so the first issue i want to turn the court's attention to is the issue that has been described as the momentous issue which takes up a significant portion of the briefing as different transaction structures are compared with each other and frankly there are lots of philosophical debates that i think we have to engage because the lower courts engaged in them as to which transaction looks more like an exchange or disposition and so forth and of course there are attempts most of that is not directly relevant to how the issue should be decided and that is because there is no universal definition of collateral or proceeds it's really not a philosophical issue it's a very specific issue that is specific to the factual context in which the question arises let's talk about the facts here the facts or the collateral issues basically substantially all of the assets that are yes perhaps yes and at some point those served its purpose means were released end of story no transfer no collateral was affected no proceeds it's over as a result you don't satisfy even the first condition precedent to get to the w collateral i think the first and really the last point that resolved this issue is the definition of collateral in the in the the the pledge agreement which basically defines unlike lamented for any of these other scenarios t c itself is collateral because the sharers of p c h that was owned by the parent of t c h was itself clenched so in other words all this debate entity so the two sides have two different versions of what happened to it under both versions it comes up the same way which is the appellee say well this trenor g t c h it's really just all the same thing nothing happened to it in which case then what was received was still collateral because the shares in t c is held by the parent if you see it itself was pledged it's within the definition of collateral if these  pledged shares i think of the same concern as the of the judges maybe i can google differently except i'm still hearing an answer the question so your theory is this is collateral under the pledge agreement of the security agreement right but those agreements have a different purpose waterfall agreement and the waterfall agreement that the the waterfall provision talks about collateral upon the exercise of remedy under the security got to go by the collateral agent it's not addressing the bankruptcy courts implementing a plan that just short said takes off the lean put it out there is no longer collateral or proceeds your adversaries would say after its release three unclear so it you can't just equate it with what's discussed in the security or pledge agreements what would your response be to that point well i would say that because the definition of collateral in the room and included all the pledge shares whatever the plan did to it whether you say  one says the plan was the means to be taken off and essential we it's the same thing nothing happened to it you still have the receipt of what was and still is part of the pledge shares in other words the agreement is set up such that the meet the creditors had what's defined as collateral which i am arguing and it's actually not an opinion it's actually explicitly defined and click shares all of th shares of t c h was collateral into beginning so the question becomes and laying aside for a woman whether it was an exercise or remedies or received by the question is what when creditors when my client received the collaboration i'm sorry receive something out of the bankruptcy what is that really on account of or is it still collateral and the definition of what's in the agreement is if you if you assume that nothing happened to it it still has what is defined as color collateral which includes quite shares so i'm sure that universe nothing happens to the collateral and they still hold what was defined in the agreements  ensure that you get reimbursed they got paid they don't get the collateral and only release that's correct you're on a date got either on their or their view of the universe i would say they still have to collateral what's defined as a collateral or for all the reasons we say an actual exchange occurred because the definition of proceeds in the agreement says not just what is actual proceeds of an actual sale of the collateral but it is probably the most broad the english language to make the definition of proceeds it includes really anything that is received at any time paid or payable under or in connection with any of the collateral so when something happens to but you made a point about the what the creditors got as secured creditors yeah let's talk about exercise remedies yes where was there an exercise or remedies here this was these distributions or events happened pursuant to a plan ye provided you're human seems to me that the exercise of remedies pursuant to the security agreement is the same as the exercise of powers by the collaterally joint that are provided by the bankruptcy court so so i would i would argue that those examples are really just examples and that it doesn't set doesn't seek to set a certain level of activity that specifically i guess it's a metaphysical question but what i would argue is that the agreements themselves when it talks about exercise or remedies not only is it not setting any low threshold those are just examples and it basically says is that even accepting collateralised work is enough already which is pretty much if you're sitting there collateral just props i was going to hit you on the head and you agreed to accept it which is it did a lot more than that here then i would say that's a fairly low standard for what it is and we have to keep in mind this is a four point one is the only provision for billions of dollars worth of values to how it will be divided up so the notion that if the collaboration didn't do enough under some vague definition the whole thing exist gets fall it falls out of really the only provision that's  it is making sure that the collateral age is not mysie how looking proceeds but why should this provision which is tres did terms of the collateral age should be read equally to apply to things that are coming out free and clear at the other end of a bankruptcy provision that's the big picture question here because what's coming out the other end of the bankruptcy provision accuracy is also going to the choir wait it's the plan itself explicitly says to be released and you can analogize is directly to a mortgage on a house if i buy a house with the benefit of a mortgage loan from a bank and they get a lien against my house and i can sell the house the mere fact that i but where we have here what's essentially the transformation of assets that were collateral and without a without a specific definition it does appear with a list all of the assets that were included and could be viewed as originally the collateral that it's they they have may have taken some different forms but there's still  some some some form of them whether in cash distribution or in in newly issued stock or being returned to these creditors can we say this is not collateral without taking on  of the that that's several questions your honor and i will try to answer them all first of all no collateral was transferred to the secured creditors under the plan between each and reorganized one holding company get swapped for another holding company basically they just change the name of the company and let's be clear while technically the stock of that holding company was by just that stock had zero value because at the operating company level secured creditors are only getting forty one cents unsecured creditors are getting zero is that when the record yes and and so the the value of that stock is zero that that that that swap of companies is completely without substance whereas the l the corporate reorganization occurs i mean it as a practical matter it all happened instead usefully but theoretically the corporate reorganization happened first and you will see the basis yet seem creased pursu and which disk your creditors now own are receiving the equity so the basis all gets increase the the holding companies are swapped out then after all that is done the the stock of the holding company is distributed to the secured creditors pursuant to plan and apt point and only about going all the liens released the liens are being released because they've been paid on their secured point by definition their security claim is limited to the value of their collateral and since they're getting the value of their car through the stock that all the liens on the holding company stock and the hard assets of the operating subsidiaries are released pursuant to that distribution and why why why isn't it just maybe in different character but why isn't it just taking off on this status that collateral even with other kinds of liens like the protection liens there's a continued interest in other words on the part of the of the creditors  various assets that may have been transformed just heard of the reorganization but it's not it's not entirely paid out there there is some degree to which that the value will was being compensate these secured creditors probably inability to pay or collateral because the automatic stay stops him from exercising their remedies under the agreement and that by the way as i know remedies wherever ok first of all the required security parties never issued any direction period and the required secured parties are only the swap that and the bank debt it is not firstly notes that d  t c represents because they came later and they were not included in the required secured party category so so whatever the collateral agent did with respect to the capital out of the water it was not at the you make the argument that that was not the asset itself that that was simply control that was being exchanged for first seventy million even control would seem to distributions that flow from that as not being proceeds of collateral well first of all your honor together was preferred stock not equity so ownership of the hard assets never  technical really non substantive transaction that meets the tax code but it has no real impact on the ownership of the assets the assets were always owned a hundred percent of the time of the holding company by the district court and that's the two eighteen west law three two eight four two seven district of new york remember thirtieth twenty  misunderstanding nothing in the agreement section one point one that a one ninety expressly includes interest and fees that accrue after the commencement of bankruptcy or insolvency of regardless of whether they're allowed claims  bankruptcy correct the definition of secured obligations and that which incorporates that provision your honor is broader than actually what's distributed on the four point three so that it's a very unfortunately it's a pretty technical argument and if you're honest want continued door to come to now just in your here after rising claim you're not distributing on account of a mature contingent obligations or not you know life's obligations so the definition broader than what's actually distributed so if you inaccurate has to be from the bar and the confirmation peers again in four point one three eighty three itself which is that only the amounts that are due and payable are the amounts that actually are paid well in this circumstance if you heard it's in the record in was down but of course below that secured creditors pay forty one cents without also in the record the plan provides for no post addition interest to accrue to accrue once a petition date they satisfied all these conditions precedent they would still not get there and if they do get it the way to get it is it's the gift of second lien agreement which is in the record that as a one who went on if you look at the second lien agreement this is the deal with the possibility that the reason they're not getting to push an interest is not that there's no value to distribute this value to distribute but but there's been a challenge to my queen and i'm not getting post recession interest and therefore it's not allowable and but to focus the court's attention on just a few provisions that i think bring us back to again the definitions of proces and collateral that are actually in the agreements as opposed to different theories about what might be proceeds or collateral the plan itself just so what's coming out is just either collateral or proceeds of collateral given that the definition of both encompasses the entirety of what's coming out right but there are couple of ways the collateral agent can receive things classically one can foreclose sell lease licens without the bankruptcy courts having put it in a plan right they have some ability to do that to preserve things during the pendency before confirmation very specifically about its having to be received and received upon some calls the connection the exercise of remedies i think you should the departures stole the whole of that it was an exercise of remedies because the collateral agent did do various things and given that that were gravity's is not specifically defined although it's defined in a very open way with only a few examples with the lowest wrong being just receipt of value and that really anything instead basically plug into the predator agreement were so broad if those were in there or that i suppose that might have a function but here they are the parties choose to define proces in collateral so property that it really encompassed not only the equity in t c h to start with but also everything to flow from it including everything there comes out that's in exchange collected on account of anything attributable to actually once having held the collateral in the beginning they have collateral and means at the end depending on who you believe either they still have the collateral or they just lost the collateral in any event the value they received from the situation was a result of what they held in the beginning which is colorado the court has any other questions i'll be happy to address them otherwise we'll respond can you speak to the question about the preferred stock and how how we should think relative to the rest of the assets here what significance that we actually have for this bankruptcy frankly i think it has really no significance i think the reason it doesn't really have any significance is that there is the definition of collateral proceeds to not require there it third party sale in fact as quickly pointed out in the briefs the creditors your contemplate that there might be affiliated sales just within the affiliates and it would still constitute still collateral proceeds of collateral so i think frankly that issue was injected by the lower courts and we've all had lots of false off with debates about it but there is no universal requirement that there be a third party sale and i think if any ruling from this court is under smith's summer stood a saying it dept for equity swap sale was made to somebody other than anybody involved in this it resulted in cash how was that the collateral or proceeds of collateral how does it even count  came in from some other entity i mean it's not collateral not cash well i think it actually involved the sale of something that was created as part of the transaction and when it was created it  collateral either way that the parties to find it to have to go back in time in terms of how it came into existence for grass and the transaction that's right because once the visitor energy is created it falls within the definition of collateral proceeds the way that the parties agreed on