javierluraschi · June 6, 2025 18:10
diff --git a/23andme-june-6-2025 b/23andme-june-6-2025

 All right. Why don't we begin the 01/30 calendar? '23 and Me Holding Co, et al. Appearances in the courtroom, please. Good afternoon, Your Honor.

 Tom Riskey and Nathan Wallace, Carmine McDonald as co counsel for the debtors. Good afternoon, Your Honor. Chris Hopkins of Paul Weiss is co counsel to the debtors. I'm here today with my colleagues, Mr. William Clerman, Mr.

 Jeffrey Recker, Ms. Grace Huts, and we're also joined by Mr. Andrew Swift from Moel's. Very good. Good afternoon, your honor.

 David Unseth of law firm Brian K. Blayton Pazner on behalf of TTAM Research Institute, Anne Wojcicki, ABC two point o LLC, the Anne Wojcicki Revocable Trust, and the Anne Wojcicki Foundation. With me today are several lawyers from the Skadden Arts firm and and the Quinn Emanuel firm, and I will introduce who will be speaking first on behalf of the parties we represent, mister Sushil Gribalani. Good afternoon, Your Honor. Good afternoon.

 Good afternoon, your honor. Emil Kleinhaas from Wachtell, Lipton, Rosen and Katz. We represent Regeneron Pharmaceuticals. I'm here in the courtroom with Benjamin Strube from Landreth GPM as well as my colleagues, Michael Benn and Michael Castle. I might need to refresh on some of these names as you come up to speak.

 A lot of new people in the last two days. Good afternoon, Your Honor. One of the new people, Spencer Desai, entered yesterday as Local Counsel for the Ad Hoc Equity Group. I would like to introduce Mr. Robert Stark and Mr.

 Andrew McCarthy of Brown Rudnick. Their pro hock motions were filed yesterday and are pending. Very good. Thank you. Good afternoon, Your Honor.

 Joshua Watts with Norton Rose Folbride for JNB Capital. Good afternoon. Good afternoon, Your Honor. Nicholas Zludicky and Miranda Swift of Stinson LLP, co counsel for the Official Committee of Unsecured Cardholder. Good afternoon.

 Good afternoon, Your Honor. Jason Adams, Kelly Dryan Warren, Counsel for the Official Committee of Unsecured Creditors with me in the courtroom today as yesterday is Megan McLaughlin. Very good. Thank you. Good afternoon, Yaronna.

 Allison Espich, Missouri Attorney General representing the State of Missouri. Good afternoon. Good afternoon, Yaronna. Neil Richards, WashU Law School here in my capacity as the CPO. I'm joined on WebEx by my counsel, Ali Gissani and Kirk Nara.

 Good to meet you in person. Thank you. Thanks for coming in. Good afternoon, Your Honor. Joe Schlotzauer with the U.

 S. Trustee. Good afternoon, Mr. Schlotzauer. Appearances on the Webex.

 Good afternoon, your Honor. Kevin Barnes, Class A shareholder. Good afternoon. Good afternoon, your honor. Charles Besendo, Class a shareholder.

 Mr. Pacino? Good afternoon, your honor. Abigail Ryan with the National Association of Attorneys General representing 23 of the states in The United States that we call The United States. Very good.

 Good afternoon, miss Ryan. Good afternoon, your honor. This is Dalila Jordan with the Minnesota Attorney General's Office representing the people of Minnesota. Good afternoon. Good afternoon, your honor.

 Can you hear me okay? I can. I'm looking for your picture on the screen, but I can hear you. Okay. Thank you.

 I'm not sure why it's not popping up. Apologies for that. Layla Milligan appearing along with my colleague, Laurel with the Texas attorney general's office, appearing on behalf of the state of Texas. Good afternoon. Justin Leonard on behalf of the state of Oregon.

 Oregon. Okay. Good afternoon. Good afternoon. Go ahead.

 Kate Smothers on behalf of the State of Alaska. Alaska. Okay. Welcome. And Heather Crockett on behalf of the State of Indiana.

 That, miss Crockett. Anyone else with WebEx? Good afternoon. Go ahead. Yes.

 Here. Hi. Angie Chang, Southeast shareholder. Shareholder. Okay.

 Okay. I think that's everyone. Mr. Riske? Thank you, Your Honor.

 Tom Riske for the record. If acceptable to the court, may I invite Mr. Hopkins to give the court an update as to some of the things going on before we get into the agenda today? Certainly. Mr.

 Hopkins? Thank you, your honor. Again, for the record, Chris Hopkins of Paul Weiss as co counsel to the debtors. So your honor, I I don't think I have much of a preamble in terms of an update. I think we can if it's alright with your honor, I think we're prepared to basically get right in today's agenda, which was filed at docket number six twenty seven.

 The first item on the agenda is our motion to expedite the hearings on the final proposed bidding procedures. Did your honor enter an order on that today? I don't think I like that. I think I entered an order on a ceiling motion, but not the motion to expedite. So, I I was considering whether we should have our status conference first, but I could be persuaded.

 There may be some benefit to having a status conference without with the veil of ignorance about who is gonna be the, what position the bidders are gonna be in when we get to the sale hearing and that sort of thing. But if if if you feel strongly about, getting to the merits of the final bidding procedures motion, you might convince me. Well, given your honor's invitation, I'll I'll take you up on that. Alright. So Why don't we go to the status conference then?

 Or or or take me up on the opportunity take the opportunity to convince me. Okay. Okay. I do think, your honor, based on Okay. That's fine.

 Go ahead. The other party should Yes. You know, speak for themselves. I think that the motion on the final proposal procedures, Your Honor's ruling on that is really going to have a significant influence on the events from here until the sale hearing. And so from the debtor's perspective, before we get into what's going to be sealed, what's not going to be sealed, what discovery is required, what briefing schedule is required, respectfully, I think that getting to the outcome of our motion and getting a ruling from your honor on how he sees what should happen next is gonna be the most efficient way to to run it today.

 Obviously, we'll defer to your honor in the views of the other parties, but I but I think that depending on how your honor rules and what the rules of the road are from here to June 17 are going to be. It's kind of that back solves into what discovery and briefing schedule and all that looks like from now until the year. Alright. Anybody feel strongly about doing it the other way? Alright.

 You win, mister Hopkins. I'll take it. Motion to expedite. I'll I'll I'll take it, your honor. So so we filed the motion to expedite, at docket number 575.

 Just a few quick points. I mean, obviously, we're all here today. I think this process, whatever your honor rules, the process needs certainty as to how this is going to play out from now until the sale hearing. We want to we wanted to get these procedures approved now, so that the court knows, the parties know, the bidders knows, the AGs know, Professor Richards is the CPO, kind of understands what's coming, what's next, when we're going to get answers to certain key questions that have great relevance to what issues, if any, are going to be litigated at the sale hearing. And so that's why we asked the court to indulge us and hear hear the the procedures motion on an emergency basis today.

 Okay. Anyone want to be heard on the motion to expedite in the courtroom first, on the WebEx? All right. Hearing no opposition, I'll grant the motion to expedite. And let's proceed to the merits of the final procedures motion.

 Is that the best terminology for it? I think so, your honor. And thank you. And so before I get into what are the procedures, I think it's important to provide the court some context to help frame the issues and kind of how we got here today. I mean to be clear, the debtor's position is this should not I mean, again, obviously deferring to your Honor, this should not be an evidentiary hearing about what happened at the auction.

 It should be about what happens next. But I think it will help the court and parties in interest as they assess why we're proposing what we're proposing to just give our perspective and our color on the key events that led us to today. And I'll try to be very brief, if that's all right with your honor. Yes, please. So the debtors ran the auction from May 14 to May 16.

 Over the course of three days, a lot of competitive bidding. And fortunately for our stakeholders, it resulted in a great outcome. It's a $256,000,000 successful bid from Regeneron and a $156,000,000 backup bid from TTAM. TTAM, as is apparent from their papers, takes issue with how that auction was conducted and believes they can continue to bid and are continuing to bid. We have a different perspective, given that it gets a lot of airtime and I think it colors how we landed on the final proposal procedures, just very briefly.

 The auction opened with seven or so qualified bidders. By the second day, it was apparent that it was really a two horse race between Regeneron and TTAM. And bidding progressed from about $52,000,000 up to the $150,000,000 threshold by the end of the day on Thursday. At that time, Regeneron requested an adjournment to the following day. The debtors conferred.

 We granted that adjournment. TTM wanted the auction to continue. They've been there for two days. They wanted to keep going. In our business judgment and with the consultation parties, we made the decision to grant the adjournment request.

 But we told parties there would be no further adjournments. Mr. Richards has a lot of work to do. There's a lot of work that needs to be done ahead of the sale hearing and we needed to bring some finality to the process. On the second day of the auction and on the third day, the debtors heard from Regeneron that we thought we were running the auction unfairly against them, that we were giving too much credit to the financial wherewithal of TTAM as an insider or an entity controlled by an insider of the debtor and that they didn't feel like it was a fair process.

 We were able to convince them that it was, but they did raise that their concerns were serious enough that absent setting the floor on the backup bid, they didn't want to continue bidding on the second day of the auction. TTAM eventually agreed to that and we proceeded through the second day on that basis. Step into the third day, we had determined that based on the financial wherewithal from TTAM that there was a certain amount they could bid up to. Luckily for the debtors, the bidding reached that threshold and passed that threshold when Regeneron submitted its bid, its current successful bid of $256,000,000 TTAM requested more time to provide evidence of financial wherewithal to the debtors. And at that point, Your Honor, we faced a choice.

 We had a decision to grant the adjournment and risk Regeneron following through on their statements that given their perceived unfairness in the process, they would no longer continue bidding. If we did that, we granted an adjournment and TTAM showed up the next day, we would one potentially face litigation from Regeneron that the auction was unfair. They're not bound to their $256,000,000 bid and everything that follows from that. And that assumes that TTAM provided evidence of financial wherewithal and actually in fact submitted a higher bid, which would have been approximately based on the rules of the auction at the time about $261,000,000 The other option was to follow through on what we said on Thursday, conclude the auction with Regeneron at $256,000,000 and Tietam as the backup bidder at $256,000,000 And that's the decision that the special committee made. And I think the question here is, what if we had allowed TTAM to keep bidding and it didn't plan out?

 They didn't provide the financial wherewithal. They couldn't close. What was the alternative the debtors were facing at the time they made that decision at the auction? We had Regeneron saying it's unfair because you're preferring an insider. We had TTAM saying it's unfair because you won't give us more time.

 And really what we faced was if we granted the adjournment, Regeneron walks, maybe TTAM wins the auction at $2.61. Regeneron litigates that process. They litigate whether their $256,000,000 bid is in fact binding based on how whether or not we complied with the bidding procedures. And if TTAM had not been able to close that transaction and Regeneron was the backup bidder, we would have incinerated $100,000,000 of value for our stakeholders. And so it was a very difficult decision.

 But that decision of putting the two fifty six million dollars bid from Regeneron at risk was not a decision that the special committee was prepared to make at that time. And so we concluded the auction. And I say that I say all that not because I want to put in evidence or ask your honor to rule on whether any of that was appropriate. I just think it's important that court understands as you evaluate the procedures. We ran an auction where both sides said it was unfair in certain ways.

 We delivered a good outcome. And now the question is, how do we preserve that outcome and continue to maximize value for our stakeholders? And so after the auction, as I said, Tecan objects and we acknowledge the objection. They continued to bid, and they submitted a revised proposal at a substantially higher purchase price than the Regeneron bid as it exists today. Because all of it's under seal, I'm not going to go into specific numbers.

 And by May 22, they had provided new forms of credit support, new forms of financial wherewithal that were not available at the auction, but have convinced us that their bid is a fully financed bid as it stands today. And the debtors under the supervision of the special committee are evaluating that bid. We're engaged in discussions with both bidders, and we're being very deliberate and very careful because we have today a very good outcome for our stakeholders and we want to be very thoughtful about not doing anything that jeopardizes that outcome while continuing to maximize value. Regeneron believes that the auction was validly conducted based on the terms of your honor's bidding procedures. TTAM is prohibited from continuing to submit bids to the debtors.

 And they also believe that if the debtors were to take certain actions to reopen competitive bidding without their consent that they have an they will argue that they have a basis to terminate their APM, that we will have violated covenants and they're no longer bound by the successful bid coming out of the auction. TTAM's view is that they tended, one, because the auction was invalidly run and concluded, and two, that we have a fiduciary out under the Regeneron APA. And so kind of distilling all that into plain language for the court, the auction resulted in a great outcome. We need to protect that outcome. We also have to maximize value.

 TTAM wants to pay us more money. Income by May 21, they had convinced us they had the financing to pay us that Regeneron thinks they can't give us more money. And if we try to get it through a competitive bidding process that they have the ability to terminate their APA, which would obviously be value destructive for the state the estates. So where does that leave us as the debtors? We have a successful bid from Regeneron.

 TTAM has submitted a revised proposal at a higher purchase price. In order to maximize value for the estate, we have to keep competitive tension in the process. TTAM wants to either reopen the auction or they want to modify the procedures to have a blind best and final, where both bidders submit best and final at the same times, neither one sees the other ones bid, we open them at the same time and we make our decision. Regeneron's position is that if TTAM gets what it wants, they're going to stand on their litigation rights and they're not going to participate in that process. Regeneron, given their views of the auction, wants it to be done.

 They want to be respected as a successful bidder and they want your honor to rule that because of what my bidding procedures say, TTAM can't bid at all. Neither of those things gives us the competitive tension we need to maximize value. So what did we do? We developed the final proposal procedures, because those procedures are the only scenario based on our discussions with Regeneron and their counsels here and they can obviously Ken and Will speak for themselves. But those final proposal procedures are the only mechanism available to the debtors today that will set up a framework in which both bidders will bid.

 And we believe that that is value maximizing and that that is the best thing for our stakeholders given where we are. Protect the burden in the hand, while creating a dynamic that's going to force the two remaining bidders, not force, because they don't have to submit a proposal if they don't want to, is going to set up a framework where both bidders should believe that the other is going to participate and that they need to put their for TTAM that they need to put their best foot forward, pay what the company is worth, show us that that purchase price and their ability to fund the business on a going concern is there. And then Regeneron will get the last look to try to beat that bid by at least $5,000,000 And I'll walk through the procedures in more detail. But I think in summary of all of that, there there's four things that we believe we've achieved today that anything other than what's in our motion puts in jeopardy. We've protected the current successful bid at $256,000,000.

 We've given both bidders the chance to submit a best and final proposal to the debtors and create more value for our stakeholders. And while we believe it to be true, I understand TTAM may disagree with this debtors after the auction, notwithstanding the arguments Regeneron is prepared to make about what the outcome should be under the bidding procedures. It brings finality to the process set ahead of the sale hearing. Obviously, it's not tenable for the court, for us parties in interest to have a potential inversion of the bids the evening of June 16. At some point, we need finality to know what issues need to be litigated at the sale hearing to make sure the timeline doesn't slip.

 And fourth, we would we believe that if your honor grants these procedures, it should moot a lot of the potential discovery and litigation that will occur between now and then. And just to make the point, we know that your honor is ready, willing, and able to rule on any issues that are put in front of them. Our point is to be clear, we don't want a ruling on the issue of whether TTAM can continue to bid because whatever that answer is will destroy competitive tension. Tension. Because if you if Regeneron feels like they can continue to bid and the auction is reopened, they've told us that their position is we will not participate.

 And so and if you rule, TTAM can't bid, it's not horrible outcome for the debtors. We think it's phenomenal that our stakeholders are looking at a $256,000,000 bid from Regeneron, but it means we're not going to get anything high. And so that was a lot, but I thought it was important to frame why we did what we did for the quarter. We if we were and I think we say this in our papers. If we were designing a process on a blank slate where both bidders would participate on whatever terms we proposed, it would be a lot different.

 And I think TTAM notes in their papers that what we originally proposed was a straight vested final. But without Regeneron's participation, that's not going to be value necessary. They know that, they've seen Regeneron's response. It means they don't have to put their best foot forward because Regeneron isn't going to participate in Molinia. And so all of that's a long way to say, our business judgment is we need competitive tension tension, and this is the only way we see today to preserve that in the process for the benefit of our stakeholders.

 That's a that's a helpful overview. Let me speaking of framing, let me suggest a few items that have struck me as I've gone through the papers that I would that I would appreciate if you and your team and the objecting parties and the supporting parties and anyone else, would address. I don't mean to suggest these are the only things I care about, but time is tight. And, to the extent you can help me sort some of these things out, not off the top of your head necessarily, but, throughout the course of the hearing, I think that'd be helpful. So, first and you and you alluded to this.

 To what extent are the facts really disputed here? In other words, the parties disagree about what should have happened, or why things happened, and they disagree about what should happen next. Is there really a dispute about what has happened so far? Second, mister Vicito and the ad hoc committee have taken aim at the prohibition on joint bids, but TTAM has not. And so I'm a little wondering if if if this is a live issue, is anyone contemplating submitting a bid that is or might be, contrary to the prohibition on joint bids?

 And so is this something that we need to work through today, or have the parties figured it out already? Third, the objectors talk about, what they call the bid chilling effect of the proposed procedures. And, I'm not an investment banker, but my preliminary read of the situation is that there are two outcomes that some or all the parties might consider inefficient. One would be that TTAM submits a winning bid and Regeneron doesn't top it. And the outcome is that TTM has bid more than it might have had to bid in a competitive step by step auction, and that's inefficient in the sense that they are they are overspending as they might view it.

 I'm not sure anyone except TTAM would be unhappy about that result, but it is arguably inefficient in an economic sense. And second, Regeneron could submit a final bid that's lower than what they might bid in a last and final sealed bid process because they only need to come up with $5,000,000 more than TTAM comes up with. So I'd like to hear from the debtors and other parties about how they evaluate these potential inefficient outcomes and whether there are others that I'm that I'm overlooking. Along the lines of bid chilling, breakup fee, as we all know, can chill bids, But I don't see anything in the motion that says that the debtors are going to deduct $10,000,000 from the nominal value of TTAM's bid for purposes of comparing it to Regeneron's, which would be, if that were occurring, it's a straightforward disadvantage to TTM for comparison purposes. I don't see that in the procedures.

 And is that part of the analysis, or are the debtors and the consultation parties simply ignoring that for purposes of giving the level playing field to the two parties? Fifth, the Eighth Circuit said in the Food Barn case that the reasonable expectations of bidders should be a guidepost in a dispute about a disputed auction and a late bid. And so with that in mind, and I saw this in the Regeneron response as I was typing my own notes about the same subject this morning. What should I make of Section 7.19 and c of the TTAM APA, which contemplates that if TTAM is the successful bidder and the debtors exercise their fiduciary out and entertain an alternative transaction with somebody else, TTAM would have the opportunity to match the alternative bid. And conversely, what should I make of the absence of a similar provision in the Regeneron APA, at least as far as I can see?

 Six, TTIM points to the motion paragraph 27 I, romanette two, which seems to require Regeneron's consent or a second court order authorizing the debtors to exercise the fiduciary out, and they argue that Regeneron is not, in fact, on board with the proposed final procedures, that Regeneron is still going to have a second bite at the apple. Is that right? What's the point of the second order or the consent? Regenerized response, lessened my concern about that somewhat, but I'd appreciate hearing more about that. And then seven, what I think is the most intriguing argument from TTAM based on what I understand so far is the idea that it's agreed to increase its deposit to something north of $250,000,000 if the debtors will only revert to a previous proposal for last and final bids or just exercise the fiduciary out and take their bid.

 And I think that's what you're referring to in your papers as a synthetic backup bid, putting the pieces together here. I think the thrust of the argument that TTM is making is that, that sort of all in shoving the chips on the table, would remove the downside risk that Regeneron could walk here. So it wouldn't be necessary to give them a breakup fee or last look or other considerations. And what I don't know and I'd like to hear more about is is that is that accurate, or are there other conditions, contingencies, etcetera, that make that proposal something less than full insurance against that downside, if that makes sense. It does.

 Okay. That's a lot to throw at you. And and the other parties who I know are prepared to it's it's great fun when you come to court. You know what you wanna say, and then all of a sudden, you know, you got Post it notes. I can see the Post it notes all over the place.

 So if it would be helpful if it would be helpful to take a short break for for both you and other parties to reorganize your thoughts, I I'm happy to do that. It's this is not intended to be a, you know, test of your, improvisational skill. Well, thank you. I appreciate that, your honor. I'm I'm prepared to go.

 If if That's that's that's fine. And we we can take we'll we'll probably need to take one or more recesses at some point anyway. But, so go ahead. That'd be great. Okay.

 Before I before I start, I had one question about what I think was your number three b. Sure. Did I hear you correctly that you said what happens if Regeneron participates in this process and submits a lower bid than the TTAM bid? No. The three b was, Regeneron tops TTAM by 5,000,000.

 But in the hypothetical alternative where you had sealed bids, Regeneron would have bid even more because they wouldn't know what TTM was bidding. And that's that's the potential inefficiency from a pure economic perspective. Okay. Would it it sounds like your honor has read through the procedures. I was going to walk you through them.

 It sounds like I should just focus on your question. Well, you're I mean, I have read the procedures. You should it'd be great if you focus on my questions, but anything else you wanna cover certainly is fine. I mean, your your points of emphasis are important in as well as mine. Understood.

 So if it's alright with your honor, can I go straight to number two and circle back to number two? Yes, of course. Yes. Okay. So on the issue of the joint bids, what is our position on that?

 Our position is from a process perspective and arguably from a value maximization perspective, it's just too late in the game. And for the joint bid construct to be raised by TTAM, I think kind of evidences this fact. There are 13 Ds in the public record that speak to TTAM or its affiliates having spoken to hundreds of financing parties leading up to the petition date. We facilitated discussions with joint bidders by the TTAM parties throughout the pre petition process leading up to the auction. That was a benefit for lack of a better word that was really afforded to very few parties other than certain qualified bidders that showed up at the auction with qualified bids that could be pieced together and potentially compete with the HoldCo bids that we received from T, Tam, Regeneron and other parties.

 A joint bid at this time, and I think I suspect you'll hear from Professor Richards today on how complex and how much scope there is to his work as it is. And you'll hear from the AGs who are evaluating these transactions that introducing a brand new counterpart at this stage when parties have had this much time that must be run through the gamut of the CPO, that must be run through the gamut of the AGs, because how are they going to receive the data? What are they going to do with it? What's their cybersecurity protocols? How do they, if at all, want to change our privacy policies on a go forward basis?

 It just doesn't work. If TTAM wants to negotiate with potential financing sources and show up at the best and final deadline with an executed financing commitment from a third party, who's just a financial investor, godspeed. But to say now at this point that we're going to bring in a co bidder who may need to make material changes to APAs that have been on file since May 20. They need to then run through the whole process with the CPO. So it's frankly not tenable.

 And we would submit the bidding procedure speak to reasonable opportunity. I think TTAM and its affiliates, given who they are, have had more than a reasonable opportunity to line up financing to help them with their bid if that's what they want to do. And just to circle back to the importance of competitive tension in the process, Regeneron will not participate in competitive bidding if joint bids are allowed. Sure. And this one is really more of a question for Mr.

 Kerpelani because TTM did not object to this provision, at least as I read their objection. But others did. And so that's why I'm trying to get a read on, is this something that I even need to be concerned about? And Mr. Krupilani can address it when he grabs the lectern here.

 But the clarification on what is and what is not a joint bid for that purpose is helpful. Understood. Thank you, Your Honor. On bid trilling, 3a, I think I'm going to kind of take this together a little bit with the fiduciary out in TTAM. So if TTAM had won, the way their fiduciary outworks, it sounds like your honor is read, We would have a no shop.

 We wouldn't be able to talk to anybody unless someone proactively comes to us. We then have to disclose the terms of that bid to them. They have a certain amount of business days to evaluate it. We have to give them notice a certain amount of business days before we would enter into any binding documentation with the third party, and they have the right to match. Fiduciary out is actually more beneficial to TTAM than what Regeneron is insisting on in these procedures, because their fiduciary out says, if they match, we have to take not an option.

 So that's kind of what they expected to have had they won at the auction. Are they overspending? I mean, potentially. I think two things to that. One, if they wanted to avoid the issue and I'm trying to be delicate here because I really don't want this hearing to become about what happened at the auction.

 If the financial wherewithal had been there to bid higher at the auction, they would have been allowed to bid higher at the auction and not have had to back solve into any kind of procedures into an argument where now the competitive bidder is taking the position that they're prohibited from bidding and we, the debtors, have no path to get to competitive bidding because Regeneron won't participate given their views on the option. Is it possible they overspend? I think so. The debtors it's theoretically possible, but the debtors position would be they should put what they think is a fair value on the business in which they're willing to transact and that they can finance it. And if it's the winning bid, it's the winning bid.

 What happens, does that potentially permit Regeneron to underbid? Again, I would circle back to the point that it's possible that Regeneron would have paid more had TTAM paid more. But we know that the alternative sitting here today facing the debtors is do you want the current TTAM bid and the litigation from Regeneron about whether that's even a valid bid you can take? And even if you prevail in that litigation, the value you're creating for your stakeholders is capped? Or do you want a situation where TTAM is going to put its best foot forward for Regeneron to the extent they want to bid has to at least exceed it by $5,000,000 and we've hopefully created even more value from our for our stakeholders than where TTAM's current revised bid sits today.

 On whether the breakup fee is a deduct to the bid, That is one where I'd like to confer. Sure. Just to make sure all of the parties are aligned. I don't want to the debtors have a view, but I don't want to speak out of school as to and just make sure that the consultation parties are okay and verify what Regeneron's understanding of the bid is. On your question about the Eighth Circuit precedent, on the reasonable expectation of finality, I think and how the fiduciary outs potentially compare with one another.

 The debtors obviously have that we ran the auction appropriately and in accordance with your honors bidding procedure. The debtors also know that we have a fiduciary out in the Regeneron APA. That says what it says. We have a termination right if we believe that proceeding with the Regeneron APA is inconsistent with our fiduciary duties. And there is a covenant that says the debtors may continue to take steps to maximize the value of their estates, including, I'm paraphrasing the language, Your Honor, pursuing alternative restructuring strategies.

 That's the fiduciary out we negotiated with Regeneron. Regeneron's position is that fiduciary out well, I shouldn't put words in their mouth. I think what they will say is that fiduciary out applies to the debtors. Nothing in that fiduciary out excuses TTAM's compliance with the bidding procedures. And that is the issue they would litigate if we pivoted to take to terminate their APA and take the TTAM bid.

 They will tell you, and I think it's very clear from their papers, they participated in auction that had certain terms. Those terms included language that says qualified bidders will not submit bids after the auction and the debtors will not consider those bids. We don't necessarily agree with Regeneron about whether or not the debtors can take that TTM bid under that fiduciary out. But we don't want to have to litigate that issue if we don't have to. We don't want to put the $2.56 at risk because that's a great outcome for our stakeholders.

 And because they've consented to these procedures, we don't have to. And I think the flip side of that is, TTIM is now here making the arguments they're making, what were their reasonable expectations or what did they negotiate for under their APA if they were the winning bidder. And it's actually a better construct than what Regeneron is insisting on. The one thing I left out from my description of their fiduciary out previously, I just realized is that if we exercise the fiduciary out, we also would have to pay them a $5,000,000 effectively liquidation fee. And that fee was set and negotiated at a time when the TTAM bid was approximately $50,000,000 So that's a 10% liquidated damages tax on our fiduciary out under their APA, which they insisted on in our negotiations with them leading up into the auction.

 And at least as far as I'm aware, have not agreed to remove from their APA today. Now Regeneron did not negotiate for the same fiduciary out, that's true. But they relied on the bidding procedures, they have their view of the world and there's a litigation if we go down that road as well. So I think our point is Regeneron has its view of the bidding procedures and that TTAM is not permitted to bid. I think if you look at TTAM's APA and what they thought was fair to impose on the debtors had they won at the auction, well then look no further than what's in our final proposal procedures, where Regeneron believes that they validly wanted the auction and so do we.

 We don't dispute. And the debtors position is we ran a valid auction where Regeneron was. So for TTAM to say that what Regeneron is getting under these procedures is not is unreasonable on its face when they negotiated for something that is better in in their own APA strikes us as a little inconsistent for lack of a better word. And then I think the last point, Your Honor, if I didn't miss anything, although I know I owe you an answer on the breakup of EDOT and we'll talk about disputed facts. The synthetic backup bid increase in the deposit.

 I think Your Honor is well aware. The CPO is hard at work on his process preparing a report. The AGs are assessing the terms of the proposed transactions as are other regulators, both foreign and domestic. They will have a view, we assume or maybe not. Either way, it will be valuable information to the debtors as to whether there are relative merits from a consumer privacy, a consumer privacy law perspective or other regulatory perspective that they will raise at the sale objection on June 10.

 And that information and the potential objections we receive are going to impact the ability to get either of these transactions approved at the sale hearing. And the $250,000,000 plus deposit, it provides security in a world where the facts are we've gotten the TTAM proposal approved and then they breach. It doesn't if we but if we're facing litigation from Regeneron and we are or we lose the Regeneron bid in favor of the TTAM bid, the objection deadline passes and the regulators or the CPOs view, and this is purely hypothetical, your Honor, I don't think this is going to happen, is that you absolutely should not approve a transaction with TTAM and your Honor agrees, then we're left nowhere. And so I'm not standing in front of you telling you that that's not a constructive proposal, and we don't appreciate what TTAM is trying to do to enhance its bid. But it is not a perfect solve.

 And further, it doesn't do anything to preserve the competitive tension that we believe is so important to maximize the value at the end of the day for the stakeholders relative to what the final proposal procedures provide for. Okay. That's helpful. Any other I mean So, yeah, so we we set on the table for the moment, the extended disputed facts, and then you're going to check on the on the breakup fee. Yeah.

 On the extended disputed facts, I mean, part of me wants to confer with the litigators, part of me wants to hear from some of the other parties as to their responses to your questions because I think that will inform my answer. That's fair. At a minimum, I think there's a dispute about whether the debtors validly terminated the auction based on TTAM's financial wherewithal. I don't think that's a secret, based on the papers. But in terms of the other bid ask and what discovery may be needed or what would be litigated at the sale hearing, I would if it's okay with your honor, I'd like to reserve my answer until we've kind of gone around the horn and heard from the other parties.

 Sure. That makes sense. Okay. Any other questions for me? That's all I have at the moment, obviously, as things develop.

 Okay. I may think of more. The only other thing I would add before I would sit down, just a couple of points on the proposed form of order. The version we filed says that on the thirteenth, which is the day that we would announce the winner. Right now, the language just says we will file a notice of who the winning bidder is.

 We think for the benefit of disclosure, core parties and interest, we should obviously disclose who the winning bidder is, but we should disclose the term of the we should disclose the term the terms of the non winning bid as well. And this gets so I realized I didn't give you an answer to your question about the Regeneron consent versus the core quarter on the fiduciary out. The deal we cut is that the bidders will bid when they bid and we will make a decision that we make. But these procedures do not remove or impact either bidders right at the sale hearing to question that business judgment and to argue to Your Honor that their bid is in fact higher highest investment. And so the order on our ability to exercise our fiduciary out is really relevant in a world where Regeneron wants to test that our selection of TTAM as the winning bidder is a sound exercise of our business judgment and the TTAM bid is in fact the highest and best.

 If they don't want to bid or they don't contest whether it's highest and best, then they can just give us consent. Okay. And I'll hear from Regeneron directly on this. But if I approve the procedures in this motion, Regeneron is not walking away tomorrow. They may not bid anymore.

 They may contest whether TTAM has the highest and best bid, but they're not terminating the APA and walking away. That's right. And I think that that's another reason why it's drafted that way, because they have agreed as part of this, which goes to the objective of trying to protect the value we have today that until then the successful bid remains in effect, enforceable by the debtors. Okay. And really I think the consent is just in a world where they've said, TTAM bid more than we're willing to pay or the bid increment is high enough that we're not going to litigate whether your business judgment is correct.

 Right. And then finally, and this is we had this discussion yesterday with the U. S. Trustee and I believe the U. S.

 Trustee touched base with my co counsel Mr. Riske this morning. I just want to be clear for the court and parties in interest. We do not expect any material changes to terms of the APAs in connections with bids. It should really be about economics, closing certainty, the provisions that we would think are going to be very important to Professor Richards as the CPO, to the AGs around what's the framework around customer data and the privacy covenants, and I wouldn't expect any of those to change.

 In the tail risk case that it does, we would take the position that parties' ability to object to any such changes between the objection deadline and the sale hearing would be fully preserved to be raised at the sale. Okay. Makes sense. Okay. All right.

 So absent any other questions for me, I will see you at the podium for now. Okay. Why don't we hear from the committee next and then I'll hear from the two bidders and then figure out where to go from there. Thank you very much, Your Honor. Thanks, Mr.

 Hawkins. Good afternoon, your honor. Again, for the record, Jason Adams, Kelly Dryden, Warden, counsel for the committee. I'm not sure it's gonna be helpful if I necessarily address all of your your questions and how That's okay. You're you're on the same team as the debtors, I think.

 Well, I think I'm in the middle of three, different points, and I'm somewhere in the middle of all three of them. Okay. We agree with the debtors in in a lot of ways in terms request that really that they've requested, which is we want a value maximizing transaction. What they have put on the table is a path to more value. And I can tell you unequivocally that this committee wants more value, right?

 There's been certain allegations maybe we don't need to get into them today that the committee satisfied because we have $2.56 and that's more than enough for the unsecured creditors and so we have no interest in that. Your Honor, as you well know, the bar date has not passed. We're not even close to it yet. We're not close to the governmental bar date. There are substantial litigation claims out there that have alleged billions of dollars of damages.

 Value maximization is critical and it is our sole focus. So any process that we can institute today, whether it's the process that the debtors have proposed, it's a modified process that all of the parties here can agree to or something that your honor imposes, we're for it. The one caveat, we've made this clear to every party who's reached out to us, including especially the debtors is what we can't risk is losing value through the go forward process. We are at two fifty six right now. We have a backup bid at 156.

 We don't want to lose $100,000,000 of value. We don't want to lose $256,000,000 of value. So what's critically important for the committee is whatever is approved today, whether it be the current procedures or something that's modified, that both of these bidders are there as a backup bidder at the end of the day for all of the reasons that counsel just talked about. There are many contingencies with respect to this sale. Quite frankly, this is not your typical $3.63 bankruptcy sale where we're talking about some stores, some tangible assets.

 We are dealing with significantly larger issues in this Chapter 11 bankruptcy. We have the state AGs who are analyzing the transaction. We have Professor Richards who is taking a look at this and is going to prepare his report for this court's consideration. This is not just simply balls and strikes and we figure it out. There's going to be potential issues that are going to need to be resolved.

 And having two bidders who can close this transaction is critically important to maintaining and enhancing value. And so wherever your honor ultimately decides or again, hopefully, there's going to be a lot of other people who are going to get up here and then maybe we can all have a conversation and maybe we can all figure it out collectively. It worked yesterday. It did work yesterday. This is maybe more complex, more parties involved.

 I know you all are not referring to one another as my friend like they did yesterday. Is that should I read something into that? I I I listen. I your honor, I used to work for a Canadian law firm, and and so, the It's nice. It it's it's a different way of practicing.

 Yes, sir. And I and I would refer to many of the people people here who I've worked with before as my friends. Good to hear. It's good to hear. But hopefully, that that's an option that that after people get their positions out there, answer some of the questions that you've asked, maybe there's a conversation that can be had amongst multiple parties to get to something that that's consensually, is consensual for everybody.

 But if we can't and if your honor has to ultimately make a decision again, our position is let's have a process that will put new bidders in these bidders with new bids in place. Your Honor did raise questions about the chilling effects. We're in an imperfect situation right now. I think that there is that possibility of chilling effects in terms of, well, if TTAM has to put their best and final forward here, how do they know what number? And is it only $5,000,000 for Regeneron?

 We agree. Is there a chance that we're leaving potential value on the table? Absolutely. It's true. But we're putting a situation in place where we can get substantially more than $256,000,000 and that is a substantial victory for these estates and for all of the stakeholders.

 But we have to maintain the backup bidders. We cannot lose them given the significant uncertainty with respect to the sale approval and what's going to happen over the coming weeks. So that is our position. We hope that we can play arbiter between the parties today, going forward, however it's going to work, because we do want both of these parties getting. And we think it's important to do so.

 And obviously, if Regeneron will agree to modifications, if TTAM will agree to modifications, the debtors will agree to modifications, Consent is the best way to do this because what we also don't want is a contested sale hearing on these issues. We may have other issues that we need to deal with, that's fine. But on whether an auction was run correctly, how this process is run, we should resolve that today and we should be prepared at the sale hearing to deal with approval of the underlying sale transaction. I cannot speak to the disputed facts, and I won't go through all the issues. I would also reserve judgment because I do want to hear what all the other parties have to say.

 We were certainly not involved as a consultation party in every conversation that happened during three days of an auction between the debtors and the various bidders. So I can't speak to all of those. But I do think that the dispute facts are fairly limited. And so whether that's for purposes of today and getting to a resolution or ultimately for sale objections down the road, I do believe that the universe of dispute facts should be fairly minimal, should require they're certainly going to require some discovery if we're going down that road, but not substantial discovery. We've maintained in our papers and I know this is getting to the second issue that we'll get to later today on the scheduling, but the importance of keeping the schedule, we do find that extremely important here.

 This company loses money every single day. The assets potentially deteriorate, and so we'd like to get a resolution here today that will keep us on the timetable and the track, that we're on. Again, I know I'm venturing into the secondary issues for today. Right. But that's the committee's position.

 I'm certainly happy to answer any questions your Honor may have. Certainly reserve responses to the extent that there are other arguments raised today, but that's the Committee's position for purposes of this moment. Okay. Thank you. I didn't have anything in particular at the moment.

 Thank you, Your Honor. Appreciate it. Go ahead. Let's hear from Regeneron. Good afternoon, your honor.

 For the record, Emil Kleinhouse, Wachtell, Lipton, Rosen, and Katz. I represent Regeneron. I'm glad to be here. A very smart litigator once told me that if the judge opens up hearing with questions, you should answer the questions instead of following your script. So I'm You can do both.

 Okay. But if you get to the questions at some point, that way I I am gonna go through the questions to try to answer them directly. I may have additional points as well, but I'm gonna use your questions as a guide since I also it's also clear your honor has read the papers. I know my friend, mister Cripalani, will address the questions, so I'd like to address them too. Okay.

 Very good. Let me start with I'm just gonna go starting with number one. Are the facts disputed? We do not believe the facts are disputed on at least one or more extremely important points. And this important point really goes to the heart of Regeneron's position relating to this motion and the auction, which is that this auction was complete on about four weeks ago.

 And it is really fundamentally unfair and contrary to basic principles of finality and the sanctity of auctions to essentially declare a do over. But the particular undisputed set of facts or at least facts that we believe are undisputed is that at least on the face of the bid procedures as they existed at the auction and they exist today, TTAM and to some extent, the debtors, and I'll I'll get to that separately, have repeatedly violated the bid procedures. The bid procedures are utterly clear that parties such as TTJM cannot submit bids after the auction or seek to reopen the auction. Paragraph 15 says, each bid must acknowledge that it has complied and will continue to comply in all respects with these bidding procedures, including after the conclusion of any auction, not to submit a bid or seek to reopen the auction. The bidding procedures are also clear.

 This is in section k, auction the auction section. The debtors shall not consider any bids or overbids submitted after the conclusion of the auction, if any. And any such overbid shall be deemed untimely and shall under no circumstances constitute a qualified bid. And to state what may be obvious, the court order approving the bidding procedures required compliance with those terms. In paragraph four, the order says, the bidding procedures shall govern the submission receipt and analysis of all bids relating to the proposed sale of the company assets.

 Any party desiring to bid for all, substantially all or a portion of the company assets shall comply with the bidding procedures and this order. Now the submissions before the court, we believe, without any more evidence, I don't think witnesses are needed, and this is true of TTAM's own submission, readily support a finding that the provisions I referenced have been violated. There is no dispute that starting on the very day after the auction, May 17, TTAM has submitted multiple new bids and has been agitating to reopen the process, directly violating the requirement, quote, not to submit a bid or seek to reopen the auction, close quote. In the objection that was filed yesterday, t ten makes a number of arguments. They argue that the debtors made misjudgments during the auction process and that the debtors may be able to change the auction procedures or at least were able to before the auction closed.

 Whether they're right or not, and we don't think that they are, neither of those arguments has any bearing at all on whether TTAM violated the auction rules that were in place at the auction and are still in place today. And as for the debtors, the debtors under the bidding procedures were supposed to not consider any bids or overbids submitted after the conclusion of the auction. And not only have they actively evaluated the TTAM bid, but they've made clear that they wanna introduce a new bidding framework that allows for additional bids. And while the debtors point to their fiduciary out, that argument respectfully goes too far. First of all, the debtors have not actually exercised any fiduciary out.

 What they've really done is stop adhering to the rules so that they can determine whether they should exercise a fiduciary out. And a fiduciary out can't be a free floating license just to not regard the bid procedures instead of coming back to court. And moreover, and I know we've said this in our paper, so I'll be brief. Whatever rights the debtors have based on a fiduciary out, Regeneron, of course, has the rights that it has under the contract to terminate based on what the debtors do. And among the various provisions that we've cited in the APA, one that's relevant is 10 o one f one, which says that Regeneron can terminate if it is not the successful bidder or backup bidder at the auction, and those are defined terms.

 Now if the auction were reopened without Regeneron's consent, that is precisely the situation Regeneron would find itself in. Instead of being the successful bidder as it was at the conclusion of the auction, it would not have that status because the auction would be reopened and ongoing. And notwithstanding an argument that was made in TTEM's brief, it makes no sense whatsoever to say that weeks after the auction ended, at which under the bid procedures Regeneron was declared the successful bidder and Tietam, the backup bidder, that if there is some new auction, somehow Regeneron can be forced to be the backup bidder after spending weeks and having a team of 60 people and having all kinds of investment and having been the successful bidder. There's no basis whatsoever in bid procedures to transform the successful bidder into the backup bidder and impose an obligation on Regeneron having won the auction the first time around. So I got a little bit off, beyond the original question.

 But just to come back to the original question, we do believe that there are not materially disputed facts as to the conduct of parties since the auction ended and the violative nature of that conduct vis a vis the bid procedures. And I'll come back to why that matters. I think your Honor, I'm sure, can predict what I'll say, but I'll come back to why that matters in the context of the expectations of parties in the Food Barn question that your honor raised. So that's question one. The next question your honor asked, joint bids, and I'll be very brief, I agree with the debtor's counsel to mention Foodbarn, which will probably get some mentions today.

 It could not be further from the reasonable expectations of any party, let alone Regeneron, that not only would there be a process for the, TTM bidders who have raised these issues to raise another bid, but that parties who just chose to sit out the auction could come back now and bid afresh. That just seems totally unfair. And as your honor pointed out, I don't think TTAM has even suggested that, because, again, it would just be a complete complete departure from the settled expectations of the parties based on this now multi month extremely expensive process that your honor approved. So certainly Regeneron does not consent to joint bids. Question three, your honor, the bid chilling effect and what your honor called, potential inefficiencies.

 And I think your honor pointed out two potential inefficiencies. One would be it's possible TTAM will bid too much, to try to win, and I guess the inefficiency would be that the estate and its stakeholders would then do too well. Yeah. Only only an economist would call it inefficient. I wanna be clear.

 And TTM would TTM would call it inefficient. Understood. Everybody else in the room would be happy. I I I get that. Understood.

 I I took some law in economics in law school a long time back. So I think I, understand the, the meaning, of what your honor meant, the economic context. But getting away from economics to parties' duties and obligations, I think the debtor's duty is to maximize value. If there's an economic inefficiency that leads to additional value, that's I'm not sure the court should focus much on that. But I think more to the point in this particular context where we have the entire auction, the debtors based on business judgment, which we have heard nothing to suggest was somehow irrational or outside the scope of appropriate business judgment.

 They made the decision. The auction is done. Regeneron won. And Teton afterwards came knocking on the door and say, we wanna keep bidding. And rather than coming to court, they just decided to violate the bid procedures over and over again.

 I don't think that's a particular inefficiency that your honor should focus on much. I I mean, as to the second point that it's possible that if Regeneron decides to bid more, it could have bid more, if it didn't have the so called matching right. I mean, I come back on back to what's already happened here in terms of we went through the entire auction process. Regeneron bid I don't know how many rounds, but many rounds to get up to $256,000,000 some $200,000,000 higher than when the auction started. The idea that this procedure that's been worked out shouldn't be approved because Regeneron might not there could be some inefficiency of Regeneron not being retraded even more than it's being retraded so far, I don't think that's a particularly compelling point either.

 The breakup fee and the potential chilling effect, first of all, our understanding is that it gets paid out of the proceeds of TTAM if this process is approved and TTAM wins. Whatever those proceeds are, we get the $10,000,000 As for whether it has a chilling effect, it Regeneron is now being asked to be, I guess, the way we've termed it as an involuntary stalking horse. Where you have a voluntary stalking horse, courts around the country have viewed 3% or so breakup fees as justified for good economic and policy reasons despite the potential chilling effect because they keep the stalking horse invested and committed while the auction goes forward. What's happening here is Regeneron who won the auction and thought we had the winning bid such that we weren't a stalking horse at all, have been told by the debtors, we think you're committed. We want you to stay committed.

 Not only that, all the expenses, and there's a huge team of people at Regeneron working on integration, working on data privacy issues, all those expenses, you should just keep on incurring them as you would have if you were the the winning bidder. But you may not be the winning bidder after all. That's why it's an involuntary stalking horse. So if there's ever a clear a case for a break fee that's clear, it's this one. It's Regeneron has been put in a position where despite all of its expectations over this this week since it won the auction, it's now being required if these procedures are approved to serve as a stalking horse when that was never its intent.

 And it's only fair and it's perfectly justified that all the expenses that are being incurred on the assumption, the understanding that Regeneron would be the winning bidder, that there's some something to mitigate those expenses. It turns out that those expectations are dashed. Question five, and I think there's a couple of parts to question five. One was relating to the matching right, and I agree with the debtors counsel. The fact that the the TTAM APA has a matching right, I mean, what that reflects is that this is not something new and extremely bespoke or anything like that.

 And we also said in a circuit case that it's worth that approved a matching right. This is something that where you have someone who wins an auction or is it in or ahead. We we won the auction, but this also gets, approved for people who are ahead. It's part of the protections that can be granted. And the fact that it's in TTAM's contract or something similar as TTAM's contract is certainly a relevant point.

 As to the eighth Circuit's case law on finality, your honor mentioned the food barn case. That's, of course, the leading case, and we we did address it in our brief. I mean, the the money quote in that case is that important notions of finality and regularity in judicial auctions are appeased if the court acts consistently with the rules by which the particular sale is conducted and in compliance with the bidders' reasonable expectations. Two parts of that. Consistently with the rules by which the particular sale is conducted.

 That has not happened. We have the auction. The bid procedure said in words of one syllable, if you don't win the auction, you can't bid anymore. The debtors agreed we're not gonna consider additional bids after the auction. Those were the finality principles that induced Regeneron to bid because Regeneron would not have bid in this auction against the consummate insider, the former CEO who's bid over and over and again for this company, had anybody told Regeneron when if if you bid up and up and up at this auction, fervent bidding.

 That's, I think, the words in food barn. Fervent bidding. If you engage in fervent bidding, when the fervent bidding is done, the former CEO and board member, notwithstanding the clearest possible rules that you're not allowed to bid anymore, can just keep bidding. And then two weeks later, we're all gonna be in court talking about what's the exactly right process under which that person's ability to continue bidding should be respected. I have the committee saying maybe we'll we'll broke or something.

 You know, Hunter, the the auction was over. The rules were clear, and the TTAM parties did what they did. That's consistently with the rules by which the particular sale is conducted. And then in compliance with the bidders' reasonable expectations, it's the flip side. Reasonable expectations are set by the rules.

 So if you have rules that say the auction is done when it's done, you don't expect those rules just to be violated without kinda with impunity and without any judicial intervention, which is what's happened here. And the food barn facts are interesting because what happened there is the court actually did eventually let in the bidder, but the court did it because there was a lack of applicable rules and guidelines in that auction. It was more loosey goosey. People just, I think, came to court and stated their bids. Yeah.

 Let let me comment on, many of the eight circuit authorities seem to involve the judge taking over and conducting the auction in the courtroom, and we're not gonna be doing that. Yeah. Exactly, your honor. So that's what happened in Foodbarn. The court said, look.

 If people are just showing up in court and raising their hands with paddles or whatever it is, And, you know, somebody doesn't raise their paddle on time. Really? They can't raise their hand after the judge started ruling and say, hold on. Actually, I changed my mind. That is the opposite of this case.

 This is a mega case with a standard set of bid procedures, not a lack of applicable rules and guidelines. And then the other thing in that was Foodbar noted was that the late bidder quote obeyed what it perceived to be the rules of the sale. I'm sounding like a broken record, but that did not happen here. The late bidder here took the opposite approach. They just kept bidding even though the rules said they couldn't.

 So I think Foodbarn is highly probative in this situation as to what the right next steps are. On the question of does Regeneron, consent to the the process, and and, specifically, is Regeneron gonna walk away tomorrow if the court approves what the debtors have proposed? The answer is no. We're not walking away tomorrow. I mean, what happened here is you've heard all of my points as to why Regeneron feels like it's been wronged here, and that that's a deeply held view that finality principles have not been respected here.

 But instead of letting this devolve into some major litigation, we negotiated with the debtors, and the compromise that resulted is reflected in those procedures. So no walking away tomorrow. We do reserve our right as debtors counsel suggested to argue later that debtors have not exercised their fiduciary duty in terms of the highest and best bid, but we can also agree right away they did, in which case the backup bid that we've agreed to goes down to $151,000,000 You're you're talking about bids that haven't been received and evaluated yet in that Bids by TTAM. Yes. Okay.

 Future bids by TTAM that we don't know what those are. Okay. Well, and my main question, this is mainly drawn by something that the TTAM was arguing with is, the debtors are offering your client some incentives. And I just wanted to make sure that your client has accepted those incentives as the price for remaining in the process. We have, and if I haven't made this clear already, to the extent the incentives and the package is not approved, which is up to your honor, our client's position is the court should enforce exercise an inherent authority to enforce its rules and respect the finality auction.

 But we walk we're willing to compromise on the particular incentives as your honor called them, but the agreement that was made, subject to the reservation of rights I noted, which is if the there are bids from TTAM if their last and final bid, we don't believe the debtors as fiduciaries could accept as the higher bid. We could object to that, but, you know, the debtors no doubt will have a basis that they have to, to go forward and would contest that objection. So that that's my answer to six. K. I think the number seven was primarily directed at the debtors.

 I think debtors have explained why the synthetic protection or the deposit in the debtor's view is not a good enough reason to jettison the process that we had. Right. Right. See if I have anything else that I need to cover now, your honor. Yeah.

 The case I I mentioned earlier is Henry Winsco. That's the quid case on on matching rights. Let's look. Yeah. Mhmm.

 Right. Your honor, reserving the right to speak further, I've tried to address your seven questions and we welcome any additional questions. I appreciate it. Thank you. Thank you.

 TTAM, Mr. Kirpalani. Good afternoon, Your Honor. Sushil Kirpalani of QuinteManuel on behalf of TTAM Research Institute, California nonprofit, as well as Anne Wojcicki and the Anne Wojcicki Foundation. First, it's a pleasure to meet you.

 I've never been in your courtroom before. Never Welcome. Saint Louis before. Welcome to St. Louis.

 My niece just graduated from WashU, and I finally made it down. Hopefully, I'll get to see her later. Very good. Very good. Bruno, let me try to address your questions as well.

 I've got an overarching theme of my own, just to keep in the back of your mind, which is bad behavior seems to be rewarded by the debtors and my client hasn't done anything to commit any bad behavior. And so we wound up being on the short end of the stick at the end of this competitive bidding process. I learned today sitting, you know, a few feet from here that behind the scenes, Regeneron was disparaging my clients, telling the debtors that they're favoring an insider and trying to twist the debtor into knots about how they're going to sue over a flawed auction process unless they hurry up and shut down this auction. I wasn't aware of that kind of pressure. I've been involved in lots of auctions in my career.

 I've never before heard of a bidder trying to pressure the debtor to hurry up and conclude it. That's really not appropriate. And so if that happened, I think that would be pretty serious for the court to consider. Where my friend, mister Kleinhaus, started, I feel in trying to answer your honor's questions about whether the facts are disputed, he went far beyond saying yes or no and gave instead a one-sided rendition of the facts and kind of assumed the answer. The purpose of today's hearing, as my friends from Paul Weiss said, is not to determine whether or not the auction was properly concluded.

 That's the subject of a dispute, factual dispute and a legal dispute, which your honor is gonna have to rule on. But all of the arguments or responses to your honor's questions from mister Kleinhaus assumes that their position is correct, that the auction was concluded. And in light of that, look at the bid procedures, and in light of that, look at how TTAM is violating a court order. So I don't think that's properly responsive to your honor's questions. It's argument, but I'm gonna try not to do likewise.

 But I just wanted to table set with that. To the to what extent are the facts really disputed? I mean, I could all my numbering right. The post notes get jumbled. I see you got the post notes.

 That's that's certainly fine. Kind of old school. But, to what extent are the facts really disputed? We actually spoke with, mister Hopkins and mister Claren Claren from Paul Weiss before the hearing to say, you know, I've got demonstratives that talk about, you know, the fourteen and a half hour adjournment that mister Kleinhauser's client was afforded in order to go get authority to bid more compared with the thirty minute of adjournment that my client was given before the auction shutdown. And I can show you.

 It looks really nice. But I said we're not gonna go through a disputed, evidentiary hearing about what really happened and what should come away from that. I thought the focus of today, which is why we tried to modulate our position a little bit in our final papers yesterday, is I'm glad we are where we are. The debtors have done a good job of exercising their fiduciary duties by coming to your honor, by saying we've got a interesting situation here and it's a good one because we've got competitive tension and people are willing to continue bidding, and the results so far are better than anyone expected. Now we need help from your honor to set the proper process, and here's our proposal.

 That's how I read the debtor's motion, and I applaud it. And what we have said in our papers is it's not a great process, what they've put forward. And the only excuse that we have heard from anybody about why this process is the only process is because Regeneron is otherwise gonna do bad things. I don't mean bad in the sense they don't have the right. I just meant behaving in a way that's not value maximizing.

 It's behaving in a way that's designed to chill better. Oh, you know, they have the right to do that. Economic behavior is something that, you know, folks study. But I'm saying very clearly that doesn't make the process one that your honor should approve. We think there are multiple other processes that your honor can approve, and we put two of them.

 One of them comes from the debtors that independently formulated one in our papers. But coming back to the questions Tornado? Was it something I said? Warning. Guess it's warning.

 Alright. We have a tornado warning. We're gonna have to call a recess. Please stay away from the windows. We have experience around here with the tornadoes recently, not to be trifled with.

 To resume. All right. We're off the record. We're off the record, yes. Thank you.

 Your Honor, we are back on the record. Thank you. A little excitement there. For those new to tornado warnings, we often find that not much actually happens, but about three weeks ago, one came through and damaged about 5,000 houses and took out 3,000 trees in one park alone or something. So we we take them seriously.

 Yeah. For sure. You should. Your honor, and thanks for the for being cautious with everyone. As a native New Yorker, I never thought I'd get to say there's no place like home, but, you know, it seems like the good time for that.

 Yes. Yes. Fair enough. But thank you for the for the time. Okay.

 I think we were just I was trying to address your honor's questions. And and as I started with discussing whether the facts are really in dispute or not and whether I felt that Regeneron was taking, you know, the liberty of giving their version of the facts and saying, let's let's assume those are all correct. Then the auction had concluded, and therefore, now everything that my client has been doing has been violating a court order. None of that is anything but argument. Obviously, I think the whole purpose that the debtors filed this motion was to try to inform the court that we're at an inflection point where the souffle is not done.

 We need, your honor, to enter some process, and I think that's the right thing to do as a fiduciary. And as I said before the break, I applaud that effort. The only problem is the proposal that they you know, obviously, you heard mister mister Kleinhouse say that they're supportive of it. They're supportive of it because they negotiated it with the debtor, what the new bidding procedures would be. That's why they're one-sided.

 They're not one-sided by accident. They're one-sided with a last look for Regeneron. They're one-sided with a $10,000,000 break of fever for Regeneron. There is absolutely no level playing field or symmetry in the proposal. And so, of course, it's easier for them to say they accept it.

 One point on the eighth circuit, Food Barn decision, just very briefly, in Food Barn, the court permitted a bidder to come back and bid because the record showed that they weren't just laying in the weeds, biding their time, I think, is the phrase from the decision, and then coming after the auction closed. Your honor has copies of the transcript. And on the third page, you'll see exactly how the how the the auction ended, from the transcript. And my colleagues at Skadden made it very clear on the record that they want to continue bidding on behalf of the TTAM parties, so there could be no and they're gonna object to the auction being abruptly terminated. So there certainly could be no reasonable expectation on the part of Regeneron that the auction was concluded, which makes, you know, their narrative, you know, all the more puzzling.

 But then beyond that, you know, the Wachtell Lipton firm, as we know, all of us of this generation grew up, you know, admiring that firm and their expertise in m and a and in particular distressed m and a. In 02/2013, the firm published a lengthy primer on distressed m and a. And in it, they they they explained the food barn decision and generally note that late offers may be allowed prior to the entry of a sale order. It's the sale order that creates the finality. It's not the auction because things do happen, and bidders are always at risk that things may change until your honor or another judge hits the gavel.

 And that is commonplace in chapter 11. This auction was not commonplace. Let me answer your honor's questions. But but on the question of disputed facts, we agreed with Paul Weiss that whatever disputes we have with the facts, we don't need to air them today. The goal today is to get some assistance from the court on what's the right process going forward.

 And we hope your honor, and I know your honor because you read the paper so carefully, is going to give some insights and some guidance in that regard. Second question that your honor asked was about the joint bidding gambit and whether, you know, know, TTAM, you know, really felt that it was necessary to have that. The answer is, of course, no. Our our latest proposal, which your honor knows about, which is materially higher than Regeneron's, which is backed by a good faith deposit greater than $250,000,000 doesn't require any third party money that we don't already have committed. So it would have been a nice to have for the future if, you know, maximizing value was the only goal.

 But that brings me back to the case law. What the case law actually says, and mister Klenos did a very nice job of quoting one half of it, is it's a balance. Finality must be balanced against the goal of every bankruptcy, which is to maximize value. And we agree with that. We agree with that.

 We don't think you can only look at one part of it. And your honor is hearing where we are right now as the inflection point because there's more money on the table that the debtor should not be compelled to leave behind. And what's the best process going forward? I wanna come back to your third question on bid chilling at the end, but I'm gonna talk about the bid chilling. I just quickly wanna run through the others.

 The reasonable expectations of the parties issue, your honor asked about section 7.19 b and I think c of, my client's, asset purchase agreement, the matching right and liquidated damages was referenced by mister Hopkins. Let me make this very simple. We enter into those agreements as part of a negotiation to have whatever ability we have. There's no reasonable expectation that those provisions are binding until your honor enters an order that approves that transaction. So it's like any when your honor is in private practice and a client calls to say, I have a deal with the debtor.

 Am I protected? The answer is no. Not until the court approves it. You don't have any protection. So it's worth whatever it's worth.

 To make it even simpler, my client is willing to walk from this $5,000,000 liquidated damages provision under its current value maximizing bid or any future bids. There shouldn't be these types of breakup fees or liquidated damages, not at this stage of the competitive process. That was very early when the bidding was in very small increments and very small dollars, and we were being used as a stocking horse, at that time. We all know that it's all subject to court approval. We talked about whether Regeneron would be agreeing to the procedures that they negotiated.

 You know, of course, they did that. They didn't negotiate it with us. And that brings me to number six I mean, to to your number three, which is the bid showing. You know, I started my presentation by talking about, you know, the bad behavior gets rewarded, or it seems to be getting rewarded. It's not rewarded until your honor says so.

 They've all assumed that TTAM is going to be a willing participant in this one-sided, lopsided, you know, last look for them, 10,000,000 for them, nothing for TTAM process, that's a big assumption to make, your honor. My client hasn't been asked for its consent to this procedure. That in itself demonstrates the asymmetry. But if what my friend, mister Adams, for the creditors committee said is the real goal to increase competitive tension, don't they need to know for sure that what they have proposed works for both sides? Otherwise, we could have a situation where they've set up this great procedure, and even the current value maximizing bid is no longer on the table because my client's not interested in participating in that.

 Well, why wouldn't your client participate? Why wouldn't we? Why wouldn't you? Because the process that they're asking to be approved gives Regeneron a last look and a breakup fee if they choose to do nothing. If all they do is literally nothing and we are gonna participate and just put in our existing offer today, stockholders, including my client, loses $10,000,000 from a breakup fee.

 It's an asymmetrical unfair process. Why should we participate in an in an unfair process? We should be participating in a proper auction. And if there is a proper auction, like I said, there's no liquidated damages that we're requiring. Our bid is the current highest.

 They can go. We can go. And we can keep going around until it's resolved for the highest. And we're putting our money where our mouth is because we're protecting the estate's downside, which was your sixth question or your sixth point, by putting into escrow more than $250,000,000 in the event that we breach and don't close on the transaction. And just Okay.

 But but help help me out here. Let's let's assume for the sake of this discussion that I approve the revised procedures. Your clients' choices are participate and maybe get the company, although maybe $10,000,000 comes out of that and goes to Regeneron instead of to unsecured shareholders, or not participate, in which case either Regeneron gets it at $2.56 or you're litigating something and trying to prevent that. Is is that the fundamental choice? I think that's the fundamental choice.

 Okay. And why and why choose option b? I think to choose option b would simply be if if the goal here is they're saying we have to create competitive tension, and what we're seeing is that the party that behaves by threatening that they won't participate is the one that gets things, you're actually creating an economic incentive for my client to say I'm gonna do what they're doing. Looks like, you know, we're trying to be constructive in trying to accept the proposal of each side submitting sealed bids, but nobody gets a leg up over the other. And if instead, by by offering to agree to that, we get, no.

 We're actually gonna do something that is unfair to you and fair to the other side. Everyone's just assuming that that's a process that we're gonna willingly participate in. And I think if the goal of these procedures are to create competitive tension, that's a very big assumption to be making. If the procedure should be set up in a way that maximizes competitive tension, that's what mister Hopkins said, that's what my friend mister Adams said. How is it that that's maximizing competitive tension when they've never gotten the consent from all bidders to participate in that process?

 They're just assuming it. I agree with you that they are assuming. I'm I'm struggling to figure out why that's a bad assumption for them to make. I mean, your your client could decide to take his ball and go home. Her, I guess.

 Her ball her her ball and go home. And where does that leave you? Not with anything particularly good, it seems to me. But I I I understand you're not willing to commit to participate and nor I I I I can't make you, and and I wouldn't, I I wouldn't expect you to commit to participate. But, the debtors and the consultation parties are assuming that your client will, and I'm not sure if that's an unreasonable assumption for them to make.

 They have to exercise some kind of business judgment here. But isn't isn't your honor the question, what is the assumption they're making on both sides? It seems to me what they're doing is they're going they're assuming that Regeneron won't participate despite announcing to the world that they're the winning bidder of this really important company, which would suit their big pharma, you know, platform very well, that they're not gonna participate anymore. And we haven't really heard that. What we heard was the debtor's special committee apparently struggling over, I guess, that thirty minute period to decide what should we do in this difficult scenario where my client asks for a reasonable adjournment to continue providing the diligence information that was being requested or that was needed.

 And what they're saying is because of that risk that Regeneron is going to walk, we're going to have to come up with one-sided procedures that favor Regeneron. But when your honor asked mister Kleinhouse a few minutes ago whether his client's gonna walk, what I heard maybe I didn't hear the whole story. What I heard is they're not walking tomorrow, And if the court doesn't enter the order that they negotiated with the debtor, then we're gonna hear more from them in objecting to a sale hearing that the bid procedures were not followed. I thought he said something different than that. I thought he said, if I do approve the procedures, they're not walking tomorrow.

 They are on board with the procedures. Sure. Like, he definitely said that. You said that. Okay.

 But I thought the additional thing we can ask him, you know, what his client's position is, but but the additional thing he said was that they're actually not walking. What they're doing is they're gonna be objecting that the bid procedures order should be strictly enforced, that that, in fact, the auction did close because in their mind, it closed, and that it was properly closed because in their mind it was properly closed as opposed to what we believe, which is the bid procedures order ensured bidders that they would have a reasonable opportunity to bid. And what's reasonable depends on the circumstances. That's why he's gonna argue if I don't approve the motion. What is what he's what he's reserv what he's reserving if I do approve the motion is two more bids come in, which none of us have seen yet.

 Well, you you have may have an idea what your client would do, but I I don't know. There are two bids, and the debtor's gonna have to choose between them. And Regeneron is reserving the right to object to the business judgment involved in the choice between those two. That's what I understood Regeneron to be reserving if I approve the motion. And if but but the point I'm asking is if you don't approve the motion If I don't approve the motion Then I thought what he said is he's still not walking.

 And what's happening is he's gonna object at the sale hearing that why do the debtors pick a higher offer that my client would have put in? That's what I thought I heard. And I think that's a pretty important fact. If the court is being told that the debtors believe that Regeneron will walk, and on that basis, we have to do this one-sided proposal, I'm not sure your honor has been convinced yet, but that's not the point. The point is it's a pretty big important fact if, actually, Regeneron is not walking, and what they're doing is reserving their rights to argue that the bid procedures order must be enforced the way they read them, the auction must be considered closed the way they think it was, and that they're had they have a binding agreement that can be enforced against my client coming in with a higher offer.

 I I do think he was arguing that that they get I think their argument, if I don't approve this, is they ought to get it at $2.56. Correct. And so then, your honor, we'll have at the sale hearing, you already know what our current bid is versus their bid. I don't see the estate losing in any of that scenarios. I don't understand what the downside risk then is that we need to have, you know, this one-sided proposal with a last look for them, which is unfair to any bidder.

 It's not that we wouldn't want to pay as much as we want. That's not the issue. The debtor should be trying to get as much as they want from us. It's that it's an unfair process which prejudices us from wanting to even participate in that type of a process. That's my concern.

 That's what I'm trying to express is the concern to answer your honor's questions about does it chill bidding? It chills bidding because at some point, this process is so loaded in favor of the other party. Why should we do that? Why not just object to the sale? Just like they would be objecting to the sale.

 And we'll put forward our money. Your honor, they'll put forward their money, and we'll go back to the eighth circuit's overall overarching, edict for all of us, which is the whole goal of an auction and a bankruptcy sale is to maximize value, and everyone will have their money with their price. Okay. Well, I'll be interested to hear the response of debtors in the committee to to that scenario. Please continue.

 Yeah. I think the what was the number the synthetic backup bid. Yeah. Number six. The synthetic backup bid, your honor asked about that.

 We haven't really heard what it is that creates a continuing risk if, as we know and as as your honor knows and as we heard the debtors state at the outset, they're now satisfied about the financial wherewithal to support that bid. It is materially higher than the bid they have today. So given that those are the that's the state of the world today, and my client's willing to put up more than $250,000,000 in a good faith deposit, we didn't talk about, you know, tail closing risk or conditions. But the reality is, and we can go through this if it's in dispute. I don't think it's in dispute.

 Our conditions to closing are less strict, less problematic than Regeneron's because we don't have Hart Scott Rodino issues. There's no condition that there needs to be antitrust approvals. And, again, I don't think this is in dispute, but it's not stipulated either, but we can talk about it. We're prepared to close very quickly. It wasn't us that put in an outside date of September in the APAs.

 That came that request came from the debtors. We were contemplating closing, you know, earlier this summer. So whatever conditions or concerns there may be with the bird in the hand now there's two birds in the hand. One of them just happens to be bigger, and it's our clients. But the the big bird in the hand could be accepted.

 There's a good faith deposit that's on the table. This requires a dance partner here and the debtors, and there is no downside risk. So I'm just a little confused why So what I heard from the debtors is that although they don't know because the privacy investigation is ongoing, your client may present a different privacy profile than Regeneron. And so having effectively two bids from your client rather than one bid from your client and one bid from Regeneron may present additional privacy risks privacy related risk, closing risk. You know what I mean?

 All all I will say to that, your honor, is Regeneron has the same privacy ombudsman consumer privacy ombudsman process that our client has. Everybody's been working around the clock. I'm not sure if it's 60 or 50 professionals helping our side. But in any event, everyone's working to try to answer the the consumer privacy ombudsman's questions. I think we're probably both in the same process.

 We're gonna know before the sale hearing what the consumer privacy ombudsman's, conclusions are. It's not lost on anyone that my client is the existing owner of the company and would be the future owner of the company. Also, my client's a non gonna acquire this through a nonprofit. We're not big pharma. I would think that the privacy concerns for us should be more streamlined and simpler, especially because my client's been down that road for for years since creating this company.

 But now I'm advocating. Just just in terms of objectively responding to your question, there's no difference between the tail risk of the consumer privacy ombudsman signing off on Regeneron as a buyer than there is for the consumer privacy ombudsman signing off on my client my clients as the buyer. So if the whole goal is well, we just like to have both of you in in the process until that deadline passes, that's currently the status quo. We're not insisting that the the debtors, you know, turn away the, the Regeneron existing bid. They have our bid.

 We're just opposing this new bid procedure. They have our bid. It's higher. They have our offer to put in a good good faith deposit. That's there.

 And your honor is gonna hear the sale hearing in, what, twelve days or eleven days. It's June 7 Seventeenth. Seventeenth. Yeah. Seventeenth.

 So all we're talking about is we're in the seventh inning of this ballgame, and suddenly the debtor says, okay. We're gonna adopt new bidding procedures, and it's gonna favor one of the last bidders, you know, the two highest bidders. It's gonna really favor them. Because not only will they get a breakup fee mid swing, but they're also gonna get the last look. I've just never seen this in in my entire career, and I've talked to lots of people in preparation for today, and I would like to ask this witness if he ever gets up there.

 Have we ever seen a situation like this where a breakup fee is going to be given to a bidder in the face of an already existing higher bid from someone else. That's literally what the debtors are asking the court to approve. And so we, you know, we we do oppose it. And I was just trying to address your honest questions about bid chilling and things of that nature. It is it is balanced.

 It can't just be all one-sided. Oh, your side has behaved well, so, therefore, we're going to impose these harsh conditions on you. This side is threatening to sue us, so, therefore, we're gonna give them something. I don't think that should be condoned. Understood.

 That's helpful. Thank you. Alright. Anyone else in the courtroom wish to be heard at this preliminary stage recognizing we haven't introduced any evidence yet? Mr.

 Schlotzauer? Joe Schlotzauer on behalf of the US trustee, your honor. I'm gonna confine my comments mainly to some of the interests and the principles that I think should guide whatever solution we come up with. I'm not necessarily going to take a specific position on factual issues, or take particular positions on how any opening, reopening of bidding should be conducted. But what I will say is that The U.

 S. Trustee has a strong interest in a prompt and value maximizing sale, as other people have mentioned. We support that as well. I would say that our main concerns lie, not necessarily with how bidding may be reopened, but with the timeline of that process. Because as you know, the CPO's report is due seven days prior to the sale hearing.

 And under some of the processes that we're discussing now, the winning bid and the final APA would not come in until after the report is due, which is creating a lot of timing constraint up leading up to the sale hearing. We have been reassured somewhat by the debtors who have said they don't intend to change the material terms of the APAs. And we still have the same two bidders that we had prior to today. Whatever we do today, it's the same two bidders essentially if we don't open it up to any third parties or or joint bids. But, provided that material terms, especially those regarding privacy don't change, then, you know and I'll let mister Richard speak for himself.

 But it's possible he could get his job done in that time. I I can't speak for him, of course. But but what I will say is whatever we decide on today and the court approves, I think that there are five goals or interests that should be served, by that process. And the first one is that competition should be preserved without favoring any particular bidder. Second, that a backup bid to protect the estate is preferred.

 Third, that the CTO and stakeholders, including the state's other regulatory agencies, have a meaningful opportunity to evaluate any final terms of a sale, especially privacy protections. Fourth, that litigation risks be minimized, particularly the termination of an APA or the risk of an appeal, which leads me to the fifth goal that I think that we should aim for and that's maintaining momentum toward a sale. Any of the side litigation over what happened with the bidding threatens to delay that, and cost the estate money. So, those would be my comments, and I'm speaking more in terms of interest and goals than particular positions. And I hope that the short window, the short period of time we had away from the court gave the parties some time to hopefully make progress toward resolution.

 All right. Thank you. Thank you. Go ahead. Just quickly, really very much in line with what the US Trustee, just stated, Gaana.

 But with regards to the the time line, understanding that, they are the same two bidders that were there previously. However, our focus had been on the winning bid up to this point in terms of our review, and the time line was quite tight, even with that focus being on the primary bidder. And so I do think that keeping the same objection date of the tenth, is is gonna be it's gonna place a hardship on the states in order to provide their objections meaningfully and potentially have to provide additional objections, once the final terms and the final bid is approved if we follow the schedule. It specifically says in there to keep the June 10 date. So we would ask that that be moved forward, in respect with respect to, a new bidding procedure.

 Again, as the trustee said, we obviously don't have a strong view on what happened with regards to the auction process or what the new procedures will look like going forward. But do you think that it is required that there's time for us to review and evaluate any new bid and new sale agreement that may come out of that process. All right. Thank you. Thank you, Johanna.

 Robert Stark from Brown Rudnick on behalf of the ad hoc committee. We didn't get the pro hoc VJ in time. You're you're fine. Thank you. Please And I and I'm gonna be very, very brief.

 I I actually did come here from New York with a really long speech, but I've tossed it. And you know every now and then you sit in the gallery and you get to listen to an art movie, and you're like fascinated by it. And what the preconceived notions of coming in, at least mine, and where it is going now is kind of an interesting moment that we're having here. Maybe it's just me, but maybe your honor is sharing some of this with me. Because what I'm observing is sort of an interesting situation with a company that didn't have any cash flow.

 It's like a technology company that was still in development. So we don't have earnings to be able to ascertain its value. Stuck in this bidding war, so our extrinsic or even internalized concepts of valuation are gonna be driven entirely by two bidders who clearly are still in the middle of bidding. This auction's not over. That's, like, patently obvious from sitting back there on the gallery.

 Right? And what is going on? What am I observing? Are the two bidders are warring over procedures to kind of advantage, non advantage, what have you in the next round. And all of it is untethered to any of our jurisprudence.

 Right? I've been doing this for a while. I know your honor has to, and I've spoken to a lot of people. Never before have I seen, let alone heard of, bid procedures and and stalking horse bids in the middle of the auction. Now I grant you there are rules, and they were put in an order, and that's important.

 But I was always taught the old saw being the auction's never over until your honor strikes the gavel on the table. And that may be that at some point, the rules become subordinated to somebody who comes in with a wheelbarrow full of cash on top of the last bid, because that's what it means in court to have the judge determining, as opposed to debt or through business judgment, what is the highest industrialization of the asset for all stakeholders. So our jurisprudence kinda doesn't answer the question. Our law doesn't answer the question. What do you do when you have two bidders in the middle of a bidding contest?

 And, like, in all seriousness, in all candor, they did a great job. And they're in a and they're stuck. Because both sides really, really well advised are threatening litigation either way, threatening to pull either way, and what are we supposed to do? I I don't agree with my friend who represents the creditors committee in committee in one part. Everything else I agree, I thought I could have adopted everything he said.

 I don't believe that the very small amount of claims is gonna be this astronomical number. I think the the unsecured claims in this case are going to be small in the end. And a lot of this value is for shareholders, and that's for a different day, and I appreciate that. But I'm sitting here watching this, fascinated by the arguments on both sides. Because what does a judge do?

 We're in the middle of an auction. So what does a judge normally do? Let's hear the evidence. So I actually rose only to preserve my point later on after I hear the evidence and hear the colloquy further. Hear both sides commit what they are and are not going to do because it's been really kind of interesting.

 They've all said we might walk away if the bid procedures that have been proposed are not approved, or we might bid even if they aren't. No one's willing to actually provide data by which we're supposed to deal with this issue. I'm fascinated by it. I'm gonna sit there with a with a platform because I wanna hear what the witness has to say because I don't know. All I know is that we want to get the most value possible, and us doing game theory here about what somebody might do in the next round of bidding is something that we in law are not really that good at doing, generally speaking.

 And that certainly isn't what the requirements are for your honor to rule on a motion such as this, as strange and aberrant as it may be. I don't know if your honor has any questions. I didn't really say anything, but I just I wanted to preserve my right saying, like, this is hard, and let's hear what they have to say and let me come back. Sure. Appreciate it, mister Stark.

 Thank you. Alright. Anyone else in the courtroom before we get to the evidence? Anyone on the Webex? Yes.

 Yes, Your Honor. Can you hear me? This is Layla Milligan. Yes. Thank you, hon.

 Leila Mulligan, along with my colleague, Rene Desai with the Texas attorney general's office of doing on behalf of the state of Texas. I want to address a couple of things that I think have been glossed over by the parties that prevent the the the bar. And I do understand and respect the financial aspect of what is happening and the dispute regarding how the auction occurred. We were not included in the auction and actually told we could not even listen in. So, pursuant to the billing procedures order.

 So I don't have any ability to opine on that part of this. But what I wanna do is look at the wording and the actual words that are in motion and the order that were filed by the debtor. One is the debtors are not changing the bill. I'm sorry. There's still objection deadline for parties on June 10, which is Tuesday.

 TTM, I'm gonna ask this call group having spam has until June 11 at 5PM to submit their bid. The general one has until June 12 at 5PM. It's in the fair bid. And notice will be filed by the debtors at 11:59PM, so that's the midnight Friday night. And the hearing on the cell motion is Tuesday morning at 9AM.

 So effectively, so let me let me say that in the terms of the motion and the order, the revised procedure does not allow any objection by any party to the revised bid and asset purchase agreement at all unless we're only objecting to the debtors business judgment doing the higher from that bid which we won't know because the entire process is confidential. So the debtors are gonna file a notice with one of these debtors with an APA that they are saying in their pleading that can be changed everything can be changed and modified and rendered in the asset person's agreement except for the definition of acquired asset. That doesn't lend any comfort to the the regulators or should to the consumers because they can change the treatment of those defined acquired assets in any way, shape, or form they want with no check and no ability to of any party to object to revised terms. This is important for due process constitutional law issues. Right?

 But the other issue that we have is that the second bidder in this case, CTAM, is led by the former CEO and a current board member of the debtor And there are potentially possibilities of both of these parties but especially someone who may be liable, and I'm not saying that they are, but may be liable under chapter five causes of action to be able to change the APA completely and wipe away any liability that she has or any other director or officer that's involved without any notice, without any due process, or ability to of anyone to object. And then it's it's fundamentally inappropriate that the debtors are asking. Now the way this is impostured, I do agree with USFC and, the gentleman on behalf of the committee. It does not seem to be bound or based on anything. There was a final bidding procedures order entered on March 28 of this case after a first day hearing, which is unusual that a final bidding procedure is ordered and it is a first a motion that it was.

 The debtors have complied with it, as far as who is allowed to participate, what the confidentiality rules are. But, what's being asked now is either to reopen the auction, which is not allowed in the bank's fee reward, or potentially to pay a breakup fee, which is specifically disallowed in the final bidding procedures order or they're attempting to get the court to approve a settlement with Regeneron to pay $10,000,000 for their trouble which is a a section, of the procedural ninety nineteen motion. None of these have been procedurally appropriate. Understanding the time crunch that the debtors have created, frankly, in this case and the computational, I forgot the word, computational, like, discomfort that the parties are dealing with it. It's a better created issue, because they have told everyone on, I think, May 19 who the one that it was, which is very generous.

 The parties, including the states, have been reviewing the asset purchase agreement and the asset purchase agreement as key pan. And on the I can only speak on behalf of state of Texas, we have significant concerns with more than just the definition of required assets in this asset purchase agreement. Both. And we plan to and we'll be objecting to both asset purchase agreements because at this point, it's unclear who is going to ingest the final bidder in this matter. I would add regarding the ticket fee, this is posted in a footnote to this motion without any basis under law or facts and any notice other than in the footnote that they intend to pay the general and the 10,000,000.

 And council said it's coming out of TCAM's proceeds, but that is not how the order reads. The order says the debtors are paying the general and these funds and their state funds. And so the debtor is seeking to pay estate funds to a a third party under terms that it's just police saying in order they're not allowed. I would note that we learned, I can only speak for myself, that miss miss I'm in miss Knoetre, and I sincerely apologize. Miss Lewinsky is still on the board yesterday.

 We would understand some pleadings and information that she had set down and she was no longer involved in, the business. But understanding that she's currently on the board of directors. She's currently potentially, a a shareholder to this puts her in every definition that I can think of as an insider. So this is now an insider proposed transaction that needs additional scrutiny, and I would posit if TTM ends up in the next in this situation, we will want discovery as to the information related to her control of this company and what led it into bankruptcy in the first place. So we're talking about at least two class action lawsuits involving people who've got out of the breach while she was at the home.

 So we have significant concerns with both of these. Another issue is that we have is that the debtors have expressed no willingness, no interest in compliance for you all regarding this bill, And neither of the ACA or cell transaction that's proposed have any modicum of compliance with what we're referring they have to comply with to be able to sell what they're trying to sell. In Texas, and this is an issue that is really from cell hearing, so I won't get into it other than saying Texans have a right a property interest in this information that they're trying to sell and require consent as do many other states. None of that is in any of these documents. There's been no indication of any intent to comply with state law.

 And so there are grave concern concerns about these APA. And now the better is asking is, everyone follow your objection to what we have now on June 10. Allow us to draft amendments to the APA that may draft around these objections, and then no one has a chance to object to that. It's patently unfair. It's patently against the process that we all have, and not only the state.

 This to level set, this is genetic data as the court knows. This is saliva sample. These are genetic results. This is medical records. These are pharmaceutical records that are trying to be sold.

 And these consumers need the ability to review the terms of a sale of their property, their information, and this rushed process is insufficient. The importance of the materials in this case and the due process right has to outweigh this We just dropped the audio, miss Milligan. Can you hear I'm sorry. Can you hear me now? Yep.

 Yep. I'm so sorry. I'm so sorry. I'm not sure where you lost me. Just But I I think the point is Not not much.

 I'm sorry. So the point in this case is we understand that our business doesn't. Debtors have a lot of new way with business doesn't. This not this motion seems to be cut full cloth out of what the debtor wants to do. What is not being considered at all or is objectively being sent over is the ability of other parties to review, analyze, decide if they want to respond or how to respond or seek the summary out that could be potentially and probably likely will be a very modified asset purchase agreement on an extremely limited time period.

 We're talking Friday night at midnight in a hearing on Tuesday. It is the deep process that has to outweigh the debtors of this judgment in this in this situation. I would add that we are talking about significant single numbers. I have not heard of a reason that this has to be rushed in this way and we are dealing with such sensitive, important data, sensitive, absolutely, presidential legal issues before this court that needs to be briefed and thoroughly vetted that the current deadline setting aside that I I'm not sure how the CTO is legitimately gonna get his work done when he's having to analyze an additional APA plus potentially two more by the deadline of his report, we certainly will not have sufficient time to review and determine how to proceed in in basically what could be seventy two hours. Right?

 So our argument at this point, what we would like to see is if the court is so inclined to entertain this request by the debtors and allow additional bills to come in, This needs to be extended out so that the parties have the ability to see the bid that is submitted, the asset purchase agreements or both, do any necessary discovery depending on what the circumstances are, And then lodge an informed objection, if appropriate, before this court so that this court has and allow the CPO to submit their findings and their opinion to the court as he is under a fiduciary obligation to work. And allow the parties that do process right and allow this court the ability to evaluate all of these issues at a properly timed bill hearing. We are not exactly against the sale. We are not putting a vote on one or the other. We want the process to be transparent and our due process rights and the consumer.

 More importantly than mine more importantly, I'm saying tech is the consumer due process rights cannot be trampled as they are being proposed to be trampled at this time. And I I would note that it has happened previously in these hearings where approving is filed, the order is filed, and we're told that the hearing that it's not that it's not gonna be modified. We have to go by what is is in the document. And right now, the the deadline, the provision, do not say only thing that is changing is cost and everyone has until the hearing on the '7 at seventeenth at ninety eight to object. It says quite the opposite.

 And even even extending the bill by 9AM on the seventeenth, because they give this this court the time to sufficiently review, what needs to be happening. The APA, the procedure, the we believe that it's it's not in compliance with state law. We don't think it's in compliance with bankers. It's really not in compliance with the Constitution. But it this is and this is not in compliance with their own final order of bidding procedures.

 So if the court is so inclined again, to deny, we will work with the Regeneron bill as filed, however it proceeds forward. If it is the court grants additional time to make bids or even as proposed by the gutters, we ask for at at least a significant amount of time so that we can have time to review more than what's being requested right now by far, but we would also likely want time for discovering another process. With that, I'll stand down and thank you for your, time. Alright. Thank you, miss Milgan.

 Anyone on the Webex for the preliminary comments before we hear the evidence? Yes, your honor. As I may be heard, this is Abigail Ryan with National Association of Attorneys General representing 23 states in The United States. Keep it short. I agree with the state of Texas, and I agree with the US trustees' concerns here.

 This case is moving extremely fast, and I think we need to take a moment to step back. And as miss Milligan said, think about what we're selling. We're we're selling the blueprint of people's body. This hasn't been sold out of things like people before. There are some serious legitimate concerns here.

 Like the state of Texas, the 23 states I represent have serious and numerous issues with the asset purchase agreement, and we do plan to file an objection before the deadline. Having said that, if things are gonna change midstream now and we don't have an extended deadline to object further. I had a huge issue with that. We were not part of the bidding process of the auction. We have no idea what happened there.

 So what I do know is we're here today as the state to protect our citizens and make sure we kinda put the brakes on what's happening here and make sure we have due process, make sure the consumer privacy on government has the time needed to review these things, and make sure that the states have the time needed to review these things and all proper objections to protect one, state laws and two, to protect our citizens. And this is going to be a precedent setting case, and it shouldn't go by in the blink of an eye. We need to stop and take time and let everyone be heard. And with that, your honor, thank you for listening to me. Thank you, miss Ryan.

 Your Honor, just a quick statement. It seems that the third party obviously is a moot issue, but I would just say as a small shareholder, to ensure that the estate has maximum value, I would look to see that there is a multi level bidding process in place and I favor some level of a multi level bidding process in your consideration. Thank you. Thanks, sir. All right.

 Mr. Hopkins, would you like to rebut, present evidence or both? Thank you, Your Honor. Chris Hopkins of Paul Weis for the debtors. Just a very brief a few remarks.

 I owe your answer some or I owe your honor answers to two of your remaining questions. But I think it makes most sense to talk process, because obviously it's very important to the states and the U. S. Trustee's office as well. I think it's important to level set a little bit.

 So the bidding procedures that got approved at the first day hearing have always contemplated that the sale hearing would contemplate the approval of the successful bid and the backup bid. We posted a sale order to the claims agent website. That's so that should have the fact that there are two bids being put up for the sale hearing has been known basically since the bidding procedures were approved. Who has between TTAM and Regeneron is going to be one or the other is admittedly up in the air. But the fact that the sale hearing and the sale order approve a successful bid and a backup bid have been known since the outset of the cases.

 We filed our notice of successful bidder and backup bidder that included the Regeneron APA and the TTEM APA on May 19. To the extent the states are seeking discovery in connection with the sale hearing, they should do that. But they should do it now, so that we're not at a point later on before the hearing where we're arguing about whether it should be delayed because because they haven't commenced discovery. On the timing point, we obviously think the issues of consumer privacy are paramount in this case. We've conducted ourselves with that at the top of our mind from day one.

 The APAs with both bidders are heavily negotiated around the privacy and the customer data provisions of those APAs. They are carefully constructed with the full knowledge that states have positions on what their state laws do or do not permit. And obviously, it's not going to surprise your honor to say that those forms of APAs we believe pass muster under those state's laws. We know or suspect that it will be litigated in connection with the sale hearing, but we're confident that either APA as currently structured will be approved. I say all that, and I think I said it at the outset of the hearing, and we can try to propose some clarifying language.

 But I want to be clear on behalf of the debtors. I don't expect either bidder to change those provisions. I don't expect either bidder to make any material modifications to the heavily negotiated APAs we have with them, maybe around purchase price, maybe around closing certainty, but nothing that should affect the issues that would be of concern to the CPO or to the state AGs around customer data and privacy. If they do, it is not our position that if you didn't predict in the future that that modification would happen that you can't then object to the sale hearing. But of course, they could.

 And frankly, the debtors would assess any modifications to those provisions as a deduct to the bid for this very reason. Because if you materially modify your APA at your best and final deadline, and now Professor Richards has to redo his assessment or the AGs feel like it's changed the landscape on what objections they may have, that's going to be value reduced or that's going to be a deduct to the value of the bid because you're creating a process issue for us. And Can I just summarize where I think you're on this point? Sure. Nobody is obligated to object to something by June 10, if it's impossible to object to it by June 10 because it hasn't happened yet.

 Of course, your honor. Of course. And time is not only important because the longer this goes on, customers start to question the process. Time is not our friend in bankruptcy and there's a cost. I believe the current estimated run rate for these cases, factoring in restructuring costs is in excess of $10,000,000 a month.

 So when people talk about a one week delay or a two week delay, people should just understand that that's taking money out of Mr. Adams and Mr. Stark's pockets. And we believe we've set up a fair process. I think if you look at three sixty three sale time clients holistically across large Chapter 11 cases, the amount of time between the conclusion of the auction and the sale hearing in this case is pretty substantial relative to precedence.

 Oftentimes, it's a number of days between the time the auction concludes and the time the sale hearing occurs. And so we will do everything we can consistent with our obligations as the debtors to give everybody notice to make sure that if to the extent they want discovery, we're timely complying with reasonable discovery request ahead of the sale hearing. That's our burden as the debtors. But I don't think the process that we're proposing is truly a sea change in how anything was going to proceed at the sale hearing, because we were always going to be approving APAs from two different bidders since the procedures were set up at the outset of the case. Can I ask, tell me about the current under your proposed schedule, Professor Richards' report would be due on the tenth and then the bids would be the eleven to twelve?

 Is his report is there a reason you want his report before you get those bids? Of course, your honor. We've been working closely with Professor Richards and his team as the CPO for the last couple of weeks. He's obviously a noted expert in the field of consumer privacy. He's going to evaluate the transactions.

 And if you're the special committee, you want to understand his opinion on the two transactions, the relative merits, if any, between the two bids. Maybe they're both the same, maybe they're vastly different. That'll be for Professor Richards to decide. But that is an important data point that if you're sitting there as a special committee saying I need to pick a winner and I need to pick a backup and which one is more likely to get approved or to the extent that the AGs or the CPO is recommending that their preconditions put on the bid, are the bidders more likely to accept one they're imposing one set of things on one bidder and another set of things on another. Is that going to blow up the deals?

 Would it give rise to a termination rate? There is a significant value to the debtors in making the correct decision about the highest invested from the perspective of what's best for our stakeholders and gives us the most value and the most likelihood of success at the sale hearing and ensuring that Your Honor approves the bid we choose as a successful bidder. And so we're not doing that to jam anybody. We're doing it to make the best decision as fiduciaries of the estate. And Your Honor is 100% correct.

 If there's a change in facts after June 10, of course, we're not going to argue that someone can't object on that basis based on new information. But again, and frankly, we would encourage the bidders and not expect them to. I would not modify the very carefully constructed privacy provisions that we've that are relevant to the issue the states and the CPO are focused on under their APAs. Ms. Milligan raised some issues about Ms.

 Wojcicki's role in this case, but I think it's just important to address head on. I think we said at the outset of the case. Prior to the petition date, Ms. Wojcicki consensually vis a vis the company resigned as CEO. And the only position she held ever since as of the petition date has been as a board member of the company.

 All of the decision making authority of the board related to the chapter 11 process, sale process, investigation of potential estate claims and causes of action has been delegated to a four mem a four member independent special committee of the board. Ms. Wojcicki does not participate in those meetings. She has no say in those meetings. She has not participated from a governance perspective in any aspect of the Chapter 11 process.

 And to give miss Milligan some comfort and all of our stakeholders some comfort, the reason that acquired assets provision exists in the order is because at the auction, at the direction of the special committee, we negotiated out of the acquired asset perimeter of the TTAM APA any estate claims and causes of action against insiders of the company, including Ann Wojcicki, which is something that I frankly have never seen happen before, where you have an insider bidding in the $3.63 sale. And so we have kind of headed off the issue of Ms. Wojcicki is a shareholder, Ms. Wojcicki is a board member, what if she's buying potential claims against herself, she is not. They remain with the estate.

 Yes. And that's public and that is you can go and look at her APA, and that that's why that provision is in here. Your your honor, I also owe you an answer on the break fee. So there is the way it works, there there is not a deduct to the TTAM bid for the purposes of what Regeneron would have to submit for it to constitute a valid overbid under our procedures. So to to just use illustrative numbers.

 If TTAM were at 100,000,000 for Regeneron to submit an overbid, it would need to be at $105,000,000 They don't get to say I can bid at $95,000,000 because there's technically a $10,000,000 deduct to her bid. When we assess the bids in my hypothetical where TTAM is at $100,000,000 and Regeneron is at $105,000,000 a factor, not the only factor because there will likely be many, but the special committee will need to consider is that the Regeneron bid at $105,000,000 is $105,000,000 of proceeds to the estate. If we were to take the TTAM bid at $100,000,000 notwithstanding Regeneron's overbid, that's $90,000,000 dollars of proceeds to the estate. But there isn't a world where Regeneron can underbid TTAM on a dollar for dollar basis and still win because of the break. Is that like under our procedures, they would not be allowed in the scenario I gave you where TTAM is at 100.

 Regeneron can't say I bid 100, but that's technically higher because if you accept my bid, you don't have to pay a break. All right. And so there was already a $5,000,000 adjustment built in based on what happened at the auction, and that's going to be considered as that's why Regeneron has to bid $5,000,000 higher in the first place, right? Yes. And that's clarified in the order as well.

 So this is separate from how the procedures work. But if you were to just compare a TTAM bid of $100,000,000 and a Regeneron bid of $100,000,000 dollars because of how the account certain it has to do with a certain assumption of post petition AP that TTAM is agreeing to Regeneron. It was easier for Regeneron to just pay more than to incorporate a bunch of payables into its systems is my understanding. But a TTAM bid of $100,000,000 and a Regeneron bid of $100,000,000 the TTAM bid is actually worth $105,000,000 because they're assuming about $5,000,000 edition AP that Regeneron would not. Flip side of that is that a Regeneron bid of $105,000,000 and a TTAM bid of $100,000,000 are effectively the same value to the estate because Regeneron is $105,000,000 of cash, TTAM is $100,000,000 of cash plus $5,000,000 of assumed liabilities that we would otherwise have to pay with that cash.

 All right. So just so I'm following, if I approve the procedures and let's keep using these same numbers, even though they're below the current bidding threshold, TTAM comes in with its final best bid and it's 100. Regeneron can bid 105. When you're comparing, you're going to deduct $5,000,000 from Regeneron because of the assumption of liabilities, but then you're going to deduct $10,000,000 from TTM because of the breakup fee. I think the way we've set it up in our procedures, and I'll my colleagues at Wachtell can jump up and tell me if they disagree.

 We are taking the rules that existed at the auction and imposing them on this best and final process. So if TTAM is at 100 in order for Regeneron to satisfy both the $5,000,000 bid increment and to make their bid apples to apples because of the difference in how AP is treated, they actually have to bid $110,000,000 Oh, it's a $5,000,000 increment and a $5,000,000 No, I'm not. I'm not sure if I'm doing my own hypothetical year. I apologize. I gave you a So nominally, they nominally, they'd bid us to be $10,000,000 higher.

 Correct. Okay. All right. And so in that scenario, the $10,000,000 theoretical deduction from TTAM is not isn't going to matter, I don't think. I think that's practically correct, Your Honor.

 In any realistic scenario, I think if Regeneron is overbidding at $10,000,000 unless there's some other fact that causes the special committee to TTAM bid. If Regeneron is declared the highest investment, no break fee is ever payable and there's no $10,000,000 credit against their purchase price. Okay. All right. I appreciate that clarification.

 And then on the material facts issue, I mean, just to state it simply, now that we've gone around and heard from all the parties, I think our simple statement on that is, we don't believe there's any dispute on any material fact that bear on the issues we're asking the court to approve today. Okay. That's helpful. Mentioning up my notes here. And then finally, Your Honor, I just want to address the comments about I just want to address the comments from TTAM's counsel about TTAM walking away.

 I just want the court and everybody to be clear how these procedures are constructed because it suggests that there may be some confusion. We're proceeding forward today on the basis that TTAM has presented a fully financed binding offer to the debtors for consideration of $3.00 $5,000,000 These procedures assume that bid because they're objecting to the sale and part of their objection is that you should exercise your fiduciary out, terminate their agreement now and take my deal is that, that bid is on the table. So the procedures we proposed take that position as a predicate. They can't, under these procedures, pull that proposal because that's the genesis of why we're here. I think it's in clause B of the orders.

 There's a proviso that says, if TTAM does not submit Your Honor, I apologize for. I I just disclosed the term of their bid that's not public. I was wondering about that. Do we need to issue a release or something? Issue a release?

 Maybe we can just ask for a short adjournment to discuss what would be appropriate. I'm not sure. Okay. I'm not sure either. Why don't we take a short recess and you want me to talk about what might be the next step and then we'll ten minutes?

 Sure. We'll reconvene about ten minutes till the hour. Thank you. Your Honor, we are back on the record. Thank you.

 Please be seated, everyone. Alright. What news, mister Hopkins? Thank you, your honor. For the record, Christopher Hopkins, Paul Weiss, co counsel to the debtors.

 So first of all, I apologize again to the court for the slip, and I thank the court and your staff for bearing with us while we figured it out charted out the path forward here with the parties. We sincerely appreciate it. I am pleased to report that I think we have a consensual path forward on the whole process as among the debtors, TTAM, Regeneron and the consultation parties. If it's all right with your rate, Your Honor, what I'd like to do is read these points into the record. I'd ask each of the bidders to confirm their agreement, make any clarifications, and then we're going to work with the parties to get an agreed form of order submitted for the court's consideration as soon as possible.

 Sure. Okay. So we will proceed with a modified best and final process that will involve both bidders. It will both start and conclude on the later of June 12 or the second business day after the later of two conditions being satisfied. Okay.

 As long as the parties are paying attention there. Yeah. I can't write that down that quickly, but go ahead. The sale objection deadline and the CPO report have occurred. So and this is the principle we talked about earlier in the day that both the bidders and the debtors want to be going into this process and making decisions with the benefit of the sale objection deadline having passed and the benefit of Professor Richards having filed his report.

 The way the best and final process will work, and I'm going to use the number now since I let the cat out of the bag, but which again I apologize for. But the starting bid at this day of the process will be TTAM's bid at $3.00 5. If Regeneron chooses to participate, Regeneron must first overbid at at least $315,000,000 As long as Regeneron bids at least $315,000,000 TTAM will receive a two hour period to come back with a best and final proposal that would be provided to the debtors, the consultation parties and Regeneron. If TTAM chooses to submit that best and final proposal, Regeneron then gets two hours to submit their own best and final proposal, which again would debtors, the consultation parties and TTAM. The debtors must then file the notice announcing who's the winning bidder and disclosing the material terms of the losing bid on the same day, so on June 12, or whatever that later date happens to be based on sale objection deadline in the CPO report.

 While this process unfolds, the parties have agreed that there'll be no discovery and there will be no litigation about the conduct of the auction. Both parties' ability to contest the debtor's decision as to which of the bids is the highest invest coming out of this process are preserved. The backup bids, so whoever ends up losing notwithstanding where they've bid in this process, the backup bids will be $146,000,000 if it's TTAM, dollars one hundred and fifty one million dollars if it's Regeneron, which is consistent with both our procedures and how we concluded the auction. We're now proposing to give each bidder, if they lose, a $10,000,000 breakup fee. So there'll be parity between the bidders.

 In the scenario where Regeneron does not choose to bid, TTAM's bid will be the $3.00 5 or I mean, I don't know why they would, but if they chose to bid higher anyway, they'd be free to do so. But whatever bid they do submit, if they submit a higher one, would be their bid. For the purposes of the sale hearing, Regeneron's bid would be the $2.56. What does that mean for the purposes of the sale hearing? So I'll let Regeneron speak for themselves.

 But I think what they are saying is if they choose not to participate in the best and final process for the purposes of the sale hearing and the potential litigation that they may want to bring challenging our decision as to whether the TTAM bid is highest and best, the comparison will be between whatever that winning TTAM bid is and the Regeneron bid at $2.56. Okay. And all parties right It's the theory being that if you were to reject the $3.00 5, you would then be talking $2.56 with Regeneron. Correct. Or Again, I don't know why you would do that, but, yeah.

 To give some I think the flip side to give just so your honor is prepared. I think the flip side would be if because the sale objection deadline has passed and the CPO report has been filed, there's information in the public domain that where they think based on what's out there, Regeneron's argument to say TTAM is a higher purchase price. Given the execution risk on getting it approved, you should have taken six. I see. Yes.

 And all parties rights are reserved with respect to any arguments either bidder wants to make around that type of process. There'll be no other bidders. And consistent with the procedures we filed, no fiduciary With that, your Honor, unless you have any questions, I'll let your Honor choose the order. But I think it makes sense to hear from the bidders, and then to the extent, obviously, anybody else or consultation parties want to weigh in. Sure.

 Let's hear from the bidders and then yes, well, we may have a question. Sure, go ahead. I apologize, Your Honor. I just wanted to be clear. When we say the Regeneron bid is at $2.56 if they choose not to participate, obviously, we could choose in our business judgment to take the $2.56 notwithstanding TTAM maybe at a higher purchase price.

 Right. That's consistent with actionable settlement for all purposes. Yeah. Okay. Okay.

 Understood. Understood. Alright. Which bidder wants to speak to this first? Go ahead.

 Your Honor, Emil Kleinhaus, Wachtell, Lipidore, and Katz for the record on behalf of Regeneron. I mean, first, just a brief statement on behalf of my client. We continue to believe the right approach here, legally and otherwise, would be for the debtors just to respect the auction as it ended on May 16. I think I've stated that position clearly today for the record, and I stated again because it is a firmly held position of our client, and that's what they believe they bargained for, and that's what they believe the way this should have ended, on May 16 and today. That said, we have continued to negotiate with the debtors first in advance of the hearing today on the proposed final procedures and then on the revisions to the proposed final procedures.

 And our client is prepared to go forward based on that revised basis with the following clarifications, one of which was just made. The $256,000,000 is a valid bid. The debtors can choose it or not, if it's not raised. As to discovery, our understanding of the deal is that there will be no discovery period by TTCAM or reciprocally during this period between now and June 12. I'm not sure I don't think the representation was to the contrary, but we understood that just as a general rule.

 Sure. Okay. Thank you, Aaron. I appreciate that. We really appreciate how much time you gave us to talk through and come up with whatever creative solutions we could.

 My pleasure. And I'm happy to report, I think it's a good day for the estate, and I'm glad that my clients could be a constructive part of it. For the record, since Mr. Kleinhaus couldn't help himself, we also believe that the bidding procedures should be enforced. And by that, I mean that all bidders who are willing to bid should be given a reasonable opportunity to do so.

 So we think what we have done by compromising today is to accomplish that. We certainly don't like the last look, but it's part of this overall package. The only thing that I would say I agree with Mr. Kleinhaus about the no discovery. I'll put down a marker that if Regeneron does want to try to object to the sale and the debtor's judgment to take my client's superior offer over theirs and they want to come and object to that, don't think they'll have standing because that goes to the merits of the bid, not bidding procedures.

 But we don't have to decide that today. We can deal with that another time. It's on my list of things to talk about in the status conference. If somebody is challenging somebody else's bid, I'm I'm going to want to see something outstanding. Right.

 Well, I mean, for us at least, we do own stock in this company, but it's different. But we don't have to litigate that now. I'm just putting down the marker. And then, lastly, I think the one detail that I didn't hear, and apologies, Mr. Hopkins gave me three opportunities to read his notes, but I forgot it, which is the overbid, he said the first overbid must be $10,000,000 higher than whatever TTAMS the three zero five million dollars not whatever, the $3.00 $5,000,000 bid going into the final day would be.

 But the second bid, if there is a second bid, would also have to be $10,000,000 higher, right? I just didn't hear you say that. The overbid from Regeneron, if we go up afterwards would also Regeneron's best and final bid you're referring to? Yes. That their last look has to be $10,000,000 higher, not $1 higher.

 Michael, Ben, Martel, Lipton, Rosen Katz, on behalf of Regeneron. Yes, Mr. Shashile is right. I'm Michael and Ben, the two first names. Just like it is in the existing order that your Honors reviewed, just like in the papers that we presented, on our best and final last look bid, we will effectively be $10,000,000 higher than whatever they're at, which includes $5,000,000 cash bump as well as to cover the $5,000,000 in post petition liabilities that they assume.

 Okay. Appreciate the clarification. Thank you. All right. Committee or other consultation parties want to weigh in?

 Your Honor, Jason Adams, Kelly Drymoron on behalf of the Committee. The hour is late. I think there's more wood to chop here. I'm going to be very brief. Pieces broken out.

 Took some time, but we're appreciative of the efforts of all the parties and it's accomplished the goals that we set out in the beginning of this hearing when I first rose. So, Your Honor, we're in support of this. Thank you. Thank you. All right.

 Any other parties in the courtroom wish to be heard briefly on the start? Well, I would have loved to see how your honor would have rolled on all of this. I'm very pleased with the outcome and I'm thankful for the parties for achieving. Thank you. Anyone on the Webex wish to be heard briefly?

 Yes, your honor. Can you hear me? This is Logan Milligan. Yes. Thank you, your honor.

 Again, Logan Milligan with the Texas Regional General of the Office of the Peruvian service on behalf of the tech business. I while I'm grateful that the parties have have stuck it out to try to work something out, I do continue the objection to maintaining the sale debt the sale objection deadline on June 10 with the subsequent asset purchase agreement and arrangement to be disclosed on June 12 or thirteenth, however that works out. It's it, the concern is that the state of Texas has significant concerns with the asset purchase agreement as they are presented currently that are beyond just things that literally for privacy. So we we do reserve those objections and would ask that if the court, agrees with this proposal that any subsequent order clearly lay out that the terms of the ACA other than the price do not change so that we do not have to come through redline, on less than a forty eight hour objection notice period, and that's just fair to all the parties in addition to the state regulators. And that's what has been presented with the court today.

 I'm not sure if that would be controversial about, any as people are preparing, objections or responses or working out agreements, having not obtained any of those IPs and moving targets is concerning. Second, we would ask just that the court confirm and the parties confirm that any limitation on discovery that has been annuity with a domestic agreement may affect PTL and the general and as far as the auction is concerned, and the other party is not limited in discovery, during the and in between for whatever spending currently in between now and the hearing date of the seventeenth. Okay. Let's start with the second one, miss Krakens. You you said earlier that if parties, want discovery, they should be serving it now.

 Other than the two bidders, does that position still stand? That's right, Your Honor. If we don't want people to sit on their rights until June 10 and then serve us with discovery, that's going to be impossible to comply with in time for the sale hearing. So we're happy to work with the states. We have a good dialogue with most of the AGs in NAG.

 So if there's information they want, and we're asking everybody to stick to our timeline, we should start those discussions now. Okay. That's helpful. On the objection deadline, miss Milligan, I'm going to overrule your objection based on the discussions we've had and with a little clarification here. The debtors and the bidders and a number of other parties, it seems, think it's important for purposes of comparing and valuing the bids to understand what the objections are as to the bids as they stand today.

 And I think that's a valid point. As we discussed earlier in the hearing, if the APA changes or something else changes about the transaction, something in the broader world changes that no one knows about on June 10, that doesn't preclude someone from lobbying in a supplemental objection. And I'll ask and I think you'll do this anyway, but I'll ask the debtors when they identify the successful we have a new term for it, maybe the winning bidder, whatever it is, and the backup bidder to file red lines of the APAs. So if there's anything that's changed since what was filed last time, it's immediately apparent to anyone who might want to take a look at that. But I think maintaining the objection deadline under the circumstances and the value that it'll add to the bid comparison process is a valid point.

 That's fine with the debtors, your honor. Your honor, just to I'm sorry. Just to be clear, if there are significant or and substantially is really subjective, though, but, assuming that we are able to see the red lines along with the notice filed on June or when it's filed, we would ask for I wanna be clear that if if there is an objection, it can be filed, anytime filing that disclosure to the the hearing the morning of the hearing because I know the hearing is at 9AM. So we wanna give the parties time to address it, of course, but we're we're talking about a very short time period of four days or less. Any issue with that, Mr.

 Hopkins? You're not anticipating From the debtors' perspective, I think this is a low probability issue, your honor. I think we would treat it the same way we're treating each of the bidders' objections regarding highest invest anytime up to and including the sale period. Okay. Alright.

 I think that makes sense. The other request you have did I I'm sorry. I'm not saying we did not mean it last year. The other request is that the debtors file a draft proposed order along with the notice, on the twelfth because they want to confirm that the order does not include any return that our otherwise objection will or change any, issue regarding the sale. It may be published already, isn't it?

 It is, your honor. We we pursuant to the local practice, we uploaded a draft sale order to the claims agent website. I believe it was last Wednesday. So that's already available for parties. For Ms.

 Milligan, I can ask someone on my team to send it around to the AGs in email so you have it direct. I may thanks. Help. Thank you. If it changes, we would just ask that it'll be filed promptly, and we'll we'll be able to access on the court's website.

 Thank you so much. Okay. K. Very good. Miss Ryan?

 Your honor yes. I wanted to hear, and I will keep this brief. Again, I understand this part has been there late, and I appreciate your courtesy. We're willing to work with the debtor, to get some discovery in and out. However, last week, we asked for a protective order because many states should not receive discovery without having a protective order in place due to, open records laws, and we haven't received one yet.

 So just while we're on the record here or if you guys can send us a draft, protective order that we can look at, we'd be happy to work with you to get that in place and then start the discovery process. That's fine, your honor. We'll expedite that. There is a protective order at least as among some parties already because we've been sharing information with the creditors committee and other parties. So that should be easy to get them to draft quickly.

 Okay. Sounds like a plan. Thank you. Anything else on WebEx wish to be heard on this resolution? All right.

 Well, very good. It sounds like a fine outcome. It's a very much of a cliche, but I think everyone will probably be happier with what you've negotiated than you would with what I would have come up with. Sitting here right now, I'm still not sure what that would have been. So it's easy for me to say.

 But I think this is very productive, and I'm glad to give I'm glad we're able to give the parties all the time they needed to work this out. And I think as Mr. Stark said, from the perspective of an equity holder, again, I don't know whether equity is in the money here or not, and that will be resolved later. But it seems like very positive development in terms of value overall for the state. And so I'm very happy the parties have reached this resolution, and we'll look for an order.

 Tomorrow is my last day in town. So if you can get that order to us relatively quickly, we'll get that taken care of. Understood, Your Honor. We are pleased to approve it. Thank you very much.

 Just two other quick points. One on Your Honor's comment about the status conference. We've conferred with both parties briefly here. Just to be clear, I think part of part of today's agreement is that the preliminary I don't wanna speak for TTAM, but I believe the preliminary objection is going to be withdrawn. Obviously, the parties will discuss whatever your honor your honor wants to discuss today.

 But I think until we kind of either have a discovery dispute with the states or somebody else or we see the sale objection deadline subject to anything your honor wants to discuss, I'm not sure that other than the existing briefing schedule, at least the debtors and the bidders are asking the court for any kind of interim deadline or relief between now and in the deadlines that we've set up under our framework. Yes. Let me look at my notes quickly. I don't want to prolong the evening unnecessarily here. We talked about standing.

 If one bidder is challenging the other is winning bidder, I'd appreciate some law and standing in the context. I don't think we need an order or anything, but keep that in mind if you want to make that challenge. We talked about the CPO's report and the timing of that. We talked yesterday about supplemental disclosures from professionals about the bidders, and I assume that's in the works. We have a few pro se objections to the sale, and this is probably on your list, but it's kind of standard practice.

 But if you or one of your team would reach out to the pro se objectors, figure out if they're still maintaining their objection, if it can be resolved easily, and just file a report, say, the Friday before the hearing, I think that'd be very helpful. We all know where those stand. Absolutely. Confidential information in the sale hearing, we don't need to talk about who the other bidders are who are no longer in play. We don't need to disclose their name.

 It seems to me we can have a sale hearing without getting into confidential information unless something unusual happens. If we need procedures around that, if you'd reach out to Mr. Spiedle and alert him so we can start to get some thought about how we handle that. Of course, sir. And it's not directly related to the sale hearing, but we do have a motion for appointment of an equity committee, and we ought to get that scheduled, I think.

 You have a suggestion about timing for that? I'll want to hear from Mr. Stark as well. So I believe that was filed today or late last night. I believe that was filed today or late last night.

 I believe that, yes. We have a good relationship with Mr. Stark. We respect him. I'm happy obviously, he should have the opportunity to come up and speak to it.

 But I think we could I'm confident we can find a mutually agreeable schedule. Okay. All right. Mr. Stark?

 Second, admiration will sit and figure it out. Okay. Very good. Very good. That's fine.

 The one the one thing I do on a management plan Sure. Yeah. Go ahead. Go ahead. Since we're a little bit later to the process, we're not officially consultation parties.

 I I told everyone, maybe I do promise to find us this, but we'd assume that we'd be allowed to sign on to the confidentiality order and participate in sort of the information flow that the others have been having. I can't imagine there's an issue with that, but I wanted to raise it in place. Yeah. What are the and we have separate conversations going on. So, your honor, why don't I confer with them if if you're on a little loud, we'll do this as a discovery dispute and I just don't wanna I'm look.

 I'm just cognizant of mister Hopkins' point about this is moving very, very quickly. Right. And we're going to have a hearing very soon with respect to something that's of critical importance to us. And I wanna be efficient. K.

 What's it's gonna impact how I'm gonna be like. Yeah. I'm I'm happy to try and resolve it if I need to. I I we'll have a period of time while I will not be able to hold a hearing even telephonically between now and the sale. I agree.

 I I and lots of really good professionals who should be able to figure this one out. But if we can't, there's going to be an angry new going on. Understood. Understood. All right.

 Thank you, Mr. Stark. Just to state on the record, as has been requested of us, with respect to the preliminary objection that the TTAM parties filed to the announcement of the successful bidder, and we filed that preliminary objection in order to reopen the bidding process. Obviously, we've just spent the last number of hours negotiating on how to reopen the bidding process. So I think it would be just most efficient, and I ran this by Mr.

 Hopkins, I think it's fine, if in whatever proposed order that will be circulated and then submitted to the court, it would just state that this resolves the preliminary objection as opposed to us filing a notice of withdrawal. I just think that's easier. Does that work for the other parties? Okay. That works.

 Okay. Alright. And then and you have a motion to seal also. That's the last piece of housekeeping that's on my Okay. My list.

 We would like that to be granted, your honor. It contains personally sensitive information about our clients' financial wherewithal should be exhibits. Right. Because depleting itself that we filed two steps. The preliminary objection had various confidential information in it.

 That motion to seal was granted and redacted version 7.5. Second phase, this new objection that we filed yesterday, the pleading itself was fully unredacted because we were careful to avoid referencing things that would be confidential. But the exhibits, several of the exhibits were redacted because they contain confidential information about our clients, and we would like that since it is part of the court's record to be granted as opposed to just left hanging out there. Okay. Is there any objection?

 Okay. So I'll grant the motion to seal as to the objection. And then there's some trial exhibit or hearing exhibits as well. I guess it's moot as to those. I think that's moot because we didn't move to have them submitted.

 Right. Okay. All right. That sounds great. Thank you.

 Any other questions from your Honor? I do have one update for you that I don't want you to head off on your vacation without knowing because it could happen while you're on vacation, your honor, and I don't want you to read about it. Lots of things lots of things could happen. Right. Sure.

 Go ahead. So we just want the court to be aware that there are at least two congressional committees who have asked representative of the debtors to appear before those committees and potentially testify about this matter. We're still in discussions with those committees about exactly when. I can't tell your honor. I know exactly what the scope will be.

 The debtors view is that it would be better generally for a whole host of reasons for that testimony to occur after the sale hearing. We're not sure if that is going to happen or not. It could happen the week of June 10 or it could happen, we hope, after the sale hearing. We just wanted to make sure the court was aware that that was happening. So you didn't read about it in the press or see it on C SPAN.

 That's how you're gonna spend your vacation. It's tempting. But that we're not asking for any relief. This is literally just while we're on the record, we wanna make sure the court is aware. Okay.

 That's helpful. Maybe. Appreciate it. Thank you. With that, your honor, I mean, other than, again, thank you to the court and your staff for bearing with us into the late evening.

 We appreciate it, and we'll work to get you a proposed form of order as quickly as we can. Okay. And professor Richards, I think, wanted to wanted to be heard on something. Go ahead, mister Kripkeline. But yeah.

 Can I just go first because it's related to what the debtors were just discussing? I don't have firsthand knowledge of all of the details, but when I heard Mr. Hopkins mention that the debtors have been requested to appear to provide testimony before Congress, my client has as well. And so we are working with the relevant authorities about whether that can be moved or wait until this process is over. But if she is required to appear, we may do that.

 I don't want anyone to think that we're doing it for some purpose other than complying with requests that we have to. So I don't want to just sit silently and not mention that to the Board. Sure. Okay. We'd much rather just focus on getting through this sale process for us.

 Understood. Understood. Thank you. Yes, sir? Thank you.

 And not to inject more chaos into the proceedings, but I did want to talk about the timing of the CPO report. We've heard a lot today about the importance of privacy. We've heard a lot about how hard we're working. We've heard a lot about Regeneron having 50 to 60 people working to return things to us. As I see it, the CPO process has three phases.

 There's the examination phase with the investigation phase that you charge us where there's deliberation and there's memorialization. And I think particularly given developments this week, it will be difficult for us to deliver a great report on a week from yesterday. And I don't have my bankruptcy accounts with me. Did I hear that under the bidding proposals, the deadline is the tenth, the twelfth or two days after my report files. Is that right?

 Chris Hopkins, always for the day. That's correct. Okay. So I didn't want to miss the chance since you're going on a trip to object. But I do think if this is the appropriate time, I might want to discuss the possibility of more time for the CPO report given the multiple bidders, the complexity, the number of privacy statutes that are implicated here in order to do the work.

 And we only received I think we met with Regeneron on Friday, and we met with TTAM on Monday, and we received submissions from written submissions in response to our questions that we've given over a week ago today. And I'm certainly not accusing either of the debt or the bidders of non cooperation. It's just as I think we are all too aware at this late hour on a Wednesday, this is a case that has become more complex by the day. And I didn't want to particularly since your honor is leaving on a trip, I didn't want to miss the opportunity if we need to file something for we've had discussions with the debtor about more resources given the increased complexity of this, but also for more time because it's my manifest goal that the report that I and my team deliver is full and comprehensive, hopefully concise, but helpful to the court in navigating some of the very complex privacy questions that are issue in this case that the state AGs have referred to, and that is worthy of the complexity and seriousness of this litigation. Sure.

 Do you have a different time frame in mind? I didn't off the top of my head, but I didn't know that we're going so quickly from the from the the bid procedure to the status conference. The the other piece, and this is this was in, my letter to the court. I I also have to to go on a plane tomorrow. We're we're burying my my my, sorry, my mother and father on Friday, in DC.

 I'm very sorry. Thank you. And so the the and and this is a the the debtor's been aware of this since the first day that I was appointed. It would make it tricky to deliver something, on the threes with the added complexity. I'm hesitant to say in open court a proposal, but if you would like me to, I'd be happy to say those words.

 I'll respect your hesitation at the moment. That might be I'm mindful that I'm a relatively small piece of a much larger transaction, but I also want to discharge my obligation to you to deliver the best possible report in a timely and concise fashion. So I can think of at least a couple ways to potentially proceed. And I think it makes sense for you and your team to discuss it with the debtors, the committee, the bidders. One would be to seek a relatively modest delay in the delivery of the report, and I know nobody's excited about that because it pushes other things off.

 Another would be to submit a preliminary report by the tenth that and I don't know if this is doable, but the debtors and the committee and the consultation parties are looking for certain aspects of the report more than others to help them think about one bid versus the other bid. And I don't know how easy it is to pinpoint which those items are as opposed to the rest of the things that might be in the report. But perhaps you can explore with the parties whether that might be doable. It's not much time, I agree with you there, with the more fulsome complete report to follow a little bit further down the road. Sorry.

 To follow a little bit further down the road. Again, I don't know what's possible. I don't know what's reasonable. Things are moving quickly. Things need to move pretty quickly.

 Everybody understands that. But this is complex, and so I would suggest that you and your team talk to the the debtors and the other parties and see what's doable and what's workable, rather than trying to put specifics around it right now. I I I think given given the the the lateness of the hour and and the fact that while I am represented by ABLE counsel, I'm currently unrepresented except by myself. Correct. And we have we have a, I I have to say that the the the the debtor and and both the bidding parties have been have been cooperative, and we have good relationships.

 And I would be happy to consult with my counsel and to to have the appropriate discussions perhaps tomorrow with with parties, and hopefully we can work something out. Sounds like a plan. Thank you, Art. Thank you very much. Anyone have anything further on 23andMe?

 Your Honor, Sushil Kerpalani from Quinn. Just reacting to the consumer privacy ombudsman. I think we should talk about it offline, and that's fine. But I'm no expert in this. But it sounds to me like if there are any either preliminary or otherwise concerns, those some of those things might be things that bidders could address.

 It's not binary. Like, oh, therefore, your bid's not good, and the debtor is gonna have two days to make a decision without any kind of discussion on how to rectify potential concerns. Like, I I don't know anything about that area of the world, that area of the law. But if the CPO says, oh, bidder a's, or bidder b's practices would violate the three states here, certainly, I would think the debtors would want some time to work with that bidder to resolve to see if they could resolve those three states so that there's a maximum chance that the bidder would be considered just as good as the other bidder. Well, I'm trying to think about this whole two business days.

 Yes. Well, and I'll see you and raise you. I think there are at least two opportunities for that discussion to occur. One is perhaps before the bids are submitted based on the bids as they exist now, before the bids are submitted next week. And the second is after the high bid is selected and before the hearing, I think the Ombudsman can serve a valuable role interfacing with the attorneys general, the other regulatory authorities, the Congress, I don't know, maybe, and trying to figure out are the obstacles that appear at first in the Ombudsman Report, can they be solved?

 And is it something that the bidders can solve without materially changing the deal. Right. So it's something that we should talk about as part of that offline discussion. Right. I think that would be very helpful.

 Thank you. All right. Anything further? All right. Thank you, everyone, for sticking it out.

 We will be adjourned.