Full text
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
IN RE:
. Chapter 11
.
VYAIRE MEDICAL, INC.,
. Case No. 24-11217 (BLS)
.
Debtor.
.
. July 24 2025
. 3:01 p.m.
. . . . . . . . . . . . . . .
TRANSCRIPT OF ZOOM DISCOVERY CONFERENCE
BEFORE THE HONORABLE BRENDAN L. SHANNON
UNITED STATES BANKRUPTCY JUDGE
APPEARANCES:
Counsel to Plan
Cole Schotz
Administrator:
BY:
PATRICK J. REILLEY, ESQ.
500 Delaware Avenue, Suite 600
Wilmington, DE 19801
Phone: (302) 652-3131
Email: preilley@colleschotz.com
Counsel to Quad
Flaster Greenberg
DBC LLC:
BY:
DAMIEN N. TANCREDI, ESQ.
221 West 10th Street, 4th Floor
Wilmington, DE 9801
Phone: (302) 351-1910
Email: damientancredi@gmail.com
Audio Operator: Ashley Alexander, ECRO
Transcription Company: Reliable
The Nemours Building
1007 N. Orange Street, Suite 110
Wilmington, Delaware 19801
Telephone: (302)654-8080
Email: gmatthews@reliable-co.com
Proceedings recorded by electronic sound recording,
transcript produced by transcription service.
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 1 of 16
2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
(Recorded proceedings commence at 3:01 p.m.)
THE COURT: Good afternoon, all. This is Judge
Shannon. I understand from the court reporter that all
necessary parties have joined. This is a telephonic or Zoom
hearing in the matter of Vyaire Medical, Inc., which is Case
No. 24-11217.
And this is a discovery conference. The Court is
in receipt of correspondence from Mr. Reilley laying out an
issue with Quad DBC Holdings relating to Quad’s motion for
allowance of an admin claim. And I have the plan
administrator’s omnibus objection which appears at Docket
1056.
I’ll hear first from counsel for the debtor.
MR. REILLEY: Good afternoon, Your Honor. Patrick
Reilley from Cole Schotz on behalf of the Vyaire plan
administrator. I’m joined this afternoon by my colleague,
Matteo Percontino.
Your Honor, thank you for scheduling this
conference regarding discovery issues. We do appreciate it.
We held off for a long time before contacting the Court. And
we try to avoid bringing discovery issues to the Court if
possible. In fact, I spend a surprisingly amount of time
dealing with litigators trying to convince them to not bring
discovery matters to the Court.
THE COURT: That is God’s work, Mr. Reilley.
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 2 of 16
3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
MR. REILLEY: I try, I try. But we thought it
would be important here to ask for a call and really to ask
for the Court’s assistance and guidance moving forward.
So if I may, and I’ll be brief, if I could provide
a brief background. I’d like to let the Court know about
current developments as of this afternoon. And I have some
thoughts about maybe where the parties can go after this
call, subject, of course, to Your Honor’s, you know, input
and guidance.
So, just to step back briefly, Quad DBC Holdings
filed an admin motion seeking approximately $2.7 million in
December. It’s a lot of money and we objected.
As an aside, Quad’s motion I believe is one of two
that are still pending on the docket that are contested admin
motions. We’ve resolved approximately 12 or 15 in the last
few months, and when I say we, it’s really been Mr.
Percontino. But we want to resolve this one too and take it
off Your Honor’s docket.
As Your Honor noted, we also filed an objection
Quad’s general unsecured claim which I believe is
approximately 24 million. That objection was filed in April.
We served document requests in April. Quad has not yet
responded to the discovery requests. And honestly, we’ve had
just an overall issue with the lack of engagement and
responsiveness.
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 3 of 16
4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
We have tried to engage in both settlement
discussions and honestly to work through these discovery
issues. And specifically, we’ve tried to get them to respond
to our document requests. At one point, Quad promised search
terms which we didn’t receive until today.
We’ve also tried to work on a scheduling order to
set various deadlines and maybe set an outside date for fact
discovery and other discovery deadlines. And as I said,
there’s simply been no engagement or responsiveness from
Quad. But, you know, we’re not here to complain, we just
need some assistance moving forward.
So we’re asking for the following. We would like
Quad to respond to our document requests; we would like to
submit a scheduling order; and we would also like to mediate,
we want to resolve this. We will be prepared to litigate,
but we do want to explore resolution.
So that’s kind of what our ask is. Recent
developments, we received a call, we spoke to counsel for
Quad this afternoon, Mr. Tancredi, we appreciate talking to
him. Quad did provide search terms before this call with the
Court which is great, a step in the right direction. And
Quad has agreed to work with us on the dates for a scheduling
order.
So there’s been a development this afternoon.
Having this hearing on the Court’s calendar I think has
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 4 of 16
5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
helped.
So this is where I think we’re at. I think we
will review Quad’s search terms and hopefully Quad will
respond to our document request in short order.
In terms of the scheduling order, which I think
would set deadlines to respond to the claim objection either
fact or discovery deadlines, the parties can work on this.
And honestly I propose, if acceptable to Your Honor and Your
Honor agrees, that the parties have a deadline into next
Friday to submit a scheduling order.
And if engagement after this call falls off and if
we can’t get a response and we can’t agree, I would
respectfully request that we just submit competing orders or
we just submit our own order next Friday. But with the idea
that the parties will work and agree on dates. And I
understand from our call this afternoon that there’s
willingness to do that. We just don’t want to leave here and
then, you know, bother Your Honor in another few weeks.
THE COURT: Sure. Okay, I understand.
MR. REILLEY: Mediation, mediation, this is not
really a discovery dispute, but we were talking about it.
And we propose an in person mediation in Wilmington with our
clients who have authority to settle. You know, I’m a big,
and I believe Your Honor is too, a big fan of mediation, it
brings parties together, and neutral third parties speaking
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 5 of 16
6
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
to clients directly, you know, it’s effective.
I mediate. And are all my mediations effective?
But a lot of them are very effective. So I would propose,
Your Honor, direct if you’re willing, in person mediation in
Wilmington. The parties can split the mediator fees and with
the clients here. These claims are large enough and
substantial enough that really I think it warrants an effort
by the parties to try to resolve.
And if we can’t resolve it, we’ll be prepared to
litigate. We don’t want to, you know, take away Quad’s right
to litigate. And I think we’ll do track it, subject to Your
Honor’s engage in discovery, but also, you know, work on
resolution like we normally do in an adversary proceeding.
So with that, Your Honor, I’ll pause and see if
you have any questions. And I’m sure Mr. Tancredi would want
to be heard.
THE COURT: No, I don’t have any questions.
Mr. Percontino, did you have anything to add
before I hear from Mr. Tancredi?
MR. PERCONTINO: No, Your Honor. Thank you.
THE COURT: Very good.
Mr. Tancredi, good afternoon. Good to see you.
MR. TANCREDI: Good afternoon, Judge Shannon.
What Mr. Reilley stated is not untrue. I’ve been
attempting to engage in this matter with my client. There
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 6 of 16
7
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
has been some turnover at the upper levels in my client’s
in-house counsel that has caused some delays that are
typically not the way I try to practice in these matters.
This is, it’s a fairly complex administrative expense claim,
a claim objection. There’s also another element where there
is an alleged or hinted to $4 million action that the plan
administrator may take against my client.
THE COURT: Regarding the letter of credit.
MR. TANCREDI: Regarding the letter of credit,
which hasn’t been, isn’t really before the Court yet, it’s
just kind of threatened.
And all that being said is we had provided an
initial search terms list in June saying that it was subject
to our, my client’s approval. The plan administrator
rightfully said, well why don’t you wait until everything is
approved, and then we’ll look at it and review it. It’s
taken a while to get there. We had the initial conference to
talk about ESI protocol shortly after the filing and the
request for production were produced.
I sent over, after our call today about noon, I
sent over to my client a scheduling order that pushed some of
the dates that Mr. Percontino initially sent over to us, some
of which have gone stale by the passage of time. I am
imploring my client to get back to me with dates. I received
a response that just provided more questions and no answers.
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 7 of 16
8
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
So I’m pushing again to have that. And I am confident that
we can have the scheduling order in place within the next few
days. Mr. Reilley said by next Friday, and I greatly
appreciate his patience. I think we’ll get it done hopefully
by the end of the day tomorrow. If not, unlikely to be
today, but hopefully by tomorrow, if not early next week.
Mediation is kind of a tricky issue right now. I
have not received approval from my client to attempt to
mediate it. And it’s been my experience that if parties are
ordered to mediate and aren’t committed to mediation, that it
really doesn’t get you anywhere.
There are, I look at this kind of as an $8 million
lawsuit, you know, 4 million one way -- 6.7, 4 million one
way, 2.7 the other way, so it’s a $6.7 million lawsuit. And
my clients right now believe that they’re entitled to
everything. And I think before we agree to mediate, it may
be better if we maybe get a little closer, get the facts
spelled out a little bit more, and I understand that that’s
my responsibility to do so.
But ordering a mediation in six week, if we’re $6
million apart or even $2 million apart, I don’t know how
successful that is going to be, and I think it could just end
up being an expensive endeavor that really accomplishes
little.
We are committed to, if we can get this case
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 8 of 16
9
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
resolved, my clients are sophisticated in a business that
understands the cost of litigations and the risks involved,
and settles almost everything I’ve ever had in front of them,
so, with them, they are not trying to dig in their heels, but
they want to make sure that they don’t get pushed into a
mediation that doesn’t have, really developed enough to be
fruitful.
THE COURT: Okay. A couple of points. First,
what we have now is a contested matter and discovery has been
propounded, and discovery will be taken in connection with
this. The facts need to get developed. I’ve only had an
opportunity to quickly read through the parties’ materials.
But, you know, I certainly understand the admin claim and I
have at least an understanding of the contours of the
debtors’ objection, both to the admin claim as well as to the
unsecured claim.
So we have a contested matter. And I certainly
appreciate your candor, Mr. Tancredi, that, you know, lawyers
can’t really answer discovery and we need boots on the ground
to answer those questions. And so I start with the
proposition that we have a contested matter and discovery is
going to get taken and I expect that there will be both
engagement and responsiveness on that.
To that end, I think that the parties entering
into a scheduling order makes abundant sense. And I would
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 9 of 16
10
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
direct that it either be filed by next Friday or competing
forms of order be submitted.
If there’s not consensus on it or if the parties
have other issues they would like to address with the Court,
I would be available for a further status conference on the
6th of August at 11:00 a.m. where we could talk about a
scheduling order.
But I want to make sure that this is now up and
running, and you know, I certainly appreciate Mr. Reilley’s
observations that as a practice he tries to avoid these kind
of hearings, but you know it’s, I’ve observed over the years
that counsel at least in my Court is placed in this, you
know, Hobson’s choice, you either impose upon the Court or
you sit and wait, and then when you come in, I will ask, well
where have you been, you know, that you haven’t gotten the
documents. And so I realize sometimes that’s actually an
instinct that’s counterproductive from my point of view.
But I think the easiest way to say this is that I
see this matter as moving to the front burner, it’s not
expedited and it’s not urgent. But this is material
litigation in the context of the bankruptcy case and I’m
going to give it the attention that it deserves.
Placing the potential status conference I think is
helpful, frankly to all sides to focus the mind. And, Mr.
Tancredi, it may also assist in getting substantive
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 10 of 16
11
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
engagement from, again, people on the ground where you know
you’re advising them, look, I need to provide something, I
need to give an answer by the 6th of August if we’re having
that hearing.
I'm not requiring that hearing, but you have that
time available to you if it would be productive. And we will
absolutely have that hearing if the parties aren’t in
agreement with respect to a scheduling order.
So that’s where we are near term. I’m gratified
to hear that the parties are moving forward with search terms
and I’ll give you that opportunity to scrub that process, but
the scheduling order should get entered and that should
happen promptly.
The final observation I would make is with respect
to mediation. And I have a firm rule that I never order
parties to mediation except when I do. And I am not ordering
the parties to mediation at this point. That would be a
discussion that we would have.
And I’m being a little b it flip, but I have
ordered parties to mediation, but generally I have a better
sense of the dynamic between and among the parties when I do
that. And I don’t really have any feel for this. This is,
as a practical matter, the first substantive engagement that
we’ve had on this at least that I recall.
You know, I don’t think anybody is disputing
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 11 of 16
12
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
mediation is valuable, and it certainly, you know, can help
get parties to reach resolution or at least to winnow away
areas that are not productive.
But I think Mr. Tancredi’s comment is accurate,
that mediation makes sense when it makes sense. And
sometimes there needs to be at least a little bit of an
understanding of what kind of meat there is on the bone, each
sides’ arguments and what the facts might be surrounding
them, rather than just pulling people into a conference room
with, you know, nothing more than a handful of emails and
some pleadings back and forth that say you owe me money, no,
you owe me money.
But, again, I’m not pushing back on the idea of
mediation. It may be that it’s appropriate, but I would need
to have a better sense of where the parties are and where the
rubber meets the road under competing positions. Again,
which I’ve had the opportunity simply to skim before I
started really talking about that or encouraging the parties
to move in that direction.
So my hope is that in the course of the next
couple of weeks, the parties will have substantive engagement
to get to both the scheduling order as well as search terms
that will get this, this process up and running. And the
scheduling order then would focus attention on collection
deadlines. It will tell you when you need to get this kind
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 12 of 16
13
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
of discovery done, when we’re going to start with
depositions.
It doesn’t seem like it would be an expert kind of
case, but whatever the scheduling order provides if the
parties are in agreement. I’m sure your experience in my
Court has been that I would essentially allow counsel to run
the mechanics and scheduling of their litigation. And if
there’s a dispute, then I will be here.
I do, I would make one final comment, and again, I
think everybody has heard this from me before. I very much
appreciate you reaching out. I apologize it took us a little
long to get on, I think this arrived right around the July 4th
holiday, so this is a little bit slower in terms of getting
together with the parties. But getting on the phone is at
least my preferred way of dealing with these issues in terms
of discovery, scheduling, briefing, mechanics, all of that
kind of stuff. I just think it’s more productive than you
know salvos of letters and motion practice on these kind of
issues.
So with that, I guess I would ask if there are any
questions. I would ask that the parties advise the Court by
end of day Friday, next Friday, whether you’ll want the
hearing on the 6th.
MR. TANCREDI: Your Honor, if I can ask one
question.
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 13 of 16
14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
THE COURT: Yeah, sure.
MR. TANCREDI: I am scheduled to have oral
argument in Superior Court of Delaware at 10:30 on August 6th.
Is there another time?
THE COURT: Of course. Yeah, sure. Hang on.
1:30? 1:30 on the 6th?
MR. TANCREDI: 10:30 is my argument, Your Honor.
THE COURT: What’s that?
MR. TANCREDI: 10:30 on August 6th, the hearing
before Judge Butler.
THE COURT: Did you say 1:30 or 10:30?
MR. TANCREDI: 10:30.
THE COURT: Right. Can we do 1:30 for argument on
the 6th?
MR. TANCREDI: Certainly.
THE COURT: Okay. Yeah, and, again, that hearing
may come off. If you guys are you know still figuring out
the discovery and moving forward and if you’ve come to terms
on a scheduling order, then we don’t need a hearing. If
it’s, if we’re not getting any traction, then I would rather
know that sooner rather than later, and then we can have a,
we can have that discussion. I’m happy to accommodate your
schedule for purposes of the argument over in the Superior
Court.
MR. TANCREDI: Thank you, Your Honor.
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 14 of 16
15
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
THE COURT: All right. And again, so this is sort
of a toggle for relief for either side, but I assume
particularly for the debtor. If you need the hearing, then
you’ll let Ms. Bello know on or before next Friday. And,
again, that would be via Zoom and it will be a status
conference, so it would be no matters that are actually
scheduled, it would just be kind of figure out how to get the
litigation itself up and running.
Does that make sense?
MR. REILLEY: That makes sense, Your Honor. Thank
you. And I’ll reach out to Ms. Bello on or before next
Friday.
THE COURT: Very good. Anything else this
afternoon?
MR. REILLEY: Nothing further. But thank you very
much, Your Honor. This has been very helpful and we greatly
appreciate it.
THE COURT: Sure thing, guys.
All right. And with that, then we are adjourned.
Be well.
(Proceedings concluded at 3:20 p.m.)
*****
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 15 of 16
16
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
CERTIFICATION
We certify that the foregoing is a correct
transcript from the electronic sound recording of the
proceedings in the above-entitled matter to the best of our
knowledge and ability.
/s/ Theresa Pullan July 30, 2025
Theresa Pullan, CET-782
Certified Court Transcriptionist
For Reliable
Case 24-11217-BLS Doc 1122 Filed 08/05/25 Page 16 of 16