{"id":"court_ctb_2031_0","court":"CTB","case_no":"22-50073","doc_number":2031,"sub_number":0,"doc_type":"TRANSCRIPT","filed_date":"2023-07-24","title":"UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION In Re \\* Case No. 22-50073 (JAM) \\* HO WAN KW","summary_zh":null,"summary_en":null,"body_en":"UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION In Re \\* Case No. 22-50073 (JAM) \\* HO WAN KWOK and GENEVER \\* HOLDINGS CORPORATION, \\* \\* Debtor. \\* LUC A. DESPINS, \\* Adv. Proc No. 23-05013 \\* \\* Plaintiff, \\* Bridgeport, Connecticut v. \\* June 27, 2023 \\* HCHK TECHNOLOGIES, et al., \\* \\* Defendants. \\* \\* \\* \\* \\* \\* \\* \\* \\* \\* \\* \\* \\* \\* \\* \\* \\* \\* TRANSCRIPT OF STATUS CONFERENCE BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE APPEARANCES: Chapter 11 Trustee: LUC DESPINS, ESQ. Paul Hastings 200 Park Avenue New York, NY 10166 For Luc A. Despins, PATRICK LINSEY, ESQ. Chapter 11 Trustee: Neubert Pepe & Montieth, PC 195 Church Street New Haven, CT 06510 NICK BASSETT, ESQ. Paul Hastings 200 Park Avenue New York, NY 10166 Proceedings recorded by electronic sound recording, transcript produced by transcription service. **Fiore Reporting and Transcription Service, Inc. 4 Research Drive, Suite 402 Shelton, Connecticut 06484 (203)929-9992**\n\nAPPEARANCES: (Cont'd.) For the Assignee, RYAN JARKECK, ESQ. Hoffmeister: Cole Schotz 1335 Avenue of the Americas 19th Floor New York, NY 10019 For G-News Operations, LLC: GREGORY F. ARCARO, ESQ. Grafstein & Arcaro, LCC 114 W. Main Street, Suite 105 New Britain, CT 06051 For 1332156 B.C. Ltd: JOSEPH M. PASTORE, ESQ. Pastore LLC 4 High Ridge Park Stamford, CT 06905\n\n2\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 3 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 3 (Proceedings commenced at 4:08 p.m.) THE CLERK: 23-05013. Despins v. HCHK Technology, Incorporated, et al. THE COURT: Good afternoon. 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. MR. BASSETT: Good afternoon, Your Honor. Nick Bassett, from Paul Hastings, on behalf of the Chapter 11 Trustee. MR. LINSEY: Good afternoon again, Your Honor. Patrick Linsey. Connecticut counsel for the trustee. MR. JARECK: Good afternoon, Your Honor. Ryan Jareck from Cole Schotz, on behalf of Mr. Hoffmeister, the assignee in the New York State Court assignment proceedings. THE COURT: Good afternoon. MR. JARECK: Good afternoon. MR. ARCARO: And, Your Honor. Good afternoon. Gregory Arcaro. I just filed my appearance on behalf of G-News Operations, LLC. It's not a party, but the subject of some outstanding discovery. THE COURT: Okay. Thank you. I just -- I just need a moment. I don't have a screen, so you'll have to bear with me for a moment.\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 4 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 4 (Pause) THE COURT: Okay, Trustee Despins, this is your request for a status conference? MR. DESPINS: It is, Your Honor. THE COURT: And it's a continued status conference that was started yesterday and continued to this afternoon. So, please, proceed. MR. DESPINS: Thank you, Your Honor. For the record, Luc Despins, Chapter 11 Trustee. Your Honor, I thought it was important to give Your Honor a bit of background. I know you have a lot of background already because you reviewed the complaint and you entered an order and you're generally familiar with what's going on, but I wanted to talk about what we filed, which is the motion to approve the settlement. Just to be clear, today, we're not asking the Court to do anything, so it's just by way of background. And so we filed this motion last Friday to approve a settlement with the assignee, Mr. Hoffmeister, and the structure of that settlement is really in three -- three phases. So the first one, which was important to us, was that of course none of this happens until the Court enters an order approving the settlement, but the first -- the first step is for the trust -- the assignee to transfer the\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 5 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 5 trustee the funds that it holds -- that he holds, and that's about \\$38 million and change. The second part of the first phase is to -- for the assignee to transfer to us, non-privileged document of this entity, HCHK. And the next step is that a trustee has agreed not to take a position with respect to the underlying complaints. So that always -- can't forget there's an underlying complaint where we're alleging that HCHK is the alter ego of the debtor, or that the debtor equitably owns HCHK or its assets. So -- THE COURT: I think you just said -- I think you may have misspoke, or I misheard you. You mean the assignee won't take a position. MR. DESPINS: Correct. The assignee. THE COURT: I think you said the trustee. MR. DESPINS: No, I'm sorry. The assignee will not take -- I apologize. THE COURT: That's okay. I might have heard you wrong, but I just -- MR. DESPINS: No, no, I am sure you did. So the assignee won't take a position on the underlying litigation. And the next point is that -- and that's what the assignee negotiated for, that the settlement is without prejudice to people that claim an interest in the assets\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 6 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 6 being transferred to us to say, wait a minute, Judge Manning, this is my asset, or I have a special right into that asset. Or somehow, you know, this transaction should not happen. I think the issue though will be that the assignee, under the assignment agreement, under this assignment for the benefit of the creditor, was assigned all the rights and interest of these companies. So I don't know who would have standing to come in and say, Judge Manning, I have a special right to those assets. We'll see that later. But clearly, under this assignment for the benefit of a creditor, there was a document signed by these companies with the assignee saying, we're transferring to you all the rights of the companies. So from a standing point of view, we'll have to see how that plays out in terms standing of other parties to come in and complain. But he negotiated for that and it was important to them that their rights are not being prejudiced to come into this court to say I have a special interest into those assets. I -- personally as the trustee, I don't see that, but they're not precluded, at this stage, from doing that, and that's very important. So that's still in the -- in the first stage of the settlement. And Stage 2, which also is not going to happen\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 7 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 7 until the Court enters an order approving the settlement, is that various things need to happen in New York, both from a practical point of view in a sense that there are assets for apparently expensive furniture, but also video equipment that is worth a lot of money, apparently, that is all in a -- located -- an office that's located in New York, and those assets need to be dealt with, meaning, one, protected. Two, moved out of there because the rent must be -- it's fairly high because it's New York City. Moved in -- moved to a location that would be cheaper, such as a warehouse somewhere and eventually sold.\n\n But the assignee, you know, needs to deal with these immediate issues. For example, closing down the shop. To be honest with you, I'm not equipped to do that short term. I could, but it would not be cost efficient for the trustee to deal with that.\n\n So there are issues that need to be dealt with short term with this equipment, protecting it, eventually selling it, and we've agreed that the assignee could proceed with some of that. Not selling it, but certainly protecting it, warehousing it and all that, with the trustee's approval and supervision. Meaning, they will not -- they are not authorized -- again, nobody's authorized to do anything at this point until you enter a settlement order, but they would not be authorized to do anything without the trustee\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 8 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 8 consenting to it. So I will be involved in supervising what they are planning to do, where they're going to move the equipment, et cetera, et cetera, and the furniture. And then if and when these assets become property of the estate, as we hope they will under the underlying litigation, then Your Honor will be presented with a motion to sell those assets, or to dispose of them, and it will be under your -- the Court's jurisdiction. But there are mechanical issues that need to be dealt with to protect these assets, to move these assets, et cetera, et cetera. So under the settlement agreement, it will be contemplated that these would take place after the Court approves the first stage of the settlement. And then the assignee needs to appear in front of the New York Court to be recognized as an assignee, to have all sorts of procedural matters dealt with. For example, the consolidation of the three or four cases. I forget if it was three or four. I think it's four cases, et cetera. But it's very clear in the settlement agreement. It's solely for the purpose of implementing this settlement that the Court would eventually approve. So these things need to approve -- need to proceed as well. And it's very clear that the New York court, any relief granted there to the assignee is not binding on Your Honor. The assignee has agreed to that.\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 9 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
9 |\n|----|----------------------------------------------------------------|\n| 1 | The injunction, the TRO would not be modified |\n| 2 | other than to allow it strictly approved under the |\n| 3 | settlement agreement that also needs to be approved by me on |\n| 4 | an individual basis.
So therefore, the estate is protected, |\n| 5 | your jurisdiction is protected. |\n| 6 | And then the last stage is, as I said, there's an |\n| 7 | underlying complaint for alter ego or equitable ownership, |\n| 8 | and we believe that that complaint -- I don't want to be |\n| 9 | cavalier about this, but we believe the complaint should be |\n| 10 | granted.
I think there's tons of evidence. |\n| 11 | Of all the satellite Kwok entities we've come |\n| 12 | across, this is probably the most compelling one in terms of |\n| 13 | all the transfers that were made by this entity to the |\n| 14 | debtor's bodyguard, to the lawyers, to Mr. Aaron Mitchell, |\n| 15 | to pay for an airplane for the son.
At least the plane is |\n| 16 | in the UK.
To pay for maintenance of all sorts -- so the |\n| 17 | evidence, we believe on the alter ego and equitable |\n| 18 | ownership, is overwhelm -- over a mountain -- of course, |\n| 19 | Your Honor will decide that, where we're right or not, what |\n| 20 | we believe is compelling. |\n| 21 | So the last stage is we would come back to Your |\n| 22 | Honor and file a dispositive motion, which may be a default |\n| 23 | motion in a sense that if the trustee does not oppose, as he |\n| 24 | is bound to do, I don't see who is going to answer that |\n| 25 | complaint that has standing to do so because, again, he was |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 10 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 10 assigned the rights of these companies. So that will be the last stage of the -- of the settlement process. There are some payments, okay, so I want to be very up front with Your Honor, that are contemplated to be made as part of that final stage for professionals and for the assignee. Under New York law, an assignee can receive compensation of up to 5 percent of the amount distributed. Here, the amount that -- and negotiated with him was much, much less than that. It's \\$550,000. And there are payment of professional fees as well that would be contemplated. But, Your Honor, you're not approving any of that now. That would be done when the settlement agreement is approved, and we would take you through why this is reasonable. To be clear, I have not yet obtained the underlying documentation that supports all these fee requests. My job is to review that and report to Your Honor when we're before Your Honor on that settlement motion, and I intend to do that. And so they will provide me with all that documentation and we will review that and provide that to the Court and provide our recommendations on that. But I would say that that was an element of the deal, and to be perfectly blunt and practical about this, you know -- I guess you'll -- we'll talk about this maybe on\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 11 Thursday -- how expensive it is to litigate, to have a trial or a mini trial on these issues. If we can avoid that, we're saving the estate a lot of money. So I don't want to be too crude about that, but from my point of view, there is a huge benefit to the estate in cutting a deal here and making these payments. But again, we're not asking you to approve that today, but I wanted to flag that for Your Honor. And there's a -- we would also modify the bar date. Again, if Your Honor grants the ultimate relief, which is that this is the alter ego or -- of the debtor, or the debtor equitably owns these assets or the companies, we would modify the bar date to allow creditors of these entities to file claims because they were not part of our process yet. That's also covered. And then there are two other provisions I want to mention briefly, because I -- again, I want to make sure that I'm very open with the Court on what this entails. And again, we're not seeking approval of that today, but the assignee raised a very basic question which is, okay, I transfer all the funds to you guys, and that's all good, but what if I get sued for doing this? Should I be entitled to indemnification? Oh, no, I got -- don't want to do an indemnification. That's too potentially expensive, et cetera. Case 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 11 of 36\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 12 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
12 |\n|----|----------------------------------------------------------------|\n| 1 | So the best way we had of dealing with that was to |\n| 2 | provide for exculpation in channeling injunctions, and we |\n| 3 | will -- again, Your Honor, I'm not asking you to approve any |\n| 4 | of this now, but we will take Your Honor through why that |\n| 5 | makes sense and why this is a good thing to do.
But it |\n| 6 | avoids satellite litigation all over the place, which would |\n| 7 | not be to the benefit of the estate. |\n| 8 | And -- because, when you think about it, if we're |\n| 9 | correct that these assets are the assets of the debtor, or |\n| 10 | the debtor equitably owns them, all of this is all related |\n| 11 | to the administration of the case. |\n| 12 | Yes, it is unusual.
I'll be very candid with you. |\n| 13 | I -- first of all, first admission is I've rarely dealt with |\n| 14 | what we call an ABC, an Assignment for the Benefit of the |\n| 15 | Creditors, and how that -- the interplay between a |\n| 16 | bankruptcy case and that.
But we believe that that relief |\n| 17 | is appropriate, and we will ask the Court at that point to |\n| 18 | consider that. |\n| 19 | And last point I want to make is that, they said, |\n| 20 | well, what if you lose?
What if Judge Manning determines |\n| 21 | that, no, HCHK is not the alter ego of the debtor, or is not |\n| 22 | -- the assets or the equity are not equitably owned by the |\n| 23 | debtor?
You're going to have to return the money.
And we |\n| 24 | said, okay, if there is a final order that provides for |\n| 25 | that, meaning final and non-appealable order, then we will |\n| | |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 13 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
13 |\n|----|---------------------------------------------------------------|\n| 1 | return the funds and this will have been all for naught. |\n| 2 | Again, I don't want to be cavalier about this, but |\n| 3 | I believe that here, this is probably our strongest case for |\n| 4 | a satellite Kwok company to be determined to be the alter |\n| 5 | ego of the debtor, or equitably owned by the debtor, but you |\n| 6 | will be the ultimate decision maker on that, Your Honor. |\n| 7 | We also filed a motion to shorten notice and to |\n| 8 | limit the scope of notice, and I wanted to talk about this, |\n| 9 | Your Honor, because I know that there was some back and |\n| 10 | forth between the Court and us in terms of the affidavits or |\n| 11 | the certificate of service that were not all as they should |\n| 12 | have been.
And so we -- I think we've corrected that. |\n| 13 | But first, on the issue of shortening notice, |\n| 14 | because the settlement does not approve the ultimate relief, |\n| 15 | if you approve -- if you enter the settlement order, you're |\n| 16 | not declaring that this is all property of the estate. |\n| 17 | You're simply directing the assignee, and he's agreeing to |\n| 18 | that, to transfer the cash to the trustee, and the other |\n| 19 | interim steps I describe.
You're not doing more than that. |\n| 20 | And because of that, and because it's not the |\n| 21 | ultimate relief, meaning the final relief we're seeking, we |\n| 22 | thought that it would make sense to shorten notice.
I'll |\n| 23 | give you some reasons for that, but again, we're not arguing |\n| 24 | this.
It's before Your Honor. |\n| 25 | We would ask you to consider entering it as soon |\n| | |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 14 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
14 |\n|----|--------------------------------------------------------------|\n| 1 | as you can, but there's a lease there in the name of this -- |\n| 2 | one of these entities.
Well, the only way to reject that, |\n| 3 | to use the rejection powers, is to have this company be, you |\n| 4 | know, essentially part of the Kwok estate or -- you know, to |\n| 5 | be -- to avail itself of 365. |\n| 6 | So can't do that now.
We need to get moving to -- |\n| 7 | because otherwise rent may be accruing, so these are |\n| 8 | examples of things, or for example, selling these assets. |\n| 9 | I told the assignee I don't think that our judge |\n| 10 | would feel comfortable with these assets being sold without |\n| 11 | this Court approving that sale. |\n| 12 | And of course that means that we need to get to be |\n| 13 | in a position to do that, and so that the point here is, |\n| 14 | given the limited relief that will be granted during the |\n| 15 | interim phase. |\n| 16 | We would ask Your Honor to consider expediting -- |\n| 17 | although we filed it last Friday, so we were already a week |\n| 18 | into it, you know, sometime in early July would be |\n| 19 | appreciated, but you know, obviously this is your call. |\n| 20 | And in terms of limiting notice, we -- the |\n| 21 | assignee has prepared, as part of his job, and with his |\n| 22 | counsel, has prepared an extensive list of people that they |\n| 23 | believe are creditors of those entities. |\n| 24 | So we would use that list to give notice to -- so |\n| 25 | that's part of the notice we would give, but we would give |\n| | |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 15 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 15 the notice, of course, to the U. S. Trustee, to the assignee, to the debtor, to the official committee, the defendants in the adversary proceeding and all parties that are on the ECF system. And also, all the parties that have been identified by the assignee in the assignment proceeding as having a claim against the HCHK parties and there's a lot of them. So they're investors, or -- it's unclear what their status is, but they've been identified by the assignee's counsel as an investor or creditor, so we would use that list to send them a notice of the motion. So the motion to approve the settlement. So we would ask the Court to consider that relief. Again, I said -- and I would end with this. I'm not asking the Court to approve anything today, but the first immediate step would be to consider the motion to expedite and too limit notice, Your Honor, and we would appreciate the Court considering that and, you know, in short order. That's all I had in terms of my presentation. I would say it's an unusual structure, but I believe that it works, given what we're able to accomplish here. But of course, I'll be happy to entertain any questions the Court may have about what -- my presentation. THE COURT: Well, the -- there -- I have a couple\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 16 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
16 |\n|----|----------------------------------------------------------------|\n| 1 | of questions or comments.
The issue about service was not |\n| 2 | because service wasn't necessarily made properly.
It was |\n| 3 | because there was no evidence on the docket yet that service |\n| 4 | -- |\n| 5 | MR. DESPINS:
Correct. |\n| 6 | THE COURT:
-- was made.
So we needed to know |\n| 7 | that because there was this issue about parties consenting |\n| 8 | to the extension of the TRO and parties not consenting to |\n| 9 | the extension of the TRO, and consenting to the continuance |\n| 10 | of the preliminary injunction hearing. |\n| 11 | So before we get into your presentation, which I |\n| 12 | understand, are you asking today for the Court to set a new |\n| 13 | preliminary injunction hearing date, or are you going to |\n| 14 | address that after the Court addresses what you described as |\n| 15 | the first step in the process with the assignee turning over |\n| 16 | -- if the -- having a hearing -- |\n| 17 | MR. DESPINS:
Yeah. |\n| 18 | THE COURT:
-- on a motion to approve that |\n| 19 | compromise of turning the funds over to you? |\n| 20 | MR. DESPINS:
We would wait until that motion is |\n| 21 | considered by the Court. |\n| 22 | THE COURT:
Okay.
So you don't want a schedule -- |\n| 23 | the preliminary injunction hearing scheduled at this point |\n| 24 | -- rescheduled at this point.
And that's fine.
As noted, |\n| 25 | the -- |\n| | |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 17 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
17 |\n|----|------------------------------------------------------------------|\n| 1 | MR. DESPINS:
I should say -- I apologize for |\n| 2 | interrupting, but the motion to expedite leaves a -- if I |\n| 3 | remember correctly, leaves a blank or -- as to what date you |\n| 4 | would feel comfortable, if I remember correctly -- let me |\n| 5 | just verify this, but I -- so it -- it may have been in |\n| 6 | there already.
Let me just look at the order.
No, I'm |\n| 7 | sorry, it's not in this -- no, sorry.
I misspoke.
It's not |\n| 8 | in this motion. |\n| 9 | THE COURT:
That's fine.
I am aware of the motion |\n| 10 | to expedite. |\n| 11 | MR. DESPINS:
Okay. |\n| 12 | THE COURT:
So I will -- we will look at that and |\n| 13 | I don't see a possibility of it being scheduled this week |\n| 14 | with other hearings in another trial we have this week. |\n| 15 | So the earliest day that we could schedule the |\n| 16 | hearing on the motion to expedite, assuming it's granted, |\n| 17 | would be July 5th, because the Court is closed July 3rd and |\n| 18 | 4th. |\n| 19 | MR. DESPINS:
Actually, I was thinking that it |\n| 20 | would be the week of the -- we have a hearing on the 12th, I |\n| 21 | believe, or -- |\n| 22 | THE COURT:
Well, you'd like to go into the |\n| 23 | following week?
That's fine.
You have a -- |\n| 24 | MR. DESPINS:
We have a trial on the 11th, so a PI |\n| 25 | trial, I believe, on the AIG. |\n| | |\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 18 THE COURT: Yeah, I -- yes. I'm sorry. My screen is frozen again. MR. DESPINS: One of the reasons I'm mentioning the 12th is because we've heard from some parties that they want more time to deal with this, so it's our -- THE COURT: So you want it on the 12th as well? Is that what you're saying? MR. DESPINS: Yes, if we could. THE COURT: Then you'd have to start -- you'd have -- I would assume, but I shouldn't I suppose -- that you'd want to address this adversary proceeding, HCHK, before starting evidence on a motion for preliminary injunction in the AIG matter, or -- MR. DESPINS: No, I thought AIG was on the 11th. No? UNIDENTIFIED SPEAKER: AIG is on the 12th. We have other matters on the 11th. MR. DESPINS: I'm sorry, I'm -- I was sure it was on the -- well, but I -- my mistake. THE COURT: It's on the 12th. You had -- there's other matters on -- MR. DESPINS: It is on the 11th. THE COURT: -- the 11th. MR. DESPINS: So perhaps we could deal with that on the 11th.\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 18 of 36\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 19 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
19 |\n|----|----------------------------------------------------------------|\n| 1 | THE COURT:
That's possible. |\n| 2 | MR. DESPINS:
The motion to approve the |\n| 3 | settlement. |\n| 4 | THE COURT:
Yeah, that's possible, yes.
It is |\n| 5 | possible.
There are matters scheduled at 12:30 on the 11th. |\n| 6 | So we could -- I have to look at the motion again but -- |\n| 7 | MR. DESPINS:
Okay. |\n| 8 | THE COURT:
-- I understand what you're saying. |\n| 9 | You're looking for the 11th, so I understand that.
Okay? |\n| 10 | And I understand what you said about, if the motion to |\n| 11 | expedite is granted, you would serve it on all parties who |\n| 12 | have filed an appearance in the main case, not just the |\n| 13 | adversary proceeding.
Is that what you're saying?
Or are |\n| 14 | you serving -- and you're serving it on a list. |\n| 15 | MR. DESPINS:
Well, the main case through ECF. |\n| 16 | THE COURT:
Yes. |\n| 17 | MR. DESPINS:
Correct.
Yes.
Yes.
Yes, Your |\n| 18 | Honor. |\n| 19 | THE COURT:
And through parties that -- on a list |\n| 20 | that the assignee has created? |\n| 21 | MR. DESPINS:
Correct. |\n| 22 | THE COURT:
Okay.
All right.
That's fine.
I |\n| 23 | mean, I understand what you're asking, and I think we can -- |\n| 24 | we will absolutely, you know, review and most likely rule on |\n| 25 | the motion to expedite tomorrow with the understanding that |\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 20 you're looking for a hearing on July 11th if possible. MR. DESPINS: Thank you. THE COURT: Okay. I had one other question, though. MR. DESPINS: Yes. THE COURT: Now, I don't remember what it was. All right. So you don't want a preliminary injunction hearing. Oh, and so the -- there's only, right now, there's only a virtual order extending the temporary restraining order, but it refers back to the original restraining order. And obviously, with regard to Ms. Wang and Holy City, the restraining order has expired, and you filed something where you acknowledge that, and if you -- you reserve the right to seek injunctive relief against them. That's fine. I mean, that's fine. That was -- part of the reason was -- about the service was to make it clear, if we needed to enter another order before the expiration of the temporary restraining order. MR. DESPINS: And we need -- to do that, we need to introduce evidence, et cetera, et cetera. THE COURT: Right. MR. DESPINS: Yeah. THE COURT: But we're not -- you're not doing Case 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 20 of 36\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 21 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 21 that. MR. DESPINS: Correct. THE COURT: So that's fine. You're not seeking an extension of the temporary -- well, it's too late anyway. MR. DESPINS: For those two parties. THE COURT: It expired yesterday -- MR. DESPINS: Yeah. THE COURT: -- as to those two parties. MR. DESPINS: Yes. THE COURT: That's right. Okay. Then I just want to make sure I didn't have any other questions. No, I don't have any other questions, but I do want to hear from counsel for the assignee or assignee. And I actually, counsel, I apologize. I don't recall your name because I don't see that you filed a notice of appearance yet. MR. JARECK: Your Honor, my name is Ryan Jareck, from the law firm of Cole Schotz. THE COURT: Did you file an appearance? MR. JARECK: We did not file an appearance yet, but we did file pro hoc pleadings this morning -- THE COURT: Oh, okay. MR. JARECK: -- for local counsel. THE COURT: Okay. Okay. MR. JARECK: Got them in. THE COURT: All right. So we just haven't --\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 22 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023 |\n|----|----------------------------------------------------------------|\n| 1 | 22
MR. JARECK:
I apologize if it's delayed on that. |\n| | |\n| 2 | THE COURT:
-- no, we had -- no, we had hearings |\n| 3 | today so we wouldn't have seen it, probably, anyway.
That's |\n| 4 | fine.
That's not a problem.
I just wanted to make sure, |\n| 5 | because I want to make sure that you are appearing properly |\n| 6 | in the matter, which you apparently are.
I just haven't |\n| 7 | seen that yet. |\n| 8 | MR. JARECK:
Okay.
Understood.
Thank you, Your |\n| 9 | Honor. |\n| 10 | THE COURT:
All right.
Go right ahead. |\n| 11 | MR. JARECK:
Your Honor, this is my first time |\n| 12 | appearing before this Court, so if you have any questions |\n| 13 | that you want me to address from the outset, maybe with your |\n| 14 | permission we could do that, or -- |\n| 15 | THE COURT:
I mean, the -- I've reviewed -- I |\n| 16 | wouldn't say I've studied it, but I've reviewed what is -- |\n| 17 | what occurred, or what was about to occur I suppose, in the |\n| 18 | New York State court -- |\n| 19 | MR. JARECK:
Uh-huh. |\n| 20 | THE COURT:
-- because Trustee Despins sought a |\n| 21 | temporary -- an ex parte temporary restraining order to stop |\n| 22 | the assignment of benefit of creditors, or at least to |\n| 23 | maintain the status quo to not have that go forward until |\n| 24 | there was some issues in this court to talk about. |\n| 25 | And apparently, you have agreed that the temporary |\n| | |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 23 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
23 |\n|----|--------------------------------------------------------------|\n| 1 | restraining order can continue, and that there is this |\n| 2 | agreement that you're going to -- and I haven't studied it, |\n| 3 | okay, but my initial review is that as the assignee of the |\n| 4 | -- of all of the -- well, I don't know if it's all the |\n| 5 | property, but property of HCHK Technologies, and other |\n| 6 | related entities, you're going to turn over a substantial |\n| 7 | amount of funds to the trustee, correct? |\n| 8 | MR. JARECK:
Yes, that's correct, Your Honor. |\n| 9 | THE COURT:
Okay.
And then -- and -- and I think |\n| 10 | Trustee Despins -- you know, I mentioned, I -- he had said |\n| 11 | originally the trustee, but he meant you as counsel to the |\n| 12 | assignee -- |\n| 13 | MR. JARECK:
Uh-huh. |\n| 14 | THE COURT:
-- are not going to contest anything |\n| 15 | that Trustee Despins is trying to accomplish in this |\n| 16 | adversary proceeding. |\n| 17 | But -- and I did see that there are certain things |\n| 18 | you need to do in the New York State Court in order to be in |\n| 19 | compliance with that proceeding, but ultimately once that's |\n| 20 | done, assuming the settlement that is described in this |\n| 21 | motion that hasn't been set for a hearing yet, then that |\n| 22 | assignment for the benefit of creditors will be closed, |\n| 23 | correct? |\n| 24 | MR. JARECK:
That's also correct. |\n| 25 | THE COURT:
Okay. |\n| | |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 24 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
24 |\n|----|---------------------------------------------------------------|\n| 1 | MR. JARECK:
There's just some clean-up items that |\n| 2 | the assignee has to do.
The deeds were filed in the end of |\n| 3 | April, so the case is, although we were actually
not heard |\n| 4 | on our first stay relief, they were pending.
Right now, |\n| 5 | they're suspended as a result of the TRO. |\n| 6 | THE COURT:
Okay. |\n| 7 | MR. JARECK:
The settlement agreement has been |\n| 8 | reached.
We just need it papered, which we had before Your |\n| 9 | Honor.
And then once we get a 9019 order from Your Honor, |\n| 10 | assuming that you grant the relief, we'll transfer the |\n| 11 | funds, and then we start the whole process that's laid out |\n| 12 | in the settlement agreement. |\n| 13 | THE COURT:
Okay.
So -- I mean, other than, you |\n| 14 | know, curiosity, really, I don't really have any questions |\n| 15 | about the assignment of benefit of creditors under New York |\n| 16 | law.
Apparently, you know, you're appointed -- but you're |\n| 17 | not appointed by the Court.
You're initially appointed -- |\n| 18 | MR. JARECK:
No, the -- |\n| 19 | THE COURT:
-- and then you come in.
The company |\n| 20 | appointed it. |\n| 21 | MR. JARECK:
It's the state law equivalent of a |\n| 22 | Chapter 7. |\n| 23 | THE COURT:
Right. |\n| 24 | MR. JARECK:
Right?
And you have a company, |\n| 25 | whether it's an officer or a director or board, with similar |\n| | |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 25 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
25 |\n|----|----------------------------------------------------------------|\n| 1 | authority to filing a Chapter 11 or a 7, except it's |\n| 2 | actually done in the form of a deed and it's recorded with |\n| 3 | the clerk.
And then once that is recorded, it gets |\n| 4 | transferred to New York State Supreme Court, and that's what |\n| 5 | initiates the case. |\n| 6 | THE COURT:
And someone from HCHK Technologies or |\n| 7 | the board directed your appointment? |\n| 8 | MR. JARECK:
Yes. |\n| 9 | THE COURT:
Okay.
Was it the board, or was it an |\n| 10 | individual? |\n| 11 | MR. JARECK:
It was an individual. |\n| 12 | THE COURT:
And you've discussed that with the |\n| 13 | trustee? |\n| 14 | MR. JARECK:
Yes. |\n| 15 | THE COURT:
Okay. |\n| 16 | MR. JARECK:
And the deeds are public record. |\n| 17 | THE COURT:
Okay. |\n| 18 | MR. JARECK:
They were signed and have schedules |\n| 19 | attached to them, so -- |\n| 20 | THE COURT:
Okay.
All right.
Well, I don't have |\n| 21 | any other questions other than, you know, there -- we are |\n| 22 | going to set a hearing on the trustee's motion.
As you just |\n| 23 | heard, the trustee is looking for July 11th.
It would be in |\n| 24 | the afternoon. |\n| 25 | The likelihood of that happening is high.
Service |\n| | |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 26 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
26 |\n|----|----------------------------------------------------------------|\n| 1 | will have to be made so that parties can have an opportunity |\n| 2 | to object, and I understand from Trustee Despins's comments |\n| 3 | that you, or your firm, or whomever, somebody's prepared a |\n| 4 | list of people that you think are creditors of the HCHK |\n| 5 | Technology entities, and that those people will be served. |\n| 6 | MR. JARECK:
Correct, Your Honor. |\n| 7 | THE COURT:
Do you anticipate, from what you know, |\n| 8 | and maybe you don't know anything, that anybody is going to |\n| 9 | object to this occurring?
That the transfer of the -- |\n| 10 | assuming the motion is granted? |\n| 11 | MR. JARECK:
I don't want to speculate, Your |\n| 12 | Honor.
There is a lot of folks on the master server's list. |\n| 13 | THE COURT:
So the -- |\n| 14 | MR. JARECK:
But we'll make sure that notice is -- |\n| 15 | THE COURT:
-- but how did you get control of the |\n| 16 | funds?
Through the deed? |\n| 17 | MR. JARECK:
Through the deed. |\n| 18 | THE COURT:
Okay. |\n| 19 | MR. JARECK:
The deed is a transfer of the assets, |\n| 20 | and Mr. Hoffmeister closed down all of the companies' |\n| 21 | existing bank accounts and opened up new accounts that |\n| 22 | connect -- |\n| 23 | THE COURT:
Oh, they opened up new accounts. |\n| 24 | MR. JARECK:
-- new custodial -- |\n| 25 | THE COURT:
All right.
So -- |\n| | |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 27 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
27 |\n|----|--------------------------------------------------------------|\n| 1 | MR. JARECK:
-- accounts under his control. |\n| 2 | THE COURT:
All the accounts of the funds that |\n| 3 | would be turned over to the trustee are no longer in the |\n| 4 | name of HCHK.
They're in the name of -- |\n| 5 | MR. JARECK:
Mr. Hoffmeister as assignee -- |\n| 6 | THE COURT:
-- as -- as -- okay.
Okay. |\n| 7 | MR. JARECK:
-- for the benefit of the creditors. |\n| 8 | Correct.
He's the sole signatory, and he's the one who |\n| 9 | controls the accounts. |\n| 10 | THE COURT:
And as part of your -- Mr. |\n| 11 | Hoffmeister, I should say -- role, does he have to do any |\n| 12 | other -- does he have to undertake any other efforts to try |\n| 13 | to locate anything other than the monies in these accounts |\n| 14 | as assets for these estates, or he just gets told that these |\n| 15 | are the assets? |\n| 16 | MR. JARECK:
So attached to the deed is -- similar |\n| 17 | to like a schedule of assets and liabilities -- |\n| 18 | THE COURT:
Uh-huh. |\n| 19 | MR. JARECK:
-- which is prepared by the company |\n| 20 | and the assignor's counsel, and he's charged with |\n| 21 | administering those assets. |\n| 22 | Obviously, we get all of the books and records, we |\n| 23 | talk to the accountant.
We had our own financial advisor, |\n| 24 | and so we had an understanding of the records and the assets |\n| 25 | that are out there, and obviously that will be turned over |\n| | |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 28 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 28 to the trustee. THE COURT: Okay. Then, I don't have any questions for you. I appreciate you being here. Other questions. Do you have any questions about this process or this adversary? MR. JARECK: No, Your Honor, I don't at this time, and obviously this is more so on for scheduling. I'll be back here on the 11th, and we can address any questions, and I'll obviously be prepared with a full presentation. THE COURT: Thank you. And I'm sure your motion for pro hoc will -- if it's in order, will be granted, you know, in the next day or so. MR. JARECK: Appreciate that. THE COURT: We have -- I didn't look, but you know, we have -- I'm sure it's true in where you practice too, but we have a requirements for certificates of good standing to be filed with the motions, and they're supposed to be filed with the motion. If they're not filed with the motion, you just need to -- who's your local counsel? MR. JARECK: The Law Offices of Bonnie Mangan. THE COURT: Oh, okay. MR. JARECK: Yeah. THE COURT: She's a Chapter 7 Trustee, so -- MR. JARECK: Okay. THE COURT: -- and she's also a practicing lawyer,\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 29 so she knows all that. So she -- you can work with her on those issues. Okay. MR. JARECK: Will do, Your Honor. THE COURT: All right. MR. JARECK: Thank you. Thank you for allowing me to appear. THE COURT: I appreciate that, and we'll look at your -- we get the pro hoc vice motions usually done very quickly. But you said it was just filed today, right? MR. JARECK: This morning, Your Honor. Yes. THE COURT: All right. Well, we've been in court all day, so -- MR. JARECK: Okay. THE COURT: -- that makes sense. MR. JARECK: Thank you. THE COURT: Okay. Thank you. Attorney Arcaro, did you wish to be heard? MR. ARCARO: Just very briefly, Your Honor. My client may be one of the -- among the parties that has an objection to the settlement based on a very small, what I would consider to be administrative claim. My client paid rent to the assignee, pre-paid rent on the Columbus Circle property, and then was evicted, so to speak, halfway through that month. So may have a very small administrative claim. Well, small in the context of this\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 29 of 36\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 30 of 36\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
30 |\n|----|----------------------------------------------------------------|\n| 1 | case, 40 or \\$50,000.
So that may be something that we want |\n| 2 | to have addressed, but that's -- I'm awaiting for |\n| 3 | instructions from my client on that. |\n| 4 | But the other thing that's -- |\n| 5 | THE COURT:
I don't know if I can address that |\n| 6 | unless and until I find that they're assets of the estate, |\n| 7 | right? |\n| 8 | MR. ARCARO:
Understood.
Understood. |\n| 9 | THE COURT:
So -- |\n| 10 | MR. ARCARO:
And we'll open up a line of |\n| 11 | communication with the -- with the trustee's counsel.
But |\n| 12 | in the other -- and the other issue is just, there is some |\n| 13 | outstanding discovery.
My client was served with discovery |\n| 14 | request on the 15th with compliance due on the 19th -- |\n| 15 | THE COURT:
In the main case? |\n| 16 | MR. ARCARO:
In the adversary proceeding. |\n| 17 | THE COURT:
In this adversary proceeding? |\n| 18 | MR. ARCARO:
Correct. |\n| 19 | THE COURT:
Okay. |\n| 20 | MR. ARCARO:
So I wanted to bring that to Your |\n| 21 | Honor's attention and ultimately we'll be seeking -- |\n| 22 | THE COURT:
With discovery due on July 19th?
Is |\n| 23 | that what you're telling me?
Or it's already passed? |\n| 24 | MR. ARCARO:
It's already passed.
It was served |\n| 25 | on June 15th and due on June 19th. |\n| | |\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 31 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 31 MR. DESPINS: That's when there was going to be a preliminary injunction hearing. But that's not -- THE COURT: Oh, yeah. So -- MR. DESPINS: -- no longer -- THE COURT: -- so then you can -- it doesn't sound like -- MR. ARCARO: Yeah. THE COURT: -- they're going to be pressing that discovery, so -- MR. ARCARO: I just wanted to bring that to Your Honor's attention. THE COURT: Okay. MR. ARCARO: And, yeah, if the plaintiff still wants the discovery, we can work with them on that, but I don't know if it will be necessary. That's all I wanted to say, Judge. THE COURT: Okay. Thank you. MR. ARCARO: Yep. MR. PASTORE: Your Honor, may I ask a question? THE COURT: Certainly. Could you come forward -- MR. PASTORE: Sure. THE COURT: -- and state your name for the record, please? MR. PASTORE: Good afternoon, Your Honor. My name is Joseph Pastore from Pastore LLC. I've been admitted in\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 32 this district for about 30 years. Last night and into early morning, I was asked by a creditor to take a -- a creditor of the HC companies, to take a look at the settlement. Obviously, I have not had time to fully come up to speed, but I anticipate we may object on the 11th. As an outside creditor -- THE COURT: Well, it will be before the 11th. MR. PASTORE: Before the 11th. I apologize. THE COURT: Yeah. You'll see -- what I would -- that's very helpful to know, and you just make sure you get your information -- your contact information to the trustee so they'll serve you. MR. PASTORE: We've emailed the trustee today. THE COURT: Okay, good, because the -- what -- if the motion expedite is granted, there will be an objection deadline prior to the hearing. MR. PASTORE: Understood. My question is, as a creditor, would we have to move to intervene in this proceeding, or would we have standing to object? And maybe I have to answer that myself, but that's really -- THE COURT: I think you might have to answer that yourself. MR. PASTORE: Right. THE COURT: But with regard to the -- you know -- Case 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 32 of 36\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 33 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 33 MR. PASTORE: And I just wanted to tell the Court so -- THE COURT: If everybody -- MR. PASTORE: -- you weren't sandbagged by it. THE COURT: -- if everybody is served, they have an opportunity to object, right, or respond, reply. MR. PASTORE: Right. THE COURT: Whether or not someone would argue that you'd have to intervene, I think on an expedited hearing basis may not be persuasive at -- for that in that circumstance, but I don't know. I guess I would have to wait and see what the basis would be as to why you'd have to intervene if you're being served with a settlement motion, which provides an opportunity to file a response. MR. PASTORE: Understood. And I also just wanted the Court to be aware so the Court wasn't surprised if we did file an objection. I honestly haven't looked at it close enough to know if I will, but I wanted to inform the Court. THE COURT: I appreciate that. MR. PASTORE: Thank you. THE COURT: Thank you. MR. DeLANEY: Your Honor, I don't think we've heard the -- who counsel represents, which -- MR. PASTORE: Oh, so it's an individual out of\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 34 Taiwan. She Sin Yo (ph). MR. DeLANEY: Thank you. THE COURT: And you've -- someone at the trustee's firm, you've emailed with that information? MR. PASTORE: My colleague, Tyler Rutherford, this morning sent an email to the trustee's -- THE COURT: Okay. MR. PASTORE: -- firm of Paul Hastings and to Connecticut counsel. THE COURT: Okay. So, then good. That's helpful. You can have some discussions and see where things go from there. MR. PASTORE: Thank you, Your Honor. THE COURT: Okay? All right. Thank you. So is there anything further, Trustee Despins, we need to address this afternoon? I will be looking at the motion to expedite. I anticipate that there will be a ruling on it tomorrow. Given the fact that the assignee and the trustee are working cooperatively with regard to the transfer of funds, the likelihood is that the hearing will -- the motion will be granted and the hearing will be set for July 11th. But it will have an objection deadline for parties to file an objection, the order -- it granting -- assuming it's granted. And it will require the trustee to make\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 34 of 36\n\nCase 22-50073 Doc 2031 Filed 07/24/23 Entered 07/24/23 16:36:55 Page 35 of 36\n\nHo Wan Kwok/Despins v. HCHK - June 27, 2023 35 service on the parties that the trustee has identified. Plus no, counsel in the courtroom that has come forward, need to be served, and the parties that the assignee has -- that are on a list created by counsel. So I think you'll see something, you know, tomorrow on that issue. So nothing else that we need to address this afternoon? MR. DESPINS: No, Your Honor. Thank you. THE COURT: Okay. All right. Thank you. Well, that concludes the status conference in the adversary -- in Adversary 23-5013, and that is the last matter on today's calendar, so court is adjourned. THE CLERK: Court is adjourned. (Proceedings concluded at 4:47 p.m.)\n\n| | Ho Wan Kwok/Despins v. HCHK - June 27, 2023
36 |\n|----|-------------------------------------------------------------|\n| 1 | I, CHRISTINE FIORE, court-approved transcriber and |\n| 2 | certified electronic reporter and transcriber, certify that |\n| 3 | the foregoing is a correct transcript from the official |\n| 4 | electronic sound recording of the proceedings in the above |\n| 5 | entitled matter. |\n| 6 | |\n| 7 | |\n| 8 | July 19, 2023 |\n| 9 | Christine Fiore, CERT |\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| | |\n| | |","body_zh":null,"key_entities":["Despins","HCHK","Kwok","Ho Wan Kwok","Je","Paul Hastings","Luc Despins","CIPA"],"ecf_references":[],"word_count":9322,"status":"published","published_at":"2023-07-24 00:00:00","created_at":"2023-07-24","updated_at":"2026-07-07 07:58:34"}