.


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1



4 112 East Pecan Street

5 Suite 1200

6 San Antonio, TX 78205

7

8 BY: W. ABIGAIL OTTMERS, ESQ. (TELEPHONICALLY)

9

10 ASHBY & GEDDES, P.A.

11 Attorneys for ABC Refrigeration

12 500 Delaware Avenue


14

15 BY: KAREN SKOMORUCHA, ESQ.

16

17 BALLARD SPAHR LLP

18 Attorneys for Levin Management, Centro Properties Group,

19 Widewaters Lakewood Village Center Co., and Widewaters

20 Pierce Drive Associates

21 1735 Market Street, 51st Floor

22 Philadelphia, PA 19103

23

24 BY: JEFFREY MEYERS, ESQ.

25


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2 BARNES & THORNBURG LLP

3 Attorneys for Topco Associates, Topco Holdings

4 1000 N. West Street

5 Suite 1200


7

8 BY: DAVID M. POWLEN, ESQ.

9

10 BIFFERATO LLC

11 Attorneys for COR Route 5, LLC

12 800 N. King Street


14

15 BY: IAN CONNOR BIFFERATO, ESQ.

16 J. ZACHARY HAUPT, ESQ.

17

18 COHEN, WEISS AND SIMON LLP

19 Attorneys for the UFCW

20 330 West 42nd Street

21 25th Floor


23

24 BY: THOMAS N. CIANTRA, ESQ.

25


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2 COOCH AND TAYLOR P.A.

3 Attorneys for the UFCW, UFCW Local One Pension Fund,

4 UFCW Local One Health Fund

5 The Brandywine Building

6 1000 West Street, 10th Floor


8

9 BY: SUSAN E. KAUFMAN, ESQ.

10

11 EPSTEIN BECKER & GREEN, P.C.

12 Attorneys for Hudson Capital Partners and RCS Real Estate

13 Advisors

14 250 Park Avenue


16

17 BY: MAURA I. RUSSELL, ESQ.

18

19 GREENBERG TRAURIG, LLP

20 Attorneys for the Second Lien Lenders

21 The Nemours Building

22 1007 North Orange Street, Suite 1200


24

25 BY: DONALD J. DETWEILER, ESQ.


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2 HARTER SECREST & EMERY LLP

3 Attorneys for Price Chopper

4 Twelve Fountain Plaza

5 Suite 400

6 Buffalo, NY 14202

7

8 BY: RAYMOND L. FINK, ESQ., ADMITTED PRO HAC VICE

9

10

11 LANDIS RATH & COBB LLP

12 Attorneys for C&S Wholesale Grocers

13 919 Market Street, Suite 1800


15

16 BY: RICHARD S. COBB, ESQ.

17

18

19 MORRIS JAMES LLP

20 Attorneys for Price Chopper

21 500 Delaware Avenue

22 Suite 1500


24

25 BY: JEFFREY R. WAXMAN, ESQ.


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1

2 OTTERBOURG, STEIndLER, HOUstON & ROSEN, P.C.

3 Attorneys for the Official Committee of Unsecured

4 Creditors

5 230 Park Avenue

6 New York, NY 10169-0075

7

8 BY: JENETTE BARROW-BOSSHART, ESQ.

9 GLENN RICE, ESQ.

10 JESSICA WARD, ESQ.

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13 PAUL, HAstINGS, JANOFSKY & WALKER LLP

14 Attorneys for General Electric Capital Corporation

15 Park Avenue Tower

16 75 E. 55th Street

17 First Floor


19

20 BY: LESLIE A. PLASKON, ESQ.

21

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23

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2 PAUL, HAstINGS, JANOFSKY & WALKER LLP


4 600 Peachtree Street, N.E.

5 Twenty-Fourth Floor

6 Atlanta, GA 30308

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8 BY: CASSIE COPPAGE, ESQ. (TELEPHONICALLY)

9 JESSE H. AUSTIN, III, ESQ. (TELEPHONICALLY)

10

11 POTTER ANDERSON & CORROON LLP

12 Attorneys for Armstrong (sic) Capital

13 Hercules Plaza, 6th Floor

14 1313 N. Market Street


16

17 BY: ETTA R. WOLFE, ESQ.

18

19 RICHARDS, LAYTON & FINGER, P.A.


21 One Rodney Square

22 920 North King Street


24

25 BY: DREW G. SLOAN, ESQ.


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2 SLEVIN & HART, P.C.

3 Attorneys for UFCW Local One Pension and Health Funds

4 1625 Massachusetts Avenue, NW, Suite 450

5 Washington, DC 20036

6

7 BY: BARRY S. SLEVIN, ESQ.

8

9 STEVENS & LEE, P.C.

10 Proposed Co-Counsel to the Official Committee of

11 Unsecured Creditors

12 1105 North Market Street, 7th Floor


14

15 BY: JOSEPH H. HUSTON, JR., ESQ.

16 MARIA APRILE SAWCZUK, ESQ.

17

18 SULLIVAN HAZELTINE ALLINSON LLC

19 Attorneys for National Industrial Portfolio, Teamsters

20 Local 317 Union

21 4 East 8th Street, Suite 400


23

24 BY: WILLIAM D. SULLIVAN, ESQ.

25 WILLIAM A. HAZELTINE, ESQ.


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1

2 WILLKIE FARR & GALLAGHER LLP

3 Attorneys for Hilco Merchant Resources and Affiliated

4 Hilco Entities

5 787 Seventh Avenue


7

8 BY: JOHN C. LONGMIRE, ESQ.

9

10

11 YOUNG CONAWAY STARGATT & TAYLOR, LLP

12 Attorneys for Tops Markets

13 The Brandywine Building

14 1000 West Street

15 17th Floor


17

18 BY: EDMON L. MORTON, ESQ.

19

20

21 PENSION BENEFIT GUARANTY CORPORATION

22 1200 K Street N.W.

23 Washington, DC 20005-4026

24

25 BY: DEBORAH J. BISCO, ESQ.


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1

2 U.S. DEPARTMENT OF JUSTICE

3 Office of the United States Trustee

4 844 King Street

5 Suite 2207


7

8 BY: THOMAS PATRICK TINKER, ESQ.

9

10

11 CRAIG AND MCCAULEY PROFESSIONAL CORPORATION

12 Attorneys for Creditor, National Industrial Portfolio

13 Federal Reserve Plaza

14 600 Atlantic Avenue

15 Boston, MA 02210

16

17 BY: WILLIAM R. MOORMAN, JR., ESQ. (TELEPHONICALLY)

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19

20 GREENBERG TRAURIG, LLP

21 Attorneys for Kim Co.

22 One International Place

23 Boston, MA 02110

24

25 BY: JEFFREY M. WOLF, ESQ. (TELEPHONICALLY)


15

1

2 HANCOCK & ESTABROOK, LLP

3 Attorneys for Creditor, Cooperstown Common Associates,

4 LP, et al.

5 1500 AXA Tower I

6 100 Madison Street

7 Syracuse, NY 13202

8

9 BY: R. JOHN CLARK, ESQ. (TELEPHONICALLY)

10

11 KELLEY DRYE & WARREN LLP

12 Attorneys for Landlord, Developers Diversified Realty

13 101 Park Avenue


15

16 BY: ROBERT LEHANE, ESQ. (TELEPHONICALLY)

17

18 RIEMER & BRAUNstEIN LLP

19 Attorneys for Creditor, General Electric

20 Three Center Plaza

21 6th Floor

22 Boston, MA 02108

23

24 BY: KEVIN J. SIMARD, ESQ. (TELEPHONICALLY)

25


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1

2 WINSTON & STRAWN LLP

3 Attorneys for Creditor, Tops Markets

4 200 Park Avenue


6

7 BY: DAVID NEIER, ESQ. (TELEPHONICALLY)

8

9 DELL BOY INC.

10 BY: JOHN PETOSA (TELEPHONICALLY)

11

12 RAUL KALKE, IN PROPRIA PERSONA (TELEPHONICALLY)

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1 P R O C E E D I N G S

2 THE CLERK: Please rise.

3 THE COURT: Please be seated.

4 Yes.

5 MR. WERKHEISER: Good afternoon, Your Honor. For the

6 record, Gregory Werkheiser, Morris, Nichols, Arsht & Tunnell,

7 on behalf of the debtors. I'm joined at counsel's table by

8 Michael Foreman and Lenard Parkins and others from Haynes and

9 Boone and from our firm.

10 Your Honor, we wanted to thank you for bearing with us

11 as this case has -- since the beginning, there's been a lot of

12 movement from day to day, hour to hour. Your Honor, as things

13 developed last evening, we did file a motion and related

14 motions seeking relief in connection with the proposed sale of

15 substantially all the debtors' assets; that's reflected on a

16 second amended agenda that we filed this morning. Did Your

17 Honor receive a copy of that?

18 THE COURT: Yes.

19 MR. WERKHEISER: Wonderful, Your Honor. Your Honor,

20 that reflects a significant change from where we were

21 previously. And what I'd like to do at this point is cede the

22 podium to Mr. Foreman who I think will try to bring everyone in

23 the courtroom and the Court up to speed on where we are, and

24 we'll try to move forward from there.

25 THE COURT: Okay.


18

1 MR. WERKHEISER: Thank you.

2 MR. FOREMAN: Good afternoon, Your Honor. Michael

3 Foreman of Haynes and Boone, for the debtors and debtors-in-

4 possession.

5 As Mr. Werkheiser said, Your Honor has indulged us a

6 lot already during the course of this short case, and we're

7 here today to ask Your Honor to indulge us again for a little

8 bit. And I think, before we go through any of the motions, I

9 should probably talk about where we are today just on the

10 docket, because last night, as Mr. Werkheiser mentioned, I

11 guess around 12:30/1:00 we did file a motion seeking the sale

12 of substantially all the assets of the estates to Tops

13 Supermarkets. We view this as a really seminal event in the

14 case and as a place that we were hoping to get to two months

15 ago. And we feel fortunate that we're at the place we are

16 today to be able to file that motion last night.

17 That is a sale for substantially all the assets of the

18 company for a cash purchase price of eighty-five million

19 dollars and includes -- it excludes assets of the estate which

20 aggregate approximately ten million dollars more, and includes

21 settlements with two significant creditors in the estate with

22 respect to certain aspects of their claims, those creditors

23 being the UFCW Local One Pension Fund and C&S Wholesale

24 Grocers.

25 With respect to each of those creditors, they'd be


19

1 reducing the claims that they'd be asserting in the estate by

2 substantial amounts such that the debtors, in their reasonable

3 business judgment, have determined that the Tops offer embodied

4 in an asset and purchase agreement and other agreements that

5 are attached to the motion filed last night is presently the

6 best offer on the table for the assets of the estates. It

7 realizes significant substantial value to the estates well in

8 excess of the secured debt, fifty-two million dollars to the

9 first and second lien creditors and about three million dollars

10 above the mortgage debt, and that after satisfaction of

11 administrative expense claims we believe will redound to a

12 significant recovery to unsecured creditors.

13 The other significant aspect of the Tops proposed

14 transaction is that it is subject to competitive bidding. So

15 together with the motion for approval of that transaction, we

16 also filed last night a motion to shorten time to bring before

17 Your Honor the first aspect of that motion, which would be sale

18 procedures and breakup fee.

19 Now, I understand that we're asking today for very

20 extraordinary relief in having filed a motion in the middle of

21 the night, coming in here at 2 o'clock on an afternoon and

22 asking Your Honor to approve bidding procedures and a breakup

23 fee, but one of the significant aspects of the Tops transaction

24 is that all major constituencies in the case are on board with

25 this deal. We have the -- every significant party has been


20

1 involved in the negotiations in one aspect or another. The

2 creditors' committee has been sitting side by side with the

3 debtors in the negotiations as we've had -- as we've gone

4 through documents and to understand the bid. The first lien

5 lenders, with GE as agent, are supportive of this transaction

6 and they've been involved in the negotiations. I believe the

7 second lien lenders, Kimco as agent, are also supportive. We

8 have two of the most significant creditors in this case, part

9 of this deal.

10 And when we look at not just the quantitative aspects

11 but the qualitative aspects of the bid, we believe that this

12 bid puts the estates in the best position to preserve the

13 highest number of jobs for our workers, the greatest number of

14 business relationships between the company and its suppliers,

15 and is truly one of these bids that's the highest and best, at

16 least as of today.

17 Now, we do have among the motions that were scheduled

18 for today a motion to sell twenty-two stores in the estates to

19 Price Chopper, and that was filed on what we called a private-

20 auction basis. No auction was conducted prior to today. And

21 that transaction had the debtors and the committee agreeing not

22 to solicit bids but had the customary fiduciary out that you

23 would expect so that we could entertain bids that were made and

24 respond to information requests.

25 And in the debtors' fiduciary duties, and the


21

1 committee's but they certainly will speak for themselves, we

2 believe we're now able to present to the Court a bid that not

3 only do all parties embrace but that brings substantially

4 greater value.

5 Now, what we had teed up with the Price Chopper

6 transaction was also a stalking-horse bid to sell substantially

7 all the rest of the assets of the estate to a liquidation

8 bidder, Hilco. And under that motion, Hilco was to have been

9 the stalking horse for the rest of the assets that would not

10 have been sold to Price Chopper, and we would have proceeded

11 down a sale procedure path which is substantially the same as

12 the one we're requesting with Tops.

13 If Your Honor were to entertain today the bidding

14 procedures and breakup fee request and to enter an order today,

15 it would be then our intention to then file motions to withdraw

16 the other motions that are on the docket, and Tops -- the Tops

17 deal will be the deal that we'll be going forward with.

18 While asking for bidding procedures and a breakup fee

19 approval perhaps is very -- I guess, perhaps we're pushing the

20 envelope as far as notice is concerned; we have had motions for

21 the sale of this business on the calendar since about the third

22 week of the case. Your Honor is very much aware of the

23 timeline that our lenders have been holding us to in our cash

24 collateral orders with respect to the sale of the assets. And

25 that order, the third amended cash collateral order, required


22

1 the debtors to file a motion for the sale of all the assets

2 other than -- well, other than the Price Chopper deal, which we

3 did by January 3rd, and that was the Hilco transaction, and

4 required then that a hearing on sale procedures be conducted

5 today and that the hearing also be conducted in the Price

6 Chopper transaction.

7 So all parties who have been noticed and following

8 these cases certainly have been on notice for a while now as to

9 the sale process, as to the fact that we would be before Your

10 Honor today seeking approval of sale procedures and breakup

11 fees. What's different is the transaction upon which that

12 request is made. There have been some changes made to the

13 bidding procedures that were contained in the other motions; I

14 can walk through that with Your Honor. And the breakup fee

15 that it's requesting is substantially the same in percentage;

16 it's three percent of the cash portion of the purchase price

17 breakup fee, which ends up, in this case, being 2,550,000

18 dollars.

19 We believe that it's important to the marketplace, to

20 any other potential bids that come in, that we do have a

21 maximum period of time for the solicitation of any further

22 bidding with respect to these assets. The lenders have made it

23 critical throughout all the discussions that they require a

24 hard and fast closing date of a transaction on January 28th.

25 And as Your Honor will recall from the last hearing, we have a


23

1 sale hearing scheduled for January 25, and in our timeline that

2 would be the sale hearing date with respect to the Tops

3 transaction. And then the week before that, we would have an

4 auction. And a few days before the auction, we'd have bids

5 submitted.

6 So I know I've laid out a lot for Your Honor. I've

7 tried to lay it out in as at least as understandable as --

8 THE COURT: I'm sorry, the auction is January 21, is

9 it?

10 MR. FOREMAN: Yeah, oh, excuse me, January 21.

11 THE COURT: Yeah.

12 MR. FOREMAN: If we were to get -- if Your Honor were

13 to entertain the bidding procedures and the breakup fee today,

14 we would be -- we are poised to get the motion out by overnight

15 delivery/Saturday delivery so that parties could have a maximum

16 amount of time to see the bid that's out there, see the

17 contract, see the agreements, determine whether or not they're

18 going to submit bids. We have an ability to aggregate bids at

19 an auction so that if a party wants to submit bids for fifteen

20 stores, for five stores or what have you, we can take a look at

21 all those bids and see whether or not they come up to a greater

22 value than the Tops transaction. So having something entered

23 sooner -- as soon as we can, we think, provides more

24 opportunity for that process to go forward.

25 As to the breakup fee, we think that the breakup fee


24

1 in this case, with respect to Tops, is a reasonable breakup

2 fee. I know three percent is at the higher end, but we would

3 submit that this is a -- this is the transaction in the case.

4 And the repercussions that this offer even has in the

5 geographic areas where the debtors conduct the business,

6 Central and Western New York, Northern Pennsylvania, this is a

7 significant transaction and certainly has gotten a lot of press

8 as other -- as well as other attention. So we believe that a

9 three percent breakup fee would be appropriate in this

10 instance.

11 Like I said, the creditors' committee is on board, GE

12 is on board. I believe Kimco's on board. We have C&S

13 Wholesale Grocers, certainly a part of the transaction. We

14 have the UFCW Local One Pension Fund on board with the

15 transaction. They're -- with this transaction significantly

16 and the steps that Tops would be taking with respect to that

17 pension fund, the estates would not incur a withdraw-liability

18 claim upwards of seventy-two million dollars. And our rough

19 estimates right now of claims in the estate's in the 250

20 million dollar area; that's a substantial claim to avoid having

21 to incur.

22 With respect to the C&S claim reduction, we calculate

23 the claim reduction being in the twenty to twenty-five million

24 dollar range. And in both instances, these agreements are

25 without prejudice to the estates' rights to pursue further


25

1 objections to claims.

2 So our history in these cases are one of filing many

3 motions, seeking many requests from Your Honor, including the

4 day after Thanksgiving, with respect to financing, and perhaps

5 trying the Court's patience from time to time. We ask it one

6 more time with respect to the Tops transaction in starting that

7 transaction today. We do believe this is in the best interests

8 of the estates. We do believe this is in furtherance of the

9 debtors' fiduciary duties.

10 And if Your Honor has any questions, I'm certainly

11 here to try to provide answers.

12 THE COURT: Okay. Not at this point.

13 MR. FOREMAN: Thank you, Your Honor.

14 THE COURT: Who else wishes to be heard?

15 MR. HUSTON: Good afternoon, Your Honor. May it

16 please the Court. Joseph Huston as co-counsel to the --

17 proposed co-counsel to the committee of unsecured creditors.

18 The committee also wishes to thank the Court for its

19 indulgence, particularly with extending our deadline. As Your

20 Honor heard, this motion really wasn't filed until 1 -- about

21 1:30 this morning, and we got our response as quickly as

22 possible. We very much appreciate your indulgence.

23 With me today from Otterbourg, Steindler, Houston & Rosen

24 is Jenette Barrow-Bosshart and Glenn Rice, as well as Ms.

25 Jessica Ward. And Ms. Barrow-Bosshart would like to address


26

1 the Court on the substance of the matters today.

2 THE COURT: Okay.

3 MS. BARROW-BOSSHART: Good afternoon, Your Honor.

4 Jenette Barrow-Bosshart on behalf of the official unsecured

5 creditors' committee.

6 Your Honor, we're here today in large part with the

7 assistance of the Court. The Court helped us in our efforts to

8 extend, pursuant to the cash collateral order, the milestones,

9 which would have had an auction for the assets of the estate

10 back in December. With the additional time that the Court

11 helped us obtain in our negotiations with GE and Mr. Huston's

12 negotiations with GE, we were able to address the expressions

13 put forth by Tops and come before you today with a global

14 proposal for a sale of substantially all of the assets,

15 resolutions of various claims, which you've heard, and a

16 procedure which allows all the parties, and there have been

17 many, who have expressed interest in bidding on some or all of

18 the assets of the estate to do so at an auction later this

19 month.

20 The Price Chopper deal was a very good proposal; it

21 was one that had the support of the committee at the time when

22 we were facing a complete sale on an expedited timetable. The

23 Price Chopper deal looked very attractive. And for those

24 particular assets, without any of the other attributes that the

25 Tops deal has, would have been very good as a private sale.


27

1 But now before you today we have something that would

2 preserve some jobs, would preserve ongoing operations in many

3 of the locations, would eliminate claims and still provide

4 Price Chopper an opportunity to come in and bid on anything and

5 everything it wants to, as well as the liquidating agents who

6 have been before you before and others who have expressed

7 interest. It also provides operators the opportunity to come

8 in and bid on individual stores that they may have a particular

9 interest in. It's not to suggest that the committee would view

10 an individual bid of one store as a higher or better offer.

11 Indeed, unless it were in combination with something that was

12 material and provided material benefits to the estate in excess

13 of the Tops transaction, we would not support that. But that

14 opportunity is there which is not there today in full.

15 And so we would ask the Court's indulgence to allow

16 this transaction to go forward with Tops as the stalking-horse

17 bid and on the timetable which GE has granted us extensions of

18 before but is not willing to go any further than the end of

19 January. With this before you today, we can keep to that

20 timeline, we can keep to the same schedule that was outlined in

21 the prior sale proposals, and we can hopefully expeditiously

22 bring this case to a sale and a conclusion which will be in the

23 best interests of all parties.

24 We did file a statement, Your Honor, and in the

25 statement we basically said what I've just said. We've


28

1 outlined numerous benefits of this sale proposal, some of which

2 Mr. Foreman did address, including leaving on the table for the

3 estate avoidance actions, other actions, accounts receivable.

4 There are a number of benefits, ancillary benefits, such as the

5 potential for savings of jobs, resolution and avoidance of --

6 between the C&S proposal and the pension fund proposal of

7 nearly ninety to a hundred million dollars in claims. It's a

8 very significant and attractive proposal, Your Honor, and we

9 would ask that Your Honor approve it as expeditiously as

10 possible.

11 THE COURT: Okay.

12 Mr. Foreman, would you explain to me -- I've read the

13 motion, but it's complex to say the least. Explain to me the

14 related operating agreements. But before you do that, do I

15 understand that Tops can take all of the stores or less than

16 the stores --

17 MR. FOREMAN: Yes, Your --

18 THE COURT: -- or less than all of the stores?

19 MR. FOREMAN: I'm glad at least one part of the motion

20 was clear. We -- and I do have to apologize again just for the

21 motion. We -- the way the transaction's constructed, we are

22 selling all -- substantially all the assets of the estates to

23 Tops. Tops -- there are a certain number of stores that Tops

24 will take immediately as of the closing, and those will

25 immediately be Tops stores, the employees immediately Tops


29

1 employees. Agreements relating to those stores all go over to

2 Tops.

3 There are a certain number of stores, a small -- right

4 now it's a small handful, where Tops has identified that

5 they're not going to be continuing in operation. And for those

6 stores we have an agency agreement with Tops, and those stores

7 will be closed down and the inventory liquidated in those

8 stores. The inventory would be sold -- and I'll call those the

9 closing stores. In the closing stores, the assets in those

10 stores would be sold to Tops, but the leases would not be

11 transferred to Tops. The leases and the stores -- and title to

12 the stores would remain in the estates, and the estates would

13 retain Tops as its agent to conduct the closing down of the

14 stores, the liquidation of the assets and everything else.

15 THE COURT: And what is the timeframe for doing that?

16 MR. FOREMAN: The timeframe for that is over the

17 course of the next month --

18 THE COURT: Okay.

19 MR. FOREMAN: -- the month after closing.

20 THE COURT: Okay.

21 MR. FOREMAN: And there are timeframes in the

22 agreement for when sales have to stop, when they have to be out

23 of locations, things like that.

24 THE COURT: Okay.

25 MR. FOREMAN: And we'd be filing, then, motions to


30

1 reject leases related to those locations, unless of course Tops

2 were to find assignees for those leases, buyers for those

3 leases, in which case we'd be making motions to sell those

4 leases.

5 THE COURT: Okay.

6 MR. FOREMAN: There are a certain number of stores

7 where Tops is not sure yet which way it wants to go, and those

8 are stores that are kind of, I guess, on the bubble

9 operationally as to whether or not it would be better to

10 continue operating them or it would be better to close them.

11 They're probably the lowest generating -- revenue-generating

12 stores or profit-generating stores.

13 With respect to those stores, those stores would be

14 governed by what's called the interim operating agreement. And

15 during the period of time when those stores are operating, the

16 debtors continue to own the stores, Tops will be managing those

17 stores for the debtors, and substantially all of the expenses

18 related to the operation of the stores will be Tops' during

19 that period, so that the estates would -- an important point I

20 forgot with the agency agreement: Under both the agency

21 agreement and this interim operating agreement, once the

22 closing of the transaction occurs the estates will no longer

23 incur expenses, costs and liabilities related to all those

24 stores. All of that will shift over to Tops.

25 THE COURT: So Tops collects the revenue and pays --


31

1 MR. FOREMAN: Exactly.

2 THE COURT: -- the expenses?

3 MR. FOREMAN: Exactly. There are -- the discussions

4 were extremely extensive and intensive as to how this interim

5 operation would be conducted. It's ultimately set forth in an

6 agreement that seems to be fairly short, but there's a lot in

7 there as far as the allocation of expenses. What was most

8 important to both the debtors and the committee was that the

9 estates not bear further administrative costs as these stores

10 are being operated and, while Tops maintained -- pursues its

11 decisions, whether or not to keep them or not and convert them

12 to Tops stores or not. So the interim operating agreement's

13 the vehicle by which they can continue to do that.

14 There's a transition services agreement. And with

15 respect to all of the stores, whether they're immediately being

16 transferred, there are these -- on the bubble stores or the

17 closing stores, the debtors will be providing a certain level

18 of transition services for Tops. A certain level of services

19 would be for thirty days, and then certain other services would

20 be for ninety days.

21 We haven't filed the schedules to all the agreements.

22 Your Honor can imagine we filed the motion at 1 or 1:30 last

23 night; that means the agreements were probably done around

24 12:30 last night. So people are still going through schedules.

25 We will file the schedules early next week to the agreements,


32

1 and the transition services will become much clearer. But it's

2 basically the, kind of, corporate headquarters type of services

3 that are provided out of the company's headquarters right now

4 would continue to be provided by Tops.

5 Similar to the interim operating agreement and the

6 agency agreement, the estates would bear no cost or liability

7 with respect to these transition services. So once closing

8 occurs, the estates will basically be -- have two parts: one

9 conducting transition services for Tops with respect to

10 transactions; the other winding down the estates and hopefully

11 going towards a plan of liquidation.

12 So I guess that probably summarizes those agreements.

13 The C&S agreement provides for certain assets of the

14 debtors to be transferred to C&S that presently are critical to

15 C&S's operation of a wholesale distribution business it

16 acquired from the debtors last December, December 2008. And it

17 also provides for C&S to have access to information technology

18 and other assets that it requires in conducting that business,

19 and provides certain other accommodations to C&S. And it's a

20 tri-party agreement between C&S, Tops and Penn Traffic, because

21 all three parties will be involved under the December 2008

22 agreement.

23 The debtors were required to provide transition

24 services to C&S; those transition services will now come under

25 the transition service agreement between Tops and the debtors,


33

1 so the debtors will be operating under one agreement and

2 providing services both to C&S and Tops for a period of time.

3 And, again, those services will be paid for by the party

4 receiving the services.

5 THE COURT: Okay, how big is Tops relative to the

6 debtor in terms of stores, locations?

7 MR. FOREMAN: That's a question you would expect me to

8 know the answer to, but --

9 THE COURT: I assume Tops is here.

10 MR. FOREMAN: Tops is here, and perhaps they could --

11 MR. NEIER: Good afternoon, Your Honor. David Neier

12 on behalf of Tops. Tops has a substantial presence. It's got

13 roughly in excess of 6,000 employees and operates a supermarket

14 chain very similar to the debtors, and it's a regional chain

15 similar to the debtors.

16 THE COURT: In the same region as the debtors?

17 MR. NEIER: It's approximately the same region. It's

18 not a precise --

19 THE COURT: Okay.

20 MR. NEIER: -- overlap by any means.

21 THE COURT: Okay.

22 MR. NEIER: Thank you.

23 MR. FOREMAN: The locations basically are contiguous,

24 but not exactly.

25 THE COURT: Okay.


34

1 MR. FOREMAN: I think they're very -- there's -- the

2 overlap is very small with respect to locations and stores that

3 have both Tops and the debtors' stores.

4 THE COURT: Okay.

5 MR. FOREMAN: And I guess they're roughly comparable

6 companies sizewise, number of employees, stores.

7 THE COURT: And I assume the commitment of Tops is not

8 contingent on financing?

9 MR. FOREMAN: That's correct. And one of the things

10 we have seen, as have all the other parties, are the

11 financing -- financial wherewithal of Tops to consummate the

12 transaction. There is no financing out.

13 One of the things to point out in the asset purchase

14 agreement, Your Honor, is there are very few outs in this

15 transaction. That was something that was critical to all of

16 us, not the least of which the lenders, as far as ability to

17 close by January 28th, by end of this month. And if you look

18 through the circumstances in which the agreement can terminate,

19 there are really very few circumstances where this agreement

20 can terminate. There's -- from our standpoint, we -- absent

21 something catastrophic, which is defined in the agreement as a

22 material adverse event, there's really, we think, very little

23 chance of Tops pulling out of the deal and Tops not being able

24 to close. And also in looking at the closing conditions for

25 the debtors, the representations, warranties --


35

1 THE COURT: And they have to make a deposit, don't

2 they?

3 MR. FOREMAN: Yes, and that deposit is a 14.7 percent

4 deposit. It's certainly greater than the ten percent deposit

5 we were getting on the other deals. And it's a twelve and a

6 half million dollar deposit on a deal where the cash purchase

7 price is eighty-five and a half million dollars.

8 One of the things -- one of the ways we've changed the

9 bidding procedures, in fact, is to require that all subsequent

10 bidders also provide a 14.7 percent deposit; that seemed only

11 fair. But we view that as very significant. It's Tops,

12 really, showing commitment right upfront that it will put the

13 money where its commitment is. That money would be paid into

14 escrow. And escrow arrangements are being made behind the

15 scenes as I speak so that that deposit could be paid today, and

16 they are prepared to pay that today.

17 THE COURT: Okay.

18 MR. FOREMAN: So that's a very, very substantial part,

19 the fact that the -- that they've agreed to close by January

20 28th and that we feel very comfortable we've closed that down.

21 Very few closing conditions. All the deliverables,

22 representations, warranties, conditions of closing on the

23 debtors' side we all feel very comfortable with as being able

24 to do that. And it's a very fair agreement.

25 And when we look at the agreement, and even purchase


36

1 price adjustment provisions, we see the value as being what's

2 in the agreement and not an agreement where the price is

3 eighty-five million but we'll end up with sixty million. We

4 feel very comfortable with this. And not only the debtors do,

5 but it's certainly been subject to sufficient scrutiny with the

6 major creditor groups that we feel pretty good about it.

7 THE COURT: Okay.

8 Anyone else wish to be heard?

9 MR. LEHANE: Your Honor, this is Robert Lehane, Kelley

10 Drye & Warren.

11 THE COURT: Representing who?

12 MR. LEHANE: I represent Developers Diversified

13 Realty, one of the landlords. I didn't know if anybody else

14 was approaching the bench.

15 THE COURT: Go ahead.

16 MR. LEHANE: Your Honor, if no one else is speaking,

17 thank you very much for allowing me to participate by

18 telephone. Developers Diversified is the landlord at the

19 debtors' stores in Rome, New York and Norwich, New York. Maybe

20 not coincidentally, both of these shopping centers are named

21 Tops Market: one at Freedom Plaza and one at PNC Plaza.

22 Your Honor, from what we have been able to glean from

23 the motion and the proposed transaction with Tops, this indeed

24 may be a profound and positive development. We filed an

25 objection to the bid procedures to deal with the possibility


37

1 that the successful bidder is a party other than the stalking

2 horse, and it's a party that landlords may only have heard

3 about a day before -- one business day before they would be

4 required to file an objection. And although it is a remote --

5 and hopefully an outcome that won't happen, I believe that the

6 bid procedures should contemplate that in a way that is fair

7 for landlords.

8 The objection that we filed is one that may have been

9 familiar to Your Honor. I don't know if you saw it or had a

10 chance to look at it, but it runs through the legal basis for

11 assumption and assignment of a lease and the heightened

12 adequate assurance requirements with respect to a shopping

13 center lease.

14 My suggestion would be that, in the event there is a

15 successful bidder that is not the stalking horse and it's

16 someone that landlords only got notice of or adequate assurance

17 information of the day before the sale hearing on the 25th,

18 that if the landlord does not consent because either it hasn't

19 had time to assess the proposed assignee or it has an

20 objection, that the 25th, in the event of those contested lease

21 assignments, be used as a status conference. That has been a

22 modification to bid procedures that's often been utilized in

23 the past when confronted with situations like this where we

24 have a stalking horse but there is the possibility of an as yet

25 unidentified proposed assignee.


38

1 And one of the real reasons why this is a problem that

2 we believe should be dealt with in this way is because there's

3 no way of knowing now, or even in the days before the auction,

4 whether or not witnesses would have to be made available.

5 There would be discovery depositions, et cetera, in the event

6 of a contested assignment to an unknown proposed assignee. And

7 we believe that it would give certainty to all the parties, the

8 landlords and the debtors and the committee and everybody else,

9 if we were in that remote zone of a successful bidder for these

10 locations that's unknown now, we know that on the 25th it's

11 only a status conference. And for the benefit of all parties,

12 we don't have to try and figure out who the witnesses would be

13 and whether we need to have them present on Monday the 25th.

14 THE COURT: Well, let me ask a question. What is the

15 bid deadline, the date of the bid deadline? The auction is

16 the --

17 MR. LEHANE: The auction is Thursday, January 21st.

18 And it looks like the bid deadline is Wednesday, January 20th.

19 MR. FOREMAN: The bid deadline actually would be the

20 19th. It would be -- because it would be two days before

21 the --

22 THE COURT: So I assume that the debtor would be in a

23 position to advise the landlords on January 19 whether there's

24 any bidder other than Tops.

25 MR. FOREMAN: That's correct, Your Honor.


39

1 THE COURT: Then they would have an opportunity to

2 examine its financial condition in terms of assurance of future

3 performance.

4 MR. FOREMAN: That's what I was going to -- that would

5 have been my response, Your Honor, that there would be an

6 opportunity between the bid -- submission of bids and the sale

7 hearing where all that's being -- because I think we would

8 also -- I'm sorry, Your Honor, we -- that's what I was

9 contemplating, that we would be able to have a period of time

10 between when bids are submitted and the sale hearing to flesh

11 out the adequate-assurance-of-future-performance issues; that

12 would certainly be critical for us to know in assessing bids

13 whether or not a prospective assignee --

14 THE COURT: Assuming, making bids, you have to -- the

15 bidder has to advise as to its financial wherewithal.

16 MR. FOREMAN: Absolutely, and we have qualified bid

17 requirements in here providing for financial wherewithal,

18 providing the financial information and disclosure that Your

19 Honor would expect to see with respect to adequate assurance of

20 future performance: no financing contingency; and eliminating

21 contingencies such as what's in the in Tops bid; also,

22 submitting a 14.7 percent good-faith deposit, and I -- but I

23 think showing availability of financing experience and other

24 ability to close a transaction. To close it within the timing

25 on January 28th is going to be critical to us, so we're going


40

1 to want to flesh that out and make sure there are no adequate

2 assurance issues.

3 So if -- what I would suggest, Your Honor, on this

4 point, that if there is an issue, I mean, we certainly, I

5 guess, could build in here that we could advise landlords,

6 within two days of the submission of bids, whether or not there

7 have been bids for their locations and give -- yeah, send out a

8 notice and give them an opportunity to do whatever they want to

9 do.

10 THE COURT: Well, let me ask you, the bid deadline is

11 January 19.

12 MR. FOREMAN: Yes.

13 THE COURT: What time of day?

14 MR. FOREMAN: We would have it as -- at 12 noon.

15 MR. LEHANE: Your Honor, what I suggest, that I'm

16 certainly happy to provide my e-mail address and our

17 information to counsel for the debtor and everybody, and that

18 if we're the only landlord raising this issue that we just ask

19 that they would be required to let us know by 6 o'clock on

20 January 19th whether there have been any bids, and provide the

21 adequate assurance information, with respect to any bids that

22 may affect our locations, by 6 p.m. on Tuesday, January 19th.

23 MR. FOREMAN: Your Honor, the only reason why I'd ask

24 just for more time is we're going to be getting in bids and

25 then we have to go through the bids and see whether or not in


41

1 fact they are qualified bids and we satisfy ourselves with

2 respect to the bids.

3 THE COURT: Yeah, how about January 20 at noon advise

4 the landlords as to who the competing bid or bidders involved?

5 And that would give them from the 20th through the 24th to

6 exchange information so that hopefully by the 25th at the sale

7 hearing the landlords will have a comfort level.

8 And let me just comment that at the sale if one or

9 more of the landlords does not have a comfort level at that

10 point and can demonstrate it to the Court, then I will

11 entertain the notion of continuing the hearing to some later

12 date, be that the next day or the day after that, but certainly

13 on -- with a very shortened extension if needed.

14 MR. FOREMAN: Yeah, I appreciate that, Your Honor. We

15 certainly would be prepared on the 25th, coming in for a sale

16 hearing, to be able to present to Your Honor whatever evidence

17 we would believe would be necessary for Your Honor to make a

18 decision on adequate assurance. So -- and as Your Honor knows,

19 the timing is critical.

20 THE COURT: Okay, well, I would suggest that --

21 MR. FOREMAN: So --

22 THE COURT: -- if there's a bidder other than the

23 stalking-horse bidder, and you would notify these people who it

24 is and what their financial condition is, that at the 25th

25 hearing you be prepared and advise the other bidders that I


42

1 want to see the CFO on the stand with a package of financial

2 information.

3 MR. FOREMAN: The CFO of the bidder?

4 THE COURT: Correct.

5 (Pause)

6 MR. FOREMAN: We certainly could incorporate that into

7 the bidding procedures --

8 THE COURT: Okay.

9 MR. FOREMAN: -- that we'd propose. Thank you, Your

10 Honor.

11 THE COURT: Okay, anyone else wish to be heard?

12 MR. SULLIVAN: Your Honor, Bill Sullivan on behalf of

13 the Teamsters Local 317 Union.

14 Your Honor, the Teamsters Union is not the union that

15 was referred to that is party to some of these agreements. And

16 the Teamsters did file an objection shortly before the hearing;

17 the objection was prepared today basically as the Teamsters

18 Union was reviewing the motion, and it was designed to preserve

19 all of their substantive rights.

20 The collective bargaining agreement applying to the

21 Teamsters employees, who are the drivers for the debtors'

22 operations, requires that if there's a sale of all of the -- of

23 the entire operation, that the purchaser agree to abide by the

24 collective bargaining agreement.

25 Your Honor, my client understands that's not an issue


43

1 for today. And after reviewing and hearing the presentation of

2 counsel, it does not appear that any of the interim agreements

3 are being approved today, or the transition agreements. And,

4 accordingly, my client is simply rising to note that its rights

5 are being reserved as to substantive issues that affect the

6 Teamsters, but does not object to the purely procedural orders

7 regarding the bid procedures.

8 THE COURT: Okay.

9 Yes?

10 MR. WAXMAN: Good afternoon, Your Honor. Jeff Waxman

11 of Morris James, on behalf of Price Chopper. With me in court

12 is my co-counsel Raymond Fink, of the law firm of Harter

13 Secrest & Emery. He has been admitted pro hac vice.

14 MR. FINK: Good afternoon, Your Honor. And I

15 apologize but I need to take a few moments. Originally --

16 THE COURT: I'm sorry, who do you represent?

17 MR. FINK: Oh, I'm sorry, Price Chopper. Very sorry.

18 We'd rather hoped that we'd be here today, Your Honor,

19 in furtherance of the motion to approve our twenty-two store

20 private sale and, as you heard from committee's counsel,

21 creditors' committee's counsel, that that certainly was a sale

22 potentially that they viewed as a positive event, a good value,

23 and, in fact, provided substantial benefit to the estate,

24 including providing enough money to pay off the secured debt,

25 which would give the debtor ample breathing room, an


44

1 opportunity to market the remaining stores and assets of the

2 debtor.

3 But today --

4 THE COURT: Well, they did market the remaining

5 stores.

6 MR. FINK: Well, they marketed the remaining stores

7 plus our twenty-two that were the subject of our APA, and

8 that's what we feel, and stridently contend, was utter bad

9 faith on the part of the debtor and other constituents in

10 negotiating the agreement with us and in terms of what they did

11 subsequently.

12 And at the same time, Price Chopper was proceeding

13 with total good faith, intended to close. We were here today

14 expecting -- hoping to close. We responded to some of the

15 objections, primarily those of the -- one of the unions and the

16 pension and health welfare fund. And we sort of stand here as

17 an island today, being a sole voice objecting to what is going

18 on.

19 Number one, we do not agree or consent to the debtors'

20 withdrawal of the motion for the private sale of the twenty-two

21 stores. The APA does have a provision that allows for

22 termination of the contract upon mutual consent. But there is

23 not mutuality of consent; nor have we been asked. There's been

24 no dialogue about terminating our APA, nor are we really

25 interested in terminating it.


45

1 Price Chopper's --

2 THE COURT: Well, you don't have contractual rights

3 until I enter an order saying that the transaction is approved.

4 MR. FINK: Your Honor, I respectfully disagree. I

5 think the contract makes this Court's approval a condition

6 subsequent. It makes it a condition of closing, of course.

7 Nobody could close without this Court's approval. The contract

8 itself and the obligations of the debtor and the other

9 constituents that approved their contract to diligently and in

10 good faith seek court approval has been totally violated.

11 Debtors can enter into contracts. They can enter into

12 contracts for a sale of assets. And there's no doubt a

13 contract out of the ordinary course of business does -- the

14 transaction does require court approval, but there is a

15 difference between court approval of a contract versus court

16 approval of the underlying transaction, the consummation of

17 that transaction. And that's what the agreement provided for.

18 Otherwise, the debtor could never enter into a contract. That

19 would mean, of course, that the Tops contract is invalid; then

20 the debtor could be free to breach it, as they've so willfully

21 breached our contract.

22 And, Your Honor, the problem is -- and I'm loathe to

23 stand here and complain, but I must, because my client is

24 aggrieved, deeply aggrieved. And at the end of the day, when

25 we walk out of here our response is going to have to be to file


46

1 an action, an adversary proceeding before this Court seeking

2 specific performance.

3 We feel we had a valid binding contract and the debtor

4 had an obligation, along with the committee and other

5 constituents, to seek court approval. And you heard there was

6 more than a fair value for those twenty-two stores.

7 Let me back up for one second. When the debtor filed

8 this Chapter 11 -- some refer to it as a Chapter 33 -- it was

9 clear from the first-day orders and the affidavits in support

10 that this was a pure liquidation case. Understood. Price

11 Chopper proceeded to negotiate with Penn Traffic to purchase

12 four stores, and that motion -- that asset purchase agreement

13 was signed, and that was -- a motion was filed with the court

14 as a stalking-horse bid to approve that transaction.

15 Well, as they continued to discuss and negotiate, that

16 four-store transaction evolved into a twenty-two store

17 transaction, much larger, much more significant: approximately

18 twenty-eight/twenty-nine percent of the debtors' operating

19 grocery stores.

20 Price Chopper and Penn Traffic negotiated a stalking

21 horse-bid, an asset purchase agreement, for forty-six million

22 dollars for those stores; that was a stalking-horse bid that

23 would have been subject to competing bids and the debtor would

24 be able and free to negotiate, solicit and pursue other bids.

25 Well, while that -- after that agreement had been


47

1 negotiated, and it hadn't been executed yet, the debtor and

2 Tops decided to pursue a joint bid for all seventy-nine stores.

3 And the debtor received from Tops and Price Chopper an asset --

4 a marked-up asset purchase agreement for seventy-nine stores at

5 an initial price of sixty-five million dollars.

6 What did the debtor do when they got that offer? They

7 sent a letter back to me and to counsel for Tops saying oh,

8 this is collusive bidding, stop it. At the same time,

9 curiously they said, and by the way, the price isn't enough.

10 Strange, but that was the mixed message that was sent.

11 Well, Price Chopper and Tops proceeded to try to

12 negotiate a joint bid over the next ensuing days, but at the

13 same time Penn Traffic was talking to Price Chopper and said we

14 want you to still go ahead and do a separate twenty-two store

15 deal, sign the stalking-horse bid, and you can still try to put

16 together a joint bid with Tops if you like.

17 Well, next thing we know, Price Chopper gets a call

18 from Penn Traffic. What's the call -- what's the message?

19 Well, if you make it a fifty-four million dollar bid, we will

20 execute an asset purchase agreement and file a motion to

21 approve a sale, and a private sale, not subject to competitive

22 bidding. We met their price, fifty-four million, a price which

23 seems to be targeted towards resolving the secured debt.

24 And, Your Honor, the asset purchase agreement that we

25 entered into for the private sale, at section 10.2, did


48

1 expressly say that "The purchase price of the Transaction

2 contemplated by this Agreement is predicated upon the entire

3 Transaction not being subject to any competing bids or

4 solicitation of any bids from other prospective purchasers.

5 Accordingly, neither the Seller nor any other party-in-

6 interest, including the creditors' committee, shall solicit any

7 competing bids. However, in the performance of the fiduciary

8 duties, the Sellers may disseminate information to prospective

9 purchasers with respect to the assets and property interests

10 that were the subject of the Contract."

11 It didn't give them license to go out and violate this

12 agreement. It did not authorize them to go out and empower

13 them to fully negotiate and actively pursue another bid, which

14 is what we have today, the asset purchase agreement that they

15 filed at 2 o'clock this morning.

16 I apologize, I wasn't up to read it at that point in

17 time. We barely have been able to get our arms around it as we

18 came into court this afternoon.

19 What was the spirit, the intent and the express

20 purpose of that agreement? Sell the other fifty-seven stores;

21 sell your remaining assets. This cleared the decks with the

22 secured creditors, an enormous benefit; would have given the

23 debtor ample opportunity and time to do what they have to do,

24 rather than coming to this Court on emergency motions and

25 trying to have this Court sign orders where nobody has really


49

1 read the contract yet or could digest the bid process that they

2 propose, and basically a constant fire drill. Unnecessary.

3 Totally unnecessary.

4 Your Honor, it really, at this point -- and it's clear

5 that we put Tops on notice of this. We felt that their conduct

6 was tortious interference with our contract, and we'll pursue

7 those remedies. We also feel that we're entitled to specific

8 performance. The twenty-two store asset purchase agreement

9 involves essentially real estate, fee titles and leases.

10 There's no adequate remedy at law, and we will bring this

11 before the Court. And we intend to fully prosecute the

12 adversary proceeding, because we feel that basically we've been

13 played with, toyed with, manipulated. And, in retrospect, we

14 now believe that the debtor engaged in deceitful conduct when

15 they induced us to sign the twenty-store private bid. We would

16 have been happy to simply go forward with the forty-six million

17 dollar twenty-two store stalking-horse bid and none of these

18 issues would have been -- would have surfaced. We also

19 presumed that the debtor would act in good faith and adhere to

20 the spirit of the agreement. They've done anything but.

21 And it's clear; it's clear because we know that they

22 were actively negotiating this Tops deal. This didn't surface

23 out of the blue. It didn't -- it wasn't unilaterally

24 presented. There were ongoing negotiations, active

25 negotiations, for weeks after the Price Chopper APA was signed,


50

1 and notice stopped. We've been played. We've been sandbagged.

2 Now, in the name of so-called fiduciary duties, do

3 they get to breach contracts? Do they get to ignore and

4 violate covenants of good faith and fair dealing that are

5 implicit in every contract? Do they have a license to do that?

6 Not in any other court they don't. It's appalling. It's a

7 travesty. And we vehemently stridently object to what they've

8 done at this point. We feel it's utter bad faith; there needs

9 to be consequences for this.

10 Now, where are we? We're left with litigation. Okay,

11 we can spend the next year litigating, but we intend to try to

12 get those stores and we intend to pursue equitable relief.

13 We're also troubled. Should we decide to want to bid

14 competitively -- and I don't know if we will at this point

15 because the element of good faith seems to have dissipated, but

16 there are problems with the agreement. We can't figure out

17 what the deal is. There is an agreement with C&S Wholesalers

18 that's redacted. How do we evaluate that? How do we

19 understand what benefit that provides to the estate, if any?

20 How do you bid against that?

21 There is a deal with the UFCW Pension and Health Fund,

22 some kind of a deal; it's referred to in the motion, in the

23 asset purchase agreement; it's part of the purchase price.

24 Where is it? How do we know? How do you evaluate that sort of

25 thing?


51

1 And by the way, Your Honor, I'm not sure their

2 evaluation of the withdrawal liability is at all correct. When

3 we responded to the pension fund objections, there are

4 provisions of ERISA that deal with withdrawal liability. And

5 when you're dealing with a wholesale asset transaction such as

6 being proposed, there's -- there are requirements for escrowing

7 and bonding, because there's a five-year window, look-forward

8 window, where if Tops were to withdraw or create a withdrawal

9 event, there's still recourse to the estate; they're not off

10 the hook.

11 So I'm not -- you know, everybody's painting with a

12 broad stroke here and making these vague assumptions. They're

13 not right. There's more to this. It's much more complex.

14 As Your Honor might gather, we're angry, we're upset,

15 and we don't feel that the debtor should be able to avail

16 itself of the protections of this Court and the bankruptcy

17 procedures and to have wholesale license to breach contracts,

18 and to essentially use Price Chopper as a stalking-horse bid

19 without negotiating a stalking-horse bid with Price Chopper.

20 They should be held to this.

21 Now, there's an easy solution: Your Honor could

22 approve the Price Chopper bid today and we could close; we

23 would close before the end of the month, and we'd license back

24 the properties to the liquidators to sell off the inventory.

25 We're still prepared to close. We're a cash buyer.


52

1 And by the way, Price Chopper is larger than Tops;

2 they've got 120 stores. They're substantially larger than

3 Tops, a more viable purchaser.

4 Your Honor, I ventilated. I hope Your Honor

5 appreciates our comments, our frustration, our disappointment

6 and our anger. Thank you.

7 THE COURT: Yes?

8 MR. LONGMIRE: Thank you, Your Honor. Good afternoon.

9 John Longmire on behalf of Hilco Merchant Resources and

10 affiliated Hilco entities. And I'm here to express -- to echo

11 in some ways some of the comments Price Chopper's counsel just

12 made, although, frankly, Hilco is in a substantially different

13 position from Price Chopper as well, and opposes certain

14 aspects of what's being proposed to be done here but for very

15 different reasons.

16 I certainly echo Mr. Fink's comments that there is

17 sort of a surreal quality to the debtors' presentation here. I

18 was struck particularly by Mr. Foreman's comments that this

19 Tops motion, this Tops deal, is a seminal event in the case

20 because it provides for a prospective acquisition of

21 substantially all the debtors' assets, changes the game in the

22 case, pays secured debt, et cetera, when I thought I read a

23 motion that said exactly the same words just a few days ago

24 with my client as the buyer. And what's surreal is the sense

25 that that didn't happen.


53

1 But just a few days ago the debtors signed an

2 agreement with Hilco to sell substantially all of the assets of

3 the estate to Hilco. They filed a motion. The reason why this

4 hearing date is here -- the reason why everyone's here is there

5 was a hearing scheduled for this date and time on a motion to

6 approve bidding procedures and bid protections for that

7 transaction.

8 And putting aside the notice that this 2 a.m. motion

9 is on or isn't on, we thought we were coming here today for a

10 hearing on what -- on a motion for approval of bid procedures

11 for a sale of substantially all the debtors' assets to Hilco.

12 As the debtors described earlier, we understand their

13 cash collateral stipulation. Their lenders required them to

14 have a motion to sell substantially all of their assets on file

15 by January 3rd, and in fact they had one, and it was a motion

16 to sell to our client.

17 Now, we understood -- we're not in the same position

18 as Price Chopper in several senses, and one of them is this was

19 not a private sale transaction; this was a typical stalking-

20 horse 363 transaction which provides in the documents that it

21 is subject to higher or otherwise better bids, provides for an

22 auction process, bid procedures, bid deadline, and all the very

23 similar items that have been described with respect to this

24 proposed Tops transaction. And Hilco understands, and

25 understood all along, that it could occur that some other


54

1 bidder might make a bid that was viewed by the debtors and the

2 committee as higher or otherwise better than Hilco's.

3 And it bargained for protections, as stalking-horse

4 bidders do in these circumstances, against that eventuality.

5 And those protections are: a breakup fee, expense

6 reimbursement, and various other bidding procedures.

7 Hilco, like any stalking horse, understands that even

8 a signed agreement with a debtor doesn't guarantee that the

9 transaction will be closed, but it understands that, the way

10 Chapter 11 works, its bid could be and might -- maybe would be

11 shop to others and would be subject to higher, better offers.

12 In fact, that appears to be exactly what occurred here. The

13 debtors, maybe to their credit, acted more quickly than

14 sometimes debtors do, and didn't wait for the procedures to be

15 approved, to negotiate terms with somebody else. And we have

16 no opposition to the debtors doing that. We understand that

17 their fiduciary duties and we want to be constructive in this

18 case.

19 And we don't have a problem with the idea that

20 somebody else might want to pay more than we do for these

21 assets. We haven't fully evaluated that offer to make our

22 determination there, but we take the debtors at their word that

23 they believe this is a higher and better offer than ours. But

24 the consequence of that is fairly straightforward under the

25 agreement we have and under the motion that's on file, and that


55

1 is that Hilco will be entitled to receive a breakup fee and

2 expense reimbursement. In fact, the entire system of 363

3 transactions that Your Honor has seen countless examples of is

4 premised on the notion that prospective buyers can be induced

5 through these very type of bid protections to engage in the

6 efforts necessary to bring deals together, do their diligence,

7 negotiate contracts, and then have those contracts be made

8 public and used to induce higher offers and to take the risk

9 that their transactions will be upset by another bidder.

10 The system is premised on inducing buyers to subject

11 themselves to those risks and incur those expenses with those

12 risks in exchange for bid protections. And, again, that

13 appears to be exactly what happened here.

14 Hilco is not suggesting that the debtors should have

15 to close their transaction if in fact they receive a higher

16 bid. Rather, we simply insist that the debtors honor their

17 agreement and maintain the integrity of the bankruptcy sales

18 process, and maybe even their own integrity, and pay the

19 breakup fee and expense reimbursement they paid to -- they

20 agreed to pay under exactly the circumstances that are

21 occurring right now.

22 Nevertheless, it appears the debtors are taking the

23 position that their word and their post-petition contractual

24 commitment has no meaning, that they can breach it with

25 impunity. In fact, they can breach with impunity an agreement


56

1 that fourteen hours ago they were asking the Court to approve.

2 And I suppose that means that from their perspective they got

3 lucky that this agreement with Tops was signed in the middle of

4 last night and not the middle of tonight. But if that is the

5 standard under which debtors are going to be able to operate

6 sales in this court and others, then we believe the entire

7 premise of 363 sale processes is in question.

8 Stalking-horse buyers rely on bid protections,

9 obviously. Stalking-horse bidders have no option but to put

10 some level of trust in debtors before bid procedures hearings,

11 and that trust is based on the contractual commitments made by

12 the debtors to provide those protections in the event of an

13 overbid, and a trust in the standards that courts have laid out

14 for approval of those protections. But for a debtor to so

15 brazenly breach its contractual commitments, and to attempt to

16 usurp the normal legal process for approval of those

17 protections, is quite shocking.

18 Hilco, just as Price Chopper, has not consented to

19 withdrawal of the motion to approve its transaction. Hilco has

20 not consented to withdrawal of a motion to approve its

21 transaction or to termination of its agreement. As far as

22 we're concerned, that agreement and that motion are still in

23 place and still before the Court, and the agreement requires

24 that these procedures be approved no later than today.

25 In fact, I refer back at the order in preparation for


57

1 what we were doing yesterday for today's hearing, the order we

2 thought was to be presented to the Court. And in that order,

3 which was prepared by the debtors, they proposed various

4 findings of fact for the Court; among those are the following:

5 "The bid procedures attached to the Hilco agreement

6 were negotiated in good faith by the Debtors and Hilco and are

7 reasonable and appropriate;

8 "The requested breakup fee and expense reimbursement

9 are the product of extensive arm's-length negotiations between

10 the Debtors and Hilco;

11 "Payment of the breakup fee and expense reimbursement,

12 under the circumstances described in the Hilco agreement, is an

13 actual and necessary cost and expense of preserving the

14 Debtors' estates, within the meaning of Sections 503(b)(1) and

15 507(a)(7) of the Code;

16 "It is commensurate to the real and substantial

17 benefit conferred upon the Debtors' estates by Hilco; is

18 reasonable and appropriate in light of the size and nature of

19 the proposed sale transaction and comparable transactions and

20 the commitments that have been made and the efforts that have

21 been and will be expended by Hilco; and it is necessary to

22 induce Hilco to continue to pursue the sales transaction and

23 continue to be bound by the agreement;

24 "The breakup fee and expense reimbursement also

25 endorse the stalking-horse agent, i.e., Hilco, to submit a bid


58

1 that will serve as a minimum floor bid on which the Debtors and

2 other bidders may rely," again, exactly what's occurred;

3 "The stalking-horse agent has provided a material

4 benefit to the Debtors and their creditors by increasing the

5 likelihood the Debtors will receive the best possible value for

6 the assets."

7 Those are the debtors' words, and it appears to be

8 what's happened. The stalking-horse agent has provided a bid

9 that set a minimum floor on which the debtors relied and which

10 provided, in the debtors' words, a material benefit to the

11 debtors and to the estates by increasing the likelihood that

12 someone like Tops would rush in to make the bid that it has to

13 to acquire the assets it seeks to acquire.

14 The agreement itself between the debtors and Hilco

15 contain certain conditions to effectiveness; none of those

16 conditions have failed. Hilco's not breached the agreement.

17 In fact, the debtors appear to be in breach of a covenant in

18 that agreement which states that they will diligently pursue

19 court approval of bid procedures for Hilco today.

20 So by the terms of the agreement, the debtors do not

21 have a legal right to terminate it. And the bid protections

22 and breakup fee provisions of the agreement provide exactly

23 what the parties have agreed would happen, under circumstances

24 that have occurred today.

25 If obligations like this are not to be honored by


59

1 debtors, then I'm concerned we're creating a new system within

2 the bankruptcy world where debtors-in-possession can disavow

3 not only the actions and agreements of pre-petition debtors,

4 which we all know is one of the advantages of this process, but

5 even so only with court approval, but also can disavow their

6 own fully negotiated, post-petition, signed, contractual

7 commitments, in this case before the ink dries.

8 Earlier in this case, I understand -- and I apologize

9 because I'm new to the case, but I've looked through the docket

10 and some of the earlier pleadings and I understand and I've

11 seen that earlier in this case the Court approved a breakup fee

12 to another buyer in other circumstances which appear to me to

13 be substantially identical to these.

14 At the outset of these cases I understand the debtors

15 sought approval of a sale of substantially all their assets to

16 a joint venture made up of parties in the inventory and real

17 estate disposition business. And while that bid procedures

18 motion for that deal was pending, they entered into an

19 agreement with Price Chopper and withdrew the original motion

20 but sought and received approval of a breakup fee for the

21 original stalking horse, and, in our view, appropriately so,

22 because that stalking horse is apparently what brought the deal

23 to the table that the debtors sought to do next. The same

24 result, we believe, should apply here. Otherwise, we're

25 unclear as to what would stop the debtors from running this


60

1 instead of as an efficient normal auction process but as an

2 auction by 363 motions. What is to stop them from doing this

3 to Tops? What is to stop them from getting another bid

4 midnight on Sunday and filing a motion Tuesday at 3 a.m. with a

5 new bidder, with a new breakup fee, calling that a stalking

6 horse as though Tops doesn't exist?

7 What they've got going here is an auction, and we

8 understand that that's what debtors like and that's good for

9 estates; we don't have a problem with that. But instead of

10 having the auction take place in a conference room where people

11 have fifteen minutes in between bids, this seems to be maybe

12 the most inefficient auction I've seen, one where they get a

13 bid and a fully negotiated contract, sign the contract, make a

14 motion for approval of the contract, and then go to the next

15 bidder, sign a fully negotiated contract with that bidder, sign

16 that contract, pretend the first one didn't exist, call the new

17 one the stalking horse, and start all over again. They seem to

18 be up to number 3, 4, I'm not quite sure, and I don't know how

19 many times this is going to happen.

20 But under these circumstances, we have an agreement

21 with the debtors that allows them to do what they've done in

22 exchange for a breakup fee. And it's notwithstanding what was

23 said before about this breakup fee being substantially similar

24 to ours. It's not at all. Ours is minimal in comparison; it's

25 a 300,000 dollar breakup fee in comparison to what I heard this


61

1 morning was a 2 1/2 million dollar, I think, or so, breakup

2 fee.

3 But, again, the motion seeking approval of that fee is

4 on today's calendar and we seek to have it approved. We don't

5 authorize the debtors to withdraw it. And, again, if this is a

6 better bid than ours, we understand; we'll evaluate our options

7 in terms of bidding against it in the auction. But if we're

8 outbid, we believe we're entitled to the fee that we bargained

9 for and that's before the Court, and that the debtors have

10 agreed in writing to pay and to support and to seek court

11 approval of.

12 If that's how these processes are going to work, then

13 I'm concerned again it will not be long before debtors are not

14 able to engender the trust necessary to engage true stalking

15 horses.

16 Again, this Court appears to have approved a breakup

17 fee for an outbid buyer earlier in this case in very similar

18 circumstances, but that's by no means the only rule we've seen

19 along these lines. We've looked -- since this 2 a.m. filing,

20 we've looked at several other cases in which this very kind of

21 event has occurred, and courts have approved breakup fees for

22 original stalking-horse buyers, even in the absence of the

23 debtors' support for their own motions.

24 I can give several examples; I'll try to keep this

25 short. I refer, for example --


62

1 THE COURT: I'm not going to make a ruling today, so

2 you don't have to cite the cases to me, cases that I haven't

3 read.

4 MR. LONGMIRE: Um-hum.

5 THE COURT: I'm not going to make a ruling on your

6 objection --

7 MR. LONGMIRE: Okay.

8 THE COURT: -- today. The only thing I want to know

9 is, in light of what you say on behalf of Hilco, and in light

10 of what Mr. Fink had to say regarding the Price Chopper deals,

11 do the debtors and the committee wish to withdraw both of the

12 motions relating to those two transactions and proceed with the

13 Tops transaction? And whatever cause of auction you think you

14 have or Price Chopper thinks it has, you can pursue that.

15 MR. LONGMIRE: We understand, and I'll let the debtors

16 answer that question; I think they may have already.

17 THE COURT: Yeah, I have to tell you I have a disputed

18 disclosure statement hearing at 3 o'clock.

19 MR. LONGMIRE: I'll stop, Your Honor. I do want to

20 say one thing in response to your last comment before I do,

21 though, and that is, again, we think we're in a different

22 position than Price Chopper because we have a breakup fee

23 agreement and motion for Your Honor today. We are not

24 intending to commence litigation to enforce specific

25 performance of this agreement. We think we have a claim before


63

1 Your Honor, under Section 503 of the Bankruptcy Code, for

2 payment of our contractual entitlement for compensation that is

3 triggered by the Tops transaction. And we would seek it at a

4 time to be determined by Your Honor, if that's not today, to be

5 approved and paid.

6 THE COURT: Okay.

7 MS. PLASKON: Your Honor, if I may, Leslie Plaskon on

8 behalf of GE Capital, the first lien lenders. Your Honor, we

9 understand the press for time, so I will keep it short.

10 Your Honor, we support a deal closing as quickly as

11 possible. We realize that the debtor has changed course a few

12 times since the case was started. The first-day orders,

13 November 19th, we were here in the court with sale procedures,

14 really, that set a timetable for a sale closing by the end of

15 December.

16 Our perspective is that there's been a significant

17 cash burn in the case. We've been funding -- at this point

18 we're marked to fund over ten million dollars since the filing

19 of the case. It's in our view that the proposal that the

20 debtor's making today to withdraw the motion and go forward

21 with the Tops sale is the best course to take. Our goal is to

22 get these deals closed by January 28th, which is the timetable

23 that we've all set out. If there are issues as to damage

24 claims and breakup fees, those can be addressed another day.

25 But in the interest of fairness in the process that really has


64

1 been very fulsome, very negotiated process in terms of

2 auctioning these assets, which really took place even prior to

3 the case filing, our perspective is that this needs to be --

4 you know, needs to be moved expeditiously in light of the

5 significant losses and job preservation issues, Your Honor.

6 Thank you.

7 MR. PARKINS: Your Honor, I will yield one more, but

8 I -- the debtor needs to respond, if I can, as soon as -- I

9 know you have time constraints; I'd like to respond on behalf

10 of the debtors.

11 THE COURT: Okay.

12 MR. CIANTRA: And, Your Honor, I will be very brief.

13 I'm Thomas Ciantra. I'm with Cohen, Weiss and Simon LLP; we

14 are counsel to the United Food and Commercial Workers' Union

15 and its Local Unions 1, 23 and 1776, which, Your Honor, are the

16 collective bargaining representatives of approximately 5,000

17 employees of the debtor.

18 Your Honor, the union is very encouraged by the

19 transaction that the debtor has negotiated with Tops, with the

20 involvement and participation of the creditors' committee, on

21 which the union also sits. The Tops transaction saves jobs,

22 Your Honor. Tops has pledged to maintain employment of

23 thousands of UFCW represented employees at many of the stores

24 that will be acquired, which is indeed extremely encouraging to

25 the union given how this case started and how it has developed.


65

1 So we are quite supportive of the procedural request that the

2 debtor has made here.

3 As the Court is aware, we have also filed an objection

4 to the Price Chopper sale motion that was noticed for hearing

5 today. Very briefly, we believe that the relief requested

6 there is inconsistent with the debtor's collective bargaining

7 obligations in its existing labor agreements that require that

8 any such sale be conditioned upon the purchaser's acceptance of

9 the relevant union agreement. There has been no such

10 acceptance, or even negotiations. Indeed, there has been no

11 commitment in connection with the Price Chopper transaction to

12 employ a single existing employee of the debtor.

13 So we believe that approval of that proposed sale

14 motion would be inconsistent with the debtor's collective

15 bargaining obligations which must be maintained under Section

16 1113(f) of the Code, and that motion would be properly denied

17 in any event.

18 So we do support the debtor's request to withdraw that

19 sale motion and the process motion that -- process relief that

20 it is requesting in conjunction with the Tops sale. The only

21 thing we would ask, Your Honor, is that, if there is going to

22 be any auction, that the debtor permit the union to participate

23 and attend that proceeding.

24 THE COURT: What do you mean by "participate"?

25 MR. CIANTRA: Well, we'd like to be present, Your


66

1 Honor. If there are going to be sales, we'd like to be

2 available to any potential purchaser of any of the markets that

3 Tops does not take or that may be sold to others, so that we

4 can negotiate some understandings in terms of how employees may

5 be hired or the terms under which they'll work.

6 THE COURT: Okay, you can attend. And if anybody

7 wants to talk to you, they can.

8 MR. CIANTRA: Thank you, Your Honor.

9 MS. RUSSELL: Your Honor, Maura Russell of Epstein

10 Becker & Green, on behalf of another bidder, Hudson Capital

11 Partners and RCS Real Estate Advisors. I will brief, Your

12 Honor.

13 We are perhaps a bidder that was probably played worse

14 than everyone: We're the only ones standing without an

15 agreement and without a breakup fee. We request that we get

16 confirmation from the debtor that these are the procedures that

17 are going to be followed.

18 We have been scrambling since the middle of November,

19 responding to the debtor's professionals' requests for bids,

20 deadlines. We were excluded from the most recent Hilco fifty-

21 seven store deal. We subsequently did submit a bid that we

22 believe was higher than the Hilco bid. But we will address

23 those issues, Your Honor, if given the opportunity and whenever

24 those issues are subsequently raised by Hilco.

25 However, with respect to the auction going forward, we


67

1 would like an understanding as to the documentation that we're

2 bidding against. My client has spent thousands and thousands

3 of dollars bidding on agreements every time a motion is filed,

4 a different agreement is filed. We have to review it; we

5 respond. Before we -- no sooner have we responded than there's

6 been another bid. And the costs and expenses to our client

7 have been extensive and perhaps in excess of 100,000 dollars.

8 And while we understand that the debtors are trying to

9 get the most value that they can, we ask the Court that they

10 not be allowed to play with people and their expenses and cause

11 them to incur expenses because of the inefficiencies of the

12 processes that they have proposed. Thank you.

13 MR. SLEVIN: Your Honor, Barry Slevin representing the

14 UFCW Local One Pension Fund and Health and Welfare Fund.

15 We objected to the prior bidding procedures and

16 approval for bids by Price Chopper and Hilco. Our objection

17 was because primarily it did not contemplate a best offer,

18 taking into account all factors for all of the assets of the

19 debtor. We specifically referred to the fact that there is a

20 provision in pension law that specifically provides that a

21 seller can avoid withdrawal liability by finding a purchaser

22 that will contribute for substantially all of the operations of

23 the seller.

24 There are other conditions, which I'll very briefly

25 address, but that is the key condition, and that is the


68

1 condition that the pension fund has been involved in

2 significant substantial discussions with Tops. And Tops has

3 provided specific assurances, and the trustees of the fund have

4 determined that that condition will be met by the proposed

5 sale.

6 So the very reason for the objections is what we had

7 hoped for, that there would be a bid that took into account

8 Section 4204.

9 Price Chopper has referred to other conditions as if

10 the pension fund or Tops or Penn, the debtor, would not be

11 aware of these conditions. We are very aware of the conditions

12 regarding secondary liability, purchasers' and sellers' bonds;

13 they have been dealt with in great detail. In fact, something

14 that would be very important to the creditors and the debtor is

15 that the board of trustees has determined that the sellers'

16 bond will not be required under Pension Benefit Guaranty

17 Corporation guidance, which is the agency with jurisdiction

18 over Section 4204. The trustees have the ability to determine

19 if that bond will not be required, and they've made that

20 finding in this case.

21 So the specter of some uncertainty about this Section

22 4204 is the furthest from the truth. It has been subject to

23 much negotiation and detailed resolution of all issues.

24 The pension and health fund have an interest not only

25 in the continuation of the plan; they also have separate claims


69

1 for delinquent contributions. I think the paper's a little

2 confusing on that point. Those claims are not being dismissed

3 by this proposed sale; it is only the seventy -- roughly

4 seventy-two million dollar withdrawal liability claim that will

5 be eliminated.

6 I think it's very important to just briefly point out,

7 withdrawal liability is designed to reimburse a plan for the

8 loss of its contribution base, whether it be a small or large

9 contributor that leaves the fund. Here, Penn Traffic was a

10 twenty-eight percent contributor to this pension fund. And the

11 seventy-two million dollar claim would go some way toward

12 reimbursing the fund for the loss of that twenty-eight percent

13 contribution base.

14 4204 has a simple concept: If a purchaser comes in

15 and substitutes for the loss of that contribution base, there

16 is no need to collect withdrawal liability. In fact, it's

17 double collection to collect withdrawal liability and have a

18 replacing employer.

19 So what's occurring here is Tops is stepping up and

20 saying yes, we will replace the debtor for substantially all of

21 the operations for which it contributed. And that's why, while

22 it may seem strange, the pension fund is actually happy not to

23 have a seventy-two million dollar withdrawal liability claim,

24 because it gets something that's much more valuable: It gets

25 a --


70

1 THE COURT: Especially because it couldn't be paid.

2 MR. SLEVIN: Well, something would be paid but,

3 frankly, the ongoing contribution stream from Tops into the

4 future is a lot more valuable maybe than seventy million

5 dollars, certainly on the amount of the seventy million dollars

6 that would actually be paid.

7 THE COURT: Okay.

8 MR. SLEVIN: Thank you, Your Honor.

9 MS. BISCO: Very quickly, Your Honor. Deborah Bisco

10 for Pension Benefit Guaranty Corporation.

11 I'm here because there are also three single-employer

12 plans the debtors have. And in the course of these five sale

13 motions prior to today, we filed twice that we have concerns

14 that need to be addressed as part of any sale. I appreciate

15 focus has been on other things, but I still don't know for sure

16 whether bidders are intending to assume any of those pension

17 plans, if they'll get credit when they -- if they do. That

18 should be clear if there's going to be an auction.

19 And, also, we have multiple debtors that are not

20 substantively consolidated. Much of the assets are in the

21 Debtor Penn Traffic Company, but there are some significant

22 assets in at least two others that I'm -- so I'm told. And I'm

23 not sure which sales deal with what or, at this point, if

24 everything is going to Tops or if there will be chunks, but

25 some kind of respect allocation and valuation for those


71

1 separate debtors' assets must be maintained. Thank you.

2 MR. PARKINS: Thank you, Your Honor. Lenard Parkins

3 for the debtors.

4 One thing we don't want to do is anger people; it's

5 not our goal. Our goal: We're trying to do our job and get

6 through this case and maximize the value for everybody and

7 preserve as many jobs for everybody in these trying times.

8 There are just some fundamentals -- we've been called

9 a lot of bad names today, but there are certain predicates, I

10 think, that the Court understands and, we believe, are the

11 right and righteous ways that the bankruptcy process works.

12 We're trying to maximize value. And we've entered into several

13 agreements, which we are not proceeding with today, with Hilco,

14 and we're not proceeding with Price Chopper. We are proceeding

15 and want to proceed and ask Your Honor to approve the bid

16 procedures in the breakup fee with respect to Tops.

17 The law is clear in this circuit and every other

18 circuit that there's no enforceable contract against the debtor

19 until the Court approves it, if it's a transaction outside the

20 course of business. I think you raised that as your initial

21 comment, and that's true. And everybody here understands those

22 rules. And if people wish to proceed in an action that seeks

23 specific performance of a contract, a debtor that sells a third

24 of its assets in this case, seeks specific performance, as Your

25 Honor has said, people should file a motion, people should file


72

1 a complaint. But we're not going forward with that transaction

2 today.

3 The other situation is one that's very similar to what

4 the Third Circuit addressed in the case of Martin v. Martin in

5 1996 where a trustee was -- had a stipulation, and then

6 circumstances changed and the trustee was caught in a situation

7 should it seek approval of the stipulation or should it do what

8 it felt was its fiduciary duty. And the Court said you need to

9 do what's right: You need to fulfill your fiduciary duty, and

10 if you can't proceed with the motion you filed because

11 circumstances have changed and you have a better deal, or

12 something has changed which says it's not meritorious or the

13 best meritorious transaction, then you can't proceed with it if

14 it's not right.

15 And that's where you have a situation. The other

16 transactions that were before the Court were good at the time;

17 they're not the best at this time. And we want to proceed,

18 because we have -- as Your Honor has noted from the first day

19 of this case, very constricted on ability to play this Chapter

20 11 case correctly, go out and have time for people to bid and

21 look at things. We have very tight timeframes, very limited

22 timeline to catch collateral orders. Very constrained.

23 So we had to start out the best we could and bring to

24 the Court now and to the creditors as a whole, to the employees

25 as a whole, a deal which we believe will bring this case to


73

1 conclusion and set up a bid process against which the entirety

2 of the case will be focused.

3 I think the law is that we have the right to proceed

4 with what we think is the best interest of the estate. We've

5 exercised our business judgment, our board has met, and, in

6 seriatim, deals have been good, have been approved. But now we

7 have a better deal. We didn't go out and solicit this deal;

8 this deal was presented to us for consideration. We didn't go

9 breach a contract. We are -- we would be in breach of our duty

10 to you, to the system, to the creditor constituency if we

11 didn't put forward what we believe to be our best deal.

12 We're here. We are sorry that people are chagrined

13 with our conduct, but we would be chagrined with our own

14 conduct if we didn't do what's right. And this is the right

15 thing to do today, to proceed to try to maximize value for the

16 estate, and we ask you to go forward with this.

17 THE COURT: Okay, does anyone else wish to be heard?

18 (No response)

19 THE COURT: I'm not sure I understood the PBGC's

20 request to keep separate debtor assets. Is there something in

21 the stalking-horse agreement that bears on this issue?

22 MS. BISCO: It's hard to know at this point which of

23 the five asset sale motions are we talking about. Tops,

24 which -- the last one I have not had a great deal of time with,

25 having left Washington this morning to be here on time today.


74

1 But it's my understanding that Tops is looking to buy basically

2 everything and that that would include a lot of Penn Traffic

3 Company but also some assets from one, or possibly two, other

4 debtor estates. And since there are separate debtor estates

5 with separate claims against them, there needs to be some

6 valuation and no commingling.

7 In the course of the auction, if there are other

8 packages of bids that may be competing with Tops, they will or

9 won't involve in their portions assets from various estates,

10 because I just don't have any factual recitation --

11 THE COURT: Okay, well --

12 MS. BISCO: -- of what's in what estate.

13 THE COURT: -- after you read the proposed asset

14 purchase agreement, why don't you contact Debtor if you have a

15 problem with that contract and may have a problem with other

16 bidders which will sign under the same contract, perhaps with

17 amendments. And if you have problems with it, I think we can

18 address it at the -- well, I'm not sure whether that might --

19 address -- the sale hearing may be too late to raise those

20 issues if bidders don't know what they're bidding on relative

21 to your interest in the separateness of the debtors. The only

22 thing I can suggest is you -- if you can't resolve it with the

23 committee and the debtors, you seek an emergency hearing here

24 today, or you seek an emergency hearing at that time, and I'll

25 try to accommodate you.


75

1 MS. BISCO: Thank you, Your Honor.

2 MR. HUSTON: Your Honor, if I may, Joseph Huston on

3 behalf of the committee. There is an omnibus hearing scheduled

4 for the 20th, which is the day before the auction. So if for

5 some reason they can't get remedy, they can hear -- they can be

6 heard that day.

7 THE COURT: Okay. That's fine.

8 MR. FOREMAN: And, Your Honor, Michael Foreman for the

9 estate. I would just note a lot of the issues, I think,

10 people, just, here are raising this time seem to be with

11 respect to allocation of sale proceeds. I think it's -- I

12 think the record in these cases are clear that sale proceeds

13 first would go to the secured lenders, the first lien lenders,

14 second lien lenders. Any assets after that go to satisfy

15 administrative claims. And then any distribution of the

16 remainder of the assets we would expect to happen within a plan

17 of liquidation. And if there are -- and at that time, there

18 would either be consolidation of the estates or not.

19 And I think these issues regarding allocation and

20 assets, all that, we certainly want to get information. We

21 have not been as probably as responsive as I would have liked

22 with the PBGC. I'm hoping, after sleeping all weekend, to be

23 able to be in a position to be more responsive to parties like

24 PBGC and be able to give them the information they're seeking.

25 THE COURT: Okay.


76

1 MR. BIFFERATO: Your Honor, I'm very sorry, but I --

2 and I'll be very brief. Connor Bifferato on behalf of COR

3 Route 5, LLC. We did file an objection to the Price Chopper

4 motion, Your Honor. We did not have time to file an objection

5 to the Tops motion. Perhaps we not necessarily would have.

6 Our primary --

7 THE COURT: I'm sorry, who do you represent?

8 MR. BIFFERATO: I'm sorry, Your Honor. COR Route 5,

9 LLC. COR Route 5, LLC owns a shopping center in Fayetteville,

10 New York, which is where the debtors' flagship store is

11 located. And they've had a desire to bid on the property

12 located in that premises. They're uniquely situated, Your

13 Honor, because they basically own all the property surrounding

14 that store. So their bid for the property, their interest in

15 the property, is significantly higher than any other potential

16 bidder, because the property can't be used without the

17 cooperation of COR Route 5, LLC.

18 And it was our desire, in objecting to the Price

19 Chopper motion, to say we wanted to participate because we had

20 the ability to give a higher and better bid, at a minimum for

21 that store, but would be substantially greater, at least in the

22 seven-figures, in terms of the result to the estate.

23 Since that had been withdrawn and there will be a bid

24 process, it's our desire to work with whoever will be bidding,

25 so that we're part of the winning bid package. But our concern


77

1 is that we had not had an opportunity to participate. And all

2 I really wanted to do was to make sure that -- because we had

3 filed an objection to the Price Chopper motion, is to confirm

4 that our rights to continue to object to this process, except

5 for any procedures that the Court may approve today, be

6 preserved --

7 THE COURT: Okay.

8 MR. BIFFERATO: -- just because of the time. Thank

9 you, Your Honor.

10 MR. MEYERS: Good afternoon, Your Honor. Jeffrey

11 Meyers representing Centro Properties, Levin Management and

12 Widewaters. We have four leases.

13 We support any resolution that ends up with a going

14 concern; I mean, that's our hope. Our only fear is that if at

15 the end of the day it's not a going concern and there's going

16 to be a sale of designation rights, we wish to preserve our

17 rights to object to any extension to assume -- any extension

18 for the period of time to assume and reject leases, because it

19 seems as though what's being negotiated here would create a

20 potential marketing period that's over the 120 days, and we

21 just don't want an order entered that allows that to happen

22 without a hearing.

23 THE COURT: Okay.

24 MR. MEYERS: Thank you.

25 (Pause)


78

1 MR. FOREMAN: With that, Your Honor, we have a sale

2 procedures and breakup fee approval order we would submit to

3 Your Honor with --

4 THE COURT: Yeah, do I understand that there are

5 documents that are not completed yet? Is the asset purchase

6 agreement complete?

7 MR. FOREMAN: It's complete. We have not yet filed

8 schedules to the agreement; that's going to be filed within the

9 next couple of days once those schedules are filed. We also

10 inadvertently forgot to -- omitted the UFCW Local One Pension

11 Fund Settlement from the motion, and we'll get that on file

12 immediately.

13 THE COURT: To be decided when?

14 MR. FOREMAN: That's part of this motion and would be

15 decided on the 25th in connection with the sale. This is the

16 UFCW Local One Pension Fund --

17 THE COURT: Okay.

18 MR. FOREMAN: -- settlement whereby the 4204

19 transaction Mr. Slevin spoke about --

20 THE COURT: Okay.

21 MR. FOREMAN: -- would be effectuated.

22 THE COURT: So as far as the APA is concerned, the

23 only thing you don't have are schedules?


25 THE COURT: And how about -- are all the bid procedure


79

1 documents finalized?

2 MR. FOREMAN: Yes.

3 THE COURT: Now, when you solicit bids, are you going

4 to send out copies of the APA with schedules, or are you simply

5 going to say if you want to see it come in and we'll give it to

6 you?

7 MR. FOREMAN: Whichever Your Honor would require. If

8 Your Honor wants us to send out the motions, we absolutely will

9 do that -- I mean, the agreements and everything else, we'll

10 absolutely do that. And if parties contact us and seek to

11 submit bids, we'll -- I'm sure we'll provide them with a Word

12 version of the agreement so they can --

13 THE COURT: How many potential bidders do you believe

14 there are?

15 MR. FOREMAN: We believe there are perhaps as many as

16 a dozen or so bidders for different configurations of stores.

17 There seem to be a lot of parties who want to liquidate the

18 debtors, and we certainly don't preclude liquidation bids from

19 the auction process. So we -- and there are certain -- we

20 could have a configuration of bids. The bidding procedures

21 contemplates we could entertain a configuration of bids, and

22 provides for us to view all the bids in the aggregate in

23 determining bids versus the stalking-horse bid.

24 THE COURT: Um-hum.

25 MR. WERKHEISER: Your Honor, for the record, Gregory


80

1 Werkheiser.

2 I did want to add, even to the extent that people

3 wouldn't be getting the paper schedules, which are several

4 hundred pages, we are going to make everything available that

5 isn't confidential commercial information electronically, so

6 that anybody can go on the Web site of the claims agent and

7 download it.

8 THE COURT: Okay.

9 MR. FOREMAN: And Mr. Werkheiser --

10 THE COURT: So they can download the APA?

11 MR. WERKHEISER: And the --


13 MR. WERKHEISER: -- schedules that are not

14 confidential --

15 THE COURT: And the schedules?

16 MR. WERKHEISER: -- yes, Your Honor.

17 MR. FOREMAN: Now, I know somebody did mention that

18 the C&S agreement, the settlement that's part of this

19 transaction, was filed in redacted fashion. We have filed a

20 motion, a request to file certain agreements and schedules

21 under seal, certain aspects of that agreement C&S believes are

22 proprietary and commercially -- information that is important

23 to maintain the confidentiality.

24 I would imagine parties seeking to bid, if they

25 haven't yet signed a nondisclosure agreement, would be -- you


81

1 know, will be signing nondisclosure agreements with us, and

2 they'll have access to that. There were also certain --

3 THE COURT: Okay.

4 MR. FOREMAN: -- schedules that we view of a

5 confidential nature, and we're seeking really almost a standard

6 authorization to file those kind of confidential schedules

7 under seal.

8 THE COURT: Okay.

9 MR. FOREMAN: Okay. We do have the bidding procedures

10 order and the bidding procedures. If Your Honor wishes, I can

11 hand up the bidding procedures. And, Your Honor, this is a

12 redline --

13 Greg? Greg? If we could give the judge a redlined

14 copy.

15 MR. WERKHEISER: That is --

16 MR. FOREMAN: Your Honor --

17 MR. WERKHEISER: I just handed a blackline of the

18 bidding procedures where the only changes are from what was

19 filed, and then this is a clean copy of the order itself.

20 THE COURT: Okay.

21 MR. FOREMAN: Your Honor, I don't know how it

22 happened, but somehow in what we filed there were -- some

23 people still had some comments to the bidding procedures, and

24 we were able to work those out among the debtors, the

25 committee, GE and the proposed stalking horse, and the changes


82

1 that you see in these bidding procedures reflect those changes.

2 THE COURT: Okay.

3 MR. FOREMAN: Most deal with the committee's

4 consultation rights, as well as the first lien agent, with

5 respect to the conduct of the auction. Most of the others

6 relate to correction of typographical errors or misstatements.

7 The most significant change appears on page 8 with respect to

8 modifications of bid procedures, providing those procedures

9 cannot be modified except with the express consent of the

10 debtors, the committee and agent, and in consultation with the

11 stalking-horse bidder.

12 And we have agreed, and the asset purchase agreement

13 provides, that we would not modify, without the consent of the

14 stalking-horse bidder, four parts of the bidding procedures:

15 the amount of the minimum initial bid; the stalking-horse

16 bidder's right to credit bid its breakup fee; the bid

17 increments not being lower than 250,000 dollars; and the amount

18 of the good-faith deposit required by a bidder in the 14.7

19 amount.

20 Your Honor also noted on the record that we advised

21 landlords by January 20th at 12 noon as to the bidders. What I

22 would request is, if Your Honor entertains the order, Your

23 Honor so order the record with respect to that provision so we

24 could get the order entered and then hopefully get the deposit

25 paid today.


83

1 THE COURT: Okay. So ordered.


3 MR. LEHANE: Your Honor, this is Robert Lehane from

4 Kelley Drye. I thank counsel for the debtor for raising that

5 issue. The other request I would have is that the Court order

6 any financial information that would be made available -- that

7 landlords are directed to keep that confidential and it not be

8 withheld on the basis of there haven't been any confidentiality

9 agreements executed with landlords, and the --

10 MR. FOREMAN: I appreciate --

11 MR. LEHANE: -- the record be so ordered that any

12 information directed to those landlords is kept confidential,

13 and that will speed the delivery of that information to the

14 landlords at noon.

15 MR. FOREMAN: I appreciate counsel's assistance in

16 that.

17 THE COURT: So ordered.


19 (Pause)

20 MR. FOREMAN: Oh, Your Honor, we just hand -- Mr.

21 Werkheiser handed you the order on the bidding procedures, the

22 clean --

23 THE COURT: I have it.

24 MR. FOREMAN: Okay. We also have orders with respect

25 to the order shortening notice for the motion to file under


84

1 seal; shortening notice on the motion approving the --

2 shortening notice on the overall transaction; shortening --

3 authorizing debtors to file schedules under seal, as well as

4 the complete C&S agreement.

5 THE COURT: Okay.

6 MR. WERKHEISER: Your Honor, could I just have a

7 moment?

8 (Pause)

9 MR. FOREMAN: Mr. Werkheiser's just checking on one

10 issue, but we do have these orders that I think end up being

11 the orders that get us to where we're requesting we want to be

12 and get -- and --

13 (Pause)

14 MR. FOREMAN: We're just trying to resolve -- Mr.

15 Werkheiser's trying to resolve that one issue the Teamsters

16 raised with respect to the filing of a redacted copy of the C&S

17 agreement.

18 (Pause)

19 MR. FOREMAN: Your Honor is getting a taste of what

20 our lives have been over the last two months.

21 THE COURT: I could imagine.

22 (Pause)

23 MR. WERKHEISER: Your Honor, thank you for indulging

24 us further. For the record again, Gregory Werkheiser.

25 We were contacted, just before the hearing, by counsel


85

1 for the Teamsters Local, who expressed some concern about our

2 request to seal portions of the C&S agreement and exhibits. I

3 think in that case we've discussed it with them and the other

4 parties to that agreement, and I believe what I understand is

5 acceptable is that, subject to negotiating an appropriate

6 confidentiality agreement among the parties, that we are

7 prepared to provide that to the Teamsters Local and would

8 proceed on that basis.

9 If that's acceptable, maybe we can just go on the

10 basis of that representation on the record.

11 MR. SULLIVAN: Your Honor, I don't think we need a

12 confidentiality agreement. We have -- we would agree to keep

13 it confidential, but we're objecting to something being filed

14 under seal that could affect -- or that we don't know whether

15 it affects our withdrawal liability right. And we got it this

16 morning, so if they're looking for a seal order, then they need

17 to agree that we can see it, assuming that we'll keep it

18 confidential. Otherwise, we need to reschedule the hearing on

19 the matter.

20 THE COURT: I thought what he just said was if you

21 execute a confidentiality agreement, you'll see it.

22 MR. SULLIVAN: Well, but I don't want to negotiate. I

23 mean, I don't -- if we negotiate one for two weeks, we've lost

24 the battle.

25 MR. WERKHEISER: Your Honor, I think our concern is


86

1 just not -- that it not be further disseminated to other

2 parties who don't have a need for it or might use it for an

3 improper purpose. Not contemplating anything exotic; just a

4 standard agreement by which they would maintain to -- agree to

5 maintain the confidential information we provide them.

6 MR. FOREMAN: Your Honor, we were able to negotiate a

7 nondisclosure agreement with C&S and as a reason to think they

8 can do it. If we need to come back in court next week with a

9 further consideration of the motion to open up what would be

10 filed under seal, perhaps that's the way to get rid of this.

11 But I --

12 THE COURT: Okay, look, if you can't reach an

13 agreement by mid next week, I'll give you an emergency hearing

14 next week.

15 MR. SULLIVAN: Okay, thank you.

16 MR. WERKHEISER: Thank you, Your Honor.

17 MR. WAXMAN: Excuse me, Your Honor. Jeff Waxman of

18 Morris James, on behalf of Price Chopper.

19 Your Honor, Price Chopper already signed a

20 nondisclosure agreement and are asking the debtors to state on

21 the record that it will disclose all of the terms upon its --

22 upon which it is relying, particularly the C&S agreement which

23 has been signed -- which has been filed, redacted form only.

24 MR. FOREMAN: If we have a nondisclosure agreement

25 with them, I don't see any issue. Perhaps Mr. Cobb does, and


87

1 we will hear from him next.

2 MR. COBB: Your Honor, Richard Cobb on behalf of C&S

3 Wholesale Grocers.

4 Your Honor, we'll attempt to work something out with

5 Price Chopper. But I would say for the Court that Price

6 Chopper is not necessarily a friend here with regard to the

7 information that it may receive. But we will attempt to work

8 something out. If we can't, Your Honor, we will reach out to

9 the Court on an expedited basis to try resolve it. But

10 we'll -- we will work in good faith to try work out either a

11 confidentiality agreement or some other means whereby Price

12 Chopper --

13 THE COURT: Or come on back in.

14 MR. COBB: I understand, Your Honor. Thank you.

15 MR. FOREMAN: Your Honor, that's fine. Just want to

16 state for the record that this is a term upon which we expect

17 that the debtors are relying in determining the highest and

18 best offer. Thank you.

19 THE COURT: Okay.

20 MR. WERKHEISER: Your Honor, if I may approach, I have

21 a few orders shortening notice: one with respect to the bid

22 procedures and one with respect to our motion to seal. Your

23 Honor, the dates are blank. We did not want to presume

24 anything before we got here today.

25 THE COURT: Okay.


88

1 MR. WERKHEISER: So --

2 THE COURT: I'll sign them.

3 MR. WERKHEISER: -- obviously we would insert today's

4 date in this.

5 THE COURT: Yes.

6 MR. WERKHEISER: And, Your Honor, then the final order

7 I have here is the form of order that was attached to our

8 motion to seal portions of our C&S agreement and redact

9 portions of the same and certain schedules to the APA. And

10 we'd present that to Your Honor, subject to incorporating the

11 stipulations that we put on the record dealing with the

12 Teamsters' request for information.

13 THE COURT: Okay.

14 MR. WERKHEISER: May I approach with this?

15 THE COURT: Yes.

16 (Pause)

17 THE COURT: Okay, anything else?

18 MR. WERKHEISER: Your Honor, we did come with orders

19 that would withdraw the prior sale motions and agency agreement

20 motions that we had presented to the Court and that were

21 originally scheduled for hearing today. These are plain-

22 vanilla orders. They say that they are withdrawn, and

23 withdrawn without prejudice to the rights of anybody with

24 respect to those; simply so the record is clear, what we are

25 going forward with at this point and what is not a motion for


89

1 the debtors' receivables.

2 THE COURT: Yeah, I'm not sure you need an order. My

3 view is whoever files the motion has the right to withdraw it

4 before it's served.

5 MR. WERKHEISER: If that's acceptable to Your Honor,

6 then I -- we would just propose to file a notice of withdrawal

7 to make the record clear --

8 THE COURT: Yeah, let me just --

9 MR. WERKHEISER: -- with respect to those others.

10 THE COURT: A number of years ago I had a -- the

11 debtor filed a settlement stipulation, and then it withdrew it.

12 And the nondebtor party to the settlement agreement claimed it

13 had standing to pursue the motion, and I ruled otherwise. So

14 that's my view on the subject.

15 MR. WERKHEISER: Thank you, Your Honor. Then we'll

16 simply file notices and make the docket clear in that fashion.

17 THE COURT: Okay.

18 MR. FOREMAN: Your Honor, we are done for today.

19 MR. WERKHEISER: Your Honor, once again --

20 MR. FOREMAN: Thank you very much.

21 MR. WERKHEISER: -- we want to thank you for your

22 great indulgence of us and for helping us move this case

23 forward today.

24 THE COURT: Okay. We stand in recess.

25 (Proceedings concluded at 3:57 PM)


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2 I N D E X

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4 R U L I N G S

5 DESCRIPTION PAGE LINE

6 Debtors' motion shortening notice 88 2

7 re: bid procedures, approved

8 Debtors' motion shortening notice 88 2

9 Re: sealing of documents, approved

10 Debtors' motion to seal portions of 88 13

11 the C&S agreement and redact portions

12 of the same and certain schedules to the

13 APA, approved

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1 C E R T I F I C A T I O N

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3 I, Clara Rubin, certify that the foregoing transcript is a true

4 and accurate record of the proceedings.

5

6 ___________________________________

7 Clara Rubin

8 AAERT Certified Electronic Transcriber (CET**D-491)

9

10 Veritext

11 200 Old Country Road

12 Suite 580

13 Mineola, NY 11501

14

15 Date: January 12, 2010

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Documents

UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE …media.syracuse.com/news/other/PennTraffic010810.pdf · 12 Attorneys for Hudson Capital Partners and RCS Real Estate 13 Advisors