those purchasers cannot be required to speculate why their indenture was written as it was or about how their notes might be characterized years later he says me erica can we find out who's banging and not sure that maybe i'm as i was saying it is the ninety three know purchasers cannot and should not be required to speculate about why their indenture was written the way it was or about later characterizations but that's exactly the position t according to its terms evidence outside the four corners of the document as to what was really intended when unstated or misstated is generally inadmissible to add to or to vary the writing and that's it seemed to me speaking only for myself rather extraordinary move i've always thought that when there was a determination of no ambiguity there simply was no need and therefore a court should not resort to extreme sic evidence and as i understand it at the if you just look at because first the bankruptcy court looked at the documents and made a decision based on what the documents said and then considered the extrinsic evidence and assuming without the sobbing that she was not entitle to look at the extrinsic evidence why was she in error in reviewing the documents themselves yes but she misconstrued the indenture and well that's what we have to do but yes but maybe i was playing in what way dispute really focuses on whether the definition of senior and in this includes upstream he's correct and cause to a five it's undisputed includes only downstream guarantees is whereas the guarantees at issue here are ours and we  that those two propositions completely answer the question before the court now of course the bankruptcy court in our adversaries take a different position they rely on to a one and two d and various provisions of article three of the indenture i'd like to try to walk through those and explain why none can alter the evidence by notes demetri's or other securities issued for money whether issued or assumed by such person noted it doesn't say whether issued assumed or guaranteed by such person and that's significant our construction of that cause that applies to money borrowed by the person in question or assumed and i believe constructions that applies to money borrowed by absolutely anyone your very few through a word yes rather for one thing construe in the clause to apply to upstream guarantees would render a clause to a five superfluous in violation of your principles of contract instruction there would be no reason to address guarantees at all in caused to a five let alone to limit the cost of downstream guarantees if the phrase in debt enough for money sure what else it covers they they've tried to construct some examples but there are few in the brief they do they are not examples that very relation to the facts known to anybody in one thousand nine hundred three but even if even if there is not to preclude a there's another construction cost to a five a superfluous it has no role to play because all guarantees are covered by other provisions of the indenture that proves that their interpretation of two of the other provisions cannot be right because the general principle is that no provision should be rendered superfluous and close to a five which is carefully limited to downstream guarantees would be superfluous under their construction there's also a general principle state in section two zero three c of the restatement that specific terms govern over general terms and to a five is the specific provision that covers guarantees to i wanted to do your much more general provisions in there construing much more general terms even if we don't have complete superfluity which i believe we do but even if we don't have complete superfluity under their interpretation the guarantees and secondly such an obligation must be in respect of indebtedness and it is in this case because the obligation was in respect of the notes kaiser negotiated so having met that definition the ninety war in ninety six obligations senior indebtedness no your honor your question leaves out five words of today that change the entire analysis those five words are described in this cause up the words are described in this cause too what today does is it takes ancillary obligations that relate to other kinds of obligations described elsewhere in cause to oh i don't think clued the necessarily means it means to understand what judy is talking about you have to look elsewhere in cause to know their obligations could not possibly refer to the notes that kaiser go she's not in context because th full context of all penalties fees premiums expenses reimbursements indemnity obligations and other up monetary obligations of such person in respect of any indebtedness obligation or guarantee described in this cause to if all it meant were any money terry obligation in respect of any indebtedness you wouldn't write it that way this is meant to capture things like interest and fees and penalties that are related to things captured elsewhere within cause to hypothetically speaking supposing we were to consider their obligations to include the the notes that are the subject of the their argument or to be still wouldn't apply because they would still not be obligations in respect of any and that in this obligation are guaranteed described in this cause too and it's terribly terribly important here that both cause to d and cause to e refer to indebtedness obligation or guaranteed described in this cause to guarantee is a word used in contradistinction to indebtedness an obligation in the very parisian they  when the draft was not guarantee they use the word guarantee when they used other words they meant other things in addition cause to do shouldn't be read to capture up in guarantees for the same two general reasons why cause to a one should not be so read one such a reading would very clearly render cause to a five superfluous if the definition is as broad as judgment  used in a vacuum it would be a very broad term but to construe it as if it were used in a vacuum ignores the entire structure of duty ignores the words of limitation in respect of any indebtedness obligation or guarantee described elsewhere in two d it renders cause to a five superfluous in violation of several principles of new york contract law followed everywhere else for that matter if i leave the rule that this specific should govern over the general as as you suggest judgment is monetary obligations as a general term and a broad term guarantees a specific term in cause to a five we have the drafters of this indenture saying very clearly which downs which guarantees our senior indebtedness namely downstream guarantees not upstream guarantees so the specific should govern over the general and to decamped to a five now if the court concludes that the definition of senior indebtedness doesn't cover upstream guarantees i believe that should be the end of this case but the bankruptcy court thought article three of the that dispose of article three even without parsing the individual terms there is a sentence on page thirty eight of the indenture page eight o five of the joint appendix that says it is understood that the provisions this article three are and are intended for the purpose of defining the relative holders the rights of the notes on the one hand and the holders of senior indebted us of the company on the other hand the drafters told us in so many words that article three of about the relationship between notes and senior indebtedness of th company not about the relationship between open senior debt and this of the subsidiary guarantors decides that section three point zero two makes it clear in its first fifteen words that it applies only upon any direct or indirect payment o upon any direct or indirect payment or distribution of assets or securities of the company the case for your honour's has nothing to do with the distribution of assets or securities of the company what is in dispute is the assets of the subsidiary guarantors that were distributed  bankruptcy so that's two quick reasons why all of article three good morning your honor isn't it please excuse me may please the court david her for the app at least i will try to address a couple of the questions i just heard i would like to talk about the extrinsic evidence issue at the end because the court doesn't need to reach that but the the new york authority cited by the bankruptcy court judge does say what she says it does and that is there's a role that you can't consider extrinsic evidence either to create an ambiguity or to vary the terms of an agreement that's the parole evidence rule fully manifest in new york law but the new york wara recognizes that you can consider certain forms of of governance for example and it's sort of like peeling an onion here i think but at the core certainly most jurisdictions would let you consider not only the indenture but also the note the prospectus and the notices that all comply that's a different point is this her that if those other documents can be determined to be part and parcel will of the main agreement then you're still not talking expense ok as long as that was argued differently below but as long as we're all on that page wonderful moving on to the other things that the bankruptcy court considered there's ample support in new york law to consider that especially the way she did it first looking at the contract determining that it is unambiguous and that she found no evidence whatsoever in the contract for this hybrid note structure of subordinated notes but if there's a default then there parry pass through with senior indebtedness or senior guarantees that's just not it doesn't exist in the  well let's let's look at article two in its entirety because i think it's important to have that language clearly in mind article two starts with the provision that something will be senior indebtedness in subclause why the first paragraph of sub to rome and that to if it's designated in writing by the seven actually yes it's seven ninety five roman there too it's the second paragraph down at the top of the page ok to the extent incurred by such a person and they go down to y in the next line designated in writing by the company's senior indebtedness in a notice to the trustee that was done the notices were given there in the record we've cited them there was no objection to that designation and that's what we're talking about are those in fact senior and yes this is and they are by operation of this provision that says if notice was given they fit within cause the it was given and not objected to there's no dispute about that this is what you need in order to get that's a condition preceding this what i the way i characterize it i believe in my supplemental brief and then it's list circumstances there's a one we explain why that gets we think quite clearly money borrowed it they do relate to money borrowed there isn't the written language in this clause that says money borrowed by such person that phrasing is prevalent throughout this indenture and i think there's a very strong argument that if they don't say by such again i want to go back indebtedness the definition of indebtedness couldn't be clearer page seven eighty four of the appendix obligation of such a person they would refer to the guarantees because those are the guarantees that were given and that's what we're talking about in this case and i understand the argument on the other side if they meant guarantees they would have said that right they don't need to say guarantee argument they do make that argument it's not a reasonable one because it's one of the reasons for having a defined term like indebtedness defined to include guarantees so you don't have to say including your fees and every you know you don't have to repeat all that verbiage throughout the document they make the argument that it can't be covered up there because that would make the subsequent specif specification in to a five support for us but it's not support for us and it's not a hypothetical or remote sort of possibility they have specifically the the a five guarantees by by a subsidiary that is limited i mean that is any indebtedness could be a lease that's not an uncommon or rare thing to think of being covered by this it's different from money borrow we go back categories and then you get down to d c where it says just to be clear and you know this is a commonplace in drafting a catch all provision spreader clause whatever you want to call it it covers now i do want to talk about or briefly about the provision this argument that only article sixteen of the agreement should be looked at and not article three i think it's it's fundamentally inconsistent with new york law to say look at part of the agreement and ignore other parts especially here where there is that there is this intrinsic connection between guarantees and the primary obligation that they are guaranteeing it is not surprising at all that relevant provisions would occur in one more than one place i think you will we when using those definitional standards if you just that we have two fairly detailed and thoughtful opinions from first the bankruptcy court in an unusually detail the pinion from the district court this is unusual for me but i'd be happy with that one word affirm and from your your characterization reading of the court was very you know no question she was reading articles three and sixteen together as you must under new york law the fundamental promise and it's reflected in several places we cite for in the brief that the senior note holders are entitled to payment in full before any subordinated note holders paying anything that's a fundamental promise the subordinated debt holders agreed that indirect payments on the notes are subordinated now i think the only we make this point the greek the only plausible category for indirect or indirect payments on the notes is payment on a guarantee of a no but this language goes even further in our favor and it says not only payments on the direct or indirect on the notes but in respect to the notes so in indirect payment in respect of the note i think you have to reach far far away from common sense language to get t interpretation that says that wouldn't include payments on a guarantee the x clause in paragraph three point zero two hey i have to ask it doesn't say talk about it but it's a simple concept and it reflects your own ambiguously the purpose of preserving subordination it says that the cardinal rule is no payments to juniors and tel seniors have been paid in fall but it does recognize it in a bankruptcy or similar proceeding in securities something might pass to juniors as part of a reorganization but if that happens it still must be in such a way that juniors get something that's not on the same level as the seniors into us that's an ambiguous expression of intent both the guarantees and the notes are subordinated and they're not at the same level there is no perry passed to treatment of them it would violate those clauses and there's the identical clause danica language in both three  sixteen mary i asked you a practical question yes time is there enough money was there is enough money to pay all  ninety four and ninety three or there isn't no year i've been they will only get a portion they do not receive one hundred cents on the dollar subsidiaries are in chapter eleven open market we don't know for sure who they are now they were purchasers of nodes frankly many of the the more institutional purchasers and many were so called retail say i'm not sure what you're on i was referring to but it might have been the service list and some of the parts of the record include the notice list in the bankruptcy proceedings which include a wide variety of sorry i do want to get back briefly to the extrinsic evidence because i think it's important you know in particular one form that squarely recognized under new york law the practical construction of the parties when the c everybody agrees that the definition of indebtedness includes guarantees we're we're not disagreeing with mr on that it also is a fact of no significance what matters is the definition of senior indebtedness of such subsidiary guarantors and it's undisputed th no but all the factual findings in this case really two extremes of evidence which was inadmissible so the factual findings drop out for a reason other than being clearly erroneous they drop out because they relate to improperly admitted evidence  while we're on the subject of improperly admitted evidence there was a colloquy between mr her and judge smith about matters that are actually part of the indenture as opposed to being extrinsic evidence and mr hurd took the position that notices that were issued one year later and senior indebtedness they are just as mr her correctly said a condition preceding to being senior and those they are necessary to be in senior indebtedness they are not sufficient to make something senior indebtedness so the mere fact that they are a step toward being senior in debt and this doesn't make them part of the indenture and if you think about it for a minute you just recap it with investment if you construed as intrinsic evidence a docking of the doesn't exist at the time someone is reading this indenture that cannot possibly be the law a five would constitute senior in god you know i think we have a disconnect here judge one to say well the athletes have never taken athletes have never taken the position in brief or to didn't today's argument that to a five covers upstream guarantees never well i'm not subsidiary of such person and then some irrelevant words those words of any subsidiary of such person or what both sides agree makes that definition limited to downstream guarantees mr relies on to a one in two d but everybody agrees that to  five covers only downstream guarantees that is a parent's guarantee of its subsidiary or the subsidiaries guarantee of its own subsidy this point is not in dispute those guarantees could not possibly be senior and that is not under two a five a we agree that they couldn't be under to a fight whether they could be example of something that would make to a five not superfluous he didn't give you an example of something covered uniquely by to a five he gave you an example something covered uniquely by two a one thank you so they didn't matter he did say it didn't matter but i well i would respectfully disagree under that label but that is mindset right well he also tried to give you an example that cut against superfluity but the example doesn't work i couldn't agree more with mr her statement of new york law but the entire contract must be considered i couldn't disagree with him more that makes article three relevant in this case why do i say that because article three tells you it's not relevant it has to do with distribution of the assets of the company if you want to talk about distribution the assets of the subsidiary guarantor you look to article sixteen the reason article three is relevant is not because we disagree about irrelevant excuse me it's not because we disagree about new york law it's because we disagree about what article says and our position which we think is very clear in the text is it's about the distribution of assets of the company which is not what happened in the court below assets of the subsidiary guarantors were distributed that's covered by article sixteen with respect to the phrase in direct payments one of mr hurst points is that that can mean nothing but the subsidiary guarantees but i can disprove that by drawing the court's attention to page eight seventy two of the cover any direct or indirect payment or distributions of assets of sub subsidiary guarantor because the phrase indirect payment of assets of subsidy or a guarantor is in there it can't be used as mr her asserts to mean existing guarantees referred to elsewhere in the document because there were no existing guarantees by subsidiary guarantors so is arguing about what indirect payment means in article three point zero two doesn't work even aside from the trumpeted in act of article three in its own terms right talk to us about something easier to understand