it please the court but the for the at pelleas on the till issue of palin's argument today focused on what they believe the market demands but the proper place to start is the principles and interpretation of present value articulated by the supreme court intil in which the court made clear should result in the same approach to interest rate determinations across the code across chapter eleven across chapter twelve and across chapter thirteen which have identically worded provisions and not just in the special class of chapter eleven bankruptcy is that mr rinker would like to create a special rule for oh yeah footnotes yes your honor you do have footnote fourteen but the proper way to interpret the dictum in footnote fourteen is to interpret in a way that's consistent with the principles and holding of till in not no way to contradict those principles and certainly not based on the flawed premise that all the supreme court was trying to do is approximate market interest rates now here's what the supreme court laid out in its general principles of how to interpret present value as that term is used across the code including in the chapter eleven provision at issue here it said is trying to capture two concerns and present value one is the time value of money and two is a risk premium now it said in the formula rate is the best approach to get that because the time value of measured money can be measured by the prime rate for the t bill rate we have here no dispute about that and then you add a risk premium to account for risk with the supreme court said until this is a page for seventy seven in the text part of the holding and rationale is it said those two factors are meant to exclude explicitly in quotes transaction costs and overall profit that are present in quote market lending rate that is what till is trying to capture and present value  exclude the very transaction costs an overall profit that appear in their so called efficient market and the reason the supreme court gives is because bankruptcies are not like the market they are court in ministry plans and what the supreme court says it paid for seventy seven until is in a court in ministered play and those sorts of transaction costs and profits are not permissible now the others tried tried to say in their briefs oh that's only super profits or extraordinary profits that language appears nowhere in the supreme court's opinion it says overall profits and transaction costs and if there's any doubt about that the supreme court cites favorably this court's precedent in valenti which makes clear it says any did three of profit is impermissible in a bankruptcy atmosphere when you have the court administering it and not market players that's also reinforced by foot now if you were to look at footnotes until footnote eighteen intil says look if there was no risk here surely the proper rate would simply be the prime rate i don't think any of the clients of opposing counsel would line up to lend at the prime rate and that simply because the supreme court has articulated a different notion of present value that backs out transaction costs and profits and that simply is trying to reflect the time value of money in the risk premium which is precisely what the bankruptcy court did below and certainly did not clearly err in trying to rate to take care of the time value money and then had a four day hearing in which it heard lots of expert evidence about these things and that brings me to the second point judge parker you asked well how do you know when you get an efficient market and the response from the other side was essentially well the bankruptcy court will know it when it sees it they don't articulate any rule for that but the bankruptcy court actually grappled with that question here like i said it had a four day hearing they put in all the evidence that they mentioned to you experts from both sides had it had all of the stuff and then the pages eighty two to eighty four of the special appendix here the bankruptcy court based on hearing that four days of evidence says look the so called efficient market evidence that the other side puts on that consisted of a market of three lenders in opaque process in which they needed to do a combination of financing to get to the amount that the court would actually have in the replacement notes and then it said that was all done on a semi confidential basis that is not an efficient market the district court then affirmed the bankruptcy courts determination that this was not an efficient market so even if you did have to go through the official market sort of theory that we think contradicts what the supreme court principles of set out until even if you had to do it the bankruptcy court already did it here it is eighty two to eighty four the district court  forty four of the special appendix there's nothing left to do that's a clear air standard everyone agrees that would be a clear era question and it would be affirmed even if you got to that step know that now they talk about they rely on the six circuits decision in american patient which they say would create a purported split if this court were to affirm under the bankruptcy courts well constructed they conceived decision faithful to the supreme court's decision until that's that is not accurate american home patient is an exceedingly odd case for the other side to be relying on and and here is exactly why american home patient the lenders of last in that case what the six circuit did in that case is it approved determination of interest rates to apply across the code chapter eleven chapter twelve chapter thirteen and then cites in a footnote footnote ten it cites the provisions in which this exact same language appears one of the provisions that cite food somewhat complicated well your honor here's my response a footnote fourteen footnote fourteen should be read to be consistent with the what the supreme court said in its principles and holding in the main text of its opinion and there fourteen is exactly how the lien holders counsel the other side explained it to the bankruptcy court and this is it paid j thirty four eighty three to thirty four eighty four and we agree with the way how they proffered adoption to the district bankruptcy court how to reconcile footnote fourteen with language that i read earlier and that's this look your honor you can look to the bankruptcy court you can look to an efficient market and that can inform how you apply the formula rate that is the bankruptcy value yes it can and yes that's exactly what the other side said it jane thirty four eighty three eighty four we agree with that you can the bankruptcy court is free to look at their evidence on market rate to premium and the bankruptcy court did that here it had all the evidence in front of it after a four day hearing it heard that evidence it heard other experts and what it said is look we think the risk premium is set and by the way they get the delta was about one percent from getting pretty close to us i think we are your honor and it comes down to a clear air review on whether the the bankruptcy court made clear error in saying look the evidence that you guys are providing are based on an opaque three lender market that had this unusual combo financing based on a semi confidential basis all in the bankruptcy court's opinion of pages eighty today eighty four and it said look what i'm going to do is a word a wrist premium and it in fact increased the risk premium from what our side it originally proposed taking into account all the evidence that's exactly what the fifth circuit and the eleventh circuit the two other circuits that have confronted this question about what's the proper interest rate approach to apply in a chapter eleven case they b affirmed bankruptcy courts in saying look it's not clear we're going to affirm the bankruptcy court and in both of those cases the bankruptcy court applied the formula rate and the courts affirmed those and so that's what we ask that that are necessary but in your view the adjustments are can involve the amount of the adjustment can involve are looking at the market to be sure the bankruptcy judge gets it right for cases there may be outliers may not look like the garden for chapter thirteen or the easy chair to live that's exactly right your honor there is no need to tie the bankruptcy courts hands when they can look at the evidence in front of it part of that may be evidence of what the exit financing rate was it can also look at all the other types of evidence that chapter eleven that bankruptcy courts have been doing since till and i think this is an important point your honor to kind of inform the work ability since till they do not cite a single case in which the court has a court any court has actually applied inefficient market rate except for american home patient in every other court in the fifth circuit goes through this they say virtually every court whether it's because they started with the formula right where they tried to do the efficient market and then got to a formula or a every other court has applied the formula rate and the reason why that's significant is  one is because there's no shock to the markets that are happening from the bankruptcy court's decision as what virtually every court has alternately done it set a formula rate lenders should not be surprised lending has not come to a halt and that none of those  things materialized but the other reason it's important the only case that they point to that's actually applied a so called efficient market rate is the six circuits decision in american home patient in that case the bankruptcy court applied the coo worst alone approach do we have a very sophisticated very robust are here in new york bankruptcy and what we're trying to do determine with the help of all of you will you know what is the best and most our most carefully addresses the problems you will face problems with a degree of complexity that a lot of other places around the country don't your honor i fully appreciate that and i think what judge drain did in his extensive and well considered opinion was to take those things into account and say look virtually every bankruptcy court post hill that has come across this problem in chapter eleven has ultimately applied the very formula rate that he ended up applying here that has never been reversed by any court of appeals question do you the southern district for example can have what do you think well your honor here's what i think that in every case that's happened so far they can't point to a single case whether the southern district bankruptcy court or any other bankruptcy court in the country has found an efficient market rate what the bankruptcy courts are capable of doing is exactly what they did in this case which is look at all of the evidence the complex evidence and come up with the risk premium and that evidence would include the so called efficient extra time so i appreciate it your honor your honor that this decision turns on a rule of law not a question of fact this is not a clear question the question is what is the rule of law and the rule of law should be precisely what the six circuit said in american home nations where there is an efficient market that rate controls how do we know how do we know that we don't market you let the bankruptcy judge in the first instance but this is the easy case this debtor had to go out and look for alternative financing because if we agreed to not when to get them a call they agreed to pay us in cash and contrary to this notion they testified that they used one of the leading investment bankers in america that they went to the leading investment banks and they went to their own equity sponsor apollo who has twenty five billion dollars in cash on its balance sheet and if it was being ripped off in any way shape or form it could have provided the financing judge drain did not say this isn't an efficient market what he said is i don't care what the efficient market says because the efficient it should never control because it has profit in it and it has transaction costs the transaction costs on a loan like this are upfront fees no one is suggesting that we're entitled to a dollar of upfront fees credit suisse j p morgan chase would have gotten that the profits i urge this court to read till again including the text i agree the text controls where the distinction is ma principle in a chapter eleven the way to determine value is exposure to the market that's the way you get to the right answer and in answer to your question judge parker the judges on the bench here are among the most sophisticated in the country i appear before him every day their former partners with years and years of experience at leading law firms in this city and town they absolutely can do this i live my life litigating valuation a security lender and be paid over time rather than be paid cash immediately is quote to put the lender in quote the same economic position as payment in payment in full to my client on the effective date meant that they got one point one billion dollars in cash payment to the one and a half meant they got two hundred fifty million dollars in cash notes that the market said were worth nine hundred fifty seven billion dollars in my client's case in two hundred two million dollars in the one and a half market lenders case that's not the same economic position i'm not in the same economic position as holding a billion one in cash gilling judge parker and i think it's quite clear the judge dream made an error of was not an error of fact he said and i would urge the court if it hasn't to read his opinion he efficient market the rule of law is it controls this case is sui generous no court in any in this circuit in any circuit around the country but for this decision has ever held that where there's a demonstrably efficient market that rate doesn't control it and eleven so judge parker i am not arguing that you should reverse because of clear error in making a factual finding i'm arguing that the bankruptcy court started from the warren rule of  the rule of law you apply is where there is an efficient market and i agree that in the first instance that's a determination for the bankruptcy court to make but here it was a late effect where there was an efficient market in a chapter eleven that rate controls if you started there then the factual finding follows as the day follows the night because here they went out to three leading lenders as well as their own equity sponsor in a process they described as competitive in a process they said produce the best possible available rate and it produced the interest rates it produced and those rates should have been the controlling rate thank you your honor i obviously rest on the papers on the may call but we certainly take that issue very seriously thank you thank you