about and the simple question at the heart of your honour's decision is going to be get these defendants make representations concerning the existing business condition of this company or didn't th were going to have to pay twenty five million dollars back for their so they're lending banks a few weeks if they're that they're going to have to find one hundred fifty million dollars to pay for their cable their undersea cable investments and they've been looking for financing for well over a year to unable to make these enormous payments and they hadn't found it they disclosed in the past that they were looking and it's making a great case about that yes they said they were looking they also said they were expecting to have no problems in finding us financing we also know from a filing i think made in the bankruptcy court that at the end of one nine hundred ninety nine after trying and failing to get this financing from the various lending banks they resorted to hiring investment bankers to try to sell their securities in a private placement  offering was never made we know that on march the first they were now a few weeks away from their deadline and what was the situation the situation was they didn't have the money the deadline was upon them the chances that they believed at that point they were going to get the money are either slim or none depending on whether you stand with  but they did not disclose this whatever the risk may have been months earlier concerning their ability to raise this money by march the first of two thousand the risk level had  escalated dramatically they were now no longer at a yellow alert they were at an orange or our i or whatever the highest alert level was one can only imagine what they must have been thinking every night when they went to bed how are we going to get past this monumental obligation without the money in hand and with after all these months of unsuccessful efforts and so what did they say what did they tell the public they issued this press release which as  court is well aware expressed delight at how well the company had been doing and about how the stage was now seth for dramatic expansion into the internet cable business and by expansion they were referring unquestionably to this under seize cable and investment that they were about to make that would enable them at long last to become international players in the internet service provider business context was we're now ready to go forward with this investment we've been trying to get the financing for it we've been telling you about our efforts to get the financing for it the stage is now set to go ahead  reasonable investor reading that statement would assume that the company's present business is ition was it was in a position to go ahead with those cable investments and i ask you hundred ninety nine which were they were at the present moment compiling into hey final form which was going to be included in the next ten k which was due out at the end of that month so what i believe they were referring to was they had done their call them in every calculations of what those numbers would be and they wanted to report they wanted to jump their own gun and get the marketplace some idea as to what those numbers were going to say the ones that were going to come out at the end of the month beyond that i don't know that there's a specific term of art that when they refer to the financial results what i assume that to mean is everything that's going to be figure out whether within the scope of that statement is a reasonable understanding by an investor that for example those five major vendors by the end of one thousand nine hundred nine had indicated that they were going to cut off services for failure to pay bills and that there were millions and millions of dollars of bills from various vendors stacked up at the end of ninety nine that were unpaid is that within the scope of the term financial results i will say th vendor invoices sitting there and rooms full of checks to vendors that they had been unable to send out because they didn't have the money to pay it however i would say that they were delighted is of course a fuzzy soft statement nonetheless the impression that was created and i think impressions count is that this company is in ok financial condition and that there's certainly nothing inconsistent with what they previously been saying about their financial condition including that they expected to be fully funded through the end of the year two thousand that's taken it was never changed to revoke or modified right up to the very day that this company went essentially belly up on april first when they finally disclosed that well we're not so the light of our financial results aren't so the like full we're having a going concern problem being expressed by our own orders we can't make the payments to the banks we can't make the payments to the cable companies someone could assume that they just figured that out the night before they released that statement but i don't believe that's a tenable assumption i can't prove the very day that they found out for sure that they weren't going to be able to you have no visible means of support and you say something like this i think that's reckless i mean it's like me telling telling the bank that i need to check tomorrow and  don't have any money in my bank account i think that's pretty reckless i don't see you and no likelihood of getting any no likelihood i mean look they hired these investment bankers in late one nine hundred ninety nine that we know and they put that in  know it doesn't take six or eight months to find out whether those investment bankers are going to have any success if anyone who has any knowledge of how the securities markets works knows that it doesn't take that long barring some peculiar fact which is not in evidence not in the record that indicates that this was taking extraordinarily long for some unknown reason one would have to assume that either the offering had collapsed or that it was in such a parlous state that they could not reasonably have been hard to mistake and if you mistake your own when the company's bankruptcy market was about to occur and everybody had to put in their proof of claim all these amounts were still outstanding no checks had arrived in the mail no any one hundred eighty they are clearing period that the district court speculated may have been responsible for all this that had all gone by all these claims were never of any offsetting balances it seems to me that one thing i feel most comfortable about is that this company we had more than sufficient evidence yearly support for the allegation that this company what cut off these people they couldn't pay them enough for any other reason sufficient to cover their current operating requirements and current capital expenditures that's another statement that is just incredible that they could say that with these rooms full of checks that they haven't been able to s already been disclosed to the market your honor if you look at the temp you for the third quarter which was the last filing before their press release this is the thank you i was just about to talk about the one that was filed november fifteenth if you look i'm not saying that banner i'm not saying and i'm certainly not agreement anyone's thing is the facts but judge nelson referred to the financial situation the company was all before investing was all been placed before the investors over and over in the company had said in the q the for the last few from the third quarter november fifteenth it said and i quote additional financing arrangements are necessary for the companies and says five capital requirements and the failure to such arrangements could have a materially adverse effect on the company when on describe what they were doing and for the timing in terms of any financing activities will be subject to market conditions in other words we don't have enough money  i would agree and what it's referring to your honor i was just your the results in page three of that earnings release they are the financial results that are their record revenue record gross profit income it's down fifty percent from the previous year and delighted seems to be corporate speak for we are terribly concerned when they go bankrupt in a month i think spreading maybe more optimism in hindsight you know i'm talking about no i'm not i'm not talking about hindsight as of march thirty first i'm talking about what did he know about the financial condition of his company as of march the first when he said yes we are delighted with our financial judge doesn't understand what the financial world understands english but this does not strike me as something that i would be delighted about or anybody would be divided about as of what happened at the end of one thousand nine and how can that possibly be financial results the fact that they've got so much trouble paying their bills that they've got five major vendors who have simply cut them off given themselves in the nose we're not going to deal with you anymore all these other problems that are not part of our financial results for that margins are declining that's been disclosed over and over again our business is increasingly diverse competitive disclosed over and over again our prices are going down that's disclosed over and over again every quarter therefore because our co business is declining as we've told you we are going to make a big effort at diversification we're going into this undersea cable business we're going to be part of this cable japanise cable to europe and it's going to cost us enormous sums efforts to raise that money had failed by march one there is not one fact in the complaint to suggest of any sort of failure all you heard opposing counsel say was well how long can it take bankers to raise money how long can it take it doesn't take six or eight months ago it had been six or eight months it has been from december to march there is not one well played fact that shows that there was any reason not to be optimistic about raising the money and there obligations so the purpose of diversification here is i'm being expressed and i fully agree that you know in the cold light of morning knowing what we now know about the  telecom it starting in late march two thousand and forward it all looks rather underlay optimistic in retrospect but there is nothing untrue here the financial situation a financial results for ninety nine are set forth the revenues and so on are accurately stated it doesn't speak to the financing and there's no reason there's nothing in the complaint to say that there was any reason not to be optimistic about doing th march but there's nothing to show that this was a foregone conclusion or indeed it even happened or even started to happen by march one council so what were the chances of mark one slim or none of doing the financing  seem in hindsight misplaced nothing shows that the be wrong and here i think the key point nothing shows that to be not just wrong but reckless or liberally reckless within the meaning of this the case nothing whatsoever particularly so because what we're talking about is an omission this is mid quarter the silence on a point is just this court said in brody you don't need to speak to everything because she speaks to some here they're talking about you know nine hundred ninety nine results they're not talking about liquidity they're not talking about financing indeed the only place in the march one press release the financing is even mentioned is in the safe harbor language at the end on page four of the press release where the court lists risk factors what is risk factor number one adequacy of funding sources to meet capital requirements that's the only thing in the press release that even refers to extreme departure from ordinary spirits or to must have known it would mislead there is nothing to show that nothing whatsoever in this case very in mind that liquidity and financing are under our system you i don't have much to add at this point other than to say that they did make statements they did make affirmative statements about their own liquidity the stage is set for internet expansion is a statement  conditions not different from the one that this court in america west just healthy to be a statement of present fact there is no question in my mind that they were signaling to the investment community that they were prepared to go forward with all these plans and he could just imagine what the effect would have been if they had included in this march first release the statement after saying at this stage you said think it's all but by the way we don't have the money to do in this context the stage of being set is i submit a specific affirmative representation concerning their own liquidity which was a misrepresentation just as they represented in the fast