also if you are siding to the record it really helps if you give us an actual site and we appreciate that very much please be on notice though that i actually have my i pad up here and i can look up that site so it needs to be  from the sale of a security of the debtor income stream payments clearly don't fall within any of the and numerated categories in section one hundred and one subdivision forty nine of the bankruptcy code and so in this case the court should not apply the residual clause as the appellee as have suggested and that's under subdivision forty nine a fourteen the question as to whether the residual clause applies is whether the interested issue bears the hallmarks of a security and that's the le in this case it's not a right to that but i've just been wondering about the us how can a company that arguably bowed nine million dollars in dividends stream or whatever you want to call it over two years filed bankruptcy what happened your honor as a craft a very profitable company nine million dollars in two years the thirty seven five percent of this that or the other dividend stream seems very high to me so what happened your honor that's one of the reasons why we ultimately want to engage in some discovery i think the the a pelleas have their contentions there i think they would argue that there was a decline in the in the market for oil u nfortunately we have a situation with respect to our clients where they were persuaded to enter into and agreed to these these transactions with some representations that were made that frankly were erroneous and and ultimately shortly after agreeing to that there was a bankruptcy filing i think we have questions off the asli about many questions about the underlying facts there and of course had my client's known and in particular mr bennett known about all of those circumstances they wouldn't agree and his agreement was frankly material he was kind of the the  person who all the family members looked looked up to but this time there was a gate at the time and the the a pelleas really wanted to get his approval for this transaction so we do think that discovery and after discovering evidence sherry hearing would help there are a lot of us that got a very i guess i'm thinking the judge here seems to have assumed that they did in fact commit fraud for example in talking mr bennett into agreeing and so on so forth for the purpose of deciding the subordination so what facts would could be revealed that would alter the outcome here your honor we do think that those that those facts underlying why the bankruptcy petition was filed in the st place  would be would be relevant in addition well so so one of the things that we are the obviously concerned about is the fact that the code and in particular five hundred and ten talks about the the the securities of the debtor and here we're talking about income stream payments that predated the transaction the they were obligations of barry petroleum ultimately formed those obligations way back in the in the forty's no longer exist they no longer existed as of one thousand nine hundred and eighty six and so how can those be securities of that of the debtor i think that's something that discovery would ultimately be very interesting to be able to determine and that's just that's just one fact obviously i think we'd like to understand why the petition was filed in the st place i think we'd like to me on that in this is the this is the what the remaining debt that ultimately needs to be decided whether it's debt or whether it's equity and i think in this case it it  if we assume argue and it is a unique case then why wouldn't the residual clause apply because if this is some animal that quacks like a duck but looks like a here this income stream payment didn't include any ownership or equity it was just of a fixed income stream payment that started from that i mean the whole the original  equity holder can exchange that equity for debt and and i think that even assuming that these interests arose from a security of the debtor which we disagree with this falls under seaquest and those particular pages i read seaquest the same way you do i mean i think my understanding is that they are the court was explaining these other circuits and how they had addressed things and why they did arrested things but ultimately held against you your honor that is absolutely correct here there are many fundamental differences that bring us outside of the out of the the residual clause and that's not just the statements in in seaquest in pages four hundred and twenty two and four  three that say that that an equity interest can be converted into something else such as debt and i think that's exactly what happened here but for the resume in order to determine whether the residual clause applies to this court  looks at a number of different items the st is whether this vault bears the hallmarks of security and we just don't believe that's the case st of all these income stream payments other encountered in the bank of the world are a world is derived from dividends that accompany your honor this is one of those instances where the facts here are relatively unique i think the closest analog that we've been able to find is the nation's right case and the nation's rent case and that's the two thousand and eight district of delaware bankruptcy court of the district of delaware a case involving the may call contracts and in that case these were individuals who had sold essentially their company to the to the debtor and they were seed stock they received all sorts of other assets but one of their income streams that they received were these ma contracts which were payments based on the price of the shares at some time in the future and so that obviously isn't identical to war circumstance because our circumstance concerns  the putting giving us payments that are identical to to what the dividends would have been but in that case nations rents the payments were made based on and identical to what the price of the shares would have been on the open as opposed to securities so we believe although obviously we're talking about a different benchmark one being the price of the shares the other being the the dividends we think that case is assert that this is a security is because the payments were tied to the price of the dividends and here if you look at other cases including the supreme they themselves are not dividends they're not negotiable mr bennett couldn't sell them they ended at the time he passed they couldn't be pledged for hypothecated they had no voting rights they couldn't appreciate in value and although the a pelleas had been able to point to a couple different examples of well security in and of itself particular securities may not have the rights but to be a security you typically have to have all the other all the other factors or it would have to look like the security in other respects so just because it doesn't meet one of the factors in lambeth doesn't doesn't mean that it's that just because we have rights just because we don't have voting rights at that somehow dispositive so we believe in fact that we're closest to one of the exceptions and that's we want to one of the six relating to profit sharing agreements and that section makes very clear that profit sharing agreements that are not registered with the f c c are in fact outside of the definition of security so we believe just in the st instance that this is not a security but even if it pelleas cannot argue that this claim arises from the purchaser sale over cision of the security of the debtor these income stream payments predated the lynn berry exchange of shares they were ultimately these rights arose from an entity that no longer exists as opposed to the debtor itself and and what would i be happy to answer any questions and reserve money my time my i apologize i give you the best information i could regarding the status of the bankruptcy but i don't have all that information in front of me ok thank you may please the court william adams for barry petroleum company i think i'll start with perhaps clear up some confusion about the bankruptcy if that's ok the nine million dollars in dividends or from two thousand and thirteen to two thousand and fifteen plan in the bankruptcy court the neither when norbury were liquidated they were reorganized they emerged from bankruptcy as separate entities an affiliate and affiliated entities and their creditors were not paid  pursuant to the confirmed play and their creditors were paid zero dollars thirty five cents on the dollar and both lynn and barry have a reserve stock to put to pay the bennett claim if there's claim was to be found to be under the plan of the can for a bankruptcy plan is purely in stock to pay out to pay off these pipes and these are the last remaining claims and the bankruptcy proceeding with that if i could turn to the dean dividend payments or the end comes stream payments my friend on the other side spent a lot of time trying to explain why those are not securities but we think they're securities in the bankruptcy court certainly found that they were but that's we think you don't need to resolve that issue here because there are three separate security transactions under which the breach of contract claim and the breach of the due sherri duty claim against my client barry arise from and though the dividend payments of the income stream payments do show that bennett was always sharing in the upside of bury the potential upside that's not the security transaction that's just that's just the payment that's the basis for the claim he didn't receive that the three security transactions and the one i like to focus on the most is the nine hundred and eighty six rescission of the victory of the victory shares and so section five hundred and ten b of the bankruptcy code in addition to having the that they removed the stock from the purpose of the trust and therefore allowed it to be sort of freely sold on the market those shares though had the notation that the notation to ensure that mr bennett and the others that were in the group be still receive their portion of the dividends attributable to those shares if barry declared their stock or i guess you get a discount rate because you're not getting your full share of the record  indicate exactly how victory came to acquire their shares but one would think that one either someone in group b or there is also a group c pointing to the the the the will one of them sold the shares of the victory or to someone who that barry entered into to ensure that mr bennett and the other surviving members of the big group would still receive the dividend payments still receive their their share of the dividends as if those shares had not been retired so there's a direct linear relationship from the initial bequest of the stock it's that has a notation on the stock to ensure that bennett and his other members of the b group get their thirty seven point five percent of the of the dividends still going to get the claims the payments that he otherwise be entitled to and it's those payments that ultimately stopped in two thousand and thirteen and after the merger of the barry lynn merger and that's the you could also look at it as these claims as arising from the victory trust which was the rescission the group which was the rescission and the creation of the trust and and that is allegedly breached here because barry stop paying the payments  or alternatively under their theory that they bury breached their fiduciary duty as the trustee of that trust and so that's the genesis of these claims and if you don't agree with those if you need to do what you want for something a little closer in time with respect to breach  every duty claim that arises out of the been the barry lynn transaction itself in two thousand and thirteen because that under the under their argument as to the breach of fiduciary duty they claim in the alternative that once the once the merger or the acquisition occurred that barry was no longer in a position to be making any of these payments and that therefore barry breached his for you surely duties under the trust by entering into the agreement with when it would be proud and their claim is that they should their claim is they should be receiving dividends because at that point barry was not it was a wholly owned subsidiary after two thousand and thirteen the wholly owned subsidiary of land was not issuing any  was not issuing any declaring any dividends or paying them still the terms for the two year period that so that's just a term of art in that and that in the contract that's we think that there's not profit sharing but it's not profit sharing your honor because len len or barry before lynn was before that before the acquisition could have made all the profits and they wanted it all of its profits and kept them for itself it had no obligation to declare war pay a dividend only once it declared or paid a dividend did the right to mr byrne to mr barry's right to payment come into play and that's actually very clear from it it says this declaration of trust is not intended to and shall not constitute a guarantee that barry petroleum will continue to declare and pay dividends on its capital stock and if such dividends are reduced or  eliminated altogether in the future payments to the life beneficiaries which would include mr mr bennett under this declaration busy of trust will be correspondingly reduced or eliminated so it's not a profit sharing agreement your honor because all profit some  math if that money were of it off the land in advance i'm not sure i'm not i'm not sure your honor but i think the answer is yes that there were dividends that were being paid they've made a claim for nine million dollars approximately nine million dollars of those then of which also involves a rescission of claims and so we think it has to we think that five hundred and ten five hundred and ten b was correctly invoked here by both the district court and the bankruptcy court because these claims are rise from the  the security and the security here that you don't have to read you don't have to decide that the security is the dream dividend payments the income stream payments the stock is either is the victory shares those or the shares of barry that were figure out help us all figure out how we went from all this money to bankruptcy in such a short time that could happen in fact that's theirs or at best liability questions and as your honor pointed out that's correct from both sides i can say that both sides assumed the facts stoli for purposes you know not admitting liability and if that if you were to send it back there would be vigorous this vigorous dispute over over liability of the objections to the claim one of which is that there is no liability and there is another objection i believe as well i would also i would as a i would clarify though that with respect to the breach of fiduciary duty claims for the nd to the nd appeal  have abandoned their discovery argument they don't prefer that they concede to below that they don't need discovery for that so the discovery really only pertains to the breach of contract claim and i can't for the life of me figure out what's different about them with respect to barry because they're both arising from the  obvious and the only other thing that i i heard him i guess you it was i think that you can resolve all of this and they just and this is according the bankruptcy court did by looking at the plain language most principally of the victory having the legend on the stock to having the victory trust agreement the one constant here is that mr bennett shared the risks and rewards of being a shareholder even if with respect to the shares he wasn't technically a shareholder he received payments just as though he were shareholder he had the enjoyed the potential upside just as he was a shareholder he enjoyed the risk of insolvency just as he was a shareholder and  that's in contrast to the relative safety of a fixed return there is no i haven't heard any identification of a fixed debt obligation that barry or any security was the fact that it was secured by that up that contractual obligation similar to a debt was secured by an equitable charge or a lien against against some of the ships the contractual payments  the amount of those were simply tied to the dividends under under the securities other than that they bore no resemblance at all to two securities so we just simply don't believe that nine hundred and eighty six dollars can provide the the provision concerning profit sharing agreements and we agree they're not they're not identical but the question is what do the income stream payments most resemble and and we believe just looking at the list of the numerated examples in section ten thousand one hundred and forty nine that that's the closest because these these simply you know talk about the sharing of profits or the dividends finally with respect to the shared risks and rewards there really is only one reward that anyone's pointed to and that would be the fact that there are payments made that mirror the amount of dividends these one dividends and sells the bennett interests never received any any or there was no equity that was ultimately tied to these income stream payments it was just a fixed return and although it wasn't liquidated this was  contractually require payments that only resembled securities in the amount of compensation and that's it and unless the court has any questions i'd be