郭文贵破产案 · ORDER · ECF #1890

UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT BRIDGEPORT DIVISION In Re \* Case No. 22-50073 (JAM) \* HO WAN KWOK, \* Bridgeport, Connecticut \* May 31, 2023 Debtor. \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* \* TRANSCRIPT OF ORDER SETTING STATUS CONFERENCE BEFORE THE HONORABLE JULIE A. MANNING UNITED STATES BANKRUPTCY JUDGE APPEARANCES: For the Debtor: STEPHEN KINDSETH, ESQ. Zeisler & Zeisler PC 10 Middle Street 15th Floor Bridgeport, CT 06604 For the Creditor, Pacific STUART M. SARNOFF, ESQ. Alliance Asia Opportunity O'Melveny & Myers LLP Fund L.P.: Times Square Tower New York, NY 10036 ANNECCA H. SMITH, ESQ. Robinson & Cole, LLP 280 Trubmull Street Hartford, CT 06103 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 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**

APPEARANCES Cont'd: For Mei Guo and HK USA: MELISSA F. WERNICK, ESQ. Chiesa Shahinian & Giantomasi 11 Times Square, 34th Floor New York, NY 10036 STEPHEN KINDSETH, ESQ. Zeisler & Zeisler PC 10 Middle Street 15th Floor Bridgeport, CT 06604 For the Defendant, PATRICK LINSEY, ESQ. Luc A. Despins, Chapter 11 Paul Hastings, LLP Trustee: 200 Park Avenue New York, NY 10166

(Proceedings commenced at 1:33 p.m.) THE CLERK: Case Number 22-50073, Ho Wan Kwok. 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. LINSEY: Good afternoon, Your Honor. Patrick Linsey for the trustee. MR. SARNOFF: Good afternoon, Your Honor. Stuart Sarnoff, O'Melveny and Myers, on behalf of Creditor, PAX. MS. SMITH: Good afternoon, Your Honor. Annecca Smith, Robinson and Cole, also on behalf of PAX. MS. WERNICK: Good afternoon, Your Honor. Melissa Wernick from CSG Law on behalf of Mei Guo and HK USA. MR. KINDSETH: Good afternoon, Your Honor. Stephen Kindseth, Zeisler and Zeisler, also on behalf of Ms. Mei Guo and HK USA. MR. KAPLAN: Good afternoon, Your Honor. Jonathan Kaplan of Pullman and Comley on behalf of the Committee. MS. CLAIBORN: And good afternoon, Your Honor. Holley Claiborn for the U. S. Trustee. THE COURT: Okay. Good afternoon, everyone. Attorney Kindseth, are you appearing on behalf of the debtor as well?

MR. KINDSETH: I am not. THE COURT: No one is appearing on behalf of the debtor? MR. KINDSETH: That's correct, Your Honor. THE COURT: Okay. All right. Go ahead, Trustee Despins. You requested this status conference with regard to the Lady May -- MR. DESPINS: Yes. THE COURT: -- so please, proceed. MR. DESPINS: Yeah, Judge. The first thing I want to say is that we're really grateful of Your Honor making herself available again on such short notice. But, you know, there's good news, but it needs -- there are some logistical items that need to be addressed. So the good news is, as you know from the status conference last week, the bids were due yesterday at 5 o'clock and we received several bids and, as you know, the minimum bid was 20 million, and the competitive dynamic created an environment that produced the highest bid at \$24 million, which was pretty close to the asking price. And so that's very good news. Now the complicating factor is that the buyer says that he wants a closing by June 30th. He wants the boat for July 4th. And you might say, well, that's ridiculous, but at that price, if he asked me to go and wash the boat, I

would do that as well.

So my point is, Your Honor, we need to try to accommodate that and I was looking at the schedule and, of course, it depends on Your Honor's schedule. But if we filed the sale motion on Friday, normally as you know it's 21 days' notice for a sale of this property, but if we shortened that by just two days to make it 19 days, and made the objection deadline on the 24th of June, so that's a shortening of two days, we could -- I'm sorry, it's the 21st. I'm sorry. The 21st of June, not the 24th. 21st of June. And the sale hearing could be, subject to Your Honor's availability, on Monday the 26th. That would allow for a closing on the 30th, which is what the buyer has requested and what we've agreed to. But to be clear, you know, the contract is not binding on me without court approval, but we did agree as part of this deal to try to close by the 30th. So that is the reason for the call, Your Honor, to save a lot of time in back and forth to see, one, if the Court is available on the 26th, and whether we can shorten the deadline by two days.

Again, the sale motion filed on Friday of this week, objection deadline on the -- Tuesday -- I'm sorry, Wednesday, the 21st of June. So that is the request, Your Honor.

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THE COURT: Okay. Does anyone else wish to be heard on the request that's been made? I have a couple of questions, but I'd like to hear if anyone else wishes to be heard. Does anybody have any questions or objections to the request that the trustee has made with regard to timing? MR. KINDSETH: Yes, Your Honor. Stephen Kindseth on behalf of Ms. Mei Guo and HK USA. Your Honor, we would like a brief opportunity to respond to this sale procedure proposal as being submitted at a status conference. We understand the need to expedite, but we don't think it's appropriate to have an oral procedures motion submitted and given literally minutes to formulate a response. My client may agree to the proposed sale procedure but, again, we would like time to respond. And I'm not talking about significant time. In fact, I would suggest 24 hours. This is just to respond to the dates that are being proposed. We'd like to confer with our client -- THE COURT: Well, you'll have an opportunity to do that -- MR. KINDSETH: -- and reflect upon those figures. THE COURT: -- because the sale motion is going to be filed by Friday and you can oppose it, if you'd like, by the -- if these dates -- if this proposal that the trustee

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is suggesting is approved insofar as -- I'm not entering any orders or anything today. All he's telling me is what he's proposing to do. And he's -- MR. KINDSETH: Okay. Then I misunderstood -- THE COURT: -- asking for a hearing date. That's what he's asking for, to put that as part of the proposal. And then there will be an objection deadline, and then there will be a hearing. MR. KINDSETH: But that's what I'm commenting on, Your Honor. I'm commenting on accelerating the sale process, setting an objection to the one set in the hearing. I'd like the opportunity -- THE COURT: Then you can file a written objection to that. MR. KINDSETH: Okay. As long as nothing is being ordered today, then, and -- THE COURT: I'm not entering any orders. MR. KINDSETH: Okay. Then I don't even know if there's a request. MR. DESPINS: There's certainly a request, Your Honor to -- THE COURT: There is a request. MR. DESPINS: -- know if Your Honor -- THE COURT: He made a request because he's trying to figure out what date, if anything -- any date the Court

has for a sale hearing. That's the -- that's what he's requesting. And then he's going to put in his papers whatever he's going to put in his papers, and then everybody will review them, and then everybody has an opportunity to object. That's what -- this is -- and we did have a status conference last week regarding the Lady May where these issues were raised. I don't recall whether you or your client participated in that, but I don't think you did, but you were aware of it. And you know that they've been moving to try to sell the boat. I mean, this is no -- this is nothing new. This is -- it's not even new to PAX, who's been trying to sell the boat or get the boat since, what, 2019? So I -- I mean, I understand what you're saying, but you will have the opportunity to object. All he's -- this is a status conference at which Trustee Despins has said he has an offer, he's going to file a motion, he's going to suggest that the hearing be held on a certain date because the buyer wants to close by June 30. So he's asking if the Court can accommodate that timing. And then if he is asking for less than 21 days, he'll have to file a motion expediting the hearing based

upon whether the Court has a hearing date available on the expedited basis. Right? So -- MR. KINDSETH: Thank you, Your Honor. THE COURT: -- so that's where we are, from the Court's perspective. As I said to -- I don't -- I think I said last week, while I'm not entering any order, you're just telling me what the process is. And I believe that Trustee Despins has done that to give the Court knowledge of what he is anticipating doing, and also in connection with scheduling, because let's say, for example, he didn't file -- he files his sale motion on Friday and then he has to find out whether or not -- and he suggests a hearing on the 26th, but he doesn't know for sure that the Court has availability. That's what he's asking for. It's a status conference. I think it's fair. I think anybody can ask for that, and they do. This is certainly not the first time I've been asked in advance of pleadings filed, is it available -- will the Court be available on X date for a hearing. Okay? And I think under the -- the very specific circumstances and facts of this case, I don't think that the request is unreasonable insofar as having a status conference to inform the Court of the proposed course of action, and then attempting to obtain a hearing date and

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work backwards from that. I don't think that's unreasonable at all. And I'm not saying you're saying it's unreasonable. I'm just telling you, that's the perspective that the Court has in connection with this request for a status conference, much of which was highlighted to the Court last week, and has been the subject of discussion in the adversary proceeding, right? I mean, that was the whole issue on summary judgment on the first counterclaim. So in any event, the issue I have with the 26th, Trustee Despins, is we have something scheduled already that's been scheduled for some time. How much time do you think you're going to need? Or you don't have any -- I don't know if you have any anticipation of how much time you're going to need on the 26th. MR. DESPINS: It's difficult to say. It really depends on the objections that are filed. I mean, I don't think -- THE COURT: I agree. MR. DESPINS: -- it should be more than two hours, but -- THE COURT: I agree. MR. DESPINS: I would just say that there's been robust marketing here and robust bidding. Yesterday, there were some side bids, so I -- you know, it's always possible that somebody shows up with a better bid. God bless if that

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happens, but I think there's been robust marketing and bidding here, so I think that should give everyone some comfort that the best price will be presented to the Court at the hearing. THE COURT: I'm looking at some things on the calendar, so you're going to all have to bear with me for a moment while I look at things. (Pause) THE COURT: Well, the problem with the 26th is that we have an -- we have a trial scheduled on the 26th, in an involuntary case that has been scheduled for some time. We could start the hearing on the 27th. I could -- I could continue some things that are on, what I would call our weekly calendar that are not of the same urgency, although they're urgent to those parties but under -- if I have to prioritize, I could move things and start -- I could move a few matters. Just give me a second, please. (Pause) THE COURT: I could move a few matters and start at noon on the 27th. And then we could go on to the 28th. I could -- and the trial that's scheduled for the 28th, I already mentioned to Attorney Claiborn when she was in hearings -- our Tuesday hearings last week, that that trial might get continued, but it was for other reasons at that

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point, but now it's for this reason. Attorney -- Trustee Despins, what do you think about that timing? MR. DESPINS: We'll take whatever time you can give us, Your Honor. THE COURT: Okay. MR. DESPINS: So we'll start on the 27th. THE COURT: I think we need to start -- I -- this trial on the 26th has been set for some time and it is an evidentiary trial on a contesting an involuntary petition, so it is something -- that, you know, does have to take priority. MR. DESPINS: Understood. Absolutely. THE COURT: So I think we can start on the 27th at noon, and then we will continue on -- and I'll have the whole day of the 28th available. Attorney Claiborn, we'll have to -- MR. DESPINS: Understood, Your Honor. THE COURT: -- we'll issue -- we could start the trial that you were involved in on the 29th, and then see where we go from there. MS. CLAIBORN: I think, Your Honor, that you may have previously scheduled, perhaps earlier today, a hearing on the fee application of Paul Hastings for the 29th. THE COURT: Oh. Did we -- did we --

MS. CLAIBORN: Hopefully, I didn't get my dates wrong. MR. DESPINS: No, that's correct. THE COURT: Yeah, but we didn't change the trial -- MR. DESPINS: At 10:00 on the -- THE COURT: -- on the 29th. We didn't say that there wasn't going to be a trial, but you're right. You're right, Attorney Claiborn, so it would just be that the trial would start later, maybe at 11:00 or 12:00 on the 29th. Okay? MS. CLAIBORN: Okay. THE COURT: We'll have to work on that, obviously. All right. So I'm turning to the courtroom deputy who understands that if Trustee Despins files a motion to sell the Lady May and a motion to expedite the hearing on this Friday, files that sometime this Friday -- and obviously, Case 22-50073 Doc 1890 Filed 06/07/23 Entered 06/07/23 12:53:48 Page 13 of 23

Trustee Despins, the sooner the better, because the clerk's office staff, you know, does leave on Fridays at -- you know, they're usually done in the afternoon.

If you file something at 5 o'clock, it might not get reviewed until Monday. So the earlier you file on Friday, the more likely there -- it would be that an order could possibly enter granting the expedited hearing and

setting the hearing for the 27th at noon. That's -- but those documents would have to be -- have to be filed first, obviously. MR. DESPINS: But the motion to expedite, I'm sure, can be filed way before 5 o'clock on Friday. The actual sale motion might take a little bit longer, but the motion to expedite can be filed, you know, long time before 5 o'clock on Friday. MR. KINDSETH: Your Honor, those should be filed together, obviously, so that we can be informed as to precisely what transpired in terms of the sale process, which I'd like to point out was not pre-approved by the Court. There is no sales procedures motion, no sale procedures order. These are the first we're going to be hearing -- THE COURT: There doesn't need to be a sales procedure motion or order, Attorney Kindseth. MR. KINDSETH: I understand. We're going to be seeing it for the first time. So the motion to expedite with respect to the substantive motion should be filed together. THE COURT: Well, that may be your position, so we'll see what happens when motions get filed. MR. DESPINS: Your Honor, I think we can -- we didn't want to do it like this, but if we file it on Friday,

| 1 | if the objection deadline is Friday, the 23rd, that's 21 | |----|----------------------------------------------------------------| | 2 | days.<br>So let's leave it at that and we'll have to work | | 3 | during the weekend and all that.<br>And the hearing will be on | | 4 | the 27th and we'll file a response Sunday evening or | | 5 | something like that. | | 6 | But any response would be -- need to file -- we'll | | 7 | file it on Sunday evening.<br>That way, there's no shortening | | 8 | of anything, so Mr. Kindseth doesn't have to be concerned | | 9 | about that. | | 10 | We just want to make sure, though, that -- and I | | 11 | think you just confirmed that you are available on the 27th, | | 12 | and so that's great.<br>We'll start on the 27th. | | 13 | THE COURT:<br>We'll start -- assuming you file your | | 14 | documents, the hearing will be scheduled on June 27th -- | | 15 | assuming you file all your documents by Friday, June 2nd, | | 16 | the hearing will be scheduled for June 27th at noon, and | | 17 | we'll continue on to June 28th, if necessary. | | 18 | MR. DESPINS:<br>Thank you, Your Honor. | | 19 | THE COURT:<br>Okay? | | 20 | MR. DESPINS:<br>The other thing I want to mention, | | 21 | which was not on the agenda but something that came up this | | 22 | morning, literally, we submitted through courtroom deputy, a | | 23 | revised proposed emergency order.<br>This is the order that | | 24 | you amended four or five times already that -- regarding the | | 25 | Sherry -- access to the Sherry Netherland. |

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And you'll recall that on purpose, I did not include myself as a person who has the right to go to the apartment. I wanted to avoid any concerns or allegation that somehow while an investigation was going, that I went on site, so I excluded myself and have never been to the apartment. But now I need to go to the apartment for various reasons, including the fact that we've discovered this morning, artwork in a closet of one of the maid's room, which artwork could be valuable and I -- I need to go and recover it today and make sure it's safeguarded. So we would ask Your Honor to nullify the order, and Mr. Bongartz has already submitted by email a draft order that would allow the trustee to go to the apartment, and obviously we'll take pictures of everything. The Sherry Netherland has already taken pictures and they're the ones who discovered this this morning, and so that's why we would ask the Court to modify the order to allow us to go on premises to recover the artwork, which time will tell whether it has any value or not, but if it has value, it needs to be protected. It can't be left in the maid's room. THE COURT: The Sherry Netherland discovered that this morning? Is that what you're saying? MR. DESPINS: That's correct, Your Honor.

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THE COURT: So they were -- MR. DESPINS: The way it works is that there are three apartments. There is the 18th floor. That's where the fire occurred. And there are two other apartments that are -- apparently in the buildings are that -- typically when you own the big apartment, you can buy one-bedroom or like a studio, basically, to put your staff in. And there are two of these that came with the 18th floor apartment, but on different floors. So you don't have to go through the 18th floor to go there. One is on the 22nd floor, the other one is on the 7th floor at the Sherry Netherland, and the Sherry Netherland had never been -- you know, well, I'm sure they had been at one point, but not recently, not since the fire. And I told them this morning that they should go and see what's in these apartments, and that's where they told me that it was artwork. They sent me pictures of that, and I don't know just by looking at the pictures the value it has, but certainly my job is to secure it. We can't leave it in the maid's room. THE COURT: Well, isn't it secure right now? I mean, who has access to -- I'm not suggest -- I just want to understand. What -- MR. DESPINS: I -- Case 22-50073 Doc 1890 Filed 06/07/23 Entered 06/07/23 12:53:48 Page 17 of 23

THE COURT: -- who has access to the area right now? MR. DESPINS: Nobody, because the order that you've entered covers both that 18th floor and the two other apartments. So in theory, no one should have access to that, in theory. But I don't -- I don't want to exaggerate here, but we have good information that Mr. Kwok has purchased artwork in the millions of dollars in the past. We don't know where that artwork is, but if that is part of it, I really think it would be ill advised to leave it on the premises there, not that I have any interest in going to the Sherry Netherlands to get this stuff, but I know if there -- if it has value, it needs to be protected. And without any issues as to who owns it and all that, that can be determined later. Right now, it needs to be in a place where nobody can access it. THE COURT: And the proposed order indicates how that is going to occur? MR. DESPINS: No, just the -- it just says that I am entitled to go to the apartment, the apartment being defined as the 18th floor and the two other maids' quarters, if you will. And I intend to go there this afternoon and bring the artwork back to our offices. MR. KINDSETH: Your Honor, may I be heard?

THE COURT: Yes. MR. KINDSETH: So I guess, Your Honor, for the record, I will be appearing for Mr. Ho Wan Kwok at this time, in light of this revelation. My suggestion is -- and I think this protects the estate and the trustee, and other parties who may claim an interest. If the trustee could circulate an inventory of what the Sherry Netherland's staff has informed him is present, at least we will have -- and I know the identification may not be clear, but he said he had photographs. Perhaps there's a complete set of photographs that he can share. So at least -- before there's any additional access, there's a record and it would be sent to me and perhaps even the United States Trustee's office. There would be a record of what we're talking about here before he access it -- accesses it and retrieves the property. MR. DESPINS: I'm happy to do that, Your Honor. We have the pictures from the Sherry Netherland. I'm happy to share them. And I said, I don't want to -- I'm not -- I know nothing about art. Or at least, I don't know anything about expensive art. This could be -- this could be junk, or it could be worth something. So that's why I think it's

important to be careful about this. MR. KINDSETH: We respect the trustee's perspective in that regard. We're just trying to create an inventory. MR. DESPINS: Not an issue, Your Honor. Absolutely. THE COURT: Okay. MR. DESPINS: And I can say that the Sherry Netherland has already told me that one of the pieces was already broken in the sense that when they -- when they -- when they opened the closet in the maid's quarter, they could hear glass -- you know, they're all in Saran -- not Saran Wrap. They're in bubble wrap, and they could hear glass, you know, moving there. So -- but we'll video all of that when we take it, but we'll also send pictures to Mr. Kindseth before going over there. THE COURT: Well, I haven't seen the order that you're talking about, and you're saying all it does is modify an existing order to allow you to have access, which Mr. Kwok's counsel is not opposing. Correct? MR. DESPINS: That's correct. That's all it does. It doesn't talk about taking custody of anything. I'll take that on my own, but it just authorizes access to the apartment, which I can't access without the order being

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modified. THE COURT: Because the Sherry Netherland won't let you in? MR. DESPINS: Correct. And they're right. They're correct. They're -- THE COURT: No, no, I understand. I'm just asking -- MR. DESPINS: They are enforcing the order. THE COURT: -- I am just asking the question. I don't have anything in front of me -- MR. DESPINS: Yes, they do. THE COURT: -- to refer to, so I'm just asking the question. MR. DESPINS: It's basically they're enforcing the prior orders Your Honor entered. As I said before, I was not on that list on purpose. Now that, you know, a month has passed, you know, since the fire, the investigations are completely over in terms of forensic investigation in the apartment, so there's no -- there's no issue about going to the apartment, so that's why I feel comfortable doing that and recovering the artwork, and we'll determine what value it has, if any. THE COURT: Okay. Well, I'll certainly take a look at that order when it's brought to my attention. I mean, now you've told us, so we'll find it and we'll look at

it. MR. DESPINS: Thank you, Your Honor. THE COURT: Okay. Thank you. MR. DESPINS: That's all we had from the trustee's point of view for today. Thank you again for making yourselves available. We really appreciate it. THE COURT: Okay. You're welcome. Then we'll see what gets filed on Friday and we will act accordingly, and we will look for an order regarding access to the apartment at the Sherry Netherland, a modification to that order. Okay? MR. DESPINS: Thank you, Your Honor. THE COURT: All right. That concludes this status conference today then, and that is our last matter on for hearing today, so court is adjourned. MR. DESPINS: Thank you. THE CLERK: Court is adjourned. MS. CLAIBORN: Thank you. (Proceedings concluded at 2:02 p.m.)

| 1 | I, CHRISTINE FIORE, court-approved transcriber and | |----|-------------------------------------------------------------| | 2 | certified electronic reporter and transcriber, certify that | | 3 | the foregoing is a correct transcript from the official | | 4 | electronic sound recording of the proceedings in the above | | 5 | entitled matter. | | 6 | | | 7 | | | 8 | June 7, 2023 | | 9 | Christine Fiore, CERT | | 10 | | | 11 | | | 12 | | | 13 | | | 14 | | | 15 | | | 16 | | | 17 | | | 18 | | | 19 | | | 20 | | | 21 | | | 22 | | | 23 | | | 24 | | | | | | | |