Supplimentary Web Site for Swissair SR111 Crash:
Rob Plenert's Court Transcript:
" Legal Intervention of Boeing in Court Proceedings Regarding The Sale Of The Assets Of
Santa Barbara Aerospace
to American Aircarriers Support, Inc.
(Rob Plenert has asked me to post the following transcript that he prepared of the intervention of Boeing in the court proceedings surrounding the sale of SBA's assets.)
DISCLAIMER: THIS IS NOT AN OFFICIAL TRANSCRIPT! IT HAS BEEN PREPARED BY ROB PLENERT SOLELY AS PRIVATE REFERENCE MATERIAL FOR THE USE OF THOSE INTERESTED IN THE DISCUSSION ON THE CRASH OF SWISSAIR FLIGHT 111. NO OTHER USE WHATSOEVER IS PERMITTED. WHILE ROB WAS CAREFUL TO TRANSCRIBE THE COURT TAPES AS ACCURATELY AS POSSIBLE, NEITHER HE NOR THE OPERATORS OF THIS SITE ACCEPT ANY RESPONSIBILITY FOR ERRORS, INNACURACIES, OMMISIONS, MISREPRESENTATIONS OR ANY OTHER PROBLEMS WHICH MAY APPEAR IN THE TRANSCRIPT. IF YOU NOTICE ANY OF THESE ERRORS, PLEASE LET ROB KNOW SO THAT HE CAN CORRECT THEM.
THIS TRANSCRIPT IS NOT INTENDED TO BE A LEGAL DOCUMENT NOR TO SUGGEST, IMPLY, OR OTHERWISE CREATE ANY IMPRESSIONS REGARDING ANY INDIVIDUAL, COMPANY, OR ORGANIZATION. IT IS INCOMPLETE, AND IS ONLY A PARTIAL TRANSCRIPT OF THE SECTIONS THAT ROB FOUND MOST INTERESTING. THE OPERATORS AND SPONSORS OF THIS SITE ACCEPT NO RESPONSIBILITY FOR THE CONTENTS OF THIS TRANSCRIPT. IF YOU HAVE ANY OBJECTIONS TO THE PUBLICATION OF THIS DOCUMENT, OR ANY OTHER DOCUMENT ON THIS WEB SITE, PLEASE CONTACT US.
NOTE: THIS IS NOT AN OFFICIAL TRANSCRIPT!
Case 99-23507
The sale of Santa Barbara Aerospace to American Aircarriers Support Inc.
Location:
U.S. Bankruptcy Court
3420 - Twelfth Street
Riverside California
92501
Hearing Dates:
January 28, 2000
- Emergency motion filed by Boeing for Stay of the sale.February 4, 2000 - Judge reads the Stipulation Order for the preservation of records.
Judge Meredith Jury
Presiding
Appearances:
Steven G. Polard
Perkins Coie (Los Angeles office)
On behalf of the Boeing Company
http://www.lnblaw.com/rb.htm
Ron Bender
Levene, Neale, Bender & Rankin (Los Angeles office)
On behalf of the Debtor (Santa Barbara Aerospace)
http://www.lnblaw.com/rb.htm
Benjamin J. Fox
Morrison & Foerster ( Los Angeles office)
On behalf of Swissair Transport
http://www.mofo.com/mofocgi/getperson?4867
Joseph E. Civiletto
President
American Aircarriers Support Inc. (AAS)
http://www.a-a-s.com/airservfs.html
David M. Furr
Gray, Layton, Kersh, Solomon, Furr, & Smith (Law firm - North Carolina)
On Behalf of the Buyer (AAS).
Michael [name unintelligible]
[Unintelligible law firm]
On behalf of the Special Litigation Council
James C. Fedalen
On behalf of the San Bernardino International Airport Authority
http://www.sabogreen.com/nonjavaindex.html
Stephen R. Wade
Lewis D'Amato Brisbois & Bisgaard
On behalf of The Official Wage Earners Committee
http://www.ldbb.com/
Daniel Reiss
Haight Brown & Bonesteel
On behalf of the Official Committee of Unsecured Creditors
http://www.hbblaw.com/about/locations.htm
Steven Casselberry
On behalf of a Secured Creditor - Bankers Trust
Jerry Cohen
On behalf of Fifth Third Leasing
Timothy J. Farris
On behalf of the U.S. Trustee
Bob Chickering
Chairman
Santa Barbara Aerospace
(And with a brief appearance on the second Hearing date)
Steven Fry
Bob Chickering's personal attorney
---------------------------------------------------
Transcript notes and summary:
This transcript is extracted from court recordings during the sale of Santa Barbara Aerospace to American Aircarriers Support Inc. in U.S. Bankruptcy Court, Riverside California.
Following months of court hearings, the sale was nearly complete when it was interrupted by the appearance of a representative from the Boeing Company.
Boeing's intention was to file an emergency motion to Stay the sale of Santa Barbara Aerospace to American Aircarriers (AAS). The purpose was to allow Boeing up to 2 weeks in order to review SBA's business records relating to the Swissair crash, and to look for a so-called 'smoking gun'.
The move seems to have been with the support of two creditor groups:
- The Unsecured Creditors Committee.
- The Unsecured Wage Earners Committee.
The purpose of the Stay was to give them the opportunity to investigate a new avenue of financial recourse, that being SBA's (unnamed) 'parent' company. The fear being that once the sale was complete, creditors would not be able to seek recourse from the potentially wealthy parent of SBA. That's because the sale would split them into separate entities.
This was referred to several times in the hearing as the 'Alter-Ego' claim, whereby the courts are asked to lift the 'corporate veil' that serves as an artificial divider between entities in the corporation.
Here's one such description of an Alter-Ego claim:
"If a company is formed for the express purpose of doing a wrongful or unlawful act or if once formed, those in control expressly direct the wrongful thing to be done, the individuals as well as the company are responsible to those to whom liability is legally owed. In such cases, or where the company is the mere agent of the controlling corporation, it may be said that the company is a sham, cloak or alter ego."
(Source: http://www.borden.com/london/london_pubs/london7.html)
As it turned out, SBA & AAS successfully opposed the emergency motion for Stay.
The best the court would allow Boeing, was 4 days access to SBA's business records, and to return to court with the results. As the judge pointed out, the sale had already been ordered the previous week, and it was to take effect in ten days. So unless Boeing found some extremely compelling evidence, it was highly unlikely that she would even consider the sale to be Stayed.
Here are some other highlights from the hearings:
The second Hearing date one week later was somewhat anti-climatic. There is no description of what Boeing found during the review of SBA's business records. Prior to the Court session, the parties had reached an agreement, and the Judge read the stipulation in court. The stipulation was for protection of the documents.
Some of the reported major creditors in the Bankruptcy included:
Note:
This transcript is not complete, nor is it in sequential order. This is NOT an official transcript.
T2000-27
January 28, 2000
Steve Polard/Council for Boeing:
I just want to...just clarify and set the stage. Basically as I think the Court and the parties are aware - and I thank them all for coming here today on such short notice, and I thank the Court for permitting this to occur - ah, is that we simply want to find out what's going on with respect to one asset that apparently is subject to the sale. And that is the so-called Alter-Ego Claims possessed by the Debtor. And I distinguish those, as the ninth circuit authority does, from the individual Alter-Ego Claims of Creditor's such as my client, Boeing. The Alter-Ego Claim issue came up from what we understand at the very last minute, at the sale Hearing, and ...
Judge:
Well, let's - just so the record is clear - and you weren't here. The word Alter Ego I do not believe was ever entered onto the record. That there were causes of action that the Creditor's Committee wish to retain, was the only thing that the Court was aware of. I don't believe they ever said Alter Ego. Nor did they identify the party. And quite frankly, I was [ ] it to be a different party than the one that [ ].
Steve Polard/Council for Boeing:
Well, we're all learning a lot your Honor. I only learned about this last Monday when I happened to be speaking with the Creditor's Committee Council for... And I don't understand why they chose to... why the Unsecured Creditor's Committee Council frankly waited so long to advise everyone of this. But that's kind of besides the point. Because the more important consideration your Honor, is that if we are confronted by a substantial potential source of recourse for Creditors - and in this case, for Boeing - it could mean hundreds... potentially hundreds of millions of dollars in connection with any adverse determination in the Swissair case, then we should all know about it. And it could obviously affect whether the sale in fact should go forward. Either by way of reconsideration, or by way of appeal. We don't know. We cannot [ ] the Court whether this is worth anything, that's why we want to take the 2004 Examination. The practical problem we're confronted with, is in order to take the 2004 Examination, we need to do this before the sale is consummated. If the sale is consummated, obviously we're going to have a mootness problem. Also the documents - the preservation which is critical - not only for purposes of the Alter-Ego Claim, but for purposes of the Swissair crash discovery, will also be transferred. And we're concerned that they'll be lost or destroyed. So the second portion of our application is to simply Stay the sale for a very short period of time. My understanding from Mr. Bender, and I will yield the floor to Mr. Bender in a moment, is that the Buyer - and who I spoke to his Council... the Council of the Buyer just before the Hearing and confirmed this - Mr. Bender and a number of other key parties involved are willing to delay the consummation until February fourteenth so as to give us the opportunity to find out whether the Unsecured Creditors are giving up a huge potential avenue of recourse here. Which is certainly attractive to them since the sale yields the Unsecured Creditors nothing. And during that time, we would conduct the 2004 Exam, and also look at all the documents and materials. And although the details have not been worked out, we would obviously like to start on Monday if possible Because it is going to take an extraordinary amount of time, and a very large team of lawyers and paralegals to go through all the documentation.
Judge:
Do you even know what the documents are? I have the proposed Order, and I...It is very broad. It sounds like every business record there ever was.
Steve Polard/Council for Boeing:
Yes. Yes it is your Honor. And it is our hope that today - or perhaps after the Hearing - that we could narrow this down. But we obviously don't want to leave it to other people's judgement as to what may, or may not be relevant to the Alter-Ego Claim. And certainly with respect to this Swissair crash issue, that's something I don't feel myself competent to narrow down. I would suggest that if this proceeds, that everyone work together in trying to narrow this down. We have the biggest interest in narrowing it down. Because it's very... it's quite possible that this guy...ah, Mr. Civiletto, is chuckling on the phone - and I mean no disrespect by saying that - because he might be saying, "these guys are going to be looking at a huge warehouse". And he might be wondering how we're possibly going to go through this in two weeks. So obviously, the cooperation of the parties on the issue would... would be helpful.
---------------------------------------------------
T2000-27
January 28, 2000
Ron Bender/Council for SBA
I got involved in this case on September 24th, right after the Brockway Moran deal was signed. Ah, Daniel Reece was involved before I was. And Steven Wade became involved right after I was. And I think that something that's set forth in the Boeing pleadings is very misleading. And that is, the implication - if not outright stated in the Boeing pleadings, is that the assets that were being sold were somehow some big surprise. On limited notice. And that this quote, knowledge about these alleged Alter Ego claims are somehow some sort of last moment discovery. Neither which is true. And nothing could be further from the truth. From the moment I became involved in this case, which is now... a little bit more than four months, it has been crystal clear to all the parties in this case, including Mr. Polard who's on special notice, exactly what assets were being sold. And those assets included all cause of actions except Boeing's cause of actions. Those have been approved by this court now, three times. The second time, was on December 9th, which was well after the Creditors Committee had in it's possession this information, which as I now understand it from the Committee's pleadings consists of a letter of approximately three years ago to one particular creditor on Santa Barbara Aerospace letterhead, talking in briefly about the financial strength of the parent. And Daniel Reiss's memory of certain testimony given by Bob Chickering in a 3:41a meeting, that the parent put a bunch of money into the sub. That's all there is. So, when we had our Hearing here last week on January 20th, while it's technically correct that the sale was approved on very short notice, what really happened was that it was really scheduled to be an overbid Hearing. And all that really happened on the 20th for all intents and purposes, is that the identity of the buyer changed. The identity of the assets that were being sold didn't change. So all this stuff about Mr. Polard didn't get served with the Order - which he wasn't required to be served with having not attended, not opposed, etcetera - doesn't mean anything. Because for four months now, everybody knew.
Judge:
I did not hear him say that right now... is the basis for his motion.
Ron Bender/Council for SBA
You do, or do not?
Judge:
I did not hear him say...
Ron Bender/Council for SBA
But that's in his... that's in his plea. The point I'm making is, everybody's known what assets were being sold. Now I don't know why the Creditors Committee did what they did, or didn't do what they didn't do. But I do know this. In my bankruptcy career - and I have represented over a hundred Debtors - I have never had a client that's more accommodating than this client. And nicer than Mr. Chickering is. He would have accommodated any request that was made in this case. No question about it. And is willing to do so going forward even though he has nothing from this sale, except for a bunch of personal liability. Notwithstanding that, I never received one single request, ever, in this case. Not from Mr. Polard, not from Mr. Reiss, not from the Creditor's Committee. Never. About a document request, information, oral examination...nothing. Not withstanding the fact that it's now clear that the Committee has had this information in its possession for months. I can't explain why that is. It was never brought to my attention. Nor were these issues related to these so-called Alter-Ego actions brought to my attention. And, as a result, I have worked essentially, probably on average about ten hours a day, for four straight months, trying to make something of this absolute mess of this case, to bring something of value to this estate. And in the process, having incurred probably out of pocket costs of twenty-thousand dollars, let alone, unpaid fees, and I know Mr. Wade has worked in his way, similarly hard, but didn't have the position that I had in the case. But the efforts, obviously were there. So now we're at a place where the Creditors come along and say, "Hey, don't allow the sale to close, because, we've got all these potentially great causes of action." Well, maybe the do, maybe they don't. But one thing is for sure. Two things are for sure. One thing is that for six months, they could have done unlimited investigation in this case, and did zero. Boeing had a lot more resources to do this investigation than the Debtor ever would have had. The Committee could have done the same investigation and did nothing. Second thing is that...[PAUSE]...is that the information that they do have, is totally unsupportive of this idea of these Alter-Ego Actions. So now we're at a place where, no matter what happens over these next two weeks, all that these claims could ever be, is highly, highly speculative claims. Boeing certainly had the resources to have bought the assets of this estate. They could have bought these assets. They could have bought these Cause of Action, and then didn't have to ask anybody's permission to pursue these actions. But no, not only didn't offer to buy, didn't investigate. Nothing. And so, why are we here? Because Mr. Polard runs into Mr. Reiss in the hallway of a building? That's why...that's why this entire courtroom of people is here. Because for six months they do nothing, and they happen to run into each other and come up with some great brainstorm about these great Cause of Action? What, what are these... what information exists today? What information exists today, is a letter from Santa Barbara Aerospace to one creditor, one vendor asking for trade credit, in which this former CFO, I think two or three years ago, takes the time in this letter to put together a few sentences about the financial strength of the parent. It's not on the parent's letterhead, it's on Santa Barbara Aerospace's letterhead. I don't even know whether that creditor or vendor extended the trade credit based upon that. They're not here. But what is clear, from the law that I researched on this yesterday on this Alter Ego, is that Cause of Action would not be property of the Bankruptcy estate that's being sold to AAS.
---------------------------------------------------
T2000-27
January 28, 2000
Ron Bender/Council for SBA
So your Honor, after receiving the pleadings yesterday I tried to reach an agreement of all the parties. And when one reads the stay motion filed by Boeing, what it appears to say is: "Well we understand the sale's going to occur, and what we're concerned about is that these books and records that we want to have access to, will somehow be destroyed". And on a side note, what I want to make sure the Court is aware of is, after receiving Mr. Polard's pleadings, I tried very hard to obtain the consent of AAS to leave behind these actions of the estate, which AAS refused to do. They have their own lawyer here, if need be they can explain the rationale. But I tried for the estate to get that asset to the extent the asset's carved out, and that was denied. So, what needed to occur as far as I understood, was, Boeing - and I guess if the Creditors Committee is interested also - to have an opportunity, although a short opportunity, to go and investigate all these documents. A lot will need to occur for that to happen. There needs to be an extension of the closing date. There needs to be an extension of the bank's relief from [ ]. My understanding after spending a lot of time yesterday, is that the bank is willing to extend the date in accordance with an agreement that the Debtor has reached with the bank on the allowed amount of the bank's claim which frankly I think is a good deal for the estate anyway. And the buyer has agreed to extend the closing date through the fourteenth of February. The Debtor has agreed to provide Boeing and the Committee with unlimited access to the Debtor's books and records, including to make photocopies of whatever they want with the proviso that the Debtor has virtually no staff to help. And that the Debtor doesn't have a photocopy machine, so they have to incur this out of their own expense. Bring in an army of people, bring in photocopy machines etcetera. And Mr. Chickering has agreed, although he doesn't have a lawyer here, and I'd want him to speak for himself in this regard, but as the President of Santa Barbara Aerospace, he has agreed to make himself available for oral examination on forty-eight hours notice. Here's where I think that we have a disagreement, but this is a very critical point And right now, speaking for the Debtor... I have not spoken with any of the parties since yesterday, and so AAS will have to speak for itself. And Boeing will have to speak for itself. I think that from listening to Mr. Polard speak, that what he's understanding this to be is a Stay of the sale through February fourteenth, and I think what Mr. Polard has in mind is that he now has from today until February fourteenth to come into this court, and argue again why the sale should not be approved. That's not what we're talking about. What we're talking about is we're extending the outside date of the sale to February fourteenth. It's my desire, and it's certainly Steve Wade's desire, I know it's the Wage Earner's Committees desire, and the Debtor's desire to close earlier. And so from my perspective, if AAS is prepared to close today, tomorrow, or any other day before February fourteenth, we want that to occur. However, AAS has agreed as part of this stipulation, to pro...continue to provide this unlimited access to its books and records, through February fourteenth. Whether they close before that or not. And why this is such an important distinction of course, is because if for some reason AAS... ah, if for some reason Boeing... can come before this court - and we will object I'm sure - unless they're offering more money, ah to somehow overturn this apple cart before AAS closes, well, there's nothing I can do about that. But if Boeing is under the impression that nothing is going to occur until February fourteenth, and that there's an agreement that nothing's going to occur... That we somehow visit this whole thing...That's not what the Debtor's agreeing to. And having not spoken with AAS, I don't know what AAS's position is, but I'm sure that's not what AAS has in mind either.
-------------------------------------------------------
T2000-27
January 28, 2000
Ron Bender/Council for SBA
I want to make one thing clear which is we don't have people to put together documents, and so what we have in our stipulation, is Boeing and the Committee can bring into the facility however many people, photocopy machines, etcetera that they like. We don't have any employees who are going to be able to sort through and find here documents that pertain to Swissair. One thing I do want to add - and I told this to Mr. Polard yesterday - and that is, there's a law firm, in Texas which according to Mr. Chickering, has much better, much more, and much more organized documents relating to Swissair crash than the Debtor will ever have, or has. And those are not being transferred to AAS's part of the sale. And so I think that, from my perspective, Boeing can do whatever it wants. They will have much better documents by serving a subpoena for document request on that law firm - and I gave Mr. Polard the name and the phone number yesterday - than they will ever try to pierce through a gigantic facility's documents. But that's just my two cents on that point.
-------------------------------------------------------
T2000-27
January 28, 2000
Steve Polard/Council for Boeing:
Based on the premise that the Court will...I'm not conceding this at all... but, based on the premise for the moment that the Court doesn't grant the emergency motion for Stay, then it would appear that we have a basis for proceeding with the 2004 Exam beginning on Monday.
Judge:
Ah, I need to hear from either Mr. Furr or Mr. Civiletto that the Buyer will allow - assuming a closing - um, will allow Boeing on premises. Again with the same...they obviously have to bring their own staff, their own copying machine, and all those other things...
Joseph Civiletto/CEO of AAS (on speakerphone)
Thank you. Your Honor? I am certainly willing to cooperate with allowing access to the books and records of the company from a review perspective. What I - just so the record's understood - what I'm unwilling to do is compromise my position about giving up the claim in the sale. So whether the sale..
Judge:
I understand that.
Joseph Civiletto/CEO of AAS (on speakerphone)
Ok, so what if we extend the sale closing date two weeks or leave the current date, I'll cooperate and allow Boeing the access whether it's before the sale, or after the sale in order to accommodate their review, just given the obvious you know...minimization of interruption of my business, and recognition that there are certain costs that they'll have to bear in order to do that. Because we can't accommodate them.
Judge:
Alright. I think on that point, that we really have a consensus that the 2004 Examination take place on the premises. Mr. Chickering, since you're not represented will you come up so that I have a representation from you about your willingness to submit yourself to the examination part of the 2004? Would you state your name please?
Robert Chickering/Chairman of SBA
As uh...Bob Chickering, your Honor. Chairman of the Debtor in Possession. As Chairman of the Debtor in Possession, I am willing to cooperate with Boeing.
Judge:
All right, thank you. I needed to hear that from you. And I'm glad I have.
Ron Bender/Council for SBA
Your Honor. One point. If you could ask Mr. Chickering - because I'm not his lawyer - regarding...
Judge:
Mr. Chickering, could you please come back.
Ron Bender/Council for SBA
...regarding his agreement to make himself available for oral examination on forty-eight hours notice because I have Mr. Chickering as a signatory to the stipulation.
Judge:
[ ] ask him.
Ron Bender/Council for SBA
I just heard him say that the Debtor in Possession would cooperate. That's not to mean something...
Judge:
Alright. Mr. Chickering? I guess I didn't ask the question right. You as an individual, having been a principle of the Debtor...
Robert Chickering/Chairman of SBA
I am not represented by Council, and I cannot, and will not, agree to that.
Judge:
To be examined?
Robert Chickering/Chairman of SBA
Not unless I'm represented by Council, which I am not.
-------------------------------------------------------
T2000-27
January 28, 2000
Ben Fox/Council for Swissair
Your Honor? Again, I'm Ben Fox for Swissair. And I was hoping just to get confirmation from the buyer that they would also allow my client access to the documents and records either prior to the sale - or ultimately if the sale goes forward - after the sale. And that none of the records are... obviously destroyed.
Judge:
Ah Mr. Civiletto, do you confirm that? That Swissair, as well as Boeing may... ah, they'll probably come in together... I know you anticipate this as an extra burden from...
Joseph Civiletto/CEO of AAS (on speakerphone)
Your Honor, I will obviously agree that it's just both of them in the review of the records. I would just merely ask them to turn first to the law firm that's done due diligence already, and verify the priorities just before they come through the company and start over on a process that may already have occurred, as it relates to the claim of Swissair, you know... in the accident.
Judge:
It certainly is a reasonable request, and it would cut down on their time and effort.
Joseph Civiletto/CEO of AAS (on speakerphone)
Absolutely.
Steve Polard/Council for Boeing:
We will be conducting the inquiry jointly your Honor.
Judge:
All right.
-------------------------------------------------------
T2000 - 28 (Side 1)
January 28, 2000
Judge:
All right. Mr. Polard?
Steve Polard/Council for Boeing:
Thank you your Honor. First, with regard to this Stipulation that we were all handed a copy of before the recess. We just had a couple of inquiries. It looks fine. We just want to confirm that if the Buyer does take title prior to February thirteenth, and/or possession, that the Buyer have the same duties as the Debtor as to the documents. The second point is that there's only a reference to books and records at the Debtor's business premises. The subject of our application was quite specific. That in addition to all the books and records, we specifically want to make sure that all the books and records and materials with regard to Santa Barbara's involvement in the installation of the In-Flight Entertainment System are specifically referenced in the Stipulation. Swissair joins with that major concern. Thirdly, that Mr. Chickering will remain available for continuing oral examination, even after there's a change of possession of ownership if that occurs before February thirteenth. And, that we would like just as a practical concern... that we would like to be advised Monday morning at the latest of the exact address where we should show up. And whether Mr. Chickering can meet us to basically show us where the documents are. And the last thing is even more practical than that. We just want to make sure that there's electrical power access if we're going to bring our own copier machines. Ah, other than that, the Stipulation looks great.
.
.
.
.
Judge:
I just changed the language of the Order - if I am to sign it - which says: "Also all materials and documents which relate to the Debtor's involvement with respect to the installation of the In-Flight Entertainment System placed in the aircraft involved in the crash of Swissair Flight 111, which occurred on September 2nd, 1998." That's very specific.
Steve Polard/Council for Boeing:
Yes.
Judge:
There's only one airplane that would meet that definition. Now on the bottom of the ocean somewhere. Or whatever has been pulled up. Is there any...[PAUSE]. Understanding that there's already been a representation that some of these records may be...in Texas.
Ron Bender/Council for SBA:
Well it's...it's not that some of the records are. What Mr. Chickering believes is that all of the records that Santa Barbara Aerospace has, that law firm also has. But that the law firm has records that Santa Barbara Aerospace does not have. That's why, we think if the... if Boeing goes to the law firm first, there will be nothing. They'll find nothing at the Debtor's premises that they don't already have.
Steve Polard/Council for Boeing:
Well, that's... that's not feasible to go there first. We're obviously going to go to both places your Honor.
Judge:
I guess... the issue is that whatever documents are presently with the Debtor will be included in whatever's [ ].
Ron Bender/Council for SBA:
Correct.
Judge:
Correct?
Ron Bender/Council for SBA:
Correct, but ah, just clarifying when you say 'produced'. All...
Judge:
Made available for their inspection. That's what I meant by that. All right. Then I think that... They're not going to purse out those documents...
Steve Polard/Council for Boeing:
No, we understand that your Honor.
-------------------------------------------------------
T2000 - 28 (Side 1)
January 28, 2000
Ron Bender/Council for SBA:
I just want to clarify one last time for the record... something which I've said repeatedly. Which is, there's an ambiguity in some people's minds about what it means to produce documents. And what the Debtor will be doing is making all of it's documents available for Boeing. - and I suppose the Creditor's Committee if they appear - without compiling any specific documents. And without pointing Boeing to any specific documents.
Steve Polard/Council for Boeing:
That's, that's fine your Honor.
-------------------------------------------------------
T2000 - 28 (Side 1)
January 28, 2000
Steve Polard/Council for Boeing:
Um, if I might address the Motion for emergency Stay your Honor?
Judge:
Yes.
Steve Polard/Council for Boeing:
The practical problem that's been identified is that the landlord would like to be paid. But if the sale is delayed, the consummation of the sale is delayed. The court is unwilling to take it out of the [ ] of the wage earners, which is totally understandable. The wage earners however being party claimants that are not totally satisfied. And also unsecured claimants that are not satisfied are...are part of the constituency that is interested in having the sale delayed slightly, so that we can look at this Alter-Ego asset. Assuming it's worth anything. Therefore, they've been kind enough to agree to essentially transfer what amounts to $6,000.00 a day rent to the landlord for Monday - well, actually it'd be like Tuesday through Thursday - so that we have the opportunity to examine the Alter-Ego issue. Not only for our benefit, but for their potential benefit.
-------------------------------------------------------
T2000 - 28 (Side 2)
January 28, 2000
Judge:
That's why I'm saying if I order that the Cause Of Action is not sold, the buyer will walk.
Steve Polard/Council for Boeing:
Yes, but that will only have been after the determination that the prospects of the Alter-Ego claim are so compelling that it makes sense to let it... a bird in hand fly off. And I don't think... We're not interested in that your Honor. The Unsecured Creditor's Committee which is also supportive of this. And all the Unsecured Creditors, Swissair...it's just not us that's looking here. We just happen to be the ones taking up the standard here. We're not interested in the deal going away unless it turns out that this Alter-Ego claim is very compelling.
Jerry Cohen/Fifth Third Leasing:
Your Honor? Respectfully, they're interested in precisely that - and only that. They're going to be determined to find in their examination next week... not to waste their time, a wide and valuable Alter-Ego claim. That they're going to come back - and no one can foresee the future - but it just would seem that they hope to come back into court and say there is such a claim. And that it's inequitable to um, deprive the Unsecured of the value of that claim. And for it to be cut out of the sale.
Steve Polard/Council for Boeing:
But we're going to have to prove that to the court. We're going to have to make a showing that's compelling...
Jerry Cohen/Fifth Third Leasing:
Your Honor - as a participant, Fifth Third says it's too late. It already should be denied.
-------------------------------------------------------
T2000 - 28 (Side 2)
January 28, 2000
Judge:
It is this Court's very great desire that unless something - some sledge hammer hits me between my eyes - [ ] bound that this sale will close, and that that sledge hammer has to tell me that everybody gets greater value than the proposed sale because of a very viable Alter-Ego claim. And that's a very, very heavy burden.
.
.
.
Judge:
All things considered, there is very small downside to delaying the closing til noon on Friday. Again, with regard to the buyer, they don't have a final Order before then anyway, with regarding the Order that I signed on Tuesday. And that Order, I'm... it stands now. It's signed, it's entered. So the time is running. The time for reconsideration is ten days. The time for an appeal is ten days. So as much as the Buyer might want... might want to have closed before then, they would have been closing at a risk anyway. So I don't believe I have altered, you know, your legal risk. And everybody else seems to be pretty much on board with it. This is as best that we can do under the circumstances. So I guess that's fine with you. I mean I actually [ ] ...I'm just taking your Motion for Stay off calendar as of now. I'm not denying it. I'm not making any findings on whether you have standing. I'm not doing anything. I'm taking it off calendar.
-------------------------------------------------------
T2000 - 28 (Side 2)
January 28, 2000
Judge:
And Mr. Wade? You haven't spoken.
Stephen Wade/ The Official Wage Earners Committee:
I have not spoken your Honor, I think.... I think things proceeded in accordance with the best interests of the Wage Earner's Committee. Frankly I think this gives us the best of both worlds. It allows the sale to stay intact and stay viable, and move towards a close. And at the same time, if there is in fact this 'smoking gun', we would be willing to assess that, and the impact on our claims. And it gives us that ability as well. Therefore we would consent to the Stipulation as Mr. Bender is now inter-litigating. Thank you.
Judge:
All right. Thank you.
-----------------------------------------------------
T2000-35
February 4, 2000
Judge (reading the Stipulation Order out loud):
"...The Debtor will be delivering most of its business records to AAS, including the Debtor's business records in his possession which relate to the Swissair litigation. Boeing and the Committee want to make sure that AAS does not intentionally destroy any of the Swissair litigation business records or any of the Debtor's other business records before advising both Boeing and the Committee (this is the Unsecured Creditors Committee) of it's intention to do so. And providing both Boeing and the committee an opportunity to take possession of those business records that AAS intends to destroy. Boeing has filed an emergency motion with the Court seeking a [ ] Seal order. The Committee intends to join in Boeings motion. The Debtor and AAS intend to oppose Boeing's emergency motion. The Debtor, Boeing, the Committee, and AAS have reached an agreement which resolves these issues. Now therefore, the parties [ ] the stipulation be as follows: Pending the closing of the Debtors asset sale to AAS, the Debtor hereby agrees that they will not intentionally destroy any of the business records. Following the closing of the Debtors asset sale to AAS, the Debtor hereby agrees that it will not intentionally destroy any of the business records not delivered to AAS. Following the closing of the Debtors asset sale to AAS, AAS hereby agrees that it will not intentionally destroy any of the business records without providing both Boeing and the Committee with 30 days prior written notice of AAS's intention to destroy any of the business records. Prior to the expiration of said 30 day period Boeing and the Committee shall have the right, at their expense, to take possession of any or all of those business records which AAS has advised Boeing and the Committee that AAS intends to destroy. If neither Boeing nor the Committee takes possession of those business records prior to the expiration of such 30 day period, AAS shall have the authority to destroy those business records which AAS has advised Boeing and the Committee that AAS intends to destroy. All the parties to this stipulation agree that this declaration does not change or extend in any way the date of entry of the sale Order, or the date by which the sale Order shall become a final non-appealable Order. Boeing and the Committee remove any right to appeal the sale Order or to seek to nullify the sale Order." It has been signed by Mr. Bender on behalf of Santa Barbara Aerospace, Mr. Furr on behalf of AAS, Mr. Polard on behalf of Boeing, and [ ] Mr. Reiss's signature on behalf of the Committee of Unsecured Creditors. Does anybody on the telephone have any problem with the Court's Order in the preservation of records?
Ben Fox/Council for Swissair:
Thank-you your Honor, this is Ben Fox speaking. As you know Swissair has an interest equal to Boeing's in the preservation of records, and we would ask that a stipulation also include a prior written notice be given to Swissair. And Swissair be given the opportunity along with Boeing to have...uh to take procession of the records rather.
Judge:
Well, I'll tell you I can't do that because this is already signed off. And I don't have all the parties that signed it present in the courtroom, or by telephone.
Steve Polard/Council for Boeing:
Your Honor [ ] If I might address Swissair's Council in the record. We will undertake to advise Swissair if we get any such notice.
Judge:
Alright, I hope that's satisfactory. I know that you're in that litigation together, and I believe that the promise of Boeing to provide you with that notice should be satisfactory. It's not that I don't think your request is reasonable, I'm just saying it's impossible for me to do it as a Stipulative Order, since I don't have all the parties here.
Ben Fox/Council for Swissair:
I understand that your Honor. This is Ben Fox again speaking, and we'll accept Boeing's offer to give us notice.
Judge:
All right, thank you.
Comments/Suggestions: Webmaster