we have two matters on for this morning in the first is in re tribune media company numbers fourteen days thirteen thirty two and thirty three ministers us don't challenge that the one point five billion should be had been held be held by us to be completely unreasonable you say it was prohibitively expensive i think on page eight or so or page fifteen i think it was a broken and very but if you don't challenge that that must mean that it's within some range of reason and you made a business decision not to put up a bond well your honor there was an attempt to appeal that to both this record and this court the appeal of the bond amount was dismissed for lack of jurisdiction it is true that the decision or really just made was that the bond was critically expensive because it would have required to really assess a bond far more than what it stood to gain and would have required a realist to assume risks of factors totally outside its control but for purposes of equitable airlines there was a similar fact pattern there was of on there was a state offered on condition of setting up on the pilots didn't post the bond nevertheless that was only the start of the analysis not likewise and some crude this court has said that even want to stay is not even sought that still only goes to one factor of the analysis it's still necessary under equitable who knows but oftentimes what happens is of course just a nice to stay and so you're you're behind the eight that was proposed and you're saying you get two point two four billion and the delta between those two was be about one point nine billion and the court says one point five billion and it doesn't seem maybe prohibitively expensive but it doesn't seem that it's outside of range of reason not all of that one point nine billion would go to really us first of all not just ours that one point nine billion is the result of total  it was too late to raise the amount of the bond as an issue on appeal in this appeal because the time to post on it past this issue that had to be made once the state was condition on the bond was whether to post the bond or whether to try to litigate expeditious this that a core component of the reason to vote in fact what was the basis i guess of professor cleese analysis and was that you have a settlement number make some of them obviously was for far less than you think it should have been but people voted on bad and it's tough to say that that wouldn't uns scramble the plan or scramble to plan i should say completely if we were to grant you the type of relief you're talking about well your honor the plan carved up the value of purview among various credit as bankruptcy plans do of course and so the same kinds of considerations that underlie the equable were to start to suggest that had the district court rule before december thirty first two thousand and twelve it would have been better to send the parties back and say this plan doesn't work come up with another one so are you trying to say that appropriate safeguards be in place to make sure the o b o unders money was genuinely on line as well that could be worked out the bankruptcy court but another another approach would simply be to go back to the bankruptcy court say three hundred sixty nine million dollars was to go in wide of the just bankruptcy court determination that arguments that invalidate the step one transactions were an act of boies and say there needs to be a new number either imposed by the court or negotiated by the parties but the result if that remedy ultimately try to take different amounts of money out of the estate shouldn't be a ground for equitable move as it is the whole point of the challenge is that the wrong numbers were used in the plan because different creditors were awarded different pieces of the pie that that should not by itself be a ground for equitable middes that's not screaming so if we look at them that it's roughly twenty nine or thirty million dollars an acre yes ok if we look at that point the monies that are involved would come from those who agreed either to take a lesser amount of an amount of money who are a lesser amount of money but an interest in the litigation trust track cars ok so if we focus on the and this is from the district court proceedings there were about one hundred thirteen or so who wanted who took some money and said i'm not interested in the village ation trust or about six hundred who  said you know i'll take a smaller amount and an interest in the litigation trust and those folks are as i understand unsecured trade creditors and other unsecured creditors and retirees they're not before the work so if if we don't order dissuasion of the money and we adopt what i understand your other alternative is which is a rate of adjustment to the litigation waterfall i understand this right yes we are you're asking us to make a decision that  complicated enough to have some small differences then the appellant was as it's entire rights beyond that there are lots of ways to structure a remedy that gives the trustees the thirty million dollars if they do fail on the merits of their appeal one is simply to ignore the two point four five and just have it be as if there were thirty two point seven three and and give money until the thirty million is satisfied another as your are if that money coming assigned or some combination separate that correct any combination that results in enforcing this one nation agreement and taking thirty million dollars away from those who should have gotten in the first place and giving it to those who should have gotten under the support nation  agreements isn't available remedy and even if for some reason for the thirty million dollars there should be a way to get it all but even if for some reason you can't get it all and you can get some of it this court and many other courts have held that there is not a woman as long as a partial remedy can be affor so there's a very wide variety of ways that are entirely fair to lead to the result that should have occurred in the bankruptcy court which is unfortunate the subordination agreement is is there some complexity because of the number of parties in class one f is there some complexity because of the election yes but that by itself shouldn't drive let me let me as a question relating to the takeoff on what your church was asking about who are third parties that are and investors in the new entity are particularly persons you would think about should it go through the net because to some extent when we talk about third parties we talk about  universe but the question is in day universe are some more justified in relying on a consummated plan than others and yes those who bring there is a an argument strongly pressed by the other side on this appeal that shareholders in reorganize tribune own should be protected as innocent third parties but of course if a publicly traded company or any widely traded company  organization in the corporate form does mean that shareholders take the risks of the company they invest and and it's particularly so that appropriate that that be so in this case because there has been disclosure all of the planets these appeals other courts have attached  those disclosures and this horseshit as well it should not treat the shareholders reorganized as the innocent third parties the doctrine is designed to protect but when you talk about investors or i soon what you're talking about are those who put in new money yes the doctors said to protect a reorganized debtor and its own reliance on the plan it becomes a self fulfilling prophecy if the debtor says we can forward this plan we relied on it and now now that it's not resolved by a bankruptcy court ultimately there was consummation of the plan or by being offered the chance to put up a fund well most of it i'm still hung up on the offer of the bond it not being appealed you made a business decision to close made a business decision ok we're going to try to get this extradited rather than putting up the bond even though you've told the court there is a very very good chance that we're going to get  correct but but the entire promise of the state proceedings in the district court was to buy time for the district court to handle the appeal on an expedited basis ultimately with five and a half months of passing from confirmations out summation the district court had those private half months now as to the rest of the dollar amounts again the one point five billion dollars bond was not set on the basis of how much are really us or any other holder might gain it was set on the basis of what harm might occur to parties on the other side because of things like fluctuations in the stock price things totally out of it really is a gate but but the result the opportunity to win the gate was gone on confirmation of the plan and wouldn't exist again unless and until an appellate court reversed so that it's not that there's one hundred percent chance of getting a one hundred percent recover also true they saluted what you what you purchased was what was a two point two four billion or was it something just one lesson that or earlier says is considerably less than that that's the entire amount of for all holders ok i don't have an exact or really is a number this we think if we have control of this litigation will get significantly more we didn't have control it ultimately because they went with the d c l plan and you were pretty much by your  and what you made my or didn't i don't know but the point is those are all business solutions you make and the bankruptcy judge here unlike a lot of bankruptcy judges really took into account ok what would be a reasonable amount to ask you to put up in order to allow you to go forward and to have full litigation or a chance for medication if you comes back to us on the merits but require a reversal on it will notice and a reversal and reinstatement but it's also true that these causes of action could be settled on remained and we have argued on appeal that our chances of prevailing on a on for recovery are north of fifty percent but that's that merits argument on appeal is largely based on the bankruptcy courts determination that the theories of for invalidating step one were network boys and there are also equitable arguments for said one was about fifty percent based on the determinations first the examiner going to the bankruptcy court of the chance of prevailing on that issue over his willingness and its money where its mouth is wouldn't extend to saying we think we have a ninety percent chance of prevailing it when you asked for extradition in the district court was there any type of hearing on your motion it was just on the papers i do not believe the district court hold a hearing i'm not one hundred percent sure of myself up but i'm  extremely busy with patents and it's hard one of the maybe the does is just record in the country but i just don't know for reasons good enough courts are busy and of course that's a fact of life but it's also true that there is a statutory right to appeal and that there shouldn't be a one two punch in which record is too busy to get expedition and then a court says it's too late that's the basic thrust of our position it's not meant as a criticism of the circuit it was simply requests for  appeal the more likely the right to appeal is to prevail over the at will destruction partial remedy you still have to be considered and the fact that a religious seeks a very large amount of money compared to the trustees shouldn't of plain consummation that is an entire estate ok was offered thank you if it really is supposed to fund i know i know a lot of time and we haven't discussed the merits at all and of course the other side hasn't reached the merits so we do understand that the court would want to do if it's going to reach the merits we would want to do so perhaps something more than just look at the briefs have been filed of this court but but i do want to say there are reasons why it argument is not that we didn't get any relief the argument is that we didn't get enough relief because of the very strength of the claims against the o b l wonders and the idea that he'll be a wonder should be able to walk away recovering lots of money from the tribunal state support shareholders but they were not they were not uniformly as centrally involved in these transactions as the electors and the one thing i don't hear in your brief arguing is that there should never be equitable there should be no such doctrine yes is it our position to judge alito is dissent was correct yes is it our position that the matters dealt with by equitable moved us should never lead to a threshold dismissal but shouldn't be taken into account fashioning remedies after a claim is if you get it on the merits yes that is our position at the same time there are cases that one can easily conceive of where there are if you go back you have literally created chaos with regard to a we look at a plan that's been substantially consummated and our spectral suggestion if if continental were to be revisited is that those cases can be dealt with in fashioning justice justice that judge alito said in his cot that that was not it was his general statement from one can conceive of cases where it would be completely chaotic and be very very difficult to do in certain cases if you have to do a do over for example just go back to unscramble a plan and you would be back to square one all over again and that seems to be against the principle of a fresh start where you if you've started you well with respect the extreme cases can be dealt with by extreme limitations on remedies but the current doctrine instead of limiting remedies after there's been an adjudication of the merits says that no article three judge should ever touch some number of these cases and if arguments such as those present on the other side in this case prevail that will not be a small subset of cases it's mostly it will be a very large number of cases in which there is no no article to review that is not that the scheme that congress designed that is not seeing the constitution is on frankly to have appellate rights cut off wholesale not retail wholesale in cases in which courts are concerned about whether the chief the relief they sought me that because one argument that mr clinton made in his brief that you had a window here i guess they're waiting for some administrative approvals  the window was at least initially one hundred sixty one days and he made the point that it's like everyone waiting for the candle the burned out and then once it does we say well i can't do anything about it from the other five pending appeals of confirmation at the time we thought there were six different appeals of confirmation they all should be heard and adjudicated together the record should be designated together that they should go to the same judge it made no sense whatsoever to us to have them heard piecemeal so we didn't want to really stick it out in front of the others and judge fully agreed with that he consolidation elson with melody the cases proceeded up together i think it's important to note on that one point with respect to the interim period we heard mr englert say that their stay request morphed from an unlimited stable one hundred eighty day stay the fact is that had a state been granted tribune would not have been able to take any of the steps necessary to progress to exit the case the reason why there was a substantial de lay between planned confirmation ineffectiveness was that confirmation was contingent on approval by the f c c and the f c c and many cases has stated we're not even going to look at the file into we know that there's a confirmation or that manner and that once we do the work that we have to do it better kamber that was our case here because there was no stay the f c c went to work we got our waivers and then we came out of bankruptcy i think it's important to didn't like the way that the tribune plan divided the pie they thought that other creditors got slices that should have gone down really is not the plan settled tribunes claims against senior lenders too cheaply so that the lenders got a bigger slice of the pie than they deserve and the trustees argued that the plan incorrectly enforced the subordination agreement so it was what is the amount has been requested in the litigation that continues with regard to the o b o there are several theories participated in the l b o those claims are currently stage nothing's happening on them that they're all before m t l paneling or you watch the claims against the shareholders are subject to a motion to dismiss that has been pending before the district court for quite some time there's some speculation that the district court is reserving judgment until it related to appeal that before the second circuit on individual creditor lawsuits against shareholders is determined today we're here talking about carving up the pie to address what would happen if hypothetically an appellate court were to conclude that the bankruptcy court got it wrong and the real issue is could the tribune pie be redistributed fairly equitably and feasible based on what really was undisputed evidence before him judge sleep concluded not he found that there was no thirty two million dollar settlement was as good as you could get my four success under the l b o action and how big the court what was the analysis as to whether there might be success put all constituents at risk and by that i mean the lenders who were subject to the avoidance claims and create l b l creditors as they call themselves who would benefit from the avoidance claims the lender seized on the likely upon constructive fraud step two that that's not accurate your honor what he found was it a a finding of intentional fraud at step two was potential i i'm not sure the prevailing on the merits of either actual or intentional fraud and that was significant because of the reduction in tribune value even preservation of the step one that would have delivered the lion's share of the lenders recovers standing by itself with respect to the bankruptcy courts at one point finding that we saw so much about india really this brief that was not a determination as mr yang would include put it that there was a fifty fifty quote a court would decide this issue one way or another unquote it's also important to note that even a fifty fifty finding on the particular issue he was talking about which was capital adequa step one would not have the equated to a fifty fifty chance of success on the avoidance claims the bankruptcy court didn't address capital adequacy approving subsidiaries which was where the lion share of value  d but much less debt so there was clearly a much less possibility of capital inadequacy at the subsidiaries and the bankruptcy court also didn't address the whole panoply of defenses asserted by the senior lenders including good faith defenses under section five forty six years the bankruptcy code and the white so to take the one mind in the bankruptcy court opinion and extrapolate that into  found a fifty fifty chance of success on his clients but then he signed off on a settlement that provided for a much lower payment he must not have known what he was doing respectfully judge carey is a very experienced judge you knows the law of recovery the largest bond amounts was was premised on some harm to the debtors in transactions that was up to four billion dollars yourself judge kerry after a full day evidentiary hearing where he took testimony to cross examination and he wrote a pretty lengthy opinion on the bond concluded that one point five billion dollars would be sufficient under the circumstances i think you noted that it was conservative in terms of much lower than the amount requested by the debtors so that's how it minded on the one point five billion dollars figure notably the appellant's didn't offer anything they didn't offer one hundred million dollars seven hundred fifty million dollars it was no we're not going to offer anything we don't think we have to offer a bond for the trustees that very significant if the trustees had offered up thirty million dollar bond rearranged among other things or you could have some combination and that there were at least two others and host of ways you could deal with that small amount well i think it's useful to conceive of them in two ways either the plausible ways and those arguments that can be made to the bankruptcy court not necessarily to us but it certainly seems like there is a remedy and yes a plan substantially consummated but it's pretty darn say and they should prevail on that then there's no justifiably involved so it's a tough argument for you to make i would take a different tack out in terms of parties to this board nation agreement that issue this board nation agreement at issue was the phones indenture so i would venture to guess that not a single one of them had ever read the phones indentur they were simply trade creditors or former employees of the debtors who had claims against the debtors and receive checks in the mail and checks and or equity and or litigation interest it's certainly understandable i would submit justifiable that those creditors proceeded to rely on the fact that a bankruptcy equated to confront and they got their money out of it i'd also note that in continental one of the principle holds the bases for the equitable mutinous doctrine is to encourage reliance on on state confirmation orders and there's a discourse in the opinion there that actually says we're not going to get into the business of deciding whether reliance was reasonable or not reasonable we think as a policy matter it makes sense for people to go forth are you saying that there's no partial relief that can be given if this is still not to be accorded that would remove with regard to the the crossties yes for two reasons with respect to tribune a moment you see this come up often times in the tax context where you have a state tax and somebody will appeal went to the supreme court and the supreme court will  rule in favor of of one of the other and they won't get into the remedy part they'll send it back to the state and they make an either take it from those who pay too much to take it from those who better windfall or perhaps going forward say those who have paid too much they will get less going forward it sounds like quite simply what you could do here i don't think so your honor because  we have a very large number of creditors as i mentioned we have a plan that provided as judge schwartz noted those creditors whether panoply of treatment options including equity including medication trust interest including our cash  you have the difficulty of not only looking at those seven hundred fifteen creditors but then the reverberations across the capital structure beyond that because it is the million reverberations would be fairly small well reduced then its claim on the subsidiaries is increased the increase in that claim on the subsidiaries results in a decrease of all the payments that were made to the senior lenders so it goes my numbers show five hundred seventeen trade one hundred ninety one retiree the bankruptcy court would be tasked with tracking down these individuals hundreds of individuals finding it ordering them to pay back a portion of what they got which included stock  for reference the document i'm referring to is that the appendix for zero seven nine which was attached to our one of the declarations we submitted to the district and you're taking these retiree entry creditors had to be tracked down and then they including one way or another as a creditor oh yes yes that's that's why they got there just russians but but from your point of view it's not just the fact that it represents percentage wise relatively small amount of dollars you're talking about the other consequences i think you  mentioned if i may judge for a few years mention is having some significance the fact that the trustees had not offered to post a bond or posted any bond on the three million dollar plane  now it would have been carved out i think that's why the bond amount could have been so much lower if it mounted issue for the trustee issues was thirty million dollars they didn't need to seek a stay of consummation of the plan they simply have set aside thirty million dollars to be dealt with after the merits were ruled upon they chose not to do that i did want to address one issue that was suggested in the briefing and then again today which is that really us would be happy first and foremost it's important to remember that these are not really this is causes of action that it wants to pursue the claims belong to the bank of sea state for the benefit of all tribune stakeholders the individual creditors had no right to bring them themselves and it's worth noting that a realist doesn't speak for all creditors or even a majority jammo as you noted the vast majority of creditors voted to approve the plan and a realist and even speak for all of the senior no hopers which is what the trucker because these represent seventy percent of them voted in favor where more importantly in the settlement that is the cornerstone of the plan the senior lenders paid hundreds of millions of dollars we value it at seven hundred sixty million to be freed of state litigation once and for all if they were subjected to suit even arsenal suit i don't know how that would work by virtue of a really as alone putting giving back its consideration they'd be deprived of their bargain the only remedy that does away with a settlement is the taking that last point first we're going to keep you close to your three minutes ok now last point first depriving the wonders of the benefit of their bargain is the whole point of a really has appeal to say that that is itself a ground for equitable who's expands the doctrine tremendously with regard to the seven hundred fifteen other parent creditors ninety seven percent by dollar value is either the or the former employee and so if the three percent of trade creditors end up being uncollectable against so to speak that's not a big deal if there can be reinstate johnston said the examiner's findings about step one were significant and then a few sentences later he said judge kerry's determination about step one being an echo of poison was merely one line that we carry a bridge too far with respect to judge kerry in determining that the step one claims were at one point after heavy heavy litigation over those claims was not just a single throwaway lot it was a cornerstone of his opinion and did he not know what he was doing that's not the phrase we would choose to recommit legally reversible error to this very good judge under pressure to resolve this case but legally reversible error when he failed to follow through on the implications of his own determination that the st determinations were met with poise yes he committed legally reversible error was it did that determination apply to the parent and the sobs yes country what mr johnson has told you the expert testimony on capital adequacy was about just ledger entries there is no logistical nightmare there is no chaos and reallocating interest in the litigation trust that simply requires changing the waterfall and my last white after the first hundred  wonders themselves get thirty five percent of money recovered by the litigation trust that makes no sense the litigation trust is pursuing theories that if successful suggest that the