{"id":"court_ctb_1268_0","court":"CTB","case_no":"22-50073","doc_number":1268,"sub_number":0,"doc_type":"ORDER","filed_date":"2022-12-28","title":"UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUTBRIDGEPORT DIVISION EXHIBIT LIST FOR HO WAN KWOK, DEBTOR","summary_zh":null,"summary_en":null,"body_en":"Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 1 of 322\n\n## **UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUTBRIDGEPORT DIVISION**\n\n## **EXHIBIT LIST FOR HO WAN KWOK, DEBTOR**\n\nIN RE:\n\nHO WAN KWOK, DEBTOR.\n\nCHAPTER 11\n\nCASE No.: 22-50073 (JAM)\n\n**ECF No. 913** Motion of Chapter 11 Trustee for Entry of Order Holding Debtor in Civil Contempt for Failure to Comply with Corporate Governance Rights Order filed by Douglas S. Skalka on behalf of Luc A. Despins, Chapter 11 Trustee\n\n**HEARING DATE(S)**: November 16-18, 2022\n\n**EXHIBITS SUBMITTED BY:** Ho Wan Kwok, Debtor\n\n**ATTORNEY:** Eric Henzy\n\n| | | ID/FULL | SUBMIT |\n|---------|----------------------------------------------------------------------------------------------------------------------|---------|------------|\n| EXHIBIT | DESCRIPTION | | DATE |\n| B | Letter dated November 10, 2022 from Debtor to the director and
nominee shareholder of Ace Decade Holdings Limited | FULL | 11/18/2022 |\n| C | Ace Decade Holdings Limited Share Transfer Instrument
signed by the Debtor. | FULL | 11/18/2022 |\n\n| Case 22-50073 | Doc 1268 | Filed 12/28/22 | Entered 12/28/22 13:58:25 | Page 2 of 322 |\n|---------------|----------|----------------|---------------------------|---------------|\n|---------------|----------|----------------|---------------------------|---------------|\n\n| EXHIBIT | DESCRIPTION | ID/FULL | SUBMIT DATE |\n|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-------------|\n| D | Ace Decade Holdings Limited Share Transfer Resolution
signed by the Debtor.1 | FULL | 11/18/2022 |\n| E | Order Pursuant to Bankruptcy Code Sections 363, 521, 1108, and
1505, (A) Confirming That Chapter 11 Trustee Holds All of
Debtor's Economic and Corporate Governance Rights in Debtor
Controlled Entities, (B) Authorizing Chapter 11 Trustee to Act in
Any Foreign Country on Behalf of Estate, and (C) Granting
Related Relief (ECF No. 717). | FULL | 11/18/2022 |\n| G | Motion of Chapter 11 Trustee for Entry of Order, Pursuant to
Bankruptcy Code Sections 363, 521, 1108, and 1505, (A)
Confirming That Chapter 11 Trustee Holds All of Debtor's
Economic and Corporate Governance Rights in Debtor- Controlled
Entities, (B) Authorizing Chapter 11 Trustee to Act in Any Foreign
Country on Behalf of Estate, and (C) Granting Related Relief. | FULL | 11/18/2022 |\n| H | Hearing Transcript dated August 1, 2022
Page 118, Line 13;
Page 121, Lines 23-25 | FULL | 11/18/2022 |\n| I | Hearing Transcript dated August 4, 2022,
updated as of August 17, 2022
Page 47, Lines 15-17
Page 64, Lines 14 and 19-22 | FULL | 11/18/2022 |\n\n1 The Debtor denies that he is the director or nominee shareholder of Ace Decade. The Debtor has executed the i) Share Transfer Instrument, Exhibit C, and ii) Share Transfer Resolution, Exhibit D, and provided those documents to the Trustee to comply with the Trustee's demands. Those documents will have whatever legal force and effect that they will have based on the fact that the Debtor is not the director or nominee shareholder. In addition, the Debtor has hand delivered to the person who is the nominee shareholder and director of Ace Decade the letter with attached Share Transfer Instrument and Share Transfer Resolution marked as Exhibit B.\n\n| | | | 2022-50073 | |\n|--|-----------------------|------|--------------------|--|\n| | Ho Wan Kwok
IN RE: | | | |\n| | | | | |\n| | Debtor | | B | |\n| | | | | |\n| | 11/18/2022 | | | |\n| | | P.E. | | |\n| | | | Debtor's Exhibit B | |\n| | | | | |\n\n# **ACE DECADE HOLDINGS LIMITED incorporated in the British Virgin Islands Company No. 1828656** (the *Company*)\n\n## **SHARE TRANSFER INSTRUMENT**\n\n**\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_**\n\n\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\n\nI, Yanping (Yvette) Wang, of [*insert address*] (the *Transferor*) DO HEREBY transfer to **Luc A.**\n\n**Despins, solely in his capacity as trustee in the chapter 11 case of Ho Wan Kwok**, of 200\n\nPark Avenue, New York, New York 10166 (the *Transferee*), all shares of the Company standing\n\n)\n\nin my name in the share register of the Company.\n\nThis share transfer instrument is governed by British Virgin Islands law.\n\nAs witness the hand of the Transferor this \\_\\_\\_\\_\\_ day of November, 2022.\n\nExecuted by ) **Yanping (Yvette) Wang** ) \\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\n\n**This share transfer instrument is not subject to stamp duty in the British Virgin Islands unless the Company or its direct or indirect subsidiaries holds real property within the British Virgin Islands. The Company will not treat the Transferee as the registered holder of any shares until the name of the Transferee has been entered in the share register of the Company.**\n\n# **ACE DECADE HOLDINGS LIMITED incorporated in the British Virgin Islands Company No. 1828656** (the *Company*)\n\n# WRITTEN RESOLUTIONS OF THE SOLE DIRECTOR OF THE COMPANY\n\nWHEREAS the Company has received a share transfer dated November \\_\\_, 2022 relating to the transfer of all shares in the capital of the Company (the *Shares*) executed by Yanping (Yvette) Wang in favour of Luc A. Despins, solely in his capacity as trustee in the chapter 11 case of Ho Wan Kwok, of 200 Park Avenue, New York, New York 10166 (the *Transferee*), together with a certificate representing the Shares (the *Certificate*).\n\nI, the undersigned, being the sole director of the Company, DO HEREBY ADOPT the following resolutions:\n\n1. the transfer of the Shares be and is hereby approved;\n\n2. the Certificate be and is hereby cancelled;\n\n3. a new certificate relating to the Shares and signed by the director of the Company be issued under the common seal of the Company to the Transferee;\n\n4. the registered agent of the Company be and is hereby authorised and directed to update the Company's share register; and\n\n5. any of the foregoing which have been done on or before the date hereof be and are hereby adopted, ratified, confirmed and approved.\n\nYanping (Yvette) Wang hereby confirms that she is the Transferor and therefore has an interest in and connection with the transactions contemplated by these resolutions.\n\nI have executed this director's resolution this \\_\\_ day of November 2022.\n\nYanping (Yvette) Wang – Director\n\n**\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_**\n\n| 2022-50073 | | | | |\n|-----------------------|------------|------|---|--|\n| Ho Wan Kwok
IN RE: | | | | |\n| | | | | |\n| | Debtor | | C | |\n| | | | | |\n| | 11/28/2022 | | | |\n| | | P.E. | | |\n| | | | | |\n| | | | | |\n\n| | | 2022-50073 | | | |\n|--|-----------------------|----------------------------|---|--|--|\n| | Ho Wan Kwok
IN RE: | | | | |\n| | | | | | |\n| | Debtor | | D | | |\n| | | | | | |\n| | 11/18/2022 | | | | |\n| | | P.E.
Debtor's Exhibit D | | | |\n| | | | | | |\n| | | | | | |\n\n| Case 22-50073
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2022-50073 | 322 | |\n|--------------------------------------------------------|--------------------------------|------------------------------------------------|--------|------------|---------------------------------|-----|--|\n| | | | IN RE: | | Ho Wan Kwok | | |\n| | UNITED STATES BANKRUPTCY COURT | | | | | | |\n| | | DISTRICT OF CONNECTICUT | | Debtor | | E | |\n| | BRIDGEPORT DIVISION | | | | | | |\n| ------------------------------------------------------ | x | | | 11/18/2022 | | | |\n| In re: | :
: | Chapter 11 | | | P.E. | | |\n| | : | | | | | | |\n| HO WAN KWOK, | : | Case No. 22-50073 (JAM) | | | | | |\n| Debtor. | :
:
: | | | | | | |\n\n# **ORDER, PURSUANT TO BANKRUPTCY CODE SECTIONS 363, 521, 541, 1108, AND 1505, (A) CONFIRMING THAT CHAPTER 11 TRUSTEE HOLDS ALL OF DEBTOR'S ECONOMIC AND CORPORATE GOVERNANCE RIGHTS IN DEBTOR-CONTROLLED ENTITIES, (B) AUTHORIZING CHAPTER 11 TRUSTEE TO ACT IN ANY FOREIGN COUNTRY ON BEHALF OF ESTATE, AND (C) GRANTING RELATED RELIEF**\n\nx\n\n------------------------------------------------------\n\nUpon the motion (the \"Motion\") of Mr. Luc A. Despins, in his capacity as the chapter 11 trustee (the \"Trustee\") appointed in the chapter 11 case of Ho Wan Kwok (the \"Debtor\"), for the entry of an order (this \"Order\"), pursuant to sections 363, 541, 1108, and 1505 of title 11 of the United States Code (the \"Bankruptcy Code\"), (a) confirming that the Trustee holds all of the Debtor's economic and corporate governance rights in all corporate entities owned and/or controlled by the Debtor (the \"Debtor-Controlled Entities\"), including, without limitation, Genever Holdings Corporation (\"Genever (BVI)\") and granting related relief, (b) authorizing the Trustee to act in any foreign country on behalf of the Debtor's estate (the \"Estate\"), and (c) granting related relief, all as more fully set forth in the Motion; and this Court having jurisdiction to consider the Motion and the relief requested therein in accordance with 28 U.S.C. §§ 157 and 1334 and the *Standing Order of Reference* from the United States District Court for the District of Connecticut (as amended); and consideration of the Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. § 157(b); and venue being proper in this Court\n\npursuant to 28 U.S.C. §§ 1408 and 1409; and the Court having found that the relief requested in the Motion is in the best interest of the Estate, its creditors, and all parties in interest; and due and sufficient notice of the Motion having been given under the particular circumstances; and it appearing that no other or further notice need be given; and upon all of the proceedings had before this Court; and any objections to the relief requested herein having been withdrawn or overruled on the merits; and after due deliberation and sufficient cause appearing therefor; and for the reasons stated on the record at the hearings held on August 1, 2022 and August 4, 2022 with respect to the Motion and the additional relief sought through, among other things, the filing of the revised proposed orders filed on July 31, 2022 [ECF No. 645], August 2, 2022 [ECF No. 671], and August 4, 2022 [ECF No. 681], it is hereby ORDERED THAT:\n\n1. The Motion is granted as set forth herein.\n\n2. Effective as of entry of the order, dated July 8, 2022, granting the appointment of Luc A. Despins as the Trustee in the Chapter 11 Case [ECF No. 523], the Trustee holds all of the Debtor's economic and governance rights, for the benefit of the Estate, with respect to all Debtor-Controlled Entities, including, without limitation, Genever (BVI). For the avoidance of doubt, the foregoing rights include the Trustee's asserted authority to replace any existing officer, director, manager, or similar person of the Debtor-Controlled Entities. As part of the foregoing, to the extent necessary, the Trustee is authorized to act, in his capacity as the chapter 11 trustee in this Chapter 11 Case, as any such officer, director, manager, or similar person who has been removed.\n\n3. In accordance with sections 521(a)(3) and 521(a)(4) of the Bankruptcy Code, the Debtor is hereby directed to, respectively, (a) cooperate with the Trustee as necessary to enable the Trustee to perform his duties, including, without limitation, the Trustee's investigation into\n\n### Case 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 3 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 10 of 322\n\nthe assets of the Debtor, and (b) surrender to the Trustee all property of the estate and any recorded information, including, without limitation, books, documents, records, and papers relating to property of the estate (including, without limitation, his shares in Genever (BVI) and all related corporate governance documents). In furtherance of the Debtor's duties under sections 521(a)(3) and 521(a)(4) of the Bankruptcy Code, the Debtor is hereby directed to:\n\n- (a) fill in all missing information and execute each of (i) the share transfer instrument, (ii) the director's resolution with respect to the Debtor's shares in Genever (BVI), and (iii) the director's resolution related to the restoration of the Genever (BVI), submission of the transfer-in pack, and appointment of a new registered agent, in each case in the forms attached hereto as **Exhibit A** (leaving such documents in undated form) and deliver, within two business days after entry of this Order, such completed and executed documents to the Trustee (who will then submit such documents to the new registered agent for Genever (BVI) in the British Virgin Islands (\"BVI\")) as well as provide the Trustee with the information necessary for the Trustee to complete the transfer-in pack of Harneys Fiduciary, in the form included in **Exhibit A** hereto, within two business days after entry of this Order (who will then submit the transfer-in pack to the new registered agent for Genever (BVI) in the BVI); and\n- (b) deliver, no later than five business days after entry of this Order, a copy of the letter in the form attached hereto as **Exhibit B** (the \"Letter to UK Counsel\") to the law firm of Harcus Parker Limited, former counsel to the Debtor in the litigation styled *Kwok Ho Wan, Ace Decade Holdings Limited, and Dawn State Limited v. UBS AG (London Branch)*, Case No. CL-2020-000345, pending in the High Court\n\n### Case 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 4 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 11 of 322\n\nof Justice, Business and Property Courts of England and Wales, Queen's Bench Division, Commercial Court (the \"UBS Litigation\"), with a copy of such letter to be delivered concurrently to the Trustee. For the avoidance of doubt, the Trustee shall be deemed, for all purposes, to be the owner of the Debtor's claims asserted in the UBS Litigation.\n\n4. To the extent the Trustee's exercise of economic and governance rights with respect to the Debtor-Controlled Entities is deemed to be outside the ordinary course of business, such exercise by the Trustee of economic and governance rights is hereby approved, as there is sound business justification for the exercise of such rights, including because the Trustee holds all of the Debtor's economic and governance rights with respect to such entities for the benefit of the Estate. Notwithstanding the applicability of any of Bankruptcy Rule 6004(h) or any other provisions of the Bankruptcy Rules or the Local Rules of Bankruptcy Practice and Procedure for the United States Bankruptcy Court for the District of Connecticut to the contrary, the terms and conditions of this Order shall be immediately effective and enforceable upon its entry, and any applicable stay of the effectiveness and enforceability of this Order is hereby waived. For the avoidance of doubt, nothing in this Order authorizes the Trustee to sell, otherwise dispose of, lease, or encumber any equity in Debtor-Controlled Entities or other assets of the Debtor.\n\n5. Pursuant to section 1505 of the Bankruptcy Code, the Trustee is hereby authorized to act, as the Estate's foreign representative, in any foreign country on behalf of the Estate in any way permitted by applicable foreign law for the purpose of (a) investigating, collecting, and recovering assets of the Debtor located in foreign countries, including relief in foreign courts in furtherance thereof, as necessary or appropriate, (b) exercising control over the Debtor-Controlled Entities, including seeking relief in foreign courts in furtherance thereof, as\n\n### Case 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 5 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 12 of 322\n\nnecessary or appropriate, and (c) requesting and obtaining corporate documents from appropriate foreign corporate registries (or similar entities) holding such documents with respect to the Debtor-Controlled Entities. Without limiting the foregoing, the Trustee is authorized, pursuant to section 1505 of the Bankruptcy Court, to request and obtain the corporate documents related to Genever (BVI) from the appropriate BVI entity holding such corporate documents.\n\n6. The Debtor shall not interfere with, hinder, or delay the Trustee's exercise of the authority under this Order, including any action taken or to be taken by the Trustee in a foreign court on behalf of the Estate in furtherance of such authority. To the extent the Debtor opposes the Trustee's exercise of such authority, the Debtor shall be limited to seeking relief from this Court (and not the relevant foreign court or other foreign entity, as the case may be) on notice to parties in interest, to the extent the Debtor can show that he has standing to do so.\n\n7. In furtherance of the Trustee's exercise of the authority under this Order, the Court respectfully requests the assistance of the foreign courts with respect to the Trustee's exercise of corporate control over the Debtor-Controlled Entities, including, without limitation, Genever (BVI).\n\n8. Nothing in this Order shall be deemed to authorize any particular action with respect to Genever Holdings LLC (\"Genever (US)\") in its chapter 11 case pending before the United States Bankruptcy Court for the Southern District of New York (the \"Genever Court\"). The Trustee shall appear before, and seek guidance from, the Genever Court to the extent the Trustee's exercise of corporate governance rights with respect to Genever (US) would impact its chapter 11 case.\n\n9. Nothing in this Order shall constitute a ruling or determination regarding the validity or enforceability of the alleged trust agreement, purportedly dated February 17, 2015 and\n\n### Case 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 6 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 13 of 322\n\nexecuted by the Debtor, Genever (US), Genever (BVI), and Bravo Luck Limited (the \"Alleged Trust Agreement\"), or regarding any challenges to the Alleged Trust Agreement, and all rights of all parties in respect thereto are preserved.\n\n10. The Trustee is authorized and empowered to take all actions necessary to effectuate the relief granted in this Order.\n\n11. The terms and conditions of this Order shall be immediately effective and enforceable upon its entry.\n\n12. This Court shall retain jurisdiction with respect to all matters arising from or related to the implementation, interpretation, and enforcement of this Order.\n\nDated at Bridgeport, Connecticut this 10th day of August, 2022.\n\n## **Exhibit A**\n\n**Share Transfer Form and Director's Resolution**\n\nCase 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 8 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 15 of 322\n\n# **GENEVER HOLDINGS CORPORATION**\n\n**incorporated in the British Virgin Islands Company No. 1862840** (the *Company*)\n\n### **SHARE TRANSFER INSTRUMENT**\n\nI, **Ho Wan Kwok**, of [*insert address*] (the *Transferor*) DO HEREBY transfer to **Luc A. Despins, solely in his capacity as trustee in the chapter 11 case of Ho Wan Kwok**, of 200 Park Avenue, New York, New York 10166 (the *Transferee*), the 1000 shares of US\\$0.001 par value standing in my name in the share register of the Company.\n\nThis share transfer instrument is governed by British Virgin Islands law.\n\nAs witness the hand of the Transferor this \\_\\_\\_\\_\\_ day of August, 2022.\n\n)\n\nExecuted by ) **Ho Wan Kwok** )\n\n**This share transfer instrument is not subject to stamp duty in the British Virgin Islands unless the Company or its direct or indirect subsidiaries holds real property within the British Virgin Islands. The Company will not treat the Transferee as the registered holder of any shares until the name of the Transferee has been entered in the share register of the Company.**\n\n### **GENEVER HOLDINGS CORPORATION Incorporated in the British Virgin Islands Company No. 1862840** (the *Company*)\n\n### WRITTEN RESOLUTIONS OF THE SOLE DIRECTOR OF THE COMPANY\n\nWHEREAS the Company has received a share transfer dated August \\_\\_\\_\\_\\_, 2022 relating to the transfer of 1000 shares in the capital of the Company (the *Shares*) executed by Ho Wan Kwok in favour of Luc A. Despins, solely in his capacity as trustee in the chapter 11 case of Ho Wan Kwok, of 200 Park Avenue, New York, New York 10166 (the *Transferee*), together with a certificate representing the Shares (the *Certificate*).\n\nI, the undersigned, being the sole director of the Company, DO HEREBY ADOPT the following resolutions:\n\n- 1. the transfer of the Shares be and is hereby approved;\n- 2. the Certificate be and is hereby cancelled;\n- 3. a new certificate relating to the Shares and signed by the director of the Company be issued under the common seal of the Company to the Transferee;\n- 4. the registered agent of the Company be and is hereby authorised and directed to update the Company's share register; and\n- 5. any of the foregoing which have been done on or before the date hereof be and are hereby adopted, ratified, confirmed and approved.\n\nHo Wan Kwok hereby confirms that he is the Transferor and therefore has an interest in and connection with the transactions contemplated by these resolutions.\n\nI have executed this director's resolution this ……. day of August 2022.\n\nHo Wan Kwok – Director\n\n**\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_**\n\nCase 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 10 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 17 of\n\n\n\n| PART A - COMPANY | | | | | |\n|-------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|--------------------------------------------------------------|--|--|\n| | Name of the Company
(Note: Type the name exactly as listed on the
Certificate of Incorporation/Registration) | | | | |\n| | Former Name(s) (if applicable) | | | | |\n| | Company Type | | | | |\n| Current Registered Agent | | Name of Registered Agent | | | |\n| | | Contact Person | | | |\n| | Contact Details | Email Address
Telephone Number | | | |\n| | Method of Change of registered office and agent | | □ I will arrange for the outgoing agent to file the transfer | | |\n| | | □ I would like to arrange a 'forced transfer' by Harneys legal team | | | |\n| | Reason for change of registered office and agent | | | | |\n| | Please click here for a template resolution to change the Company's
Director's Resolution
registered agent. | | | | |\n| Is the Company operating a non-profit/charity within
the British Virgin Islands? | | O Yes O No | | | |\n| | Is the Company regulated by or registered with the
Financial Services Commission? | O Yes O No | | | |\n| | Purpose of Company | | | | |\n| (Note: Please be specific \"holding Company\" or \"investment fund\" is insufficient) | | | | | |\n| | | | | | |\n| | | | | | |\n| | | | | | |\n| Intended nature of Company's business | | | | | |\n| Does the Company: | | | | | |\n| 1. | receive more than 20% of its revenue in the form of cash or equivalents? | O Yes ■ No | | | |\n| Is the company involved in: | | | | | |\n| 2. | the arms, defence, military or nuclear industries? | | O Yes
No | | |\n| 3. | trading oil and gas, precious metals, gems, jewels, fine art, real estate or other
O Yes
O No
collectors' items? | | | | |\n| 4. | the creation or provision of any one of the following: | | O Yes O No | | |\n\nCase 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 11 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 18 of\n\n\n\n| | blockchain technology | | | | |\n|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|--|--|--|\n| | the creation or issuance of virtual assets or tokens | | | | |\n| | any one of the following: the offering of an exchange between virtual assets
and fiat currencies, the offering an exchange between one or more forms of
virtual assets, the provision of services relating to the transfer of virtual assets,
the provision of virtual asset custody services or the participation in, and
provision of, financial services related to a virtual asset issuance or the sale of
a virtual asset? | | | | |\n| 5. | the production or trading of substances or products? | O Yes [] No | | | |\n| 6. | gambling or the adult entertainment industry? | O Yes O No | | | |\n| 7. | activities that may have a major environmental impact (e.g. forestry, oil and gas, deep
sea mining, quarrying or power generation)? | O Yes O No | | | |\n| | Collective Investment | | | | |\n| | 8. | O Yes O No | | | |\n| Structure | | | | | |\n| | If this entity will form part of a group (includings of minority interests), please provide a chart indicating the
position this entity will take in the structure. The chart should include all entities holding, directly, an intere
st of 10% or more in this entity and any subsidiaries of the entity. If the structure has 3
layers or less then copies of the Reqister of Members of each entity through to the ultimate parent maybe provided as
an alternative to a structure chart. | | | | |\n| If you have answered YES to any of the questions above, please provide details. | | | | | |\n| If the intended nature of the Company's business is not identified above, please provide details. | | | | | |\n| Country(ies) of intended business activities | | | | | |\n| (Note: Please include location of customers, distributors and bank accounts.) | | | | | |\n| | | | | | |\n| Source of funds
(Note: Please provide details of the source of funding for the initial activities of the Company. You may be asked to provide
supporting documentation.) | | | | | |\n| | | | | | |\n| PART B - ECONOMIC SUBSTANCE | | | | | |\n| The Company may be required to have adequate substance' in the BVI. | | | | | |\n| Please click here to review Harneys guidance requirements. If you have any queries please liaise with
your usual Harneys contact. | | | | | |\n| Economic Substance Financial Reporting Period | | | | | |\n| | | | | | |\n\nCase 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 12 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 19 of\n\n\n\n| | | Default reporting periods depend on the date of incorporation. If you have elected to use an economic substance reporting
period end that is not your default date please tick here, and confirm the date of your reporting period end: | | | | |\n|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|---------------|----------------------------|--|\n| | reporting period, our current reporting period end is: | We have formally notified the ITA of a change to our economic substance | | | [dd/mm/yyyy to dd/mm/yyyy] | |\n| | We would like to apply to make a change to our default reporting period. Harneys is able to arrange this notification - we
will contact you to discuss what is possible to achieve and provide a quote. | | | | | |\n| | If no box is ticked, the default reporting period will apply. | | | | | |\n| Does Company conduct: | | | | | | |\n| 1. | banking business? | | | | O Yes O No | |\n| 2. | distribution and service centre business? | | | | O Yes O No | |\n| 3. | financing and leasing business? | | | | O Yes O No | |\n| 4. | fund management business? | | | | T Yes ■ No | |\n| 5. | headquarters business? | | | | O Yes O No | |\n| ട. | holding company business? | | | | O Yes O No | |\n| | Please specify the types of asset(s) that the
Company is intending to hold. | | | | | |\n| | partnership interests, etc.) | Please provide details of any other legal entities in
which the Company will hold interests (e.g. shares, | | | | |\n| 7. | insurance business? | | | O Yes [] No | | |\n| 8. | intellectual property business? | | | O Yes O No | | |\n| ு. | shipping business? | | | O Yes [] No | | |\n| If you have answered YES to any of the questions above, please provide details.
(Note: The activities above may be relevant activities' for economic substance purposes. Please include as much detail as
possible on the exact scope of any relevant activity.) | | | | | | |\n| Please confirm the entity's country(ies) of tax residence. | | | | | | |\n| PART C - SHAREHOLDERS | | | | | | |\n| (Note: Details of additional shareholders can be entered in Part I.) | | | | | | |\n| | Name of Shareholder
Name | | | | | |\n| | Contact Details | Telephone Number | | Email Address | | |\n| | Name of Shareholder | Name | | | | |\n\nCase 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 13 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 20 of 322\n\n\n\n| Contact Details | Telephone Number | Email Address | |\n|-------------------------------------|------------------|---------------|--|\n| | | | |\n| Name of Shareholder | Name | | |\n| Contact Details | Telephone Number | Email Address | |\n| | | | |\n| Name of Shareholder | Name | | |\n| Contact Details
Telephone Number | | Email Address | |\n| | | | |\n\n-\n-\n\n| First Name | Middle
Name | Surname | Residential Address | |\n|------------------------------|----------------|----------------------------|--------------------------|-------|\n| | | | Address 1 | |\n| Nationality | | Date of Birth (DD/MM/YYYY) | Address 2 | |\n| | | | City | State |\n| BOSS Act Beneficial
Owner | 0
Yes
0 | No | Country
Post/Zip Code | |\n| | | | | |\n| First Name | Middle
Name | Surname | Residential Address | |\n| | | | Address 1 | |\n| Nationality | | Date of Birth (DD/MM/YYYY) | Address 2 | |\n| | | | State
City | |\n| BOSS Act Beneficial
Owner | Yes
■ | No | Country
Post/Zip Code | |\n\nCase 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 14 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 21 of\n\n\n\n| First Name | Middle
Name | Surname | | Residential Address | | |\n|-----------------------------------------------------------------------------------------------------------------------------|----------------|----------------------------|---------------------|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|\n| | | | Address 1 | | | |\n| Nationality | | Date of Birth (DD/MM/YYYY) | | Address 2 | | |\n| | | | City | | State | |\n| BOSS Act Beneficial
Owner | Yes | No | Country | | Post/Zip Code | |\n| First Name | Middle
Name | Surname | Residential Address | | | |\n| | | | Address 1 | | | |\n| Nationality | | Date of Birth (DD/MM/YYYY) | Address 2 | | | |\n| | | | City | | State | |\n| BOSS Act Beneficial
Owner | Yes | No | Country | | Post/Zip Code | |\n| | | | | | | |\n| Beneficial Owner Particulars - Registrable Legal Entities | | | | | | |\n| may be requested. | | | | | Note: A registrable legal entity which would be a beneficial owner if it were a natural person and falls into one of
the following categories: (a) its securities are listed on a recognised stock exchange or an entity the securities of
which are so listed; (b) it is a BV regulated investment fund or a subsidiary of such a fund; (c) it is a BV/ regulated person or a
foreign regulated person; or (d) it is a sovereign state or a wholly owned subsidiary of a sovereign state. Additional information | |\n| Full Legal Name | | Registered Address | | | | |\n| | | Address 1 | | | | |\n| | | Address 2 | | | | |\n| Alternative Name(s) (if applicable) | | City | | City | | |\n| | | Country | | Country | | |\n| Country of Registration | | | | | | |\n| | | | | | | |\n| | | (DD/MM/YYYY) | | | | |\n| | | | | | | |\n| Registration Number
Date of incorporation
Name of Stock Exchange (if applicable)
Name of Regulator (if applicable) | | | | | | |\n| Location of Beneficial Ownership Database | | Address | | | | |\n\nCase 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 15 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 22 of\n\n| | | Address 2 | | | |\n|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|------------------|---------------|---------------|------------|\n| | | City | | City | |\n| | | Country | | Country | |\n| Contact Details | | Telephone Number | | Email Address | |\n| Beneficial Owner - Exemption | | | | | |\n| Will the company be an exempt person under the BOSS Act? | | | | | O Yes ■ No |\n| If YES, on what basis? | | | | | |\n| | | | | | |\n| PART E - DIRECTOR(S) | | | | | |\n| Each director must sign and complete the relevant section in our Compliance Pack (Individuals or Others)
together with a Consent to Act Form signed at their original date of appointment – if you need to reproduce this document
please use this template (Individual Directors or Non-Individual Directors).
Please refer to our Additional Services section for more information about our director services.
(Note: Details of additional directors can be entered in Part I.) | | | | | |\n| Name of Director | Name | | | | |\n| Contact Details | Telephone Number | | Email Address | | |\n| | | | | | |\n| Name of Director | Name | | | | |\n| Contact Details | Telephone Number | | Email Address | | |\n| | | | | | |\n| Name of Director | Name | | | | |\n| Contact Details | Telephone Number | | Email Address | | |\n| PART F - OFFICER(S) | | | | | |\n| (Note: Details of additional officers can be entered in Part I.) | | | | | |\n| Name of Officer | Name | | | | |\n| Contact Details | Telephone Number | | Email Address | | |\n| | | | | | |\n| Name of Officer | Name | | | | |\n| Contact Details | Telephone Number | | Email Address | | |\n| PART G - COMPLIANCE QUESTIONNAIRE | | | | | |\n| Any natural person or corporate entity which is listed in one of the following sections must compliance
Questionnaire: | | | | | |\n\nCase 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 16 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 23 of\n\n\n\n| Corporate Record | Harneys | | Alternative Address | | |\n|----------------------------|------------------|---------------------|---------------------|---------------|--|\n| | 0 | Address 1 | | | |\n| | | Address 2 | | | |\n| Register of Members | | City | | State | |\n| | | Country | | Post/Zip Code | |\n| Contact Details | Telephone Number | | Email Address | | |\n| Corporate Record | Harneys | | Alternative Address | | |\n| | | Address 1 | | | |\n| | | Address 2 | | | |\n| Register of Directors | | City | | State | |\n| | | Country | | Post/Zip Code | |\n| Contact Details | Telephone Number | | Email Address | | |\n| Corporate Record | Harneys | Alternative Address | | | |\n| | ■ | Address 1 | | | |\n| Minutes and Resolutions of | | Address 2 | | | |\n| Directors and Members | | City | | State | |\n| | | Country | | Post/Zip Code | |\n| Contact Details | Telephone Number | | Email Address | | |\n| Corporate Record | Harneys | | Alternative Address | | |\n| | | Address 1 | | | |\n| Register of Charges | 0 | Address 2 | | | |\n\nCase 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 17 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 24 of\n\n| | | City | | State | |\n|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|-----------------------|---------------------|---------------|--|\n| | | Country | | Post/Zip Code | |\n| Contact Details | Telephone Number | | Email Address | | |\n| Note: Additional fees will be incurred annually by the Company which must be paid in advance if Harneys are required to
maintain the original financial records. | | | | | |\n| Corporate Record | Harneys | | Alternative Address | | |\n| | | Name of record keeper | | | |\n| Financial records and underlying | | Address 1 / Address 2 | | | |\n| documentation | | City | | State | |\n| | | Country | | Post/Zip Code | |\n| Contact Details | Telephone Number | | Email Address | | |\n| Harneys can also provide specialised Bookkeeping and
Financial Statement preparation services. Would you like
us to contact you with more information? | | O Yes | | | |\n| PART I - ADDITIONAL INFORMATION | | | | | |\n| Note: Please use this space to provide us with any special information. Any work which is not within
the scope of our services may be referred to our affiliate law firm, Harneys Westwood & Riegels LP, who will contact you
directly. | | | | | |\n| PART J - PAYMENT INSTRUCTIONS AND BILLING
If you have not received a quote in relation to our services please contact our New Business Team. | | | | | |\n| Method of payment: We accept payments via wire transfer and credit card. Please click here for our payment instructions
and use the reference 'New Business' and the proposed name of the Company provided in Part A. | | | | | |\n| Instructing Agent/Client | | | | | |\n| Please indicate your method of payment | | □ Credit Card | Wire | | |\n| | | Address 1 | | | |\n| | | Address 2 | | | |\n| Billing Address | | City | | City | |\n| | | Country | | Country | |\n| Billing Email (Note: We only send invoices by email.) | | | | | |\n| PART K - DECLARATION AND UNDERTAKING | | | | | |\n\nCase 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 18 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 25 of 322\n\n\n\n| Full Name | |\n|------------------------------------------------|--|\n| Name of corporate entity (if applicable) | |\n| Position with corporate entity (if applicable) | |\n| Signature | |\n| Date | |\n\nCase 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 19 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 26 of\n\n322\n\n*Transfer-In Pack – BVI Business Company*\n\n\n\n### **ADDITIONAL SERVICES**\n\n### **Company Secretarial Services**\n\nOur company administration teams provide secretarial and administrative support including acting as company secretary throughout the life of a business or project. This includes maintenance of company records.\n\n### **Nominee Shareholder Services & Trust Services**\n\nWe provide nominee shareholder services. For clients interested in succession planning involving their BVI business company shares we would invite you to consider the use of our trust services. Our experienced team of private wealth practitioners can advise you on this process. One of the key benefits of succession planning through trusts is avoiding the time, cost and publicity associated with a BVI probate application.\n\n### **Director Services**\n\nHarneys Fiduciary offers both corporate directors and qualified professionals who may be appointed to serve as directors of a BVI Company. Provision of director services is considered on a case by case basis, however, taking into consideration the type of company and its activities.\n\n### **Bank Accounts**\n\nWe work closely with numerous financial institutions in the BVI and internationally and can help you open a bank account for your new company quickly and efficiently. We can provide authorised signatories for bank accounts and maintain and keep your financial records.\n\n### **Accounting Services**\n\nHarneys Fiduciary has its own in-house accounting team specialising in the provision of bookkeeping and accounting services to meet the needs of companies, limited partnerships and trusts.\n\nOur accounting services include maintenance of financial records, preparation of monthly, quarterly, or annual management accounts, preparation of annual financial statements and liaising with external auditors and advisors as required.\n\nWe can also provide access to auditors and other specialists outside our firm if this is necessary to meet your particular needs. Our connections both locally in the BVI and internationally are numerous and well established.\n\n### **Other Services**\n\nHarneys Fiduciary also provides other services including liquidation services, authorised representative services, safe custody, escrow and a wide range of corporate secretarial services provided on an ad-hoc basis.\n\nIf you have any questions or would like more information on any of the above services please contact us.\n\n### **GENEVER HOLDINGS CORPORATION Incorporated in the British Virgin Islands Company No. 1862840** (the *Company*)\n\n### WRITTEN RESOLUTIONS OF THE SOLE DIRECTOR OF THE COMPANY\n\nWHEREAS the Company's registered agent has resigned, and the Company is currently struck‐off of the Registry of Corporate Affairs (the *Registry*) pursuant to s.213(1) of the BVI Business Companies Act 2004.\n\nWHEREAS the Company intends to rectify the status of the Company and place it back in good standing and in order to do so desires to appoint Harneys Corporate Services Limited of Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, VG 1110, British Virgin Islands as its registered agent.\n\nI, the undersigned, being the sole director of the Company, DO HEREBY ADOPT the following resolutions:\n\n- 1. the Company change its registered agent to Harneys Corporate Services Limited of Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, VG 1110, British Virgin Islands;\n- 2. the Company change its registered office to Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands;\n- 3. a notice, in the approved form, of the change of registered agent and registered office of the Company, be filed with the BVI Registry of Corporate Affairs; and\n- 4. the sole director, any employee of Harneys Corporate Services Limited or any employee of Harney Westwood & Riegels LP, be and is hereby authorised to:\n\t- a. pay any outstanding fees due to the Registry;\n\t- b. execute or submit any document to the Registry; and\n\t- c. to take any and all other actions necessary to bring the Company into good standing and to give full effect to the change of registered agent and registered office; and\n\n## Case 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 21 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 28 of 322\n\n5. the terms and conditions of Harneys Corporate Services Limited for the provision of registered office and registered agent services (as amended or supplemented from to time) be and are approved, and the completion and execution of the Harneys Corporate Services Limited 'transfer‐in pack' for and on behalf of the Company by the sole director be and is hereby approved.\n\nHo Wan Kwok hereby confirms that he has no conflict of interest in connection with the transactions contemplated by these resolutions.\n\nI have executed this director's resolution this ……. day of August 2022.\n\nHo Wan Kwok – Director\n\n**\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_**\n\n# **Exhibit B**\n\n**Letter to Harcus Parker Limited**\n\nHo Wan Kwok [*insert address*]\n\nAugust [\\_\\_], 2022\n\n# **VIA EMAIL**\n\nHarcus Parker Limited 7th Floor Melbourne House 44 - 46 Aldwych London, WC2B 4LL Attn: Jennifer Morrissey Email: JMorrissey@harcusparker.co.uk\n\n# **Re:** *Kwok Ho Wan, Ace Decade Holdings Limited, and Dawn State Limited v. UBS AG (London Branch)***, Case No. CL-2020-000345 – Appointment of Trustee in Chapter 11 Case of Ho Wan Kwok**\n\nDear Ms. Morrissey:\n\nThis is to confirm to you that Luc A. Despins has been appointed as the trustee (the \"Trustee\") in my chapter 11 case, pending before the United States District Court for the District of Connecticut (the \"U.S. Bankruptcy Court\"). All of my interests in the litigation against UBS AG (London Branch) pending in the High Court of Justice, Business and Property Courts of England and Wales, Queen's Bench Division, Commercial Court (the \"UBS Litigation\") is property of my bankruptcy estate as a matter of United States bankruptcy law.\n\nUpon Mr. Despins' appointment as the Trustee, he exercises control over all property of the bankruptcy estate, including my claim in the UBS Litigation, so that he now has authority and standing to apply to be recognized as the appropriate party to prosecute my claim in the UBS Litigation. As a matter of United States bankruptcy law, I have no authority or standing at this time to prosecute the UBS Litigation.\n\nIn furtherance of the foregoing, and for the avoidance of doubt, I hereby expressly authorize you to have full and complete discussions on my behalf with Mr. Despins regarding the UBS Litigation, the merits thereof, any related settlement discussions, and any other topics related to the prosecution of the UBS Litigation and to take instructions from him in relation to my claim in the UBS Litigation regardless of any attorney-client privilege, work product, or other privilege which belongs to me. Any waiver of privilege is limited to the provision of this information to the Trustee. My consent is limited to giving access to the Trustee to the extent that I am entitled and contains no wider waiver of privilege and is not consent by me to the Trustee to waive my privilege.\n\n## Case 22-50073 Doc 717 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 24 of 24 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 31 of 322\n\nAmong other things, and as detailed in the order of the U.S. Bankruptcy Court (a copy of which is enclosed as Exhibit 1), I instruct you to (i) as soon as is practicable deliver to and share with the Trustee all memoranda, advice, and other communications by you to me regarding the UBS Litigation, any other information (whether in written form or not) regarding the merits of the UBS Litigation, and any settlement offers received or made by me or you in connection with such litigation, and (ii) as soon as is practicable provide the Trustee will full access to the parts of your case file in the UBS Litigation to which I am entitled as well as all pleadings and other court documents filed in the UBS Litigation.\n\nSincerely,\n\nHo Wan Kwok\n\ncc: Luc A. Despins, in his capacity as trustee in the chapter 11 case of Ho Wan Kwok\n\nEnclosure\n\n# **Notice Recipients**\n\nDistrict/Off: 0205−5 User: admin Date Created: 8/10/2022 Case: 22−50073 Form ID: pdfdoc2 Total: 66\n\n### **Recipients submitted to the BNC (Bankruptcy Noticing Center) without an address:**\n\n20 Pacific Alliance Asia Opportunity Fund L.P. cr Zheng Wu 20 Rui Ma 20 Weican Meng intp Golden Spring (New York) LTD crcm Official Committee of Unsecured Creditors intp HK International Funds Investments (USA) Limited, LLC intp Mei Guo cr Baosheng Guo cr Yan Zhao cr Ning Ye cr Chong Shen Raphanella cr Xiaodan Wang cr Rong Zhang aty Michael S. Weinstein\n\n### **Recipients of Notice of Electronic Filing:**\n\n| ust | U. S. Trustee
USTPRegion02.NH.ECF@USDOJ.GOV |\n|-----|---------------------------------------------------------|\n| tr | Luc A. Despins
lucdespins@paulhastings.com |\n| aty | Aaron Romney
aromney@zeislaw.com |\n| aty | Aaron A Mitchell
aaron@lmesq.com |\n| aty | Annecca H. Smith
asmith@rc.com |\n| aty | Avram Emmanuel Luft
aviluft@paulhastings.com |\n| aty | Carollynn H.G. Callari
ccallari@callaripartners.com |\n| aty | David S. Forsh
dforsh@callaripartners.com |\n| aty | David V. Harbach, II
dharbach@omm.com |\n| aty | Douglas S. Skalka
dskalka@npmlaw.com |\n| aty | Douglass E. Barron
douglassbarron@paulhastings.com |\n| aty | Eric A. Henzy
ehenzy@zeislaw.com |\n| aty | G. Alexander Bongartz
alexbongartz@paulhastings.com |\n| aty | Holley L. Claiborn
holley.l.claiborn@usdoj.gov |\n| aty | Irve J. Goldman
igoldman@pullcom.com |\n| aty | James C. Graham
jgraham@npmlaw.com |\n| aty | James M. Moriarty
jmoriarty@zeislaw.com |\n| aty | Jay Marshall Wolman
jmw@randazza.com |\n| aty | John L. Cesaroni
jcesaroni@zeislaw.com |\n| aty | Jonathan Kaplan
jkaplan@pullcom.com |\n| aty | Kristin B. Mayhew
kmayhew@mdmc−law.com |\n| aty | Laura Aronsson
laronsson@omm.com |\n| aty | Luc A. Despins
lucdespins@paulhastings.com |\n| aty | Lucas Bennett Rocklin
lrocklin@npmlaw.com |\n| aty | Mia N. Gonzalez
mgonzalez@omm.com |\n| aty | Michael S. Weinstein
mweinstein@golenbock.com |\n| aty | Nicholas A. Bassett
nicholasbassett@paulhastings.com |\n| aty | Patrick M. Birney
pbirney@rc.com |\n| aty | Patrick R. Linsey
plinsey@npmlaw.com |\n| aty | Peter Friedman
pfriedman@omm.com |\n| aty | Peter J. Zarella
pzarella@mdmc−law.com |\n| aty | Sara Pahlavan
spahlavan@omm.com |\n| aty | Scott D. Rosen
srosen@cb−shea.com |\n| aty | Stephen M. Kindseth
skindseth@zeislaw.com |\n| aty | Stuart M. Sarnoff
ssarnoff@omm.com |\n| aty | Thomas J. Sansone
tsansone@carmodylaw.com |\n| aty | Timothy D. Miltenberger
Tmiltenberger@cbshealaw.com |\n| aty | William R. Baldiga
wbaldiga@brownrudnick.com |\n\nTOTAL: 15\n\nTOTAL: 38\n\n| | | Recipients submitted to the BNC (Bankruptcy Noticing Center): | | | | |\n|-------|-----------------------|---------------------------------------------------------------|---------------------|------------------------------------|------------|----------------------|\n| db | Ho Wan Kwok | 373 Taconic Road | Greenwich, CT 06831 | | | |\n| cr | Logan Cheng | c/o Randazza Legal Group, PLLC | | 100 Pearl Street | 14th Floor | Hartford, CT |\n| | 06103 | | | | | |\n| ca | Stretto | 410 Exchange, Suite 100 | Irvine, CA 92602 | | | |\n| dbaty | Brown Rudnick LLP | One Financial Center | | Boston, MA 02111 | | |\n| crcm | Pullman & Comley, LLC | 850 Main Street | | Bridgeport, CT 06601 | | |\n| 20 | Huizhen Wang | c/o TroyGould PC | | 1801 Century Park East, 16th Floor | | Attn: Christopher A. |\n| | Lilly | Los Angeles, CA 90067−2367 | | | | |\n\n### Case 22-50073 Doc 717-1 Filed 08/10/22 Entered 08/10/22 13:12:37 Page 2 of 2 Case 22-50073 Doc 1268 12/28/22 12/28/22 13:58:25 Page 33 of\n\n322\n\ncr Chao−Chih Chiu c/o TroyGould PC 1801 Century Park East, 16th Floor Attn: Christopher A.\n\n| | Lilly | Los Angeles, CA 90067−2367 | | |\n|----|-----------|----------------------------|------------------------------------|----------------------|\n| cr | Yunxia Wu | c/o TroyGould PC | 1801 Century Park East, 16th Floor | Attn: Christopher A. |\n| | | | | |\n\nLilly Los Angeles, CA 90067 cr Keyi Zilkie c/o TroyGould PC 1801 Century Park East, 16th Floor Attn: Christopher A. Lilly Los Angeles, CA 90067\n\nintp Yongbing Zhang 223 West Jackson Bl;vd. #1012 Chicago, IL 60606\n\ncr Brown Rudnick LLP One Financial Center Boston, MA 02111\n\naty Luc A. Despins Paul Hastings LLP 200 Park Avenue New York, NY 10166\n\naty Steven E. Mackey Office of the U.S. Trustee The Giaimo Federal Building 150 Court Street, Room 302 New Haven, CT 06510\n\nTOTAL: 13\n\n| Case 22-50073
Case 22-50073 | Doc 598
Doc 1268
Filed 07/23/22
Filed 12/28/22 | Entered 07/23/22 20:10:20
Entered 12/28/22 13:58:25
322 | IN RE: | | Ho Wan Kwok | 2022-50073
Page 1 of 26
Page 34 of | |\n|--------------------------------|------------------------------------------------------------------|---------------------------------------------------------------|--------|------------|-------------|------------------------------------------|--|\n| | UNITED STATES BANKRUPTCY COURT | DISTRICT OF CONNECTICUT | | Debtor | | G | |\n| | | BRIDGEPORT DIVISION | | | | | |\n| | -----------------------------------------------------------
x | | | 11/18/2022 | | | |\n| | : | | | | P.E. | | |\n| In re: | : | Chapter 11 | | | | | |\n| | : | | | | | | |\n| HO WAN KWOK, | : | Case No. 22-50073 | (JAM) | | | | |\n| Debtor.1 | :
:
: | | | | | | |\n| | -----------------------------------------------------------
x | | | | | | |\n\n# **MOTION OF CHAPTER 11 TRUSTEE FOR ENTRY OF ORDER, PURSUANT TO BANKRUPTCY CODE SECTIONS 363, 541, 1108, AND 1505, (A) CONFIRMING THAT CHAPTER 11 TRUSTEE HOLDS ALL OF DEBTOR'S ECONOMIC AND CORPORATE GOVERNANCE RIGHTS IN DEBTOR-CONTROLLED ENTITIES, (B) AUTHORIZING CHAPTER 11 TRUSTEE TO ACT IN ANY FOREIGN COUNTRY ON BEHALF OF ESTATE, AND (C) GRANTING RELATED RELIEF**\n\nLuc A. Despins, in his capacity as the chapter 11 trustee (the \"Trustee\") appointed in the chapter 11 case of Ho Wan Kwok (the \"Debtor\"), respectfully states as follows in support of this motion (the \"Motion\"):\n\n## **RELIEF REQUESTED**\n\n1. By this Motion, the Trustee seeks entry of an order, substantially in the form attached hereto as **Exhibit A** (the \"Proposed Order\"), confirming that, as of his appointment on July 8, 2022, the Trustee holds all of the Debtor's economic and governance rights, for the benefit of the Debtor's estate (the \"Estate\"), with respect to all corporate entities owned and/or controlled by the Debtor (the \"Debtor-Controlled Entities\"). The Debtor-Controlled Entities include, without limitation, Genever Holdings Corporation (\"Genever (BVI)\"), a British Virgin Islands (\"BVI\") corporation that, through its wholly owned subsidiary, Genever Holdings LLC\n\n1 Although the Debtor's legal name is Ho Wan Kwok, he is also known as Guo Wengui, Miles Guo, and Miles Kwok, as well as numerous other aliases. The last four digits of the Debtor's taxpayer identification number are 9595.\n\n### Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 2 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 35 of 322\n\n(\"Genever (US)\"), 2 a New York limited liability company, is the registered owner of, among other things, an apartment at the Sherry-Netherland building in New York, New York (the \"Sherry-Netherland Apartment\"). 3 This relief is necessary because the Debtor has shown a willingness to defy court orders, suggesting that the Debtor and related persons (whether acting individually or through the Debtor-Controlled Entities) may try to take advantage of any ambiguity or misunderstanding concerning the Trustee's rights in order to frustrate the Trustee's efforts to identify and recover property of the Estate.\n\n2. In addition, to facilitate the Trustee's exercise of corporate control over the Debtor-Controlled Entities and to support the Trustee's investigation, collection, and recovery of other Estate assets that may be located in foreign jurisdictions, the Trustee requests, pursuant to section 1505 of the Bankruptcy Code, the authority to act, as the Debtor's foreign representative, in any foreign country on behalf of the Estate in any way permitted by applicable foreign law for the purpose of (a) investigating, collecting and recovering assets of the Debtor located in foreign countries, including seeking relief in foreign courts in furtherance thereof, as necessary or appropriate, (b) exercising control over the Debtor-Controlled Entities, including seeking relief in foreign courts in furtherance thereof, as necessary or appropriate, and (c) requesting and obtaining corporate documents from appropriate foreign corporate registries (or similar entities)\n\n2 On October 12, 2020, Genever (US) commenced a chapter 11 case, which is currently pending before the United States Bankruptcy Court for the Southern District of New York, Case No. 20-12411 (JLG). For the avoidance of doubt, at this time, the Trustee is not requesting any relief with respect to the chapter 11 case of Genever (US), including any modification of the *Second Amended and Restated Settlement Agreement*, dated as of September 24, 2021 [ECF No. 131-1 in Case No. 20-12411 (JLG)]. Nor should the requested relief, if granted, be deemed to authorize the Trustee to take any particular action with respect to Genever (US) in its chapter 11 case, with respect to which the Trustee will seek relief from the United States Bankruptcy Court for the Southern District of New York (the \"New York Bankruptcy Court\"), as may be appropriate. The Trustee reserves all its rights in that regard.\n\n3 As the Court is aware, the identity of the true owner of the Sherry-Netherland Apartment is presently subject to dispute.\n\n### Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 3 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 36 of 322\n\nholding such documents with respect to the Debtor-Controlled Entities, including the corporate documents related to Genever (BVI) from the appropriate BVI entity.\n\n3. To enable the Trustee to exercise the foregoing authority without interference from the Debtor, the Trustee requests confirmation from the Court that the Debtor may not interfere with, hinder, or delay the Trustee's exercise of the Debtor's economic and governance rights with respect to the Debtor-Controlled Entities or the Trustee's authority as the Debtor's foreign representative under section 1505 of the Bankruptcy Code.\n\n4. Finally, the Trustee requests that the Court request the assistance of the foreign courts in furtherance of the Trustee's exercise of the foregoing authority, including the assistance of the BVI courts regarding any request of the Trustee for relief (including on an emergency basis) with respect to the Trustee's exercise of corporate control over Genever (BVI).\n\n## **JURISDICTION, VENUE, AND STATUTORY BASES**\n\n5. The United States Bankruptcy Court for the District of Connecticut (the \"Court\") has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the *Standing Order of Reference* from the United States District Court for the District of Connecticut (as amended). This is a core proceeding within the meaning of 28 U.S.C. § 157(b).\n\n6. Venue in this District is proper pursuant to 28 U.S.C. §§ 1408 and 1409.\n\n7. The statutory bases for the relief requested herein are sections 363, 541, 1108, and 1505 of title 11 of the United States Code (the \"Bankruptcy Code\").\n\n### **BACKGROUND**\n\n8. On February 15, 2022 (the \"Petition Date\"), the Debtor filed with the Court a voluntary petition for relief under chapter 11 of the Bankruptcy Code.\n\n### Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 4 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 37 of 322\n\n9. On March 21, 2022, the United States Trustee appointed an Official Committee of Unsecured Creditors (\"Committee\") in the Debtor's chapter 11 case (the \"Chapter 11 Case\"). No examiner has been appointed in the Chapter 11 Case.\n\n10. On June 15, 2022, the Court entered a memorandum of decision and order [ECF No. 465] (the \"Trustee Order\") directing the United States Trustee to appoint a chapter 11 trustee in the Chapter 11 Case. Pursuant to the Trustee Order, the United States Trustee selected Luc A. Despins as the Trustee.\n\n11. On July 8, 2022, the Court entered an order granting the appointment of Luc A. Despins as the Trustee in the Chapter 11 Case [ECF No. 523] (the \"Appointment Order\").\n\n### **BASIS FOR RELIEF**\n\n## **A. The Court Should Confirm that the Trustee Holds All of Debtor's Economic and Governance Rights with Respect to All Debtor-Controlled Entities**\n\n12. Section 541 of the Bankruptcy Code provides that property of the estate includes \"all property, wherever located and by whomever held, to which the debtor has legal or equitable interest.\" 11 U.S.C. § 541. In addition, section 1108 of the Bankruptcy Code provides that \"[u]nless the court, on request of a party in interest and after notice and a hearing, orders otherwise, the trustee may operate the debtor's business.\" *Id*. § 1108. The related case law confirms that a chapter 11 trustee \"possesses both the economic and governance rights to participate in the management of [the debtor-owned entity] that the Debtor himself enjoyed prior to his bankruptcy filing.\" *In re Modanlo*, 412 B.R. 715, 728 (Bankr. D. Md. 2006) (confirming chapter 11 trustee's authority to, among other things, amend formation papers of debtor's wholly-owned Delaware LLC, designate himself as the LLC manager, and place LLC into voluntary chapter 11). *See also In re Albright*, 291 B.R. 538 (Bankr. D. Col. 2003) (\"Because the Trustee became the sole member of [debtor-owned entity] upon the Debtor's bankruptcy\n\n### Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 5 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 38 of 322\n\nfiling, the Trustee now controls, directly or indirectly, all governance of that entity, including decisions regarding liquidation of the entity's assets.\").\n\n13. It is paramount that the Trustee exercise, as soon as possible, economic and corporate control over the Debtor-Controlled Entities, including Genever (BVI), in order to preserve and recover assets for the benefit of the Estate. For the avoidance of doubt, this includes the Trustee's authority to replace any existing officer, director, manager, or similar person of the Debtor-Controlled Entities.\n\n14. It is undisputed that the Debtor owns all of the equity in Genever (BVI).4 It is also undisputed that Genever (BVI), in turn, wholly owns Genever (US),5 which owns, among other things, the Sherry-Netherland Apartment. According to the Genever (US)'s schedules of assets and liabilities in its chapter 11 case, the Sherry-Netherland Apartment had an initial purchase price of \\$70 million, and the Trustee believes it continues to have substantial value. Genever (US) is seeking in its chapter 11 case to sell the Sherry-Netherland Apartment, with the proceeds to be distributed pursuant to a proposed chapter 11 plan.6 Chapter 11 counsel to Genever (US) has advised the Trustee that, to date, the Debtor has been directing such counsel in the conduct of Genever (US)'s chapter 11 case. In light of the Trustee having stepped into the shoes of the Debtor, including as it relates to the Debtor's economic and governance rights with respect to Genever (BVI), *the Trustee, not the Debtor*, should have the authority to provide direction to Genever (US). Accordingly, the Trustee needs to exercise, as soon as possible, the\n\n4 *See, e.g.*, *Global Notes and Statements of Limitations, Methodology, and Disclaims Regarding the Debtor's Schedules of Assets and Liabilities and Statement of Financial Affairs* at 4 [ECF No. 77] (the \"Global Notes\"). The Debtor has asserted that he holds the equity in Genever (BVI) in trust for Bravo Luck Limited, the equity of which is owned by the Debtor's son. The Trustee is investigating to what extent this assertion is accurate.\n\n5 *See* List of Equity Holders attached to Chapter 11 Petition of Genever (US) [ECF No. 1] (Case No. 20-12411 (JLG) (Bankr. S.D.N.Y.) (identifying Genever (BVI) as sole equity holder).\n\n6 To be clear, the Trustee is not seeking to stop the sale process with respect to the Sherry Netherland Apartment. The Debtor reserves all rights, however, with respect to the proceeds of such sale.\n\n### Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 6 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 39 of 322\n\nEstate's rights in Genever (US)'s chapter 11 case, which will include seeking relief in the New York Bankruptcy Court, as necessary.\n\n15. In addition, the Trustee is investigating the extent to which the Debtor owns and/or controls additional corporate entities.7 As part of this investigation, on July 12, 2022, the Trustee sent letters to Debtor's counsel requesting, among other things, documentation and information regarding the Debtor's economic and governance rights in the Debtor-Controlled Entities, including Genever (BVI). Among other things, the Trustee requested, with respect to each such entity, the organizational documents, capitalization tables, structure charts, schedules identifying the composition of board of directors, board of directors, or similar governing bodies, schedules of all officers, and other related documents.8 To date, the Debtor has not provided any such documents to the Trustee. The Trustee needs these documents to understand the full universe of corporate entities with respect to which the Trustee has governance rights.\n\n16. Unless the Court confirms the Trustee's governance rights with respect to all Debtor-Controlled Entities, the Trustee is deeply concerned that the Debtor will continue his efforts to impede the Trustee's exercise of control over assets of the Estate. Indeed, as the Court is aware, Justice Barry Ostrager of the New York Supreme Court already found that the Debtor has a history of \"secret[ing] his assets in a maze of corporate entities and with family members.\"9 He further observed:\n\n7 For example, in addition to Genever (BVI), the Debtor's *Statements of Financial Affairs* identifies two corporate entities that the Debtor claims he owned in the past, but for various reasons, no longer controls, namely Shiny Times Holdings, LTD, and Well Origin Limited. *See* Global Notes at 6-7.\n\n8 The Trustee's letter also requested that Debtor's counsel preserve all documents, data, information, and communications related in any what to the Debtor, his affiliates, the Estate, property of the Estate, and/or the Chapter 11 Case.\n\n9 *Pacific Alliance Asia Opportunity Fund L.P. v. Kwok Ho Wan, et al.*, Case No. 22-50073 (February 9, 2022) (the \"New York State Court Ruling\") at 1. A copy of New York State Court Ruling is attached hereto to **Exhibit B**.\n\n## Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 7 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 40 of 322\n\n[t]he machinations associated with the shell game Kwok has orchestrated with respect to the Lady May are of a piece with every other evasive and contemptuous act Kwok has taken during the five years this litigation has been pending . . . 10\n\nAccordingly, the relief the Trustee seeks with respect to corporate governance rights is both critically important and very time sensitive.\n\n17. To be clear, through this Motion, the Trustee is merely seeking confirmation from this Court that he now holds the same economic and corporate governance rights in the Debtors-Controlled Entities as the Debtor had prior to entry of the Appointment Order. The Trustee is not seeking permission to *exercise* such governance rights, as doing so is well within the ordinary course of the Debtor's business. However, to the extent the Court finds it necessary to authorize such actions under section 363(b) of the Bankruptcy Code, the Trustee requests such authorization and submits that sound business justification exists for this request for all the reasons set forth above. *See Modanlo*, 412 B.R. at 732 (granting chapter 11 trustee's request, under section 363(b) of Bankruptcy Code, to take corporate action related to subsidiary of entity owned by debtor, but without deciding whether such action was inside or outside the ordinary course of business). To be clear, by this Motion, the Trustee is not seeking authority to sell or otherwise dispose of any equity in any Debtor-Controlled Entities or other assets of the Debtor. To the extent the Trustee seeks to sell or otherwise dispose of assets that are identified and recovered for the benefit of the Estate, the Trustee will seek approval of any such sales or dispositions by separate motion.\n\n18. Finally, to the extent the Court finds it necessary to rely on section 363(b) for the relief requested in this Motion, the Trustee requests a waiver of the fourteen-day stay requirements under Bankruptcy Rule 6004(h), such that the Proposed Order be effective\n\n10 New York State Court Ruling at 7.\n\n### Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 8 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 41 of 322\n\nimmediately upon entry thereof. For all the reasons set forth above, delays in the Trustee's exercise of economic and corporate governance rights could adversely affect the Trustee's ability to identify and recover property of the Estate.\n\n### **B. The Court Should Appoint the Trustee as Foreign Representative of Debtor's Estate**\n\n19. Section 1505 of the Bankruptcy Code provides that, to the extent consistent with applicable foreign law, a \"trustee or another entity (including an examiner) may be authorized by the court to act in a foreign country on behalf of an estate created under section 541.\" 11 U.S.C. § 1505. Here, the Trustee requests authority under section 1505 to act as the Debtor's foreign representative in any foreign country for the purpose of (a) investigating, collecting, and recovering assets of the Debtor located in foreign countries, including seeking relief in foreign courts in furtherance thereof, as necessary or appropriate, (b) exercising control over the Debtor-Controlled Entities, including seeking relief in foreign courts in furtherance thereof, as necessary or appropriate, and (c) requesting and obtaining corporate documents from appropriate foreign corporate registries (or similar entities) holding corporate documents with respect to the Debtor-Controlled Entities, including the corporate documents related to Genever (BVI) from the appropriate BVI entity. The Trustee will, of course, comply with all applicable foreign law requirements when acting in any foreign country.\n\n20. In addition, and in furtherance of the this relief, the Trustee requests that the Court request the assistance of the foreign courts, including the assistance of the BVI courts regarding any request of the Trustee for relief with respect to the Trustee's exercise of corporate control over Genever (BVI). In this regard, the Trustee is informed by BVI counsel that the BVI courts will be in summer recess until September 2022, which practically means that no hearing could be held in the BVI until September 2022, except on an emergency basis. The Trustee respectfully\n\n### Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 9 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 42 of 322\n\nrequests this Court's assistance in obtaining emergency relief from the BVI courts as necessary.11 Such relief is plainly warranted in light of the Debtor's propensity, as discussed above, to hide his assets from creditors and to disregard court orders (even when threatened with contempt sanctions). Given this history, the Debtor should not be left to exercise any corporate governance rights with respect to the Debtor-Controlled Entities for one more day.\n\n21. To enable the Trustee to exercise the foregoing authority without interference from the Debtor, the Court should confirm that the Debtor may not to interfere with, hinder, or delay the Trustee's exercise of the Debtor's economic and governance rights with respect to the Debtor-Controlled Entities or the Trustee's authority as the Debtor's foreign representative under section 1505 of the Bankruptcy Code, including any action taken by the Trustee in a foreign court on behalf of the Estate in furtherance thereof. To the extent the Debtor opposes any action taken or to be taken by the Trustee in accordance with the foregoing authority, the Debtor should be limited to seeking relief from this Court (and not the relevant foreign court or other foreign entity, as the case may be) on notice of parties in interest in this case, to the extent the Debtor can show that he has standing to do so.\n\n### **NO PRIOR REQUEST**\n\n22. The Trustee has not previously sought the relief requested herein from this or any other court.\n\n[*Remainder of page intentionally left blank.*]\n\n11 The Trustee is hopeful that he will not have to seek the intervention of the BVI courts on an emergency basis but needs to be authorized to do so to the extent necessary.\n\n## Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 10 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 43 of 322\n\nWHEREFORE, for the foregoing reasons, the Trustee respectfully requests entry of the\n\nProposed Order granting the relief requested in this Motion and such other relief as is just and\n\n## proper.\n\nDated: July 23, 2022 LUC A. DESPINS,\n\nNew Haven, Connecticut CHAPTER 11 TRUSTEE\n\nBy: */s/ Patrick R. Linsey*\n\nPatrick R. Linsey (ct29437) NEUBERT, PEPE & MONTEITH, P.C. 195 Church Street, 13th Floor New Haven, Connecticut 06510 (203) 781-2847 plinsey@npmlaw.com\n\n*and*\n\nNicholas A. Bassett *(pro hac vice* pending) PAUL HASTINGS LLP 2050 M Street NW Washington, D.C., 20036 (202) 551-1902 nicholasbassett@paulhastings.com\n\n*and*\n\nAvram E. Luft *(pro hac vice* pending) Douglass Barron (*pro hac vice* pending) PAUL HASTINGS LLP 200 Park Avenue New York, New York 10166 (212) 318-6079 aviluft@paulhastings.com\n\n*Proposed counsel for the Chapter 11 Trustee*\n\n# **EXHIBIT A**\n\n**Proposed Order**\n\n## **UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION**\n\n| ----------------------------------------------------------- | x | |\n|-------------------------------------------------------------|--------|----------------------------|\n| In re: | :
: | Chapter 11 |\n| | : | |\n| HO WAN KWOK, | :
: | Case No. 22-50073
(JAM) |\n| Debtor. | : | |\n| ----------------------------------------------------------- | :
x | |\n| | | |\n\n# **ORDER, PURSUANT TO BANKRUPTCY CODE SECTIONS 363, 541, 1108, AND 1505, (A) CONFIRMING THAT CHAPTER 11 TRUSTEE HOLDS ALL OF DEBTOR'S ECONOMIC AND CORPORATE GOVERNANCE RIGHTS IN DEBTOR-CONTROLLED ENTITIES, (B) AUTHORIZING CHAPTER 11 TRUSTEE TO ACT IN ANY FOREIGN COUNTRY ON BEHALF OF ESTATE, AND (C) GRANTING RELATED RELIEF**\n\nUpon the motion (the \"Motion\") of Mr. Luc A. Despins, in his capacity as the chapter 11 trustee (the \"Trustee\") appointed in the chapter 11 case of Ho Wan Kwok (the \"Debtor\"), for the entry of an order (this \"Order\"), pursuant to sections 363, 541, 1108, and 1505 of title 11 of the United States Code (the \"Bankruptcy Code\"), (a) confirming that the Trustee holds all of the Debtor's economic and corporate governance rights in all corporate entities owned and/or controlled by the Debtor (the \"Debtor-Controlled Entities\"), including, without limitation, Genever Holdings Corporation (\"Genever (BVI)\") and granting related relief, (b) authorizing the Trustee to act in any foreign country on behalf of the Debtor's estate (the \"Estate\"), and (c) granting related relief, all as more fully set forth in the Motion; and this Court having jurisdiction to consider the Motion and the relief requested therein in accordance with 28 U.S.C. §§ 157 and 1334 and the *Standing Order of Reference* from the United States District Court for the District of Connecticut (as amended); and consideration of the Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. § 157(b); and venue being proper in this Court\n\n### Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 13 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 46 of 322\n\npursuant to 28 U.S.C. §§ 1408 and 1409; and the Court having found that the relief requested in the Motion is in the best interest of the Estate, its creditors, and all parties in interest; and due and sufficient notice of the Motion having been given under the particular circumstances; and it appearing that no other or further notice need be given; and upon all of the proceedings had before this Court; and any objections to the relief requested herein having been withdrawn or overruled on the merits; and after due deliberation and sufficient cause appearing therefor, it is hereby ORDERED THAT:\n\n1. The Motion is granted as set forth herein.\n\n2. Effective as of entry of the order, dated July 8, 2022, granting the appointment of Luc A. Despins as the Trustee in the Chapter 11 Case [ECF No. 523], the Trustee holds all of the Debtor's economic and governance rights, for the benefit of the Estate, with respect to all Debtor-Controlled Entities, including, without limitation, Genever (BVI). For the avoidance of doubt, the foregoing rights include the Trustee's authority to replace any existing officer, director, manager, or similar person of the Debtor-Controlled Entities. As part of the foregoing, to the extent necessary, the Trustee is authorized to act, in his capacity as the chapter 11 trustee in this Chapter 11 Case, as any such officer, director, manager, or similar person who has been removed.\n\n3. To the extent the Trustee's exercise of economic and governance rights with respect to the Debtor-Controlled Entities is deemed to be outside the ordinary course of business, such exercise is hereby approved, as there is sound business justification for the exercise of such rights, including because the Trustee holds all of the Debtor's economic and governance rights with respect to such entities for the benefit of the Estate. Notwithstanding the applicability of any of Bankruptcy Rule 6004(h) or any other provisions of the Bankruptcy Rules or the Local\n\n### Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 14 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 47 of 322\n\nRules of Bankruptcy Practice and Procedure for the United States Bankruptcy Court for the District of Connecticut to the contrary, the terms and conditions of this Order shall be immediately effective and enforceable upon its entry, and any applicable stay of the effectiveness and enforceability of this Order is hereby waived. For the avoidance of doubt, nothing in this Order authorizes the Trustee to sell or otherwise dispose of any equity in Debtor-Controlled Entities or other assets of the Debtors.\n\n4. Pursuant to section 1505 of the Bankruptcy Code, the Trustee is hereby authorized to act, as the Debtor's foreign representative, in any foreign country on behalf of the Estate in any way permitted by applicable foreign law for the purpose of (a) investigating, collecting, and recovering assets of the Debtor located in foreign countries, including relief in foreign courts in furtherance thereof, as necessary or appropriate, (b) exercising control over the Debtor-Controlled Entities, including seeking relief in foreign courts in furtherance thereof, as necessary or appropriate, and (c) requesting and obtaining corporate documents from appropriate foreign corporate registries (or similar entities) holding such documents with respect to the Debtor-Controlled Entities. Without limiting the foregoing, the Trustee is authorized, pursuant to section 1505 of the Bankruptcy Court, to request and obtain the corporate documents related to Genever (BVI) from the appropriate British Virgin Island (\"BVI\") entity holding such corporate documents.\n\n5. The Debtor shall not interfere with, hinder, or delay the Trustee's exercise of the authority under this Order, including any action taken or to be taken by the Trustee in a foreign court on behalf of the Estate in furtherance of such authority. To the extent the Debtor opposes the Trustee's exercise of such authority, the Debtor shall be limited to seeking relief from this\n\n### Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 15 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 48 of 322\n\nCourt (and not the relevant foreign court or other foreign entity, as the case may be) on notice to parties in interest, to the extent the Debtor can show that he has standing to do so.\n\n6. In furtherance of the Trustee's exercise of the authority under this Order, the Court respectfully requests the assistance of the foreign courts, including the assistance of the BVI courts regarding any request of the Trustee for relief (including on an emergency basis) with respect to the Trustee's exercise of corporate control over Genever (BVI).\n\n7. Nothing in this Order shall be deemed to authorize any particular action with respect to Genever Holdings LLC (\"Genever (US)\") in its chapter 11 case pending before the United States Bankruptcy Court for the Southern District of New York (the \"Genever Court\"). The Trustee shall appear before, and seek guidance from, the Genever Court to the extent the Trustee's exercise of corporate governance rights with respect to Genever (US) would impact its chapter 11 case.\n\n8. The Trustee is authorized and empowered to take all actions necessary to effectuate the relief granted in this Order.\n\n9. The terms and conditions of this Order shall be immediately effective and enforceable upon its entry.\n\n10. This Court shall retain jurisdiction with respect to all matters arising from or related to the implementation, interpretation, and enforcement of this Order.\n\nCase 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 16 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 49 of 322\n\n## **EXHIBIT B**\n\n**February 9, 2022 Decision of Supreme Court of the Statue of New York**\n\n# **SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY**\n\n**FILED: NEW YORK COUNTY CLERK 02/09/2022 04:33 PM** INDEX NO. 652077/2017 NYSCEF DOC. NO. 1181 RECEIVED NYSCEF: 02/09/2022\n\nCase 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 17 of 26 Case 22-50073 Doc 50-1 Filed 02/28/22 Entered 02/28/22 21:19:53 Page 7 of 73 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 50 of 322\n\n| PRESENT: | HON. BARRY R. OSTRAGER | PART | IAS MOTION 61EFM |\n|----------|------------------------------------------------------------------------------------|-----------------|----------------------------|\n| | Justice | | |\n| | ---------------------------------------------------------------------------------X | | |\n| | PACIFIC ALLIANCE ASIA OPPORTUNITY FUND | | |\n| L.P., | | INDEX NO. | 652077/2017 |\n| | Plaintiff, | | |\n| | -
v - | MOTION DATE | |\n| | KWOK HO WAN, a/k/a KWOK HO, a/k/a GWO WEN | | |\n| | GUI, a/k/a GUO WENGUI, a/k/a GUO WEN-GUI, a/k/a | MOTION SEQ. NO. | 019 |\n| | WAN GUE HAOYUN, a/k/a MILES KWOK, a/k/a | | |\n| | HAOYUN GUO, GENEVER: HOLDINGS LLC, and | | DECISION + ORDER ON MOTION |\n| | GENEVER HOLDINGS CORPORATION, | | |\n| | | | |\n\n Defendants. ---------------------------------------------------------------------------------X HON. BARRY R. OSTRAGER\n\nIn this 2017 case with 1,180 docket entries – almost all of which involve defendant Kwok Ho Wan's (\"Kwok\") efforts to avoid and deceive his creditors by parking his substantial personal assets with a series of corporations, trusted confidants, and family members -- this Court is called upon to determine whether the plaintiff, Pacific Alliance Asia Opportunity Fund L.P. (\"PAX\"), has met the burden of establishing that the Court should enter a final Order of Civil Contempt against Kwok. For the reasons that follow, this Court is simultaneously issuing a final Order of Civil Contempt.\n\nPAX secured a judgment against Kwok in the sum of \\$116,402,019.57 on February 3, 2021 (NYSCEF Doc. No. 716). Thereafter, PAX undertook a year's long effort to enforce its judgment by first identifying and then attempting to levy upon Kwok's assets in the United States. PAX encountered difficulty identifying assets over which Kwok exercised control because Kwok, who is a self-declared multi-billionaire, had secreted his assets in a maze of corporate entities and with family members. This scheme has enabled Kwok to assert that he has no assets despite his lavish lifestyle, which plaintiff has catalogued with material from social\n\n### **FILED: NEW YORK COUNTY CLERK 02/09/2022 04:33 PM** INDEX NO. 652077/2017 NYSCEF DOC. NO. 1181 RECEIVED NYSCEF: 02/09/2022 Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 18 of 26 Case 22-50073 Doc 50-1 Filed 02/28/22 Entered 02/28/22 21:19:53 Page 8 of 73 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 51 of 322\n\nmedia clippings, photographs and videotapes showing Kwok living large and boasting of his wealth, expensive homes, private plane, and yacht. As noted in the transcript of proceedings of February 2, 2022, this evidence is of little probative value, as the witnesses sponsoring this evidence have no first-hand knowledge of the authenticity of this \"evidence\" other than that it is accessible on various websites.\n\nOn February 2, 2022, this Court held an evidentiary hearing at which seven witnesses submitted direct testimony by affidavit and were made available for cross-examination. The hearing followed protracted proceedings by PAX to locate and levy upon assets owned by defendant Kwok. Those proceedings established, among other things, that Kwok exercised dominion and control over a yacht called the Lady May and resulted in a series of orders restraining Kwok and/or the registered owners of the yacht called Lady May from removing the Lady May from the Court's jurisdiction. The first such Order was issued on September 30, 2020, as described in detail *infra,* and was followed by an October 15, 2020 Order that restrained \"Mr. Kwok and/or the registered owners of . . . the yacht, the 'Lady May'\" from leaving the jurisdiction. (NYSCEF Doc. No. 630). As detailed *infra*, Kwok spent much of July, August and September of 2020 on the Lady May. Contemporaneously with the proceedings resulting in the September 30 and October 15, 2020 restraining Orders, Kwok and his cohorts made arrangement for the Lady May to sail to Florida in early October 2020 and, thereafter, to the Bahamas. On March 16, 2021, the Court issued a conditional order of civil contempt which directed that if Kwok failed to return the Lady May to the jurisdiction of this Court by May 31, 2021, he would be subject to a \\$500,000.00 fine for each day that the Lady May remained outside the jurisdiction of this Court.\n\nThe Appellate Division, First Department, affirmed this Court's order holding Kwok in conditional civil contempt, finding that \"the daily fine of \\$500,000.00 was intended to strongly\n\nencourage defendant to purge himself of the contempt, which, despite being permitted to accomplish, he has shown no interest in doing. . .\" NYSCEF Doc. No. 953, 199 AD3d 423 (2021). The Appellate Division further held:\n\nThe motion court acted within its discretion in holding defendant in civil contempt, as plaintiff established by clear and convincing evidence that defendant violated a lawful, clear mandate of the court, of which he had knowledge, and that such violation resulted in prejudice to plaintiff's rights (*see El-Dehdan v El-Dehdan*, 26 NY3d 19, 29 [2015]; Judiciary Law § 753). … The motion court is instructed to proceed with an evidentiary hearing to resolve a dispute as to ownership and control of the yacht, and to assess appropriate penalties.\n\nPursuant to the Appellate Division's Order, this Court scheduled the February 2, 2022 evidentiary hearing to resolve the issue of whether Kwok beneficially owns and controls the yacht. Kwok failed to testify at the February 2, 2022 hearing, having previously invoked his Fifth Amendment right to decline to testify or respond to discovery requests relating to the Lady May in response to PAX's asset discovery efforts. PX 27, 28, 29, 30.1 This invocation of the Fifth Amendment notwithstanding, Kwok is an active litigant in multiple fora and he has given prior testimony in this and other proceedings.\n\nKwok also filed a complaint in this court captioned *Guo Wengui a/k/a Miles Kwok v Hong Zeng*, 157025/2020, which references a blog post from Freebeacon.com dated September 8, 2017 in which Kwok complains about \"several incidents involving *his* 152-foot motor yacht, Lady May...\" (Complaint ¶ 8, NYSCEF Doc. No. 001) (\"the Zeng Complaint\"). The Zeng Complaint describes Kwok as an \"outspoken critic of the CCP\" who has gone to great \"lengths to expose the rampant corruption within the CCP and the Chinese government.\" The *Washington Post* reported that a former advisor to President Trump, Steve Bannon, was arrested in 2020 while on board the Lady May, and described Mr. Bannon as a friend and business\n\n1 \"PX\" refers to Plaintiff's Trial Exhibits.\n\n### **FILED: NEW YORK COUNTY CLERK 02/09/2022 04:33 PM** INDEX NO. 652077/2017 NYSCEF DOC. NO. 1181 RECEIVED NYSCEF: 02/09/2022 Case 22-50073 Doc 50-1 Filed 02/28/22 Entered 02/28/22 21:19:53 Page 10 of 73 Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 20 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 53 of 322\n\nassociate of Kwok, \"a vocal online critic of the Chinese government who was once close with that country's intelligence service but is now wanted by authorities in Beijing on charges of fraud, blackmail and bribery.\" Other news outlets have reported that Mr. Bannon utilized Kwok's private jet on more than one occasion to travel to political rallies.\n\nThe testimony adduced at the hearing out of the mouths of defendants' witnesses clearly and convincingly demonstrated that Kwok beneficially owns and controls the Lady May and has utter contempt for this Court and the judicial process.\n\nKwok once was the sole shareholder of Hong Kong Investments Limited (\"HK International\"). The testimony adduced at the hearing established that in 2014 Kwok transferred a 100% interest in HK International to one Qu Guo Jiao for no consideration. Ms. Qu was a trusted business associate of the Kwok family. Thereafter, Kwok fled China and on February 23, 2015, HK International purchased the Lady May for £ 28 million GBP. No testimony adduced at the hearing established the source of funds to purchase the Lady May, but the uncontradicted testimony of Kwok's daughter Mei Guo established that Ms. Qu did not provide the funds to purchase the yacht. Tr. 44. 2 Consequently, a reasonable inference is that Kwok provided the funds to HK International which were used to purchase the yacht. It is undisputed that Ms. Qu transferred the ownership of the Lady May to Kwok's daughter, Mei Guo, on or around June 17, 2017, for \\$1 or no consideration. Tr. 47. According to Ms. Guo's affidavit (NYSCEF Doc. No. 1162), Ms. Guo ultimately transferred ownership of the Lady May to the current title holder HK International Funds Investments (USA) Limited, LLC (\"HK USA\"). Ms. Guo further avers that she is the sole owner of HK USA, although all of the multi-million dollar annual expenses for the\n\n2 \"Tr.\" refers to the transcript of the evidentiary hearing, efiled at NYSCEF Doc. No. 1179.\n\n### **FILED: NEW YORK COUNTY CLERK 02/09/2022 04:33 PM** INDEX NO. 652077/2017 NYSCEF DOC. NO. 1181 RECEIVED NYSCEF: 02/09/2022 Case 22-50073 Doc 50-1 Filed 02/28/22 Entered 02/28/22 21:19:53 Page 11 of 73 Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 21 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 54 of 322\n\nLady May, including fuel, maintenance, and the captain and crew are paid by Golden Spring (New York) Ltd. (\"Golden Spring.\"), which is allegedly the Kwok family office.\n\nAt the hearing Ms. Guo testified that her brother had bought the Lady May for her. Tr. 46. The Court cannot credit this testimony as there is no evidence that Ms. Guo's brother was involved with the corporate transactions leading to Ms. Guo's acquisition of the title to the yacht. And, indeed, in response to a question from the Court, Ms. Guo acknowledged that her brother was not involved in any of the transfers that occurred before she acquired the yacht. Tr. 47.\n\nOther testimony adduced at the hearing established that Kwok was repeatedly on the yacht every summer and that Ms. Guo was infrequently on the yacht. Trial Tr. 88:8-20. The Lady May's captain testified that Kwok was aboard the yacht for a significant portion of the months of July, August and September in 2020 and that this was consistent with his usual practice in the summer. Trial Tr. 87:24-88:7. Subsequent to this Court's September 30, 2020 restraining Order, in October 2020 the Lady May was sent to Florida and then the Bahamas for repairs and was subsequently dispatched to Italy in October 2021, purportedly at the direction of Golden Spring. Ms. Guo acknowledged that she was aware of both this Court's September 30, 2020 restraining Order and this Court's subsequent March 16, 2021 Order directing that the Lady May be returned to the Court's jurisdiction Tr. 55; 57-60; 62.\n\nMs. Guo testified that on the one hand, she directed the Lady May's itinerary but, on the other hand, testified that security for Kwok was such a concern that there would be no memorialization of any itinerary. Tr. 52. She further testified that when her father was on the yacht unaccompanied by her he had the freedom to choose wherever he wanted to go. Tr. 50. The fundamental issue, however, is who directed the yacht to be removed from this Court's jurisdiction in October 2020. Ms. Guo claims that in early October 2020 she no longer wished to\n\n### **FILED: NEW YORK COUNTY CLERK 02/09/2022 04:33 PM** INDEX NO. 652077/2017 NYSCEF DOC. NO. 1181 RECEIVED NYSCEF: 02/09/2022 Case 22-50073 Doc 50-1 Filed 02/28/22 Entered 02/28/22 21:19:53 Page 12 of 73 Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 22 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 55 of 322\n\nuse the yacht and relayed that instruction to Golden Spring which, in turn, relayed her directive to the then captain of the ship, Captain Heaslop. Tr. 53.\n\nUpon further questioning, Ms. Guo admitted that it was Golden Spring that advised her that the yacht needed to be moved to a warmer place. Tr. 55. Ms. Guo then repeated her retracted testimony that her brother had given her the yacht, and she stated that her brother is the sole owner of Golden Spring. Tr. 56. This testimony is not credible given that on September 30, 2020 the Court entered a temporary restraining order restraining Kwok\n\n. . . from making or causing any sale, assignment, transfer, or interference with any property in which he has an interest, or from paying over or otherwise disposing of any debt now due or thereafter coming due to him, subject to the exceptions set forth in CPLR 5222 and in the ordinary course.\n\nNYSCEF Doc. No. 591. Significantly, Captain Heaslop, the then Captain of the Lady May, testified that Mr. Kwok told Captain Heaslop that Kwok would no longer be a guest on the Lady May \"a few days\" before the Lady May departed for Florida in early October 2020 (and apparently after the issuance of this Court's September 30, 2020 Order). Tr. 89. Captain Heaslop also contradicted Ms. Guo's testimony that Ms. Guo gave Captain Heaslop instructions about the yacht's movement. Tr. 94.\n\nMs. Guo also acknowledged having subsequently read the Court's March 16, 2021 Order requiring the Lady May to be returned to the Court's jurisdiction by May 31, 2021 (NYSCEF Doc. No. 728). She further acknowledged that she had discussed the Order with her lawyer (whose services were paid for by Golden Spring) and that she had *ignored* the Order.\n\nRussell Stockil, the Yacht Management Director for Yachtzoo SARL, testified that his company had a management contract with HK USA dated May 2021 and that he communicated with HK USA and Golden Spring, but never with Ms. Guo. Tr. 78. This was also the testimony of successor Captain Momchil Ivanov. Tr. 82. In short, Ms. Guo's testimony that she owns and\n\n### **FILED: NEW YORK COUNTY CLERK 02/09/2022 04:33 PM** INDEX NO. 652077/2017 NYSCEF DOC. NO. 1181 RECEIVED NYSCEF: 02/09/2022 Case 22-50073 Doc 50-1 Filed 02/28/22 Entered 02/28/22 21:19:53 Page 13 of 73 Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 23 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 56 of 322\n\ncontrols the Lady May cannot be credited in any respect. Ms. Guo appears to be a woman in her twenties, has introduced no evidence that she exercised dominion and control of the Lady May, and provided no confirmation that she came into possession of the Lady May, other than as a ruse to shield the Lady May from being levied upon by her father's creditors.\n\nThe machinations associated with the shell game Kwok has orchestrated with respect to the Lady May are of a piece with every other evasive and contemptuous act Kwok has taken during the five years this litigation has been pending, which is why there are 1,180 docket entries in this case.\n\nThe Court has the authority to hold Kwok in civil contempt under Judiciary Law\n\n§ 753—and \"to punish [him], by fine and imprisonment\"—where, as here, the Court \"expressly find[s] that [Kwok's] actions were calculated to or actually did defeat, impair, impede, or prejudice the rights or remedies of a party to a civil proceeding.\" *Oppenheimer v. Oscar Shoes, Inc.*, 111 A.D.2d 28, 28 (1st Dep't 1985) (citing N.Y. Judiciary Law § 753). Section 753 sets forth four requirements:\n\n[T]o find that contempt has occurred in a given case, it must be determined that [1] a lawful order of the court, clearly expressing an unequivocal mandate, was in effect. [2] It must appear, with reasonable certainty, that the order has been disobeyed . . . [3] Moreover, the party to be held in contempt must have had knowledge of the court's order, although it is not necessary that the order actually have been served upon the party . . . [4] Finally, prejudice to the right of a party to the litigation must be demonstrated.\n\n*Fleetwood Fin. v Walter J. Dowd, Inc.*, 2016 WL 11546917, at \\*2 (N.Y. Sup. Ct. Sept. 14, 2016) (citing *McCormick v Axelrod*, 59 N.Y.2d 574, 583, *amended*, 60 N.Y.2d 652 (1983)). The testimony adduced in this case satisfies each element of this standard. Indeed, the Appellate Division intimated as such. *See Pacific Alliance Asia Opportunity Fund L.P*., 199 A.D.3d 423 (1 st Dep't 2021) (\"[PAX has] established by clear and convincing evidence that [Kwok] violated\n\n### **FILED: NEW YORK COUNTY CLERK 02/09/2022 04:33 PM** INDEX NO. 652077/2017 NYSCEF DOC. NO. 1181 RECEIVED NYSCEF: 02/09/2022 Case 22-50073 Doc 50-1 Filed 02/28/22 Entered 02/28/22 21:19:53 Page 14 of 73 Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 24 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 57 of 322\n\na lawful, clear mandate of the court, of which he had knowledge, and that such violation resulted in prejudice to plaintiff's rights. . .\").\n\nThe extent of PAX's ongoing \"prejudice\" turns on whether PAX has demonstrated that it could ultimately levy on the Lady May to satisfy its now centi-million dollar judgment against Kwok. Under CPLR § 5225, \"money or other personal property\" is leviable where the debtor holds the requisite \"interest.\" To satisfy this requirement, \"[i]t is not necessary that the judgment debtor have legal title to the property; a beneficial interest is sufficient.\" Weinstein, Korn & Miller, New York Civil Practice: CPLR ¶ 5225.09. \"A beneficial interest is '[a] right or expectancy in something . . . as opposed to legal title to that thing.'\" *Peterson v. Islamic Rep. of Iran*, 2013 WL 1155576, at \\*30 (S.D.N.Y. Mar. 13, 2013) (citing Black's Law Dictionary, Interest (9th ed. 2009)). Kwok has much more than a beneficial interest in the Lady May. Not only does Kwok control the yacht, it appears he provided the funds to purchase it and he is the person who principally enjoys the use of the yacht.\n\nThe key factor is whether \"the property benefitted [the beneficial owner] as if he had received the property directly.\" *Id*. (quoting *Exp.-Imp. Bank of U.S. v. Asia Pulp & Paper Co., Ltd.*, 609 F.3d 111, 120 (2d Cir. 2010); *see also Gliklad v. Chernoi*, 129 A.D.3d 604 (1st Dep't 2015) (upholding rejection of the judgment debtor's contention that he no longer held an interest in property because he transferred his interest to his daughters); *Colfin Bulls Funding B, LLC v. Ampton Invs., Inc*., 112 N.Y.S.3d 868 (Table), at \\*2, 6 (N.Y. Sup. Ct. 2018) (granting judgment creditor's turnover motion notwithstanding judgment debtor's assertion that he transferred property to a corporation, because even if true, the evidence showed that he \"retained control and/or an interest\" in the property).\n\n\n\nThe evidence clearly and convincingly demonstrates that Kwok holds a beneficial interest in and controls the Lady May. In the latter connection, the Court takes notice of the filing of the Zeng case and draws an inference from all the record facts that Kwok has taken extraordinary steps to shield the yacht from his creditors. Moreover, Kwok's \"family office\" funds the yacht's day-to-day operations and maintenance.\n\nThe Court finds that Ms. Guo's testimony was not only internally inconsistent and dissembling, but also significantly undermined by the testimony of Captains Heaslop and Ivanov and Mr. Stockil, who stated that they have never taken yacht-related direction from Ms. Guo in the four and-a-half years that she directly or indirectly held title to the yacht.\n\nIn addition, it is established New York law that a party's invocation of the Fifth Amendment in a civil proceeding \"may form the basis of an adverse factual inference.\" *DeBonis v. Corbisiero*, 155 AD2d 299, 300 (1st Dep't 1989). An adverse inference may be applied whenever a factual determination is necessary or permitted, including in the context of contempt motions. *S.E.C. v. Durante*, No. 01 Civ. 9056 (DAB) (AJP), 2013 WL 6800226, at \\*10 (S.D.N.Y. Dec. 19, 2013), *aff'd*, 641 F. App'x 73 (2d Cir. 2016); *LiButti v. United States*, 107 F.3d 110, 120–25 (2d Cir. 1997).\n\nSimilarly, under the missing witness rule, \"[a] trier of fact may draw the strongest inference that the opposing evidence permits against a witness who fails to testify.\" *Crowder v. Wells & Wells Equip., Inc.*, 11 A.D.3d 360, 361 (1st Dep't 2004) (applying adverse inference where defendant who failed to appear \"would be knowledgeable about a material issue raised by the evidence\").\n\nPAX is entitled to an adverse inference under both of these avenues. Kwok has invoked his Fifth Amendment right against self-incrimination in response to PAX's post-judgment discovery, including in response to requests specifically about the Lady May. While Kwok\n\n### **FILED: NEW YORK COUNTY CLERK 02/09/2022 04:33 PM** INDEX NO. 652077/2017 NYSCEF DOC. NO. 1181 RECEIVED NYSCEF: 02/09/2022 Case 22-50073 Doc 50-1 Filed 02/28/22 Entered 02/28/22 21:19:53 Page 16 of 73 Case 22-50073 Doc 598 Filed 07/23/22 Entered 07/23/22 20:10:20 Page 26 of 26 Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 59 of 322\n\nargues that an adverse inference is not appropriate here because \"[o]nly after a threshold showing that a piece of evidence is authentic is a party obligated to respond to it,\" this contention fails of its own weight. PAX has proffered substantial admissible evidence that Kwok has the requisite beneficial interest in and control of the Lady May. *See People v. Primo*, 96 N.Y.2d 351, 753 N.E.2d 164 (2001) (explaining that evidence is probative if it \"tends to prove the existence or non-existence of a material fact, *i.e.*, a fact directly at issue in the case\").\n\nAs of February 7, 2022, the Lady May has remained outside the jurisdiction of the Court for 268 days. Based on the daily fine of \\$500,000 imposed by this Court and affirmed by the Appellate Division, the resultant fine would amount to \\$134,000,000.00, which is more than PAX's outstanding judgment of nearly \\$120 million and a multiple of the GBP £ 28 million purchase price of the Lady May. Nevertheless, if billionaire litigants can simultaneously seek to use Court process in New York and elsewhere in the United States while knowingly and intentionally violating Court orders, there is no rule of law. Kwok must remit \\$134,000,000.00 to PAX within five business days of the service of this Court's Order with Notice of Entry. The Court is prepared to exercise its full authority under Judiciary Law § 753 in the event the fine is not timely paid.\n\nDated: February 9, 2022\n\n**CHECK ONE: CASE DISPOSED** X **NON-FINAL DISPOSITION** X **GRANTED DENIED GRANTED IN PART OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE**\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 60 of\n\n| UNITED STATES BANKRUPTCY COURT
DISTRICT OF CONNECTICUT
BRIDGEPORT DIVISION | | | |\n|---------------------------------------------------------------------------------------------------------|-------------|---------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|\n| In Re | * | | Case No. 22-50073(JAM) |\n| HO WAN KWOK, | *
*
* | | Bridgeport, Connecticut
August 1, 2022 |\n| Debtor. | *
* | | |\n| * * * * * * * * * * * * * * * * | | | |\n| TRANSCRIPT OF MOTION HEARING
BEFORE THE HONORABLE JULIE A. MANNING
UNITED STATES BANKRUPTCY JUDGE | | | |\n| APPEARANCES: | | | |\n| For the Debtor: | | Bridgeport, CT | AARON ROMNEY, ESQ.
ERIC A. HENZY, ESQ.
STEPHEN M. KINDSETH, ESQ.
Zeisler & Zeisler, P.C.
10 Middle Street, 15th Floor
06604 |\n| | | New York, NY | WILLIAM BALDIGA, ESQ.
Brown Rudnick, LLP
Seven Times Square
10036 |\n| For the Creditor, Pacific
Alliance Asia Opportunity
Fund L.P.: | | 7 Times Square
New York, NY | PETER FRIEDMAN, ESQ.
STUART M. SARNOFF, ESQ.
O'Melveny & Myers LLP
Times Square Tower
10036 |\n| | | Robinson & Cole
Hartford, CT | PATRICK BIRNEY, ESQ.
28 Trumbull Street
06103 |\n| | | | 2022-50073 |\n| Proceedings recorded by electronic sound recording,
transcript produced by transcription service. | | | Ho Wan Kwok
IN RE: |\n| Fiore Reporting and Transcription Service, Inc.
4 Research Drive, Suite 402 | | | H
Debtor |\n| Shelton, Connecticut 06484 (203)929-9992 | | | |\n| | | | 11/18/2022 |\n| | | | P.E.
Debtor's Exhibit H |\n\nAPPEARANCES Cont'd: For the Creditors Committee: IRVE GOLDMAN, ESQ. Pullman & Comley 850 Main Street Bridgeport, CT 06601 For the Creditors, Rui Ma, KRISTEN MAYHEW, ESQ. Weican Meng and Zheng Wu: McElroy Deutsch 225 Liberty Street 36th Floor New York, NY 10281 For the U.S. Trustee: HOLLEY L. CLAIBORN, ESQ. Office of the United States Trustee The Giaimo Federal Building 150 Court Street, Room 302 New Haven, CT 06510 For HK International and STEPHEN M. KINDSETH. ESQ. Mei Guo: Zeisler & Zeisler, P.C. 10 Middle Street, 15th Floor Bridgeport, CT 06604 Chapter 11 Trustee: LUC A. DESPINS, ESQ. Paul Hastings LLP 200 Park Avenue New York, NY 10166 Proposed Counsel for the DOUGLAS SKALKA, ESQ. Chapter 11 Trustee: Neubert, Pepe & Monteith 195 Church Street New Haven, CT 06510\n\n| | 322 |\n|----|--------------------------------------------------------------|\n| | 3 |\n| 1 | ((Proceedings commenced at 12:15 p.m.) |\n| 2 | THE COURTROOM DEPUTY:
Case No. 22-50073, Ho Wan |\n| 3 | Kwok. |\n| 4 | THE COURT:
Okay.
Good afternoon.
If we could |\n| 5 | have appearances for the record, starting with the Chapter |\n| 6 | 11 Trustee, please. |\n| 7 | MR. DESPINS:
Good afternoon, Your Honor.
Luc |\n| 8 | Despins, Chapter 11 Trustee. |\n| 9 | THE COURT:
Good afternoon. |\n| 10 | MR. SKALKA:
Good afternoon, Your Honor.
Douglas |\n| 11 | Skalka as proposed local counsel for the Chapter 11 Trustee. |\n| 12 | THE COURT:
Good afternoon. |\n| 13 | MS. CLAIBORN:
Good afternoon.
Holley Claiborn |\n| 14 | for the U.S. Trustee. |\n| 15 | THE COURT:
Good afternoon. |\n| 16 | MR. GOLDMAN:
Good afternoon, Your Honor.
Irve |\n| 17 | Goldman, Pullman & Comley, representing the creditors |\n| 18 | committee. |\n| 19 | THE COURT:
Good afternoon. |\n| 20 | MR. GOLDMAN:
If I can ask where I might get a |\n| 21 | mask from the Court? |\n| 22 | THE COURT:
There's some right on the table here, |\n| 23 | Attorney Goldman, right in front of Attorney Henzy. |\n| 24 | MR. GOLDMAN:
Oh, okay.
Thank you. |\n| 25 | THE COURT:
Sure. |\n\nFiore Reporting and Transcription Service, Inc.\n\n# Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 62 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 63 of\n\n| | 4 |\n|----|-----------------------------------------------------------|\n| 1 | MR. FRIEDMAN:
Good afternoon, Your Honor.
Peter |\n| 2 | Friedman from O'Melveny & Myers, on behalf of Pacific |\n| 3 | Alliance Asia Opportunity Fund, L.P. |\n| 4 | THE COURT:
Good afternoon. |\n| 5 | MR. FRIEDMAN:
Thank you. |\n| 6 | THE COURT:
And with your is your co-counsel and |\n| 7 | local counsel? |\n| 8 | MR. SARNOFF:
Stuart Sarnoff also of O'Melveny & |\n| 9 | Myers. |\n| 10 | MR. BIRNEY:
And Patrick Birney, Robinson & Cole. |\n| 11 | Good afternoon. |\n| 12 | THE COURT:
Good afternoon. |\n| 13 | Attorney Henzy? |\n| 14 | MR. HENZY:
Eric Henzy for Ho Wan Kwok. |\n| 15 | THE COURT:
Good afternoon. |\n| 16 | MR. ROMNEY:
Aaron Romney also on behalf of |\n| 17 | debtor, Ho Wan Kwok. |\n| 18 | THE COURT:
Good afternoon. |\n| 19 | MR. KINDSETH:
Stephen Kindseth on behalf of Ho |\n| 20 | Wan Kwok. |\n| 21 | THE COURT:
And what about your other clients, Mr. |\n| 22 | Kindseth? |\n| 23 | MR. KINDSETH:
I don't know if it would be |\n| 24 | necessary for us to appear on behalf of HK International, |\n| 25 | but also on behalf of HK International, Stephen Kindseth, |\n| | |\n\n Zeisler & Zeisler. THE COURT: And Mei Guo? MR. KINDSETH: And Mei Guo. THE COURT: Okay. Thank you. MS. MAYHEW: Good afternoon, Your Honor. Kristen Mayhew, McElroy Deutsch Mulvaney & Carpenter, on behalf of Creditors Rui Ma, Zheng Wu and Weican Meng. THE COURT: Good afternoon. Mr. Baldiga, I saw you back there, but please go ahead and announce -- MR. BALDIGA: Yes, Your Honor. William Baldiga, Brown Rudnick. Thank you. THE COURT: Good afternoon. Does anyone else wish to make an appearance on the record today? (No audible response.) THE COURT: Okay. Mr. Baldiga, we're going to take up your application, your motion to withdraw as attorney, first, if you'd like to come forward, please. You can come up to the lectern if that's easier, whatever is easier for you. MR. BALDIGA: I'll do that. Thank you. THE COURT: Good afternoon. MR. BALDIGA: Good afternoon. Well, Your Honor, our motion was filed on July 13. We supplemented it with a\n\n further submission at docket 623 last week. THE COURT: I did see that. Thank you. MR. BALDIGA: Okay. And I think there were possibly at least two concerns with the court or among other parties. One is a matter of law, whether we are entitled to withdraw, especially now that there has been the appearance of two other firms for Mr. Kwok as debtor out of possession. And then second, we anticipated, I think appropriately and had conversations with Ms. Claiborn and Mr. Despins, as to our continuing responsibilities as to our retainer and as former counsel to the debtor. We just wanted there to be no mystery or no question about the fact that we understand the rules. We've complied with the rules throughout and would continue to. And if -- if there were any concerns, I wanted to be proactive in addressing those, including with the court today. We have no benefit from holding the retainer. And so we -- other than security for our fee obviously -- and so we're happy to have whatever arrangements -- I think the current arrangements are fine with Ms. Claiborn and her office and with the trustee and his office -- THE COURT: For your firm to retain the -- or to keep the retainer subject to an order granting your fees, is\n\n that the current -- is that -- MR. BALDIGA: Yes, Your Honor. THE COURT: Yeah. Sure. Okay. Go ahead. That's fine. MR. BALDIGA: And, I mean, it's with a very wellregarded bank. It's not the firm's funds. THE COURT: Right. MR. BALDIGA: It's we keep retainers in a segregated account. We're a firm in -- fortunately in good standing financially and otherwise so I don't think they're at risk in any way. As to replacement counsel, I unfortunately was on vacation at the last hearing, but I've read the -- THE COURT: Well, hopefully it was a good vacation. MR. BALDIGA: -- transcript and I understand the dialog. THE COURT: Hopefully, it wasn't unfortunate that you were on vacation. Hopefully -- MR. BALDIGA: I wasn't going to say that, but I appreciate that comment. I think that's right. I'm not going to take a position as to the Zeisler retention. THE COURT: Understood. MR. BALDIGA: That's a matter for other parties to address. But Mr. Mitchell has appeared. The Zeisler firm\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 66 of\n\n has appeared. I think our motion to withdraw should be allowed as a matter of law whether or not actually there is replacement counsel. But with the replacement counsel, I think it should be, hopefully, routinely addressed. I'm happy to answer any questions from any party or the court, but otherwise I would just rest on those papers. THE COURT: Thank you. I want to hear from everyone else as -- I haven't seen anyone object to your motion and I don't know of any objection. So if anyone has an objection I'd like them to raise it now. MR. DESPINS: Your Honor, it's not an objection, but we had subject to, so if we could be heard at the appropriate time? THE COURT: Well, subject to -- I'm going to make Brown Rudnick -- they're going to have to file a fee application. They know that. That's already -- that's not a problem. Is the issue -- when you say -- are you concerned about Brown Rudnick holding onto the funds? I thought there was no problem with that. MR. DESPINS: No, Your Honor. The issue is that we want them to confirm that they will make themselves\n\n available. And may I approach, Your Honor? THE COURT: Yes. Yes. Yes, please. MR. DESPINS: Okay. THE COURT: I'm sorry. I understand what your point is now that I forgot to mention. You had said in your papers that you would like them to be available and to assist you if necessary. MR. DESPINS: Subject to whatever protective order Your Honor would enter. THE COURT: Right. MR. DESPINS: We filed a 2004 -- THE COURT: Yes. MR. DESPINS: -- last week. They're one of the targets. THE COURT: Right. MR. DESPINS: So we don't need to debate the merits of that. Just that -- THE COURT: Right. MR. DESPINS: -- I want to make sure that they're not sailing into the sunset. That's all. THE COURT: Okay. And have you and Mr. Baldiga had any -- I don't know that you've had an opportunity, but have you had any conversations about what you've just said on the record?\n\n| | Case 22-50073
Doc 1268
Filed 12/28/22
Entered 12/28/22 13:58:25
Page 69 of
322 |\n|----|-----------------------------------------------------------------------------------------------|\n| | 10 |\n| 1 | MR. DESPINS:
Not about that point. |\n| 2 | MR. BALDIGA:
I'd be happy to address it, Your |\n| 3 | Honor. |\n| 4 | Well, we have obligations, obviously, to the Court |\n| 5 | under the rules and under law.
Former counsel is in an |\n| 6 | awkward position when it comes to matters as to privilege. |\n| 7 | We don't want to be whipsawed in that I don't want to make a |\n| 8 | commitment to do something that could violate a privilege |\n| 9 | here. |\n| 10 | And so, for example, of course, I've already had |\n| 11 | conversations with Mr. Despins.
Will continue to be |\n| 12 | available.
I'm not hard to find. |\n| 13 | I certainly don't want to make a commitment that |\n| 14 | would put our firm at risk for a claim by a former client |\n| 15 | that we've somehow invaded a privilege or put them in a |\n| 16 | position where they couldn't defend a privilege. |\n| 17 | This is really I don't think an issue for Brown |\n| 18 | Rudnick as much as it is for the trustee and counsel, |\n| 19 | replacement counsel, to the debtor to navigate.
These, in |\n| 20 | my experience, have been challenging issues to navigate in |\n| 21 | the few other cases I've been in where there's a debtor out |\n| 22 | of -- out of possession. |\n| 23 | So I'm pleased to continue to be available to Paul |\n| 24 | Hastings as they -- as they wish, but I will not commit to |\n| 25 | do something that will put our firm at risk. |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 70 of\n\n THE COURT: Understood. I have a question for you though too. MR. BALDIGA: Certainly. THE COURT: And I'll hear from Mr. Despins if he wants to respond to what you've said. What I would ask is -- and I -- I would assume this would not be a problem from your perspective, that the firm will, you know, accept service. There won't be any issue of service if -- Mr. Despins going to serve probably a subpoena, right, on your records. He's going to want to see your records. And you're going to -- you're going to either -- you or other counsel object on privilege grounds and then we'll have to see how it all works out at the end of the day, whether there can be some form of protective order that's agreed to or that the Court has to enter. I just don't want to have an issue that you wouldn't accept service or something along -- because, to me, that's rudimentary. You have every right, your firm has every right to file whatever documents they think are appropriate with regard to any discovery requests that are made upon you and anything like that. That's not what I'm talking about. I'm just talking about I don't want us all to spend time on issues of service or something that I would\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 71 of\n\n consider, you know, fundamental. There is every -- you have every right to raise any issue you feel is appropriate under applicable law and rules with regard to your attorney/client privilege and any other privilege that you may assert, but I just want -- that would be the commitment that the Court would -- I don't want to spend any time on that and I don't think you do either. MR. BALDIGA: So two commitments, Your Honor. One, as is customary and appropriate, the trustee as one of his first orders of business -- I think as he said in his papers, sent a simple letter, a document hold letter -- THE COURT: Right. MR. BALDIGA: -- which is customary in investigations more generally. And we have -- and I told the trustee this, we have implemented our hold internally, so we've been responsible in that regards. So nothing will be lost. That's step number one and frankly basics. Step number two, there will not need to be service or constables or any type of thing. If there's a 2004 order entered, we'll comply with it. We don't need a subpoena or other formal process as long as the debtor is not challenging whether this trustee has gone through the appropriate steps. That's really up for the debtor to say --\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 72 of\n\n| 1 | THE COURT:
I understand. |\n|----|---------------------------------------------------------------|\n| 2 | MR. BALDIGA:
-- that something is lacking, but it |\n| 3 | won't be Brown Rudnick standing in the way. |\n| 4 | THE COURT:
That's my question and my request and |\n| 5 | I appreciate that.
Thank you. |\n| 6 | MR. BALDIGA:
Okay. |\n| 7 | THE COURT:
Now, Mr. Despins, do you have anything |\n| 8 | else you want to add to what Mr. Baldiga just stated? |\n| 9 | MR. DESPINS:
No, Your Honor.
You covered my |\n| 10 | point.
Thank you. |\n| 11 | THE COURT:
Okay.
Thank you.
All right. |\n| 12 | So, Mr. Baldiga, as you said in your remarks, we |\n| 13 | haven't had that many cases where -- in recent past, where |\n| 14 | the debtor has been removed from possession and so the |\n| 15 | issues about whether -- you know, I don't even understand |\n| 16 | the two counsel yet. I'm going to talk to Mr. Henzy about |\n| 17 | that. |\n| 18 | But I agree with you that your motion should be |\n| 19 | granted.
And it is going to be granted on the grounds that |\n| 20 | other parties, other lawyers, have filed an appearance on |\n| 21 | behalf of the debtor, and the debtor is out of possession. |\n| 22 | So that's fine. |\n| 23 | What I need to know from you, and I don't know if |\n| 24 | you've had any conversations with Attorney Claiborn about |\n| 25 | this, or anybody else, and I'm not saying you should have -- |\n| | |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 73 of\n\n how much time do you need to file a fee application? MR. BALDIGA: On that point, Your Honor, I have not had discussions, but I've had quite a bit of thought about it. At the -- at the last couple of hearings, one of the Court's comments, which I thought was very well taken by everyone, is that what you would hate to do is put people through a lot of work needlessly. I think the same goes -- there will be a time and a place for a fee application. Given the criteria for the allowance of fees, especially as counsel for the estate, is so what did your work come to? I think it would be very difficult for the Court or any party to assess today. For example, in your memorandum of decision appointing a trustee, you cited to two of the things that we brought about. One was we filed a plan. Whether that is stillborn or ends up being the basis for a plan that's confirmed in this case, time will tell. I don't think it's possible to assess that today and maybe not for some time. Second, the boat. We don't know where the boat -- the whole issue with the boat is going. Not just procedurally, but does that become part of the estate or not? Is it voluntary or by court decision? Is it part of the deal or not?\n\nFiore Reporting and Transcription Service, Inc.\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 74 of\n\n| | 15 |\n|----|----------------------------------------------------------------|\n| 1 | We take some pride in what we've done, substantial |\n| 2 | pride in what we've done.
The case, for us, is not ending |\n| 3 | in the way that we had intended, but I think the Court, and |\n| 4 | especially the trustee, the Office of the United States |\n| 5 | Trustee, the replacement counsel, the committee, will all be |\n| 6 | able to assess the value of what we've done with the benefit |\n| 7 | of some hindsight once the dust has settled here. |\n| 8 | So I -- and it's a lot of work to put together a |\n| 9 | fee application. |\n| 10 | The other problem with doing a fee application |\n| 11 | today is it's very hard to go further than what I just did |\n| 12 | without concerns of privilege and confidentiality.
Those |\n| 13 | will be lessened over time as discovery plays out. |\n| 14 | So I would ask that given the recognition, that I |\n| 15 | confirm again, that the money doesn't go anywhere without a |\n| 16 | fee application that we just table that for this -- at this |\n| 17 | point.
And at some point any party can say to the Court or |\n| 18 | to me, hey, I think we need to get this going.
But I just |\n| 19 | don't think it's today.
And I think as the case proceeds it |\n| 20 | will become more obvious when that will be. |\n| 21 | THE COURT:
Okay.
I would like to hear from |\n| 22 | others about that point.
Okay? |\n| 23 | MR. BALDIGA:
Of course. |\n| 24 | THE COURT:
But I understand your point.
Thank |\n| 25 | you. |\n| | |\n\n| | Case 22-50073
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322 |\n|----|-----------------------------------------------------------------------------------------------|\n| | 16 |\n| 1 | All right.
Does anybody -- |\n| 2 | MR. BALDIGA:
Anything else from me right now, |\n| 3 | Your Honor? |\n| 4 | THE COURT:
Say that again? |\n| 5 | MR. BALDIGA:
Anything else right now from -- |\n| 6 | THE COURT:
I don't have any questions right now. |\n| 7 | I understand what your position is.
And I'm curious to hear |\n| 8 | what other parties think about that. |\n| 9 | MR. BALDIGA:
I'll stand back for a moment. |\n| 10 | THE COURT:
Okay.
Thank you. |\n| 11 | I'd like to know what the other parties think |\n| 12 | about Mr. Baldiga's suggestion that while the motion to |\n| 13 | withdraw the appearance would be granted at this time that |\n| 14 | there wouldn't be a need to file a fee application at this |\n| 15 | time? |\n| 16 | MS. CLAIBORN:
Your Honor, Holley Claiborn for the |\n| 17 | U.S. Trustee. |\n| 18 | I think Attorney Baldiga makes some fair and valid |\n| 19 | points about the process and about where we are in this |\n| 20 | case.
And perhaps the easiest way to do it is to put it on |\n| 21 | a tickler say four to six months out and we can revisit the |\n| 22 | issue, where we are in the case and whether or not it's an |\n| 23 | appropriate time to file a fee application. |\n| 24 | Because as Attorney Baldiga noted there would be a |\n| 25 | difficulty at this point in assessing the value to the |\n\n| | 322 |\n|----|----------------------------------------------------------------|\n| | 17 |\n| 1 | estate of the services that were provided because we don't |\n| 2 | know all the facts and we aren't anywhere near the finish |\n| 3 | line. |\n| 4 | THE COURT:
Okay.
Thank you. |\n| 5 | Anyone else wish to be heard? |\n| 6 | MR. DESPINS:
Your Honor, the trustee agrees with |\n| 7 | Mr. Baldiga's proposal. |\n| 8 | THE COURT:
Okay.
Thank you. |\n| 9 | Mr. Friedman? |\n| 10 | MR. FRIEDMAN:
It's Peter Friedman from O'Melveny |\n| 11 | & Myers.
PAX agrees that this is a sensible way to proceed. |\n| 12 | THE COURT:
Okay.
Thank you. |\n| 13 | MR. GOLDMAN:
Your Honor, for the committee, Irve |\n| 14 | Goldman.
We have no problem with the proposal suggested by |\n| 15 | the U.S. Trustee. |\n| 16 | THE COURT:
And Mr. Baldiga? |\n| 17 | MR. GOLDMAN:
Correct. |\n| 18 | THE COURT:
Yes.
Thank you. |\n| 19 | Anyone else wish to be heard? |\n| 20 | (No audible response) |\n| 21 | THE COURT:
Okay.
So, Mr. Baldiga, the motion to |\n| 22 | withdraw as attorney filed on behalf of Brown Rudnick, and |\n| 23 | obviously all the individuals from Brown Rudnick who filed |\n| 24 | notices of appearance, in the case is granted. |\n| 25 | And there will not be a need to file a fee |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 76 of\n\n| | 18 |\n|----|---------------------------------------------------------------|\n| 1 | application at this time. |\n| 2 | So the order, probably just do some firm of a |\n| 3 | virtual order that says the motion to withdraw is granted |\n| 4 | for the reasons stated on the record, and that further order |\n| 5 | of the Court will enter with regard to the filing of a fee |\n| 6 | application by Brown Rudnick. |\n| 7 | Does that make sense to you? |\n| 8 | MR. BALDIGA:
It does, Your Honor.
Thank you. |\n| 9 | THE COURT:
Okay.
All right.
Well, I'm sorry to |\n| 10 | see you go.
But it is an unusual case.
And I understand |\n| 11 | the position that you and your firm have taken on the |\n| 12 | parties, all of the parties who have been intimately |\n| 13 | involved in the case, and newly involved in the case, agree |\n| 14 | with your position and so I have no reason to think it |\n| 15 | should move in any other direction at this point. |\n| 16 | MR. BALDIGA:
Thank you, Your Honor. |\n| 17 | THE COURT:
Okay.
Thank you. |\n| 18 | MR. BALDIGA:
May I take my leave? |\n| 19 | THE COURT:
Yes, you may. |\n| 20 | MR. BALDIGA:
Okay. |\n| 21 | THE COURT:
Okay. |\n| 22 | MR. BALDIGA:
Very good.
Thank you, Your Honor. |\n| 23 | THE COURT:
All right.
Thank you very much. |\n| 24 | All right.
So the motion to withdraw as attorney |\n| 25 | is granted and an order will enter, but it will most likely |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 78 of\n\n| | 19 |\n|----|--------------------------------------------------------------|\n| 1 | be just a virtual order.
Okay?
So that's ECF 543. |\n| 2 | All right.
Just if everyone could give me one |\n| 3 | moment and then we'll turn to the rest of the matters. |\n| 4 | (Pause) |\n| 5 | THE COURT:
Now, with regard the rest of the |\n| 6 | matters on the calendar, I'm sure people have an idea of how |\n| 7 | they think they should proceed, as far as the order, in |\n| 8 | which they should go.
I have an idea of how I think they |\n| 9 | should proceed. |\n| 10 | Mr. Despins, what is your position as to what we |\n| 11 | should address next today? |\n| 12 | MR. DESPINS:
Thank you, Your Honor. |\n| 13 | Very briefly, as an initial matter I want to say |\n| 14 | that at the end of the hearing we have a lot of -- not a lot |\n| 15 | -- but we have a number of housekeeping matters that we will |\n| 16 | want to cover. |\n| 17 | THE COURT:
Well, do you want to cover them now? |\n| 18 | Are we talking about motions that have been pending by the |\n| 19 | debtor since the beginning of the case, or are you -- |\n| 20 | MR. DESPINS:
No.
But, for example, the bar date |\n| 21 | order.
There's a -- I don't want to cover it now because |\n| 22 | it's actually more involved than initially thought. |\n| 23 | THE COURT:
Okay. |\n| 24 | MR. DESPINS:
So the bar date order is one of |\n| 25 | them.
Also we would want the Court to -- so I'm not going |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 79 of\n\n to cover all of them -- but to schedule status conferences on a regular basis in the case. THE COURT: That's fine. MR. DESPINS: So things like that. THE COURT: I will say one thing that's not relevant to you actually -- or it might be -- Mr. Baldiga, as counsel, and his firm, filed several motions some time ago that never were resolved because of the change of the circumstance of the case when the debtor decided to withdraw the motion for funding. There are still outstanding motions out there that we're -- we can talk about later -- but the committee also has outstanding applications to employ professionals. There's a lot of things that maybe we do just address at a status conference or later today, but we're going to resolve those one way or another. I would want to know whether or not you, as the trustee, are going to, you know, step into the shoes of any of those pending motions that were -- for example, they were -- the debtor was -- we had an evidentiary hearing about a financial advisor. You know, I was about to rule when all of that changed, everything changed, the motion to withdraw the funding came. You know, it was withdrawn. And then I think that the reality is that that is a motion at least if Brown\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 80 of\n\n| | 21 |\n|----|-----------------------------------------------------------------|\n| 1 | Rudnick stayed in the case they were no longer going to |\n| 2 | pursue.
I have no idea if you're going to do that.
But in |\n| 3 | any event we can talk about it later. |\n| 4 | With regard to where we are today -- |\n| 5 | MR. DESPINS:
Yes. |\n| 6 | THE COURT:
-- I mean, the most important things |\n| 7 | -- everything's important, but -- including the bar date |\n| 8 | order -- and I did look at -- I have to say I haven't |\n| 9 | scoured, but I looked at the proposed order that you |\n| 10 | submitted with redlining and things like that and I have a |\n| 11 | couple of thoughts on that but nothing substantial.
Okay? |\n| 12 | With regard to whether or not -- so the things |\n| 13 | that have to be decided today are -- everything has to -- |\n| 14 | has to be handled -- but as we had our last hearing, I know |\n| 15 | there's a lot of discovery that's been served on you because |\n| 16 | you filed motions to quash.
So I understand that. |\n| 17 | Mr. Henzy's pursuing this -- his motion for relief |\n| 18 | from judgment order.
That's been objected to by several |\n| 19 | parties.
I have some concerns about the motion and the |\n| 20 | process that we'll all need to talk about. |\n| 21 | And then you -- and then it's the Paul Hastings' |\n| 22 | retention and the -- and the local counsel retention. |\n| 23 | MR. DESPINS:
Correct.
And then there was also -- |\n| 24 | but I'm not sure you're going to take that up -- you had |\n| 25 | asked the Zeisler firm and the U.S. Trustee to brief some |\n| | |\n\n issue. THE COURT: Yes. MR. DESPINS: We didn't get involved in that -- THE COURT: No. MR. DESPINS: -- so I don't know where that stands. THE COURT: That has -- that's where we're going to turn next I believe. MR. DESPINS: Okay. THE COURT: Okay. But let's do the housekeeping, for what we call housekeeping, although it has substantive impact at the end then. MR. DESPINS: Yes. THE COURT: Let's hope. MR. DESPINS: There's a lot -- there's a lot to cover in a sense that -- THE COURT: Yes. MR. DESPINS: -- for example, the bar date, we did mark it up because you asked us to do that. THE COURT: Right. MR. DESPINS: And that's going to sound bizarre, but I don't think we should proceed with that for reasons related to the *Genever* case. There's a whole thing -- THE COURT: Oh, okay. MR. DESPINS: -- that I want to explain to Your\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 82 of\n\n Honor. THE COURT: Okay. MR. DESPINS: -- so we'll do that at the end of the hearing -- THE COURT: Okay. That's fine. MR. DESPINS: Thank you, Your Honor. THE COURT: All right. Thank you. All right. So, Attorney Claiborn and Attorney Henzy, the last hearing I did ask you both -- and I know you did brief the issue on whether or not 327(a) applies to Zeisler & Zeisler and whether or not there's an actual conflict of interest because of the representation of three parties in this case at the same time. Before we get to that though, I don't understand the other lawyer, Attorney Henzy, who has filed an appearance and what his role is going to be and why there's a need for another attorney? MR. HENZY: I'm going to take my mask off just when I speak, Your Honor. THE COURT: Go right ahead. MR. HENZY: I apologize for that. I just -- So Attorney Mitchell appeared -- as I understand it, Your Honor, there was this window, I'll call it, between Brown Rudnick exiting and one -- I don't think it makes any difference to Mr. Baldiga's presentation, but the debtor had\n\n| | 24 |\n|----|--------------------------------------------------------------|\n| 1 | --
I'm told -- I was not part of it, but made an |\n| 2 | affirmative decision to terminate -- |\n| 3 | THE COURT:
That's what we were told by someone |\n| 4 | from Brown Rudnick last week.
And I don't remember who it |\n| 5 | was, so I apologize. |\n| 6 | MR. HENZY:
And, of course, subject to any |\n| 7 | bankruptcy code, bankruptcy rules issue, under the Rules of |\n| 8 | Professional Conduct, if a client terminates a lawyer, the |\n| 9 | lawyer is ethically prohibited from representing a client |\n| 10 | any further. |\n| 11 | So there was this window where Brown Rudnick was |\n| 12 | no longer representing -- again, putting the bankruptcy |\n| 13 | code, bankruptcy rules and the need to withdraw aside -- but |\n| 14 | I could understand them taking the position they were no |\n| 15 | longer representing the debtor and my firm was not -- was |\n| 16 | not at that point retained by the debtor and Mr. Mitchell |\n| 17 | appeared really solely for the purpose -- I think at the |\n| 18 | time of that -- the July 8 hearing that Your Honor held on |\n| 19 | the U.S. Trustee's motion to appoint Mr. Despins as trustee, |\n| 20 | to put something on the record that the debtor in fact was |\n| 21 | objecting to Mr. Despins' appointment as trustee. |\n| 22 | And my recollection is that it was done by filing |\n| 23 | a kind of a letter as opposed to a formal pleading that you |\n| 24 | typically would see. |\n| 25 | But I believe that the debtor does not have any |\n\n# intention of having Attorney Mitchell be in court representing him. That's why he's retained -- he's retained us. THE COURT: Well, then, will Mr. Mitchell be withdrawing his appearance? MR. HENZY: I'd certainly discuss that with the debtor and with Mr. Mitchell, yes. THE COURT: Because Mr. Mitchell said in the letter that he understood all the rules in the bankruptcy court, but yet he filed this letter. So I -- I don't think that there should be two lawyers for the debtor in this court. I don't see the need for it. And I don't -- and Mr. Mitchell, who says he understood, does not understand how it works here apparently. So I would think that it would be wise for Mr. Mitchell to withdraw his appearance. MR. HENZY: Understood, Your Honor. THE COURT: Okay. MR. HENZY: And we'll get that cleaned up. THE COURT: Okay. All right. Now, turning to the 327(a) issue, and Attorney Claiborn as well, and, you know, Attorney Henzy, I went back when you said, you know, it was black letter law. And of course it's not really black letter law. Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 84 of\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 85 of\n\n It says it in a line in *Collier's* that -- and it doesn't cite to any cases. And then the cases that cite to the proposition that says that a debtor out of possession, 327(a), doesn't apply, cite to the *Collier's* cite. So it's very interesting actually because you would think there would have been more out there than there really is. And the cases that cite for the proposition that say you are out of possession and, therefore, the chapter -- I'm sorry -- therefore, the 327(a) does not apply all rely on a sentence in *Collier's* which is fairly interesting to me. But in any event there's other things in *Collier's* that are interesting as well with regard to the status of this case. Attorney Claiborn, your motion talks about whether the debtor's acting on behalf of the estate or on his individual -- in an individual way as to why -- whether 327(a) should apply. So where do things stand from the U.S. Trustee's standpoint at this point? MS. CLAIBORN: Your Honor, I don't think we're any further than we were when we filed our brief except to say that the debtor's brief filed by the Zeisler firm did acknowledge the fact that there have been conflict waivers\n\n# executed amongst the parties. THE COURTROOM DEPUTY: Attorney Claiborn, you're a little low. THE COURT: She can't -- yeah. You have to speak up a little bit. She can't you. I'm sorry. MS. CLAIBORN: I am actually speaking loudly, but I'll try again. I wanted to point the court to the fact that in the Zeisler brief at ECF 620 there is a representation that conflict waivers have been executed by and between the debtor, HK International and Ms. Guo. We have not seen those conflict waivers and we're not privy to any discussions that may have happened by and among the debtor, HK, and Ms. Guo and Zeisler's office. So as we are at the moment not any further along in the analysis than we were when we filed our brief back on July 27th, so in our viewpoint it very much depends on what the debtor is aiming towards and what the debtor is doing as to whether or not the Zeisler firm must comply with Section 327(a). And as part of that it has a lot to do with their role with respect to the three different parties, the debtor, HK and Ms. Guo. THE COURT: Okay. So you're -- you don't know whether 327(a) applies? Or you're saying it's not -- it's not discernible because you don't know what role they're Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 86 of\n\n playing? MS. CLAIBORN: Correct. THE COURT: Okay. Does anyone else wish to be heard on the conflict issue? The 327(a) issue, I have to say, again, *Collier* says in one line that it doesn't apply to a debtor not in possession. That's all it says. But that issue, you know, could be continually raised depending upon what happens in the case just because -- if I find 327(a) doesn't apply at this time, it doesn't mean I couldn't find 327(a) doesn't apply at some other time. But that's aside from the fact that the Zeisler firm represents now Mr. Kwok, HK International and Ms. Guo, and says that because the trustee now is automatically substituted as a party in the adversary proceeding that HK brought against Mr. Kwok that there's no conflict. Do you agree with that? MS. CLAIBORN: I don't think it's as pure as that, Your Honor. THE COURT: Well, that's their argument though. MS. CLAIBORN: Correct. THE COURT: Okay. And so what do you think? MS. CLAIBORN: Your Honor, the U.S. Trustee -- the brief that we filed sets out the opinions that have been issued in various different jurisdictions, and obviously not\n\n| | Case 22-50073
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322 |\n|----|-----------------------------------------------------------------------------------------------|\n| | 29 |\n| 1 | this one, as to the applicability of 327 and I think there |\n| 2 | is support for the idea that depending on what counsel is |\n| 3 | doing and what their role really is in the case, that they |\n| 4 | are subject to 327. |\n| 5 | To the extent that the debtor is pursuing the |\n| 6 | debtor's Rule 60(b) motion here today with the mind set and |\n| 7 | the goal that that trustee appointment is invalid because |\n| 8 | Trustee Despins does not satisfy the disinterested status |\n| 9 | that is required, that position is being taken and advocated |\n| 10 | for the apparent benefit of the estate. |\n| 11 | And so to the extent that that is the debtor's |\n| 12 | objective and that is the debtor's goal, there is an |\n| 13 | interpretation that can be made that 327(a) does in fact |\n| 14 | imply to Zeisler. |\n| 15 | THE COURT:
Okay.
Attorney Henzy? |\n| 16 | MR. HENZY:
On the two points, Your Honor, I -- I |\n| 17 | did not recollect that all of the cases that I cited on the |\n| 18 | 327(a) issue that I -- I know for sure several of them did |\n| 19 | cite the Collier's, but I'm not sure all of them did. |\n| 20 | I could not find any case that said to the |\n| 21 | contrary, that a debtor out of possession is required to |\n| 22 | retain -- |\n| 23 | THE COURT:
I think you're right.
I couldn't |\n| 24 | either.
I looked.
I agree with you.
I don't -- and I |\n| 25 | think the references in those cases to Collier is it. |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 89 of\n\n There's other cases -- there's other issues about whether you can be compensated under 330. That's a different issue. MR. HENZY: Yeah. Yeah. Which I think the Supreme Court -- THE COURT: But I agree. The 327(a), there's nothing that says that a debtor in -- a debtor out of possession's counsel must abide by 327(a). I wasn't able to find anything. And then the only thing is whether or not you had to disclose your compensation. And you disclosed your compensation. But I don't understand what an evergreen retainer means from your perspective. I think I know what it means, but I assume that means when you're done with your hundred thousand you get another -- it's evergreen, it's always blooming, it never loses it's -- MR. HENZY: It always -- it's always blooming. THE COURT: It's always blooming. MR. HENZY: It's always blooming, yes. THE COURT: So you -- so you go -- you use the hundred thousand -- I'm just saying -- and then you get another hundred thousand. MR. HENZY: Or whatever has been used that particular billing period. Yeah.\n\n| | Case 22-50073
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322 |\n|----|-----------------------------------------------------------------------------------------------|\n| | 31 |\n| 1 | THE COURT:
Okay.
And so -- |\n| 2 | MR. HENZY:
So let's say in a month we billed |\n| 3 | \\$10,000, we would bill the client -- we would send the |\n| 4 | client an invoice for \\$10,000.
We would take the \\$10,000 |\n| 5 | from the retainer and the client would be obligated to |\n| 6 | replenish the retainer. |\n| 7 | THE COURT:
Okay. |\n| 8 | MR. HENZY:
That's the idea. |\n| 9 | THE COURT:
And the -- and how would -- how would |\n| 10 | the Court know when your retainer is -- has -- is about to |\n| 11 | lose its bloom and needs to be replenished? |\n| 12 | MR. HENZY:
I don't know that the Court would know |\n| 13 | that.
I don't know that the Court under the rules needs to |\n| 14 | know that.
I suppose they're not -- I'm just saying in |\n| 15 | theory, say take a hypothetical, if the -- if a -- in a |\n| 16 | situation like that, the retainer stopped blooming, the way |\n| 17 | the Court might find out about it is that counsel might be |\n| 18 | filing a motion to withdraw on the basis that the client -- |\n| 19 | THE COURT:
Okay. |\n| 20 | MR. HENZY:
-- is not satisfying its obligations. |\n| 21 | THE COURT:
That's possible.
But, again, the |\n| 22 | debtor's son has provided you with the hundred thousand |\n| 23 | dollars, correct? |\n| 24 | MR. HENZY:
Yeah.
That's correct. |\n| 25 | THE COURT:
Okay.
And so the debtor's son -- you |\n| | |\n\n## Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 91 of\n\n represent the debtor, the debtor's daughter, the entity that asserts -- MR. HENZY: Says that it owns the boat. THE COURT: -- that they're the registered owner of the boat, and now -- now you're getting money from the debtor's son? MR. HENZY: Yes. THE COURT: Okay. And you don't think any of that's a conflict? MR. HENZY: I do not believe that any of it is a non-waivable conflict other -- THE COURT: Well, there's other things you have to meet under Rule 1.7. It's not just that you got an informed consent waiver in writing. It's four things. That you reasonably believe that you'll be able to provide competent and diligent representation. I'm not suggesting you don't. You may believe that. Somebody might not agree with you, but you may reasonably believe that. The representation is not prohibited by law. Well, I'm not sure about that if the bankruptcy code sections apply, as Attorney Claiborn asserts they might. MR. HENZY: Which I would like to come back to that. THE COURT: Yeah. We'll come back to that. The representation does not involve the assertion\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 92 of\n\n of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal. So we're not just talking about the adversary proceeding here, right? We're talking about the case as a whole, the Chapter 11 case, where the entity -- Mr. Friedman reminded me last hearing, because I couldn't remember the entity who was loaning the money to the estate, was also an entity I believe controlled by the son, and now who's paying you, I guess not through an entity but by himself. That's what your disclosure says, correct? MR. HENZY: Yes. THE COURT: That the money came directly from the son, not from any other entity? MR. HENZY: Yes. THE COURT: Okay. Okay. And so you have four things you have to meet under Rule 1.7, not just -- not just the waiver of the conflict. And there's plenty of cases out there -- and I don't -- I'm not saying we're going to go through them today, okay -- but there's plenty of cases out there, bankruptcy judges saying you can assert all those things, but that doesn't mean that the conflict is truly waivable. Just because you got them to sign a letter that says they waive the conflict doesn't mean it's actually waivable.\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 93 of\n\n That's the issue that you have -- or one of the issues that I think you have.\n\n And given what has occurred outside of this court before the filing of this case, there's a lot of information that could become fact in this case to the contrary, that there's -- they're all one in the same. And some people could argue that your representation of all of them just supports that they're all one in the same, because Mr. Despins said last time we were here that -- and he may be filling more of this in later -- that with regard to the New York bankruptcy case that the direction came from Mr. Kwok, not from the corporate entity.\n\n13 And, you know, I mean, Mr. Friedman's papers, as you know, Mr. Henzy, I'm sure you've read them, go through extensively all the findings that have been made outside of this court.\n\n So Mr. Friedman says, you know, you may need to think about that, Judge, because maybe this is all just a continuation of what was going on back in New York, that through this weave and this web of issues that we just continue to do the same thing, just in another court.\n\n And what I'm having difficulty with is I don't see how you can represent all three of those entities and now get paid by the son and say that you don't have a concurrent conflict of interest under Rule 1.7, which is different from\n\n| 322 |\n|-----|\n|-----|\n\n| 1 | the 327(a) issue.
Okay? |\n|----|----------------------------------------------------------------|\n| 2 | I'm not -- I'm saying even if I agree with you |\n| 3 | that 327a doesn't apply, and I think you might be right -- |\n| 4 | although I hear Attorney Claiborn's argument. I think the |\n| 5 | argument with that though is that it has to be raised when |\n| 6 | the issue has obviously come up.
I don't -- I don't think |\n| 7 | she's -- her office is able to at this point show that this |\n| 8 | issue that you're really -- that it's -- you're really |\n| 9 | representing the estate, because I'm not sure I agree with |\n| 10 | that at this point either. |\n| 11 | It's complex, obviously, as you know, and this has |\n| 12 | been going on for a long time.
So I just don't see how it's |\n| 13 | not a conflict of interest. |\n| 14 | There is -- there are claims in the estate that |\n| 15 | are going to -- how are you going to provide advice to Mr. |\n| 16 | Kwok individually, and HK and Ms. Guo, individually without |\n| 17 | being -- without having their interests overlap and/or |\n| 18 | conflict, which they can and very well may do? |\n| 19 | MR. HENZY:
So I guess a couple of preliminary |\n| 20 | points, Your Honor. |\n| 21 | THE COURT:
Yeah. |\n| 22 | MR. HENZY:
Absolutely court has the authority to |\n| 23 | enforce the rules of professional conduct when it involves |\n| 24 | proceedings in their court.
Absolutely, no -- I don't |\n| 25 | question that in any way, shape or form. |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 95 of\n\n However, the principal -- in the first instance, it's up to the lawyer to be aware of and to -- their own conflicts and to make sure that they're in compliance with the rules of professional conduct. And, again, if something is in front fo the Court and the Court says that that's a conflict, the Court certainly has the authority and maybe the obligation to do something.\n\n Courts are, the Second Circuit says, to be somewhat deferential to a client's choice of counsel because there's a generally recognized right of people to retain counsel and to retain counsel of their choosing. And I think the 1.7(a) rules don't recognize that or address that or deal with that.\n\n On 1.7(a)(1), right now, there is no adversity. We represent HK International and I think -- and Mei Guo. And there may be other issues that we end up representing them on in the case, but principally, and I don't want to say almost exclusively, it's been on the Lady May.\n\n Now, I understand we filed appearances in the case -- and in theory could an issue come up other than with respect to the Lady May where they're adverse to each other -- but all we've done so far for those two -- those two -- the person and the entity is with respect to the Lady May.\n\n I think it is generally recognized, Your Honor, that where there is no existing concurrent conflict -- and\n\nFiore Reporting and Transcription Service, Inc.\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 96 of\n\n that's what Rule 1.7 says, is a concurrent conflict of interest exists that the fact that there may be a conflict sometime in the future does not disqualify counsel and you potentially have to deal with that. And it certainly is our practice, and I think most firms' practice, to -- in any joint representation -- to advise clients if there -- if you end up with adverse -- end up adverse to each other, we're going to have to deal with that and that may have consequences to you. We may have to resign for one, both, all three, it's -- but you don't know that until you get to that concurrent conflict and you have to deal with it. Really, same theme on 1.7(a)(2), there is no -- THE COURT: I'm not talking about (a) though. I'm talking about (b). MR. HENZY: I'm going to -- I'm going to get to (b) because (b) follows (a). It's -- THE COURT: Yeah. But it says notwithstanding. MR. HENZY: But you don't get to (b) -- if there's no concurrent conflict of interest, you don't get to (b). THE COURT: Okay. Go ahead. MR. HENZY: (b) is notwithstanding the existence of a concurrent conflict of interest under subsection (a). A lawyer may represent a client, yes, but you don't get to (b) unless you fail (a).\n\n THE COURT: How can you fail -- how do you get by (a)(1) then? You represent HK and Mr. Kwok. The boat -- the trustee wants the boat to be property of the estate. MR. HENZY: Yeah. THE COURT: HK's got a different interest in that boat than Mr. Kwok does according to you. So how is it right now that there is -- they're not directly adverse to each other? MR. HENZY: Well, Mr. Kwok is no longer a party to that adversary proceeding -- THE COURT: That's not what I'm saying. MR. HENZY: -- and has no -- THE COURT: I don't care if he's not a party to the adversary proceeding. He still has an adverse interest with regard to the boat because he -- because they're still going to have to be -- if Mr. Despins is successful, right, in saying that the boat is property of the estate, then that is an -- then it's an adverse interest to your client and to HK because then HK doesn't have the boat and the debtor does. How are they not -- how are they not -- how is it not adverse? MR. HENZY: Certainly it would be adverse to HK if the Court said -- THE COURT: Right. And you represent HK and the\n\n debtor. MR. HENZY: Yeah. But I'm not sure I agree with you. Mr. Kwok's position is that HK owns the boat so they're not adverse. He does not believe that he owns the boat. He does not believe that it's property of the bankruptcy estate. I'll say that unequivocally on the record. So I don't see how they can be adverse if they take the same position. I think he's -- he would -- I know he would contemplate not being involved in that fight. That's a fight between presumably the trustee and HK International. But I don't -- Mr. Kwok -- again, I'll say this on the record, he will not be -- I suppose he might be involved if someone wants to call him as a witness or something like that, but he will not be taking positions. That will be a fight between the trustee and HK International, so there's no adversity, Your Honor. THE COURT: I don't agree with you, but go ahead. MR. HENZY: Okay. When you get to (b), as you said, we do believe that we can provide competent, diligent representation to each client. I'm not concerned that we're going to be pulling punches on behalf of HK International or having what's going on with the boat impact our representation of Mr. Kwok at all. On (b)(2), the 327 issue, again, we can talk more\n\n about. I've made the point in the papers -- I don't want to belabor it, Mr. Kwok is no longer a party to the adversary proceeding. I believe Mr. Despins said that at the last hearing. He was automatically substituted as the party in that -- in that adversary proceeding. And I cited the rule and cases that say that, that upon appointment of a trustee, he is automatically substituted for the debtor in that action. And all three clients have given consent. We did advise them, if they wanted to, to consult with other counsel and they've confirmed their consent in writing. So even assuming that there is a concurrent conflict under 1.7(a) -- and, Your Honor, to your point, it may be that at some point in this case a concurrent conflict does arise. I don't think one exists today -- there may be at some point a concurrent conflict arises. And if it does, then in compliance with the rules of professional responsibility, we will have a professional responsibility to address that. And, again, typically when you have a joint representation you advise clients if a concurrent conflict arises we may need to withdraw or otherwise address it. But if and when a conflict -- concurrent conflict\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 100 of\n\n arises, we'll -- we will have to address it. And the clients have been informed of that. And, again, they have -- they have given their consent. THE COURT: Well, we -- I don't know how they gave their consent. So, I mean, you could have just said I consent. I don't know what they said. I know what you're saying they said, but just by saying I consent doesn't mean that's a -- that is a waiveable conflict -- MR. HENZY: Well, the only -- THE COURT: -- because you have to know what they're consenting to. MR. HENZY: The only non-waiveable conflict under this rule is if we represent two parties in the same litigation. And because Mr. Kwok is no longer a party to the adversary proceeding, I believe that we do not represent two parties to the same litigation. So they can consent -- THE COURT: But it's not just to the litigation that -- you keep focusing on the issue of the adversary -- it's the case. It's the case. It's still Mr. Kwok is in the case. It's his case whether he's not -- out of possession or not. It doesn't just go away because he's out of possession. It's still an issue in the case. You know, it's too convenient to say Mr. Despins steps into the shoes of Mr. Kwok in that adversary but not in any of the 523 adversaries. And I understand the\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 101 of\n\n argument. I'm not -- I understand the argument. But it doesn't -- you just don't have a conflict and then it doesn't -- it just doesn't -- it goes away. It doesn't exist anymore. That's not how it works. The conflict as I think we talked about it the last time, you know, you take the client as you find him. You know, you may argue you don't have a conflict at the moment, but the parties have a conflict with each other. There's some issues here. MR. HENZY: I don't -- I don't see where the parties right now are directly adverse to each other. THE COURT: Well, you may not see it, but that doesn't mean it doesn't exist. MR. HENZY: But if -- THE COURT: The problem is in this case, and in the case before this case, that there were -- there were many, many findings made with regard to this -- these number of family -- closely -- and they're all insiders by the way so let's just -- we didn't raise that either. They're all insiders. MR. HENZY: None of it before you, Your Honor. THE COURT: No. No. No. I'm talking -- MR. HENZY: None of it before you. THE COURT: No. No. No. I'm talking about in this case right now. Ms. Guo is an insider of Mr. Kwok.\n\n| 322 |\n|-----|\n|-----|\n\n| MR. HENZY:
Yes. |\n|----------------------------------------------------------------|\n| THE COURT:
The son who paid you a hundred |\n| thousand dollars is an insider of Mr. Kwok.
HK |\n| International may or may not be an insider of Mr. Kwok, but |\n| it's close. |\n| MR. HENZY:
Okay. |\n| THE COURT:
Okay?
So how is that not a conflict? |\n| MR. HENZY:
Because they are not adverse -- they |\n| are not directly adverse to each other.
Your Honor, if a -- |\n| THE COURT:
If Mr. Despins sues Ms. Guo right now |\n| -- |\n| MR. HENZY:
Yeah. |\n| THE COURT:
-- and says she got paid whatever she |\n| got -- I'm making -- I'm giving a hypothetical. She got paid |\n| by Mr. Kwok a hundred thousand dollars 90 days before the |\n| filing, then how are they not adverse? |\n| MR. HENZY:
I think that Mr. Despins and Ms. Guo |\n| would be adverse. |\n| THE COURT:
No.
Because the money's got to come |\n| back from Mr. Kwok and Mr. -- you've got -- you keep -- |\n| MR. HENZY:
If Ms. -- if Ms. Guo is sued for -- |\n| THE COURT:
What's the -- you're not going to -- |\n| are you going to raise a defense on her part?
What's her |\n| defense? |\n| MR. HENZY:
Hold on.
Assume -- I apologize, Your |\n| |\n\n Honor. THE COURT: No. That's okay. It's okay. MR. HENZY: No. No, that was not okay. I apologize. THE COURT: That's okay. MR. HENZY: If Mr. Despins sues Ms. Guo for a preference, which I think is what you were positing, or for whatever, for whatever -- THE COURT: For whatever. MR. HENZY: -- then the money would come back I think from Ms. Guo, not from Mr. -- THE COURT: But what's her defense? She's going to have a defense. She's not going to just turn it over. If she can, she can turn it over today then. MR. HENZY: I don't know -- THE COURT: How are you going to represent her? MR. HENZY: I don't know what claim Mr. Despins is bringing against her, so I don't -- THE COURT: I understand that. MR. HENZY: -- I don't know what her defense would be. It's possible. I suppose he would bring a claim, I don't know what it would be, that would create some direct adversity, in which case we would have to deal with that. But that doesn't exist today. THE COURT: Okay.\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 104 of\n\n MR. HENZY: It may exist, Your Honor, sometime in the future, but it doesn't exist today. And for the 1.7(a) analysis, it's a concurrent conflict of interest exists. Today, is there a conflict? If a conflict -- and the rules specifically contemplate -- I think it's in the comments to 1.7 where it addresses joint representation -- that a conflict -- a conflict may arise in the future. And if it does, counsel has an ethical responsibility to address it. But today, Ms. Guo hasn't been sued by Mr. Despins for anything. She may get sued by him for something and that, whatever that suit is, may or may not raise -- put Ms. Guo and Mr. Kwok in a directly adverse position. But I -- but I don't know. I can't know that today. THE COURT: Well, (a) doesn't talk about the fact that there has to be a lawsuit by the way. MR. HENZY: Oh, no. It's any -- it's any adverse -- THE COURT: So it doesn't talk about it. MR. HENZY: No. It's any -- I was just -- I was addressing your -- THE COURT: (b) talks about it, not (a). MR. HENZY: I was addressing Your Honor's comment about what if -- THE COURT: I understand. So I'm saying there\n\n| | 322 |\n|----|--------------------------------------------------------------|\n| | 46 |\n| 1 | doesn't have to be a lawsuit in (a).
It's if you have the |\n| 2 | representation of one client will be directly adverse to |\n| 3 | another. |\n| 4 | MR. HENZY:
And I -- |\n| 5 | THE COURT:
There doesn't have to be a lawsuit to |\n| 6 | have that issue. |\n| 7 | MR. HENZY:
And today I don't see how Ms. Guo and |\n| 8 | Mr. Kwok are directly adverse -- |\n| 9 | THE COURT:
Okay. |\n| 10 | MR. HENZY:
-- on anything.
I don't see how HK |\n| 11 | International and Mr. Kwok are directly adverse on anything. |\n| 12 | Again, Mr. Despins is going to bring whatever |\n| 13 | claims he brings and we're going to go -- we're going to go |\n| 14 | from there ormake whatever claims he makes. |\n| 15 | THE COURT:
Okay. |\n| 16 | MR. DESPINS:
Your Honor, if I could be heard for |\n| 17 | two minutes on this? |\n| 18 | THE COURT:
Yes.
Yes, please. |\n| 19 | MR. DESPINS:
Not on 327.
I don't have a view on |\n| 20 | that. |\n| 21 | But on the issue of waivable conflict or not, 521, |\n| 22 | debtor's duties, 521(a)(3), if there's a trustee appointed, |\n| 23 | the debtor's duty is to cooperate with the trustee as |\n| 24 | necessary to enable the trustee to perform the trustee's |\n| 25 | duties.
(a)(4), if there's a trustee serving, they must |\n\nFiore Reporting and Transcription Service, Inc.\n\n# Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 105 of\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 106 of\n\n| 1 | surrender all properties, et cetera. |\n|----|---------------------------------------------------------------|\n| 2 | Of course their view is, oh, you know, he's a |\n| 3 | billionaire, but he has no assets so, therefore, we're on |\n| 4 | the same side of the V.
But that duty that a -- statutory |\n| 5 | duty that the debtor has exists today.
And you know that |\n| 6 | there are criminal provisions in 18 U.S.C. that tie into |\n| 7 | these obligations to do these things. |\n| 8 | So I'm -- so I'm not so sure this is a waivable |\n| 9 | conflict despite the fact that there's consent because the |\n| 10 | debtor has a statutory duty to do certain things that are in |\n| 11 | direct conflict with the other party that they're |\n| 12 | representing. |\n| 13 | Thank you, Your Honor. |\n| 14 | THE COURT:
Thank you. |\n| 15 | MR. DESPINS:
And also, by the way, I want to |\n| 16 | mention that chart that they said the son paid, they also |\n| 17 | checked the box that the debtor would -- might pay in the |\n| 18 | future.
I want to be very clear under 549 we reserve all |\n| 19 | rights.
If the debtor is paying Zeisler, I don't want them |\n| 20 | to think that because they checked that box that somehow |\n| 21 | we're looking the other way.
I don't see how the debtor is |\n| 22 | paying -- would be paying them during the case. |\n| 23 | Thank you, Your Honor. |\n| 24 | THE COURT:
Thank you. |\n| 25 | MR. HENZY:
I'm pretty sure that Mr. Despins is |\n| | |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 107 of\n\n not looking the other way on anything, Your Honor. THE COURT: But it's a good point about the debtor making future payments for fees. I think that would be tremendously problematic. MR. HENZY: Your Honor, the debtor is not going to make any payments at the very least out of any -- Mr. Despins references to 549 and any property that's property of the bankruptcy estate. And we wouldn't -- we wouldn't take any such payments, certainly not knowingly anyway. So I'll say again, Your Honor, the debtor -- so the debtor has duties under 521, but I'm not seeing how that -- and Mr. Despins already has made in the corporate governance motion some proposals, but I'm still not seeing that today that there's any directly adverse -- that anyone's directly adverse. Again, it may be that something happens in the future where there is adversity. The only conflict -- expressly under the rules, the only conflict that is not waivable is the (b)(3). So we may think that a client should not -- THE COURT: I'm not sure that's true by the way. I mean, that's not -- case law doesn't really support that completely. I understand that's your argument. But when do -- where -- what authority are you relying on that says the only thing that's not waivable is (b)(3)? MR. HENZY: I think that that's the plain language\n\n of the rule. That is the -- unless it's prohibited by law, which is back to the 327(a) issue. THE COURT: Which is (2). Yeah. MR. HENZY: Okay. But I'm not aware of any prohibition in any law -- THE COURT: Well, actually there's a lot -- believe it or not, I've seen some case law that the -- even when the informed consent is in writing, the bankruptcy court has found that it's not a waivable conflict no matter what, you know, was written in that consent. Okay? There's cases, and there's recent cases about it, throughout the country that talk about, you know, the -- that it's -- you know, you can waive -- you can say whatever you want and waive it, but just because you said it doesn't mean it's enforceable and it's waivable. MR. HENZY: Yeah. I -- THE COURT: And at this point, you know, I'm not sure that it is. But go ahead. MR. HENZY: I don't understand I guess that point. THE COURT: Well -- MR. HENZY: If there's no prohibition by law and it's not claims made against each other -- THE COURT: Because it impacts the estate as a whole. This isn't just about the one adversary proceeding in which HK International sued Mr. Kwok. It's what Mr. Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 108 of\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 109 of\n\n Despins is saying and more. The debtor still has -- he may be a debtor out of possession, but he still has obligations under the bankruptcy code.\n\n He voluntarily came to this court and subjected himself to the jurisdiction of this court. And with that, you know, he gets all the benefits, but he also has the burdens. And he has to cooperate and turn over to the trustee all of his -- all property of the estate, whatever equitable or legal interest he has in a -- in a -- any piece of -- any property, whatever it is, whether it's real, personal, whatever. And when there are --\n\n We still haven't gotten to the issue of what HK is doing with regard to the certification on the boat. That seems to have gone by the wayside for a while. But there's \\$37 million in an escrow account that Mr. Despins is going to argue one way or another either that money or the boat's the estate. And that money --\n\n Now Mr. Friedman's going to have to remind me again, was that Golden Spring who funded that 37 million or was it somebody else?\n\n MR. HENZY: But, Your Honor, a couple of points. THE COURT: No. But wait a minute. Let me just finish my thought process first and I'll get back to you. But the point is Mr. Kwok is going to argue that something different -- how could Mr. Kwok -- is he -- he's\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 110 of\n\n| 322 | |\n|-----|--|\n| | |\n\n| | 51 |\n|----|----------------------------------------------------------------|\n| 1 | going to say, oh, yeah, go ahead HK, give the boat over to |\n| 2 | the estate or don't?
Go ahead, Mr. -- escrow agent.
Give |\n| 3 | the 37
-- who's going to fight that fight? |\n| 4 | MR. HENZY:
Not Mr. Kwok. |\n| 5 | THE COURT:
Well, who's going to fight the fight? |\n| 6 | HK International.
And you represent HK International and |\n| 7 | Mr. Kwok. |\n| 8 | MR. HENZY:
And Mr. Kwok's not fighting that fight |\n| 9 | at all. |\n| 10 | THE COURT:
He's not going to fight the fight. |\n| 11 | MR. HENZY:
No. |\n| 12 | THE COURT:
So then I could find today -- I could |\n| 13 | make a ruling that the boat is property of the estate and |\n| 14 | Mr. Kwok's not going to fight that fight? |\n| 15 | MR. HENZY:
Mr. Kwok is out of that fight. |\n| 16 | THE COURT:
He's not going to fight it? |\n| 17 | MR. HENZY:
He is -- |\n| 18 | THE COURT:
So you're going to represent HK |\n| 19 | International in that fight? |\n| 20 | MR. HENZY:
He is out of that fight.
That fight |\n| 21 | is now Mr. Despins' fight with HK International.
It's not |\n| 22 | Mr. Kwok's fight. |\n| 23 | THE COURT:
All right.
What about the \\$37 million |\n| 24 | in escrow? |\n| 25 | MR. HENZY:
Same answer, that's not Mr. Kwok's |\n| | |\n\n| Case 22-50073 | Doc 1268 | Filed 12/28/22 | Entered 12/28/22 13:58:25 | Page 111 of | |\n|---------------|----------|----------------|---------------------------|-------------|--|\n| 322 | | | | | |\n\n| | 52 |\n|----|---------------------------------------------------------------|\n| 1 | fight.
That is HK International's fight.
And Mr. -- I'm |\n| 2 | not sure that's even a fight. |\n| 3 | THE COURT:
So how can you represent HK |\n| 4 | International in a fight against the estate in which the |\n| 5 | estate is your client's estate? |\n| 6 | MR. HENZY:
But the estate is not my client.
The |\n| 7 | Supreme Court says that in the Baker Botts decision and the |\n| 8 | -- |\n| 9 | THE COURT:
Yes.
But the estate is the |\n| 10 | responsibility of your client. |\n| 11 | MR. HENZY:
No. |\n| 12 | THE COURT:
Yeah.
Yes, it is under 521. |\n| 13 | MR. HENZY:
No.
I think that's wrong. |\n| 14 | THE COURT:
Yes.
He's got to turn it over.
He's |\n| 15 | got to cooperate and turn it over. |\n| 16 | MR. HENZY:
He has responsibilities -- |\n| 17 | THE COURT:
So is he going to cooperate right now |\n| 18 | and say that, yeah, you know what, HK International really |\n| 19 | doesn't own the boat.
I do according to the New York State |\n| 20 | Court.
So why don't you just move it over here now? |\n| 21 | Is that how he's going to cooperate? |\n| 22 | And then how does that make sense for him to say |\n| 23 | that and then have HK say, no, I'm the -- I'm the record |\n| 24 | owner of the boat? |\n| 25 | MR. HENZY:
So he -- he has his obligations under |\n| | |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 112 of\n\n| | 53 |\n|----|----------------------------------------------------------------|\n| 1 | 521, but that doesn't mean -- 521 doesn't mean that he has |\n| 2 | to say -- get on the witness stand and say something is true |\n| 3 | that he doesn't believe is true. |\n| 4 | So if Mr. Despins is pursuing that action or that |\n| 5 | action is being pursued and Mr. Kwok is put on the witness |\n| 6 | stand and Mr. Despins says, isn't it true that you own the |\n| 7 | boat?
And Mr. Kwok says, no.
That's not -- he's not |\n| 8 | violating his obligations under 521 of the bankruptcy code. |\n| 9 | He's giving truthful testimony.
So I'm not -- |\n| 10 | THE COURT:
Well, whether it's true or not isn't |\n| 11 | for Mr. Kwok to decide.
That's the point.
Otherwise why |\n| 12 | are we here? |\n| 13 | MR. HENZY:
Oh.
I agree with you.
But he's |\n| 14 | obligated to give truthful testimony. |\n| 15 | THE COURT:
He's obligated to give testimony. |\n| 16 | MR. HENZY:
To give truthful -- |\n| 17 | THE COURT:
He makes the determination of whether |\n| 18 | or not it's truthful. |\n| 19 | MR. HENZY:
Well, but -- but no one would say, |\n| 20 | well, Mr. Kwok you believe that you don't own the boat? |\n| 21 | That's right, I believe I don't own the boat.
Well, you |\n| 22 | can't give that answer.
You have to testify that you do own |\n| 23 | the boat because 521 says you have to testify -- |\n| 24 | THE COURT:
Nobody would suggest -- nobody's |\n| 25 | suggesting that. |\n\n| | Case 22-50073
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Then I'm missing -- I'm missing the |\n| 2 | point. |\n| 3 | THE COURT:
Okay.
Maybe I'm not articulating it |\n| 4 | well.
I don't understand how this can continue, but we'll |\n| 5 | talk about it. |\n| 6 | Does anyone else wish to be heard on whether or |\n| 7 | not the Zeisler firm can represent these three entities at |\n| 8 | the same time and not have it be deemed to be a conflict of |\n| 9 | interest? |\n| 10 | MR. HENZY:
One point, Your Honor.
If you're |\n| 11 | going to rule that we have a conflict of interest, or you're |\n| 12 | not going to rule, then I don't believe anything else should |\n| 13 | go forward today.
You can't -- because the debtor is then |\n| 14 | -- |\n| 15 | THE COURT:
I agree with you and that's why I |\n| 16 | asked to hear what everybody else -- |\n| 17 | MR. HENZY:
Okay.
Because then the debtor is not |\n| 18 | -- |\n| 19 | THE COURT:
That's why we're talking about this |\n| 20 | right now. |\n| 21 | MR. HENZY:
The debtor is not represented.
And to |\n| 22 | the extent you haven't ruled -- |\n| 23 | THE COURT:
Well, he is represented.
He's got |\n| 24 | another lawyer.
He's got Mr. -- whatever -- |\n| 25 | MR. HENZY:
No one's here in court today |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 114 of\n\n| | 55 |\n|----|--------------------------------------------------------------|\n| 1 | representing the debtor. |\n| 2 | THE COURT:
I understand that.
But that -- you |\n| 3 | know, this is not news that the issue was raised about the |\n| 4 | conflict of interest.
So just hold on. |\n| 5 | MR. HENZY:
Okay. |\n| 6 | THE COURT:
I hear you.
I hear you. |\n| 7 | MR. HENZY:
Okay. |\n| 8 | THE COURT:
Does anyone else wish to be heard on |\n| 9 | this conflict of interest issue? |\n| 10 | MR. DESPINS:
I would just say, Your Honor, that |\n| 11 | I'm not sure.
We need a genie to decide that issue today. |\n| 12 | I think the issue is still live, will continue to be live, |\n| 13 | you know, later. |\n| 14 | THE COURT:
Okay.
Thank you. |\n| 15 | Attorney Claiborn? |\n| 16 | MS. CLAIBORN:
Your Honor, I agree the issue does |\n| 17 | not die today if the Court decides not to rule on it today. |\n| 18 | The only other issue that I would throw into the |\n| 19 | mix is that looking into the future and cognizant of the |\n| 20 | past, the debtor's position on things has changed over time. |\n| 21 | And to the extent that the debtor uses this particular |\n| 22 | conflict, albeit resolved at the moment as a future sword, |\n| 23 | then we have a problem in this case. |\n| 24 | THE COURT:
What do you mean? |\n| 25 | MS. CLAIBORN:
To the extent that he takes the |\n| | |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 115 of\n\n position in the future that his guidance and his advice from his now current counsel, Zeisler, was conflicted and that he should not be bound by any of the outcomes of that, that's going to cause a problem in this case in the future. The debtor does have a history of parting ways with counsel. THE COURT: Okay. I think I understand your point. I might -- I might not be understanding it fully at the moment, but that's fine. Anyone else wish to be heard? (No audible response) THE COURT: Okay. So, Mr. Henzy, with regard to the concurrent representation of these three parties, Mr. Kwok, who has continuing and remaining and continuous obligations under the bankruptcy code, even if he is a debtor out of possession, and HK International, and Mei Guo, the debtor's daughter, I agree with you that at the moment there is -- you appear to be complying with all of the provisions of Rule 1.7. But I do agree that things can change very quickly and parties, including you, and/or the Court, and/or others, need to bring this to the Court's attention if there are issues that are happening in this case. I think your client, as I said to you the other day, you take your client as you found them. And as your client has some issues with regard to\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 116 of\n\n litigation that has occurred outside of this court, that at some point's going to come back to this court somehow. Mr. Despins is going to have to do what Mr. Despins has to do and so do all the other creditors. I have no idea what any of the other creditors are going to do. They have their rights too. And they -- they can seek whatever relief they think is appropriate with regard to your clients, all three of them. So I -- given the positions that have been taken, and that the U.S. Trustee believes that 327(a) may apply and that you may have a conflict, I think the issue is continuing before this court and there won't -- you know, could be a problem as early as tomorrow. Who knows? And we'll have to deal with that. With regard to your motion for relief from judgment order under -- MR. HENZY: Your Honor, can I -- can I just ask a question? THE COURT: Yes. MR. HENZY: I'd like to think anyway that I take my obligations under the rules of professional responsibility pretty seriously. THE COURT: No one's questioning that. MR. HENZY: Okay. I'll accept that. But -- THE COURT: But you have to understand that the\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 117 of\n\n issues that have been raised in this case are every day -- every week it changes, right? We're going down one path, then we go down another path, now we're down an other path. Now you're filing a motion to try to remove the trustee after, you know, you said -- after your client came in and wanted the boat to be part of the \\$8 million, have the boat be part of the estate, move forward, try to -- who Mr. Baldiga said on many occasions wants to have -- and it says it in the papers, so it's an admission of your party, of your client, whether or not you represent your client or Mr. Baldiga represented your client, that they wanted this case to be a place where everyone could come together and resolve all the issues and have a fair and equal distribution to creditors. And that's not what's happening. Okay? That's not what's happening. There wouldn't have been an appointment of a Chapter 11 trustee if that was what was happening. So I'm not trying to challenge your personal seriousness about the Rule 1.7. As I keep saying to you, you don't represent yourself. You represent your clients. And your clients already have some negative rulings against them that the Court has heard about time and time again.\n\n And your client has come in and said he wanted to do all these things and then immediately changes course and\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 118 of\n\n pulls the plug on everything and leaves everybody in a completely different -- on a completely different path than he came in here and said that he was going to pursue. That's what I'm talking about. Okay? MR. HENZY: The point I was going to make, Your Honor, is I think I take my obligations pretty seriously. And if I ever believe that I have a concurrent conflict, I'm going to address it, with the clients if necessary, with the Court. So I would -- I would always do that. A second point is, Mr. -- Ms. Claiborn's point that she doesn't want to see the debtor using a purported conflict of my firm as a sword, I make the same point back at people. To have this sort of weird maybe three -- so if 327 applies, if the debtor is asserting his rights, and if I'm arguing too vigorously about some issue, then 327(a) applies. But if the debtor just sits and doesn't -- quietly and doesn't push back on anything, then 327 doesn't apply. I would hope that parties aren't going to use that in the future when the debtor potentially is objecting to something to stand up and say now he's under 327, he's got to go. A third point, Your Honor, the -- what happened outside of this court in pre-bankruptcy litigation I'm not sure what that has to do with whether or not my firm has a\n\n conflict under Rule 1.7 or 327(a) is implicated. I don't -- I don't think that it does.\n\n This is a tough case. I don't think anybody would disagree with that. This is a -- this is a tough, tough case. But the toughness of the issues isn't the driver on I have a conflict or I don't have a conflict. I either have a conflict or I don't have a conflict.\n\n And what I -- what I don't want to do, Your Honor, is go away from today with you having -- because I -- when you -- I think anyway, okay -- I never would intend to put words in Your Honor's mouth, that's why I'm going to say what I thought I heard -- what I thought I heard was you agree with me that today you believe I don't have an issue under Rule 1.7. But then you said -- I think anyway -- again, I want to be very careful -- but maybe you do.\n\n And if the Court is going to determine that today I have a concurrent conflict of interest and I should not be representing the debtor, I need to know that, because then if that's the case, from the time the Court says that every word that comes out of my mouth I am violating my obligations under the rules of professional responsibility. So either the Court finds I have a concurrent\n\n And recognizing that if something comes up in the future that creates that conflict, we're going to have to\n\nconflict of interest today or it doesn't.\n\nFiore Reporting and Transcription Service, Inc.\n\n| | Case 22-50073
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But I -- I kind of need to know that today. |\n| 2 | THE COURT:
I think I said you didn't have a |\n| 3 | concurrent conflict of interest today, but you might in the |\n| 4 | future. |\n| 5 | MR. HENZY:
Agreed. |\n| 6 | THE COURT:
And that parties needed to bring that |\n| 7 | to the Court's attention. |\n| 8 | MR. HENZY:
Understood, Your Honor. |\n| 9 | THE COURT:
Okay? |\n| 10 | MR. HENZY:
Thank you. |\n| 11 | THE COURT:
All right.
With regard to Rule 9024 |\n| 12 | motion, as I mentioned to you last time, I didn't understand |\n| 13 | why you weren't moving under section 324, the removal of the |\n| 14 | trustee. |\n| 15 | And the case law that I've looked at says that a |\n| 16 | rule -- and Collier, again, says that Rule 60 is not the |\n| 17 | appropriate way to challenge the appointment of a trustee |\n| 18 | under -- that the United States -- because the Court's not |\n| 19 | involved in the appointment.
Remember.
Right?
The Court's |\n| 20 | not involved in the appointment.
The U.S. Trustee's |\n| 21 | involved in the appointment. |\n| 22 | And the U.S. Trustee is only simply asking that |\n| 23 | the appointment be approved and the Court approved it.
No |\n| 24 | one was able to put forth any evidence as to why it |\n| 25 | shouldn't be approved. |\n\n And so -- then it's -- then that appointment stands. And the way that you have to proceed is a motion of 324. And if that motion is denied, it's not a final appealable order. Which obviously you want the Rule 60 to be an appealable order. So we're not -- we're not proceeding down the Rule 60 road, because according to sources that I've looked at, it's not appropriate. Mr. Despins was appointed as the Chapter 11 Trustee. And the only way he can be removed is under 324. So if you want to file a motion under 324 and meet those requirements, you're entitled to do so. MR. HENZY: I think or under 1105, Your Honor. But the -- THE COURT: Under what? MR. HENZY: I think also 1105 provides for the termination of trustee's appointment. THE COURT: But it refers back to 324. MR. HENZY: 1105 doesn't, but that's neither here nor there. THE COURT: The rules do. MR. HENZY: I understand. Just to be clear, is Your Honor denying our -- THE COURT: Yes.\n\n MR. HENZY: -- 60(b) motion? THE COURT: I'm denying your 60(b) motion. MR. HENZY: Thank you, Your Honor. THE COURT: And all discovery that was related to the 60(b) motion is denied because the motion -- because it's moot. MR. HENZY: Can I have one moment, Your Honor? THE COURT: Yes. (Pause) MR. HENZY: So, Your Honor, the motion -- the motion to quash is granted? THE COURT: It doesn't need to be granted. It's moot. The Rule 60(b) motion is denied. MR. HENZY: Very well. Understood. THE COURT: Any discovery with it, associated with it, is moot. MR. HENZY: Understood, Your Honor. Understood. MR. DESPINS: Your Honor -- THE COURT: Yes. MR. DESPINS: -- may I be heard on this? THE COURT: Yes. MR. DESPINS: I know your reaction might be, you just won, why don't you sit down. But, Your Honor, I know in this case what's going to happen. Everything is going to get appealed. And I wonder whether the Court would Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 122 of\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 123 of\n\n entertain alternative findings on this, which is that you've already ruled it's not procedurally proper. But in any event, the concept of disinterestedness under 101.54 or 59, I forget which subsection -- MR. HENZY: 14. MR. DESPINS: 14. Sorry. 101.14 deals with the estate, not the debtor. And there's nothing that's been alleged in anything they've produced that would somehow affect the disinterestedness of the trustee vis-a-vis the estate as an alternative finding. Just because what I -- you know what I'm -- I don't want to go back and forth, back and forth -- THE COURT: Well, I haven't -- I haven't written an order -- MR. DESPINS: Okay. THE COURT: -- denying the Rule 60 motion yet, which would have to happen before there could even be an appeal. Number one. MR. DESPINS: Thank you, Your Honor. Thank you. THE COURT: And number two, if there was an appeal, they'd have to be a bond posted. MR. HENZY: And I don't know whether there will be an appeal or not. But, Your Honor, I think those alternative findings should not be made. And I actually disagree with Mr. Despins that a\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 124 of\n\n trustee does not have to be disinterested vis-a-vis a debtor. And there is case law that says a trustee has to be disinterested vis-a-vis a debtor. But, again, I don't think you need to make alternative findings. You've denied the motion. I understand the basis for the denial. And I think that should be it. THE COURT: Well, there's still going to be a written order. There has to be a written order. MR. HENZY: I mean, if you're going to go beyond denying on the I'll call it the 324 ground, which I understand, then I am aware Collier says a 324 or 1105 motion is preferable to a 60(b). But there -- I would -- if you're going to make alternative findings, I would at least like an opportunity to argue because -- THE COURT: You put that argument in your papers. Your argument is in the papers. You stated why you think the trustee should be removed and why the relief from the order should enter. And your papers say all that. You say -- you talk about all that in your papers. MR. HENZY: I think you can -- I would argue you can -- you can deny -- again, that sounds funny because you can do what you obviously decide to do. But denial based on that you need to bring a\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 125 of\n\n| | 66 |\n|----|----------------------------------------------------------------|\n| 1 | motion under 324, I think you -- |\n| 2 | THE COURT:
I didn't say -- I didn't say just |\n| 3 | that.
That's not appropriate. |\n| 4 | I said you have to bring a -- and I said to you at |\n| 5 | the last hearing that the standards under Rule 60 and the |\n| 6 | standards under 324 are completely different. |\n| 7 | And so I didn't just say it's denied because you |\n| 8 | didn't bring it under 324.
That's not what I said. |\n| 9 | MR. HENZY:
Okay. |\n| 10 | THE COURT:
Okay?
I said that the motion is |\n| 11 | denied because you didn't bring it under 324 because that's |\n| 12 | the appropriate section to bring it under.
Number one. |\n| 13 | And number two, I don't-- I don't have any -- |\n| 14 | there's no -- you didn't bring forth anything to me under a |\n| 15 | Rule 60 motion that met the standard under a Rule 60 motion, |\n| 16 | which is that under your 60(b) motion, you would have to |\n| 17 | find -- I would have had to have found that there was |\n| 18 | inadvertent mistakes, surprise or excusable neglect.
That's |\n| 19 | doesn't apply. |\n| 20 | Newly discovered evidence that with reasonable |\n| 21 | diligence could not have been discovered in time to move for |\n| 22 | a new trial.
That doesn't apply.
Fraud, which doesn't |\n| 23 | apply.
You brought forth no evidence of that.
That the |\n| 24 | judgment is void.
That doesn't apply.
The judgment has |\n| 25 | been satisfied, released or discharged.
That doesn't apply. |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 126 of\n\n| | 67 |\n|----|----------------------------------------------------------------|\n| 1 | Or any other reason that justifies relief.
There |\n| 2 | is no other reason that you've set forth that justifies |\n| 3 | relief under Rule 60. |\n| 4 | So if you want to file a motion and try to meet |\n| 5 | the requirements of 324, you're welcome to do so. |\n| 6 | But you already argued all of those issues in your |\n| 7 | Rule 60(b) motion and I'm denying it.
There are no grounds |\n| 8 | for relief that you have presented to the Court under Rule |\n| 9 | 60 and bankruptcy Rule 9024, to grant relief under those |\n| 10 | rules. |\n| 11 | MR. HENZY:
Understood, Your Honor. |\n| 12 | THE COURT:
Okay.
Thank you. |\n| 13 | All right.
So now we can move on to the |\n| 14 | application to employ Paul Hastings. |\n| 15 | MR. DESPINS:
Thank you, Your Honor. |\n| 16 | There were two -- one statement and one objection. |\n| 17 | And the first, the objection, is filed by the |\n| 18 | debtor.
And we cited a Fifth Circuit decision -- although |\n| 19 | we don't need a Fifth Circuit decision, but the technical |\n| 20 | decision that says a debtor out of possession cannot -- does |\n| 21 | not have standing to object to the retention of counsel.
So |\n| 22 | I believe that's hornbook law. |\n| 23 | Actually, you had hinted at that at the last |\n| 24 | hearing without talking about the retention of counsel |\n| 25 | specifically. |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 127 of\n\n But that case applies to the retention of counsel because it's a case administration matter and the debtor out of possession does not have standing unless there's a surplus. And in this case, they're saying there's no surplus because they have no assets.\n\n Now, I think it's still important again, for appellate purposes, to just assume standing for two minutes and address the debtor's objection. And I go back to the definition of disinterestedness. It's keyed off to the word estate. And it's true that it talks about creditors, equity holders, and the debtor, but the test is vis-a-vis the estate. And none of what's been alleged here has anything to do with the estate.\n\n The issue of Mr. Wynn, you know, has nothing to do with the estate. And I want to be clear about this. My firm was retained after Mr. Wynn was sued by the DOJ, did not advise Mr. Wynn in any way regarding what to do or not to do vis-a-vis Mr. Kwok. There's none of that. Mr. Wynn is not a creditor. The Wynn litigation will not affect the estate up or down in any way and that's very important.\n\n And it's the same thing with the Chinese offices. I mean, that the fact that we have offices in China first of all was well known from the beginning.\n\n But it all falls on the basic point I made before -- and I want to explain this concept where I used insanity\n\n -- in their papers. They say that's outrageous that he says it was insane. I've always been very precise that what is insane is the lack of a link that they're establishing between what's happening between the debtor, his immigration status and the Chinese Communist Party, and this estate. Your Honor is not dealing with an immigration matter. Your Honor is not -- we are not dealing with that. We have no position on that. It's not our issue and we're not going to be involved in these issues. And that's where everything falls apart because there's no link between all of this and the -- and the estate and the job we have to do, which is to get the maximum assets possible and to the holders of allowed claims in this case. The other point is the UBS matter. That's another distraction. First, they've known about UBS from the beginning. That was in the first declaration we said that we represent UBS affiliates. I think I said predominantly or primarily regarding financing matters. We didn't say exclusively. But what does it matter whether we represent them regarding traffic tickets or financing matters or bankruptcy matters? I've said clearly that I've never represented them. I'm not representing them. I am able to be\n\n## Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 129 of\n\n litigation adverse, meaning as trustee against them. And, in fact, the litigation against them is pending in England. And as Your Honor knows, you know, in England to be appearing in court and to argue a case you have to be a barrister. Paul Hastings are not barristers in the U.K. So practially the people will use -- if you look for example -- at their objection, attached to the complaint that filed against UBS, if you go to the end, there are three signatures there. These are three barristers. We don't have barristers. And those are the people I would think that would continue to handle this matter given they've been handling it for two years, with some success by the way. Well, procedural success I should say. So the issue of UBS is a non-issue because in any event I'm the one as trustee who will handle this. I will supervise the work of U.K. barristers -- who are not Paul Hastings people because we don't have barristers -- and that, again, resolves that issue. And I believe the rest is all the same as the 60(b). PAX also filed a response. I think it would probably make sense to deal with the debtor's issues first, and then we'll come back to PAX after that. Thank you. THE COURT: That's fine. Thank you. Mr. Henzy? MR. HENZY: Thank you, Your Honor.\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 130 of\n\n So if I could address the standing issue first. With standing, first point, 1109(b) says the debtor has a right to raise, appear and be heard on any issue in a Chapter 11 case. That's very, very clear. I recognize that 1109, courts hold that a debtor still has to have -- you may be able to raise, appear and be heard, but that doesn't necessarily mean listening to me talk is the equivalent of an objection that the Court needs to rule on. So you can maybe painfully have to listen to me, but then say, thank you, Mr. Henzy, but I don't -- you don't have standing to object. And you've raised, appeared and been heard, but I don't have to rule on anything. So I understand that there's -- there's really just two levels to the analysis. There's 1109(b) and then there's do you have standing. The traditional standing analysis is you have to -- you either have to be classically aggrieved -- and I don't think that's what's at issue here, because we're dealing with a statute -- or you have to have statutory standing. So you have to have a statute that Congress has passed where the argument is that Congress intended to give a party a right to be heard in connection with that. And that is all very well laid out in many Supreme Court\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 131 of\n\n| 1 | decisions, Your Honor. |\n|----|----------------------------------------------------------------|\n| 2 | The standard that the Supreme Court has laid out |\n| 3 | in those decisions -- so the principal decisions being |\n| 4 | Association of Data Processing Service vs. Camp, that's at |\n| 5 | 397 U.S. 150, and then Clarke vs. Security Industry |\n| 6 | Association, that's at 479 U.S. 388, where they lay out that |\n| 7 | it is a party within the zone of interest to be protected by |\n| 8 | the statute in question. |\n| 9 | The standard that the Supreme Court has laid out |\n| 10 | is a -- it's a pretty low bar.
It's a quote from the Clarke |\n| 11 | decision. |\n| 12 | The Court to say there's no standing would have to |\n| 13 | find that the zone of interest denies a right to participate |\n| 14 | of the parties because the parties' interests are so |\n| 15 | marginally related to or inconsistent with the purpose |\n| 16 | implicit in the statute that it cannot reasonably be assumed |\n| 17 | that Congress intended to permit participation. |\n| 18 | The Clarke court further says the test is not |\n| 19 | meant to be especially demanding.
In particular, there be |\n| 20 | no indication of congressional purpose to benefit the would |\n| 21 | be plaintiff. |\n| 22 | And back to Collier's, the -- discussing those |\n| 23 | cases, Collier's at Volume 7, 1109.04, subparagraph (4)(b), |\n| 24 | says given the nature of Section 1109(b) because courts have |\n| 25 | said that in thinking about that zone of interest analysis |\n| | |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 132 of\n\n| | 73 |\n|----|--------------------------------------------------------------|\n| 1 | under the Supreme Court case law you plug that in together |\n| 2 | with 1109(b).
And so Collier's says given the nature of |\n| 3 | section 1109(b) and the purposes that it was designed to |\n| 4 | serve the zone of interest has to be liberally construed in |\n| 5 | favor of participation in Chapter 11 cases. |\n| 6 | There are cases, Your Honor, that say that a |\n| 7 | debtor has a right to object to the retention of counsel. |\n| 8 | Among other cases, Judge Krechevsky, in In re Pappas, at 216 |\n| 9 | B.R. 87, it's a 1997 decision, ruled that -- he actually |\n| 10 | ruled that Rule 2002 refers to a debtor as a party in |\n| 11 | interest and the debtor had standing to object under 327. |\n| 12 | And then Judge Brozman in a case, the Vebeliunas |\n| 13 | -- it's V-E-B-E-L-I-U-N-A-S -- it's 231 B.R. -- give me one |\n| 14 | second, Your Honor -- 181. |\n| 15 | And actually, Your Honor, there Judge Brozman |\n| 16 | disqualified trustee's counsel on the basis that trustee's |\n| 17 | counsel, before the 341 had occurred, before ever examining |\n| 18 | the debtor, had made public statements that indicated an |\n| 19 | extreme bias against the debtor.
He called the debtor a |\n| 20 | liar and other inappropriate things.
And Judge Brozman |\n| 21 | found that the debtor there both had standing to and, in |\n| 22 | fact, disqualified counsel on that basis. |\n| 23 | Also I point, Your Honor, to a Second Circuit |\n| 24 | decision, Savage & Associates, P.C. vs. K&L Gates, 640 F.3d |\n| 25 | 53, where the Second Circuit made clear that a debtor has |\n\n standing to -- I'm sorry -- that a party may have standing not just based -- not based on a financial interest alone, but also based on having a legal interest. And, again, both Judge Krechevsky and Judge Brozman found that a debtor did have a legal interest in objecting to a 327(a) application where counsel was not disinterested. On the financial interest, look, I have no idea where this case is going to come out, Your Honor. And I understand that at filing the debtor had some very small amount of money in his possession. But speaking of the U.K. litigation, the amount demanded there is \\$500 million. And I don't know anything really about the status other than I think I may have heard a comment that maybe sounds like something similar to what Mr. Despins has heard that that litigation apparently has gone reasonably well. So it may well be that this estate is not solvent. And it may be that there's a \\$500 million recovery against UBS in the U.K. And that would be terrific for everyone, including the debtor. So I believe that the debtor does have standing here to -- to object to Paul Hastings' retention. In terms of the conflicts and -- I did, you know,\n\nfile a witness and exhibit list with exhibits. I'm prepared\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 134 of\n\n| | 75 |\n|----|----------------------------------------------------------------|\n| 1 | to put on evidence.
Although with respect to much of the |\n| 2 | evidence I would put on, I'm not sure that there's any |\n| 3 | disputed issue.
And I don't want to belabor or take up a |\n| 4 | lot of time that we don't need to take up. |\n| 5 | I don't think it's disputed that Paul Hastings |\n| 6 | does work for various UBS entities.
The initial declaration |\n| 7 | that Mr. Despins filed states that and names the entities. |\n| 8 | Actually the Paul Hastings financial restructuring web page |\n| 9 | says that they have done -- I don't know if they do today -- |\n| 10 | but that they have done work for UBS entities. |\n| 11 | I don't think it's disputed that the defendant in |\n| 12 | the U.K. action is UBS AG.
That the -- in the debtor's |\n| 13 | schedules, and I don't know why -- in the statement of |\n| 14 | financial affairs I don't know why this was done, but it was |\n| 15 | disclosed there was an action against UBS AG, and then, in |\n| 16 | parens, it says London branch. |\n| 17 | And in the initial declaration filed by Mr. |\n| 18 | Despins the UBS AG that he is talking about in the |\n| 19 | declaration is defined to be that UBS AG, in parens, London |\n| 20 | Branch. |\n| 21 | But if you look at the complaint, which I actually |\n| 22 | attached to our objection -- again, I could -- I'm happy to |\n| 23 | put it into evidence, Your Honor, but it's attached to our |\n| 24 | objection and I don't think there's any dispute that it is |\n| 25 | -- it is the complaint -- it's clear that the defendant |\n| | |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 135 of\n\n there is UBS AG -- I'm going to say the big UBS AG -- the one that's headquartered in Switzerland and presumably is the parent of a whole bunch of other UBS entities. Again, the damages there asserted is \\$500 million. So this is not an insignificant claim. And that's in, again, in the complaint that I attached to the -- to the objection that we filed. Mr. Despins says he's never represented any UBS entity -- this is in his -- in his initial declaration -- and that he in his capacity as trustee is able to be adverse to UBS AG and to be named plaintiff. A couple of points. In the declaration, because of the way he's defined UBS AG, again, to be just UBS AG, in parens, London Branch, close parens, I don't think his declaration as filed actually covers the actual defendant in that lawsuit because his declaration -- he does say in the declaration that he can be adverse to any -- he's never represented any UBS -- what the declaration says is he's never represented any UBS entity. That's easy to understand. In my capacity as trustee, I'm able to be adverse to UBS AG and to be named plaintiff as Chapter 11 Trustee in any lawsuit against UBS AG. But, again, his definition of UBS AG is UBS AG, London Branch, and that's not -- the principal defendant in that action is UBS -- big UBS AG I'll\n\n call it. And so his declaration just -- it just does not -- other than that he's never represented any UBS entity, it does not address the actual defendant in that lawsuit. The actual -- THE COURT: Why does it need to address the actual defendant if he said he didn't represent any UBS entity ever? MR. HENZY: Well, Your Honor, because it's not clear from all of that whether Paul Hastings has represented -- if we were talking about my denied 60(b) motion, that would be important. But we're not. We're talking about Paul Hastings. And so the issue is whether -- not whether Mr. Despins has ever represented any UBS entity. It's whether any UBS entity is a former or current client of Paul Hastings. And I don't think that his declaration addresses that. THE COURT: Okay. MR. HENZY: Mr. Bassett -- in the actual application to retain Paul Hastings, it's Mr. Despins' application, but there's a declaration by his partner, Mr. Bassett, that's attached. And Mr. Bassett's declaration does not address that representation at all. What it does is it points to Mr. Despins' declaration, his first declaration and just\n\n says when it comes to connections, I'm just relying on his declaration. Which I actually under Rule -- under the rule, I'm not really sure that you can do that. I'm not sure counsel -- in a retention application, I'm not sure that the firm affidavit or declaration that's attached to the application can point to something else and say I'm not -- I'm not disclosing any conflicts. I'm pointing you to somebody -- a different declaration that somebody else has filed and go look at that. But I guess in some sense I'm not -- I'm not swearing to anything here other than what Mr. Despins said over there is true. So Mr. Bassett doesn't himself in his declaration address the UBS issue at all. So I think the bottom line of all of that is that I'm sure the UBS issue has been addressed by the existing declarations. And I'm also not sure how you get around -- or maybe you can get around Paul Hastings representing the trustee here, but I don't think that what is on file now does that. It doesn't carve out Paul Hastings from representing UBS. It just -- it just doesn't. They're being retained as general bankruptcy counsel to the trustee and I think that that's a significant conflict for them.\n\n That UBS is a client of Paul Hastings I think is admitted. And UBS is a defendant in a major asset of this bankruptcy estate. And I'm a -- I'm a little -- I could keep -- I don't know if we're going to address the PAX/PAG issue separately. Or I can keep going on the issues that I've raised. Because I guess I think the issues that Attorney Friedman has raised are actually different than the ones I would raise with respect to PAX and PAG. So should I keep going, Your Honor? THE COURT: Well, I don't know. Maybe we should hear from Mr. Despins first on this issue and then keep going. I mean, otherwise we're going to be here all day. Right? I mean, what -- you know, the issue is, Mr. Despins, Mr. Henzy's saying your firm has a conflict because they represent UBS. It's not clear that they represent UBS. And they're -- UBS is a defendant in the adversary -- in the case in London. So, you know, he's saying that Mr. Barnett I believe -- MR. DESPINS: Bassett. THE COURT: Bassett, I'm sorry, his affidavit isn't -- doesn't answer that question. MR. DESPINS: May I, Your Honor?\n\nFiore Reporting and Transcription Service, Inc.\n\n# Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 138 of\n\n THE COURT: Yes, please. MR. DESPINS: So the application to retain Paul Hastings, which I signed, incorporates by reference my declaration, and the declaration addresses both the trustee appointment and Paul Hastings. It says that expressly, that the disclosures in that declaration cover both the trustee and Paul Hastings. That declaration says that we don't represent London, sorry, UBS AG currently. We've represented them in the past, but we represent other UBS entities. And I don't think -- I'll check this -- but I don't think that the fact that it said, open paren, London Branch verses non-London Branch changes the analysis. I think that from my point of view it's the same thing. Luc Despines as Trustee can be trustee and handle as trustee litigation against any UBS entity, London Branch of not, and practically -- that's why Mr. Henzy has not -- he makes all of these great points, but doesn't die into reality. The reality here is that there is counsel involved in the case. They're barristers. These are the people that have been handling this case for two years. And I'm -- I think they will continue to do that. It would be not a good idea to replace them with new counsel. In any event, even if I wanted to do that, Paul Hastings are not barristers in\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 140 of\n\n| | 81 |\n|----|----------------------------------------------------------------|\n| 1 | London, therefore, cannot handle that litigation. |\n| 2 | So Paul Hastings, it's a false issue.
Paul |\n| 3 | Hastings cannot handle that litigation.
So that's really |\n| 4 | the crux of the issue, Your Honor, is that it's a non-issue |\n| 5 | for that reason. |\n| 6 | And, you know -- you know, I'm sure Your Honor |\n| 7 | knows the difference between solicitors and barristers.
But |\n| 8 | we are solicitors in London, we're not barristers, cannot |\n| 9 | file a complaint or handle a trial.
I'd love to be able to |\n| 10 | do that, but we're not equipped to do that.
So that, to me, |\n| 11 | deals with that issue completely. |\n| 12 | THE COURT:
Okay. |\n| 13 | MR. DESPINS:
Thank you. |\n| 14 | THE COURT:
Thank you. |\n| 15 | Go ahead, Mr. Henzy. |\n| 16 | MR. HENZY:
So just -- so just to be clear, Your |\n| 17 | Honor, the only place where the UBS issue is addressed is in |\n| 18 | the U.S. Trustee's application for order approving |\n| 19 | appointment of Chapter 11 Trustee, which attached to that |\n| 20 | was Mr. Despins' declaration of disinterestedness. |\n| 21 | And paragraph 7(c) of that declaration provides |\n| 22 | while Paul Hastings previously represented UBS AG, in |\n| 23 | parens, London Branch, defined -- it's in quotes -- \"UBS |\n| 24 | AG.\"
So in -- in his declaration, UBS AG means UBS AG, |\n| 25 | London Branch.
That's not my definition.
I'm not -- I |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 141 of\n\n| | 82 |\n|----|----------------------------------------------------------------|\n| 1 | don't think I'm parsing things, words, or anything like |\n| 2 | that.
That's how he has defined UBS AG. |\n| 3 | And what the declaration says is then I have never |\n| 4 | represented any UBS entity, including UBS AG.
I, in my |\n| 5 | capacity as trustee, am able to be adverse to UBS AG -- |\n| 6 | again, substitute for that UBS AG, London Branch -- and to |\n| 7 | be named the plaintiff as Chapter 11 Trustee in a lawsuit |\n| 8 | against UBS AG -- again, substitute UBS AG, London Branch. |\n| 9 | What the declaration says about Paul Hastings is |\n| 10 | Paul Hastings does not currently represent UBS AG.
But, |\n| 11 | again, that-- the way he's defined it UBS AG means UBS AG, |\n| 12 | London Branch.
It doesn't mean big UBS AG.
That may -- I |\n| 13 | don't know.
It may or may not be true that Paul Hastings |\n| 14 | doesn't represent big UBS AG, but that's not what this says. |\n| 15 | Paul Hastings does currently represent certain UBS |\n| 16 | entities, namely UBS Securities, LLC, UBS Securities, |\n| 17 | Limited, Seoul Branch, UBS Investment Bank, that are |\n| 18 | affiliates of UBS AG, which again I think means UBS AG, |\n| 19 | London Branch, in unrelated matters. |\n| 20 | And so I don't think Mr. Despins' declaration |\n| 21 | addresses Paul Hastings' representation of big -- what I'm |\n| 22 | calling big UBS AG, which is the defendant in the U.K. |\n| 23 | action, at all.
It just doesn't. |\n| 24 | And Mr. Bassett's declaration does no more than |\n| 25 | refer to Mr. Despins's declaration. |\n| | |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 142 of\n\n Mr. Despins' declaration may be adequate with respect to his being disinterested with respect to this issue. And he says that he is able to be adverse to UBS AG, and meaning London Branch, and to be the named plaintiff against UBS AG, London Branch, but it doesn't say anything about Paul Hastings. So right now I don't think there's been any disclosure, Your Honor. And, again, I don't know if it's -- I've never seen in an application to retain a professional that the declaration with the affidavit attached to the affidavit simply makes reference to somebody else's declaration. But that -- maybe there's something out there that says that's okay. So the application is for Paul Hastings to be general bankruptcy counsel. There's no -- there's no carve out. MR. DESPINS: Your Honor, I'm happy to put a carve out. Paul Hastings will not handle the U.K. litigation. That's the end -- that's the end of it. I mean, we can -- because we can't. We're not barristers, Your Honor. THE COURT: Anything further on that point, Mr. Henzy? MR. HENZY: I don't have anything further on that point, Your Honor.\n\n THE COURT: Okay. So what's your next point? MR. HENZY: With respect to PAX/PAG that was the subject of -- I understand there was disclosure right at the time of the July 8 hearing, and then there was a supplemental disclosure. There has been no disclosure with respect to the common officers, common directors, common control between the PAG, the so-called PAG entities, that Paul Hastings until very recently represented and apparently terminated that relationship. There's no disclosure of the circumstances of the termination of the relationship. And I -- Mr. Friedman can certainly correct this, but based on the statement that he made at the July 21 hearing, my sense was that PAG may not have understood that it was a former client of Paul Hastings. And, again, Mr. Bassett's declaration does not address PAX or PAG at all. It just refers to Mr. Despins' -- actually his initial declaration. So I don't think that the disclosure here has been adequate. And as the Court is obviously very, very aware, the -- PAX is a major creditor in this -- in this bankruptcy case. THE COURT: Mr. Despins? MR. DESPINS: Your Honor, the first supplemental declaration, again, says it's filed in support of the\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 144 of\n\n trustee appointment and the Paul Hastings retention. That's paragraph one. So that issue is addressed. My declaration covers both. So I don't understand why going back to Bassett -- Bassett is irrelevant for the purpose of conflict. There's only one conflict disclosure. They're my declarations. Number one, number two, number three. So Bassett, the fact that he's incorporated by reference is of no meaning because the application to employ Paul Hastings says we -- Paul Hastings is relying on the declarations of Luc Despins. Plural. Now, on the issue of PAX, he's saying we don't know if they're the same officers and all that, paragraph 4 of the declaration says, and in any event assuming without conceding the point that PAG entities and PAX would be treated as one for conflict purposes, meaning assuming that they have the same directors and officers, which we didn't get into, I'm still able to be adverse to them because they're a former client. So that's the end of the inquiry, meaning I'm assuming the worst here, that they are all the same, which I'm not sure is the case. But assuming it is the case, we are able to be adverse because they're former clients on a -- on a related matter.\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 145 of\n\n There was -- the last transaction is a transaction that closed in May -- I forget the exact date -- May 15th, 17th, something like that. And it's a corporate transaction, and there was a closing, and that was the closing transaction. That was in May of 2022. So I'm not sure I see the point there. THE COURT: Mr. Henzy? MR. HENZY: I mean, again, Your Honor, the only declaration that was actually attached to the application to retain Paul Hastings was Mr. Bassett's. But, I mean, it's always the case, Your Honor, where you have a transactional client there's going to be periods of time where there's no transaction that's pending, and it sounds like PAG, these PAG entities, were transactional clients of Paul Hastings. And I don't -- I don't doubt that in I guess it was May that whatever transaction they were working on closed, but, I mean, at least it appears that there was a relationship. And Paul Hastings certainly can take the position that, well, right now we're not representing any of the PAG entities on any matter and, therefore, they're a former client. Now, that -- and that's always a sort of discussion thing. If you have a client and you're doing\n\n| | Case 22-50073
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322 |\n|----|------------------------------------------------------------------------------------------------|\n| | 87 |\n| 1 | work for that client on a regular basis, but at a point in |\n| 2 | time you don't have any matter you're actively working on, |\n| 3 | is the client a former client or is the client a current |\n| 4 | client? |\n| 5 | I think I understand the technical argument is a |\n| 6 | former client, but I think often times clients don't |\n| 7 | understand the technical argument and might not always agree |\n| 8 | with that. |\n| 9 | I still think that there is a disclosure issue |\n| 10 | though.
What were the -- what were the circumstances of |\n| 11 | PAG, the PAG entities, becoming former clients? |\n| 12 | I mean, did Paul Hastings inform them we are not |\n| 13 | going to represent you anymore?
I think that is -- I think |\n| 14 | that's relevant. |\n| 15 | How many -- how long did the relationship exist? |\n| 16 | How many transactional matters did Paul Hastings represent |\n| 17 | the PAG entities on?
I think that is all relevant |\n| 18 | disclosure, Your Honor. |\n| 19 | THE COURT:
Anything further? |\n| 20 | MR. HENZY:
No, Your Honor. |\n| 21 | THE COURT:
Anything further on the application to |\n| 22 | employ Paul Hastings as a whole? |\n| 23 | MR. HENZY:
Yes, Your Honor. |\n| 24 | THE COURT:
What?
What's next? |\n| 25 | MR. HENZY:
Okay.
Next is I'll call it the |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 147 of\n\n broadly Paul Hastings' connections with China. I don't think, Your Honor, that it's disputed that Paul Hastings has a presence in China. It has offices in Beijing, in Shanghai, and it also has an office in Hong Kong. I don't know if it's -- would be disputed today that Paul Hastings does do work for Chinese state owned entities and it also does work for businesses. They're doing business in China. I don't expect anyone to agree with me today that China exercises significant review, control, over businesses in China. I will admit that I'm not going to be able to prove that today. I'm not sure how I would have prove it. I did cite a statement by the Director of the FBI, Christopher Wray, in the objection. I did not subpoena Mr. Wray to court here today to say in court today what he has said publicly in terms of China's -- the degree of control China exercises over -- over businesses in China, including their license to do business in China. I also believe, Your Honor -- I don't know if this would be disputed or not -- there's a pretty good public record of this, that to put it mildly, Mr. Kwok got on the wrong side of the government of China. He had to leave the country. He is seeking asylum here. The Peoples -- the Chinese government and/or the Hong Kong government seized billions of dollars of assets of\n\n family members, and others and potentially very significant dollars that I don't think he would dispute were in entities that he did control, like the Pangu Plaza, which my understanding is that that was actually PAX's -- connected with PAX's loan and kind of was the part anyway of the reason that a lot that unraveled. Mr. Kwok may have claims against the government of Hong Kong or the Peoples Republic of China based on the seizure of those assets. I am not obviously an expert in that world, but my understanding is that there at least in form is a procedure that a person can go through if their assets have been seized. I don't know of Mr. Despins has done any analysis of that at all in terms of is there a claim to be made by the estate based on the seizure of assets. So there's -- that's a specific concern. The general concern is that the Chinese government I think it has demonstrated that it is -- it is going after Mr. Kwok. Again, we cite Department of Justice documents in the objection, Your Honor, that make it clear that the government of China has attempted in various ways to remove Mr. Kwok from this country. And so there's a couple of concerns with that. One is that the Chinese government will seek to\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 149 of\n\n exercise influence over Paul Hastings. Paul Hastings cannot do business in China if -- unless China allows it to do business there. And, again, according to the FBI director, the government of China does exercise control over businesses that are doing business there. Very recent and up front is -- and Mr. Despins made reference to this, the United States Department of Justice has sued Mr. Stephen Wynn for failing to register under the Foreign Agent Registration Act. And the allegation is that Mr. Wynn acted as an agent for the Chinese government in seeking to have Mr. Kwok removed from -- from this country. On July 15, Paul Hastings appeared on behalf of Mr. Wynn in that District of Columbia action and they are seeking to dismiss that action. Mr. Despins -- after we put this in the objection, he filed a second supplemental disclosure, and among other things, in paragraph 3 of that disclosure, he said I did not disclose Paul Hastings' representation of Mr. Wynn in the prior declaration because he first learned about it by -- via the objection. Well, obviously the firm knew about its representation of Mr. Wynn and I think it's the firm has an\n\nobligation to make their adequate disclosure.\n\nIn the paragraph 4 of the declaration, Mr. Despins\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 150 of\n\n also says that he believes the Wynn representation has no bearing on the retention of Paul Hastings as counsel, and essentially it's just -- it's completely unconnected, irrelevant. I think it's connected in a number of ways. Or the Chinese government's actions are certainly connected in a number of ways. One, if Mr. Kwok is removed from this country that obviously has significant impact on this bankruptcy case if he's not here. Mr. Despins states in the -- in his declaration that the debtor will not be a witness in the action that's pending in -- in the District of Columbia. I don't know how Mr. Despins could know that to be true. I don't know how anyone, unless they talk to someone at the DOJ, could know whether or not the DOJ is going to decide, or maybe Mr. Wynn is going to decide, that Mr. Kwok should be called as a witness. Mr. Despins also states the debtor's estate will not be increased or decreased based on the action that's pending in the District of Columbia. I don't know if Mr. Despins has concluded that the debtor has no claim against Mr. Wynn. And if you -- if you read the complaint filed in the District of Columbia action, it essentially alleges a pretty broad, you know, pattern of behavior put it.\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 151 of\n\n Someone might -- you know, someone might say it looks like a conspiracy amongst a group of people to have Mr. Kwok removed from the country. So he may well have a claim or there may well be a claim against Mr. Wynn on account of Mr. Wynn's conduct related to Mr. Kwok. So that is it, Your Honor. THE COURT: Okay. Thank you. Mr. Despins, did you want to respond to that last point? MR. DESPINS: Yes, Your Honor. First, you know, the -- Mr. Henzy talks about claims the debtors may have. The schedules don't mention any of this. Claims against the Chinese government is not in the schedules. And here, again, the point about exercising pressure is, you know, there's always a failure to connect to the conduct by the trustee of this case. How is that going to be influenced by any pressure that the -- that could be put on. It's really not there. He's not going to be a witness because it has -- as my partner told me -- it could have been lobbying to sell Chinese technology or Chinese tea or something or anything like that. It's you need to register if you are acting as a foreign agent. The subject matter of the discussion is not\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 152 of\n\n part of the case. The fact is you did make representation or not -- don't know -- regarding -- on behalf of a foreign entity. And if that's the case, you need to register. That's the end of it. So that's why he's not going to be a witness.\n\n As to the Kwok claims against Mr. Wynn, you know, I hesitate to say this because -- but have at it. I mean, meaning Paul Hastings is not going to represent Mr. Wynn in defending him against claims asserted by Mr. Kwok because clearly they're trying to create a scenario of some kind where somehow Mr. Kwok, you know, has a legitimate concern.\n\n I'm telling you right now if Mr. Kwok decides to sue Mr. Wynn for whatever, Paul Hastings will not defend Mr. Wynn in that litigation. So there's no animosity or issue there. So I think that answers those questions. Thank you.\n\n MR. HENZY: I'll be brief. I probably was not clear. I think the concern is does the trustee and Paul Hastings representing the trustee have an obligation to investigate what claims might exist against Mr. Wynn or other people who were involved in this behavior where they were seeking to assist the Chinese government in having Mr. Kwok deported.\n\n I mean, in terms of a claim against either the government of Hong Kong or the government of China, the debtor did not schedule that. But presumably Mr. Despins\n\nFiore Reporting and Transcription Service, Inc.\n\n and Paul Hastings representing Mr. Despins would want to investigate that. Again, this Pangu Plaza was worth hundreds of millions of dollars, and it was -- and it was seized. And I think whatever assets that either indirectly or directly may have been owned by a debtor go away that that's something that needs to be looked at an investigated. THE COURT: Anything further? MR. DESPINS: Just one last point on this, Your Honor. If the debtor gets into a car accident tomorrow and has a claim against the other driver, am I supposed to pursue that or is that -- that's another, you know -- so the claims against Mr. Wynn have nothing to do with -- it's not a -- it's a post-petition claim by the debtor. I'm not sure that's for the trustee to prosecute. MR. HENZY: This is -- all the conduct here occurred pre-petition, Your Honor. All of the conduct. The lawsuit was filed by the DOJ post-petition, but all the conduct that occurred occurred pre-petition. And the same thing with the seizure of assets. So it's -- to the extent that there are assets, they're pre-petition. I think those would be property of the bankruptcy estate I believe. THE COURT: Anything further, Mr. Henzy, on your objection to Paul Hastings being retained as counsel to the\n\n| | 95 |\n|----|---------------------------------------------------------------|\n| 1 | Chapter 11 trustee?
Mr. Henzy? |\n| 2 | MR. HENZY:
I'm sorry, Your Honor. |\n| 3 | THE COURT:
I said is there anything further that |\n| 4 | you want to state with regard to your objection of -- for |\n| 5 | Paul Hastings being retained as counsel to the trustee? |\n| 6 | MR. HENZY:
No, Your Honor.
No, Your Honor. |\n| 7 | THE COURT:
Okay.
Thank you. |\n| 8 | Anyone else? |\n| 9 | Mr. Friedman, didn't you file an objection or a |\n| 10 | limited objection with regard to the retention of Paul |\n| 11 | Hastings? |\n| 12 | MR. FRIEDMAN:
Good afternoon, Your Honor.
It's |\n| 13 | Peter Friedman from O'Melveny & Myers. |\n| 14 | THE COURT:
Good afternoon. |\n| 15 | MR. FRIEDMAN:
So we noted our concern that if |\n| 16 | there's going to be a circus around this that that is a |\n| 17 | problem.
Obviously, there are other routes that could have |\n| 18 | been gone in terms of a trustee. |\n| 19 | But I don't -- we don't think, having looked at |\n| 20 | the issues, there's a statutory reason other than it not |\n| 21 | being potentially in the best interest of the estate to have |\n| 22 | Paul Hastings retained. Our objections were mostly fee |\n| 23 | oriented and cost-structurally oriented. |\n| 24 | The colloquy back and forth though did sort of |\n| 25 | remind me of an issue you talked about, which is, you know, |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 155 of\n\n you take the debtor as you find them. And it is a little weird to hear the debtor now talking about all these potentially valuable assets he has that weren't in the schedules and when it was convenient for him to say I have \\$3,850 or, no, the assets were never mine. They were always my families'. But now he claims he maybe does have lawsuits against the Chinese government. There is sort of this very weird miasma around -- it's almost like an -- the case is almost like an etch a sketch from the debtor's perspective.\n\n What he said in the past literally doesn't matter to what he feels today. I think that's sort of a troubling portion of this case, that it simply just doesn't matter what he said in the past in other context. Something else that comes up new that sort he thinks he can ride on the back -- like a blank slate, if it advantages him today and that is sort of a troubling pattern that we've seen over the years.\n\n Look, on fees, Your Honor, we were in a situation where the U.S. Trustee picked somebody who had a lower fee structure, much lower fee structure, which we do think is appropriate for the case overall, particularly if you wind up with either a non-consensual plan or low recoveries. We are concerned about eating into creditor recoveries, you know, if substantial costs are run up by the\n\ntrustee and his counsel.\n\nFiore Reporting and Transcription Service, Inc.\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 156 of\n\n The trustee sort of, you know, has a response. One of the points of the response is, well, on the other hand, we're not acting like a true contingency counsel fee firm because the upside isn't so great.\n\n And to be fair, Your Honor, if the upside turns out to be even better, right, maybe our proposals on the upside aren't as generous as they could be. If the trustee recovers \\$150 million, I think we, you know, we might be open to substantial fee enhancements.\n\n We just -- our real concern is, you know, if there is a low end or if some money gets exhausted after running after Mr. Kwok for many years. And Mr. Despins may well not.\n\n But, you know, and you end up with 60 or 70 million dollars of recovery, but you also wind up with 10 or 15 million dollars in legal fees, that would be a real loss from the PAX perspective and I think the perspective of other creditors, particularly where there was an option at the outset of the case for lower costs. So that's our concern.\n\n And so, you know, I think the Court has it in her power either to evaluate costs now, evaluate costs in the context of what value is given to the estate as things come up. Obviously, you know, people may prefer for it to be dealt with now. We would. But, you know, that's where we\n\nFiore Reporting and Transcription Service, Inc.\n\n| 1 | stand. |\n|----|--------------------------------------------------------------|\n| 2 | This is -- you know, I think you've heard from me |\n| 3 | over the course of years.
This isn't like a -- over the |\n| 4 | last six months.
This isn't like I'm going to pound the |\n| 5 | table because there are immediate factual issues that have |\n| 6 | to be addressed. |\n| 7 | But there are real concerns from PAX about how |\n| 8 | much money is PAX going to wind up with at the end of the |\n| 9 | day versus how much is going to be paid to professionals. |\n| 10 | So I think, and said, we've -- we've put forward. |\n| 11 | Beyond that, you know, our specific concerns and |\n| 12 | specific proposal, I think we're amenable to making the |\n| 13 | upside better from our perspective if that's enticing and |\n| 14 | appealing to the trustee and his law firm. |\n| 15 | But whether it's dealt with now or whether it has |\n| 16 | to be dealt with in the future when asset -- when cash comes |\n| 17 | in, we think it's really important to address. |\n| 18 | Thanks, Your Honor. |\n| 19 | THE COURT:
Thank you. |\n| 20 | Anyone else wish to be heard? |\n| 21 | Oh, I'm sorry, Mr. Despins.
Would you like to |\n| 22 | respond first? |\n| 23 | MR. DESPINS:
No.
Maybe others want to be heard. |\n| 24 | MR. GOLDMAN:
Just briefly, Your Honor.
Irve |\n| 25 | Goldman for the creditors committee, Your Honor. |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 158 of\n\n On the -- this newly raised potential claim that the debtor says he may have against Steve Wynn, as Mr. Friedman pointed out, that's a claim that should have been but was not listed on the schedules. As Mr. Henzy said it's based on pre-petition conduct so it would have had to have been listed on the schedules as an asset of the estate. 8 There is well settled case law that when a debtor doesn't list a claim on its schedules and then tries to bring an action post confirmation, for example, it's going to be judicially estopped from pursuing that claim. And that's the situation here. It should be judicially estopped from making the argument that he has a claim that the trustee needs to investigate against Mr. Wynn. As to the Paul Hastings application, we did file a statement indicating that we had certain understandings concerning how the Paul Hastings firm would represent the trustee in this case, which were formed based on discussions with Mr. Despins. And that is that they would, whenever possible,\n\n economize by using local counsel, whose rates are much lower than the Paul Hastings firm, and that also they would not be seeking litigation funding for the causes of action that we believe exist and which results in a savings in the sense of it would have been an expensive proposition to obtain\n\n litigation funding. So I think it's important that these understandings at least be confirmed on the record here today. Another one of those understandings was that the trustee himself, in the capacity as trustee, would not be seeking percentage compensation under Section 326 for assets that may be recovered and distributed in this case, but that he would be just looking for his hourly rate as counsel for Paul Hastings for -- in lieu of any percentage compensation that he might claim under section 326 at the end of the day. So I would just appreciate if he can confirm those understandings on the record. As we said in our papers, we have no objection to the retention. THE COURT: Okay. And just why do you think that he should not be receiving a statutory percentage of any recovery? MR. GOLDMAN: Well, because if he's going to be compensated as a lawyer for Paul Hastings at these rates -- THE COURT: Oh, if he's going to be as -- working as a lawyer? MR. GOLDMAN: Yeah. THE COURT: Okay. All right. MR. GOLDMAN: Yeah. THE COURT: I didn't understand. I got it now.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 160 of\n\n| | 101 |\n|----|--------------------------------------------------------------|\n| 1 | Okay. |\n| 2 | MR. GOLDMAN:
Yeah. |\n| 3 | THE COURT:
Sorry. |\n| 4 | MR. GOLDMAN:
And that he -- |\n| 5 | THE COURT:
I got you. |\n| 6 | MR. GOLDMAN:
Okay. |\n| 7 | THE COURT:
I didn't understand it.
I just didn't |\n| 8 | hear you properly I guess. |\n| 9 | MR. GOLDMAN:
Okay.
Thank you. |\n| 10 | THE COURT:
I'm sorry. |\n| 11 | MR. GOLDMAN:
Thank you. |\n| 12 | THE COURT:
Okay.
Thank you. |\n| 13 | Attorney Claiborn? |\n| 14 | MS. CLAIBORN:
Your Honor, the U.S. Trustee has no |\n| 15 | objection to the employment of Paul Hastings based upon the |\n| 16 | documentation filed thus far in the case. |\n| 17 | I just would note, as we observed this previously |\n| 18 | in this case, that the continuing obligation to disclose |\n| 19 | exists today, tomorrow, into the future. |\n| 20 | And then with respect to the issue of the |\n| 21 | compensation, the U.S. Trustee's position is that attorneys |\n| 22 | carry their firm's fees and their own hourly rates with them |\n| 23 | from their home market. |\n| 24 | And that this is a complex case.
It's got a lot |\n| 25 | of moving parts and it requires experienced counsel and that |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 161 of\n\n necessarily sometimes translates into higher fees. The work that's got to get done in this case does need to get done in a cost effective manner. I think everyone has made that clear to Trustee Despins and he's aware of it and I'm sure that he's going to do his best to make sure that the skills match the services and that we are doing them in a cost effective manner. And that when we get to a place of fee application that is the appropriate place and the time to debate the cost effectiveness of the services rendered and the benefit to the estate. THE COURT: Thank you. Trustee Despins, is there -- would you like to respond? MR. DESPINS: Thank you, Your Honor. I'll pick up where counsel for the committee, you know, left off, which is I've made that commitment to try to be as nimble as possible. First of all, it's our job to do that, but -- and that means practically relying on local counsel, on Mr. Skalka and Mr. Linsey, as much as we can. 22 And also leverage what PAX has done in the state court, because there's three years, maybe four years, of learning there and there's no point in us reinventing that wheel. Us as lawyers. We can just borrow from that and we\n\n intend to do that. And that combined together should lower the cost. But I don't want to mislead you. This is going to be an expensive process. And I want to touch on the point that I've agreed there will be no litigation funding. That is correct. But I did get a quote just to give Your Honor a sense. A litigation funder -- let's assume we wanted \\$5 million to pursue claims -- they -- the fee they will charge will be two to four times the amount. So you have to repay the 5 million. Then it would be a 10 to 20 million dollar fee. Just to put that in perspective. We're not asking for any of this. We're not asking for 30 percent, 40 percent. We're asking for our rates. I understand that our rates are high compared to local rates. I understand that, Your Honor. But here I could end up with a zero recovery. I know we all know and we believe what should happen. And I believe that too. But from that to reality is going to take a lot of time and a lot of effort. And we are bearing the risk of that because the debtor has unlimited resources and they will fight us on everything. It will be appealed to the Second Circuit. And if they can, to the Supreme Court. I've no doubt about\n\n that. And that's what we're facing in terms of getting paid. And, therefore, we believe in light of that it would be really inappropriate to say, oh, we're going to discount your rates if you don't collect more than X dollars. Because, for example, let's assume tomorrow I wave a magic wand in my dreams and I get the Sherry-Netherland and the yacht here, how much do they sell for? I don't know. What if they sell -- and this is not my goal -- I want them to sell for 70 million for the apartment and 40 million for the yacht. But let's assume they sell for 20 each. Well, under Mr. Friedman's proposal I'm taking a hit because even though I've obtained a good result in bringing these two assets in, I didn't get the value that people thought would be obtained from the assets. I've become an insurer of the value of the assets. That's really wrong. So I understand PAX's frustration. They've spent millions of dollars chasing this debtor in a kind of a catch me if you can caper. And they almost, almost got it. Almost got it, but they didn't. And now they have -- they have this fear -- and I share the fear -- which is is this the beginning of another\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 164 of\n\n catch me if you can? And my job is to make sure that the movie is shorter this time or more successful. But I -- but the point is that that should not translate into we're going to -- we're frustrated and we're going to hurt you on your fees. I just -- I don't want to sound arrogant about this, Judge, but if I came back to the office and said it's a contingent case and I took a discount on my hours, they would say what did you do? They would just say they would have to have my head examined. So I don't want to be arrogant about this, Judge, but -- and I wish -- I feel Mr. Friedman and his client's pain on this, but there's nothing I can do on the hourly rates. And I would urge Your Honor to look at this as a contingency fee transaction. And in that context, it's a very reasonable rate. Thank you, Your Honor. THE COURT: Thank you. Mr. Henzy? MR. HENZY: So the -- on the Wynn claim, this action was just filed by the Department of Justice on May 17. So approximately three months after the petition was filed and after the schedules were filed. So a lot of -- THE COURT: But you said it was all pre-petition conduct. MR. HENZY: I'm basing that on -- I'm reading the\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 165 of\n\n| | 106 |\n|----|--------------------------------------------------------------|\n| 1 | complaint, Your Honor. I'm saying the complaint was filed -- |\n| 2 | THE COURT:
Well, your client would know or not |\n| 3 | know whether it was pre-petition conduct.
That's -- |\n| 4 | MR. HENZY:
No, Your Honor. |\n| 5 | THE COURT:
Yes, he would. |\n| 6 | MR. HENZY:
That's not -- the facts of what |\n| 7 | happened here became public on May 17.
They all occurred |\n| 8 | years ago.
They became public on May 17, 2022 when the |\n| 9 | government filed it's complaint against Mr. Wynn. So I'm |\n| 10 | just -- I'm pointing out that many of the facts which |\n| 11 | occurred years ago became public for the first time when |\n| 12 | this complaint was filed.
That's all. |\n| 13 | So three months after the case was filed and after |\n| 14 | the schedules were filed. |\n| 15 | A second point -- |\n| 16 | THE COURT:
Well, the trustee didn't get appointed |\n| 17 | until July 8th.
So your client could have amended his |\n| 18 | schedules before that. |\n| 19 | MR. HENZY:
I suppose he could have, Your Honor. |\n| 20 | I'm not sure -- |\n| 21 | THE COURT:
Well, he has a duty to do that. |\n| 22 | MR. HENZY:
I'm not sure in this case -- |\n| 23 | THE COURT:
It's not just a supposition. |\n| 24 | MR. HENZY:
Yeah, given all that was going on I |\n| 25 | don't know -- |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 166 of\n\n THE COURT: What was going on? Your client wasn't doing anything. They weren't fighting anything. They decided that the case should be dismissed. MR. HENZY: Yeah. THE COURT: Right. So he then just decided what he thought should happen and he doesn't have any other obligations under the code? MR. HENZY: No, I don't think that's fair, Your Honor. THE COURT: Well, I don't think it's fair to say that he could have maybe amended his schedules. MR. HENZY: Maybe. THE COURT: He had an obligation to amend his schedules. MR. HENZY: Your Honor, I'm pointing out the facts here became public well after the case was filed and also -- THE COURT: It wasn't well after the case was filed, by the way. The schedules weren't filed until March. MR. HENZY: Mr. Despins I don't think is judicially estopped by what's in the debtor's schedules. So whether there's a claim against Mr. Wynn or not I don't know, but I do know that Mr. Despins is not estopped. MR. DESPINS: Your Honor, two seconds on that. THE COURT: Yes. MR. DESPINS: Just to show you -- you know, Mr.\n\n Henzy's very creative. We'll give him that. So we could have a claim. Let's look at his motion to remove me as trustee. THE COURT: Why don't we do that. MR. DESPINS: It says -- THE COURT: Hold on a second. Let's look at it all together because it's a lot easier for me when we're all looking at it together. So his motion to remove you -- MR. DESPINS: Is 561. THE COURT: 561. Let's look at that. MR. DESPINS: Paragraph 21. THE COURT: Just give the courtroom deputy a second and we'll pull it up. (Pause.) THE COURT: What page? MR. DESPINS: Paragraph 21, page 7, Your Honor. THE COURT: Thank you. Can we make that bigger, please? Thank you. Okay. MR. DESPINS: So the point there, Your Honor, as you'll see, it talks about a former DOJ official pleaded guilty to facilitating the transfer of millions of dollars from foreign bank accounts to the United States to fund a lobbying campaign to pressure a high ranking U.S. official\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 167 of\n\n to unlawfully remove the debtor from the United States. Whoa, that's pretty bad. And is that claim in the schedules anywhere? That's 2018. Is that in the schedule? It's not in the schedules. Why? Because, again, I give credit to Mr. Henzy to come up with these theories, but the debtor had a beautiful claim apparently here against this person but is not pursuing that claim. So the claims against Wynn are all of the same ilk, meaning obviously, if the debtor thought they had a claim against Wynn, they would have asserted this one for sure against the DOJ -- ex DOJ official. So it's just to show you that this all pretends to try to bounce Paul Hastings from the case, Your Honor. THE COURT: Thank you. All right. Anyone else wish to be heard? All right. The application -- go ahead, Mr. Friedman. I'm sorry. MR. FRIEDMAN: Your Honor, the only thing I would say is just in response to Attorney Claiborn's position is obviously they also thought that the first counsel they hired was sophisticated and capable and just came in with a different set of rates. That's all I have to say, Your Honor. THE COURT: Okay. Thank you.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 169 of\n\n Now Mr. Despins, I just have to look back at -- with your application did you file a proposed order? I think you did. I'm not sure it was filed with it or subsequent. MR. DESPINS: It should have been. Let me -- THE COURT: I've looked at -- I may even have it right here. As you can imagine -- MR. DESPINS: Let me find it. (Pause.) THE COURT: I'll look. Don't worry. I can take a look. It will just take me a second. (Pause.) MR. DESPINS: It's document 539. THE COURT: Yeah, it's there. It is there. It's Exhibit -- it's -- proposed order is five pages. MR. DESPINS: Yes. 531 -- 539-1. THE COURT: Yes, I'm looking at it right now. Thank you. (Pause.) When do -- Mr. Despins, do hourly rate increases go into effect in your firm? Does it happen at the beginning of the year or -- is it normally when that happens? MR. DESPINS: Typically, yes, Your Honor, but we have a fiscal year that starts in February, February 1st. So\n\n typically it would be at that time. THE COURT: Okay. Because I think -- and one of the things that I tend to do in cases where people are concerned about hourly rates is to make sure that I'm aware of whatever rate increases there are before they would be binding on anyone in this case. So, for example, in your proposed order you say that you would give no less than ten business day's notice about any increases in rates. And you'll file such notice with the court. I think that's fine, because it may be that depending upon where we are, that maybe the rate will not be increased in the case, okay? It's possible. MR. DESPINS: Understood. THE COURT: Okay. And then I just want to look at one other thing and then I'll -- (Pause.) I know that -- as everybody has acknowledged today, that this is a difficult case. There are many issues and I understand everyone's concerns. I think people have a right to -- raise the concerns that they've raised and I have listened to them. I have looked at the documents that have been filed in the connection with the application to employ Paul Hastings. I know that Paul Hastings and Trustee Despins have a continuing duty, as does everyone in the case, to address\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 171 of\n\n issues that may impact conflicts or disinterestedness. I at this point find that Paul Hastings is disinterested. That the arguments that have been set forth by the debtor through counsel are not persuasive and that the application to employ Paul Hastings will be granted. The proposed order, Mr. Despins, if there's any minor change to it, it will be minor, but I note, as I note for all counsel, or at least try to remember to. I don't know if I do it as well as I think I do or should, but Section 330 of the bankruptcy code allows the court after a hearing on reimbursement of compensation and expenses to award and amount less than that sought and, therefore, while these rates and issues are before the court are -- you've set forth what you're going to charge, that those are your rates, that the court could make a different finding in the future. But I'm not suggesting that that's what's going to happen. I'm just suggesting the code -- I like to make sure that counsel knows that the code says that. The code says, and I think it's 330(b), that compensation can be awarded in an amount of less than that sought.\n\n And I do understand your point with regard to this case and how to view it, but at this point the application is granted. The proposed order with some minor change may - - I think the only change it will be -- a reference to rule\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 172 of\n\n| | 113 |\n|----|--------------------------------------------------------------|\n| 1 | -- I mean, excuse me, Section 330 and that, you know, the |\n| 2 | court may not enforce an increase in rates if one is filed |\n| 3 | with the court. It may not be enforced against the estate or |\n| 4 | it may, depending upon the circumstances of what happens. |\n| 5 | Again, I think this case has a lot of issues and, |\n| 6 | you know, I think we just have to see what happens. I think |\n| 7 | the flexibility is there in the code to give the court as |\n| 8 | the oversight body the ability to make a determination on |\n| 9 | the fees and expenses. |\n| 10 | MR. DESPINS:
Understood, Your Honor. Our only |\n| 11 | point is that we didn't want that discretion, which is |\n| 12 | normal, meaning if it costs us \\$500,000 to obtain a bond, |\n| 13 | you should disallow that.
Okay? |\n| 14 | THE COURT:
Right? |\n| 15 | MR. DESPINS:
But I want to be clear is that |\n| 16 | that's not going to be a back door way to bring local rates, |\n| 17 | or anything like that -- |\n| 18 | THE COURT:
No, I'm not doing that. I agree with |\n| 19 | that. |\n| 20 | MR. DESPINS:
Thank you, Your Honor. |\n| 21 | THE COURT:
That is not happening.
The only thing |\n| 22 | that would happen is if an application is filed and the |\n| 23 | court finds that there's some reason why the services |\n| 24 | rendered should not be reimbursed. |\n| 25 | MR. DESPINS:
Absolutely.
Understood, Your Honor. |\n| | |\n\n THE COURT: And not an increase in rates. I'm not sure that an increase in rates will be -- we'll have to see where we stand at that point. MR. DESPINS: Understood. THE COURT: Mr. Friedman. MR. FRIEDMAN: I just want to make clear, and I don't think we need to add this to the order because I think it's always part of the procedure that, for example, if we want to object to compensability for sideshows about whether a disclosure was appropriate, or if there's an appeal to the Supreme Court that somebody brings, we always have the right in connection with each application, whether interim or final, to assert that a specific time entry was not for value to the estate. THE COURT: Absolutely. Everybody has that right. That is correct. MR. FRIEDMAN: Thank you, Your Honor. Thank you very much. THE COURT: Okay. And the court could make that determination as well, upon review of the fee application. So the application to employ Paul Hastings is granted and the order will enter with minor changes, Trustee Despins, okay? MR. DESPINS: Thank you, Your Honor. THE COURT: Now we can move onto the application\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 174 of\n\n| | 322 |\n|----|--------------------------------------------------------------|\n| | 115 |\n| 1 | to employ Neubert, Pepe and Monteith. |\n| 2 | MR. SKALKA:
Good afternoon, Your Honor. |\n| 3 | THE COURT:
Good afternoon. |\n| 4 | MR. SKALKA:
Douglas Skalka on behalf of Neubert, |\n| 5 | Pepe and Monteith's application. |\n| 6 | Your Honor, as you I think are aware, the trustee |\n| 7 | filed an application to retain my firm as his local counsel. |\n| 8 | The application was dated July 19th. It's docket no. 569. |\n| 9 | We received no objections or responses to the application. |\n| 10 | We did get a request from the U.S. Trustee's |\n| 11 | Office to submit a supplemental declaration, which we did on |\n| 12 | July 26th. |\n| 13 | As part of that supplemental application we |\n| 14 | indicated that we no objection to amending our order to add |\n| 15 | a paragraph indicating that we would need seek compensation |\n| 16 | for trustee related services.
So that's not in the order |\n| 17 | that's on file, Your Honor. |\n| 18 | THE COURT:
Okay. |\n| 19 | MR. SKALKA:
I can submit a revised order to that |\n| 20 | effect and certainly would be willing to do that later today |\n| 21 | or tomorrow. |\n| 22 | THE COURT:
And does anyone else wish to be heard |\n| 23 | in connection with the trustee's application to employ |\n| 24 | Neubert, Pepe and Monteith? |\n| 25 | MS. CLAIBORN:
Your Honor, just briefly.
Holley |\n| | |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 175 of\n\n| 322 |\n|-----|\n|-----|\n\n| 1 | Claiborn for the U.S. Trustee. |\n|----|-------------------------------------------------------------|\n| 2 | The paragraph to which Attorney Skalka's referring |\n| 3 | is also found in the application to employ Paul Hastings in |\n| 4 | that proposed order for Paul Hastings at paragraph 5. |\n| 5 | And it limits the compensation that might be |\n| 6 | awarded to the firm and excludes compensation for trustee |\n| 7 | services. |\n| 8 | THE COURT:
Thank you. |\n| 9 | So you're saying Attorney Skalka just needs to |\n| 10 | have that language in the proposed order. |\n| 11 | MS. CLAIBORN:
Correct. |\n| 12 | THE COURT:
Okay.
That's fine. |\n| 13 | MS. CLAIBORN: And with that the U.S. Trustee has |\n| 14 | no objection. |\n| 15 | THE COURT:
Okay.
Thank you. |\n| 16 | MR. SKALKA:
And it's completely acceptable to |\n| 17 | Your Honor -- to my firm, Your Honor. |\n| 18 | THE COURT:
Does anyone else wish to be heard on |\n| 19 | the application to employ Neubert, Pepe, Monteith? |\n| 20 | Okay.
Hearing nothing from anyone else and having |\n| 21 | reviewed the application and the desire of all parties to |\n| 22 | attempt to make this case as efficient as possible, |\n| 23 | including fees and expenses, I understand the trustee's |\n| 24 | reason for seeking to employ Neubert, Pepe and Monteith. |\n| 25 | I think that Neubert, Pepe and Monteith has |\n\n demonstrated that they are disinterested and that no one else has any objection to the application. Neubert, Pepe and Monteith has stated that they will submit a new proposed order with the qualifications set forth on the record by the United States Trustee's Office and that were in the order approving the application to employ Paul Hastings. So for all those reasons the application to employ Neubert, Pepe and Monteith is granted and the proposed order -- Attorney Skalka, how much time do you need to submit that proposed order? MR. SKALKA: I think I'll have it by tomorrow, Your Honor. THE COURT: Okay. Well, I'll give you -- so it's easier for the clerk's office I'll say till August 3rd. How's that? That's Wednesday. MR. SKALKA: That's fine. THE COURT: Okay. Thank you. MR. SKALKA: Thank you, Your Honor. THE COURT: If everyone could just give me one moment, please. (Pause.) Okay. So that application is granted. Then just so we're clear on what's on the calendar today, then -- I already said that the motion to quash is moot due to the denial of the Rule 60 motion.\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 177 of\n\n So then we just have left on the calendar the motion for order confirming that the Chapter 11 trustee holds all the debtor's economic and corporate governance rights and debtor controlled entities and authorizing the trustee to act in a foreign country. So Mr. Despins, would you like to be heard on that? MR. DESPINS: Yes, Your Honor. THE COURT: Please. Go right ahead. MR. DESPINS: And also remember that we have housekeeping matters. THE COURT: Yes. MR. DESPINS: Okay. So the corporate governance motion is basically to confirm that we step into the shoes of the debtor. And I'm glad we filed the motion because the debtor's response made clear that it's unclear to the extent they will cooperate with us. So basically they raised issues regarding BVI -- sorry. Genever BVI. Remember, that's the parent holding company in BVI that holds the interest in the Chapter 11 debtor that's in front of Judge Garrity. And to address their concern about what would happen there we actually provided yesterday, last night fairly late, we filed an amended proposed order that says okay, this is what we need from the debtor.\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 178 of\n\n We look at this, to be kind of colloquial about it, the debtor has a car. We want the keys to the car. Or the debtor has stock. We want the debtor to endorse the stock essentially to give it to us. So the way to do that under BVI law is that he needs to sign certain documents, which we have attached drafts thereof, which our BVI counsel has drafted, and basically the order says Mr. Kwok will within I guess two business days sign these documents, assigning his rights to those share to the trustee. And there's a lot of text, but that's really what it is. In addition to that, because of an issue that was unresolved with the UK lawyers that I mentioned that represent Mr. Kwok in the litigation against UBS, basically, I reached out to them a long time ago, I think two days or three days after being appointed, and they called Mr. Henzy -- actually it would have been later because Mr. Henzy was not appointed til Friday the 14th or something like that. In any event, they reached out to Mr. Henzy saying this guy, meaning the trustee, is calling us. Should we talk to him. Mr. Henzy, to his credit, wrote a very nice email to them saying the trustee owns all the rights in the litigation. Mr. Kwok doesn't control any of this. Talk to\n\n| | 322 |\n|----|---------------------------------------------------------------|\n| | 120 |\n| 1 | him. |\n| 2 | So we got on the phone with them and they said |\n| 3 | well, that may be the U.S. view of the law, but that's not |\n| 4 | the U.K. view.
You may have to file a motion to be |\n| 5 | recognized as a foreign -- and I said, no. I need to do that |\n| 6 | if I want to start a foreign insolvency proceeding against |\n| 7 | someone. But if I just want to be substituted as a plaintiff |\n| 8 | I don't need to do that. |\n| 9 | Not to make the story too long, Your Honor, they |\n| 10 | said well, actually, what we need is a letter from Mr. Kwok, |\n| 11 | because they're afraid of getting sued for -- they haven't |\n| 12 | used those terms getting sued but it's clear from the body |\n| 13 | language that they don't want to do anything with a letter |\n| 14 | from Mr. Kwok. |\n| 15 | So that's the same analogy here. I need the keys |\n| 16 | to the car and the keys to the car, Mr. Kwok has it.
He |\n| 17 | just needs to send a letter to them. It's basically -- |\n| 18 | parrots what Mr. Henzy has written to them already but it |\n| 19 | would be under the debtor's signature that says this |\n| 20 | litigation is owned by the Chapter 11 Trustee now.
He has |\n| 21 | all the rights.
You should tell him everything, privileged |\n| 22 | or not.
You should communicate everything with him. |\n| 23 | So that's really what we're doing with this |\n| 24 | motion. The criticism we've received is by the debtors that |\n| 25 | -- first of all there's a standing issue and the debtor be |\n| | |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 180 of\n\n heard on these issues. They raised the rights of others like Bravo Luck, although we gave notice to Bravo Luck. We served Bravo Luck's counsel. So that's not an issue. But the debtor's standing on this is questionable. But putting aside the standing yes, we're seeking broad relief, Your Honor. Why, because cost. We don't want to come back to the court saying hey, could you authorize this for Australia, please? Could you authorize this for Canada? I'm making those up. And come back to court all the time. So, yes, we're asking for something that's broad. The idea is that the trustee will use his discretion to do this in a way that makes sense and if not, you're going to get me basically. You're going to tell me that I shouldn't have done these things. But I think that it is standard, and we cited cases to that effect, to have the trustee's authority to act from a corporate governance point of view recognized. For example, we need to see Judge Garrity in the Genever case. I don't want to be in a situation where Bravo Luck, which is the son's alleged company, shows up to say he's not authorized to speak. He didn't get the shares from BVI, et cetera. We can't deal with that. And that's what this accomplishes. Basically, it makes it very clear that we hold all these rights and that's why we would ask Your Honor to enter the order.\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 181 of\n\n But I'm happy to answer any questions, Your Honor, or respond to any remaining criticism by the debtor. THE COURT: I just have a question about this -- again, the order was filed yesterday. So I looked at it I would say not as intently as I might otherwise. But that's fine. I've looked at it. I would assume, but I shouldn't assume, but I won't assume. What -- if this order enters and Mr. Kwok doesn't sign these documents, then what's the next step? MR. DESPINS: You're getting to a point that we'll get to in this case eventually, which is contempt. THE COURT: So we need to have another hearing. MR. DESPINS: Well, there'll be a motion to hold them in contempt. THE COURT: Right. MR. DESPINS: Yes. THE COURT: Okay. So that's -- I mean, that's my read of it but, again, as I'm saying to you, I read it not as thoroughly as I might have otherwise because I just had a little bit of time this morning to look at it, but that's fine. I understand the terms and conditions of it in general and I understand that you are asking the court to enter an order under specific sections of the bankruptcy code, including the sections that --\n\n| 1 | MR. DESPINS:
521. |\n|----|--------------------------------------------------------------|\n| 2 | THE COURT:
The debtor's duties under the code, |\n| 3 | whether the debtor's in possession or not.
And that you |\n| 4 | need this for different -- not only in the United States but |\n| 5 | for different matters that are pending and were pending at |\n| 6 | the time that Mr. Kwok filed his Chapter 11 case here in |\n| 7 | Connecticut. |\n| 8 | So I have no further questions. I just was asking |\n| 9 | about that issue. |\n| 10 | MR. DESPINS:
Thank you, Your Honor. |\n| 11 | THE COURT:
Thank you.
Mr. Henzy? |\n| 12 | MR. HENZY:
So, Your Honor -- |\n| 13 | THE COURT:
So you wish to be heard on this? |\n| 14 | MR. HENZY:
I do, Your Honor. |\n| 15 | THE COURT:
Okay.
Go ahead. |\n| 16 | MR. HENZY:
On the two what I'm going to call new |\n| 17 | pieces of relief that are now being sought, they were not in |\n| 18 | the motion. |\n| 19 | THE COURT:
You mean the letters? |\n| 20 | MR. HENZY:
So the letter that he's asking you to |\n| 21 | order Mr. Kwok to sign that would be sent to the Harcus |\n| 22 | Parker law firm in the U.K., that was not addressed in the |\n| 23 | motion in any way, shape or form. |\n| 24 | So I don't know how Mr. Despins gets that relief |\n| 25 | today.
That's new. |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 183 of\n\n With respect to the substance there, Mr. Despins is right. I tried to get out front on that because the Harcus Parker people were trying to contact me and my position was I don't want to talk to you because Mr. Kwok is no longer party in that action. You need to talk to Mr. Despins. And I copied him on the email that I sent him and I have not been part of any communication between them and him since I sent that email. I don't know what the law is in the U.K. I don't know what requirements there are for a court over there. I don't know what privilege issues they live under. I do know -- I mean, I don't represent these people but Mr. Kwok is being asked to sign a letter that may impact other people's rights. I don't know -- the Harcus Parker firm I believe represents other people in that action as well. So I'm in a position where Mr. Despins is adding relief to what was in the motion and I don't know what -- and the relief -- with respect to this anyway would direct Mr. Kwok to do something and I have no idea whether -- what Mr. Kwok is being directed to do is appropriate in the facts and circumstances. THE COURT: Well, let me ask you a question. MR. HENZY: Sure.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 184 of\n\n| | 125 |\n|----|----------------------------------------------------------------|\n| 1 | THE COURT:
You are objecting to Mr. Kwok even |\n| 2 | signing the share transfer instrument of the Genever |\n| 3 | Holdings Corporation? |\n| 4 | MR. HENZY:
Well, let me get to that. |\n| 5 | THE COURT:
That's my question.
Are you objecting |\n| 6 | to that. |\n| 7 | MR. HENZY:
So that was not part of the relief |\n| 8 | sought either. |\n| 9 | THE COURT:
Let me just ask the question. |\n| 10 | You now have come in and you articulated very |\n| 11 | clearly that Mr. Kwok is no longer a debtor in possession. |\n| 12 | MR. HENZY:
That's right. |\n| 13 | THE COURT:
Okay.
So he still has obligations |\n| 14 | under the bankruptcy code and Mr. Despins has asked him to |\n| 15 | provide information to him, including turning over the |\n| 16 | shares of Genever Holdings Corporation, correct? |\n| 17 | Didn't you say you got a letter -- Mr. Despins |\n| 18 | sent you a letter or sent Mr. Kwok a letter saying he wanted |\n| 19 | all the information? |\n| 20 | MR. HENZY:
I don't -- |\n| 21 | MR. DESPINS:
Your Honor, we sent a letter to Mr. |\n| 22 | Baldiga before he was terminated.
We sent a letter to Mr. |\n| 23 | Mitchell?
And then we copied -- when they were appointed we |\n| 24 | copied saying we need all this.
And it asked for all the |\n| 25 | corporate governance documents regarding BVI. |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 185 of\n\n| | 126 |\n|----|--------------------------------------------------------------|\n| 1 | THE COURT:
Right.
So wait a minute. So my |\n| 2 | question to you is why would Mr. Kwok not sign over the |\n| 3 | shares of a company that he owns to this trustee? |\n| 4 | MR. HENZY:
I didn't know if you were done, Your |\n| 5 | Honor. |\n| 6 | THE COURT:
I am, actually.
So go right ahead. |\n| 7 | MR. HENZY:
Okay.
So the background is that |\n| 8 | there's this apartment in New York at the Sherry Netherland |\n| 9 | Hotel.
That's owned by an entity that is in a Chapter 11 |\n| 10 | before Judge Garrity. |\n| 11 | THE COURT:
I understand. |\n| 12 | MR. HENZY:
Okay.
And my understanding, okay, |\n| 13 | because I haven't spent a bunch of time looking at |\n| 14 | everything that's gone in that case is that the ownership of |\n| 15 | then the BVI parent is -- has been disputed. |\n| 16 | And actually, Judge Garrity -- there was a |\n| 17 | settlement -- an order, a settlement type of order I guess |\n| 18 | I'll call it, by Judge Garrity where he -- it basically |\n| 19 | provides for the sale of the apartment and it's to be |\n| 20 | overseen by Melanie Cyganowski. |\n| 21 | And as I understand it the debtor in the Chapter |\n| 22 | 11 case really signed away almost most of its -- or maybe |\n| 23 | all of its ability to control that sale. |\n| 24 | So everybody agreed the apartment's going to get |\n| 25 | sold and we're going to put it in Melanie Cyganowski's hands |\n\n to do that. So that -- the apartment's not going anywhere. It's going to get sold. And I assume the money is going to be in a DIP account in that case and nothing bad is going to happen. But again, the ownership of the parent is in dispute. The allegation is that a trust owns the parent and Mr. Kwok holds the shares as trustee. Your Honor, I want to be clear, that's the allegation that has been made, again, in the Chapter 11 case in front of Judge Garrity. I haven't spent any time on it. My concern is that Mr. Kwok with -- this is -- I saw these documents for the first time -- actually I think I saw them this morning when I woke up because they were filed at 10:09 last night and, frankly, I turned my phone off probably not long before that. So Mr. Kwok -- Mr. Despins has asked you to enter an order directing Mr. Kwok to sign these documents. I have no idea, Your Honor, whether these documents are the appropriate documents. I have no idea how this impacts what's going on in Judge Garrity's case. How it impacts anything. I have no idea. I'm not a BVI lawyer. I don't know if these are the correct documents. I don't know what BVI law says. I've never seen the trust agreement that allegedly exists that\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 187 of\n\n| would control anybody's rights here. |\n|---------------------------------------------------------------|\n| So if Mr. Despins wants to get an order from the |\n| court directing Mr. Kwok to sign specific documents and here |\n| -- these specific documents, my argument is that he should |\n| have to file a motion and that -- I should have some time to |\n| review the motion and to review these documents and try to |\n| get an understanding about whether or not these documents |\n| are appropriate documents. |\n| Again, these documents were not attached to the |\n| motion that was filed with the court, Your Honor.
This is |\n| new relief that is being sought. |\n| All that was sought -- what was sought with |\n| respect to the corporate governance was just this |\n| confirmation that the trustee has all of the economic and |\n| governance rights of the debtor.
It wasn't -- there was |\n| nothing in the motion that said please give me an order that |\n| directs the order to sign specific documents. |\n| THE COURT:
Okay.
Mr. Despins? |\n| MR. DESPINS:
Yes, Your Honor. |\n| The history there, as you relate is, is that we've |\n| been asking for documents since July 14th.
They have not |\n| produced one single document, and the document on corporate |\n| governance of this entity. |\n| So when we filed this motion they said oh, we're |\n| not sure this works under BVI law, I said fine.
We'll make |\n| |\n\n| | Case 22-50073
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322 |\n|----|------------------------------------------------------------------------------------------------|\n| | 129 |\n| 1 | it work.
That's why the order actually provides what it |\n| 2 | provides. |\n| 3 | And it's true that it's on short notice, but 1021 |\n| 4 | says that -- I'm sorry.
Which section says after notice and |\n| 5 | a hearing -- |\n| 6 | THE COURT:
1021 |\n| 7 | MR. DESPINS:
1021.
It is whatever notice is |\n| 8 | appropriate under the particular circumstances. |\n| 9 | So if Your Honor wanted to -- and I think you have |\n| 10 | -- Tuesday are bad days for you, right?
You have a full |\n| 11 | calendar or -- I don't know -- or Wednesday morning, so he |\n| 12 | can respond but I want before we close on this to provide an |\n| 13 | exhibit to, Your Honor, if I may approach. |\n| 14 | THE COURT:
Is it something in the record already? |\n| 15 | MR. DESPINS:
No.
It's something in the record of |\n| 16 | the New York court where Mr. Kwok -- |\n| 17 | THE COURT:
Judge Garrity's case? |\n| 18 | MR. DESPINS:
No.
It's in the New York Ostrager |\n| 19 | case.
Where Mr. Kwok swore that he's the only owner of the |\n| 20 | shares.
So may -- |\n| 21 | THE COURT:
Yes, you could approach the courtroom |\n| 22 | deputy, please.
Thank you. |\n| 23 | MR. HENZY:
Your Honor, I'm not -- I'm going to |\n| 24 | object to the admission here.
This is an affidavit by -- |\n| 25 | MR. DESPINS:
It's more than that.
It's a |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 189 of\n\n compilation of documents, but in the first affidavit you'll see it's highlighted. And it says Mr. -- this is an affidavit by and entity that is related to Mr. Kwok. And it says Mr. Kwok is a sole shareholder of BVI. But let's assume that doesn't exist. Let's continue flipping the pages. Then we get to Defendant Kwok's responses and objections to plaintiff Pacific Alliance set of interrogatories. Then you go to a page, page 6, responses to interrogatories. Subject to general, dah, dah, dah, I respond that I am the legal owner of the issued shares of Genever Holdings Corporation. And then if you go to the end of that document it's signed by Kwok Ho Wan, December 4th, 2020. THE COURT: And actually, he says it again on page 9 in response to interrogatory number 5. MR. DESPINS: So yes, there's this issue of -- okay, I'm not trying to be cute here. There is an issue of a trust agreement that would render the son the beneficial owner of the apartment. But that does not -- that does not affect the fact that Kwok is the sole shareholder of the BVI holding entity. And, in fact, the fact that he has -- him, not his son, has continued to exercise control over the debtor entity. For example, when the debtor in front of Judge Garrity enters\n\n into an agreement, it's signed by Mr. Kwok on behalf of the debtor entity. So the only thing we're asking is to have the same rights at BVI and at the debtor entity level so that we can be recognized by Judge Garrity in that case. So -- and I've said this before. We're not trying to stop the sale. But there are things I will address during the housekeeping issues that are fundamental issues that we need to address in that case that makes this a time sensitive issue. MR. HENZY: I'm not clear. Are we having a trial, Your Honor, on the issues -- the ownership issues on this that have been in front of Judge Garrity and that I think the order he entered contemplates that are going to get resolved in litigation someplace else, that's not -- none of this is before the court. None of this was in the motion that was filed by Mr. Despins. He asked for a broad confirmation of whatever governance and economic rights he has. And this is -- none of this is in that motion. MR. FRIEDMAN: Your Honor? THE COURT: Yes. MR. FRIEDMAN: It's Peter Friedman. I just want to be heard for two seconds on this. THE COURT: Yes. MR. FRIEDMAN: I just think, again, there's a lot\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 191 of\n\n of etch-a-sketch and just to go back to one of the issues we talked about a moment ago, if you look at -- I think it's docket no. 107, I think it's paragraph 16, just to be clear and I think you should take into this account the etch-a- sketch nature of everything that happens from that side. Mr. Kwok actually says under oath in that declaration that he knew in May, 2021 about Steve Wynn, right? And now you hear he didn't know until May, 2022. I just think you need to be really careful with everything you hear connected to Mr. Kwok. And that goes to who owns the Genever shares. The one thing I wanted to add is that one of the thing we won in addition to the contempt order, in addition to the judgment, was a turnover the shares from Justice Ostrager who said that Mr. Kwok was actually required to turn over the shares of Genever BVI to PAX. So this is just another -- as we see it as this is another attempt to frustrate legitimate creditor access to the shares of valuable entities. And we think it should stop and we think that the shares should be ordered to be turned -- that the shares have already been ordered to be turned over and that should be effectuated by the relief sought today. And it's just -- it's just a continued pattern of really trying to thwart every effort of creditors to recover\n\n| | 322 |\n|----|----------------------------------------------------------------|\n| | 133 |\n| 1 | assets.
And that's just so important from PAX's perspective |\n| 2 | that that not be delayed any further.
Thank you, Your |\n| 3 | Honor. |\n| 4 | THE COURT:
Thank you.
Mr. Henzy? |\n| 5 | MR. HENZY:
I never said that Mr. Kwok didn't know |\n| 6 | about Mr. Wynn prior to the case being filed.
What I said |\n| 7 | was that a lot of the facts came out after the case was |\n| 8 | filed, when the DOJ filed it's complaint. |\n| 9 | And so I think that to keep going back to that, |\n| 10 | it's twisting I think what I said.
I said when I stood up, |\n| 11 | Your Honor, that it may be that signing these documents, |\n| 12 | that there's no objection. |\n| 13 | What there's an objection to is that the -- |\n| 14 | there's nothing in the motion that asks for this relief. |\n| 15 | The first -- |\n| 16 | THE COURT:
Well, it asks for it generally. I |\n| 17 | understand your point.
There were -- |\n| 18 | MR. HENZY:
The -- |\n| 19 | THE COURT:
I understand your point.
There |\n| 20 | weren't two letters attached to the motion for Mr. Kwok to |\n| 21 | sign. I understand that. |\n| 22 | MR. HENZY:
That would be egregious, Your Honor. |\n| 23 | To say that the relief sought in that motion translates to - |\n| 24 | - and you have to sign these specific documents -- |\n| 25 | THE COURT:
Well, I don't know if it's egregious |\n| | |\n\nFiore Reporting and Transcription Service, Inc.\n\n# Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 192 of\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 193 of\n\n| | 134 |\n|----|----------------------------------------------------------------|\n| 1 | though.
I don't know if I agree with you completely, okay, |\n| 2 | insofar as there's been a trustee in place since July 8th. |\n| 3 | It's August 1st.
The debtor has obligations.
The debtor |\n| 4 | stated in prior documents in different cases that he owns |\n| 5 | certain things. |\n| 6 | There's a share certificate that has been |\n| 7 | produced.
There's -- this isn't anything new. It may be new |\n| 8 | to you, but it's not new.
And looking at what Mr. Friedman |\n| 9 | just pointed out to me again the declaration of Mr. Kwok |\n| 10 | that was entered on March 20, 2022, where he references the |\n| 11 | article -- and article about Steve Wynn facing Justice |\n| 12 | Department action. |\n| 13 | You know, there comes a point where the arguments |\n| 14 | start to not be credible.
And the problem is Mr. Kwok |\n| 15 | thought his case was going to get dismissed.
I don't know |\n| 16 | why he thought that, but he thought that. |\n| 17 | After -- you know, when there was a potential -- |\n| 18 | two other things happening.
Appointment of Chapter 11 |\n| 19 | trustee or conversion to Chapter 7. |\n| 20 | He has obligations.
He doesn't -- he hasn't met |\n| 21 | those obligations.
With regard to your argument -- |\n| 22 | MR. HENZY:
In what way?
In what way? |\n| 23 | THE COURT:
Hold on a second. |\n| 24 | MR. HENZY:
In what way, Your Honor, has he not |\n| 25 | met -- since the -- |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 194 of\n\n THE COURT: He hasn't turned over to Mr. Despins what Mr. Despins' asked him to turn over. MR. HENZY: Mr. Despins sent a letter -- THE COURT: Hold on. Wait a minute. Wait a minute. Now you're not answering my question. MR. HENZY: Well, what's your -- I don't -- THE COURT: He hasn't turned over to Mr. Despins what Mr. Despins rightfully under the Bankruptcy Code told him to turn over. MR. HENZY: Okay. I don't have the letter in front of me and I -- and what I don't want -- THE COURT: Well, your client should have provided it to you. MR. HENZY: What I don't -- no, I've seen the letter, Your Honor. And what I don't want is for Mr. Friedman to jump up and say -- and twist my words and say I said something I didn't say, okay? But I don't have the letter in front of me. I don't -- THE COURT: Well, no, but -- MR. HENZY: I don't have the letter in front of me, Your Honor. THE COURT: Yeah. MR. HENZY: I think what Mr. Despins asked for in the letter, and Mr. Despins has the letter out and he's\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 195 of\n\n going to tell you if I'm wrong, is it was a very broad -- we want to see a whole bunch of information about specific entities, okay? So I don't remember right now, was there a demanding that letter that these documents, okay, but -- which I don't know if these documents even exist. I don't remember there being a demand in that letter that said anything other than we want you to turn over a whole bunch of stuff to us, which I will tell you, Your Honor, the debtor -- we are working on that. We are trying to collect those documents to send them to Mr. Despins. We are doing that, okay? I have no doubt that Mr. Despins and maybe Your Honor thinks that that should go faster and fine. But we are working on that. But I don't remember in that letter a document that said -- okay. Mr. Kindseth is telling me, and I think he has a better knowledge of that letter than I do, that there was no such request, okay? So I'm not -- THE COURT: No specific letter or with regard to Genever? I mean, that's a different -- you're parsing things differently. MR. HENZY: I'm not parsing things. There was a letter that Mr. Despins sent that appropriately -- okay,\n\n there's no push back -- said you've got to send me this stuff, okay? That hasn't happened yet. I admit that. The debtor -- we're working on that. THE COURT: Okay. MR. HENZY: Should it go more quickly? Maybe it should. THE COURT: But let me just say why your argument is failing, okay? Mr. Kwok submitted an affidavit in this court on May -- March 20, ECF 107, paragraph -- I'll tell you what page. Page 16 or 108. Cooperative shares in the Sherry Netherland apartment are held by Genever Holdings, LLC. The membership interests in Genever U.S. are in turn held by Genever Holdings Corporation, Genever BVI. I hold all of the equity of Genever BVI. That's Mr. Kwok. MR. HENZY: But you have to keep going. I think -- I would suggest -- THE COURT: No, I don't. MR. HENZY: However -- THE COURT: No, I really don't. Not when it matters with regard to Genever BVI and that's what the trustee's asking about. MR. HENZY: However, pursuant to a declaration of trustee agreement dated February 17, 2015 I hold such equity in trust for Bravo Luck Limited. My son owns the equity of Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 196 of\n\n the apartment owner. THE COURT: Well, guess what? You don't get to Bravo Luck, Limited till you get to Genever BVI. You can't -- all you have to do is look at the chain. You don't get to Bravo Luck Limited until you get to Genever BVI because he holds all the equity but then he holds it in a trust. I mean, it's going to be very difficult. We can do a chart. We can make a nice little chart. We can draw the lines from entity to entity. But this -- MR. HENZY: What this -- I apologize, Your Honor. THE COURT: This is what he said. And he said it also bears noting that any interest I have in Genever BVI has been ordered by Justice Ostrager to be turned over to PAX, provided that such a turnover does not interfere with pending litigation in the British Virgin Islands or Genever U.S. bankruptcy. Okay? So Mr. Kwok said this on March 20. It's August 1st. For him to be -- I'm not saying I'm not going to give you an opportunity to respond, because I am going to give you one, okay? It's not going to be long. And the point is this -- to make an argument that you don't -- not that you, not about you. That counsel for Mr. Kwok doesn't know whether this will have an impact and other parties, worried about other third parties, that's all\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 198 of\n\n irrelevant because Mr. Kwok already swore to this court that he holds all the equity of Genever BVI. MR. HENZY: I think that you and I are reading this differently, Your Honor. I'm sorry. THE COURT: Okay. Then we're reading it differently. But then guess what? Then you'll have -- I'm going to rule that he has to do this ultimately. This is what he said. This is what he said. My son owns -- the apartment owner. However, pursuant to a declaration of trust, I hold such equity in trust for Bravo Limited. MR. DESPINS: He still holds it. MR. HENZY: He holds it in -- THE COURT: He's still -- MR. HENZY: He holds it in trust for Bravo Limited. THE COURT: Okay. MR. HENZY: Look, I -- THE COURT: And how did Bravo Limited pay for that apartment? Are we just going to go through all the -- this is what -- we're going to follow the money, right? Is that what we're going to do? Isn't that what we're doing? MR. HENZY: I have no idea. THE COURT: That's what we're doing. That's why there was a Chapter 11 trustee appointed. That's what we're\n\n| | 140 |\n|----|------------------------------------------------------------------|\n| 1 | doing. |\n| 2 | What's happened here is -- |\n| 3 | MR. HENZY:
There's a bunch of things here that |\n| 4 | seem to me like they're not connected, Your Honor. |\n| 5 | THE COURT:
Well, how can they not be connected? |\n| 6 | He said they're connected.
He wrote it in his own |\n| 7 | declaration.
This is what he -- he is saying.
So -- |\n| 8 | MR. HENZY:
He says he holds it in trust for |\n| 9 | someone else.
And look, again, I haven't had -- I have not |\n| 10 | had time to analyze this because this was -- |\n| 11 | THE COURT:
Okay.
Let's look at the certificate. |\n| 12 | Let's look at the certificate that was in the New York State |\n| 13 | action, which is dated some time in -- February 13, 2015. |\n| 14 | He holds the -- it says \"I certify that I am the registered |\n| 15 | holder of 1,000 share of U.S. dollar, one penny par value, |\n| 16 | each being fully paid in the above company subject to the |\n| 17 | memorandum and article association of the company.\" |\n| 18 | So that's February 13, 2015.
This trust was dated |\n| 19 | four days later.
So then he took his equity.
So then maybe |\n| 20 | it's a fraudulent transfer. |\n| 21 | MR. HENZY:
It might be. It might, Judge. |\n| 22 | THE COURT:
It might be. |\n| 23 | MR. HENZY:
Okay.
But we're not -- I don't think |\n| 24 | we can resolve that on essentially 14 hours notice. |\n| 25 | THE COURT:
I just told you I'm going to give you |\n\n| | 141 |\n|----|--------------------------------------------------------------|\n| 1 | time to respond. |\n| 2 | MR. HENZY:
Okay. |\n| 3 | THE COURT:
I'm going to give you time to respond. |\n| 4 | MR. HENZY:
To circle all the way back here, I |\n| 5 | said, Your Honor, it may be completely appropriate, the |\n| 6 | debtor may have no objection to signing these documents, but |\n| 7 | I don't know because this was filed at 10:09 last night. |\n| 8 | And it wasn't in the motion that had previously been filed. |\n| 9 | THE COURT:
Okay.
Well, I'm going to give you an |\n| 10 | opportunity to ask your client if he's going to sign the |\n| 11 | documents, okay? |\n| 12 | MR. HENZY:
Thank you, Your Honor. |\n| 13 | THE COURT:
Okay. |\n| 14 | MR. HENZY:
Can I have enough time to do the |\n| 15 | diligence?
Because I have -- I would like to find out -- |\n| 16 | for me to advise my client I think I need to do some |\n| 17 | diligence and understand this, okay?
So I'm hoping I'm |\n| 18 | going to get more than 24 or 36 hours. I heard Mr. Despins |\n| 19 | say Wednesday morning.
Nothing is happening here, Your |\n| 20 | Honor.
The apartment -- |\n| 21 | THE COURT:
That's the point. Nothing is happening |\n| 22 | here. |\n| 23 | MR. HENZY:
No, no, no, no.
On the apartment -- |\n| 24 | and everybody -- |\n| 25 | THE COURT:
And we've got to get some stuff to |\n| | |\n\n move forward. MR. HENZY: I don't know what I said that was funny. I'm generally not viewed as being a funny guy, but the apartment is going to get sold under a process that's being supervised by Melanie Cyganowski. The apartment, the money, it's all going to be property of that bankruptcy estate in the Southern District under Judge Garrity's supervision. It's not going anywhere. I don't know -- is the idea that Mr. Kwok is going to somehow abscond with the apartment, he's going to take the Sherry Netherland apartment and go away with it or he's going to take the money from the apartment and go away with it. That's not going to happen. So I think it's fair given the complexity here. And you and I do read this paragraph differently. I think that -- I don't know, Your Honor, what the structure is here. I do know that property that's held in trust for another is not property of a bankruptcy estate, depending on -- THE COURT: I'm not so sure about that. MR. HENZY: Depending on facts and circumstances. THE COURT: I'm not so sure about that. MR. HENZY: So maybe sometimes it is. I think often times it is not. So I don't know what all of the facts are here because as I said, this was not part of a\n\n motion that had been filed. This was in an order that was filed at 10:09 last night. THE COURT: I understand. MR. DESPINS: And, Your Honor, I'll provide Mr. Henzy more documents. Actually, there's one which is -- MR. HENZY: Don't hand -- I don't want you to hand me documents. We're in court. MR. DESPINS: Okay. MR. HENZY: You can get me documents. MR. DESPINS: Okay. But the point, Your Honor, is that Mr. Kwok is exercising control over that entity. So ti's not his son. So, for example, when the Genever U.S. wanted to file for bankruptcy the authorization is signed by Mr. Kwok. It's not signed by the son or Bravo Luck. It's signed by Mr. Kwok. So I guess, Your Honor, we're talking about scheduling since -- THE COURT: Yes, we are. We're talking about scheduling. I'm going to give Mr. Henzy some time to look at this and file a response. I'm looking at -- hold on one second, okay? I just need to look at the calendar. (Pause.) All right. With regard to the motion filed by the Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 202 of\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 203 of\n\n| | 144 |\n|----|--------------------------------------------------------------|\n| 1 | trustee, the motion for order confirming that the Chapter 11 |\n| 2 | trustee holds all the debtor's economic and corporate |\n| 3 | governance rights, ECF 598, and the order -- revised |\n| 4 | proposed order with regard to that motion that appears at |\n| 5 | ECF 645, for the reasons stated on the record that matter |\n| 6 | will -- this matter will be continued to Thursday, August |\n| 7 | 4th at 1:00 p.m. |\n| 8 | Now with regard to the -- so that I think takes |\n| 9 | care of all of our matters, other than the housekeeping |\n| 10 | matters, Trustee Despins, which includes the proof of claim |\n| 11 | bar date order. |\n| 12 | MR. HENZY:
Can I have one point or question, Your |\n| 13 | Honor? |\n| 14 | THE COURT:
Yes. |\n| 15 | MR. HENZY:
Okay.
On the letter to the Harcus |\n| 16 | Parker firm, I'm not talking to Harcus Parker without Mr. |\n| 17 | Despins being on the phone because I think I'm going to get |\n| 18 | -- probably I'm going to get accused of saying something I |\n| 19 | shouldn't have said or my words are going to get twisted. |\n| 20 | THE COURT:
Well, you and Mr. Despins work that |\n| 21 | out. I'm not ordering that you be on the phone. |\n| 22 | MR. HENZY:
I don't know what their availability |\n| 23 | is. I don't know -- you know, so I don't know if that can |\n| 24 | happen by August 4 at 1 o'clock.
That's all. |\n| 25 | I certainly will make myself available and use |\n\n| | 322 |\n|----|----------------------------------------------------------------|\n| | 145 |\n| 1 | best efforts, but we're talking about talking to lawyers in |\n| 2 | London and I don't know what -- how much time that's going |\n| 3 | to take. |\n| 4 | THE COURT:
I don't think anybody's talking about |\n| 5 | talking to lawyers in London other than you. |\n| 6 | MR. HENZY:
We have to. |\n| 7 | THE COURT:
Then that's your issue. You can figure |\n| 8 | it out. We're having a hearing on Thursday at 1:00 p.m. |\n| 9 | MR. HENZY:
Okay.
So I don't know how I figure it |\n| 10 | out if I -- |\n| 11 | THE COURT:
Well, you'll try.
You can figure it |\n| 12 | out.
You'll try to. |\n| 13 | MR. DESPINS:
Your Honor, Thursday at 1:00 is that |\n| 14 | in person or a Zoom? |\n| 15 | THE COURT:
Well, what do you -- do you have a |\n| 16 | conflict with Thursday?
Is that what you're telling me? |\n| 17 | MR. DESPINS:
Yes, I'm out of the country. |\n| 18 | THE COURT:
Oh, you're out of the country.
Well, |\n| 19 | that's -- |\n| 20 | MR. DESPINS:
But I can do Zoom. |\n| 21 | THE COURT:
Okay.
Well, then we can -- I guess -- |\n| 22 | when are you going to be back?
Are you out for a long time? |\n| 23 | MR. DESPINS:
Yes. |\n| 24 | THE COURT:
Okay.
All right.
So then we'll do it |\n| 25 | by Zoom then. |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 204 of\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 205 of\n\n MR. DESPINS: Thank you, Your Honor. THE COURT: We'll do it by Zoom. MR. DESPINS: So now I would go into the housekeeping matters, but -- THE COURT: Last point and I'll be quiet, Your Honor. I promise. I just want to be clear. There's other relief sought in that motion that the debtor objected to. So I don't want the court to think that -- and I'm fine if that goes to -- THE COURT: I don't know -- we're going to talk all about that on Thursday. MR. HENZY: So everything is getting carried to -- THE COURT: I will tell you, I -- my initial review, subject to further argument on Thursday, is I don't know what the basis for the objection of the debtor would be to any other relief set forth in that motion. MR. HENZY: Okay. Understood, Your Honor. THE COURT: Okay. MR. DESPINS: So, Your Honor, we've been at it for three hours and 45 minutes. I don't know if you want to take a break before we go into the -- because there's a good 20 -- THE COURT: Well, I'll ask the courtroom staff. Would you like to take a break? I'm sure they would, actually. Would you like to take a few minute break? Okay.\n\n Thank you. So it's 3:40. What, do you want to come back at 3:50 or you want longer than that? MR. DESPINS: No, that's fine, Your Honor. THE COURT: Does that work for you -- all of us? I mean, it works for me. So court will be in recess until 3:50. (Recess from 3:37 p.m. until 3:50 p.m.) THE COURTROOM DEPUTY: We're still on case no. 22- 50073, Ho Wan Kwok. THE COURT: Okay. Mr. Despins. Before the recess we were going to talk about a few -- MR. DESPINS: Housekeeping. THE COURT: -- housekeeping matters, so go right\n\nahead.\n\n MR. DESPINS: The first one, Your Honor, was the request to have the status conference every ten days or so. And the trustee would have an obligation to file an agenda 24 hours before.\n\n I may be that sometimes we'll say no need for the status conference, but I think it's really important, especially in the first few months of the case, to stay in touch with the court and so, therefore, we would ask that we could just --\n\nTHE COURT: That's fine. That's absolutely fine.\n\n| | Case 22-50073
Doc 1268
Filed 12/28/22
Entered 12/28/22 13:58:25
Page 207 of
322 |\n|----|------------------------------------------------------------------------------------------------|\n| | 148 |\n| 1 | Do you have proposed dates in mind or -- |\n| 2 | MR. DESPINS:
Not yet.
I'll discuss this with Mr. |\n| 3 | Skalka and we'll come back to Your Honor but I just want to |\n| 4 | -- |\n| 5 | THE COURT:
Certainly. |\n| 6 | MR. DESPINS:
Okay. |\n| 7 | The next item -- this is more complicated.
And I |\n| 8 | know last time we talked about the bar date and I said we |\n| 9 | would mark it up and we did. |\n| 10 | But I started looking deeper into this and |\n| 11 | realized that there's a fundamental problem here and it is |\n| 12 | as follows. |\n| 13 | You've go the Genever U.S. case that was filed |\n| 14 | before this case -- |\n| 15 | THE COURT:
Yes. |\n| 16 | MR. DESPINS:
-- and what's at state there is who |\n| 17 | owns the Sherry Netherland.
And there was a bar date set in |\n| 18 | that case, but notice was not given -- first of all, there |\n| 19 | was no publication notice and there was no notice given to |\n| 20 | potential creditors of Mr. Kwok.
It was given to a few |\n| 21 | people and Mr. Friedman and his colleagues, of course, were |\n| 22 | around the hoop because they were already involved. |\n| 23 | And God bless them from their point of view.
They |\n| 24 | did file a claim of PAX against Genever there but my |\n| 25 | position vis-a-vis that entity is I'm an equity holder |\n\n| | 149 |\n|----|----------------------------------------------------------------|\n| 1 | because I'm -- I own the shares. |\n| 2 | Well, I own the shares not personally, but this |\n| 3 | estate owns the share.
And that doesn't work because the |\n| 4 | bar date has passed in that case.
My Goldman's clients were |\n| 5 | never on notice of this because he didn't exist then because |\n| 6 | there was no case here. |\n| 7 | So there is a need -- a pretty important need to |\n| 8 | coordinate these two cases, not only because of that issue, |\n| 9 | because there are many ways of fixing that issue. One would |\n| 10 | be expand the bar date in that case, reopen it to allow Mr. |\n| 11 | Goldman's clients to file claims. I'm not saying that's a |\n| 12 | preferred course, but that's one. |\n| 13 | Another one would be for us to file a piercing the |\n| 14 | veil or alter ego claim in that case, et cetera, et cetera. |\n| 15 | But the point is there's a need for coordination |\n| 16 | because right now that case is going on its merry way.
The |\n| 17 | sale is not an issue.
That's not a problem. |\n| 18 | It's going on its merry way where at the end of |\n| 19 | the day assuming the best thing, which is the Sherry |\n| 20 | Netherland is owned by Mr. Kwok, that money would be shared |\n| 21 | with those creditors around the hoop there only and that's |\n| 22 | PAX and the Sherry Netherland, the hotel itself and very few |\n| 23 | other people.
Well, that's -- a fiduciary to the creditors |\n| 24 | in this case to me that can't work. |\n| 25 | So -- and there's a second thing that's |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 209 of\n\n fundamental. We should not have two courts, two separate courts, deciding the issue of the Sherry Netherland -- the ownership of the Sherry Netherland and the issue of who owns the yacht. And you might say well, the yacht is different than the hotel, yes. But at the end of the day, one is the daughter, one is the son. It's all the same issues. Yes, there'll be different timing issues, but at the end of the day the arguments will all be the same. To have two separate courts decide that issue would be a huge waste of judicial resources and professional fees. So you might say well, that's a lot to process and to digest and I've been struggling with this. And I've talked to the committee and to PAX about this and they're proceeding it too. But I think what needs to happen is there should be - - because I would appear in front of Judge Garrity and tell him the same things. But I think you and him need to either -- I don't know how you feel about that, have a conversation about this or have a joint status conference, which is very unusual, but it's been done. But that issue needs to be tackled in one way or another in the next month or so because it is unfair to the people who have claims against Mr. Kwok to have missed out on the bar date in that case because they have no greater or worse\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 210 of\n\n right than PAX had. PAX claim against Genever is a piercing the veil, an alter ego claim.\n\n And, again, I'm not criticizing them. They're doing their job. They're not a fiduciary for anyone and for some reason the debtor -- well, the debtor was controlled by Mr. Kwok so obviously not interested in publicizing -- having publication notice et cetera, et cetera, and that's why I told you the bar date, even though we marked it up an all that.\n\n I think until that issue is resolved we should park it because what I don't want to do is do two publication notice and we need to resolve this issue one way or another and my job is to propose a path forward which I'm not ready to do without talking again to the committee and to PAX and to debtor's counsel in the Genever case.\n\n And I want to be clear, this does not affect the sale. I'm not trying to say oh, we're not going to sell the -- that's not the case.\n\n But there's a nee for coordination and I wanted to put that in front of Your Honor. I don't expect you to have a response on the spot because there's a lot of moving pieces to this but I think that -- and I know you have a full docket, so I'm not trying to put another case on your plate. I understand that.\n\n Judge Garrity is also very busy so that's why I think there needs to be either a call between the two of you or a\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 211 of\n\n joint status conference but I think that makes sense to happen once we have a path forward to recommend. THE COURT: Well, so what I think you're saying is you think that both of the cases should be in front of the same judge. So isn't there a way to do that by filing a motion? MR. DESPINS: Yeah, there is. But I -- THE COURT: Because I don't know that a judge should have a conversation with another judge about -- I mean, I -- THE COURT: Well, especially do you want to -- one of the reasons I would be not inclined to do that is I don't want to open up any allegations that there was something improper or -- MR. DESPINS: Yeah. THE COURT: I mean, what -- you know, but if you think that's appropriate, then you can file -- anyone can file a motion. MR. DESPINS: Well, but to be clear, that motion would have to be filed in front of Judge Garrity, because he's the first to file. THE COURT: I understand. And so this case may go there is what you're saying. MR. DESPINS: What I'm saying is that, first of all, I would never file that motion without talking to you first because you might say what did you just do? And so I'm socializing the issue with you. You should think about it and\n\n we will come back to the court probably at our next status conference on this. But I want to make sure that is something that you're thinking about because it needs to be resolved in one way or another. So that's really the issue regarding the bar date in Genever. The next thing I wanted to mention very briefly the Lady May inspection. Mr. Kindseth last time described the fact that they were very -- well, I won't say very minor, but fairly discreet issues that need to be resolved. It turns out that that's not the case. As Your Honor will remember even though I'm not a party to the stipulation, they allowed me visiting rights or inspection right and it turns out that there are more issues. But the parties are talking and we're hopeful that that will be resolved. But I wanted to make sure that you knew that that dialogue was ongoing. We had a call I think last week about this with the Zeisler firm and with PAX's counsel. Your Honor, you will recall that we hired Paul Derektor as an expert to assist us with that, \\$2,500. And it's a request for Your Honor, and I know the rules and the U.S. Trustee will probably scream about this, but would it be okay if we just expensed it. What I mean by that is not file a motion to retain him as an expert? We can do that but it's going to cost more\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 213 of\n\n than the \\$2,500 and my point is -- expensive meaning right now there are no assets. So I mean we're paying for it. Eventually we hope that there'll be money to be paid but we would put that as a line item expense rather than filing a motion to retain Mr. Derektor in the case as an expert. But I don't feel strongly. It's just from a cost savings point of view I think it would make sense. THE COURT: Well, I think you should talk to the parties about that too. I mean, if people don't have an objection, then it's likely to be fine. MR. DESPINS: Okay. We'll table that. You're absolutely right, Your Honor. Lady May we talked about. Just housekeeping, the debtors are still -- their monthly operating reports from May and June still haven't been filed. The debtor still is under obligation to file that so I want to remind everyone of that and that's all I have from a housekeeping point of view, Your Honor. THE COURT: Okay. MR. DESPINS: Thank you. THE COURT: Let me just take one look for a second and see if there's anything else that I think I had any questions about. (Pause.) So with regard to the bar date motion and the\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 214 of\n\n| | 155 |\n|----|-----------------------------------------------------------------|\n| 1 | proposed order then, we're just going to continue those to a |\n| 2 | future status conference?
Is that what you're thinking? |\n| 3 | MR. DESPINS:
That's correct, Your Honor. |\n| 4 | THE COURT:
Okay.
So to a date to be determined |\n| 5 | essentially. |\n| 6 | MR. DESPINS:
Yes, Your Honor. |\n| 7 | (Pause.) |\n| 8 | THE COURT:
Mr. Kindseth? |\n| 9 | MR. KINDSETH:
Yes, Your Honor.
In the interest of |\n| 10 | just basically updating Your Honor and the other parties with |\n| 11 | respect to the Lady May, Your Honor, for HK International, no |\n| 12 | one is more interested in expediting the satisfaction of the |\n| 13 | requirements set forth in the stipulation with respect to the |\n| 14 | Lady May more than my client.
We've been working very |\n| 15 | diligently to satisfy those obligations. |\n| 16 | Your Honor made reference to the certification.
My |\n| 17 | client is unable to file the certification until the other |\n| 18 | elements are satisfied, one of which is this court's |\n| 19 | establishment of the repair reserve. The repair reserve |\n| 20 | requires my client to provide proposals with respect to the |\n| 21 | repairs that need to be done for the Lady May to be returned in |\n| 22 | good working order. |\n| 23 | There's been some delay with respect to finding and |\n| 24 | getting proposals from entities just because they're very busy |\n| 25 | right now. |\n| | |\n\n### Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 215 of\n\n As we've received proposals we've circulated them with the trustee, creditors committee counsel and PAX counsel. With respect to the actual repairs that need to be performed, unbeknownst to me at the time before Your Honor last there was an additional repair that needs to be performed. Apparently when the fuel pump failed, which I did disclose to the court, it caused the gears, some gears to basically get stripped. And so there are tiny shards of metal that you can see from the gears -- and, again, this was produced to everybody -- that were circulated in the oil system within the engine. So the oil needs to be cleaned out. The shards need to be reduced. We's just talking about little pieces but obviously it needs to be repaired and we received a quote for that. And so we're in communications with the trustee and counsel for the creditors committee and counsel for PAX to try to come up with an agreed up number for the repair reserve which would then enable us, once this court orders the repair reserve, to file the certification. Thank you, Your Honor. THE COURT: Thank you. Does anyone else wish to be heard? MR. HENZY: Not on the Lady Mae, Your Honor, but am I to file a replay before Thursday at 1 o'clock on the -- THE COURT: Yes. Yes.\n\n| 322 |\n|-----|\n|-----|\n\n| | 157 |\n|----|------------------------------------------------------------------|\n| 1 | MR. HENZY:
And I didn't write it down -- |\n| 2 | THE COURT:
I didn't give you a time frame, but I can |\n| 3 | give you till Thursday morning at 9 o'clock, if you'd like. |\n| 4 | But I can't give you any longer than that. I've got to be able |\n| 5 | to read it before the hearing or there's no point in the |\n| 6 | hearing. |\n| 7 | MR. HENZY:
I'll get it -- thank you, Your Honor.
I |\n| 8 | expect I'll get it filed before then but thank you. |\n| 9 | THE COURT:
Okay.
Anyone else wish to be heard? |\n| 10 | (No audible response.) |\n| 11 | THE COURT:
Okay. I think that takes care of all the |\n| 12 | matters today then in this case and we will reconvene on |\n| 13 | Thursday, via Zoom at 1:00 p.m.
And the debtor has until 9:00 |\n| 14 | a.m. on Thursday morning to file the response to the corporate |\n| 15 | governance motion, okay? |\n| 16 | That takes care of all the matters on the calendar so |\n| 17 | court is adjourned. |\n| 18 | (Proceedings adjourned at 4:05 p.m.) |\n| 19 | |\n| 20 | |\n| 21 | |\n| 22 | |\n| 23 | |\n| 24 | |\n| | |\n| | |\n\n| | 322 | |\n|--|-----|--|\n\n| 1 | |\n|----|-----------------------------------------------------------------|\n| 2 | I, CHRISTINE FIORE, court-approved transcriber and |\n| 3 | certified electronic reporter and transcriber, certify that the |\n| 4 | foregoing is a correct transcript from the official electronic |\n| 5 | sound recording of the proceedings in the above-entitled |\n| 6 | matter. |\n| 7 | |\n| 8 | |\n| 9 | August 9, 2022 |\n| 10 | Christine Fiore, CERT |\n| 11 | Transcriber |\n| 12 | |\n| 13 | |\n| 14 | |\n| 15 | |\n| 16 | |\n| 17 | |\n| 18 | |\n| 19 | |\n| 20 | |\n| 21 | |\n| 22 | |\n| 23 | |\n| 24 | |\n| | |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 218 of\n\n## 322\n\n| | UNITED STATES BANKRUPTCY COURT
UPDATED
DISTRICT OF CONNECTICUT
10/17/22
BRIDGEPORT DIVISION |\n|----------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|\n| In Re | *
Case No. 22-50073 (JAM)
* |\n| HO WAN KWOK,
Debtor. | *
Bridgeport, Connecticut
*
August 4, 2022
*
* |\n| * * * * * * * * * * * * * * * * | TRANSCRIPT OF PROCEEDINGS
BEFORE THE HONORABLE JULIE A. MANNING
UNITED STATES BANKRUPTCY JUDGE |\n| APPEARANCES: | |\n| For the Debtor: | ERIC A. HENZY, ESQ.
Zeisler & Zeisler, P.C.
10 Middle Street, 15th Floor
Bridgeport, CT
06604 |\n| For the Creditor, Pacific
Alliance Asia Opportunity
Fund L.P.: | PETER FRIEDMAN, ESQ.
STUART M. SARNOFF, ESQ.
O'Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, NY
10036 |\n| | PATRICK BIRNEY, ESQ.
Robinson & Cole
28 Trumbull Street
Hartford, CT
06103 |\n| For the Creditors Committee: | IRVE GOLDMAN, ESQ.
Pullman & Comley
850 Main Street
Bridgeport, CT
06601 |\n| Proceedings recorded by electronic sound recording,
transcript produced by transcription service. | 2022-50073
Ho Wan Kwok
IN RE: |\n| Fiore Reporting and Transcription Service, Inc.
4 Research Drive, Suite 402
Shelton, Connecticut 06484 (203)929-9992 | I
Debtor |\n| | 11/18/2022 |\n| | Debtor's Exhibit I
P.E. |\n\nAPPEARANCES: (Cont'd) For the Creditors, Rui Ma, KRISTEN MAYHEW, ESQ. Weican Meng and Zheng Wu: McElroy Deutsch 225 Liberty Street 36th Floor New York, NY 10281 For the U.S. Trustee: HOLLEY L. CLAIBORN, ESQ. Office of the United States Trustee The Giaimo Federal Building 150 Court Street, Room 302 New Haven, CT 06510 Chapter 11 Trustee: LUC A. DESPINS, ESQ. Paul Hastings LLP 200 Park Avenue New York, NY 10166 Counsel for the G. ALEXANDER BONGARTZ, ESQ. Chapter 11 Trustee: Paul Hastings LLP 200 Park Avenue New York, NY 10166 PATRICK R. LINSEY, ESQ. Neubert, Pepe & Monteith, P.C. 195 Church Street, 13th Floor New Haven, CT 06510 For Creditor Logan Cheng: JAY M. WOLMAN, ESQ. Randazza Legal Group, PLLC 100 Pearl Street, 14th Floor Hartford, CT 06103\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 220 of\n\nHo Wan Kwok - August 4, 2022 3 (Proceedings commenced at 1:05 p.m.) THE COURTROOM DEPUTY: Case No. 22-50073, Ho Wan Kwok. THE COURT: Thank you. If we could have appearances for the record, starting with the Chapter 11 trustee, please. MR. DESPINS: Good afternoon, Your Honor. Luc Despins, Chapter 11 Trustee. And I'm here with my counsel from Paul Hastings, Alex Bongartz, and Mr. Linsey, local counsel to the trustee. THE COURT: Good afternoon. And then if we could have counsel for the committee, please. MR. GOLDMAN: Good afternoon, Your Honor. Irve Goldman, Pullman & Comley, representing the creditors committee. THE COURT: Good afternoon. And counsel for the creditor PAX. MR. BIRNEY: Good afternoon, Your Honor. Patrick Birney, Robinson & Cole, on behalf of PAX. With me this afternoon is Stuart Sarnoff from O'Melveny & Myers. THE COURT: Good afternoon. Who am I missing? Counsel -- MR. BIRNEY: Your Honor, Mr. Friedman has just\n\nHo Wan Kwok - August 4, 2022 4 joined as well. THE COURT: Okay. Thank you. Counsel for the creditors Rui Ma and related creditors. MS. MAYHEW: Yes. Good afternoon, Your Honor. Kristen Mayhew, McElroy Deutsch Mulvaney & Carpenter, on behalf of Rui Ma, Zheng Wu and Weican Meng. THE COURT: Good afternoon. Counsel for the debtor. MR. HENZY: Good afternoon, Your Honor. Eric Henzy, of Zeisler & Zeisler, for the debtor. THE COURT: Good afternoon. Counsel for the U.S. Trustee, please. MS. CLAIBORN: Good afternoon, Your Honor. Holley Claiborn for the U.S. Trustee. THE COURT: And I think Mr. Wolman. And that's the only person I'm missing at this point, is that right? THE COURTROOM DEPUTY: I believe so, Your Honor. MR. WOLMAN: Good afternoon, Your Honor. Jay Wolman, of Randazza Legal Group, for creditor Logan Chang. THE COURT: Good afternoon. Okay. I think everyone's appearances have been noted for the record. As I stated before, that there are two matters on the calendar. Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 221 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 222 of\n\nHo Wan Kwok - August 4, 2022 5 I did not see any objection or response to the Chapter 11 trustee's motion for extension of time with regard to the removal of civil actions. The motion looks fine to me, as does the proposed order. Does anyone wish to be heard on the trustee's motion to extend the deadline for removal of civil actions? (No audible response) THE COURT: Okay. Hearing no response -- MR. LINSEY: Your Honor. THE COURT: Yes. MR. LINSEY: Yeah. I won't say much if the motion looks fine to you. THE COURTROOM DEPUTY: Attorney Linsey -- MR. LINSEY: This is Patrick Linsey for the trustee. Just note -- THE COURTROOM DEPUTY: Excuse me. Attorney Linsey, if you could just state your name. MR. LINSEY: This is Patrick Linsey for the trustee. THE COURTROOM DEPUTY: Thank you. THE COURT: Go right ahead. MR. LINSEY: I won't -- I won't say much considering Your Honor said the motion looks acceptable. I will just note there was a prior motion that had been filed by the debtor that I do not believe there were\n\nHo Wan Kwok - August 4, 2022 6 any objections to that's not been acted upon. And presuming the Court enters the order that we filed with our motion will then be causing the debtor's motion to be withdrawn. THE COURT: Yes. That was noted in your motion. So thank you. And when this order enters, that -- the proposed order that was submitted with the motion, as appears at pages 10 and 11 of ECF 672,and when that order enters, then the prior motion of the debtor will be withdrawn is on the record now withdrawn by the trustee. MR. LINSEY: Thank you, Your Honor. THE COURT: Okay. Thank you. So that motion is granted and the proposed order can enter. So that takes care of the first matter on today's calendar. The second matter obviously is the -- was continued from Monday, the 1st, to today, and it is the trustee's motion for an order confirming that the trustee holds all the debtor's economic and corporate governance rights. And this was continued to today to give the debtor an opportunity to file a response, which the debtor did this morning. And I also -- the debtor objected and then the Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 223 of\n\nChapter 11 Trustee filed a reply to the objection.\n\nSo I understand in the papers, or at least I've\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 224 of\n\nHo Wan Kwok - August 4, 2022 7 seen some mention in the papers, and I'll turn to you, Mr. Despins, first, that there's been some discussions. And I see that there's been a redline version of an order that appears to show there's been some I guess I would call progress with counsel in London about the issues that we discussed on Monday, but I'd like to hear from you on where things stand, please. MR. DESPINS: Yes, Your Honor. So there are two aspects to the motions. Well, there are many aspects, but there are two that are contested I think. The focus is on UBS, which is you just raised. And then the other one is what's happening with the BVI shares, et cetera. So since you started with UBS, let me launch into that. There were a lot of back and forth between me and counsel for -- or counsel for the debtor in that UBS action. And basically, you know, they raised several issues. And at the end of the day, I said, look, why don't you just draft a letter that you would be comfortable receiving from Mr. Kwok that would allow you to, you know, give me an update on the merits of the claims, any settlement proposals, basically what a client would receive. And eventually she did that. And the -- and we said that in the reply. There are parts of this that I have swallow hard\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 225 of\n\n| | 322 |\n|----|---------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
8 |\n| 1 | to accept in the sense that, you know, you know, to say |\n| 2 | that, you know, that the Court's jurisdiction is a U.S. |\n| 3 | issue only.
I mean, as you know in the U.S. we view you, |\n| 4 | Your Honor, as having worldwide jurisdiction over all assets |\n| 5 | of the debtor. |\n| 6 | But putting that aside I figure let's not have a, |\n| 7 | you know, US/UK debate over jurisdiction. |\n| 8 | And so we took her letter with some minor changes |\n| 9 | and basically that's the letter that we're now asking the |\n| 10 | Court to direct the debtor to send to her that basically |\n| 11 | says give him full access. |\n| 12 | But the debtor, per her -- U.K. counsel's request |\n| 13 | is saying that his consent, and this is in the letter, does |\n| 14 | not extend to me waiving a privilege. |\n| 15 | And that's not an issue meaning, I didn't intend |\n| 16 | to do that anyways.
But I thought it's always my privilege |\n| 17 | to waive.
But my point is let's not get into those issues. |\n| 18 | The important thing is to get access to the files |\n| 19 | and understand the case, to get a full briefing.
And based |\n| 20 | on the letter I think, although they were very careful about |\n| 21 | saying we cannot guarantee that this letter will bind us, |\n| 22 | and we said fine, but I think that based on that letter we |\n| 23 | should have full access to the files.
And that's the goal. |\n| 24 | And, therefore, you know, we're going to look the |\n| 25 | other way on the issues of limiting the Court's jurisdiction |\n\nHo Wan Kwok - August 4, 2022 9 and all that. So that's where we are on that. So from my point of view, vis-a-vis U.K. counsel, I think we're done. But I don't know where the debtor is at on that issue. THE COURT: Attorney Henzy? MR. HENZY: We're not done on that issue. A couple of points, Your Honor. First, Mr. Despins referred to U.K. counsel, which the person that he and I both have been communicating with is Jenny Morrissey of the Harcus Parker firm. As debtor's counsel, I just want to be clear. I'm not sure that that is correct. I'll be honest with you, Your Honor. The convergence of U.S. and U.K. law is a little bit unclear to me. I know that under the bankruptcy code that upon his appointment Mr. Despins was automatically substituted as the plaintiff in that U.K. action. What I've heard from Attorney Morrissey is that what the bankruptcy code says, that's not her view anyway. And I'm not -- I don't -- I know zero about U.K. law, so she's right, she's wrong, but that -- that is her view. I believe it's also her view that Mr. Despins is not yet a party in that action. There are some steps that have to be taken under U.K. law. Again, I don't opine as to that. I'm reporting to you what Attorney Morrissey Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 226 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 227 of\n\nHo Wan Kwok - August 4, 2022 10 indicated to me. So I don't think she's the debtor's lawyer. I don't think she's Mr. Despins' lawyer. I frankly am not sure where that leaves the status of whoever is the plaintiff in that action in the U.K. I'm not sure where the letter stands. The last iteration of the letter that I saw was from Paul Hastings to Harcus Parker. I think Mr. Despins said this on the last day Harcus Parker is being very, very careful here, so I don't know if the last iteration that Paul Hastings sent to Harcus Parker would be acceptable to Harcus Parker or not. Even assuming that it is, I believe that it is simply beyond question that the Court, with all due respect to the Court, may not compel Mr. Kwok to waive his attorney- client privilege. Now, I -- THE COURT: The letter doesn't say that he is waiving his privilege. In fact, it says that any waiver of the privilege is limited to the provision of this information to the trustee. That's what it says. MR. HENZY: That the waiver is -- that the waiver is privileged, Your Honor. So there's -- I want to make a distinction here. There are two -- and, Your Honor, we're dealing with cross- border issues here. So the privilege here I think anyway is\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 228 of\n\n| | 322 |\n|----|----------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
11 |\n| 1 | not under U.S. law.
It's under U.K. law. |\n| 2 | And as I understand my communications from |\n| 3 | Attorney Morrissey, there may be items that -- I think this |\n| 4 | is true under U.S. law too, a trustee is appointed and |\n| 5 | there's different standards between a corporate debtor and |\n| 6 | an actual person.
An actual person may maintain certain |\n| 7 | privilege even after the appointment of a trustee.
And as I |\n| 8 | understand it, it is similar in the U.K. |\n| 9 | So there may be items that are in the possession |\n| 10 | of Harcus Parker that Mr. Kwok personally still has a |\n| 11 | privilege with respect to, as opposed to items that under |\n| 12 | U.K. law he doesn't. |\n| 13 | And I -- again, I don't know U.K. law.
I don't |\n| 14 | think Mr. Despins knows U.K. law.
What's what I do not |\n| 15 | know. |\n| 16 | There's a right way to do this, Your Honor, I |\n| 17 | think.
Mr. Despins needs to take steps to have himself |\n| 18 | recognized as a party in the U.K. action and that privilege |\n| 19 | issue then I think needs to be worked through. |\n| 20 | I don't know how the debtor -- I don't know how |\n| 21 | Mr. Kwok can say I'm going to grant a waiver of any |\n| 22 | privilege rights I have.
Again, it's any privilege rights |\n| 23 | that he has. |\n| 24 | Your Honor, I don't know.
Attorney Morrissey may |\n| 25 | make a judgment that he doesn't have any privilege rights. |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 229 of\n\nHo Wan Kwok - August 4, 2022 12 She may make a judgment that he has a lot of privilege rights with respect to what's in her possession. I don't know how he can fairly be asked to waive any privilege that he still has when he doesn't know what he's waiving it with respect to. So I don't know what documents Attorney Morrissey would say would come under an umbrella of things that Mr. Kwok under U.K. law still has a privilege in. Again, I think there is a way to work through this. It may be that Attorney Morrissey would identify some discrete number of documents that she would say these are documents that Mr. Kwok has privilege in and possibly subject to me reviewing and they're completely innocuous -- and that's great -- but there has to be a process gone through. Mr. Kwok cannot make a knowing and voluntary waiver when he doesn't know what he's waiving. He can't do that. And he's not going to do that. And, again, with all due respect, I don't believe you can compel him to do that. I do not believe that you can compel him by signing this letter to waive his -- whatever his attorney/client privilege is under U.K. law. MR. DESPINS: Your Honor, if I may? THE COURT: Yes. MR. DESPINS: You know, there's an attempt to\n\nHo Wan Kwok - August 4, 2022 13 muddy the waters here. If the letter doesn't work for counsel in the U.K., I'll deal with that. So let's put that aside for now. I think it will work because she marked up our letter and she sent us this letter. We made some very minor nonsubstantive kind of changes, so that's number one. And that letter basically, that she marked up, says that if she gets that letter she will share the privilege as to -- or she will give me privileged information. As to what? As to the merits of the litigation. That's an asset of the debtor. Mr. Henzy made a big deal about his 475 million or whatever sum. That's an asset of the debtor. The only way -- this is like a car. In order to access the car, I need the key. The key is the letter. Because otherwise they won't talk to me because, you know, either U.K. rules or their concern about being sued. They've never actually articulated that, but that's the subtext here. It's pretty clear. So the letter I think works. There's not an unknown or unlimited waiver of the privilege. It's regarding the merits of that litigation. That's what she's going to share with me. Because Mr. Henzy has -- you must remember -- had very nicely sent an email to Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 230 of\n\nHo Wan Kwok - August 4, 2022 14 them a long time ago that said I own the claims basically dealing with Mr. Despins. Mr. Kwok is completely out of this -- out of that claim. He did say that. So what would be the point of me being, you know, having the claim if I cannot be briefed by the lawyers about the merits of the claim? Again, it's the key that gets me the car. And I absolutely need that. And case law is clear, Your Honor, that the trustee can have access to privileged information of the debtor with respect to assets of the debtor. Here there's not even a dispute. This is not like the yacht or the Sherry-Netherland apartment where he says, oh, I don't own it. He says -- he filed a claim. He said I own this. It's clear that the trustee owns the claim now. And clearly I have the right to have access to that. There's not an unknown or unlimited waiver. And so, therefore, we believe the Court can compel. This is 521(a)(3),(a)(4). The Court can absolutely do that because this is equal to the debtor saying, yeah, here's the car, but I'm not giving you the key. Without the briefing on the merits of the claim or knowing whether there has been any settlement, I cannot drive the car. I cannot sell the car. You know, that's the analogy. And we need access to that. Thank you, Your Honor. Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 231 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 232 of\n\nHo Wan Kwok - August 4, 2022 15 MR. HENZY: Your Honor, if I may? THE COURT: Yes. MR. HENZY: One point I want to be clear on, that Attorney Morrissey's clear with me on, is that there's two other plaintiffs here and the privilege is joint. And Attorney Morrissey's been clear that Mr. Kwok cannot raise the privilege with respect to information that is the joint information of -- along with those other parties. So she's been very, very clear that the only thing that in theory Mr. Kwok could raise with respect to -- with the property that as I understand it he is the sole owner of. So, again, what the -- the universe of information here is that Harcus Parker would ever say that they're going to release is that, you know, I don't know. But I want to give you two cites that were not in my objection. I did have a relatively short time to get the objection done, Your Honor. I did cite one case where the Second Circuit says that you cannot compel a person to waive their attorney/client privilege. And, again, I want to be clear here, Your Honor, to the extent that Mr. Kwok no longer owns the privilege, under -- I think it's under U.K. law -- not under U.S. law -- whether -- what the attorney-client privilege is in the U.K. and what -- to what extent the privilege belongs to him\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 233 of\n\n| | 322 |\n|----|--------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
16 |\n| 1 | versus belongs Mr. Despins, that's what's -- that's a matter |\n| 2 | of U.K. law.
It's not U.S. law. |\n| 3 | But two other Second Circuit Court of Appeals |\n| 4 | cases.
One is Highland Capital Management vs. United |\n| 5 | States.
It's at 626 F. App'x -- I never know how to |\n| 6 | pronounce that thing, 324.
It's a 2015 decision. |\n| 7 | If I could quote, Your Honor.
\"Compelled |\n| 8 | disclosure of privileged attorney/client communications |\n| 9 | absent waiver or acceptable exception is contrary to well |\n| 10 | established precedent.
When parties disagree whether a |\n| 11 | privilege applies, courts often review the contested |\n| 12 | material in camera.
In contrast, requiring a litigant to |\n| 13 | turn over documents subject to claims of attorney/client |\n| 14 | privilege to opposing counsel without a judicial ruling on |\n| 15 | the merits of the claim will undermine the attorney/client |\n| 16 | privilege and it's, therefore, impermissible.\" |\n| 17 | So, again, what privilege Mr. Kwok has here and |\n| 18 | what privilege he doesn't have may well be subject to |\n| 19 | dispute.
Plus you can't order him to waive privilege |\n| 20 | without working through that dispute. |\n| 21 | And I'll say again, Your Honor, there's a right |\n| 22 | way to do this.
If Mr. Despins, rather than trying to |\n| 23 | bulldoze through an order here, would work with U.K. counsel |\n| 24 | and me to try to identify what potentially is the universe |\n| 25 | of documents that even are at issue here she may go through |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 234 of\n\nHo Wan Kwok - August 4, 2022 17 her documents, Your Honor, and say I can't give you anything because these other people have privilege and I'm not going to -- I'm not going to give you anything. She may say there's five pieces of paper that Mr. Kwok is the sole owner of that I could ever release to you. And the five pieces of paper are pictures of his kids. And no one -- and no one's going to care about that -- to tell us any number of things. But there's a -- there's a process that has to be worked through. The Second Circuit says that you cannot order this kind of blanket waiver without making findings with respect to specific documents. THE COURT: Where does it say that in the *Highland* case? I'm looking at it. And the *Highland* case is not a bankruptcy case. It's a third-party subpoena with regard to an IRS issue. So where does it say that? Where does it say that a court cannot compel a debtor out of possession to waive a privilege with regard to an asset that the debtor has stated under penalty of perjury is an asset of his estate? MR. HENZY: Your Honor, this is -- you're right. This is not a debtor case. But I don't think -- I don't -- I'm not aware of any case. And I will say this, Your Honor. I'm not aware of any case that says that.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 235 of\n\nHo Wan Kwok - August 4, 2022 18 Because what the Second Circuit says is that after an applicable exception. And I think the typical exception that comes up in cases is where a party -- in criminal cases where a party says it had ineffective assistance of counsel. And the rule is that you can't say you haven't had effective assistance counsel unless you're going to be willing to waive relevant communications with counsel. I'm not aware of any case that says that a -- that there's an applicable exception for a debtor. But I'm going to push back to one of the other points I've made here. I don't think it's up to the debtor that's here to prove the negative. Not by motion. But by submitting a proposed order Mr. Despins is seeking relief from it. He is seeking to have you compel the debtor -- THE COURT: Not yet. MR. HENZY: -- to waive his privilege. THE COURT: Not yet. If the debtor doesn't sign the document, then -- I asked that question of Mr. Despins the other day, and then he will file a motion. The problem is your case law says compel disclosure of privileged attorney/client communications absent waiver or applicable exceptions contrary to well- established precedent. Well, this is -- this is -- Mr. Kwok has stated under penalty of perjury in his schedules -- and you've\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 236 of\n\n| | 322 |\n|----|----------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
19 |\n| 1 | reached out to the lawyer in the U.K. saying that Mr. |\n| 2 | Despins is the party, and you've acknowledged that Mr. |\n| 3 | Despins steps into the shoes of Mr. Kwok in the action in |\n| 4 | the U.K.
And so you can't then argue that Mr. Kwok -- the |\n| 5 | lawyers who represented Mr. Kwok can't turn over that |\n| 6 | information to Mr. Despins for his review.
I mean, you can |\n| 7 | make that argument, but it's not persuasive. |\n| 8 | You're having -- |\n| 9 | MR. HENZY:
Okay.
There's nothing -- |\n| 10 | THE COURT:
Excuse me.
Let me -- let me just |\n| 11 | finish. |\n| 12 | You are coming to this court.
Your client |\n| 13 | voluntarily came to this court and put his assets in |\n| 14 | question for creditors of this estate and has stated that |\n| 15 | this cause of action is his cause of action and an asset of |\n| 16 | the estate. |\n| 17 | The minute the Chapter 11 trustee was appointed, |\n| 18 | the Chapter 11 trustee steps into the shoes of Mr. Kwok.
So |\n| 19 | the Chapter 11 trustee has the privilege of Mr. Kwok in that |\n| 20 | lawsuit. |\n| 21 | And so your arguments are not persuasive.
So |\n| 22 | let's move onto the next issue about whether -- because that |\n| 23 | order -- |\n| 24 | MR. HENZY:
Your Honor, can I -- can I -- may I -- |\n| 25 | THE COURT:
Excuse me.
I'm not finished. |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 237 of\n\n| | 322 |\n|----|---------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
20 |\n| 1 | MR. HENZY:
Okay. |\n| 2 | THE COURT:
That letter -- Mr. Despins has just |\n| 3 | stated he's a -- he is subject to Rule 11 sanctions if he's |\n| 4 | incorrect, Mr. Henzy.
That he got this letter from the |\n| 5 | lawyers in -- from the barristers or solicitors in London. |\n| 6 | They're willing to sign it.
They marked it up.
That's |\n| 7 | what's going to happen.
That's what's going to happen. |\n| 8 | So let's go to the next issue which has to do with |\n| 9 | the Genever issue and the fact that you've argued that Mr. |\n| 10 | Kwok, you know, doesn't have any control over Genever. |\n| 11 | But when you look at the trustee's reply to your |\n| 12 | objection this morning, there are exhibits attached to it |\n| 13 | where Mr. Kwok admits -- it's an admission of a party, that |\n| 14 | he owns the shares of the cooperative that owns the |\n| 15 | apartment. |\n| 16 | So what's your response to that? |\n| 17 | MR. HENZY:
Your Honor, just if I could go back |\n| 18 | for a second.
For the record, you're not going to hear any |\n| 19 | further arguments from me on the privilege issue. |\n| 20 | THE COURT:
That is correct. |\n| 21 | MR. HENZY:
I just want to make -- |\n| 22 | THE COURT:
I've decided the issue. |\n| 23 | MR. HENZY:
I want to make a record. |\n| 24 | THE COURT:
I've decided the issue.
That is |\n| 25 | correct.
Your arguments about the privilege are not |\n| | |\n\nHo Wan Kwok - August 4, 2022 21 persuasive. Mr. Despins stepped into the shoes of the debtor when he became the Chapter 11 trustee. There's well settled case law on that, Attorney Henzy. The cases that you've cited are not applicable. They're not involving a Chapter 11 trustee who steps into the shoes of a debtor who has been taken out of possession. And so, therefore, your case law does not support your argument. And I will -- and we can move on to the next issue now about the Genever Holdings matter and the Sherry- Netherlands apartment. MR. HENZY: Thank you, Your Honor. On the Genever BVI issue, my first -- because I got this not that long ago, but the documents that are attached to the reply are not in evidence, Your Honor. I think we can all agree on that. And I -- I'm not -- I do not -- THE COURT: Well, I'm not sure that's true. First of all, some of them are from the bankruptcy court in New York. And this court can take judicial notice of those documents and their reliability based upon the fact that they were filed in a -- in the Chapter 11 case of Genever Holdings in New York. So when you say they're not in evidence, well, Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 238 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 239 of\n\nHo Wan Kwok - August 4, 2022 22 then I can make them in evidence. I can say that they are now evidence in connection with the trustee's motion because they were all filed, many of them -- and we can go through each one -- in the -- in the bankruptcy case of Genever Holdings. And the Court can take judicial notice under the federal rules of evidence of that because the reliability of that is obvious. So to say that they're not in evidence, well, okay, I'm going to now rule that they are in evidence. That the exhibits attached to the trustee's reply that was filed today in response to your objection, Exhibits A through G, are in evidence and they will be marked as exhibits. So that if you want to appeal you can -- these exhibits will be in evidence. (Exhibits A through G attached to Trustee's motion for an order received into evidence as Trustee Exhibits A through G.) MR. HENZY: Thank you, Your Honor. Just for the record, so I make my record, I do object to their admission. THE COURT: Understood. MR. HENZY: And in addition to -- I'm in a difficult position to give you specific objections as I'm required to do under the rules of evidence as I've -- as that I've had almost no time to go through these documents\n\nHo Wan Kwok - August 4, 2022 23 individually. So that is an issue for me. And that kind puts, you know, pushes me to a different issue which -- THE COURT: Well, let's go through them right now. We'll pull up Exhibit A. MR. HENZY: That's unfair, Your Honor. Because if I -- THE COURT: No, it's not unfair, counsel. MR. HENZY: It is. THE COURT: Because these are all exhibits that your client signed or you should have as his counsel. You don't get to come in and stall things. And I'm not saying -- you don't get to come in and say the trustee, who's been appointed since July 8th, can't do his job because I'm new counsel and I haven't had a chance to look at all this. You don't get that opportunity. MR. HENZY: No. THE COURT: It doesn't happen that way. MR. DESPINS: Your Honor. MR. HENZY: The point -- the point I was going to make, Your Honor, is that you're admitting exhibits in connection with relief sought by the trustee that is not in the motion that he filed and on a hearing that as far as I know was not scheduled as a trial, but an evidentiary hearing. I have no ability to try to rebut what is in these documents. That this is just -- it is fundamentally unfair. Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 240 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 241 of\n\nHo Wan Kwok - August 4, 2022 24 THE COURT: Okay. MR. HENZY: I have no notice -- THE COURT: How would you rebut the -- your client's answers to interrogatories that were filed in the New York State Court, which is Exhibit A and which he signed? How would you rebut that? What could you possibly put forth that could rebut that -- those interrogatory answers that your client signed in an action in New York that has been pending for years? MR. HENZY: I'm going to try to answer that specifically, Your Honor, but I think -- and actually I'm going to try to answer your question. Okay. The first -- I don't know. I'm not -- I don't -- I do not practice trial law in New York State so I don't know if interrogatories are filed. They're not filed, for example, in federal court or state court in Connecticut. So maybe they are and maybe they aren't. I don't know that. So that if they're not, I don't think you could take judicial notice. That's one issue. THE COURT: Well, there's a file stamp on the top of it from New York filed New York County Clerk 4/28/2021, 10:54 p.m. That states that on the top of the document. MR. HENZY: Sorry. I don't -- again, Your Honor, I'm not -- I don't practice trial law in New York so I don't know what the procedure is.\n\nHo Wan Kwok - August 4, 2022 25 I will point out, Your Honor, if you go to page 3, the definition of interest. THE COURT: Page 3 of Exhibit A? Is that what you're saying? MR. HENZY: Of what I -- what I'm understanding is now you've admitted this as Exhibit A. THE COURT: That is correct. MR. HENZY: Okay. And just to be clear, I do object to that, Your Honor. I understand you're overruling my objection, but the -- on page 3, definition 2 -- I might -- I might be getting this wrong, Your Honor -- again, I have not -- I understand Your Honor. I'm not telling you that I don't have a responsibility to have gone through things, but there is a lot that was put on in connection with this this morning. But the definition of interest is very, very broadly defined there. The term interest means any direct, indirect interest, whether partial, whole or potential, et cetera. So it's a very, very broad definition of interest. Again, if I go to response interrogatory number one, where, among other things, there's a little box that says admission of ownership -- and I don't, Your Honor, where that came from. I don't -- I don't know if that was part of what was filed with the New York State Court. I'm going to doubt it, as opposed to this is somehow Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 242 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 243 of\n\nHo Wan Kwok - August 4, 2022 26 constructive for your purposes or someone else's purposes. I don't know. I just wasn't -- I did -- I don't know the answer to that. That -- I think that should not be before Your Honor.\n\n But his answer is I am the legal owner of the issued shares of Genever Holdings Corporation. And if you go back to definition of interest -- again, it's a very, very broad definition, it makes the distinction between legal and equitable.\n\n And if I jump to response interrogatory number 5, on page 9, again, I am the legal owner of the issued shares of Genever Holdings Corporation. That statement is consistent with the statements that Mr. Kwok made in the declaration he filed in this case and also consistent with the global notes to the statement of financial affairs that he filed in this case. That is, that he is the legal owner of the issued shares of Genever Holdings Corporation, which will be referred to as Genever BVI.\n\n And what he's said there -- in the declaration filed in this case and in the global notes filed in this case -- is that he holds those shares, he holds legal title to those shares as trustee under a trust. And the beneficiary of that trust is Bravo Luck.\n\n So I -- we can debate -- and I know Mr. Sarnoff really wants to debate -- about what this says. But my\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 244 of\n\nHo Wan Kwok - August 4, 2022 27 point is I'm -- I am not able to put on evidence, Your Honor, to explain this and to explain what's in the declaration and to explain what's in the global notes. And that's not -- that's fundamentally unfair. This was not scheduled to have an evidentiary trial. I have -- this is not even -- what the relief sought here -- as I pointed out in my objection, Your Honor, it is not even relief that's sought in the motion that was actually filed. This is -- this is new relief. And we're now having, as I understand it, a trial on almost no notice on new relief where I have absolutely no ability to meet the claim that is now being made. And that is -- again, I think that's fundamentally unfair and I absolutely object to it. MR. SARNOFF: Judge Manning, this is Stuart Sarnoff. May I be very, very briefly heard, because I might be able to help the Court on an issue relating to this? THE COURT: Go right ahead. MR. SARNOFF: So I -- Judge Manning, I've been the lead counsel for PAX in the state court litigation. I filed the complaint on its behalf. All I want to do, Your Honor, is to point out that PAX filed and won a turnover motion with respect to Genever BVI shares as a post judgment enforcement action. And I would just raise that never proffered before\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 245 of\n\n| | 322 |\n|----|---------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
28 |\n| 1 | the Court was the alleged deed of trust.
But in any event, |\n| 2 | the judge -- on September 22nd, 2021, Judge Ostrager, |\n| 3 | Justice Ostrager, in his ruling on the record, and then |\n| 4 | confirmed in an order dated that day, ordered the turnover |\n| 5 | to PAX of Mr. Kwok's Genever BVI share ownership because he |\n| 6 | said, quote, on page 16 of the September 22nd, 2021 |\n| 7 | transcript, \"Mr. Kwok identified his ownership interest in |\n| 8 | Genever Holdings BVI as his only asset worth more than |\n| 9 | \\$10,000 in response to PAX's post-judgment interrogatories,\" |\n| 10 | which is the document at number 756 in this case at page 9. |\n| 11 | The ownership shares -- and then he goes on to say the |\n| 12 | ownership -- so he's admitted that this is his one asset. |\n| 13 | And because PAX has a judgment of 130-something |\n| 14 | million dollars at that time, \\$126,000 million, they're |\n| 15 | entitled to get turnover. |\n| 16 | We had to bring a subsequent contempt motion which |\n| 17 | was pending when Mr. Kwok filed for bankruptcy because of |\n| 18 | course Mr. Kwok didn't do what he was supposed to do, vis-a |\n| 19 | vis, the turning over. |\n| 20 | But there is -- you know, there's a judicial |\n| 21 | ruling that the shares belong to Mr. Kwok for purposes of |\n| 22 | being able to turn them over or for, in this case, for Mr. |\n| 23 | Despins to step into those shoes to have that same bundle of |\n| 24 | rights. |\n| 25 | And I would also note, Your Honor, that Mr. Kwok |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 246 of\n\nHo Wan Kwok - August 4, 2022 29 did not appeal that ruling. You know, it should be collaterally estopped. You know, whatever it is. This has been litigated whether or not the shares are sufficiently his for purposes of turnover or for Mr. Despins to step into his shoes. And in a ruling on September 22nd, 2021 -- MR. HENZY: Your Honor. MR. SARNOFF: -- Justice Ostrager ruled on that. MR. HENZY: I want to be clear. Is Mr. -- are you taking this as Mr. Sarnoff's testimony? Because if you are, I would like him to be sworn. THE COURT: I'm not taking it as Mr. Sarnoff's testimony, Attorney Henzy. MR. HENZY: Thank you, Your Honor. Mr. Despins? MR. DESPINS: Your Honor, if I may very briefly? You are not -- we're not asking you today to find that the trust agreement isn't valid or doesn't exist. We added -- in what we filed today at 681, docket 681, we added a safety valve. So I thought that Mr. Henzy would jump at that. But basically it says the Court is not finding -- making any findings regarding the validity or invalidity of the trust agreement. Any challenges to the trust agreement are preserved.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 247 of\n\nHo Wan Kwok - August 4, 2022 30 However, what cannot be controverted is that he's the legal owner of these shares and now we are entitled to get those shares.\n\n And the issue of the validity of that trust -- by the way, we have craved out over it -- you know, that trust, the allegation that there's a trust was never raised in state court for four years, so that gives you a sense of how -- you know, that's let not editorialize over that.\n\n But the point is that there's a safety valve in the order and, therefore, the order should enter. And then Mr. Henzy also complained about the lack of notice in these documents.\n\n Your Honor, on August 1st, you may remember -- I don't know if you saw this, but I offered Mr. Henzy more documents. These were these documents and he threw them to the floor. A little temper tantrum there. I don't know if you saw that.\n\n But the point is that if he hadn't done that he would have all these exhibits, that these were the exhibits I was giving him at the time, which are, as you said, are exhibits, for example, in the Genever Chapter 11 case, which nobody can dispute.\n\n And those are to the effect that Mr. Kwok is exercising, and I've exercised, all corporate governance rights with respect to Genever Holdings, Genever USA, and --\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 248 of\n\nHo Wan Kwok - August 4, 2022 31 And so regardless of the trust agreement, there's never a -- in all these signature pages, you never see a countersign or approved by Bravo Luck or anything like that. It's Mr. Kwok signing. And so, therefore, that tells you that these are the rights we should have. And those include the rights to direct the Chapter 11 case of Genever Holdings subject to the jurisdiction of Judge Garrity. And there's also a safety valve in the order that says you're not ordering me or allowing me to do anything in that case without his approval. So that's all covered. But I think it's important to stick to the facts here. And it's a limited relief. And it's basically getting the shares in my name so I can exercise all the corporate governance rights of that entity. Thank you, Your Honor. MR. HENZY: Your Honor, just so I could be clear, I assume that that was -- you're not taking Mr. Despins' statements as testimony either? THE COURT: I'm not taking anyone's statements, including yours, as testimony either. MR. HENZY: Oh, I know you're not taking or I think I know you're not taking mine. Your Honor, I probably did have a little, very brief temper tantrum on Monday.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 249 of\n\nHo Wan Kwok - August 4, 2022 32 But this is a trial by ambush, Your Honor, and I think the rules do need -- there does need to rules. There needs to be order in proceedings. And I don't -- I don't think that that is happening here. I've tried -- I don't know if Your Honor has more questions of me. I would like to make further points, again, just to make my record, you know. I believe there is a dispute. I understand that Mr. Despins doubts it. I understand that Mr. Despins and Mr. Sarnoff have formed a version of facts to, you know, to the Court that, again, I'm not in a position to rebut. I don't have a witness here. I don't -- I didn't know this was going to be a trial. I will point out, Your Honor, that this dispute is the subject of a settlement agreement in the Genever U.S. case that was approved by Judge Garrity, that as I understand it contemplates that this ownership issue is to be litigated in the BVI. Again, that is my -- THE COURT: So do you -- so you're asking for your exhibits then to become part of the record as well in evidence because now you're relying on exhibits that you attached to your objection to make the statement that you just made? MR. HENZY: You know, Your Honor, I am relying on that --\n\nHo Wan Kwok - August 4, 2022 33 THE COURT: Okay. Then they'll be admitted into evidence as well. MR. HENZY: -- to try to make an argument, to try to respond. THE COURT: Okay. Well, then your exhibits are admitted into evidence as well. (Exhibits attached to Debtor's objection to Trustee's motion for an order received into evidence.) I mean, what else do you -- why else would you have filed an exhibit -- and the same reason that Mr. Despins did -- so the Court could review them in connection with your positions? MR. HENZY: In connection with -- THE COURT: And so to argue that this is now an evidentiary hearing and that you're being -- you're not given fair opportunity -- but you want to make your argument based upon the exhibits that you attached to your motion, your reply. So I think you need to be a little bit more -- we need to be -- treat this the same on both sides of these -- of the equation. You can't argue that Mr. Despins is now making this an evidentiary hearing because he's submitted exhibits and attached to his reply, but you can persuade the Court with regard to the exhibits you've attached to your -- to Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 250 of\n\nHo Wan Kwok - August 4, 2022 34 your objection and that's -- that's not part of an evidentiary hearing. Well, of course it is. It's either -- it's all in evidence or it's not, Mr. Henzy. It's part of the record of this case. You made it part of the record when you submitted your objection with those exhibits. That's the record of this case, ss are the exhibits that Mr. Despins submitted. Then you made the argument, well, they're not in evidence. Well, I don't agree with you because they're part of the record of the case. But we'll just put them all in evidence. So there's no -- MR. HENZY: Well, Your -- THE COURT: -- there's nothing unfair about that, Mr. Henzy. That's how it works. MR. HENZY: Oh, I think there is something unfair about it, Your Honor, but I understand your ruling. THE COURT: I know you do. MR. HENZY: I understand -- THE COURT: But you haven't been able to articulate or point to any case law or statute that supports your argument. MR. HENZY: Your Honor, you're taking evidence. And I understand I attached a document to my memo. Okay. And that's for the purposes of argument. I was not Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 251 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 252 of\n\nHo Wan Kwok - August 4, 2022 35 contemplating anything was going to be admitted into evidence. You're taking evidence. You're holding a trial right now as I understand it. THE COURT: No, I'm not holding a trial, Mr. Henzy. You're the one that said that Mr. Despins couldn't argue about the exhibits attached to his reply because they weren't in evidence. And I said to you, okay, well, then let's put them in evidence because they are part -- MR. HENZY: And I -- THE COURT: -- of the record of this case. And then you just said -- you just said -- you weren't relying on those exhibits to make findings but, yes, you are. You exactly just said the settlement agreement that's been approved by Judge Garrity is what controls Genever Holdings. And so it's either part of the record or it's not. If you're -- then nothing you've said -- you don't have any -- anything to support your argument because you don't want it to be part of the record. So fine. If you don't want it to be part of the record, that's fine. And if you don't -- but you already made it part of the record because you submitted it with your pleading. MR. HENZY: I'm not going to dispute, Your Honor, that you can take judicial notice for what it's worth of a\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 253 of\n\n| | 322 |\n|----|----------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
36 |\n| 1 | document that's been filed in the Genever bankruptcy case. |\n| 2 | I'm not going to -- I'm not going to dispute that. |\n| 3 | THE COURT:
But you have to do that under the |\n| 4 | federal rules of evidence, Attorney Henzy.
I don't just say |\n| 5 | I take judicial notice.
I have to do that under the -- the |\n| 6 | applicable rule of evidence regarding judicial notice.
So |\n| 7 | it's evidence, as is the documents you've submitted with |\n| 8 | regard to the settlement agreement. |\n| 9 | MR. HENZY:
Yeah.
I understand, Your Honor.
I |\n| 10 | understand your ruling. |\n| 11 | But there is a dispute, Your Honor, as to the |\n| 12 | ownership.
Now, Mr. Despins did file -- and that dispute I |\n| 13 | believe under applicable law has to be resolved by an |\n| 14 | adversary proceeding.
And I've cited lots and lots of cases |\n| 15 | that say that. |\n| 16 | THE COURT:
Mr. Henzy, let me stop you right there |\n| 17 | on the adversary proceeding issue. |\n| 18 | I think you have a problem with the language in |\n| 19 | 7004 -- 7001(a) that you didn't -- you stopped the sentence. |\n| 20 | I mean, I looked back at it three times this morning because |\n| 21 | I thought that you were -- that was not an accurate |\n| 22 | statement.
And it says -- (a)(1) says a proceeding to |\n| 23 | recover money or property other than a proceeding to compel |\n| 24 | the debtor to deliver property to the trustee. |\n| 25 | How do you -- do you not see that language?
How |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 254 of\n\nHo Wan Kwok - August 4, 2022 37 do you interpret that language in any other way that that still requires Trustee Despins to file an adversary proceeding? How do -- I don't understand that. MR. HENZY: So, Your Honor, just as with the cases that -- Judge Trancredi case that I cited that dealt with a 363 motion, I don't -- I understand he can file a motion for turnover but, Your Honor, he hasn't filed a motion for turnover. THE COURT: He doesn't have to. Your client is obligated to cooperate with him under the debtor's duties when he voluntarily came to this court and sought this court's protection. And then -- and to say that your client's being ambushed, this issue of the trustee has been pending since the middle of February. The trustee was appointed on July 8th. It's August 4th. And your client hasn't cooperated with the trustee. I mean, you can continue to make the argument, but your argument is not persuasive. MR. HENZY: May I speak, Your Honor? THE COURT: Yes. MR. HENZY: I don't agree that Mr. Kwok has not cooperated with the trustee. So that's one. I understand this case was filed in February. The trustee was not appointed until July 8th, Your Honor. I\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 255 of\n\nHo Wan Kwok - August 4, 2022 38 understand a trustee was appointed. I have tried to familiarize myself with as much of the record in this case as I could. I don't understand that Your Honor has ever made findings regarding the debtor's lack of cooperation, regarding the debtor being a bad person. My understanding of your ruling granting the motion was really -- that it was focused on best interest of creditors. You said that there may be assets -- just a centralized form. So really the best interest of creditors type of matters. I've read your decision and I don't see anything regarding misconduct. I believe that Mr. Kwok's consent that there was cause was based on best interest of creditors. There was no admission by him as to malfeasance or any kind of bad conduct. So in the -- I guess it's three or four weeks since Mr. Despins -- and I'll say, Your Honor, I don't -- I don't believe that because a person files Chapter 11 that they then waive any and all of their rights if and when a trustee is appointed. THE COURT: Okay. But you didn't answer my question, Mr. Henzy, about 7001(a) and how you could interpret it in any way other than the language in the rule? MR. HENZY: So, Your Honor, 542 -- 7001(a)(1) --\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 256 of\n\nHo Wan Kwok - August 4, 2022 39 I'm sorry -- 7001(1) applies -- I recognize it applies to a proceeding to compel the debtor to deliver property to the trustee. But where -- I think that is with respect to property where there's no dispute that the property is property of the estate. And here there is a dispute. It's the same as with the 363 motion, Your Honor. The courts have held, including Judge Tancredi, that you can't grant a 363 motion until you've decided whether the property that's sought to be sold is property of the bankruptcy estate. And that requires an adversary proceeding. THE COURT: We're not selling property at this time. Number one. And number two, it is being sold subject to the New York Bankruptcy Court's order selling the property. So that's already been done, number one. And then your client admits that it is his asset in some way, shape or form, Mr. Henzy. I don't have to find whether he -- it's a legal interest, an equitable interest, a beneficial interest. I don't have to find any of that. Your client has already admitted it, that it's his asset. So I don't -- so I don't -- you still haven't answered the question of how 7001(a) requires Mr. Despins to bring an adversary proceeding. MR. HENZY: Well, Your Honor, I think there is no\n\nHo Wan Kwok - August 4, 2022 40 7001(a). It's 7001(1), which does provide -- THE COURT: Okay. Sorry, 7001(1). MR. HENZY: -- a carve -- it carves out -- THE COURT: Sorry. MR. HENZY: -- it carves out turnover. But, again, that's for property of the estate. There has to be a determination that that, in fact, is property of the estate. And that -- THE COURT: Your client has already said it is property of the estate in the declaration. Even if he says he's holding it in trust, he still owns the shares. He says that in the declaration 107 that we talked about the other day. So he's already said that. MR. HENZY: What he said is that he has -- he has legal title as -- THE COURT: Okay. And guess what, as you know, the definition of property of the estate includes all interests, legal, beneficial, equitable, that you have in any property that you have. And so he has. MR. HENZY: But, Your -- THE COURT: It's property of the estate. MR. HENZY: Your Honor, Mr. Despins filed the -- the third revised proposed order, I think, nine -- or nine and a half minutes before the hearing. I did not have a chance to look at it. If there are appropriate protections Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 257 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 258 of\n\nHo Wan Kwok - August 4, 2022 41 in there, then it may well be that the debtor won't object to the entry of that order, but I would like an opportunity, and not in the middle of this hearing, to review that order. THE COURT: Okay. Would you like to take a recess for an hour and you can go read the order? I mean, that's fine if that's what you'd like to do. But Mr. Despins just explained how he did put in safeguards in that order. MR. HENZY: I don't know what safeguards he put in and I don't know if they're sufficient. The issue, Your Honor, the problem, is that what Mr. Despins put in front of you would appear to be a -- require a transfer of the shares in full. Okay. That's the way I understood it. Okay. Where he said these shares get transferred to him solely in his capacity as Chapter 11 trustee. Well, if Mr. Kwok is the mere legal owner, as trustee, and these are now being transferred to Mr. Despins, I think Mr. Despins is becoming the trustee of that trust. If there's a valid -- if there's a valid trust, there has to be a trustee. And if Mr. Despins is now the legal owner of the shares, I think he's owning them as trustee of that trust. So, again, if we're all clear that that is the case, then maybe we don't have a problem. I'm not sure Mr. Despins really wants to be a\n\nHo Wan Kwok - August 4, 2022 42 trustee of that trust with all that that might bring in terms of duties to the beneficiary of the trust, but you can't have it both ways. As Your Honor has said multiple times, you take the debtor as -- in this case -- he comes. And the argument is that with respect to this asset the way he came was as the legal owner, as trustee of a trust, for the benefit of a third party. So if -- if the -- all that he has is that legal ownership interest as trustee is what's being transferred, and it's being transferred to Mr. Despins as trustee of that trust, then maybe that's okay. MR. DESPINS: Your Honor. THE COURT: Yes. Go ahead. MR. DESPINS: That argument is preserved. We're not asking you to go all the way and find that the trust is not valid. We're preserving that issue for another date. But he cannot have an advisory opinion saying that a trust is valid. As you pointed out in the interrogatories, it's not question whether they've been filed or not in New York State. They're signed under penalty of perjury by Mr. Kwok. And he never mentioned the trust, the trust that existed five years or four years before. So that's the state of the law. That's how we Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 259 of\n\nHo Wan Kwok - August 4, 2022 43 take our debtor. The debtor said nothing about that trust. And I'm -- I think we're being kind. We're preserving their argument that there's a trust for a later date, meaning it would be unfair to ask you to rule that the trust is not valid. We have serious issues about it, but that's for another day. That's what the order provides. It leaves that issue open for another day. THE COURT: All right. So, Mr. Henzy, did you -- MR. SARNOFF: Your Honor, it's Stuart Sarnoff. THE COURT: Okay. Hold on one second. MR. SARNOFF: Your Honor, I was just going -- THE COURT: Go ahead, Mr. Sarnoff. Go ahead. MR. SARNOFF: Your Honor, I was merely going to point out that the Court's decision and -- decision and order on motion with respect to PAX's motion for turnover, not the transcript, but the written decision and order, was filed. We filed it in this court's docket on March 1st, 2022 as I believe docket number 57-2. If I have my -- forgive me if my information is incorrect. We were scrambling. But I think that's the correct information. It's a Supreme Court in the State of New York decision and order, and that would be the court's -- Justice Ostrager's ruling on our motion for a turnover. The Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 260 of\n\nHo Wan Kwok - August 4, 2022 44 predicate of which was it was his asset that he needed to turn over to PAX. THE COURT: You think it's at ECF what? What page? 57 at what page? MR. SARNOFF: Dash 2, Your Honor. THE COURT: It's just taking a minute to open. I'm trying to see. MR. DESPINS: And, Your Honor, with your permission, could we show on the Zoom -- I don't know -- THE COURT: Yes. MR. DESPINS: -- my colleague -- put up the -- THE COURT: Yes, we can. What would you like to show? MR. DESPINS: Show the paragraph that we've added to the order so Mr. -- so they can see that. It's a very short paragraph. THE COURT: So we need to pull up ECF 681. And you want to go to the black lined version or the plain version? MR. DESPINS: My colleague -- my colleague, Mr. Bongartz, can tell us exactly where we have to go. MR. BONGARTZ: It's page 35 at 40. THE COURT: Okay. We'll just need a minute, and the clerk will pull it up so we can all read it. MR. DESPINS: Thank you, Your Honor. Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 261 of\n\nHo Wan Kwok - August 4, 2022 45 (Pause) MR. BONGARTZ: And, Your Honor, while he's doing that, I do have a page reference. I guess -- I guess 57-2 is an exhibit. I believe it's page 131 of the exhibit, 1-3- 1 of the exhibit. Sorry. THE COURT: Thank you. (Pause) THE COURT: We're just waiting on 681, right, to be pulled up? And go to page 35 of 40 on that, please. I'm looking at a hard copy of it, but I can -- I'm sure we can pull it up in a second. THE COURTROOM DEPUTY: Yes. (Pause) THE COURT: If you're having difficulty, I can share my screen and show it. Right? THE COURTROOM DEPUTY: Yes. THE COURT: Is there a -- THE COURTROOM DEPUTY: She is having a problem there. Yes, she's having a problem. THE COURT: All right. So then you need me to -- you need to let me share then. THE COURTROOM DEPUTY: Okay. You can share. THE COURT: Okay. THE COURTROOM DEPUTY: You have ability. (Pause) Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 262 of\n\nHo Wan Kwok - August 4, 2022 46 THE COURT: Is it showing? THE COURTROOM DEPUTY: Yes. THE COURT: I can't see because I can't know that I'm sharing. All right. So this is the paragraph, Mr. Despins, paragraph 9? MR. DESPINS: Yes. Correct, Your Honor. THE COURT: Yeah. Can everyone see that? (No audible response) THE COURT: Okay. Everyone can at least view that? Attorney Henzy, do you see that? I'm not suggesting that you can't have a recess to look at the whole order. I'm just asking do you see paragraph 9? MR. HENZY: I see it, Your Honor. THE COURT: Okay. Thank you. All right. So, Attorney Henzy, are you -- are you asking the Court for a recess so that you can review this matter, or what are you asking the Court to do at this point? MR. HENZY: I don't think I was asking the Court to do anything, Your Honor. If the Court would like, I'm happy to take a recess and review this carefully. I don't know if it will take an hour. I don't know if it will require discussions with Mr. Despins or anyone else. I will though -- I want to be clear, Your Honor, Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 263 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 264 of\n\nHo Wan Kwok - August 4, 2022 47 that I am pressing my objection that this was not in the motion that was filed. And under Rule 9013 and relevant case law, I think it's not properly before the Court. So principally my argument is that you should not rule on this and that you should tell Mr. Despins to file a motion so that this can be done in an orderly way, as opposed to this was first filed and raised at 10:09 on Sunday night, Your Honor. Okay. So, again, this is -- this is not fair. There's not sufficient notice. His support for the relief he's seeking is not stated with particularity anywhere. Certainly it's not in the motion. And I don't think it's -- the revised proposed order that he has, it does not speak for itself. MR. DESPINS: Your Honor, we filed a very broad motion seeking all corporate governance rights and we mention BVI specifically. Mr. Henzy responded saying BVI, it's too late. There's no -- you can't just -- you can't give an open-ended order like that with respect to BVI. We responded by saying, okay, we'll be very precise. That's exactly what we need from BVI. That's subsumed in the relief sought. So I don't understand the -- but he got it Sunday. The relief, again, this is very simple. There's a\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 265 of\n\n| | 322 |\n|----|----------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
48 |\n| 1 | car, we need the key.
If we're to get the keys to Genever, |\n| 2 | we need the debtor to sign all these documents so that the |\n| 3 | transfer is processed.
That's very consistent with the |\n| 4 | motion.
It didn't have to be more specific than that, but |\n| 5 | now it's very, very specific and it's been very specific |\n| 6 | since Sunday. |\n| 7 | MR. HENZY:
I disagree, Your Honor.
I think it's |\n| 8 | not -- it was not -- the relief that's sought now was not |\n| 9 | part of the motion that was -- that was produced and filed. |\n| 10 | So I'm going to -- I'm going to press that objection. |\n| 11 | Again, if the Court or the parties think it makes |\n| 12 | sense for us to take an hour recess so I can look at the |\n| 13 | order and potentially talk to my client at least, I'm happy |\n| 14 | to do that. |\n| 15 | But I don't -- I don't want there to be a surprise |\n| 16 | if I come back and I say something like irrespective of |\n| 17 | what's in this order I'm objecting to the relief being |\n| 18 | entered. |\n| 19 | THE COURT:
Does anyone else wish to be heard? |\n| 20 | MR. HENZY:
Your Honor, this doesn't need to |\n| 21 | happen this way.
But the status in the Genever U.S. case is |\n| 22 | the property is being sold under the supervision of Melanie |\n| 23 | Cyganowski.
As I understand it the debtor there has |\n| 24 | essentially handed control of that process over to Melanie |\n| 25 | Cyganowski. |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 266 of\n\nHo Wan Kwok - August 4, 2022 49 As I understand it, I don't think the debtor can do anything to impede that process. So nothing here is going anywhere. There's going to be a sale process. The sale proceeds I believe will be property of that bankruptcy estate and I believe won't be distributed except pursuant to court order, a court order entered by Judge Garrity. So there's no -- I don't think there's any rush here. And, again, as with the discovery, the U.K. discovery issue, Your Honor, if it's done the right way, this might be a lot easier. I don't think -- I don't think I'm creating the agita here. I think the trustee is creating the agita by the way that he's choosing to do this, which is really just to try to push them through on essentially no notice. MR. DESPINS: Your Honor, the reason for the emergency is that we need to appear in the Genever case for reasons I explained about of last year. There are time- sensitive issues. We need to resolve them as soon as possible. And I don't want to go to that court and have someone like Bravo Luck say, well, he doesn't have the right to be here because he doesn't hold the shares. I don't want to be in that position, Your Honor. That's why we're doing this now.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 267 of\n\nHo Wan Kwok - August 4, 2022 50 Thank you. MR. FRIEDMAN: Your Honor, it's Peter Friedman. If I may be heard for just a moment? We strongly agree with that. There's a plan on file in that case which PAX has objected to. But, you know, it has all sorts of provisions that we think unfairly favor certain parties that are aligned with Mr. Kwok. And obviously the debtor as a -- we don't think he's actually acted as a fiduciary in the context of that plan proposal and we believe that it would be much more appropriate to have Mr. Despins in whatever capacity dealing with the debtor in an even handed manner that benefits Mr. Kwok's legitimate creditors and so there actually is time sensitivity. I think there's a disclosure statement here -- and at least currently scheduled for August 16th. And the shape of the river of that case could be substantially changed if Mr. Despins' ability to participate in that case is made clear. THE COURT: Right. MR. GOLDMAN: Your Honor, Irve Goldman for the committee. May I be heard briefly? THE COURT: Yes. MR. GOLDMAN: Your Honor, I think a distinction has to be drawn between the equitable ownership of share\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 268 of\n\nHo Wan Kwok - August 4, 2022 51 interests and the legal ownership of share interests which carry with it corporate governance rights. And I think it's unquestionable that the debtor has acknowledged he's the legal owner of the shares and he has exercised that legal ownership to control the administration of the Genever USA Chapter 11 case. So that is the subject of the motion. And the trustee has acknowledged by paragraph 9 of the order that the equitable interest by virtue of the trust agreement cannot be determined at this point. So I'm not sure what the argument is about. Secondly, even under the case law that Attorney Henzy cited regarding Rule 9013 and the need to be particular about the relief granted, this is simply incidental to the principal form of the relief that was sought in the first instance. It just got more -- the relief got more particular at the request of the debtor. So we support completely what the trustee has presented in the form of the proposed order. I just want to go back for a minute to the proposed letter to Attorney Morrissey before we break. And these are -- these comments are really pro estate comments. I think that the way the letter is drafted, the revised letter, could suggest that the attorney/client privilege belongs to the debtor. It does not.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 269 of\n\nHo Wan Kwok - August 4, 2022 52 I agree fully with the trustee that the trustee holds the debtor's attorney/client privilege particularly when it relates to a matter that seeks to augment the estate. Now, this letter states that -- in part the black lined version states -- and to take instructions from him, meaning the trustee, in relation to my claim in the UBS litigation regardless of any attorney/client privilege, work product, or other privilege which belongs to me. I would suggest that the word may be inserted, which may belong to me, and then the following sentence. Any waiver of privilege is limited to the provision of this information to the trustee. My consent is limited to giving full access to the trustee and is not a consent by me to allow the trustee to waive the privilege. I don't want that sentence to be taken to mean that we need Mr. Kwok's allowance to the trustee to waive the privilege. The privilege belongs to the trustee in the first instance. So I would suggest if it wouldn't upset the agreement that the trustee reached, or apparent agreement the trustee reached with the U.K. firm that these provisions be massaged somewhat to -- not be taken to concede that it's the trustee that has the privilege. MR. HENZY: Your Honor, may I be heard?\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 270 of\n\nHo Wan Kwok - August 4, 2022 53 THE COURT: Yes. MR. HENZY: Thank you. Mr. Goldman can hope, we can all, but I will tell you that that letter I'm aware has gone through several iterations between U.K. counsel and Mr. Despins' firm. And I think the U.K. counsel is taking a pretty careful approach and they're -- they are very concerned about their own professional obligations. In response to something that Mr. Goldman said, the trustee holds the privilege. We're talking about privilege under U.K. law, Your Honor. We're not talking about attorney/client privilege under U.S. law. There's new litigation pending in the U.K. Mr. Goldman may have some expertise on privilege under U.K. law. I'll admit I have none. I'm relying on what U.K. counsel has stated to me. So I don't think it's as simple as this is what the bankruptcy code says when a trustee is appointed vis-a- vis privilege. There's a -- how the privilege works in the U.K. is how it works in the U.K. So I don't think -- I don't know that anybody on this hearing can with any authority speak on that, on how the privilege works in the U.K. So I think -- I think it's dangerous to -- to be -- I'm trying to wordsmith -- when we frankly don't know\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 271 of\n\nHo Wan Kwok - August 4, 2022 54 that we really know we're talking about. MR. DESPINS: Your Honor, if I may? I totally feel Mr. Goldman's pain. I feel the same pain. He is correct. Except that here, you know, this is -- I think this could turn out to be a fool's errand, meaning that they could play a game where the letter is sent and they say, oh, we're not going to share anything with you because he hasn't waived the privilege or anything like that. Of course, we'll be back to Your Honor. The important thing is Your Honor or the trustee are not taking the position. The letter is being sent by or is supposed to be sent by Mr. Kwok to counsel and that's his letter. We're not -- the trustee is not taking the position that that's the correct view under U.S. law. It is my price of admission apparently to see what's behind the curtain. And if it's there's nothing behind the curtain, I'll be back to Your Honor. I hope that I will see what's behind the curtain. And I think the same thing as Your Honor. But because you're directed to send the letter doesn't mean that you agree that I don't have access to the privilege. It's a -- it's a practical solution. And I am -- this will be rare event. I would be aligned with Mr. Henzy on this. I\n\nHo Wan Kwok - August 4, 2022 55 would not try to wordsmith the letter today on this if we can. And I am not naive. I know this -- this could be a setup where, in fact, there's nothing behind the curtain and I'll be back before Your Honor. Your Honor is not ruling that the privilege does not belong to me. It's just directing the debtor to send that letter. So I want to be -- So, Mr. Goldman, I understand his point completely, but I would urge the Court not at this stage to play with the language. Thank you. THE COURT: Thank you. MR. GOLDMAN: Your Honor, I think with that, with that caveat, you know, I think I would be fine as long as we recognize that no ruling here -- there's no ruling on whether the trustee holds a privilege and -- or whether it's Mr. Kwok. I think there is an issue, given that this is an asset of a bankruptcy estate in the U.S., whether, you know, it's U.S. or U.K. law that governs a privilege -- but we -- I agree with Mr. Despins that it's not necessary to make that determination today. THE COURT: And the motion doesn't ask -- MR. HENZY: I think it's really not necessary because -- Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 272 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 273 of\n\nHo Wan Kwok - August 4, 2022 56 THE COURT: The motion doesn't ask for -- MR. HENZY: -- as I said -- THE COURT: Hold on a second, Attorney Henzy. And the motion doesn't ask for that determination to be made. So I'm not making that determination. Sorry, Attorney Henzy. Go ahead. MR. HENZY: Well, Your Honor, actually the motion doesn't address the Harcus Parker issue at all in any way, shape or form. We can argue about whether the action on BVI is incidental to the motion that was filed, and I think it wasn't, but I don't think there really is an argument that the Harcus Parker issue is part of that motion. It's just not there, Your Honor. And I'll say again I think that the right way to do this where, you know, it may be that we can get to a productive place, and this -- this is not it. In terms of talking about the contents of the letter, Mr. Kwok is not going to waive, voluntarily waive, attorney-client privilege. He's not going to do it. And as I said I'm not going to compel him to do it. So it may be that if you're going to enter an order we're going to get to -- we're going to get to a contempt, but he's not going to do it. So I don't know how much time we need to spend on\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 274 of\n\nHo Wan Kwok - August 4, 2022 57 the language of that, of that letter. THE COURT: Well, I'm going to take a recess until 3:30. And then we'll come back and see if you've had any discussions. And if not, we'll go from there. MR. HENZY: Right. Thank you, Your Honor. THE COURT: All right. Court is in recess until 3:30. (Recess from 2:25 p.m. until 3:31 p.m.) THE COURTROOM DEPUTY: The United States Bankruptcy Court in the District of Connecticut is now in session after recess. We remain on case number 2022-50073, Ho Wan Kwok. THE COURT: Okay. Good afternoon. We're back after recess. When we took a recess, the parties were going to attempt to talk and look at a proposed order that was filed on the docket today by the Chapter 11 trustee. So, Mr. Despins, where do things stand after a recess? MR. DESPINS: I'll let Mr. Henzy provide more detail because it's really the ball is in his camp. But we -- we did talk about one aspect -- well, we talked about all aspects, but one might be resolved, so maybe Mr. Henzy can address the Court on this. THE COURT: Okay. Thank you.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 275 of\n\nHo Wan Kwok - August 4, 2022 58 Mr. Henzy? MR. HENZY: Sure. So, Your Honor, with that additional paragraph 9, you know, the Court -- the Court enters an order directing Mr. Kwok to sign these -- the BVI share transfer document and the resolution and the -- the so-called Transfer-In Pack of Harneys Fiduciary, that Mr. Kwok is going to do that. Just for the record, I believe that, you know, the trust agreement itself does prohibit Mr. Kwok from transferring the shares, but he is not doing so voluntarily. He's being forced to by a court. Whatever flows from that flows from that I believe. And whatever other rights any party has as a result of Mr. Despins becoming the -- whatever he's becoming, the legal owner, trustee under a trust, et cetera, whatever he is, flow from that, I just -- the debtor is not, you know, certainly not opining on what may flow from it. And I don't think I want the debtor to be accused of having failed to fully inform people or anything like that. But all that being said, with that paragraph 9, the debtor is not going to object to the entry of that portion of the order. THE COURT: Okay. Thank you. MR. DESPINS: Your Honor, just two seconds on this.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 276 of\n\nHo Wan Kwok - August 4, 2022 59 1 The transfer occurred on July 8th when I was appointed. The bankruptcy code made that transfer happen. What we're doing here is we're documenting the transfer. Again, you own the car. The car became the trustee's car, not personally, but in a trustee capacity, and now we're dealing with the registration to make sure it's endorsed and all that. The transfer occurred on July 8th by operation of law. I think that's very important to -- to understand that. But, you know, it is what it is. So we're -- I think we're happy that this aspect of it was resolved. MR. HENZY: And just for the record, I hear Mr. Despins' position. I don't agree with it. But, again, this aspect of it is resolved because Mr. Kwok, upon being ordered to do so, is going to sign these documents. THE COURT: Okay. Then what is left is the issue of the letter to counsel in -- to the firm in London. Is that the remaining issue? MR. HENZY: So, Your Honor, just to be clear, I had filed -- after the motion itself was filed, but before the revised proposed order was filed, I filed an objection raising other objections and I have not waived those objections. I know at the last hearing you told me that -- and I can't remember your exact words, you were inclined or you\n\nHo Wan Kwok - August 4, 2022 60 had -- to overrule those objections. But I want to be clear that I am not waiving those objections. That I'm pressing those objections. And I'm happy to be -- THE COURT: Well, let's make the record clear then because -- MR. HENZY: I would like to be -- THE COURT: -- I need to know what you're objecting to. MR. HENZY: Thank you, Your Honor. THE COURT: You're objecting to the fact that Mr. -- that Mr. Despins didn't file an adversary proceeding to have the property turned over to him? MR. HENZY: Your Honor, I think that issue is resolved. THE COURT: Well, I need to know that. When you say you think that issue is resolved, if it's not, I'm going to rule on it, so you need to tell me whether it's resolved. MR. HENZY: Now, Judge, I'm sorry. I think I was being unclear. The argument that this needs to be done by adversary proceeding, that argument has gone away because that related to this share transfer that we just told you is resolved and going to happen. So when I'm referring to my other objections, if dial back to the motion as originally filed -- give me one Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 277 of\n\nHo Wan Kwok - August 4, 2022 61 second, Your Honor -- THE COURT: Sure. MR. HENZY: -- the motion as originally filed, which is document 598 -- THE COURT: ECF 598. Right. And you're saying you still want to preserve your objection that the trustee didn't specifically reference section 521 of the code? MR. HENZY: No. So, Your Honor, on July 29, I filed an objection. It's document number 643. THE COURT: Yes. I understand. MR. HENZY: Okay. Okay. And I raised objections to the relief that was originally sought in the motion that has nothing to do with Harcus Parkus -- I keep saying Harcus Parkus, which sounds terrible -- but Harcus Parker and then the share issue that we resolved. I raised other objections that we haven't talked about at all today. THE COURT: Okay. Well, go ahead then. MR. HENZY: And, again -- THE COURT: I want to know what it is specifically you are still objecting to. MR. HENZY: Okay. And maybe, Your Honor, the -- to try to be -- to try and like to be clear, I am objecting to -- give me one -- I'm sorry, Your Honor. Give me one second. THE COURT: That's fine. Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 278 of\n\nHo Wan Kwok - August 4, 2022 62 (Pause) MR. HENZY: I'm sorry. I'm getting all these orders straight. So in the objection that I filed on July 29, if I -- if I look at the -- the easiest way to organize it might be the order that was filed this afternoon just before the hearing, which is document no. 681. THE COURT: Yes. Go ahead. I'm listening. I'm not sure where you're going. I thought we were going to -- MR. HENZY: Okay. I just want -- THE COURT: -- talk about what you're -- MR. HENZY: I want -- Judge, I'm sorry. I just wanted to try to tie back to the objection I filed on July 29. THE COURT: Okay. MR. HENZY: Okay. It's paragraph 2 -- and this is -- this is -- putting aside -- THE COURT: Paragraph 2 of what, the order or your objection? MR. HENZY: Of the order. THE COURT: Paragraph 2 of ECF 681. MR. HENZY: Correct. THE COURT: You're objecting to what? MR. HENZY: Okay. I'm objecting to paragraph 2, although, again, we've dealt with the BVI issue. Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 279 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 280 of\n\nHo Wan Kwok - August 4, 2022 63 But this, the relief sought here asks for very broad relief with respect to entities that are not specified, the authority to replace any existing officer, director, manager or similar person. So Mr. Despins is seeking this court to give him authority over entities that are not specified without regard to those particular entities, what applicable law, non-bankruptcy law governs those entities and what the organization documents of those entities might provide. I don't think, Your Honor, that this works. I think that this type of authority -- with Mr. Despins, I think he has the authority that he has, and this goes -- and I'm not disputing any particular authority he has with respect to any entities because I don't know what entities we're talking about. But what this provision would do is give him authority that may not be provided for under applicable non-bankruptcy law and the governing documents of particular entities. THE COURT: Can't that just be -- MR. HENZY: And the cases that Mr. -- THE COURT: Can't that just -- can't we just fix that problem by saying that -- you're talking about for the avoidance of doubt language, that sentence? For the avoidance of doubt, that foregoing rights include the trustee's asserted authority. He's asserting he\n\nHo Wan Kwok - August 4, 2022 64 has the authority. If he doesn't and he does something wrong, then you can sue him. MR. HENZY: Actually, Your Honor, I mean, I think I put this in my response, which is, if this paragraph had just been made -- made subject to applicable non-bankruptcy law and the governing documents of these entities, then I -- then I would have no objection to this provision. Again, I'm not trying -- I'm not trying to create an issue here. I really am not. But I think that that is the correct statement of law. He has whatever authority he has as trustee, but with respect to any particular entity, it is subject to applicable non-bankruptcy law and the governing documents of that entity. That's all. MR. DESPINS: Your Honor, if we do, we do. If we don't, we don't. But I don't want to open satellite litigation over these issues with the debtor because that's how the fees are going to be -- you know, going to get out of control in this case. The reason we asked for blanket authority is because we will not exercise that right unless we believe through due diligence we have the power to do it. And if we're doubtful, we'll come back to the Court. But we cannot be in a position where there's a satellite litigation open whether -- what state law provides, what foreign law provides, because that's a -- Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 281 of\n\nHo Wan Kwok - August 4, 2022 65 that's going to be another case basically. MR. HENZY: Judge, the last thing that Mr. Kwok wants to do is engage in litigation over how these entities are going to be governed. But if Mr. Despins is saying to you he -- after doing his diligence, that he would only do what he has the power to do, then I don't know -- all I want is to say that in this order, but I think that's not what this order says. THE COURT: Well, I think that a -- MR. HENZY: It goes -- it goes beyond that. THE COURT: -- I think my suggestion works. For the avoidance of doubt, the foregoing rights include the trustee's asserted authority to replace any existing officer, director, manager or similar person of the debtor- control entities. And then the next sentence says as part of the foregoing. So the point is he's asserting he has this authority. He's acting as a trustee. So that's what he's asserting. And that's what I'm going to -- I'm going to add the word assert. And that's all I'm going to change in paragraph 2. MR. HENZY: Thank you, Your Honor. Just to be clear, I'm not -- I am not -- I am pressing my objection to that, that language. THE COURT: Understood. That objection's Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 282 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 283 of\n\nHo Wan Kwok - August 4, 2022 66 overruled. So what's your next objection? MR. HENZY: Okay. Again, I'm trying to simplify here, Your Honor. Is I have no objection on -- to the first decreedal paragraph of paragraph 3. And then now with this resolution on BVI that we had just told you about, to that -- then that -- as you go over to page 3, that little (a), I have no objection to that paragraph. Then that's been resolved. The next paragraph down on that page, paragraph (b), we've discussed that at length, the -- on the U.K. issue, the UK/UBS litigation issue and I maintain my objection on that issue. On paragraph -- THE COURT: Hold on. Just wait a minute. I'm just writing this down. So what else are we going to discuss about (b)? I think the arguments have been made, correct? MR. HENZY: I think the arguments have been made, Your Honor. I don't want to belabor anything. THE COURT: Okay. MR. DESPINS: But, Your Honor, I just want to add briefly to that the only privilege information we're seeking is with respect to the merits of the affirmative claims of Mr. Kwok against UBS. No other issues.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 284 of\n\nHo Wan Kwok - August 4, 2022 67 So, for example, crazy example, Mr. Kwok, in the context of that representation, said, oh, by the way, I've transferred an interest in a private jet to my daughter. I'm not -- I'm not seeking that. That's not part of the affirmative claim of Mr. Kwok against UBS. So that privilege that the -- that Your Honor is directing him to send a letter about is the privilege regarding that litigation, that affirmative litigation, only. I want to make sure the record is clear about that. MR. HENZY: And, Your Honor, I'd like to be clear. I understand Mr. Despins' position. I'd like to be clear that I believe Mr. Despins owns whatever -- I assume, again, I don't know U.K. law -- he owns whatever privilege he owns and Mr. Kwok has whatever privilege he has, if any. And Mr. Kwok is -- to the extent he has any privilege, he is not going to waive it. But, again, I think we've made -- I've made the argument that I have to make on that. I think. THE COURT: Okay. The objection to the language in paragraph (b) on page 3 of the proposed order is overruled. MR. HENZY: Thank you, Your Honor. THE COURT: So what's your next objection? MR. HENZY: On paragraph 4, on page 4, Your Honor, that essentially is a blanket authorization to the trustee\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 285 of\n\nHo Wan Kwok - August 4, 2022 68 to act outside of the ordinary course of business with respect to so-called debtor controlled entities. And I object to that. Frankly, I've never heard of or seen that. My understanding of bankruptcy code Section 363 is that when a debtor trustee -- debtor or trustee -- debtor- in-possession or trustee wants to act out of the ordinary course of business, they need to notice a hearing, come and ask for the Court's authority to do that. And this would make it so that there doesn't have to be notice and a hearing. And, again, this is a blanket authority. And I think that is not provided for in the code. I think that is just extraordinary relief and I don't think it's appropriate. MR. DESPINS: Your Honor, on that point, it's the same argument as to applicable law. We don't want to be in a position where later it is argued that we acted outside of the ordinary course of business. And the safe valve -- the safety valve, is at the end of paragraph 4 where it says for the avoidance of doubt nothing in this order authorizes the trustee to sell, otherwise dispose of, lease or encumber any equity in debtor controlled entities or other assets of the debtor. So, yes, the language is broad, but then it's completely narrowed at the end to avoid the type of concerns\n\nHo Wan Kwok - August 4, 2022 69 that have been raised. The reason we need the opening language is we don't want to be in a position where we're litigating over, well, you know, you terminated or you removed a director, an officer. You shouldn't have done that. That's not -- that's not in the ordinary course of business, and we have all these satellite litigation over whether we acted within -- with or without it. We believe that we should get both reliefs as long as the safety valve is in there which protects the estate, no sale, no lease of property without a court order. Thank you. THE COURT: Does anyone else -- MR. HENZY: I see -- I see the limitation, Your Honor, but I still think -- I don't think there's any such thing as blanket authorization to act out of the ordinary course under 363. MR. DESPINS: That solely to exercise corporate governance rights, Your Honor. Nothing else. MR. FRIEDMAN: Your Honor, may I be heard -- it's Peter Friedman -- for just a moment? The order that was originally proposed did not include that language that Mr. Despins put in and we thought it was extremely important. And, you know, I think had that language not been Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 286 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 287 of\n\n| | 322 |\n|----|----------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
70 |\n| 1 | in there, as creditors, we would have objected.
But we |\n| 2 | found that that addition to be -- to represent I think an |\n| 3 | extremely good faith move by the trustee in balancing the |\n| 4 | economic interests of creditors, which I think has to be |\n| 5 | paramount, with efficiency. |\n| 6 | So we strongly support the inclusion of that |\n| 7 | particular paragraph with the protective language that was |\n| 8 | added at our request. |\n| 9 | THE COURT:
Thank you. |\n| 10 | Does anyone else wish to be heard on paragraph 4? |\n| 11 | (No audible response) |\n| 12 | THE COURT:
Okay.
I'm just reading the language |\n| 13 | again. |\n| 14 | (Pause) |\n| 15 | THE COURT:
Okay.
Anything further from anyone on |\n| 16 | paragraph 4? |\n| 17 | (No audible response) |\n| 18 | THE COURT:
While I understand the objection, |\n| 19 | Attorney Henzy, I'm overruling it because I think that the |\n| 20 | language -- it is specific to the economic and governance |\n| 21 | rights with respect to the debtor-controlled entities.
And, |\n| 22 | you know, if litigation ensues about that, then it can |\n| 23 | ensue.
But we're not going to -- it is -- it is qualified |\n| 24 | by the last sentence and I think it's protective enough of |\n| 25 | the debtor. |\n\nHo Wan Kwok - August 4, 2022 71 MR. HENZY: Thank you, Your Honor. THE COURT: So what is your next objection? MR. HENZY: And, Your Honor, great news, I have no objection to paragraph 5. THE COURT: Okay. Thank you. MR. HENZY: On paragraph 6, the -- so paragraph 6 provides debtor shall not interfere with, hinder or delay trustee's exercise of authority on this order. I have no objection to the first sentence of paragraph 6. However, the second sentence would restrict the debtor's ability to seek relief and it would restrict it to seek relief from this court. And I don't -- I don't know that the debtor ever would seek relief. But because particularly for the fact this paragraph 4 and the broad authority that Mr. Despins is being granted there, I don't know what might occur here. I don't know what rights, if any, the debtor would have to do anything. But I don't think the debtor -- to the extent that the debtor otherwise would have a right to seek relief, I don't think it should be restricted by this order. So I would ask that the second sentence of paragraph 6 be struck from the order. MR. DESPINS: Your Honor, same issue. The debtor is before this court. He has worldwide assets. From your perspective you have exclusive jurisdiction over that. We Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 288 of\n\n| | Case 22-50073
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72 |\n| 1 | cannot have the debtor running in foreign courts to assert |\n| 2 | claims. |\n| 3 | It may be that he comes, Your Honor, but, you know |\n| 4 | what, there's a real important twist on the U.K. law |\n| 5 | regarding issue XYZ there.
And you might decide, yeah, |\n| 6 | you're right, go for it or something like that.
But |\n| 7 | everything needs to be centralized in this court by this |\n| 8 | debtor.
He cannot have satellite litigation elsewhere.
And |\n| 9 | they have the ability to come to this court for relief.
So |\n| 10 | that's a very important position, Your Honor. |\n| 11 | MR. HENZY:
Your Honor, the way this order is set |\n| 12 | up, Mr. Despins can run to other courts including courts in |\n| 13 | foreign countries. |\n| 14 | MR. DESPINS:
That's correct. |\n| 15 | MR. HENZY:
So the way that this would now be set |\n| 16 | up is Mr. Despins decides he's going to go to a court in |\n| 17 | this country or a foreign country and the debtor, even |\n| 18 | assuming under the law of that foreign country, the debtor |\n| 19 | has a right to appear and do whatever a debtor is going to |\n| 20 | do. This order says the debtor can't do that. |\n| 21 | And it says the debtor I guess would have to come |\n| 22 | back to you and say to you Mr. Despins is doing this thing |\n| 23 | in a foreign court and I'm in front of you telling you he |\n| 24 | shouldn't be doing it because I've been told I can't go to a |\n| 25 | foreign court to make the argument that under the foreign |\n\nHo Wan Kwok - August 4, 2022 73 court law I'm entitled to make. And that doesn't -- that does not make any sense to me. MR. DESPINS: Your Honor -- MR. HENZY: If Mr. Despins is going to have the ability without seeking court authority to go to other courts, then -- again, Your Honor, you said it, you take the debtor as he comes. The debtor should be able to go do whatever the debtor has a right to do under the foreign law. THE COURT: Well, the problem is -- MR. DESPINS: Your Honor -- THE COURT: -- Mr. Despins is the debtor and so he already has the rights. He doesn't need authority from this court to do what he's doing in the actions that are already pending in which the debtor is a party. So your argument, while I understand it to an extent, the problem is what right would Mr. Kwok have to do anything in any of those foreign courts if Mr. Despins has now become Mr. Kwok? MR. HENZY: Well, Mr. Despins is not -- THE COURT: Which you've admitted in your papers that as soon as the filing of -- as soon as the order appointing the trustee was approved, that Mr. Despins became Mr. Kwok. So what possible rights would Mr. Kwok have? MR. HENZY: Well, Your Honor -- THE COURT: Mr. Despins has stepped into all of Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 290 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 291 of\n\nHo Wan Kwok - August 4, 2022 74 those rights. MR. HENZY: I think I agree. I didn't -- I don't think I said Mr. Despins became Mr. Kwok. And I'm going to guess Mr. Despins doesn't want to be Mr. Kwok, but he absolutely is substituted for Mr. Kwok in any pending litigation. But I don't think that the way this order is set up it's not just pending litigation, Mr. Despins can commence new litigation that the debtor might or might not even be a party to. Now, what rights in particular in a foreign jurisdiction Mr. Kwok might have as a debtor out of possession? Your Honor, I don't know. He may or may not have any. He may not have any rights. So I don't know because I don't know what jurisdiction we're talking about. I don't know what entity we're talking about. I don't know what action it is that Mr. Despins would be taking. So I'm perfectly -- look, the way, again, this is set up is Mr. Despins can go do whatever he's going to do, only to the extent that under some applicable foreign law Mr. Kwok would have a right to show up and do something -- and he might not, he might not, Your Honor, he should be able to do that. I don't -- I don't think he should have to come back to this court to find out whether or not he has a right to show up in another court under non-bankruptcy --\n\nHo Wan Kwok - August 4, 2022 75 applicable non-bankruptcy law. MR. FRIEDMAN: Your Honor, may I be heard for a moment on this issue? It's Peter Friedman. I think it is really important because I think the issue is, you know, in any premise, Mr. Kwok's going to have to determine if he has standing given the insolvency of his estate. So I think it's actually critical, given that he said he has \\$3,850, that before he goes to another court and be permitted to litigate, that he actually would show that he would have permission to interfere with the trustee's use of debtor property given his economic -- where the economics of this exist. I think that's an issue that really has to be made to determine with reference to U.S. bankruptcy law and his rights. So I actually think what Mr. Despins has proposed is extremely appropriate. It certainly is a prudent measure and one that falls really within core bankruptcy determination as to whether he even has standing to have standing to be heard. MR. HENZY: Your Honor, just to pose a hypothetical. Let's say Mr. Despins goes to a foreign court and in the foreign court seeks to compel Mr. Kwok to do the kind of things that he sought to do with this order. He seeks to Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 292 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 293 of\n\n| | 322 |\n|----|----------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
76 |\n| 1 | compel him to execute a document, let's say a corporate |\n| 2 | document.
Then I don't -- I mean, would anyone say that Mr. |\n| 3 | Kwok wouldn't have standing in that foreign court to tell |\n| 4 | the judge in the foreign court, well, I shouldn't have to |\n| 5 | execute this document for whatever reason. |\n| 6 | And the judge may say, you're wrong, you have to |\n| 7 | execute the document.
The judge is going to say whatever |\n| 8 | the judge is going to say.
But how could Mr. Kwok not have |\n| 9 | the right to show up in that foreign court -- and it's |\n| 10 | before a judge -- before a judge can say to Mr. Kwok I don't |\n| 11 | believe you have standing for whatever reason.
And Mr. |\n| 12 | Despins can tell the judge, the foreign judge, Mr. Kwok |\n| 13 | doesn't have standing. |\n| 14 | So how can Mr. -- in my hypothetical, how can Mr. |\n| 15 | Kwok not have the ability to show up in court and |\n| 16 | potentially defend his rights to the extent that he has any? |\n| 17 | MR. FRIEDMAN:
Your Honor, I won't speak for Mr. |\n| 18 | Despins, but I don't understand the order as depriving Mr. |\n| 19 | Kwok of the ability to defend himself if there's a matter in |\n| 20 | a different court. |\n| 21 | But if he's seeking to initiate litigation, I |\n| 22 | think he would certainly have to come to this court. |\n| 23 | MR. HENZY:
Well, that's not what the order says. |\n| 24 | MR. DESPINS:
In any event, Your Honor, the point |\n| 25 | is that the Court has exclusive jurisdiction over Mr. Kwok. |\n| | |\n\nHo Wan Kwok - August 4, 2022 77 He needs to come back to this court. And, in fact, if there are compelling circumstances, yeah we'll authorize him to go to Australia, for example, to defend some action to see that. The point is that he should not be roaming around and having the ability to disrupt what we're doing around the world without coming to Your Honor to say this is what I'm doing. I have some particularized injury that somehow I'm able to assert even though I'm out of possession. Well, that argument should only be made to Your Honor. And then if you find it compelling, you'll send -- you'll authorize him to do whatever he wants abroad. But you cannot have him running around in this. It's just fundamental, Your Honor. MR. HENZY: But, Your Honor, arguably what this order is doing though you are giving up a certain degree of jurisdiction to Mr. Despins, meaning you're telling him that he can act out of the ordinary course of business without coming and asking permission from you. But then what Mr. Despins and Mr. Friedman are essentially arguing is but you -- but you hang on with respect -- let's say to the same matter, you hang on to jurisdiction with respect to the debtor. So Mr. Despins can do whatever he wants to do, but Mr. Kwok can't respond to that. And that seems it should be Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 294 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 295 of\n\nHo Wan Kwok - August 4, 2022 78 one way or the other. If Mr. Despins wants to come back and make a motion to act out of the ordinary course of business and the debtor has to respond to that in bankruptcy court, that's okay. But if he's going to not have to do that, then I think the debtor should be able to show up wherever he's doing things and respond to the extent that he has a right to do so. MR. DESPINS: Your Honor, the debtor and the trustee are not on equal footing. This concept that somehow because we have the right to do it they should. That's not the way it works. THE COURT: Well, I was going to make that point. The point is Mr. Despins is an independent third party who's been appointed to run the -- administer the estate of Mr. Kwok. It's the -- the language says in the second sentence to the extent the debtor opposes the trustee's exercise of authority, okay, the debtor shall be limited to seeking relief from this court on notice to parties in interest to the extent the debtor can show he has standing to do so. And, unfortunately, given where -- for the debtor -- given what he's stated in all of his filings, and as\n\nwe've talked before, there is no evidence before this court,\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 296 of\n\nHo Wan Kwok - August 4, 2022 79 and nothing in the record -- in fact, the only things in the record support that the debtor will have no interest in this estate because there won't be any -- a full payment to creditors in this case. And so there will not be any surplus to which the debtor would have standing to raise such arguments. And if Mr. Despins does something outside of his authority, then the debtor still has the right to make that argument. But he has to make it here in this court subject to this court's authority over this estate. And that's one of the, you know, results of the appointment of a Chapter 11 trustee. So, again, while I understand your argument, it doesn't foreclose the debtor from opposing the trustee's exercise of authority, but he has to do it in this court. And so I'm going to overrule your objection to paragraph 6. MR. HENZY: Thank you, Your Honor. Just as an aside, just saying, the damage claim in the UBS litigation in the U.K. is \\$500 million. I have no knowledge of the strength -- THE COURT: That claim wasn't listed as an asset of this estate, Mr. Henzy. MR. HENZY: Oh, no, it was. THE COURT: No. It actually wasn't originally.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 297 of\n\nHo Wan Kwok - August 4, 2022 80 MR. HENZY: I believe it was. THE COURT: No. I think it was not. MR. HENZY: Okay. I'll go -- I'll go back and check, but I thought that it was. But in any event, I don't -- I don't think the debtor would dispute at all that to the extent that it wasn't in the schedules, Your Honor, it should have been. And I think the debtor absolutely -- THE COURT: Well, maybe it was. So let me just -- let me go back in the global notes which aren't really notes -- which, again, there's no authority for any debtor, that I'm aware of under the bankruptcy code, under case law, under statute, under local rules, under the federal rules, to file global notes to your -- to your schedules to disavow what you say in your schedules under penalty of perjury. I've never seen or heard of such a thing, but I understand that's now becoming something that people do. But that doesn't -- that doesn't mean that the global notes have any bearing on whether or not Mr. Kwok accurately completed his schedules. All that being said, even if he did list it, it's a \\$500 million claim with two other plaintiffs, correct? MR. HENZY: Yes, but -- THE COURT: So it would be split three ways, correct?\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 298 of\n\nHo Wan Kwok - August 4, 2022 81 MR. HENZY: Under -- THE COURT: And the claim of -- the claim of PAX that your client did put in his schedules, actually on a schedule, is -- he listed it as not less than \\$254 million, I believe, maybe it's 53. I haven't looked at it recently. But in any event, the solvency of your debtor, of your client, is still very much at issue in this case. MR. HENZY: I don't -- I don't disagree with that at all, Your Honor. THE COURT: Okay. MR. HENZY: I'm just pointing out that you're not -- I have no idea of what the strength or weakness of the claim in the U.K. is and what percentage -- THE COURT: I understand. MR. HENZY: -- if that's so. THE COURT: But he'll have -- he'll have to come back here and explain why he opposes the trustee's exercise of authority. And he'll be heard. MR. HENZY: Okay. Understood. My objection on -- I understood. THE COURT: Maybe. MR. HENZY: That objection's overruled. THE COURT: Depending upon if he has standing, okay, at that point in time. MR. HENZY: Understood, Your Honor.\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 299 of\n\n| | 322 |\n|----|-------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
82 |\n| 1 | THE COURT:
So that -- so that, I overruled your |\n| 2 | objection to paragraph 6, the language in paragraph 6 we |\n| 3 | just discussed on the record. |\n| 4 | MR. HENZY:
Thank you, Your Honor. |\n| 5 | THE COURT:
So what is your next objection? |\n| 6 | MR. HENZY:
The last objection is on paragraph 7. |\n| 7 | THE COURT:
Okay. |\n| 8 | MR. HENZY:
So this asks for an order where -- |\n| 9 | that provides that you request the assistance of foreign |\n| 10 | courts, including the assistance of the BVI court regarding |\n| 11 | any request of the trustee for relief with respect to the |\n| 12 | trustee exercising corporate control over Genever BVI. |\n| 13 | I would -- I'm absolutely not going to tell the |\n| 14 | Court what it ought to be telling other judges, but I just |\n| 15 | -- I think that is very, very broad. |\n| 16 | And the way I read this is it would sort of give |\n| 17 | Mr. Despins this court's impromatur to go in front of |\n| 18 | another judge and say please give this to me -- and Judge |\n| 19 | Manning tells you that you ought to give it to me, even if |\n| 20 | you, Your Honor, don't know that -- what it is that he's |\n| 21 | telling another judge that it is that he wants. |\n| 22 | THE COURT:
Okay. |\n| 23 | MR. DESPINS:
So, Your Honor, this type of |\n| 24 | language is often used in the foreign, you know, foreign |\n| 25 | representative context. |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 300 of\n\n| | 322 |\n|----|---------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
83 |\n| 1 | I'm happy -- obviously, you don't know me and you |\n| 2 | may not be comfortable giving me a blank check and I don't |\n| 3 | think this is a blank check -- but it's really an indication |\n| 4 | to foreign courts that it may not be (indiscernible) as U.S. |\n| 5 | courts that this court is requesting their assistance not to |\n| 6 | do something illegal or inappropriate, but in requesting |\n| 7 | their assistance. |\n| 8 | That's kind of run of the mill language, but I was |\n| 9 | always told never raise section 105 in front of Judge |\n| 10 | Manning, so I'm not going to raise it. |\n| 11 | But it's something along those lines.
So if you |\n| 12 | -- I'm happy with it or without it.
I'd rather have it in, |\n| 13 | but I'm not going to -- I don't want to put you in a |\n| 14 | position where you don't feel 100 percent comfortable with |\n| 15 | that. |\n| 16 | THE COURT:
Well, I mean, I think that the section |\n| 17 | in Chapter 15 -- you know, the whole purpose of Congress |\n| 18 | making Chapter 15 part of the code in 2005 was to |\n| 19 | acknowledge, you know, cross border cases and try to have |\n| 20 | cooperation between the foreign courts and foreign |\n| 21 | representatives.
Okay? |\n| 22 | So I think we could -- we could say in furtherance |\n| 23 | of the trustee's exercise of authority of this order, the |\n| 24 | Court respectfully requests the assistance of foreign courts |\n| 25 | with respect to the trustee's exercise of corporate control |\n| | |\n\nHo Wan Kwok - August 4, 2022 84 over debtor entities, including Genever BVI. I don't think there's -- MR. DESPINS: Absolutely. Good point. THE COURT: -- any problem with that. I mean. And I think that it -- I mean, I think in the -- there have been cases in this district where an order like that has entered with regard to proceedings in other -- outside of the United States. So I don't -- I think I could change -- Mr. Despins, do you have any problem -- I didn't write down exactly what I just said -- MR. DESPINS: No. THE COURT: -- but would the -- with the change that I described? MR. DESPINS: We'll make that change, Your Honor, if you want. THE COURT: Okay. MR. DESPINS: Or it's up to you. MR. HENZY: And, Your Honor, just for the record, I am -- if the Court's comfortable with the language, I'm not going to press an objection on that issue. THE COURT: All it's -- MR. HENZY: Again, that -- THE COURT: All it's asking for, and I believe is appropriate, is that because Congress decided to make Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 301 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 302 of\n\n| | 322 |\n|----|----------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
85 |\n| 1 | Chapter 15 a separate and distinct chapter in the code that |\n| 2 | they're trying to recognize the cooperation between courts |\n| 3 | that might be necessary for a case in one jurisdiction to be |\n| 4 | carried out with respect to related proceedings in another |\n| 5 | jurisdiction outside of this country. |\n| 6 | So I don't have a problem with it, with the |\n| 7 | changes as I've just described them. |\n| 8 | MR. HENZY:
Understood, Your Honor. |\n| 9 | THE COURT:
Okay. |\n| 10 | MR. DESPINS:
We'll make the change, Your Honor. |\n| 11 | THE COURT:
Thank you. |\n| 12 | MR. HENZY:
Last issue, Your Honor -- and I'm not |\n| 13 | trying to go back and argue the -- |\n| 14 | MR. DESPINS:
I thought it was the -- that was the |\n| 15 | last issue. |\n| 16 | MR. HENZY:
There's one more.
I'm not -- I'm not |\n| 17 | trying to go back.
On paragraph 3, so back on page 3, this |\n| 18 | is the Harcus Parker letter, what this says is that the |\n| 19 | debtor is directed to deliver no later than two business |\n| 20 | days after the entry of this order.
Well, there's a couple |\n| 21 | of issues with that, Your Honor. |\n| 22 | The copy of the letter and the form attached as to |\n| 23 | Exhibit B to what's in front of you has -- as I understand |\n| 24 | it, that has not been agreed to by Harcus Parker.
So you're |\n| 25 | kind of in some sense -- |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 303 of\n\nHo Wan Kwok - August 4, 2022 86 THE COURT: I just have a question about that though because Trustee Despins said that this is the letter he got back from them, so how would they not agree to it? MR. DESPINS: It's a letter. What I said is the letter we got back from them with some minor changes that we made. But in the event, I'll deal with that, meaning if they -- if they say -- I think the changes we made are -- and by the way, we did send them earlier today a -- the changes we made, so they've seen them. We haven't heard back from them. But if it's an issue, we'll fix it, meaning, that's not Mr. Kwok's issue, meaning, we have the letter as we submitted it to Your Honor and we'll see what they say. And if it needs to be modified, we'll just file a supplement. It would be very, very -- a very minor change really. MR. HENZY: I guess -- so I'm not clear if -- so he's going to be -- Mr. Kwok's going to be ordered to sign a letter that U.K. counsel may tell us is not acceptable. I don't want to be in a situation where Mr. Despins is negotiating for three days with the U.K. counsel on what a letter might say and this says he has to sign -- THE COURT: So I think what you're saying, Attorney Henzy, is you just don't want the Court to enter the order until you see the final version of the letter. Is\n\n| | Case 22-50073
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87 |\n| 1 | that what you're saying? |\n| 2 | MR. HENZY:
Or at least until there -- yes, until |\n| 3 | there is a final version.
Yes, until there is -- right now, |\n| 4 | as I understand it, there is no final version. |\n| 5 | But then the second point is -- as I said earlier, |\n| 6 | Mr. Kwok is not going to sign this letter.
This provides |\n| 7 | that he must do so within two business days of whenever the |\n| 8 | letter is actually finalized and complete. |\n| 9 | And I just -- you know, I -- we will be filing an |\n| 10 | appeal.
We will seek a stay pending appeal. |\n| 11 | I just -- I don't want Mr. Kwok to be in contempt |\n| 12 | because he has not -- he has not signed this order.
I just |\n| 13 | want -- so I just wanted to alert the Court. |\n| 14 | I would -- I guess I don't know why there's a rush |\n| 15 | of two business days.
I don't know what's going to happen |\n| 16 | in two business days, you know, and why there couldn't be a |\n| 17 | little longer period of time so that Mr. Kwok can get his |\n| 18 | appeal filed and file whatever motion for stay pending |\n| 19 | appeal he's going to file. |\n| 20 | I just don't want to have an unnecessary fire |\n| 21 | drill, Your Honor.
If the order ends up not being stayed |\n| 22 | and he -- and he's not signing it, then whatever |\n| 23 | consequences from that will flow from that. |\n| 24 | But I don't -- I don't know how realistic it is |\n| 25 | going to be that we're going to be able to get in front of |\n| | |\n\nHo Wan Kwok - August 4, 2022 88 Your Honor within two business days on a motion for a stay pending appeal. That's all. And, again, I don't -- I would ask that this be a longer period than two days. MR. DESPINS: So, Your Honor, we -- I understand your concern and I share your concern to be sure that the changes we made were stylistic only. But, you know, given where this is heading, we should have precision. So what we should do is -- I'm just kind of thinking out loud here what's the best way to handle this -- I mean, there will be a letter. There should be a final letter. And maybe the order can provide that we will provide the letter in the final form within X days and the debtor will have Y days to -- to do it. Y number of days to do it. And the letter will be substantially in the form attached. So we can submit an order that will address that issue, that exact issue, Your Honor. And understand that precision -- we shouldn't -- we should be careful about this and have more precision rather than that. I understand your point, Your Honor. THE COURT: Do you have any objection to extending the two days to a longer period of time for the debtor? He's not going to sign it, but I guess what he's saying is he wants the -- he's going to be filing an appeal so -- I Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 305 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 306 of\n\nHo Wan Kwok - August 4, 2022 89 don't -- MR. DESPINS: Sure. THE COURT: I don't have an opinion either way. I was just asking you the question. MR. DESPINS: Your Honor -- and the answer is of course. I mean, whatever you, Your Honor, feels is a better period of time we'll obviously go with that. Generally we want to get the show on the road regarding that claim, but two versus four days is not going to, you know, break the bank. THE COURT: Mr. Henzy? MR. HENZY: I'd ask for five business days. That I don't -- I don't know when exactly this is all going to happen. I don't know what will be going on in my life. I don't know what will be going on with the Court. I don't -- I don't think a day or two one way or another -- MR. DESPINS: You know, five business days is fine, Your Honor. Thank you. MR. HENZY: I just -- THE COURT: Five days did you say, Mr. Despins? That's fine? MR. DESPINS: Yes, Your Honor. THE COURT: Okay. Then there you go. You've got five days, Attorney Henzy. MR. HENZY: And, Your Honor, again, I -- because I\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 307 of\n\nHo Wan Kwok - August 4, 2022 90 don't want to have parties, you know, pointing at me or pointing at Mr. Kwok, I think this is going to be a mess, okay, in terms of getting this letter done. The Harcus Parker lawyer told me that a prerequisite to her ever agreeing to do anything is that any waiver by Mr. Kwok would have to be voluntary. And this is not going to be voluntary. I'm not telling her what position she should take based on that. Mr. Kwok is not communicating with her. So I don't -- what her response to Mr. Kwok being ordered over the objection to sending this letter, I, you know, that's not my -- that's not my thing. That's not Mr. Kwok's thing. The U.K. lawyer is going to react however -- they going to react however they react. Okay? MR. DESPINS: I understand that, Your Honor. And the point is that there's a certain limit to what we're going to allow these folks to dictate. If they get a letter from someone regardless of whether a court orders them to do it or not -- and by the way, this is moot because he's saying he's not going to sign the letter. So, you know, we're arguing -- we're -- THE COURT: Right. He's not going to sign it anyway. Right. MR. HENZY: Well, but the -- there just may never be a letter. That's all. I mean, at some point, I\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 308 of\n\nHo Wan Kwok - August 4, 2022 91 understand -- THE COURT: Oh, no. I think there'll be a letter. The point is your client's already stating he's not going to sign it. He's not. He's already stating through you that he's not going to comply with this court order. MR. HENZY: And, Your Honor -- THE COURT: And it hasn't even entered yet, but he's not going to comply with it. MR. HENZY: He's not going to voluntarily waive his privilege, Your Honor, to the extent he has any. But I think -- the point I'm trying to make is a letter, I understand Mr. Despins at some point is going to put a letter in front of you and that letter may not be agreed to by the Harcus Parker firm. That's all. Because the Harcus Parker -- THE COURT: He's not going to put a letter in front of me that's not agreed to by that firm. They're the ones that have prepared it. MR. HENZY: No, they haven't. THE COURT: They're the ones who have made the final comments to it. MR. HENZY: Your Honor, I don't know what they're going to do. If they understand that the debtor is not voluntarily waiving, they make take the position we're not -- we're just not doing it. Okay. I don't know that, Your\n\nHo Wan Kwok - August 4, 2022 92 Honor. THE COURT: Well, then, Mr. Despins will have to deal with that. MR. HENZY: Okay. THE COURT: If he doesn't have a letter, then there isn't any five days to worry about. If he doesn't get a letter from them, then you -- there's nothing -- then your client won't be in violation of a court order because there wouldn't be a letter -- MR. HENZY: Okay. THE COURT: -- for him to have to sign to deliver to them. MR. DESPINS: No. Actually, Your Honor, I think -- at one point we will need a letter from the debtor, because otherwise these lawyers would just keep us in limbo. What's going to happen is that if the debtor refuses to sign the letter, we'll have a court order. We'll go to U.K. court. It will cost a lot of money and all that, but we'll go to the U.K. courts and seek relief from the U.K. courts against these lawyers who are refusing to give us access even if there's a letter from the debtor that says you need to give them access. But, again, I -- you know, we're arguing over a letter that the debtor says we'll never -- they will never sign anyway, so, you know, I think that's -- let's get to Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 309 of\n\nHo Wan Kwok - August 4, 2022 93 that point first. MR. HENZY: I'm comfortable with the Court saying if there's no -- if there's no letter the firm is agreeing to there's nothing for the debtor to do. MR. DESPINS: No. Your Honor, because that's giving -- that's -- THE COURT: Well, that's not what I said. I said then the five days doesn't matter. MR. HENZY: Okay. THE COURT: If there's no letter, than the five days doesn't matter. That's what I said. You asked for more time. MR. HENZY: Yeah. Yeah. THE COURT: He's agreed to more time. Then you've now said, what you've also said on many times during the -- during this day that your client's not going to sign the letter. MR. HENZY: Yes. THE COURT: So I said if he's not going to sign the letter, then he's going to be in violation of the court order. MR. HENZY: I'm positing a situation where there is not a letter that the firm in the U.K. has agreed to. That's all. MR. DESPINS: And the firm in the U.K. cannot be Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 310 of\n\nHo Wan Kwok - August 4, 2022 94 the ultimate arbiter of what happens in this case. We've given them a lot of leeway. And Your Honor is not going to give a U.K. lawyer control over privilege in this case. So we're willing to work with them. And we're doing that. But, you know, Mr. Henzy cannot use their ability to derail the process as a defense for him, his client, not signing the letter. MR. HENZY: I'm not using anything to derail the process here, Your Honor. Your Honor, if you -- I understand that if there is a letter and you order -- whether the U.K. firm has agreed to the letter or not, and you order Mr. Kwok to sign that letter that his five days will start to run. I understand that. MR. DESPINS: That's all I'm asking. And, Your Honor, we would propose to revise the order to deal with the letter and all that. So we will do that if Your Honor will authorize us because we need to fix the order. You suggested better language elsewhere so we need to do that and we will do that with your permission. THE COURT: Yes. You have my permission to do that. And do you think you will get that order to the Court tomorrow? MR. DESPINS: Yes, Your Honor. Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 311 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 312 of\n\n| | 322 |\n|----|-----------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
95 |\n| 1 | THE COURT:
Okay.
Or Monday? |\n| 2 | MR. DESPINS:
From our point of view, yes.
We |\n| 3 | will do our best to do that, yes. |\n| 4 | THE COURT:
Or Monday. |\n| 5 | MR. HENZY:
Can I have some time -- I would like |\n| 6 | some time just to review the order, Your Honor. |\n| 7 | MR. DESPINS:
Yes. |\n| 8 | MR. HENZY:
Okay. |\n| 9 | THE COURT:
Well, we've just gone through what the |\n| 10 | order is going to say.
We've gone through every paragraph |\n| 11 | including every one of your objections, which were |\n| 12 | overruled.
I've stated all the rulings on the record. |\n| 13 | MR. HENZY:
I would like to just put eyes on the |\n| 14 | order, Your Honor, just -- I'm not -- I completely trust Mr. |\n| 15 | Despins, that he's going to accurately make the changes that |\n| 16 | we talked about, but I just am in the practice of wanting to |\n| 17 | see the final order.
That's all.
I'm not saying I'm going |\n| 18 | to object to it or anything like that. |\n| 19 | THE COURT:
But then if you disagree, we're going |\n| 20 | to have another hearing.
That's what -- that's what you're |\n| 21 | trying -- that's what you're saying.
You're saying you -- |\n| 22 | if something -- if something doesn't comport with what you |\n| 23 | think it is, then we're going to have another hearing. |\n| 24 | That's what you're saying. |\n| 25 | MR. HENZY:
Yes.
But that's all because -- |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 313 of\n\n| | 322 |\n|----|----------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
96 |\n| 1 | THE COURT:
Well, I'm not going to have another |\n| 2 | hearing.
I've ruled.
I've ruled what the order's -- what |\n| 3 | the order needs to say.
We've gone through it. |\n| 4 | You just spent the time.
You said to me -- this |\n| 5 | is what you said -- I asked you what your objections were to |\n| 6 | the relief.
And I went back and I started with so you're |\n| 7 | objecting about the fact that Mr. Despins didn't cite to |\n| 8 | 521.
And you said, no, no.
Let's go -- let's go through |\n| 9 | the order.
Let's go through my original objections and |\n| 10 | let's go through the order.
So that's what we just did. |\n| 11 | We're not coming back to court on this.
This is |\n| 12 | what we just did. |\n| 13 | MR. HENZY:
So, Your Honor, what if -- what if -- |\n| 14 | what if the order that's submitted -- again, I am not |\n| 15 | telling -- saying I think Mr. Despins is going to do this -- |\n| 16 | what if the order that's submitted is not consistent with |\n| 17 | what's been on the record today? |\n| 18 | THE COURT:
Then I'm not going to enter it.
I'm |\n| 19 | going to read the order. |\n| 20 | MR. HENZY:
I'm sorry, Your Honor.
I think it's |\n| 21 | customary for all counsel to have an opportunity to review |\n| 22 | an order before it's entered.
But I understand. |\n| 23 | THE COURT:
But that's what we just did.
We just |\n| 24 | spent the time that you would spend going over an order. |\n| 25 | MR. HENZY:
I understand what the Court's saying. |\n| | |\n\nHo Wan Kwok - August 4, 2022 97 THE COURT: We just spent a substantial amount of time, as a matter of fact, going through every paragraph in the order. MR. HENZY: Your Honor, if you're ruling I'm not going to have an opportunity to review the final order -- THE COURT: Mr. Despins -- MR. HENZY: -- then I understand the Court's -- THE COURT: You know, I'm -- Mr. Despins, is your firm going to have -- This is what I would want everyone to do. This is how it's going to work out because we are not doing this on a regular basis. Mr. Despins, would you please send an email to the courtroom deputy box, your firm will know and Mr. Linsey can help you if necessary, with the order CC'ing all the parties. I'm not going to enter that order for some period of time -- I don't know what -- but several hours probably. Okay? And then I'm going to enter the order. I'm not going to have another hearing going through the language of the order. We just did that. The only reason that that order will not enter is if Mr. Despins wrote something like the Court has allowed me to live in the courtroom. Then I wouldn't enter that order. Okay? For many reasons. It wouldn't be comfortable for him Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 314 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 315 of\n\nHo Wan Kwok - August 4, 2022 98 anyway. But that's the point. We're not going to do this. We've had -- this is the second hearing on this issue. This motion was filed on July 23rd. It's August 4th. Your client is no longer a debtor in possession. Someone has to come to that realization. Okay? The trustee has that authority to do what he's doing as I have just ruled. And that's -- we've gone through every paragraph of the order and I have made rulings on those paragraphs. And there are changes that will be made. And so that's what we're going to do. Mr. Despins, your office or through Mr. Linsey will send -- MR. DESPINS: Yes. THE COURT: -- an email to the courtroom deputy box in Bridgeport and indicate that the order -- this is the order that has been prepared after the hearing on August 4th with all the changes discussed on the record. And you will CC all the parties, including Mr. Henzy. And then I will enter that order in due course after some period of time. But I am not having a further hearing. This hearing is concluded. MR. DESPINS: Understood, Your Honor. THE COURT: I have ruled. Okay?\n\nHo Wan Kwok - August 4, 2022 99 MR. DESPINS: Your Honor, two housekeeping matters. THE COURT: Yes. Go right ahead. MR. DESPINS: Five minutes. Okay. First, we have suggested dates, but of course subject to Your Honor's schedule for status conferences. THE COURT: Did you submit them to someone yet? MR. DESPINS: Actually, we have not. THE COURT: Okay. MR. DESPINS: So you're absolutely right. That's tabled. Let's table. We were going to post them. I don't know if my colleague has the ability to put that up on Zoom, the potential suggested dates. Or you know what, Your Honor, let's circulate. We'll table that. Let's circulate those dates. We'll come back to Your Honor about that. THE COURT: Okay. MR. DESPINS: Apologies. You're absolutely right. We should -- THE COURT: And you can communicate to the courtroom deputy about those suggested dates through the email box and CC everybody so everybody knows this is what you're suggesting. MR. DESPINS: Will do. THE COURT: Okay? Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 316 of\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 317 of\n\n| | 322 |\n|----|--------------------------------------------------------------|\n| | Ho Wan Kwok - August 4, 2022
100 |\n| 1 | MR. DESPINS:
Will do, Your Honor. |\n| 2 | Next item I want to raise is we've had a meet and |\n| 3 | confer with the debtor's counsel regarding the Rule 2004 |\n| 4 | discovery on the issue of discovery of professionals, like |\n| 5 | lawyers. And that issue is going to be a problem in the |\n| 6 | sense that they -- their view is that we don't have access |\n| 7 | to the -- at least the way it was articulated to me, that we |\n| 8 | don't have access to the privilege documents when the debtor |\n| 9 | -- with respect to assets of the debtor or assets we think |\n| 10 | should be the debtor's such as the Lady May or Sherry |\n| 11 | Netherland because the debtor believes they're not assets |\n| 12 | and, therefore, they would be invading his privilege to go |\n| 13 | after these documents. |\n| 14 | So the reason I'm telling you this -- I'm not -- |\n| 15 | because I'm not asking you to rule on this, but we need to |\n| 16 | tee that up sooner rather than later because they want to |\n| 17 | tee it up 30 days after they receive the subpoena which |\n| 18 | would get us into September/October. |\n| 19 | There's a clear issue here which is an issue of |\n| 20 | what privilege the trustee succeeds to.
And I think the |\n| 21 | case law is clear that when dealing with assets of the |\n\nFiore Reporting and Transcription Service, Inc.\n\nestate, either assets that are already in the estate or\n\nassets that there is a claim they belong to the estate, such\n\nas the Lady May and the Sherry-Netherland, that the trustee\n\nhave access to privileged communications regarding these\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 318 of\n\nHo Wan Kwok - August 4, 2022 101 assets, or with respect to administration of the case, for example, preparation of schedules by Brown Rudnick. I'm not asking you to rule, but we need to tee that up. And we're not going to do that now, but we want to tell you we're going to ask for a date earlier than 30 days after the service of subpoena because that could bring us to September or October. So that's an issue that's out there. The last issue, Your Honor, is, you know, you've asked us, you raised this issue of conflict before and we left it the other day. And you said, hey, people need to be attuned to this. But this meet and confer just made us or my partners realize that the issue is not a Zeisler issue. The issue is that a target of the trustee's investigation, which is his son, the debtor's son, is paying for the fees of counsel. It's impossible for counsel to be adverse or to think in any way adverse to somebody paying their fees. It's theoretically possible, but I wouldn't hold anyone to that standard. So we're not asking -- there's no punch line here where we're saying we're asking you to disqualify Zeisler. I don't think it's Zeisler issue. I think that it is very difficult for any firm\n\nHo Wan Kwok - August 4, 2022 102 that represents the debtor, that has duties to the estate, to be paid by the targets of the trustee's claims. And the harm here, that's the Sherry-Netherland, Bravo Luck, et cetera. And so, you know, again, I don't have a punch line. We're still thinking about it, but I wanted to -- we have a duty to relay the issue to the Court. I don't want somebody weeks from now to say you sat on this. Really, that's the issue, is the payment of fees by a target of the investigation to debtor's counsel. That is problematic, I think. THE COURT: Okay. Thank you. MR. DESPINS: That's all we have. MR. HENZY: May I be heard, Your Honor? THE COURT: Yes. MR. HENZY: Thank you. On the 2004, I don't know why that's coming up now. We're talking about 2004 orders that haven't been entered. As to the objection date to the 2004 motions that were filed hasn't even come up. It's tomorrow. So we're talking about 2004 orders that haven't entered and subpoenas that haven't issued. I don't know how that's going to play out, but right now it's interesting to preview it I suppose, but I have no idea how that's going to play out. On my firm's conflict issue, if Mr. Despins wants Case 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 319 of\n\n| | Case 22-50073
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103 |\n| 1 | to file a motion disqualifying my firm, he should do that. |\n| 2 | Any party wants to file a motion to disqualify my firm, they |\n| 3 | should do that. |\n| 4 | If the Court believes my firm should be |\n| 5 | disqualified, then the Court should take whatever action the |\n| 6 | Court deems necessary. |\n| 7 | But other than that, I'm not going to -- I'm not |\n| 8 | going to think about it and I'm not going to talk about it. |\n| 9 | I'm going to represent my client. |\n| 10 | All the facts are out there.
If somebody thinks |\n| 11 | there's a problem, they should -- they should do that. |\n| 12 | I said this at the hearing the other day.
This |\n| 13 | should not being used as
(indiscernible) sword against my |\n| 14 | firm or against Mr. Kwok.
So either file your motion or |\n| 15 | just leave it alone. |\n| 16 | THE COURT:
All right.
Anything further from |\n| 17 | anyone this afternoon? |\n| 18 | MR. DESPINS:
No, Your Honor.
Thank you. |\n| 19 | THE COURT:
Okay.
Thank you. |\n| 20 | Then the -- so that the record is clear, the |\n| 21 | trustee's motion for order extending deadline to file |\n| 22 | notices of removal is granted and the proposed order will |\n| 23 | enter. |\n| 24 | The motion for order confirming that the Chapter |\n| 25 | 11 Trustee holds all of the debtor's economic and corporate |\n| | |\n\nCase 22-50073 Doc 1268 Filed 12/28/22 Entered 12/28/22 13:58:25 Page 321 of\n\n| 322 | | | | | | | | | |\n|-----|----------------------------------------------------------------|--|--|--|--|--|--|--|--|\n| | Ho Wan Kwok - August 4, 2022
104 | | | | | | | | |\n| 1 | governance rights in debtor controlled entities authorizing | | | | | | | | |\n| 2 | Chapter 11 trustee to act in any foreign country on behalf | | | | | | | | |\n| 3 | of the estate and granting related relief is granted for the | | | | | | | | |\n| 4 | reasons stated on the record with an order to be submitted | | | | | | | | |\n| 5 | by trustee's counsel on notice to all other parties who will | | | | | | | | |\n| 6 | be -- receive a copy of that when it's submitted to the | | | | | | | | |\n| 7 | Court.
And then the Court will review it and enter it after | | | | | | | | |\n| 8 | the fact. | | | | | | | | |\n| 9 | Okay?
All right.
Thank you, all.
This is the | | | | | | | | |\n| 10 | last matter on the calendar, so court is adjourned. | | | | | | | | |\n| 11 | ALL COUNSEL:
Thank you, Your Honor. | | | | | | | | |\n| 12 | (Proceedings concluded at 4:35 p.m.) | | | | | | | | |\n| 13 | | | | | | | | | |\n| 14 | | | | | | | | | |\n| 15 | I, CHRISTINE FIORE, court-approved transcriber and | | | | | | | | |\n| 16 | certified electronic reporter and transcriber, certify that | | | | | | | | |\n| 17 | the foregoing is a correct transcript from the official | | | | | | | | |\n| 18 | electronic sound recording of the proceedings in the above | | | | | | | | |\n| 19 | entitled matter. | | | | | | | | |\n| 20 | | | | | | | | | |\n| 21 | | | | | | | | | |\n| 22 | October 17, 2022 | | | | | | | | |\n| 23 | Christine Fiore, CERT | | | | | | | | |\n| 24 | Transcriber | | | | | | | | |\n| 25 | | | | | | | | | |\n| | | | | | | | | | |\n\n| | Case 22-50073 | Doc 1268 | Filed 12/28/22 | 322 | Entered 12/28/22 13:58:25 | Page 322 of | |\n|----|---------------|-------------------|----------------|---------------------------------|---------------------------|-------------|-----|\n| | | | | Ho Wan Kwok - August 4, 2022 | | | 105 |\n| 1 | | | | INDEX | | | |\n| 2 | | | | | | | |\n| 3 | | TRUSTEE EXHIBITS: | | | | PAGE | |\n| 4 | A-G | | | Attachments to Trustee's motion | | 33 | |\n| 5 | | | | | | | |\n| 6 | | | | | | | |\n| 7 | | | | | | | |\n| 8 | | | | | | | |\n| 9 | | | | | | | |\n| 10 | | | | | | | |\n| 11 | | | | | | | |\n| 12 | | | | | | | |\n| 13 | | | | | | | |\n| 14 | | | | | | | |\n| 15 | | | | | | | |\n| 16 | | | | | | | |\n| 17 | | | | | | | |\n| 18 | | | | | | | |\n| 19 | | | | | | | |\n| 20 | | | | | | | |\n| 21 | | | | | | | |\n| 22 | | | | | | | |\n| 23 | | | | | | | |\n| 24 | | | | | | | |\n| 25 | | | | | | | |\n| | | | | | | | |","body_zh":null,"key_entities":["Kwok","Despins","Je","Ho Wan Kwok","Paul Hastings","Guo","CIPA","Luc Despins","CCP","Miles Guo","Chinese Communist Party"],"ecf_references":[{"doc_number":1,"court":"CTB"},{"doc_number":2,"court":"CTB"},{"doc_number":50,"court":"CTB"},{"doc_number":77,"court":"CTB"},{"doc_number":107,"court":"CTB"},{"doc_number":131,"court":"CTB"},{"doc_number":465,"court":"CTB"},{"doc_number":523,"court":"CTB"},{"doc_number":539,"court":"CTB"},{"doc_number":543,"court":"CTB"},{"doc_number":598,"court":"CTB"},{"doc_number":620,"court":"CTB"},{"doc_number":645,"court":"CTB"},{"doc_number":671,"court":"CTB"},{"doc_number":672,"court":"CTB"},{"doc_number":681,"court":"CTB"},{"doc_number":717,"court":"CTB"},{"doc_number":913,"court":"CTB"}],"word_count":84205,"status":"published","published_at":"2022-12-28 00:00:00","created_at":"2022-12-28","updated_at":"2026-07-07 07:49:47"}